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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C.  20549
 

FORM 8-K
 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of report (Date of earliest event reported):  October 29, 2018
 

CBL & ASSOCIATES PROPERTIES, INC.

CBL & ASSOCIATES LIMITED PARTNERSHIP

(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
 
 
 
Delaware
 
1-12494
 
62-1545718
Delaware
 
333-182515-01
 
62-1542285
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Commission File
 Number)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN 37421
(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)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
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






ITEM 2.02 Results of Operations and Financial Condition

On October 29, 2018, CBL & Associates Properties, Inc. (the "Company") reported its results for the third quarter ended September 30, 2018. The Company's earnings release and supplemental financial and operating information for the third quarter ended September 30, 2018 is attached as Exhibit 99.1. On October 30, 2018, the Company held a conference call to discuss the results for the third quarter ended September 30, 2018. The conference call script is attached as Exhibit 99.2.

The information in this Form 8-K and the Exhibits attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01 Financial Statements and Exhibits

(a)
Financial Statements of Businesses Acquired
Not applicable

(b)
Pro Forma Financial Information
Not applicable

(c)
Shell Company Transactions
Not applicable

(d)
Exhibits
 
 
 
 
Exhibit
Number
 
Description
 
 










SIGNATURES
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


CBL & ASSOCIATES PROPERTIES, INC.


/s/ Farzana Khaleel
___________________________________
Farzana Khaleel
Executive Vice President -
Chief Financial Officer and Treasurer


CBL & ASSOCIATES LIMITED PARTNERSHIP

By: CBL HOLDINGS I, INC., its general partner


/s/ Farzana Khaleel
___________________________________
Farzana Khaleel
Executive Vice President -
Chief Financial Officer and Treasurer
                             


Date: October 30, 2018
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1















395550692_cblmark.jpg



Earnings Release and
Supplemental Financial and Operating Information

For the Three and Nine Months Ended
September 30, 2018





395550692_cblmarka01.jpg
Earnings Release and Supplemental Financial and Operating Information
Table of Contents

 
 
Page
 
 
 
 
 
 
 
 
Reconciliations of Supplementary Non-GAAP Financial Measures:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



395550692_pressreleaseheadercopya01.jpg


Contact: Katie Reinsmidt, EVP - Chief Investment Officer, 423.490.8301, katie.reinsmidt@cblproperties.com


CBL PROPERTIES REPORTS RESULTS FOR THIRD QUARTER 2018 AND DECLARES COMMON AND PREFERRED STOCK DIVIDENDS
Results in-line; Full-Year Guidance Range Maintained

CHATTANOOGA, Tenn. (October 29, 2018) – CBL Properties (NYSE:CBL) announced results for the third quarter ended September 30, 2018. A description of each supplemental non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is located at the end of this news release.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
 
2018
 
2017
 
Net income (loss) attributable to common shareholders per diluted share
$
(0.07
)
 
$
(0.01
)
 
 
$
(0.34
)
 
$
0.30

 
Funds from Operations ("FFO") per diluted share
$
0.39

 
$
0.52

 
 
$
1.26

 
$
1.63

 
FFO, as adjusted, per diluted share (1)
$
0.40

 
$
0.50

 
 
$
1.28

 
$
1.51

 
(1) For a reconciliation of FFO to FFO, as adjusted, for the periods presented, please refer to the footnotes to the Company's reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders on page 10 of this news release.
 
KEY TAKEAWAYS:

FFO per diluted share, as adjusted, was $0.40 for the third quarter 2018, compared with $0.50 per share for the third quarter 2017. Third quarter 2018 FFO per share was impacted by approximately $0.01 per share of higher G&A expense primarily due to severance expense, $0.01 per share of dilution from asset sales completed in 2017 and year-to-date, $0.05 per share of lower property NOI, $0.01 per share higher interest expense and $0.02 per share lower income tax benefit.
Total Portfolio Same-center NOI declined 6.1% for the third quarter 2018 and 6.6% for the nine months ended September 30, 2018.
Portfolio occupancy increased 90 basis points to 92.0% as of September 30, 2018, compared with 91.1% as of June 30, 2018, and declined 110 basis points compared with 93.1% as of September 30, 2017. Same-center mall occupancy was 90.8% as of September 30, 2018, a 120 basis point increase compared with 89.6% as of June 30, 2018, and a 90 basis point decline compared with 91.7% as of September 30, 2017.
Year-to-date, CBL has completed gross asset sales totaling more than $89 million.
Same-center sales per square foot for the stabilized mall portfolio for the twelve-months ended September 30, 2018, increased to $378 per square foot compared with $376 per square foot for the prior-year period.
Construction is underway on nine redevelopment projects with three redevelopment projects opened year-to-date.


 
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"Operational results for the quarter and year-to-date were delivered in-line with our expectations and previously issued guidance range," commented Stephen Lebovitz, chief executive officer.  "Despite significant additional rent losses from unanticipated store closings, we are on-track to end the year at the mid-to-high point of our adjusted FFO per share guidance range and the mid-to-low point of the same-center NOI range. While our leasing spreads continue to be pressured, the positive sales in our portfolio year-to-date are a healthy leading indicator for an improved leasing backdrop in 2019. 
"We are also making strong progress on our redevelopment program.  Of the ten leased Bon Ton stores that closed in August, we have leases executed or out-for-signature for replacement users at six locations and three others in advanced negotiations.  We are utilizing our capital-lite redevelopment strategy for a number of these projects and today have nine anchor replacements across our portfolio that require little to no investment by CBL and several more underway.  This under-appreciated strategy allows us to replace closed anchor locations with exciting uses while preserving capital. At the same time, we are having excellent results in diversifying our offerings, with executed or pending deals for 50 restaurants, 14 entertainment operators, nine hotels, two supermarkets, five fitness operators, four self-storage locations and four multi-family projects.
            "Now that the much-anticipated Sears bankruptcy is behind us, we have the opportunity to accelerate additional redevelopments to further transform our malls into suburban town centers.  We anticipate minimal impact to our financial results for 2018 as a result of the six additional Sears closures announced as part of the filing.  Three were stores that we had purchased in our 2017 sale-leaseback transaction with redevelopment plans already well underway.         
"We also are strengthening our balance sheet by extending our maturity schedule. We closed on a 10-year, fixed loan at a rate of 5.103% secured by The Outlet Shoppes at El Paso this quarter.  Our share of nearly $95 million in net proceeds from this financing and the CoolSprings Galleria refinancing completed during the second quarter, coupled with disposition proceeds of nearly $90 million year-to-date funded the majority of the $190 million term loan paydown completed in July.  We have also made significant progress with our bank group towards finalizing the recast of our lines of credit and term loans.  With their strong support we remain on-track to close in or before January 2019 and will be excited to share details at that time."
Net loss attributable to common shareholders for the third quarter 2018 was $12.6 million, or a loss of $0.07 per diluted share, compared with a net loss of $2.3 million, or a loss of $0.01 per diluted share, for the third quarter 2017.
FFO allocable to common shareholders, as adjusted, for the third quarter 2018 was $68.6 million, or $0.40 per diluted share, compared with $84.7 million, or $0.50 per diluted share, for the third quarter 2017. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the third quarter 2018 was $79.2 million compared with $98.7 million for the third quarter 2017.

Percentage change in same-center Net Operating Income ("NOI")(1):
 
 
Three Months Ended
September 30, 2018
 
Nine Months Ended September 30, 2018
Portfolio same-center NOI
 
(6.1)%
 
(6.6)%
Mall same-center NOI
 
(6.4)%
 
(6.8)%
(1)
CBL's definition of same-center NOI excludes the impact of lease termination fees and certain non-cash items of straight-line rents, write-offs of landlord inducements and net amortization of acquired above and below market leases.

Major variances impacting same-center NOI for the quarter ended September 30, 2018, include:
Same-center NOI declined $10.0 million, due to a $12.3 million decrease in revenues offset by a $2.3 million decline in operating expenses.
Minimum rents and tenant reimbursements declined $11.4 million during the quarter, including a $3.0 million decline in real estate tax reimbursements.

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Percentage rents declined $0.5 million compared with the prior year quarter.
Property operating expenses were relatively flat compared with the prior year. Maintenance and repair expenses increased $0.5 million. Real estate tax expenses declined $2.8 million.
 
PORTFOLIO OPERATIONAL RESULTS

Occupancy(1):
 
As of June 30,
 
As of September 30,
 
2018
 
2018
 
2017
Portfolio occupancy
91.1%
 
92.0%
 
93.1%
Mall portfolio
89.2%
 
90.5%
 
91.6%
Same-center malls
89.6%
 
90.8%
 
91.7%
Stabilized malls 
89.5%
 
90.8%
 
91.7%
Non-stabilized malls (2)
71.9%
 
73.6%
 
87.9%
Associated centers
97.9%
 
97.2%
 
98.2%
Community centers
96.9%
 
96.8%
 
98.2%
(1)
Occupancy for malls represents percentage of mall store gross leasable area under 20,000 square feet occupied. Occupancy for associated and community centers represents percentage of gross leasable area occupied.
(2)
Represents occupancy for The Outlet Shoppes at Laredo as of September 30, 2018. Represents occupancy for The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Laredo as of September 30, 2017.

New and Renewal Leasing Activity of Same Small Shop Space Less Than 10,000 Square Feet:
% Change in Average Gross Rent Per Square Foot:
 
 
 
Three Months
Ended
September 30, 2018
 
Nine Months Ended
September 30, 2018
Stabilized Malls
(13.1
)%
 
(11.3
)%
New leases (1)
(9.5
)%
 
(3.1
)%
Renewal leases
(13.8
)%
 
(12.9
)%
(1)
Excluding three leases executed during Q3 2018, average new lease spreads would have been 0.6% and (0.2)% for the three and nine months ended September 30, 2018, respectively.

Same-Center Sales Per Square Foot for Mall Tenants 10,000 Square Feet or Less:
 
Twelve Months Ended September 30,
 
 
 
2018
 
2017
 
% Change
Stabilized mall same-center sales per square foot
$
378

 
$
376

 
0.5%
Stabilized mall sales per square foot
$
378

 
$
373

 
1.3%

DIVIDEND
“A major financial priority for CBL is to preserve liquidity and the flexibility of our balance sheet," commented Lebovitz. "As we discussed on our second quarter earnings call, we have been evaluating an adjustment to our dividend to a level that maximizes available cash flow for investing in our properties and debt reduction.  In order to accomplish this goal, we are reducing the common dividend for 2019 to an annualized rate of $0.30 per share from $0.80 per share. The reduction will preserve an estimated $100 million of cash on an annual basis. This significantly enhanced liquidity will help to fund value-adding redevelopment activity and debt reduction and ultimately enhance

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long-term shareholder value.  In addition to the funds retained through the dividend reduction, we will continue to enhance financial flexibility through a number of avenues, including efficiencies in operations, reductions to overhead and opportunistic dispositions to generate equity proceeds as well as proactively extending our debt maturity schedule to limit financing risk."

CBL’s Board of Directors has declared a quarterly cash dividend for the Company’s Common Stock of $0.075 per share for the quarter ending December 31, 2018. The dividend is payable on January 16, 2019, to shareholders of record as of December 31, 2018. The dividend represents an annualized rate of $0.30 per share.

The Board also declared a quarterly cash dividend of $0.4609375 per depositary share for the quarter ending December 31, 2018, for the Company’s 7.375% Series D Cumulative Redeemable Preferred Stock. The dividend, which equates to an annual dividend payment of $1.84375 per depositary share, is payable on December 31, 2018, to shareholders of record as of December 14, 2018.

The Board also declared a quarterly cash dividend of $0.4140625 per depositary share for the quarter ending December 31, 2018, for the Company’s 6.625% Series E Cumulative Redeemable Preferred Stock. The dividend, which equates to an annual dividend payment of $1.65625 per depositary share, is payable on December 31, 2018, to shareholders of record as of December 14, 2018.

DISPOSITIONS
Year-to-date, CBL has raised more than $89 million in gross proceeds through asset sales.
Property
Location
Date Closed
Gross Sales Price (M)
Various Outparcels
Various
Various
$
24.3

Phase III Gulf Coast Town Center
Ft. Myers, FL
March
$
9.0

Janesville Mall
Janesville, WI
July
$
18.0

Statesboro Crossing
Statesboro, GA
August
$
21.5

Parkway Plaza
Ft. Oglethorpe, GA
October
$
16.5

Total
 
 
$
89.3


    
FINANCING ACTIVITY
In September, CBL closed on a $75.0 million non-recourse loan secured by The Outlet Shoppes at El Paso in El Paso, TX. The 10-year loan bears interest at a fixed rate of 5.103%.

Proceeds from the loan were used to retire a $6.5 million loan secured by the second phase of the property, which was scheduled to mature in December. CBL’s share of net proceeds of $65.0 million was utilized to reduce outstanding balances on the lines of credit.

In April, CBL, along with its 50% joint venture partner, closed on a $155.0 million ($77.5 million at CBL’s share) non-recourse loan secured by CoolSprings Galleria in Nashville, TN. The 10-year loan bears interest at a fixed rate of 4.839%.

Proceeds from the loan were used to retire the existing $97.7 million loan, which bore interest at a fixed rate of 6.98% and was scheduled to mature in June. CBL’s share of nearly $29.0 million in excess proceeds was utilized to reduce outstanding balances on its lines of credit.

In May, CBL completed the extension of the $56.7 million ($28.4 million at CBL’s share) loan secured by The Pavilion at Port Orange in Port Orange, FL, and the $58.2 million ($29.1 million at CBL’s share) loan secured by Hammock Landing in West Melbourne, FL. The loans were extended for an initial term of three years, with two one-year extensions available at the Company’s option, for a final maturity in February 2023. The new loans bear interest at 225 basis points over LIBOR, an increase of 25 bps over the prior rate.


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In July, CBL repaid $190.0 million of its $490.0 million unsecured term loan using availability on its lines of credit, reducing the outstanding balance to $300 million.     This loan matures in July 2021.

In October, CBL exercised its option to extend the maturity date of its $350.0 million unsecured term loan to October 2019. It also extended the $27.4 million loan secured by Hickory Point Mall to December 2019.

DEVELOPMENT
Major redevelopments completed and underway in 2018 include (complete project list can be found in the financial supplement):
Property
Prior Tenant
 
New Tenant(s)
Brookfield Square
Sears
 
Marcus Theaters, Whirlyball
Eastland Mall
JCPenney
 
H&M, Outback, Planet Fitness
Frontier Mall
Sports Authority
 
Planet Fitness
Jefferson Mall
Macy's
 
Round 1
York Galleria
JCPenney
 
Marshalls
Hanes Mall
Shops
 
Dave & Busters
Parkdale Mall
Macy's
 
Dick's, Five Below, HomeGoods

Additional Replacement Activity Completed or Underway with Minimal or No Investment by CBL:
Property
Prior Tenant
 
New Tenant(s)
Layton Hills Mall
Macy's
 
Dillard's (Opened Q4 '17)
Stroud Mall
BonTon
 
Shoprite ('19 Opening)
Westmoreland Mall
BonTon
 
Casino ('19 Construction)
Kentucky Oaks
Sears (Seritage)
 
Burlington (Opened fall '18)
West Towne Mall
Sears (Seritage)
 
Dave & Buster's/Total Wine (Opened summer '18)
Northwood Mall
Sears (Seritage)
 
Burlington (Opened spring '18)
Honey Creek Mall
Carson's
 
Vendor Village (Est. Open Q4 '18)
Hanes Mall
Sears
 
Novant Health (Opening TBD)
CherryVale Mall
Bergner's
 
ChoiceHome (Est. Open Q4 '18)

OUTLOOK AND GUIDANCE
Based on year-to-date results and expectations for the fourth quarter 2018, CBL anticipates achieving 2018 FFO, as adjusted, at the mid-to-high end of its guidance range of $1.70 - $1.80 per diluted share. Guidance incorporates a reserve in the range of $10.0 - $20.0 million (the "Reserve") for potential future unbudgeted loss in rent from tenant bankruptcies, store closures or lease modifications that may occur in 2018. Based on bankruptcy and leasing activity year-to-date, including the impact of any co-tenancy, CBL currently expects to utilize approximately $16 - $18 million of the Reserve. Key assumptions underlying guidance are as follows:
 
Low
 
High
2018 FFO, as adjusted, per share (Includes the Reserve)
$1.70
 
$1.80
2018 Change in Same-Center NOI ("SC NOI") (Includes the Reserve)
(6.75)%
 
(5.25)%
Reserve for unbudgeted lost rents included in SC NOI and FFO
$20.0 million
 
$10.0 million
Gains on outparcel sales
$12.0 million
 
$14.0 million


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Reconciliation of GAAP net income (loss) to 2018 FFO, as adjusted, per share guidance:
 
Low
 
High
Expected diluted earnings per common share
$
(0.32
)
 
$
(0.23
)
Adjust to fully converted shares from common shares
0.04

 
0.04

Expected earnings per diluted, fully converted common share
(0.28
)
 
(0.19
)
Add: depreciation and amortization
1.61

 
1.61

Less: gain on depreciable property
(0.03
)
 
(0.03
)
Add: loss on impairment
0.42

 
0.42

Add: noncontrolling interest in loss of Operating Partnership
(0.04
)
 
(0.03
)
Expected FFO, as adjusted, per diluted, fully converted common share
$
1.68

 
$
1.78

Adjustment for certain significant items
0.02

 
0.02

Expected adjusted FFO per diluted, fully converted common share
$
1.70

 
$
1.80


INVESTOR CONFERENCE CALL AND WEBCAST
CBL Properties will host a conference call on Tuesday, October 30, 2018, at 11:00 a.m. ET. To access this interactive teleconference, dial (888) 317‑6003 or (412) 317-6061 and enter the confirmation number, 4666560.  A replay of the conference call will be available through November 6, 2018, by dialing (877) 344-7529 or (412) 317‑0088 and entering the confirmation number, 10123148.
The Company will also provide an online webcast and rebroadcast of its third quarter 2018 earnings release conference call.  The live broadcast of the quarterly conference call will be available online at cblproperties.com on Tuesday, October 30, 2018, beginning at 11:00 a.m. ET.  The online replay will follow shortly after the call.
To receive the CBL Properties third quarter earnings release and supplemental information, please visit the Invest section of our website at cblproperties.com or contact Investor Relations at (423) 490-8312.
ABOUT CBL PROPERTIES
Headquartered in Chattanooga, TN, CBL Properties owns and manages a national portfolio of market-dominant properties located in dynamic and growing communities. CBL’s portfolio is comprised of 114 properties totaling 71.9 million square feet across 26 states, including 73 high-quality enclosed, outlet and open-air retail centers and 12 properties managed for third parties. CBL continuously strengthens its company and portfolio through active management, aggressive leasing and profitable reinvestment in its properties. For more information visit cblproperties.com.

NON-GAAP FINANCIAL MEASURES
Funds From Operations
FFO is a widely used non-GAAP measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. The Company’s method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The Company believes that FFO provides an additional indicator of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate

6




assets declines predictably over time. Since values of well-maintained real estate assets have historically risen with market conditions, the Company believes that FFO enhances investors’ understanding of its operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of the Company’s properties and interest rates, but also by its capital structure.
The Company presents both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as it believes that both are useful performance measures. The Company believes FFO allocable to Operating Partnership common unitholders is a useful performance measure since it conducts substantially all of its business through its Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company’s common shareholders and the noncontrolling interest in the Operating Partnership. The Company believes FFO allocable to its common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to its common shareholders.
In the reconciliation of net income (loss) attributable to the Company's common shareholders to FFO allocable to Operating Partnership common unitholders, located in this earnings release, the Company makes an adjustment to add back noncontrolling interest in income (loss) of its Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders. The Company then applies a percentage to FFO of the Operating Partnership common unitholders to arrive at FFO allocable to its common shareholders. The percentage is computed by taking the weighted-average number of common shares outstanding for the period and dividing it by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units held by noncontrolling interests during the period.
FFO does not represent cash flows from operations as defined by GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating the Company’s operating performance or to cash flow as a measure of liquidity.
The Company believes that it is important to identify the impact of certain significant items on its FFO measures for a reader to have a complete understanding of the Company's results of operations. Therefore, the Company has also presented adjusted FFO measures excluding these items from the applicable periods. Please refer to the reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders on page 10 of this news release for a description of these adjustments.
Same-center Net Operating Income
NOI is a supplemental non-GAAP measure of the operating performance of the Company's shopping centers and other properties. The Company defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).
The Company computes NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated properties. The Company believes that presenting NOI and same-center NOI (described below) based on its Operating Partnership’s pro rata share of both consolidated and unconsolidated properties is useful since the Company conducts substantially all of its business through its Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company's common shareholders and the noncontrolling interest in the Operating Partnership. The Company's definition of NOI may be different than that used by other companies and, accordingly, the Company's calculation of NOI may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to the operations of the Company's shopping center properties, the Company believes that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on the Company's results of operations. The Company’s calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-off of landlord inducement assets in order to enhance the comparability of results from one period to another. A reconciliation of same-center NOI to net income is located at the end of this earnings release.

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Pro Rata Share of Debt
The Company presents debt based on its pro rata ownership share (including the Company's pro rata share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties) because it believes this provides investors a clearer understanding of the Company's total debt obligations which affect the Company's liquidity. A reconciliation of the Company's pro rata share of debt to the amount of debt on the Company's condensed consolidated balance sheet is located at the end of this earnings release.
Information included herein contains "forward-looking statements" within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual events, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. The reader is directed to the Company's various filings with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K, and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included therein, for a discussion of such risks and uncertainties.

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CBL & Associates Properties, Inc.
Supplemental Financial and Operating Information
For the Three and Nine Months Ended September 30, 2018
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
142,248

 
$
150,836

 
$
441,097

 
$
468,195

Percentage rents
2,429

 
3,000

 
6,610

 
7,127

Other rents
2,347

 
3,790

 
6,898

 
11,171

Tenant reimbursements
55,374

 
63,055

 
172,601

 
192,577

Management, development and leasing fees
2,658

 
2,718

 
8,022

 
8,747

Other
1,822

 
1,251

 
6,448

 
4,079

Total revenues
206,878

 
224,650

 
641,676

 
691,896

OPERATING EXPENSES:
 
 
 
 
 
 
 
Property operating
30,004

 
31,295

 
92,357

 
96,250

Depreciation and amortization
71,945

 
71,732

 
217,261

 
225,461

Real estate taxes
19,433

 
21,573

 
61,737

 
62,343

Maintenance and repairs
11,475

 
11,254

 
36,713

 
36,322

General and administrative
16,051

 
13,568

 
47,845

 
45,402

Loss on impairment
14,600

 
24,935

 
84,644

 
71,401

Other
38

 
132

 
377

 
5,151

Total operating expenses
163,546

 
174,489

 
540,934

 
542,330

Income from operations
43,332

 
50,161

 
100,742

 
149,566

Interest and other income (loss)
283

 
(200
)
 
714

 
1,235

Interest expense
(55,194
)
 
(53,913
)
 
(163,164
)
 
(165,179
)
Gain on extinguishment of debt

 
6,452

 

 
30,927

Gain (loss) on investments

 
(354
)
 
387

 
(6,197
)
Income tax benefit (provision)
(1,034
)
 
1,064

 
1,846

 
4,784

Equity in earnings of unconsolidated affiliates
1,762

 
4,706

 
9,869

 
16,404

Income (loss) from continuing operations before gain on sales of real estate assets
(10,851
)
 
7,916

 
(49,606
)
 
31,540

Gain on sales of real estate assets
7,880

 
1,383

 
15,998

 
86,904

Net income (loss)
(2,971
)
 
9,299

 
(33,608
)
 
118,444

Net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating Partnership
1,628

 
81

 
8,978

 
(8,702
)
Other consolidated subsidiaries
(24
)
 
(415
)
 
369

 
(25,266
)
Net income (loss) attributable to the Company
(1,367
)
 
8,965

 
(24,261
)
 
84,476

Preferred dividends
(11,223
)
 
(11,223
)
 
(33,669
)
 
(33,669
)
Net income (loss) attributable to common shareholders
$
(12,590
)
 
$
(2,258
)
 
$
(57,930
)
 
$
50,807

 
 
 
 
 
 
 
 
Basic and diluted per share data attributable to common shareholders:
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders
$
(0.07
)
 
$
(0.01
)
 
$
(0.34
)
 
$
0.30

Weighted-average common and potential dilutive common
shares outstanding
172,665

 
171,096

 
172,426

 
171,060

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.200

 
$
0.265

 
$
0.600

 
$
0.795


9


CBL & Associates Properties, Inc.
Supplemental Financial And Operating Information
For the Three and Nine Months Ended September 30, 2018


The Company's reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows:
(in thousands, except per share data)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Net income (loss) attributable to common shareholders
$
(12,590
)
 
$
(2,258
)
 
$
(57,930
)
 
$
50,807

Noncontrolling interest in income (loss) of Operating Partnership
(1,628
)
 
(81
)
 
(8,978
)
 
8,702

Depreciation and amortization expense of:
 
 
 
 

 
 
 Consolidated properties
71,945

 
71,732

 
217,261

 
225,461

 Unconsolidated affiliates
10,438

 
9,633

 
31,177

 
28,533

 Non-real estate assets
(910
)
 
(934
)
 
(2,748
)
 
(2,590
)
Noncontrolling interests' share of depreciation and amortization
(2,136
)
 
(2,170
)
 
(6,424
)
 
(6,791
)
Loss on impairment, net of taxes
14,600

 
24,935

 
84,644

 
70,185

Loss on impairment of unconsolidated affiliates
1,022

 

 
1,022

 

Gain on depreciable property, net of taxes and noncontrolling interests' share
(3,307
)
 
1,995

 
(5,543
)
 
(48,761
)
FFO allocable to Operating Partnership common unitholders
77,434

 
102,852

 
252,481

 
325,546

Litigation expenses (1)

 
17

 

 
69

Nonrecurring professional fees reimbursement (1)

 

 

 
(919
)
(Gain) loss on investments, net of taxes (2)

 
354

 
(287
)
 
6,197

Non-cash default interest expense (3)
1,784

 
1,904

 
3,616

 
4,398

Gain on extinguishment of debt, net of noncontrolling interests' share (4)

 
(6,452
)
 

 
(33,902
)
FFO allocable to Operating Partnership common unitholders, as adjusted
$
79,218

 
$
98,675

 
$
255,810

 
$
301,389

 
 
 
 
 
 
 
 
FFO per diluted share
$
0.39

 
$
0.52

 
$
1.26

 
$
1.63

 
 
 
 
 
 
 
 
FFO, as adjusted, per diluted share
$
0.40

 
$
0.50

 
$
1.28

 
$
1.51

 
 
 
 
 
 
 
 
Weighted-average common and potential dilutive common shares outstanding with Operating Partnership units fully converted
199,432

 
199,321

 
199,630

 
199,325

 
 
 
 
 
 
 
 
(1) Litigation expense is included in general and administrative expense in the consolidated statements of operations. Nonrecurring professional fees reimbursement is included in interest and other income in the consolidated statements of operations.
(2) The nine months ended September 30, 2018 includes a gain on investment related to the land contributed by the Company to the Self Storage at Mid Rivers 50/50 joint venture. The three months and nine months ended September 30, 2017 represents a loss on investment related to the write down of the Company's 25% interest in River Ridge Mall based on the contract price to sell such interest to its joint venture partner. The sale closed in August 2017.
(3) The three months and nine months ended September 30, 2018 includes default interest expense related to Acadiana Mall and Cary Town Center. The three months and nine months ended September 30, 2017 includes default interest expense related to Acadiana Mall and Wausau Center. The nine months ended September 30, 2017 also includes default interest expense related to Chesterfield Mall and Midland Mall.
(4) The three months ended September 30, 2017 primarily represents a $6,851 gain on extinguishment of debt related to the non-recourse loan secured by Wausau Center, which was conveyed to the lender in the third quarter of 2017, which was partially offset by a loss on extinguishment of debt related to a prepayment fee of $371 related to the early retirement of a mortgage loan. Additionally, the nine months ended September 30, 2017 also includes a gain on extinguishment of debt related to the non-recourse loan secured by Chesterfield Mall, which was conveyed to the lender in the second quarter of 2017, a loss on extinguishment of debt related to a prepayment fee on the early retirement of the loans secured by The Outlet Shoppes at Oklahoma City, which was sold in the second quarter of 2017, and a gain on extinguishment of debt related to the non-recourse loan secured by Midland Mall, which was conveyed to the lender in the first quarter of 2017.

    

10


CBL & Associates Properties, Inc.
Supplemental Financial And Operating Information
For the Three and Nine Months Ended September 30, 2018



The reconciliation of diluted EPS to FFO per diluted share is as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Diluted EPS attributable to common shareholders
$
(0.07
)
 
$
(0.01
)
 
$
(0.34
)
 
$
0.30

Eliminate amounts per share excluded from FFO:
 
 
 
 
 
 
 
Depreciation and amortization expense, including amounts from consolidated properties, unconsolidated affiliates, non-real estate assets and excluding amounts allocated to noncontrolling interests
0.40

 
0.40

 
1.20

 
1.23

Loss on impairment, net of taxes
0.08

 
0.13

 
0.43

 
0.35

Gain on depreciable property, net of taxes and noncontrolling interests' share
(0.02
)
 

 
(0.03
)
 
(0.25
)
FFO per diluted share
$
0.39

 
$
0.52

 
$
1.26

 
$
1.63


    
The reconciliations of FFO allocable to Operating Partnership common unitholders to FFO allocable to common shareholders, including and excluding the adjustments noted above, are as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
FFO allocable to Operating Partnership common unitholders
$
77,434

 
$
102,852

 
$
252,481

 
$
325,546

Percentage allocable to common shareholders (1)
86.58
%
 
85.84
%
 
86.37
%
 
85.82
%
FFO allocable to common shareholders
$
67,042

 
$
88,288

 
$
218,068

 
$
279,384

 
 
 
 
 
 
 
 
FFO allocable to Operating Partnership common unitholders, as adjusted
$
79,218

 
$
98,675

 
$
255,810

 
$
301,389

Percentage allocable to common shareholders (1)
86.58
%
 
85.84
%
 
86.37
%
 
85.82
%
FFO allocable to common shareholders, as adjusted
$
68,587

 
$
84,703

 
$
220,943

 
$
258,652

 
 
 
 
 
 
 
 
(1) Represents the weighted-average number of common shares outstanding for the period divided by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units outstanding during the period. See the reconciliation of shares and Operating Partnership units outstanding on page 16.


11


SUPPLEMENTAL FFO INFORMATION:
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Lease termination fees
$
783

 
$
879

 
$
9,788

 
$
1,990

    Lease termination fees per share
$

 
$

 
$
0.05

 
$
0.01

 
 
 
 
 
 
 
 
Straight-line rental income
$
388

 
$
(409
)
 
$
(3,923
)
 
$
223

    Straight-line rental income per share
$

 
$

 
$
(0.02
)
 
$

 
 
 
 
 
 
 
 
Gains on outparcel sales
$
4,548

 
$
3,605

 
$
11,033

 
$
11,696

    Gains on outparcel sales per share
$
0.02

 
$
0.02

 
$
0.06

 
$
0.06

 
 
 
 
 
 
 
 
Net amortization of acquired above- and below-market leases
$
(1,210
)
 
$
1,046

 
$
982

 
$
3,462

Net amortization of acquired above- and below-market leases per share
$
(0.01
)
 
$
0.01

 
$

 
$
0.02

 
 
 
 
 
 
 
 
Net amortization of debt premiums and discounts
$
314

 
$
(369
)
 
$
727

 
$
(772
)
Net amortization of debt premiums and discounts per share
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
Income tax benefit (provision)
$
(1,034
)
 
$
1,064

 
$
1,846

 
$
4,784

    Income tax benefit (provision) per share
$
(0.01
)
 
$
0.01

 
$
0.01

 
$
0.02

 
 
 
 
 
 
 
 
Gain on extinguishment of debt, net of noncontrolling interests' share
$

 
$
6,452

 
$

 
$
33,902

Gain on extinguishment of debt, net of noncontrolling interests' share per share
$

 
$
0.03

 
$

 
$
0.17

 
 
 
 
 
 
 
 
 Gain (loss) on investments, net of taxes
$

 
$
(354
)
 
$
287

 
$
(6,197
)
     Gain (loss) on investments, net of taxes per share
$

 
$

 
$

 
$
(0.03
)
 
 
 
 
 
 
 
 
Non-cash default interest expense
$
(1,784
)
 
$
(1,904
)
 
$
(3,616
)
 
$
(4,398
)
     Non-cash default interest expense per share
$
(0.01
)
 
$
(0.01
)
 
$
(0.02
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
Abandoned projects expense
$
(38
)
 
$
(132
)
 
$
(377
)
 
$
(5,151
)
    Abandoned projects expense per share
$

 
$

 
$

 
$
(0.03
)
 
 
 
 
 
 
 
 
Interest capitalized
$
1,198

 
$
452

 
$
2,736

 
$
1,676

     Interest capitalized per share
$
0.01

 
$

 
$
0.01

 
$
0.01

 
 
 
 
 
 
 
 
Litigation expenses
$

 
$
(17
)
 
$

 
$
(69
)
     Litigation expenses per share
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
Nonrecurring professional fees reimbursement
$

 
$

 
$

 
$
919

Nonrecurring professional fees reimbursement per share
$

 
$

 
$

 
$


 
As of September 30,
 
2018
 
2017
Straight-line rent receivable
$
57,284

 
$
62,681


12


CBL & Associates Properties, Inc.
Supplemental Financial And Operating Information
For the Three and Nine Months Ended September 30, 2018


Same-center Net Operating Income
(Dollars in thousands)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
(2,971
)
 
$
9,299

 
$
(33,608
)
 
$
118,444

 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
Depreciation and amortization
71,945

 
71,732

 
217,261

 
225,461

Depreciation and amortization from unconsolidated affiliates
10,438

 
9,633

 
31,177

 
28,533

Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries
(2,136
)
 
(2,170
)
 
(6,424
)
 
(6,791
)
Interest expense
55,194

 
53,913

 
163,164

 
165,179

Interest expense from unconsolidated affiliates
6,551

 
6,244

 
18,849

 
18,815

Noncontrolling interests' share of interest expense in other consolidated subsidiaries
(1,875
)
 
(1,584
)
 
(5,912
)
 
(5,160
)
Abandoned projects expense
38

 
132

 
377

 
5,151

Gain on sales of real estate assets
(7,880
)
 
(1,383
)
 
(15,998
)
 
(86,904
)
(Gain) loss on sales of real estate assets of unconsolidated affiliates
28

 
(227
)
 
(564
)
 
(189
)
Noncontrolling interests' share of gain on sales of real estate assets in other consolidated affiliates

 

 

 
26,639

(Gain) loss on investment

 
354

 
(387
)
 
6,197

Gain on extinguishment of debt

 
(6,452
)
 

 
(30,927
)
Noncontrolling interests' share of loss on extinguishment of debt in other consolidated subsidiaries

 

 

 
(2,975
)
Loss on impairment
14,600

 
24,935

 
84,644

 
71,401

Income tax (benefit) provision
1,034

 
(1,064
)
 
(1,846
)
 
(4,784
)
Lease termination fees
(783
)
 
(879
)
 
(9,788
)
 
(1,990
)
Straight-line rent and above- and below-market lease amortization
822

 
(637
)
 
2,941

 
(3,685
)
Net (income) loss attributable to noncontrolling interests in other consolidated subsidiaries
(24
)
 
(415
)
 
369

 
(25,266
)
General and administrative expenses
16,051

 
13,568

 
47,845

 
45,402

Management fees and non-property level revenues
(2,293
)
 
(2,762
)
 
(9,642
)
 
(10,312
)
Operating Partnership's share of property NOI
158,739

 
172,237

 
482,458

 
532,239

Non-comparable NOI
(5,623
)
 
(9,145
)
 
(20,112
)
 
(37,291
)
Total same-center NOI (1)
$
153,116

 
$
163,092

 
$
462,346

 
$
494,948

Total same-center NOI percentage change
(6.1
)%
 
 
 
(6.6
)%
 
 















13




Same-center Net Operating Income
(Continued)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Malls
$
137,973

 
$
147,449

 
$
416,452

 
$
446,926

Associated centers
8,016

 
7,899

 
23,788

 
24,390

Community centers
5,784

 
5,994

 
17,387

 
18,148

Offices and other
1,343

 
1,750

 
4,719

 
5,484

Total same-center NOI (1)
$
153,116

 
$
163,092

 
$
462,346

 
$
494,948

 
 
 
 
 
 
 
 
Percentage Change:
 
 
 
 
 
 
 
Malls
(6.4
)%
 
 
 
(6.8
)%
 
 
Associated centers
1.5
 %
 
 
 
(2.5
)%
 
 
Community centers
(3.5
)%
 
 
 
(4.2
)%
 
 
Offices and other
(23.3
)%
 
 
 
(13.9
)%
 
 
Total same-center NOI (1)
(6.1
)%
 
 
 
(6.6
)%
 
 

(1)
CBL defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income), less property operating expenses (property operating, real estate taxes and maintenance and repairs). Same-center NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-offs of landlord inducement assets. We include a property in our same-center pool when we own all or a portion of the property as of September 30, 2018, and we owned it and it was in operation for both the entire preceding calendar year and the current year-to-date reporting period ending September 30, 2018. New properties are excluded from same-center NOI, until they meet this criteria. Properties excluded from the same-center pool that would otherwise meet this criteria are properties which are under major redevelopment or being considered for repositioning, where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender, or minority interest properties in which we own an interest of 25% or less.

14


CBL & Associates Properties, Inc.
Supplemental Financial And Operating Information
As of September 30, 2018 and 2017

Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
 
As of September 30, 2018
 
Fixed Rate
 
Variable
Rate
 
Total per
Debt
Schedule
 
Unamortized
Deferred
Financing
Costs
 
Total
Consolidated debt
$
3,160,776

 
$
970,508

 
$
4,131,284

 
$
(15,476
)
 
$
4,115,808

Noncontrolling interests' share of consolidated debt
(94,787
)
 

 
(94,787
)
 
611

 
(94,176
)
Company's share of unconsolidated affiliates' debt
553,339

 
96,598

 
649,937

 
(2,826
)
 
647,111

Company's share of consolidated and unconsolidated debt
$
3,619,328

 
$
1,067,106

 
$
4,686,434

 
$
(17,691
)
 
$
4,668,743

Weighted-average interest rate
5.16
%
 
4.01
%
 
4.90
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2017
 
Fixed Rate
 
Variable
Rate
 
Total per
Debt
Schedule
 
Unamortized
Deferred
Financing
Costs
 
Total
Consolidated debt
$
3,170,000

 
$
1,065,450

 
$
4,235,450

 
$
(19,272
)
 
$
4,216,178

Noncontrolling interests' share of consolidated debt
(77,494
)
 
(5,434
)
 
(82,928
)
 
719

 
(82,209
)
Company's share of unconsolidated affiliates' debt
535,134

 
58,692

 
593,826

 
(2,357
)
 
591,469

Company's share of consolidated and unconsolidated debt
$
3,627,640

 
$
1,118,708

 
$
4,746,348

 
$
(20,910
)
 
$
4,725,438

Weighted-average interest rate
5.19
%
 
2.79
%
 
4.63
%
 
 
 
 



Debt-To-Total-Market Capitalization Ratio as of September 30, 2018
(In thousands, except stock price)
 
Shares
Outstanding
 
Stock
Price (1)
 
Value
Common stock and Operating Partnership units
199,430

 
$
3.99

 
$
795,726

7.375% Series D Cumulative Redeemable Preferred Stock
1,815

 
250.00

 
453,750

6.625% Series E Cumulative Redeemable Preferred Stock
690

 
250.00

 
172,500

Total market equity
 
 
 
 
1,421,976

Company's share of total debt, excluding unamortized deferred financing costs
 
 
 
 
4,686,434

Total market capitalization
 
 
 
 
$
6,108,410

Debt-to-total-market capitalization ratio
 
 
 
 
76.7
%

(1)
Stock price for common stock and Operating Partnership units equals the closing price of the common stock on September 28, 2018. The stock prices for the preferred stocks represent the liquidation preference of each respective series.





15


CBL & Associates Properties, Inc.
Supplemental Financial And Operating Information
As of September 30, 2018 and 2017



Reconciliation of Shares and Operating Partnership Units Outstanding
(In thousands)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
Basic
 
Diluted
 
Basic
 
Diluted
2018:
 
 
 
 
 
 
 
Weighted-average shares - EPS
172,665

 
172,665

 
172,426

 
172,426

Weighted-average Operating Partnership units
26,767

 
26,767

 
27,204

 
27,204

Weighted-average shares - FFO
199,432

 
199,432

 
199,630

 
199,630

 
 
 
 
 
 
 
 
2017:
 
 
 
 
 
 
 
Weighted-average shares - EPS
171,096

 
171,096

 
171,060

 
171,060

Weighted-average Operating Partnership units
28,225

 
28,225

 
28,265

 
28,265

Weighted-average shares - FFO
199,321

 
199,321

 
199,325

 
199,325



Dividend Payout Ratio
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Weighted-average cash dividend per share
$
0.20888

 
$
0.27281

 
$
0.62661

 
$
0.81843

FFO, as adjusted, per diluted fully converted share
$
0.40

 
$
0.50

 
$
1.28

 
$
1.51

Dividend payout ratio
52.2
%
 
54.6
%
 
49.0
%
 
54.2
%

16


CBL & Associates Properties, Inc.
Supplemental Financial And Operating Information
As of September 30, 2018
Consolidated Balance Sheets
(Unaudited; in thousands, except share data)
 
 As of
 
September 30,
2018
 
December 31,
2017
ASSETS
 
 
 
Real estate assets:
 
 
 
Land
$
818,436

 
$
813,390

Buildings and improvements
6,543,965

 
6,723,194

 
7,362,401

 
7,536,584

Accumulated depreciation
(2,514,904
)
 
(2,465,095
)

4,847,497

 
5,071,489

Held for sale
14,807

 

Developments in progress
71,319

 
85,346

Net investment in real estate assets
4,933,623

 
5,156,835

Cash and cash equivalents
20,695

 
32,627

Receivables:
 
 
 
Tenant, net of allowance for doubtful accounts of $2,214
      and $2,011 in 2018 and 2017, respectively
77,095

 
83,552

Other, net of allowance for doubtful accounts of $838 in 2017
7,109

 
7,570

Mortgage and other notes receivable
8,171

 
8,945

Investments in unconsolidated affiliates
275,884

 
249,192

Intangible lease assets and other assets
170,184

 
166,087

 
$
5,492,761

 
$
5,704,808

 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 
 
 
Mortgage and other indebtedness, net
$
4,115,808

 
$
4,230,845

Accounts payable and accrued liabilities
249,232

 
228,650

Total liabilities
4,365,040

 
4,459,495

Commitments and contingencies
 
 
 
Redeemable noncontrolling interests  
6,228

 
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, 172,663,873 and 171,088,778 issued and
outstanding in 2018 and 2017, respectively
1,727

 
1,711

Additional paid-in capital
1,967,882

 
1,974,537

Dividends in excess of cumulative earnings
(927,416
)
 
(836,269
)
Total shareholders' equity
1,042,218

 
1,140,004

Noncontrolling interests
79,275

 
96,474

Total equity
1,121,493

 
1,236,478

 
$
5,492,761

 
$
5,704,808


17


CBL & Associates Properties, Inc.
Supplemental Financial And Operating Information
As of September 30, 2018
Condensed Combined Financial Statements - Unconsolidated Affiliates
(Unaudited; in thousands)
 
 As of
 
September 30,
2018
 
December 31,
2017
ASSETS:
 
 
 
Investment in real estate assets
$
2,025,289

 
$
2,089,262

Accumulated depreciation
(658,163
)
 
(618,922
)
 
1,367,126

 
1,470,340

Developments in progress
68,768

 
36,765

Net investment in real estate assets
1,435,894

 
1,507,105

Other assets
186,912

 
201,114

Total assets
$
1,622,806

 
$
1,708,219

 
 
 
 
LIABILITIES:
 
 
 
Mortgage and other indebtedness, net
$
1,322,144

 
$
1,248,817

Other liabilities
42,986

 
41,291

Total liabilities
1,365,130

 
1,290,108

 
 
 
 
OWNERS' EQUITY:
 
 
 
The Company
183,392

 
216,292

Other investors
74,284

 
201,819

Total owners' equity
257,676

 
418,111

Total liabilities and owners’ equity
$
1,622,806

 
$
1,708,219

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
 Total revenues
$
54,579

 
$
57,395

 
$
166,843

 
$
175,250

 Depreciation and amortization
(19,606
)
 
(20,151
)
 
(58,918
)
 
(60,276
)
 Operating expenses
(17,215
)
 
(17,431
)
 
(54,026
)
 
(52,818
)
 Income from operations
17,758

 
19,813

 
53,899

 
62,156

 Interest and other income
355

 
356

 
1,059

 
1,186

 Interest expense
(13,368
)
 
(12,907
)
 
(38,845
)
 
(38,891
)
 Loss on impairment
(89,826
)
 

 
(89,826
)
 

 Gain (loss) on sales of real estate assets
(55
)
 
606

 
1,128

 
529

 Net income (loss)
$
(85,136
)
 
$
7,868

 
$
(72,585
)
 
$
24,980

 
Company's Share for the
Three Months Ended September 30,
 
Company's Share for the
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 Total revenues
$
28,057

 
$
28,448

 
$
86,198

 
$
87,916

 Depreciation and amortization
(10,438
)
 
(9,633
)
 
(31,177
)
 
(28,533
)
 Operating expenses
(8,503
)
 
(8,338
)
 
(26,575
)
 
(25,150
)
 Income from operations
9,116

 
10,477

 
28,446

 
34,233

 Interest and other income
247

 
246

 
730

 
797

 Interest expense
(6,551
)
 
(6,244
)
 
(18,849
)
 
(18,815
)
 Loss on impairment
(1,022
)
 

 
(1,022
)
 

 Gain (loss) on sales of real estate assets
(28
)
 
227

 
564

 
189

 Net income
$
1,762

 
$
4,706

 
$
9,869

 
$
16,404


18


CBL & Associates Properties, Inc.
Supplemental Financial And Operating Information
For the Three and Nine Months Ended September 30, 2018

EBITDA for real estate ("EBITDAre") is a non-GAAP financial measure which NAREIT defines as net income (loss) (computed in accordance with GAAP), plus interest expense, income tax expense, depreciation and amortization, losses (gains) on the dispositions of depreciable property and impairment write-downs of depreciable property, and after adjustments to reflect the Company's share of EBITDAre from unconsolidated affiliates.  The Company also calculates Adjusted EBITDAre to exclude the non-controlling interest in EBITDAre of consolidated entities, and the Company's share of abandoned projects expense and gain or loss on extinguishment of debt. 

The Company presents the ratio of Adjusted EBITDAre to interest expense because the Company believes that the Adjusted EBITDAre to interest coverage ratio, along with cash flows from operating activities, investing activities and financing activities, provides investors an additional indicator of the Company's ability to incur and service debt.  Adjusted EBITDAre excludes items that are not a normal result of operations which assists the Company and investors in distinguishing changes related to the growth or decline of operations at our properties.  EBITDAre and Adjusted EBITDAre, as presented, may not be comparable to similar measures calculated by other companies.  This non-GAAP measure should not be considered as an alternative to net income, cash from operating activities or any other measure calculated in accordance with GAAP.  Pro rata amounts listed below are calculated using the Company's ownership percentage in the respective joint venture and any other applicable terms.

Ratio of Adjusted EBITDAre to Interest Expense
(Dollars in thousands)