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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission File No. 1-12494
CBL & ASSOCIATES PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 62-1545718
- -------------------------------- -----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
6148 Lee Highway, Suite 300
Chattanooga, Tennessee 37421
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 855-0001
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of Each Class on which Registered
- ------------------------- --------------------------------------
Common Stock, $.01 par New York Stock Exchange
value per share
9% Series A Cumulative
Redeemable Preferred Stock, par New York Stock Exchange
value $.01 per share,
Securities registered pursuant to Section 12(g) of the Act: None
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. Yes ___X___ No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was approximately $673,090,299 based on the closing price on the
New York Stock Exchange for such stock on March 23, 2001.
As of March 23, 2001, there were 25,247,198 shares of the Registrant's
Common Stock outstanding and 2,875,000 shares of 9% Series A Cumulative
Redeemable Preferred Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates certain information by reference to the Registrant's
definitive proxy statement filed on March 29, 2001 in respect to the Annual
Meeting of Stockholders to be held on May 2, 2001.
1
FORM 10-K
TABLE OF CONTENTS
Item No. Page
PART I
Item 1 Business................................................... 3
Item 2 Properties................................................. 16
Item 3 Legal Proceedings.......................................... 38
Item 4 Submission of Matters to a Vote of Security Holders........ 38
PART II
Item 5 Market for Registrant's Common Equity and Related
Shareholder Matters........................................ 39
Item 6 Selected Financial Data.................................... 40
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 41
Item 7A Quantitative and Qualitative Disclosures about Market Risk. 51
Item 8 Financial Statements and Supplementary Data................ 51
Item 9 Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure........................ 51
PART III
Item 10 Directors and Executive Officers of the Registrant......... 51
Item 11 Executive Compensation..................................... 52
Item 12 Security Ownership of Certain Beneficial Owners
and Management............................................. 52
Item 13 Certain Relationships and Related Transactions............. 52
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K........................................ 52
2
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION OR THE PURPOSE
OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
This Annual Report on Form 10-K contains "forward-looking statements", such
as information relating to the Company's growth strategy, projects targeted for
development or under construction, liquidity and capital resources, and
compliance with environmental laws and regulations. Such statements are subject
to certain risks and uncertainties which could cause actual results to differ
materially, including, but not limited to, those set forth below. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which, unless otherwise expressly indicated, speak only as of December 31, 2000.
The Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events.
PART I
ITEM 1. BUSINESS.
FORMATION OF THE COMPANY
CBL & Associates Properties, Inc. (the "Company") is a self-managed,
self-administered, fully-integrated real estate company which is engaged in the
ownership, operation, marketing, management, leasing, expansion, development,
redevelopment, acquisition and financing of regional malls and community and
neighborhood centers. The Company was incorporated on July 13, 1993 under the
laws of the State of Delaware to acquire an interest in substantially all of the
real estate properties owned by CBL & Associates, Inc. and its affiliates
("CBL") and to provide a public vehicle for the expansion of CBL's shopping
center business.
The Company conducts substantially all of its business through CBL &
Associates Limited Partnership, a Delaware Limited Partnership (the "Operating
Partnership"), in which the Company owns an indirect 68.0% interest and of which
the Company's wholly-owned subsidiary is the sole general partner. To comply
with certain technical requirements of the Internal Revenue Code of 1986, as
amended (the "Code") applicable to Real Estate Investment Trusts' ("REITs"), the
Company's property management and development activities, sales of peripheral
land and maintenance and security operations are carried out through CBL &
Associates Management, Inc. (the "Management Company").
On November 3, 1993, the Company completed the initial public offering (the
"Offering") of 15,400,000 shares of its common stock, par value $.01 per share
(the "Common Stock"). Simultaneously with the completion of the Offering, CBL
transferred to the Operating Partnership substantially all of CBL's interests in
its real estate properties and its management and development operations in
exchange for an interest in the Operating Partnership. CBL also acquired an
additional interest in the Operating Partnership for a cash payment.
The Offering and the application of proceeds therefrom, including the
Operating Partnership's acquisition of certain property interests, and the
contribution by CBL of property interests to the Operating Partnership, are
referred to herein as the "Formation."
In September 1995, the Company completed a follow-on offering of 4,163,500
shares of its Common Stock at $20.625 per share. CBL purchased 150,000 of these
shares.
In January 1997, the Company completed a follow-on offering of 3,000,000
shares of its Common Stock at $26.125 per share. CBL purchased 55,000 of these
shares.
3
In June 1998, the Company completed a public offering of 2,875,000 shares
of 9% Series A Cumulative Redeemable Preferred Stock (the "Series A Preferred
Stock") at a price to the public of $25.00 per share. The net proceeds of $70
million were used to repay variable rate indebtedness incurred in the Company's
development and acquisition programs.
After giving effect to the above transactions, at December 31, 2000 CBL
(including interests held by former executives) held a 25.5% limited partner
interest in the Operating Partnership, the Company held a 68.0% general and
limited partner interest in the Operating Partnership and third parties held a
6.5% limited partner interest. In addition, CBL holds approximately 2.0 million
of the outstanding shares of Common Stock for a total ownership share of 30.9%.
On September 25, 2000, the Company entered into a series of agreements with
Jacobs Realty Investors Limited Partnership and certain of its affiliates and
partners ("Jacobs") pursuant to which the Company agreed to acquire from Jacobs
a portfolio of 21 malls and 2 associated centers for an aggregate consideration
of approximately $1.3 billion. The transaction closed on January 31, 2001.
Additionally, in a separate transaction, the Company acquired the remaining 50%
interest in Madison Square Mall as of January 31, 2001. In connection with these
transactions, the Operating Partnership issued approximately 12.7 million
special common units of the Operating Partnership ("SCUs"), representing in the
aggregate a 25.48% limited partner interest in the Operating Partnership.
Additionally, in connection with these transactions, the Operating Partnership
incurred or assumed an aggregate $ 865.5 million of additional indebtedness.
After giving effect to this transaction, CBL (including interests held by former
executives) held a total 22.9% ownership interest in the Company and the
Operating Partnership, the Company held a 50.8% general and limited partner
interest in the Operating Partnership and Richard E. Jacobs and his affiliates
held a 23.0% limited partner interest in the Operating Partnership.
GENERAL
The Company owns interests in a portfolio of properties, which as of
December 31, 2000 consisted of 30 enclosed regional malls (the "Malls"), 16
associated centers (the "Associated Centers"), each of which is part of a
regional shopping mall complex, and 72 independent community and neighborhood
shopping centers (the "Community Centers"). Except for eleven Malls, three
Associated Centers and four Community Centers which were acquired from third
parties, each of these properties were developed by CBL or the Company.
Additionally, as of December 31, 2000 the Company owned two regional Malls,
one office building, one neighborhood shopping center and one mall expansion
currently under construction (the "Construction Properties"). The Company also
owned as of December 31, 2000 options to acquire certain shopping center
development sites (the "Development Properties").
The Company also owned, as of December 31, 2000, mortgages (the
"Mortgages") on community and neighborhood shopping centers owned by non-CBL
affiliates. The Mortgages were granted in connection with sales by CBL of
certain properties previously developed by CBL. The Company also owns an
interest in a three-story office building in Chattanooga, Tennessee, a portion
of which serves as the Company's headquarters (the "Office Building"). The
Malls, Associated Centers, Community Centers, Construction Properties,
Development Properties, Mortgages and Office Building (but without taking into
account any of the properties acquired in the Jacobs transaction) are
collectively referred to herein as the "Properties" and individually as a
"Property".
As of December 31, 2000 the Company had also entered into standby purchase
agreements with third-party developers for the construction, development and
potential ownership of two community centers in Texas (the "Co-Development
Projects"). The developers have utilized these standby purchase agreements as
additional security for their lenders to fund the construction of the
Co-Development Projects. The standby purchase agreements for each of the
Co-Development Projects require the Company to purchase the related
Co-Development Project upon such Co-Development Project meeting certain
completion requirements and rental levels. In return for its commitment to
purchase a Co-Development Project pursuant to a standby purchase agreement, the
Company receives a fee as well as a participation interest in each
Co-Development Project. The outstanding amount of standby purchase agreements at
December 31, 2000 is $51.4 million.
4
The Company and the Operating Partnership generally own a 100% interest in
the Properties. With two exceptions, where the Company and the Operating
Partnership own less than a 100% interest in a Property, the Operating
Partnership is the sole general partner, managing general partner or managing
member of the property partnership or limited liability company which owns such
Property (each a "Property Partnership"). For one Mall and its Associated
Center, affiliates of the Operating Partnership are non-managing general
partners in the two applicable Property Partnerships.
For a full description of the Properties, see Item 2 -- "Properties."
The Company's executive offices are located at 6148 Lee Highway, Suite 300,
Chattanooga, Tennessee 37421-6511. The telephone number at this address is (423)
855-0001.
MANAGEMENT AND OPERATION OF PROPERTIES
Management Company
The Company is self-managed and self-administered. To comply with certain
technical requirements of the Code, the Company's property management and
development activities, sales of peripheral land and maintenance and security
operations are carried out through the Management Company.
The Operating Partnership holds 100% of the preferred stock and 5% of the
common stock of the Management Company. The remaining 95% of the common stock is
held by Charles Lebovitz, his family and his associates. Substantially all of
CBL's asset management, property management and leasing and development
operations, including CBL's executive, property, financial, legal and
administrative personnel, were transferred to the Management Company as part of
the Formation. The Management Company manages all of the Properties (except for
Governor's Square and Governor's Plaza in Clarksville, Tennessee -- see below)
under a management agreement that may be terminated at any time by the Operating
Partnership upon 30 days written notice. In addition, the Management Company
manages certain properties owned by CBL that were not transferred to the Company
in the Formation as well as certain shopping centers owned by non-CBL
affiliates. Through its ownership of the Management Company's preferred stock,
the Operating Partnership enjoys substantially all of the economic benefits of
the Management Company's business. Requirements set forth in the Management
Company's Amended and Restated Certificate of Incorporation, state that a
majority of the Management Company's board of directors are required to be
independent of CBL. From November 1993 to the current date, the board of
directors of the Management Company has consisted of seven of the members of the
Company's board of directors, including four of the Company's independent
directors.
On-Site Management
The on-site property management functions at the Malls include leasing,
management, data processing, rent collection, project bookkeeping, budgeting,
marketing, and promotion. Each Mall, for itself and its Associated Centers, has
an on-site property manager who oversees the on-site staff and an on-site
marketing director who oversees the marketing program for that Mall. District
managers, most of whom are located at the Company's headquarters, oversee the
leasing and operations at a majority of the Community Centers. The on-site Mall
managers are experienced managers with training in mall management.
5
Virtually all operating activities of the Company are supported by a
computer software system which is designed to provide management with operating
data necessary to make informed business decisions on a timely basis. The
Company has a program of on-going upgrades to hardware and software that support
the accounting and management information system. The Company also maintains a
web site to publish integrated information on the world wide web about the
Company and the properties. These systems were developed to more efficiently
assist management in efforts to market the properties, maintain management
quality, enhance investor relations and communications and enhance tenant
relations while minimizing operating expenses. Retail sales analysis, leasing
information, budget controls, accounts receivable/payable, operating expense
variance reports and income analysis are continually available to management.
Through these systems management also has available information that facilitates
the development and monitoring of budgets and other relevant information.
Management pursues periodic preventative property maintenance programs,
which encompass paving, roofing, HVAC and general improvements to the
Properties' common areas. The on-site property managers oversee all such work in
accordance with approved budgets with the coordination of, and reporting to home
office management.
Governor's Square
Governor's Square and Governor's Plaza were the only Properties in the
Company's portfolio on December 31, 2000 in which the Company was not the sole
general partner or managing general partner. Governor's Square is owned by a
Property Partnership, the managing general partner of which is a non-CBL
affiliate which owns a 47.5% interest in the Mall. The Company is a non-managing
general partner of Governor's Plaza. Although the managing general partner of
this partnership controls the timing of distributions of cash flow, the
Company's approval is required for certain major decisions, including permanent
financing, refinancing and sale of all or substantially all of the partnership's
assets. Property management services, including accounting, auditing,
maintenance, promotional programs, leasing, collection and insurance, are
performed by a property manager affiliated with the non-CBL managing general
partner for which such property manager receives a fee.
EMPLOYEES
The Company, through the Management Company, currently employs
approximately 560 full time and 517 part time persons. None of these employees
is currently represented by any union. The Company does not have any employees
other than its statutory officers.
ENVIRONMENTAL MATTERS
Under various federal, state and local laws, ordinances and regulations, a
current or previous owner or operator of real estate may be liable for the costs
of removal or remediation of petroleum, certain hazardous or toxic substances
on, under or in such real estate. Such laws typically impose such liability
without regard to whether the owner or operator knew of, or was responsible for,
the presence of such substances. The costs of remediation or removal of such
substances may be substantial, and the presence of such substances, or the
failure to promptly remediate such substances, may adversely affect the owner's
or operator's ability to sell such real estate or to borrow using such real
estate as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or
remediation of such substances at the disposal or treatment facility, regardless
of whether such facility is owned or operated by such person. Certain laws also
impose requirements on conditions and activities that may affect the environment
or the impact of the environment on human health. Failure to comply with such
requirements could result in the imposition of monetary penalties (in addition
to the costs to achieve compliance) and potential liabilities to third parties.
Among other things, certain laws require abatement or removal of friable and
certain non-friable asbestos-containing materials ("ACMs") in the event of
demolition or certain renovations or remodeling. Certain laws regarding ACMs
require building owners and lessees, among other things, to notify and train
certain employees working in areas known or presumed to contain ACMs. Certain
laws also impose liability for release of ACMs into the air and third parties
may seek recovery from owners or operators of real properties for personal
injury or property damage associated with ACMs. In connection with its ownership
and operation of the Properties, the Company, the Operating Partnership or the
relevant Property Partnership, as the case may be, may be potentially liable for
such costs or claims.
6
All of the Properties (excluding properties upon which the Company holds an
option to purchase but does not yet own) have been subject to Phase I
environmental assessments or updates of existing Phase I environmental
assessments by independent environmental consultants. Such assessments generally
consisted of a visual inspection of the Properties, review of federal and state
environmental databases and certain information regarding historic uses of the
Property and adjacent areas and the preparation and issuance of written reports.
Some of the Properties contain, or contained, underground storage tanks ("UST"s)
used for storing petroleum products or wastes typically associated with
automobile service or other operations conducted at the Properties. At Parkway
Place in Huntsville Alabama asbestos abatement will occur in portions of the
existing mall during demolition which will be completed by the end of the second
quarter of 2001. Certain Properties contain, or contained, dry-cleaning
establishments utilizing solvents. Where believed to be warranted, samples of
building materials or subsurface investigations were, or, will be undertaken. At
certain Properties, where warranted by the conditions, the Company has developed
and implemented an operations and maintenance program that establishes operating
procedures with respect to ACMs. The costs associated with the development and
implementation for such programs were not material.
Although there can be no assurances that such environmental liability does
not exist, other than Parkway Place none of the environmental assessments have
identified and the Company is not aware of any environmental liability with
respect to the Properties that the Company believes would have a material
adverse effect on the Company's financial condition, results of operations or
cash flows. Nevertheless, it is possible that the environmental assessments
available to the Company do not reveal all potential environmental liabilities,
that subsequent investigations will identify material contamination, that
adverse environmental conditions have arisen subsequent to the performance of
the environmental assessments, or that there are material environmental
liabilities of which management is unaware. Moreover, no assurances can be given
that (i) future laws, ordinances or regulations will not impose any material
environmental liability or (ii) the current environmental condition of the
Properties has not been or will not be affected by tenants and occupants of the
Properties, by the condition of properties in the vicinity of the Properties or
by third parties unrelated to the Company, the Operating Partnership or the
relevant Property Partnership. The existence of any such environmental liability
could have an adverse effect on the Company's results of operations, cash flow
and the funds available to the Company to pay dividends.
The Company has not recorded in its financial statements any material
liability in connection with environmental matters.
GENERAL RISKS OF THE COMPANY'S BUSINESS
General Factors Affecting Investments in Shopping Center Properties and
Effect of Economic and Real Estate Conditions
A shopping center's revenues and value may be adversely affected by a
number of factors, including: the national and regional economic climates; local
real estate conditions (such as an oversupply of retail space); perceptions by
retailers or shoppers of the safety, convenience and attractiveness of the
shopping center; and the willingness and ability of the shopping center's owner
to provide capable management and maintenance services. In addition, other
factors may adversely affect a shopping center's value without affecting its
current revenues, including: changes in governmental regulations, zoning or tax
laws; potential environmental or other legal liabilities; availability of
financing; and changes in interest rate levels. There are numerous shopping
facilities that compete with the Properties in attracting retailers to lease
space. In addition, retailers at the Properties face continued competition from
discount shopping centers, outlet malls, wholesale clubs, direct mail,
telemarketing, television shopping networks and shopping via the Internet.
Competition could adversely affect the Operating Partnership's revenues and
funds available for distribution to partners, which in turn will affect the
Company's revenues and funds available for distribution to stockholders.
7
Geographic Concentration
The Properties are located principally in the southeastern United States in
Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South
Carolina, Tennessee and Virginia. Twenty Malls, fifteen Associated Centers,
fifty-four Community Centers and the Office Building are located in these
states. The Company's results of operations and funds available for distribution
to stockholders therefore will be subject generally to economic conditions in
the southeastern United States. As of December 31, 2000, the Properties located
in the southeastern United States accounted for 65.0% of the Company's total
assets, and provided 65.6% of the Company's total revenues for the year ended
December 31, 2000. After giving effect to the Jacobs transaction the properties
located in the southeastern United States account for 64.6% of the Company's
total assets.
Third Party Interests In Certain Properties
As of December 31, 2000 the Operating Partnership owned partial interests
in seven Malls, five Associated Centers, one Community Center, the Office
Building and two Malls under development. The Operating Partnership or an
affiliate of the Company is the managing general partner of the Property
Partnerships that own such Properties, except for the Governor's Square Mall and
its Associated Center, Governor's Plaza, in which affiliates of the Operating
Partnership are non-managing general partners.
Where the Operating Partnership serves as managing general partner of
Property Partnerships, it may have certain fiduciary responsibilities to the
other partners in those partnerships. In certain cases, the approval or consent
of the other partners is required before the Operating Partnership may sell,
finance, expand or make other significant changes in the operations of such
Properties. To the extent such approvals or consents are required, the Operating
Partnership may experience difficulty in, or may be prevented from implementing
its plans with respect to expansion, development, financing or other similar
transactions with respect to such Properties.
With respect to Governor's Square and Governor's Plaza, the Operating
Partnership does not have day-to-day operational control or control over certain
major decisions, including the timing and amount of distributions, which could
result in decisions by the managing general partner that do not fully reflect
the interests of the Company, including decisions relating to the standards that
the Company is required to satisfy in order to maintain its status as a real
estate investment trust for tax purposes. However decisions relating to sales,
expansions, dispositions of all or substantially all of the assets and
financings, are subject to approval by the Operating Partnership. On January 31,
2001, in the Jacobs transaction the Company acquired a non-managing interest in
Kentucky Oaks Mall. This investment will be subject to similar risks as the
investments in Governor's Square and Governor's Plaza.
Dependence on Significant Properties
Hamilton Place Mall in Chattanooga, Tennessee, Coolsprings Galleria in
Nashville, Tennessee and Burnsville Center in Minneapolis (Burnsville),
Minnesota and accounted for approximately 4.9%, 4.7% and 4.7%, respectively, of
total revenues of the Company for the period ended December 31, 2000. The
Company's financial position and results of operations will therefore be
disproportionately affected by the results experienced at these Properties.
Hamilton Place Mall was renovated in 1999 and the Company has started a
renovation of Burnsville Center in 2001. After giving effect to the Jacobs
transaction, Hanes Mall in Winston-Salem, North Carolina would represent the
largest revenue producing property in the combined portfolio. Hamilton Place,
Coolsprings Galleria and Burnsville Center would then represent the next most
significant revenue producing properties. The Company will begin a renovation of
Hanes Mall in 2001. Generally, a renovation is a pro action step taken to both
preserve and enhance a properties dominant position in its markets.
8
Dependence on Key Tenants
As of December 31, 2000, The Limited Inc. Stores (including Intimate
Brands, Inc.) maintained 121 stores in the Company's properties and in the year
ended December 31, 2000 accounted for approximately 6.5% of total revenues of
the Company. As of December 31, 2000, the Venator Group, Inc. (Champs Sports,
Footlocker, etc.) had 74 stores and in the year ended December 31, 2000,
accounted for 2.5% of the total revenues of the Company. As of December 31,
2000, The Gap, Inc. (The Gap, Gap Kids, Old Navy, etc.) had 36 stores and in the
year ended December 31, 2000, accounted for 2.1% of the total revenues of the
Company. Except for theses top three tenants no other tenant provided more than
2% of total revenues for the year ended December 31, 2000. After giving effect
to the Jacobs Transaction The Limited stores (including Intimate Brands, Inc)
would have 209 stores and would represent 9.0% of the mall store GLA in the
combined portfolio, the Venator Group, Inc. would have 142 stores and would
represent 3.0% of mall store GLA in the combined portfolio and The Gap, Inc.
would have 62 stores and represent 3.5% of mall store GLA. These tenants would
represent approximately the same proportion of total revenues after the
transaction as before. The loss or bankruptcy of any of these or other key
tenants could negatively affect the Company's financial position and results of
operations.
THE COMPANY'S STRATEGY FOR GROWTH
Management believes that per share growth in the Company's Funds from
Operations, as defined below, is one of the key factors in enhancing shareholder
value. Management also believes that Funds from Operations is a widely used
measure of the operating performance of REITs, and its consistent determination
provides a relevant basis for comparison among REITs. It is the objective of the
Company's management to achieve growth in Funds from Operations through the
aggressive management of the Company's existing Properties, the expansion and
renovation of existing Properties, the development of new properties, and select
acquisitions. Funds from Operations can also be affected by external factors,
such as inflation, fluctuations in interest rates or changes in general economic
conditions, which are beyond the control of the Company's management.
"Funds from Operations" is defined by the Company as net income (loss)
before property depreciation, other non-cash items, gains or losses on sales of
real estate assets and gains or losses on investments in marketable securities.
The National Association of Real Estate Investment Trusts ("NAREIT") has
clarified the definition of Funds from Operations to include all operating
results - recurring and non-recurring - except those results defined as
"extraordinary items" under accounting principles generally accepted in the
United States. The Company implemented this clarification in the first quarter
of 2000 and no longer adds back to FFO the development costs charged to net
income. This amount was $127,000 for the year ended December 31, 2000. For
comparative purposes, the Company has recomputed its 1999 FFO to exclude the
add-back of development costs charged to net income of $1,674,000. The cost of
interest rate caps and finance costs on the Company's lines of credit are
amortized and included in interest expense and, therefore, reduces Funds from
Operations. Funds from Operations also includes the Company's share of Funds
from Operations in unconsolidated properties and excludes minority interests'
share of Funds from Operations in consolidated properties. The Company excludes
outparcel sales from its Funds from Operations calculation, even though the
NAREIT definition allows their inclusion. Funds from Operations does not
represent cash flow from operations as defined by generally accepted accounting
principals ("GAAP") and is not necessarily indicative of cash available from
operations to fund all cash flow needs and should not be considered an
alternative to net income (loss) for purposes of evaluating the Company's
operating performance or to cash flows as a measure of liquidity.
The Company classifies its regional malls into two categories - stabilized
malls ("Stabilized Malls") which have completed their initial lease-up and new
malls ("New Malls") which are in their initial lease-up phase or are being
redeveloped. At December 31, 2000, the New Mall category was comprised of
Springdale Mall in Mobile, Alabama which was acquired in September 1997 and
which is currently being redeveloped and retenanted; Bonita Lakes Mall in
Meridian, Mississippi which opened in October 1997; Parkway Place Mall in
Huntsville, Alabama which was acquired in December, 1998 and which is being
redeveloped and Arbor Place in Atlanta (Douglasville), Georgia, which opened in
October 1999.
9
Specifically, the Company has implemented its objective of growing its
Funds from Operations and will continue to do so by:
o Acquiring existing retail properties where cash flow can be enhanced
by improved management, leasing, redevelopment and expansion.
-- On September 25, 2000, the Company agreed to acquire from Jacobs
interests in twenty-one malls and two associated centers. The
transaction closed on January 31, 2001. The total gross leasable
area of the twenty-three properties is 19.2 million square feet,
or an average gross leasable area of 914,000 square feet per
mall. The gross leasable area of Mall Stores is approximately 5.9
million square feet. The malls are located in middle markets
predominantly in the Southeast and the Midwest. Following is
certain information concerning properties acquired from Jacobs:
Year of Sales Percentage
most Recent per Mall Store
Name of Year of Expansion/ Proposed Total GLA Mall Store Square GLA
Mall/Location Opening Renovation Ownership (1) GLA Foot(2) Leased(3) Anchors
- ----------------------------------------------------------------------------------------------------------------------------
Brookfield Square. 1967 1997 100.00% 1,041,000 317,000 $407 91% Boston Store, Sears,
Brookfield, WI JCPenney
Cary Towne Center. 1979 1993 80.00% 953,000 296,000 352 96% Dillard's, Hecht's,
Cary, NC Hudson, Belk,
Cherryvale Mall... 1973 1989 100.00% 714,000 305,000 307 86% Bergner's, Marshall
Rockford, IL Fields, Sears
Citadel Mall...... 1981 2000 100.00% 1,068,000 299,000 254 84% Parisian, Dillard's,
Charleston, SC Belk, Target, Sears
Columbia Mall..... 1977 1997 79.00% 1,113,000 299,000 229 87% Dillard's, JCPenney,
Columbia, SC Rich's, Sears
Eastgate Mall (6). 1980 1995 100.00% 1,099,000 270,000 244 73% JCPenney, Kohl's,
Cincinnati,OH Dillard's, Sears
East Towne Mall... 1971 1997 65.00% 895,000 301,000 279 92% Boston Store, Younkers,
Madison, WI Sears, JCPenney
Fashion Square.... 1972 1993 100.00% 786,000 289,000 293 86% Hudson's, JCPenney,
Saginaw, MI Sears
Fayette Mall...... 1971 1993 100.00% 1,096,000 309,000 492 98% Lazarus, Dillard's,
Lexington, KY JCPenney, Sears
Hanes Mall........ 1975 1990 100.00% 1,556,000 555,000 335 93% Dillard's, Belk, Hecht's,
Winston-Salem, NC Sears, JCPenney
Jefferson Mall.... 1978 1999 100.00% 936,000 276,000 262 90% Lazarus, Dillard's,
Louisville, KY Sears, JCPenney
Kentucky Oaks Mall 1982 1995 50.00% 878,000 278,000 257 98% Dillard's(4), Elder-
Paducah, KY(5), Beerman, JCPenney,
Midland Mall...... 1991 - 100.00% 514,000 197,000 237 88% Elder-Beerman,
Midland, MI JCPenney, Sears,
Target
Northwoods Mall... 1972 1995 100.00% 833,000 314,000 279 87% Dillard's, Belk,
Charleston, SC JCPenney, Sears
10
Old Hickory Mall.. 1967 1994 100.00% 556,000 161,000 308 97% Belk, Goldsmith's,
Jackson, TN Sears, JCPenney
Parkdale Mall..... 1986 1993 100.00% 1,411,000 475,000 250 86% Dillard's(4), JCPenney,
Beaumont,TX Montgomery Ward(5),
Sears
Randolph Mall..... 1982 1989 100.00% 376,000 147,000 232 84% Belk, JCPenney,
Asheboro, NC Roses(5), Sears
Regency Mall...... 1981 1999 100.00% 918,000 268,000 244 80% Boston Store, Younkers,
Racine, WI JCPenney, Sears
Towne Mall........ 1977 - 100.00% 521,000 154,000 310 56% Elder-Beerman,
Franklin, OH Dillard's, Sears
Wausau Center..... 1983 1999 100.00% 429,000 156,000 297 96% Younkers, JCPenney,
Wausau, WI Sears
West Towne Mall(6) 1970 1990 65.00% 1,468,000 263,000 355 90% Boston Store, Sears,
Madison, WI JCPenney
---------- ----------
Total............. 19,161,000 5,929,000
========== =========
- -----------
(1) Includes improved outparcels acquired in the transaction.
(2) Annual sales per square foot for the year ended December 31, 1999.
(3) Occupancy as of December 31, 2000.
(4) Represents two Dillard's stores.
(5) Vacant Anchor Store.
(6) Includes Associated Center.
- On January 31, 2001, the Company acquired the 50%
interest in Madison Square Mall in Huntsville, Alabama
not owned by the Company for total consideration of
603,344 special common units in the Operating
Partnership(SCUs) and the assumption of $23.8 million
of non-recourse mortgage debt.
o Maximizing the cash flow from its existing portfolio of Malls,
Associated Centers and Community Centers, and other retail
complexes through aggressive leasing, management, and
marketing, including:
- an active leasing strategy which seeks to increase
occupancy. At December 31, 2000, the occupancy at the
Stabilized Malls, New Malls, Associated Centers, and
Community Centers was 94.5%, 90.4%, 94.9%, and 97.8%,
respectively, as compared to occupancies of 94.5%,
91.8%, 93.2%, and 97.7%, respectively, at December 31,
1999 (excluding, from both years, Parkway Place which
is under redevelopment);
- expanded merchandising, marketing and promotional
activities, with the goal of enhancing tenant sales and
thereby increasing percentage rents. Mall store sales
per square foot for the year ended December 31, 2000
were relatively the same at the Stabilized Malls
compared with the year ended December 31, 1999;
- increased base rents as tenant leases expire,
renegotiation of leases and negotiation of terminations
of leases of under performing retailers. At December
31, 2000 average base rents per square foot at the
Malls, Associated Centers, and Community Centers was
$21.57, $9.88, and $8.85, respectively, as compared to
average base rents per square foot of $20.68, $9.78,
and $8.32, respectively, at December 31, 1999;
11
- control of operating costs. Occupancy costs as a
percentage of sales at the Stabilized Malls increased
slightly to 11.9% for the year ended December 31, 2000
as compared to 11.5% for the year ended December 31,
1999 (excluding acquisition malls from year of
acquisition).
o Expanding and renovating existing properties to maintain their
competitive position.
- Most of the Malls were designed to allow for expansion
and growth through the addition of new department
stores or other large retail stores as anchors
("Anchors"). Twenty-four of the thirty Malls have
undergone expansion or renovation since their opening,
and all of the non-acquired Malls have been either
built or renovated in the last 10 years. Three of the
Malls had available Anchor pads at December 31, 2000.
Twenty existing Anchors at eleven Malls have expansion
potential at their existing stores. During 2000, the
Company renovated and expanded Asheville Mall in
Asheville, North Carolina and Meridian Mall in Lansing
(Okemos), Michigan and expanded Springdale Mall in
Mobile, Alabama. The Company also began construction of
a food court at Georgia Square Mall in Athens, Georgia.
During 2001, the Company will continue to expand and
re-develop Springdale Mall in Mobile, Alabama and
complete the expansion of Meridian Mall in Lansing
(Okemos), Michigan. The Company will also begin the
renovation of Burnsville Center in
Minneapolis(Burnsville), Minnesota and three malls
acquired in the Jacobs transaction: Hanes Mall in
Winston-Salem North Carolina; Fashion Square Mall in
Saginaw, Michigan and Cary Towne Center in Cary, North
Carolina.
- In the Community Center and Associated Center
portfolios, the Company renovated three Community
Centers, and expanded two Community Centers. In 2001,
the Company plans to expand two Community Centers,
renovate at least two Community Centers and redevelop a
vacant theater location in one Associated Center.
o Developing new retail properties with profitable returns on
capital, leading to growth in the future.
12
- In 2000, the Company opened three Mall expansions, one
Associated Center, two Community Centers and two
Community Center expansions. Summary information
concerning these properties is set forth below.
Summary Information Concerning Properties
Opened During the Year Ended December 31, 2000
Anchor Non-
Name of Center/ Total GLA Anchor Percentage Opening
Location GLA (1) (2) GLA Leased(3) Date Anchors
- ----------------------------- ------------ ------------ ------------ ------------- ------------ -------------------
Mall Expansions
- ----------------
Asheville Mall........... 143,000 58,000 85,000 100% Nov-2000 Belk
Asheville, NC
Meridian Mall............ 85,000 85,000 0 - Nov-2000 Jacobson's
Lansing (Okemos), MI
Springdale Mall.......... 45,000 45,000 0 100% Apr-2000 Carmike
Mobile, AL
Associated Centers
- ------------------
Gunbarrel Pointe......(4) 195,000 126,000 69,000 100% Oct-2000 Goody's,
Chattanooga, TN Target(5),
Kohl's(4)
Community Centers
- -----------------
Coastal Way.............. 177,000 144,000 33,000 99% Aug-2000 Sears
Spring Hill, FL
Chesterfield Crossing.... 406,000 391,000 15,000 97% Oct-2000 Home Depot(5),
Richmond, VA PetsMart,
Wal*Mart(5), Ben
Franklin
Community Center Expansions
- ---------------------------
Sand Lake Expansion...... 38,000 24,000 14,000 89% May-2000 Staples
Orlando, FL
Sutton Plaza............. 28,000 28,000 0 100% Feb-2000 A & P Food Market
A & P Expansion
Mt. Olive, NJ
------------ ------------ ------------
Total Properties Opened. 1,117,000 901,000 216,000
============ ============ ============
( 1) Gross Leasable Area ("GLA") includes total square footage of Anchors (whether owned or leased by the Anchor) and
Mall stores or shops.
( 2) Includes total square footage of Anchors (whether owned or leased by the Anchor)
( 3) Percentage leased and committed for Malls does not include
Anchor GLA. For the Community Centers, Associated Centers and
power centers, percentage leased and committed includes
non-Anchor GLA and leased Anchor GLA.
( 4) An additional 87,000 square feet opened in March 2001 containing Kohl's.
( 5) Owned by Anchor.
- As of December 31, 2000 the Company had two Malls, one
Mall expansion, one Associated Center, one Community
Center expansion, and one Office Building under
construction. These properties will add approximately
1,901,000 square feet to the Company's portfolio at
opening. During 2001 and 2002 the Company expects to
open 1,142,000 and 759,000 square feet, respectively.
13
Summary Information Concerning Construction Properties
As of February 28, 2001
Ownership
by Company Percenage
Anchor Non- and Pre-Leased
Name of Center/ Total GLA Anchor Operating and Projected
Location GLA (1) (2) GLA Partnership Committed(3) Opening Anchors
- ------------------------- ----------- ----------- ----------- ------------- -------------- --------------- ---------------
Malls
- -----
The Lakes Mall 558,000 339,000 219,000 90% 70.0% Aug-2001 Sears (4),
Muskegon, MI Younkers (4),
JCPenney (4)
Parkway Place 631,000 350,000 281,000 50% 41.0% Oct-2002 Dillard's (4),
Huntsville, AL Parisian (4)
Mall Expansion
- ----------
Meridian Mall 93,000 80,000 13,000 100% 0% Apr-2001
Lansing (Okemos), MI
Associated Center
- ------------------
Gunbarrel Pointe 87,000 87,000 0 100% 100.0% Mar-2001 Kohl's(5)
Chattanooga, TN
Community Center
- ----------------
Creekwood Crossing 404,000 347,000 57,000 100% 90.0% Apr-2001 Lowe's(4)(5),
Bradenton, FL KMart(5),
Bealls
Office Building
- ---------------
CBL Center 128,000 72,000 56,000 90% 78.0% Dec-2001 CBL &
Chattanooga, TN Associates
Management
----------- ----------- -----------
Total Construction
Properties 1,901,000 1,275,000 626,000
=========== =========== ===========
( 1).....Includes total square footage of Anchors (whether owned or leased by the Anchor).
( 2).....Includes total square footage of Anchors (whether owned or leased by the Anchor).
( 3).....Percentage leased and committed for Malls does not include Anchor GLA.
For the Community Centers, Associated Centers and power centers,
percentage leased and committed includes non-Anchor GLA and leased
Anchor GLA.
( 4).....Owned by Tenant.
( 5).....The anchor store opened in March 2001.
- In addition to the Construction Properties as of
December 31, 2000, the Company was pursuing the
development of a number of sites which the Company
believed were viable for future development as malls
and community and neighborhood shopping centers.
Regional mall development sites were being pursued in
Georgia, Mississippi and South Carolina and Community
and Associated Center shopping center sites were being
pursued in Florida, Tennessee, Pennsylvania and
Virginia.
- In general, the Company seeks out development
opportunities in middle-market trade areas that it
believes are under-serviced by existing retail
facilities, have demonstrated improving demographic
trends or otherwise afford an opportunity for effective
market penetration and competitive presence.
14
RISKS ASSOCIATED WITH THE COMPANY'S GROWTH STRATEGY
In connection with the implementation of this growth strategy, the Company
and the Operating Partnership will incur various risks including the risk that
development or expansion opportunities explored by the Company and the Operating
Partnership may be abandoned; the risk that construction costs of a project may
exceed original estimates, possibly making the project not profitable; the risk
that the Company and the Operating Partnership may not be able to refinance
construction loans which are generally with full recourse to the Company and the
Operating Partnership; the risk that occupancy rates and rents at a completed
project will not meet projections, and will therefore be insufficient to make
the project profitable; and the need for anchor, mortgage lender and property
partner approvals for certain expansion activities. In the event of an
unsuccessful development project, the Company's and the Operating Partnership's
loss could exceed its investment in the project.
The Company has in the past elected not to proceed with certain development
projects and anticipates that it will do so again from time to time in the
future. If the Company elects not to proceed with a development opportunity, the
development costs associated therewith ordinarily will be charged against income
and Funds From Operations for the then-current period. Any such charge could
have a material adverse effect on the Company's results of operations for the
period in which the charge is taken.
COMPETITION
There are numerous shopping facilities that compete with the Properties in
attracting retailers to lease space. The Malls are generally located in
middle-markets. Management believes that the Malls have strong competitive
positions because they generally are the only or largest enclosed malls within
their respective trade areas. In addition, retailers at the Properties face
continued competition from discount shopping centers, outlet malls, wholesale
clubs, direct mail, telemarketing, television shopping networks and shopping via
the Internet. Competition could adversely affect the Operating Partnership's
revenues and funds available for distributions to partners, which in turn will
affect the Company's revenues and funds available for distribution to
stockholders.
SEASONALITY
The Company's business is somewhat seasonal in nature with tenant sales
achieving the highest levels during the fourth quarter because of the holiday
season. The Malls earn most of their "temporary" rents (rents from short-term
tenants) during the holiday period. Thus, occupancy levels and revenue
production are generally the highest in the fourth quarter of each year. Results
of operations realized in any one quarter may not be indicative of the results
likely to be experienced over the course of the entire year.
QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST
The Company has elected to be taxed as real estate investment trust under
the Code, commencing with its taxable year ended December 31, 1993, and will
seek to maintain such status. As a qualified real estate investment trust, the
Company generally will not be subject to Federal income tax to the extent it
distributes at least 90% of its current year real estate investment trust
taxable income to its shareholders. If the Company fails to qualify as a real
estate investment trust in any taxable year, the Company will be subject to
Federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates.
INSURANCE
The Operating Partnership carries comprehensive liability, fire, extended
coverage and rental loss insurance covering all the Properties, with policy
specifications and insured limits customarily carried for similar properties.
Management believes that the Properties are adequately insured in accordance
with industry standards.
15
ITEM 2. PROPERTIES.
MALLS
Each of the Malls is an enclosed regional shopping complex. Each Mall
generally has at least three Anchors which own or lease their stores and
numerous non-anchor stores with GLA less than 30,000 square feet ("Mall
Stores"), most of which are national or regional retailers, located along
enclosed malls connecting the Anchors. At most of the Malls, additional
freestanding restaurants and retail stores are located on the periphery of the
Mall complex. These freestanding stores are, in most cases, owned by their
occupants. As of December 31, 2000, thirteen of the Mall complexes included one
or more Associated Centers.
The total GLA of the 30 Malls owned on December 31, 2000 was approximately
22.6 million square feet or an average GLA of approximately 754,000 square feet
per Mall. Mall Store GLA was 8,033,000 square feet including leased
free-standing buildings at December 31, 2000. The Company wholly owned all but
seven of such Malls and managed all but one of them.
In the years ended December 31, 1998, 1999 and 2000, Mall revenues
represented approximately 74.9%, 76.9% and 77.3%, respectively, of total
revenues from the Company's Properties.
Occupancy of mall stores in the Stabilized Malls ("Stabilized Mall Stores")
was 94.5% at December 31, 1999, and at December 31, 2000.
In the years ended December 31, 1998, 1999 and 2000, average Stabilized
Mall Store sales per square foot were approximately $272.00, $283.75 and
$283.00, respectively (computed using a monthly weighted average).
Average base rent per square foot at the Mall Stores increased from $20.73
at December 31, 1999 to $21.57 at December 31, 2000.
Occupancy costs as a percentage of sales for tenants in the Stabilized
Malls (excluding acquisition malls from the year of acquisition) were 11.1%,
11.5% and 11.9% for the years ended December 31, 1998, 1999, and 2000,
respectively.
The Malls are generally located in middle-markets. Management believes that
the Malls have strong competitive positions because they generally are the only,
or the dominant enclosed malls within their respective trade areas. Trade areas
have been identified by management based upon a number of sources of
information, including the location of other malls, publicly available
population information, customer surveys, surveys of customer automobile license
plates, as well as ZIP codes and third-party market studies.
The three largest revenue-producing Malls in 2000 were Hamilton Place Mall,
Coolsprings Galleria and Burnsville Center. Hamilton Place is located on a
187-acre site in Chattanooga, Tennessee and represented, as of December 31,
2000, 3.4% of the Properties' total GLA, 3.6% of total Mall Store GLA and 4.9%
of total revenues from the Company's Properties. Coolsprings Galleria is located
on a 150-acre site in Nashville, Tennessee and represented, as of December 31,
2000, 3.4% of the Properties' total GLA, 3.6% of total Mall Store GLA and 4.7%
of total revenues from the Company's Properties. Burnsville Center is located in
the Suburbs of Minneapolis, Minnesota in Burnsville and represented, as of
December 31, 2000, 3.1% of the Properties' total GLA, 3.9% of total Mall Store
GLA and 4.7% of total revenues from the Company's Properties.
Twenty-four of the thirty Malls owned on December 31, 2000 had undergone an
expansion or remodeling since their opening, and all but four of the Malls were
either built, renovated or expanded in the last 10 years one of which, Parkway
Place in Huntsville, Alabama is currently scheduled for
16
demolition and redevelopment. In 2000, the Company renovated and expanded
Asheville Mall in Asheville, North Carolina and Meridian Mall in Lansing,
Michigan. The Company will complete the expansion of Meridian Mall in 2001 and
will begin the renovation of Burnsville Center in Minneapolis (Burnsville),
Minnesota and three malls in the Jacobs transaction: Hanes Mall in
Winston-Salem, North Carolina, Fashion Square in Saginaw, Michigan and Cary
Towne Center in Cary, North Carolina. At December 31, 2000 three of the Malls
have available Anchor pads providing expansion potential totaling approximately
405,700 buildable square feet. At December 31, 2000 twenty existing Anchors at
eleven Malls have aggregate expansion potential at their existing stores of
approximately 473,000 buildable square feet.
The land underlying the Malls owned on December 31, 2000 was owned in fee
simple in all cases, except for Walnut Square, WestGate Mall, St. Clair Square,
Bonita Lakes Mall, Meridian Mall and Stroud Mall which were each subject to
long-term ground leases for all or a portion of their land.
The table on the following page sets forth certain information for each of
the Malls as of December 31, 2000.
17
Percen-
Mall tage
Store Mall Fee
Year of Ownership by Total Sales Store Simple
Year of Most Company and Mall per GLA Anchor or
Opening/ Recent Operating Total Store Square Leased Vacan- Ground
Name of Mall/Location Acquisition Expansion Partnership GLA(1) GLA(2) Foot(3) (4) Anchors cies Lease
- ----------------------- ----------- --------- ------------- -------- ---------- ------- ------ ---------------------- ------ ------
New Malls
- ---------
Arbor Place.........(5) 1999 N/A 100% 1,035,320 386,380 $281 92% Dillard's, Parisian, None Fee
Atlanta(Douglasville),GA Sears, dekor, Old Navy,
Bed , Bath & Beyond
Bonita Lakes Mall...(5) 1997 N/A 100% 641,047 192,620 250 100% Goody's, Dillard's, None Ground
Meridian, MS JCPenney, Sears, McRae's Lease
(6)
Parkway City Mall...(5) 1957/1998 1974 50% 414,540 187,825 199 N/A McRae's, Parisian None Fee
Huntsville, AL
Springdale Mall........ 1960/1997 2000 100% 954,237 319,936 221 82% Dillard's, McRae's, None Fee
Mobile, AL Burlington Coat, Goody's
--------- --------- ---
Total New Mals 3,045,144 1,086,761 88%
========= ========= ===
Stabilized Malls
- ----------------
Asheville Mall......... 1972/1998 2000 100% 816,755 253,420 $313 99% Dillard's, JCPenney, None Fee
Asheville, NC Sears, Belk
Burnsville Center...... 1977/1998 N/A 100% 1,069,887 408,844 312 94% Mervyn's, Dayton's, None Fee
Burnsville, MN JCPenney, Sears
College Square......(5) 1988 1993 100% 459,473 156,604 212 97% JCPenney, Sears, None Fee
Morristown, TN Wal*Mart, Goody's,
Proffitt's
CoolSprings Galleria(5) 1991 1994 100% 1,129,764 374,749 336 100% Hechts, Dillard's, None Fee
Nashville, TN Sears, JCPenney,
Parisian
Foothills Mall......(5) 1983/1996 1997 95% 476,768 180,072 180 92% Sears, JCPenney, None Fee
Maryville, TN Goody's,
Proffitt's I,
Proffitt's II
Frontier Mall.......(5) 1981 1997 100% 523,004 234,003 206 90% Dillard's I, JCPenney, None Fee
Cheyenne, WY Dillard's II, Sears
Georgia Square......(5) 1981 N/A 100% 677,906 256,352 247 97% Belk, JCPenney, None Fee
Athens, GA Macy's, Sears
Governor's Square...(5) 1986 1999 48% 690,437 269,436 241 95% JCPenney, Parks-Belk, None Fee
Clarksville, TN Sears, Dillard's,
Goody's
Hamilton Place......(5) 1987 1998 90% 1,166,776 375,128 356 100% Dillard's, Parisian, None Fee
Chattanooga, TN Proffitt's I,
Proffitt's II, Sears,
JCPenney
Hickory Hollow Mall.... 1978/1998 1991 100% 1,125,946 455,757 248 92% JCPenney, Sears, None Fee
Nashville, TN Dillard's, Hechts
Janesville Mall........ 1973/1998 1998 100% 609,364 161,535 312 84% JCPenney, Kohl's, None Fee
Janesville, WS Boston Store, Sears
Lakeshore Mall......(5) 1992 1999 100% 500,890 153,062 214 91% KMart, Belk-Lindsey, None Fee
Sebring, FL Sears JCPenney, Beall's
(9)
Madison Square......(5) 1984 1985 50% 934,161 301,326 311 98% Dillard's, JCPenney, None Fee
Huntsville, AL McRae's, Parisian, Sears
Meridian Mall.......... 1969/1998 2000 100% 794,461 463,292 332 92% JCPenney, Mervyn's, None Fee
Lansing, MI Dayton Hudson, Ground
Jacobson's Lease
(8)
Oak Hollow Mall.....(5) 1995 N/A 75% 802,239 251,411 221 95% Goody's, JCPenney, None Fee
High Point, NC Belk-Beck, Sears,
Dillard's
18
Percen-
Mall tage
Store Mall Fee
Year of Ownership by Total Sales Store Simple
Year of Most Company and Mall per GLA Anchor or
Opening/ Recent Operating Total Store Square Leased Vacan- Ground
Name of Mall/Location Acquisition Expansion Partnership GLA(1) GLA(2) Foot(3) (4) Anchors cies Lease
- ----------------------- ----------- --------- ------------- -------- ---------- ------- ------ ---------------------- ------ -----
Pemberton Square....(5) 1985 1999 100% 351,920 133,685 160 84% JCPenney, McRae's, None Fee
Vicksburg, MS Dillard's, Goody's
Plaza del Sol Mall..(5) 1979 1996 51% 261,507 105,326 190 99% Beall Bros(10), None Fee
Del Rio, TX JCPenney,
KMart
Post Oak Mall.......(5) 1982 1985 100% 776,347 318,166 266 90% Beall Bros.(9), None Fee
College Station, TX Dillard's, Foley's,
Dillard's, Sears,
JCPenney
Rivergate Mall......... 1971/1998 1998 100% 1,073,970 326,210 308 89% Sears, Dillard's, None Fee
Nashville, TN JCPenney, Hechts
St. Clair Square....... 1974/1996 1993 100% 1,044,502 315,559 366 98% Famous Barr, Sears, None Fee/
Fairview Heights, IL JCPenney, Dillard's Ground
Lease
(10)
Stroud Mall............ 1977/1998 1994 100% 427,194 177,011 285 100% JCPenney, Sears, None Ground
Stroudsburg, PA The Bon-Ton Lease
(11)
Turtle Creek Mall...(5) 1994 1995 100% 846,234 223,140 300 100% JCPenney, Sears, None Fee
Hattiesburg, MS Dillard's, McRae's I,
Goody's, McRae's II
Twin Peaks Mall.....(5) 1985 1997 100% 556,248 242,863 247 95% JCPenney, Dillard's I, None Fee
Longmont, CO Dillard's II, Sears
Walnut Square.......(5) 1980 1992 100% 450,385 223,650 224 96% Belk, JCPenney, None Ground
Dalton, GA Proffitt's, Sears, Lease
Goody's (12)
WestGate Mall.......... 1975/1995 1996 100% 1,100,513 286,044 281 97% Belk-Hudson, JCPenney, None Fee/
Spartanburg, SC Dillard's, Sears, Bed, Ground
Bath & Beyond Lease
(7)
York Galleria.......... 1998/1999 N/A 100% 766,972 229,755 280 88% Boscov's, JCPenney, None Fee
York, PA ---------- ---------- --- --- Sears, The Bon-Ton
Total Stabilized Malls 19,433,623 6,876,400 $283 94%
========== ========== ==== ===
Grand Total All Malls 22,478,767 7,963,161
========== =========
19
( 1) Includes the total square footage of the Anchors (whether owned or
leased by the Anchor) and Mall Stores. Does not include future expansion
areas.
( 2) Does not include Anchors.
( 3) Totals represent weighted averages.
( 4) Includes tenants paying rent for executed leases as of December 31, 2000.
( 5) Developed by the Company.
( 6) Company is the lessee under a ground lease for 82 acres which extends
through June 30, 2035. The average annual base rent is $37,656 increasing
by 6% per year.
(7) The Company is the lessee under several ground leases for approximately
53% of the underlying land. The leases extend through October 31, 2084,
including six ten-year renewal options. Rental amount is $130,000 per year.
In addition to base rent, the landlord receives 20% of the percentage rents
collected. The Company has a right of first refusal to purchase the fee.
(8) The Company is the lessee under several ground leases in effect through
March 2067 with extension options. Fixed rent is $18,700 per year and 3% to
4% of all rents.
(9) Beall Bros. operating in Texas is unrelated to Beall's operating in
Florida.
(10) The Company is the lessee under a ground lease for 20 acres which extends
through January 31, 2073, including 14 five-year renewal options and one
four-year renewal option. Rental amount is $40,000 per year. In addition to
base rent, the landlord receives .25% of Dillard's sales in excess of
$16,200,000.
(11) The Company is the lessee under a ground lease which extends through July
2089. The rental amount is $50,000 with an additional $100,000 paid every
10 years.
(12) The Company is the lessee under several ground leases which extend through
March 14, 2078, including six ten-year renewal options and one eight-year
renewal option. Rental amount is $149,450 per year. In addition to base
rent, the landlord receives 20% of the percentage rents collected. The
Company has a right of first refusal to purchase the fee.
Anchors. Anchors are a critical factor in a Mall's success because the
public's identification with a property typically focuses on its Anchors. Mall
Anchors generally are department stores whose merchandise appeals to a broad
range of shoppers. Although the Malls derive a smaller percentage of their
operating income from Anchor stores than from Mall Stores, strong Anchors play
an important part in generating customer traffic and making the Malls desirable
locations for Mall Store tenants.
Anchors either own their stores together with the land under them,
sometimes with adjacent parking areas, or enter into long-term leases with
respect to their stores at rental rates that are significantly lower than the
rents charged to tenants of Mall Stores. Anchors account for approximately 7.1%
of the total revenues from the Company's Properties. Each Anchor which owns its
own store has entered into a reciprocal easement agreement with the Company
covering, among other things, operating covenants, reciprocal easements,
property operations, initial construction and future expansions.
As of December 31, 2000, the Malls had a total of 135 Anchors and one
vacant Anchor store at Asheville Mall. The following table indicates all Mall
Anchors and sets forth the aggregate number of square feet owned or leased by
Anchors in the Malls as of December 31, 2000.
20
Mall Anchor Summary Information
As of December 31, 2000
GLA GLA Total
Number Owned Leased Occupied
of Anchor by by by
Name Stores Anchor Anchor Anchor (1)
- ----------------------------------------- ----------------- ------------------ ---------------- ------------------
JCPenney............................ 27 1,015,865 1,586,868 2,602,733
Sears............................... 25 1,929,897 1,042,651 2,972,548
Dillard's............................ 21 2,681,459 202,004 2,883,463
Sak's
Proffitt's....................... 10 1,203,750 0 1,203,750
McRae's.......................... 7 511,359 243,000 754,359
Parisian......................... 5 351,756 209,541 561,297
----------------- ------------------ ---------------- ------------------
Subtotal..................... 22 2,066,865 452,541 2,519,406
Belk
Belk............................. 4 0 426,991 426,991
Belk-Lindsey..................... 1 0 61,029 61,029
Belk-Hudson...................... 1 0 156,648 156,648
Parks-Belk....................... 1 0 122,367 122,367
----------------- ------------------ ---------------- ------------------
Subtotal..................... 7 0 767,035 767,035
The May Company
Foley's.......................... 1 103,888 0 103,888
Famous Barr...................... 1 0 236,489 236,489
----------------- ------------------ ---------------- ------------------
Subtotal..................... 2 103,888 236,489 340,377
Goody's.............................. 9 0 292,749 292,749
Montgomery Ward(vacant).............. 1 0 92,484 92,484
Dayton-Hudson........................ 2 323,326 0 323,326
The Bon Ton ......................... 2 131,915 87,024 218,939
Wal*Mart............................. 1 0 112,541 112,541
Kmart................................ 2 0 173,940 173,940
Mervyn's............................. 2 124,919 74,889 199,808
Boscov's............................. 1 150,000 0 150,000
Burlington Coat...................... 1 0 153,345 153,345
Macy's............................... 1 115,623 0 115,623
Boston Store......................... 1 0 96,000 96,000
Kohl's............................... 1 0 88,691 88,691
Dekor................................ 1 0 80,000 80,000
Jacobson's........................... 1 0 83,916 83,916
Bed, Bath & Beyond................... 2 0 73,823 73,823
Old Navy............................. 1 0 37,585 37,585
Beall Bros. (Texas).................. 2 0 61,916 61,916
Beall's (Florida).................... 1 0 45,844 45,844
----------------- ------------------ ---------------- ------------------
Total........................ 136 8,643,757 5,842,335 14,486,092
================= ================== ================ =================
(1)Includes all square footage owned by or leased to such Anchor including tire,
battery and automotive facilities and storage square footage.
MALL STORES. As of December 31, 2000, the Malls had approximately 4,277
Mall Stores. National or regional chains (excluding individually franchised
stores) leased approximately 79.6% of the occupied Mall Store GLA. Although Mall
Stores occupied only 35.5% of total Mall GLA, the Malls derived approximately
88.3% of their revenue from Mall Stores for the year ended December 31, 2000.
Among the companies with the largest representation among Mall Stores are:
The Limited, Inc./Intimate Brands, Inc. stores (The Limited, Limited Too,
Express, Lerner New York, Lane Bryant, Structure, Victoria's Secret, and Bath
and Body Works) and Venator Group, Inc. (Footlocker, Lady Footlocker and Champs
Sports Stores). As of December 31, 2000, The Limited, Inc.'s and Intimate
Brands, Inc.'s 121 stores accounted for 10.3% of total mall leased GLA and 6.7%
of total revenues from the Company's Properties. As of December 31, 2000 Venator
Group, Inc. accounted for 2.9% of total mall leased GLA and 2.5% of total
revenues. No single Mall Store retailer accounted for more than 10.3% of total
leased GLA and no single Mall Store retailer accounted for more than 6.7% of
total revenues from the Company's Properties for the year ended December 31,
2000.
21
The following table sets forth certain information for executed renewal
leases with current tenants or leases of previously occupied space with new
tenants at the Malls during the year ended December 31, 2000.
Prior Lease New Lease Increase Increase
Total Base and Initial Year per New Lease per
Number Square Percentage Rent Base Rent Square Average Square
of leases Feet per Square Foot per Square Foot Foot Base Rent Foot
- --------------- --------------- ------------------ ------------------- ------------- ---------------- -------------
309 688,008 $23.36 $25.05 $1.69 $25.75 $2.39
The following table sets forth the total Mall Store GLA, the total square
footage of leased Mall Store GLA, the percentage of Mall Store GLA leased, the
average base rent per square foot of Mall Store GLA and average Mall Store sales
per square foot as of the end of each of the past five years.
Stabilized Mall Store Summary Information
Total Percentage Average Average Mall
Total Mall Store of Mall Store Base Rent Store Sales
At Mall Store Leased GLA per Square per Square
December 31, GLA GLA Leased (1) Foot (2) Foot (3)
- ---------------------- ---------------- ----------------- ------------------ ----------------- -------------------
1996............. 3,452,997 3,073,190 89.0% $ 19.03 $ 240
1997............. 3,503,490 3,214,176 91.7 18.98 263
1998.............. 7,166,498 6,707,283 93.6 19.82 273
1999.............. 7,429,503 6,956,451 94.5 20.68 284
2000(4)........... 7,558,160 7,110,705 94.5 21.57 283
(1) Mall Store occupancy includes tenants with executed leases who are paying
rent.
(2) Average base rent per square foot is based on Mall Store GLA occupied as of
the last day of the indicated period for the preceding twelve-month period.
(3) Calculated for the preceding twelve-month period.
(4) Excludes Parkway Place GLA which will be renovated.
Lease Expirations. The following table shows the scheduled lease
expirations for Malls Stores only in the Malls owned on December 31, 2000
(assuming that none of the tenants exercise renewal options).
Mall Lease Expiration
Percentage of Total
Represented by
Approximate Expiring Leases
Mall Store ------------------------------
Number of Annualized Base GLA of Base Rent Annualized Leased Mall
Year Ending Leases Rent of Expiring Expiring per Square Base Rent Store GLA
December 31, Expiring Leases (1) Leases Foot
- --------------------- -------------- ----------------- --------------- ------------- ------------- ----------------
2001............. 328 $11,033,751 579,764 $19.03 8.1% 8.4%
2002............. 314 13,372,313 695,278 19.23 9.8 10.1
2003............. 281 13,598,922 696,769 19.52 9.9 10.1
2004............. 311 16,028,501 692,075 23.16 11.7 10.0
2005............. 377 20,809,875 999,520 20.82 15.2 14.5
2006............. 197 9,703,487 484,725 20.02 7.1 7.0
2007............. 205 12,541,485 630,774 19.88 9.2 9.2
2008............. 161 11,208,791 523,183 21.42 8.2 7.6
2009............. 177 11,193,532 447,891 24.99 8.2 6.5
2010............. 147 8,190,658 358,544 22.84 6.0 5.2
(1) Total annualized base rent for all leases executed as of December 31, 2000
includes rent for space that is leased but not yet occupied but excludes (i)
percentage rents, (ii) additional payments by tenants for common area
maintenance, real estate taxes and other expense reimbursements and (iii)
contractual rent escalations and cost of living increases due after December
31, 2000.
Cost of Occupancy. Management believes that in order to maximize the
Company's Funds from Operations, tenants in Mall Stores must be able to operate
profitably. A major factor contributing to tenant profitability is the tenant's
cost of occupancy.
22
The following table summarizes for Stabilized Mall Store tenants the
occupancy costs under their leases as a percentage of total Mall Store sales for
the last three years.
For the Year Ended
December 31, (1)
----------------------------------
1998 1999 2000
---------- ----------- -----------
Mall Store sales (in millions)(2)......... $1,105.5 $1,426.3 $1,487.1
========== =========== ==========
Minimum rents............................. 7.7% 7.8% 7.9%
Percentage rents.......................... 0.3 0.4 0.5
Expense recoveries (3).................... 3.1 3.3 3.5
---------- ----------- -----------
Mall tenant occupancy costs............... 11.1% 11.5% 11.9%
========== =========== ===========
(1) Excludes Malls not owned or open for full reporting period.
(2) Consistent with industry practice, sales are based on reports by
retailers (excluding theaters) leasing Mall Store GLA and occupying
space for the reporting period. Represents 100% of sales for these
Malls. In certain cases, the Company and the Operating Partnership will
own less than 100% interest in these Malls.
(3) Represents real estate tax and common area maintenance charges.
ASSOCIATED CENTERS
The sixteen Associated Centers owned at December 31, 2000 were each part of
a Mall complex and generally had one or two Anchor tenants and various smaller
tenants. Anchor tenants in these centers included such retailers as
Books-A-Million, Target, Toys "R" Us, TJ Maxx, and Goody's, which were category
dominant retailers that benefited from the regional draw of the Malls. The
Associated Centers also generally increase the draw to the total Mall complex.
Total leasable GLA of the sixteen Associated Centers was approximately 2.5
million square feet, including Anchors, or an average of approximately 156,000
square feet per center. As of December 31, 2000, 94.9% of total leasable GLA at
the Associated Centers was occupied. During 2000 the Company opened one
Associated Center in Chattanooga, Tennessee.
In the years ended December 31, 1998, 1999, and 2000, revenues from the
Associated Centers represented approximately 3.9%, 3.7% and 4.1%, respectively,
of total revenues from the Company's Properties.
In the years ended December 31, 1998, 1999 and 2000, average tenant sales
per square foot at the Associated Centers were approximately $172, $184 and
$185, respectively.
Average base rent per square foot at the Associated Centers increased from
$9.78 at December 31, 1999 to $9.88 at December 31, 2000.
Each of the Associated Centers was developed by the Company, except for
WestGate Crossing, Village at Rivergate and Courtyard at Hickory Hollow which
were acquired in August 1997, July 1998 and July 1998, respectively. All of the
land underlying the Associated Centers is owned in fee simple except for Bonita
Crossing.
23
Lease Expirations. The following table shows the scheduled lease
expirations for the Associated Centers owned as on December 31, 2000 (assuming
that none of the tenants exercise renewal options).
Associated Center Lease Expiration
Percentage of Total
Represented by
Approximate Expiring Leases
Mall Store ------------------------------
Number of Annualized Base GLA of Base Rent Annualized Leased Mall
Year Ending Leases Rent of Expiring Expiring per Square Base Rent Store GLA
December 31, Expiring Leases (1) Leases Foot
- --------------------- -------------- ----------------- --------------- ------------- ------------- ----------------
2001........... 17 $442,630 47,467 $9.32 4.1% 4.4%
2002........... 22 960,929 70,339 13.66 8.8 6.4
2003........... 24 1,158,602 128,650 9.01 10.6 11.8
2004........... 25 1,305,010 178,690 7.30 11.9 16.4
2005........... 21 1,825,523 227,783 8.01 16.7 20.9
2006........... 7 473,286 44,453 10.65 4.3 4.1
2007........... 3 96,315 8,476 11.36 0.9 0.8
2008........... 2 224,500 14,000 16.04 2.1 1.3
2009........... 9 1,141,451 75,404 15.14 10.4 6.9
2010........... 4 554,320 59,641 9.29 5.1 5.5
(1) Total annualized base rent for all leases executed as of December 31,
2000 includes 12 months of rent for space that is newly leased but not
yet occupied and base rent on ground leases with no square footage but
excludes (i) percentage rents, (ii) additional payments by tenants for
common area maintenance, real estate taxes and other expense
reimbursements and (iii) contractual rent escalations and cost of
living increases due after December 31, 2000.
24
The following table sets forth certain information for executed renewal
leases with current tenants or leases of previously occupied space with new
tenants at the Associated Centers during the year ended December 31, 2000.
Prior Lease New Lease Increase Increase
Total Base and Initial Year per New Lease per
Number Square Percentage Rent Base Rent Square Average Square
of leases Feet per Square Foot per Square Foot Foot Base Rent Foot
- --------------- --------------- ------------------ ------------------- ------------- ---------------- -------------
16 50,687 $9.88 $11.04 $1.16 $11.09 $1.21
The following table sets forth certain information for each of the
Associated Centers as of December 31, 2000.
Ownership
Year of by Company
Name of Opening/Most and Total Percentage
Associated Recent Operating Total Leasable GLA
Center/Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors
- -------------------------- --------------- ------------- ------------ ----------- ------------ ---------------------
Bonita Crossing...(10) 1997/1999 100% 118,884 118,884 97% Books-A-Million,
Meridian, MS TJ Maxx, Office
Max, The Gap
CoolSprings Crossing.. 1992 100% 353,369 53,286 100% Target(7)
Nashville, TN Service Merchandise,
Toys "R" Us,
Lifeway Books
Courtyard at Hickory
Hollow............... 1979(9) 100% 77,460 77,460 100% Carmike Cinemas,
Nashville, TN Just For Feet
Foothills Plaza....... 1983/1986 100% 191,216(4) 71,216 100% Eckerd(6),
Maryville, TN Carmike Cinemas
Frontier Square....... 1985 100% 161,615 16,615 100% Buttrey Food & Drug,
Cheyenne, WY Target
Georgia Square Plaza.. 1984 100% 15,393 15,393 0%
Athens, GA
Governor's Square Plaza 1985(5) 50% 180,018 57,820 100% Office Max, Premier
Clarksville, TN Medical Group,
Target
Gunbarrel Pointe...... 2000 100% 281,525 155,525 100% Kohl's(11), Target,
Chattanooga, TN Goody's
Hamilton Corner....... 1990 90% 88,298 88,298 99% Michael's, Goody's,
Chattanooga, TN Fresh Market
Hamilton Crossing..... 1987/1994 92% 185,370 92,257 91% Service
Chattanooga, TN Merchandise(7)
Toys "R" Us, TJ Maxx
The Landing........... 1999 100% 163,164 85,507 78% Toys "R" Us,
Atlanta(Douglasville),GA Circuit City,
Michael's
Madison Plaza......... 1984 75% 153,085 98,690 96% Food World, TJ
Huntsville, AL Maxx, Service
Merchandise
Pemberton Plaza....... 1986 100% 77,893 26,947 87% Kroger, Blockbuster
Vicksburg, MS
The Terrace........... 1997 92% 155,987 116,715 100% Barnes & Noble,
Chattanooga, TN Home Place, Old
Navy, Staples,
Circuit City
Village at Rivergate.. 1981(9) 100% 166,366 166,366 100% Target, Just For
Nashville, TN Feet
WestGate Crossing..... 1985/1999(8) 100% 151,489 151,489 100% Goody's, Toys "R"
Spartanburg, SC Us, Old Navy
------------ ----------- ------------
Total Associated Centers 2,521,131 1,392,466 95%
============ =========== ===========
25
(1) Includes the total square footage of the Anchors (whether owned or leased by
the Anchor) and shops. Does not include future expansion areas.
(2) Includes leasable Anchors.
(3) Includes tenants with executed leases at December 31, 2000. Calculation
includes leased Anchors.
(4) Total GLA include, but total leasable GLA and percentage GLA leased
excluding a furniture store of 80,000 square feet owned by others. Carmike
Cinemas is subject to a ground lease (40,000 square feet of GLA).
(5) Originally opened in 1985, and was acquired by the Company in June 1997.
(6) Eckerd has closed its store but is continuing to meet its financial
obligations under its lease and is subleased to Dollar General.
(7) Owned by tenant.
(8) Originally opened in 1985, and was acquired by the Company in August 1997.
(9) Acquired by the Company in July 1998.
(10)The land is ground leased through June 2015 with options to extend through
June 2035. The annual rent is $14,355 increasing by 6% each year.
(11)Opened in March 2001.
COMMUNITY AND POWER CENTERS
In addition to Mall development, the Company's development activities focus
on Community Centers, and power centers. Community Centers pose fewer
development risks than Malls because they have shorter development timetables
and lower up-front costs. Community Centers also afford the Company the
opportunity to meet the needs of retailers for whom a "convenience" type of
location is more appropriate and the needs of customers whose trade areas cannot
support a regional mall. Power centers are larger than other Community Centers,
with several large anchor stores which draw shoppers from a wider geographic
area.
The Company's Community Center developments in the 1980's were generally
anchored by supermarkets, and, in certain cases, by drug stores. Management's
current focus has expanded to include the development of larger centers,
anchored by mass merchandisers and department stores, while continuing the
development of smaller centers anchored by supermarkets and drug stores.
Recently completed Community Centers include centers in Richmond Virginia and
Spring Hill, Florida. Anchors at these new centers include, Home Depot, Sears,
Belk, Goody's and , Wal*Mart. During 2000, the Company sold thirteen Community
Centers for total proceeds of $51 million and totaling 799,000 square feet. The
proceeds were primarily used to retire debt. The Company also sold one Community
Center Jean Ribaut Square in Beaufort, South Carolina in February 2001. The net
proceeds of $5.8 million were placed in escrow in anticipation of a like-kind
exchange of properties under section 1031 of the Code.
Community Centers, other than power centers, range in size from 25,000
square feet to in excess of 286,000 square feet. Anchors in Community Centers
generally lease their store space and occupy 60-85% of a center's GLA. The
number of stores in a Community Center ranges from one to sixteen with an
average of seven stores per center.
The Company's two power centers, which were completed and opened in 1997
and 1998, average 786,000 square feet and have an average of nine major anchor
stores and additional small shop space ranging from 38,000 square feet to
136,000 square feet. The projects include expansion areas for additional major
retailers. These power centers are included in the Community Center
classification in this report.
Total GLA of the 72 Community Centers is approximately 9.1 million square
feet, or an average of approximately 126,000 square feet per center. Excluding
power centers the average is 107,000 square feet per center. As of December 31,
2000, 97.8% of total leasable GLA at the Community Centers was leased.
In the years ended December 31, 1998, 1999 and 2000, revenues from the
Community Centers represented approximately 19.6%, 17.8% and 17.5%,
respectively, of total revenues from the Company's Properties.
Occupancy at the Community Centers increased from 97.7% at December 31,
1999 to 97.8% at December 31, 2000.
Average base rent per square foot at the Community Centers increased from
$8.32 at December 31, 1999, to $8.85 at December 31, 2000.
As of December 31, 2000, Food Lion, a major regional supermarket operator
with headquarters in North Carolina served as an anchor tenant in 27 of the
Company's Community Centers. For the year ended December 31, 2000, Food Lion
accounted for approximately 1.7% of the revenues generated by the Company's
Properties.
26
With the exception of Suburban Plaza, Sutton Plaza, Lions Head Village and
the Market Place at Flower Mound, which were acquired by the Company in March
1995, January 1997, July 1998 and March 2000, respectively, each of the
Community Centers was developed by the Company.
The following table summarizes the percentage of total leasable GLA leased,
average base rent per square foot (excluding percentage rent) and tenant sales
per square foot at the Community Centers for each of the last five years.
Community Center Summary Information
Average
Percentage Base Rent Tenant
Year Ended GLA Per Square Sales Per
December 31, Leased (1) Foot (2) Square Foot (3)
- ----------------------------------------- -------------- ------------- -------------------
1996................................. 97.2% $6.94 $210
1997................................. 97.6% 7.42 221
1998................................. 97.0% 8.22 220
1999................................. 97.7% 8.32 214
2000................................. 97.8% 8.85 213
(1) Percentage leased includes tenants who have executed leases and are paying rent as of the specified date.
(2) Average base rent per square foot is based on GLA occupied as of the last day of the indicated period.
(3) Consistent with industry practice, sales are based on reports by
retailers (excluding theaters) leasing GLA and occupying space for the
12 months ending on the last day of the indicated period.
Lease Expirations. The following table shows the scheduled lease
expirations for the Community Centers owned on December 31, 2000 (assuming that
none of the tenants exercise renewal options).
Community Center Lease Expiration
Percentage of Total
Represented by
Approximate Expiring Leases
Mall Store ------------------------------
Number of Annualized Base GLA of Base Rent Annualized Leased Mall
Year Ending Leases Rent of Expiring Expiring per Square Base Rent Store GLA
December 31, Expiring Leases (1) Leases Foot
- --------------------- -------------- ----------------- --------------- ------------- ------------- ----------------
2001.............. 71 $1,696,086 185,464 $9.15 3.7% 3.4%
2002.............. 129 3,635,937 457,901 7.94 8.0 8.5
2003.............. 125 3,952,969 584,816 6.76 8.7 10.8
2004.............. 96 3,394,916 355,729 9.54 7.4 6.6
2005.............. 82 3,330,741 387,562 8.59 7.3 7.2
2006.............. 23 1,381,458 269,309 5.13 3.0 5.0
2007.............. 19 1,535,460 178,553 8.60 3.4 3.3
2008.............. 21 2,419,904 234,428 10.32 5.3 4.3
2009.............. 21 3,789,875 398,381 9.51 8.3 7.4
2010.............. 20 1,558,331 247,915 6.29 3.4 4.6
(1) Total annualized base rent for all leases executed as of December 31,
2000 includes 12 months of rent for space that is newly leased but not
yet occupied and base rent on ground leases with no square footage but
excludes (i) percentage rents, (ii) additional payments by tenants for
common area maintenance, real estate taxes and other expense
reimbursements and (iii) contractual rent escalations and cost of
living increases for periods after December 31, 2000.
The following table sets forth certain information for executed renewal
leases with current tenants or leases of previously occupied space with new
tenants at the Community Centers during the year ended December 1, 2000.
Prior Lease New Lease
Total Base and Initial Year Increase New Lease Increase
Number Square Percentage Rent Base Rent per Square Average per Square
of leases Feet per Square Foot per Square Foot Foot Base Rent Foot
- --------------- --------------- ------------------ ------------------- ------------- ---------------- -------------
151 322,809 $10.34 $11.14 $0.80 $11.53 $1.19
The following table sets forth certain information for each of the
Company's Community Centers at December 31, 2000.
27
Ownership
Year of by
Opening/ Company Square
Most and Total Percentage Feet Fee or Number
Name of Community Recent Operating Total Leasable GLA Of Anchor Ground of
Center/Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors Vacancies Lease Stores
- --------------- --------- ----------- ------- --------- --------- ------------------------ ---------- ------ ------
Anderson Plaza 1983/1994 100% 46,258 46,258 100% Food Lion, Eckerd(7) 8,640 Fee 4
Greenwood, SC
Bartow Village 1990 100% 40,520 40,520 97% Food Lion, Family Dollar None Fee 5
Bartow, FL
Beach Crossing 1984 100% 45,790 45,790 88% Food Lion(4), CVS None Fee 5
Myrtle Beach, SC
Bennington Place 1994 100% 42,712 42,712 100% Food Lion None Fee 3
Roanoke, VA
BJ's Plaza 1991 100% 104,233 104,233 100% BJ's Wholesale Club None Ground 1
Portland, ME Lease(5)
Briarcliff Square 1989 100% 41,778 41,778 86% Food Lion None Fee 7
Oak Ridge, TN
Buena Vista Plaza 1989/1997 100% 151,320 17,500 93% Wal*Mart, Winn Dixie None Fee 8
Columbus, GA
Bulloch Plaza 1986 100% 34,400 34,400 96% Food Lion None Fee 2
Statesboro, GA
Capital Crossing 1995 100% 83,700 83,700 100% Lowe's Food, Staples None Fee 2
Raleigh, NC
Cedar Bluff Crossing 1987/1996 100% 53,050 53,050 100% Food Lion None Fee 12
Knoxville, TN
Cedar Plaza 1988 100% 95,000 50,000 100% Quality Stores None Fee 5
Cedar Springs, MI
Chester Square 1997 100% 64,844 64,844 60% Kroger None Fee 5
Richmond, VA
Chesterfield Crossing 2000 100% 404,258 52,986 100% Home Depot, Wal*Mart None Fee 10
Richmond, VA
Chestnut Hills 1982 100% 68,364 68,364 92% JCPenney None Fee 10
Murray, KY
Coastal Way 2000 100% 170,875 170,875 98% Belk, Sears None Fee 11
Spring Hill, FL
Colleton Square 1986 100% 31,000 31,000 96% Food Lion(4) None Fee 4
Walterboro, SC
28
Ownership
Year of by
Opening/ Company Square
Most and Total Percentage Feet Fee or Number
Name of Community Recent Operating Total Leasable GLA Of Anchor Ground of
Center/Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors Vacancies Lease Stores
- --------------- --------- ----------- ------- --------- --------- ------------------------ ---------- ------ ------
Collins Park Commons 1989 100% 37,400 37,400 94% Tractor Supply Co. None Ground 5
Plant City, FL Lease(6)
Conway Plaza 1985 100% 33,000 33,000 92% Food Lion(7) 21,000 Ground 7
Conway, SC Lease(8)
Cosby Station 1994/1995 100% 77,811 77,811 94% Publix None Fee 11
Douglasville, GA
Cortlandt Towne Center1997/1998 100% 763,260 630,017 100% Marshalls, Wal*Mart, Home 53,000 Fee 34
Cortlandt, NY Depot, A & P Food Store,
Seaman Furniture, Barnes &
Noble, Office Max, PetsMart
County Park Plaza 1982 100% 60,750 60,750 100% Bi-Lo None Fee 4
Scottsboro, AL
Devonshire Place 1996 100% 104,414 104,414 100% Lowe's Food, Kinetix, None Ground 4
Cary, NC Borders Books Lease(9)
East Ridge Crossing 1988 100% 58,950 58,950 100% Food Lion None Fee 13
Chattanooga, TN
East Towne Crossing 1989/1990 100% 158,751 70,011 100% Home Depot, Regal Cinemas, None Fee 8
Knoxville, TN Food Lion
58 Crossing 1988 100% 49,984 49,984 100% Food Lion, CVS(7) None Fee 9
Chattanooga, TN
Garden City Plaza 1984/1991 100% 188,446 76,246 96% Wal*Mart, JCPenney None Fee 16
Garden City, KS
Girvin Plaza 1990 100% 78,419 78,419 88% Winn Dixie None Fee 13
Jacksonville, FL
Greenport Towne Centre 1994 100% 191,622 75,525 100% Wal*Mart, Price-Chopper None Fee 3
Hudson, NY
Hampton Plaza 1990 100% 44,420 44,420 97% Food Lion(4) None Fee 8
Tampa, FL
Henderson Square 1995 100% 268,327 164,329 97% JCPenney, Belk Leggett, None Fee 13
Henderson, NC Goody's, Wal*Mart
Jasper Square 1986/1990 100% 95,950 50,550 100% Lowe's, Goody's None Fee 7
Jasper, AL
29
Ownership
Year of by
Opening/ Company Square
Most and Total Percentage Feet Fee or Number
Name of Community Recent Operating Total Leasable GLA Of Anchor Ground of
Center/Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors Vacancies Lease Stores
- --------------- --------- ----------- ------- --------- --------- ------------------------ ---------- ------ ------
Jean Ribaut (20) 1977/1993 100% 223,497 223,497 98% Belk, KMart, Bi-Lo None Fee 17
Beaufort, SC
Keystone Crossing 1989 100% 40,400 40,400 100% Food Lion None Fee 5
Tampa, FL
Kingston Overlook 1996/1997 100% 119,350 119,350 100% Baby Superstore, Michael's None Fee/ 3
Knoxville, TN Ground
Lease(10)
Lady's Island 1983/1993 100% 60,687 60,687 100% Winn Dixie, Eckerd None Fee 9
Beaufort, SC
LaGrange Commons 1996 100% 59,340 59,340 100% A & P Food Store None Fee 9
LaGrange, NY
Lions Head Village 1980(19) 100% 99,165 99,165 100% Steinmart, Office Max None Fee 15
Nashville, TN
Longview Crossing 1988 100% 40,598 40,598 100% Food Lion None Ground 3
Hickory, NC Lease(11)
Lunenburg Crossing 1994 100% 198,115 25,515 92% Wal*Mart, Shop'n Save None Fee 7
Lunenburg, MA
Marketplace at Flower 1999 100% 118,722 118,722 84% Winn Dixie None Fee 17
Mound
Flower Mound, TX
Massard Crossing 1997 100% 290,717 88,410 100% Wal*Mart, TJ Maxx, Goody's, None Fee 14
Ft. Smith, AR Cato
North Creek Plaza 1983 100% 28,500 28,500 100% Food Lion None Fee 2
Greenwood, SC
North Haven Crossing 1993 100% 104,612 104,612 100% Sports Authority, Office None Fee 6
North Haven, CT Max, Barnes & Noble
Northridge Plaza 1984/1988 100% 129,570 79,570 99% Winn Dixie(7), Eckerd, P.B. 35,922 Fee 16
Hilton Head, SC Realty
Northwoods Plaza 1983/1992 100% 32,705 32,705 100% Food Lion None Fee 2
Albemarle, NC
Oaks Crossing 1990/1993 100% 144,998 27,300 100% Wal*Mart, Buck's Variety None Fee 10
Otsego, MI
30
Ownership
Year of by
Opening/ Company Square
Most and Total Percentage Feet Fee or Number
Name of Community Recent Operating Total Leasable GLA Of Anchor Ground of
Center/Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors Vacancies Lease Stores
- --------------- --------- ----------- ------- --------- --------- ------------------------ ---------- ------ ------
Orange Plaza 1983 100% 46,875 46,875 100% Food World (12), Dollar 24,900 Fee 9
Roanoke, VA General
Park Village 1990 100% 48,505 48,505 100% Food Lion, Family Dollar None Fee 11
Lakeland, FL
Perimeter Place 1985/1988 100% 156,945 54,525 100% Home Depot, Fred's(7) 22,500 Fee 17
Chattanooga, TN
Rawlinson Place 1987 100% 35,750 35,750 100% Food Lion(7) 25,000 Fee 7
Rock Hills, SC
Rhett at Remount 1983/1994 100% 42,628 42,628 100% Food Lion, Eckerd(7) 8640 Fee 3
Charleston, SC
Salem Crossing 1997 100% 289,348 92,420 100% Kroger, Wal*Mart None Fee 17
Virginia Beach, VA
Sand Lake Corners 1999 100% 558,630 155,250 93% Lowe's, Bealls, Wal*Mart, None Fee 27
Orlando, FL Petsmart, Staples
Sattler Square 1989 100% 132,746 94,760 100% Quality Stores, Perry Drug None Fee 15
Big Rapids, MI
Seacoast Shopping Cent 1991 100% 208,690 91,690 98% Wal*Mart, Shaw's Supermarket None Fee 13
Seabrook, NH
Shenandoah Crossing 1988 100% 28,600 28,600 100% Food Lion(7) 25,000 Fee 2
Roanoke, VA
Signal Hills Village 1987/1989 100% 24,100 24,100 100% (13) None Ground 9
Statesville, NC Lease(14)
Southgate Crossing 1985 100% 40,100 40,100 100% Food Lion(7) 25,000 Ground 3
Bristol, TN Lease(15)
Springhurst Towne 1997 100% 810,539 422,539 99% Cinemark, Kohl's, None Fee 33
Louisville, KY Books A Million, Party
Source,
TJ Maxx, Meijer, Old Navy,
Target, Fashion Shop, Office
Max, Dick's Sporting Goods
Springs Crossing 1987/1996 100% 42,920 42,920 100% Food Lion, Kerr Drugs None Ground 4
Hickory, NC Lease(16)
Statesboro Square 1986 100% 41,000 41,000 100% Food Lion(4), Rentown 25,000 Fee 6
Statesboro, GA
31
Ownership
Year of by
Opening/ Company Square
Most and Total Percentage Feet Fee or Number
Name of Community Recent Operating Total Leasable GLA Of Anchor Ground of
Center/Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors Vacancies Lease Stores
- --------------- --------- ----------- ------- --------- --------- ------------------------ ---------- ------ ------
Stone East Plaza 1983 100% 45,259 45,259 100% Food Lion(4) None Fee 10
Kingsport, TN
Strawbridge Market Pla 1997 100% 43,764 43,764 100% Regal Cinema None Fee 1
Virginia Beach, VA
Suburban Plaza 1995 100% 129,259 127,259 87% Toys "R" Us, Barnes & Noble None Fee 18
Knoxville, TN
Sutton Plaza 1972(17) 100% 150,035 150,035 100% A & P Food Store, Ames None Fee 14
Mt. Olive, NJ
34th St. Crossing 1989 100% 51,120 51,120 100% Food Lion, Family Dollar None Fee 11
St. Petersburg, FL
Uvalde Plaza 1987/1992 75% 111,160 34,000 100% Wal*Mart, Beall's None Fee 8
Uvalde, TX
Valley Commons 1988/1994 100% 45,580 45,580 97% Food Lion None Fee 9
Salem, VA
Valley Crossing 1988/1991 100% 186,077 186,077 93% Goody's, TJ Maxx, Office None Fee 20
Hickory, NC Depot, Rack Room Shoes,
Circuit City, Factory Card
Outlet
The Village at Wexford 1990 100% 102,450 72,450 100% Quality Stores(18) None Fee 8
Cadillac, MI
Village Square 1990/1993 100% 163,294 27,050 100% Wal*Mart, Fashion Bug None Fee 12
Houghton Lake, MI
Willow Springs Plaza 1991/1994 100% 224,910 130,910 100% Home Depot, Office Max, None Fee 11
Nashua, NH JCPenney Home Store
--------- --------- ---
Total Community Centers 9,140,865 5,883,371 98%
========= ========= ===
32
(1) Includes the total square footage of the Anchors (whether owned by others
or leased by the Anchor) and shops. Does not include future expansion
areas.
(2) Includes leasable Anchors.
(3) Includes tenants paying rent on executed leases on December 31, 2000. Calculation includes leased Anchors.
(4) Tenant has closed its store but is continuing to meet its financial obligation and is sub-leasing the space.
(5) Ground Lease term extends to 2051 including four 10-year extensions. Lessee has an option to purchase and
a right of first refusal to purchase the fee.
(6) Ground Lease term extends to 2049 including three 10-year extensions.
Lessor receives a share of percentage rents during initial term and
extensions. Lessee has an option to purchase and a right of first refusal
to purchase the fee.
(7) Represents a tenant which has closed its store but is continuing to meet its financial obligations under its lease.
(8) Ground Lease term extends to 2055 including two 20-year extensions. During extension periods, lessor
receives a share of percentage rents. Lessee has a right of first refusal
to purchase the fee. Lessor receives a share of sale proceeds upon sale of
the center to a third party only if sale occurs while fee is subordinated
to a mortgage.
(9) Ground lease extends to 2076 including 12 five year options. Lessor receives no additional rent.
(10) Ground lease for an out-parcel extends to 2046 including 4 ten year options. Lessor receives 20% of percentage rentals.
(11) Ground Lease term extends to 2049 including three 10-year extensions. Lessor receives a share of percentage
rents during initial term and extensions. Lessee has a right of first refusal to purchase the fee.
(12) Represents a Food World which has closed its store but is continuing to
meet its financial obligations under its lease and is sub-leasing the
space.
(13) Signal Hills Village is part of Signal Hills Crossing, a Property on which the Company holds a Mortgage.
(14) Ground Lease term extends to 2084. Rent for entire term has been prepaid. Lessee has an option to purchase
the fee under certain circumstances.
(15) Ground Lease term extends to 2055 including one 20-year extension.
Commencing in 2005, rental will be the greater of base rent or a share of
the revenue from the center. Lessee has a right of first refusal to
purchase the fee.
(16) Ground Lease term extends to 2048 including three 10-year extensions.
Lessor receives a share of percentage rents during initial term and
extensions. Lessee has a right of first refusal to purchase the fee.
(17) Sutton Place opened in 1972 and was acquired by the Company in January 1997 and expanded in 2000.
(18) Quality Stores has an option to purchase its 56,850 square foot store
commencing in 1996 for a price based upon capitalizing minimum annual rent
being paid at the time of exercise at a rate of 8.33%.
(19) Lionshead opened in 1980 and was acquired by the Company in July 1998 and was expanded in 2000.
(20) Sold in February 2001.
MORTGAGES
The Company owns certain Mortgages which were granted prior to the Offering
in connection with sales by CBL of properties which it had previously developed.
The Company holds fee mortgages on seven community centers, which mortgages
had, as of December 31, 2000, an aggregate outstanding principal balance of $7.2
million. Such mortgages entitle the Company to receive substantially all of such
properties' current cash flow in the form of periodic debt service payments. The
encumbered properties all opened between 1981 and 1984 and have one Anchor
vacancy.
In the years ended December 31, 1998, 1999, and 2000, revenues from the
Mortgages represented approximately 0.7%, 0.6%, and 0.3%, respectively, of total
revenues from the Company's Properties.
33
The following table sets forth certain additional information regarding the
Mortgages as of December 31, 2000.
Mortgage Information Center Information
--------------------------------------------------- --------------------------------------------------------
Annual Principal Annual Total Percentage Number
Name of Center/ Interest Balance as Debt Maturity Total Leasable GLA of
Location Rate of 12/31/00 Service Date GLA(1) GLA Leased(2) Anchors Stores
- ----------------------- ----------- ------------- ---------- -------------- ---------- ---------- ------------ ----------- ---------
BI-LO South............ 9.50% $1,206 $175 Dec-2006 56,557 56,557 100% BI-LO, 7
Cleveland, TN Rite-Aid
Gaston Square.......... 11.00 1,665 179 Dec-2001 33,640 33,640 100 Food 4
Gastonia, NC Lion,
Eckerd
Inlet Crossing......... 11.00 1,443 327 Dec-2001 55,248 55,248 100 Food Lion 13
Myrtle Beach, SC
Olde Brainerd Centre... 9.5 14 35 Dec-2006 57,293 57,293 100 Bi-LO 7
Chattanooga, TN
Signal Hills Crossing.. 11.00 2,049 244 Dec-2001 44,220 44,220 100 Food 6
Statesville, NC Lion(3)
Soddy Daisy Plaza...... 9.5 173 48 Dec-2006 100,095 47,325 100 Wal*Mart, 5
Soddy Daisy, TN Bi-Lo, CVS
University Crossing.... 8.75 650 79 Feb-2010 101,964 20,053 N/A Sears 8
Pueblo, CO
------------- ---------- ---------- ---------- ------------ --------
Total................ $7,200 $1,087 449,017 314,336 100% 50
============= ========== ========== ========== ============ ========
(1) Includes Anchors.
(2) Includes all leases executed on or before December 31, 2000. Leased GLA includes non-Anchor GLA and leased Anchor GLA.
(3) Tenant has closed but is continuing to meet its financial obligation.
Office Building
The Company owns a 95% interest in a 49,082 square foot office building in
Chattanooga, Tennessee in which the Company's headquarters are located. The
Company occupies 34,470 square feet or 70% of the total square footage of the
Office Building. The Office Building is 100% occupied.
34
Top 25 Tenants
The following table sets forth the Company's top 25 tenants based upon a
percentage of total revenues from the Company's Properties owned on December 31,
2000.
% OF NUMBER OF
RANK TENANT REVENUES STORES SQUARE FEET
- ---------- --------------------------------------- ----------------------- ------------------ --------------------
1 Limited, Inc., The................... 5.10% 80 658,961
2 Venator Group, Inc................... 2.46% 74 234,516
3 Gap Inc., The........................ 2.13% 36 346,290
4 JCPenney Co. Inc..................... 1.79% 32 2,839,343
5 Food Lion............................ 1.70% 27 691,905
6 Goody's Family Clothing, Inc......... 1.45% 17 585,733
7 Intimate Brands. .................... 1.43% 41 164,810
8 Shoe Show, The....................... 0.98% 27 127,800
9 Regal Cinemas, Inc................... 0.98% 6 221,135
10 Camelot - Transworld Entertainment... 0.98% 25 92,476
11 American Eagle Outfitters............ 0.94% 20 87,992
12 Sears, Roebuck, & Co................. 0.88% 27 2,914,307
13 Barnes & Noble, Inc.................. 0.86% 12 137,127
14 Regis Corporation, The............... 0.86% 62 69,433
15 Great Atlantic and Pacific........... 0.86% 3 168,496
16 Footstar............................. 0.86% 15 116,100
17 Consolidated Stores Corporation...... 0.83% 26 91,575
18 Carmike Cinema....................... 0.80% 9 214,235
19 Claire's Boutiques, Inc.............. 0.76% 53 55,862
20 Homeplace Stores Two, Inc............ 0.67% 3 159,465
21 Office Max, Inc...................... 0.65% 6 151,224
22 Belk Atlanta Group Office............ 0.62% 8 688,497
23 United Artists Theatre............... 0.61% 5 151,854
24 Kirkland's........................... 0.60% 17 69,811
25 Tandy Corporation.................... 0.58% 33 78,426
MORTGAGE DEBT AND RATIO TO TOTAL MARKET CAPITALIZATION
As of December 31, 2000, the Operating Partnership's proportionate share of
indebtedness of all Properties (whether or not consolidated for financial
statement reporting purposes, including the Construction Properties) was
approximately $1.452 billion. The Company's total market capitalization (the
aggregate market value of the Company's outstanding shares of Common and
Preferred Stock, assuming the full exchange of the limited partnership interests
in the Operating Partnership for Common Stock, plus the $1.452 billion total
debt of the Operating Partnership) as of December 31, 2000 was $2.4 billion.
Accordingly, the Company's debt to total market capitalization ratio as of
December 31, 2000 was 59.4%. The debt to total market capitalization ratio,
which is based upon the Company's proportionate share of consolidated and
unconsolidated indebtedness and market values of equity, differs from
debt-to-book capitalization ratios, which are based upon consolidated
indebtedness and book values.
35
The following table sets forth certain information regarding the mortgages
and secured lines of credit encumbering the Properties.
MORTGAGE DEBT
(Dollars in thousands)
Mortgage Loans Outstanding in
Whole or in Part at December 31, 2000
-------------------------------------
Ownership
Share of Estimated Earliest
Company Annual, Balloon Date at
and Annual Principal all Annual Payment Which Loans
Center Pledged Operating Interest Balance as of Interest Debt Maturity Due on Can Be
As Collateral Partnership Rate 12/31/00(1) Payment(2) Service Date Maturity Prepaid(3)
- --------------------------- ----------- ------------ --------------- ------------ ---------- ------------ ----------- --------------
Malls:
Arbor Place......... 100% 7.809%(4) $99,300 $7,754 $7,754 Jun-2001 $99,299 --
Asheville Mall...... 100% 7.563%(4) 51,000 3,857 3,857 Apr-2002 51,000 --
Bonita Lakes Mall... 100% 6.820% 28,936 1,973 2,503 Oct-2009 22,539 Oct-2003(15)
Burnsville Center... 100% 8.000% 74,184 5,935 6,900 Aug-2010 60,341 Sep-2005(9)
College Square...... 100% 6.750% 14,726 994 1,726 Sep-2013 -- -- (5)
Coolsprings Galleria 100% 8.290% 64,654 5,360 6,636 Oct-2010 47,827 Oct-2000(6)
Frontier Mall....... 100% 10.000% 1,960 196 2,220 Dec-2001 -- -- (7)
Governor's Square... 48% 8.230% 34,538 2,855 3,476 Sep-2016 14,454 Sep-2001(8)
Hamilton Place...... 90% 7.000% 70,251 4,918 6,361 Mar-2007 59,505 -- (9)
Hickory Hollow Mall. 100% 6.770% 93,775 6,349 7,723 Aug-2008 80,847 May-2008(9)
Janesville Mall..... 100% 8.375% 16,010 1,341 1,857 Apr-2016 -- --
Madison Square...... 50% 9.250% 47,651 4,408 4,936 Mar-2002 46,482 Feb-1997(10)
Meridian Mall....... 100% 7.612%(4) 80,000 6,090 6,090 Aug-2003 80,000 --
Oak Hollow Mall..... 75% 7.310% 49,585 3,625 4,709 Feb-2008 39,567 Feb-2002(9)
Parkway Place....... 50% 8.094%(4) 11,253 911 911 Sep-2001 11,253 --
Plaza del Sol....... 51% 9.150% 5,092 463 796 Aug-2010 -- Sep-2001(9)
Rivergate Mall...... 100% 6.770% 75,789 5,131 6,241 Aug-2008 65,340 May-2008(9)
Springdale Mall..... 100% 7.867%(4) 21,683 1,704 1,704 Nov-2001 19,950 --
St. Clair Square.... 100% 7.000% 73,047 5,113 6,361 Apr-2009 58,975 --(11)
Stroud Mall ........ 100% 8.420% 32,500 2,736 2,977 Dec 2010 29,385 --
Turtle Creek Mall... 100% 7.400% 32,868 2,432 2,966 Mar-2006 26,992 Mar-1999(9)
Walnut Square...(12) 100% 10.125% 729 74 194 Feb-2008 -- --(17)
Walnut Square....... 100% 9.750%(14) 389 38 38 Feb-2008 389 -- (14)
WestGate Mall....... 100% 6.950% 46,724 3,247 4,819 Feb-2002 45,221 Feb-2002(19)
York Galleria....... 100% 8.340% 52,000 4,337 4,727 Dec-2010 46,932 --
---------------
Malls Subtotal: 1,078,644
---------------
Associated Centers:
Bonita Lakes Crossing 100% 6.820% 9,067 618 784 Oct-2009 7,062 Oct-2003(9)
Courtyard At Hickory 100% 6.770% 4,366 296 359 Aug-2008 3,764 May-2008
Hollow..............
Georgia Square Plaza 100% 9.000% 12 1 13 Jan-2001 -- Feb-1997(9)
Hamilton Corner..... 90% 10.125% 3,063 310 471 Aug-2011 -- --(21)
Madison Plaza....... 75% 10.125% 1,545 156 537 Feb-2004 -- --(22)
The Landing At Arbor Place 100% 7.111%(4) 11,162 865 865 Jun-2001 11,162 --
The Terrace......... 92% 7.300% 10,147 741 1,047 Sep-2002 9,596 --(20)
Village at Rivergate 100% 6.770% 3,580 242 295 Aug-2008 3,086 May-2008
Westgate Crossing... 100% 8.500% 9,876 839 907 Jul-2010 8,954 Jul-2010
---------------
Associated Centers Subtotal: 52,818
---------------
Community Centers:
Bennington Place.... 100% 10.250% 510 52 83 Aug-2010 -- Jul-2000(19)
BJ's Plaza.......... 100% 10.400% 3,112 324 476 Dec-2011 -- --(16)
Briarcliff Square... 100% 10.375% 1,556 161 226 Feb-2013(20) -- Feb-1998(21)
Cedar Bluff Crossing 100% 10.625% 1,129 120 230 Aug-2007 -- Jan-2008(22)
Colleton Square..... 100% 9.375% 909 85 143 Aug-2010(24) -- Aug-1998(19)
Collins Park Commons 100% 10.250% 727 74 202 Oct-2010 -- Sept-2000(19)
Cortlandt Town Center 100% 6.900% 51,949 3,584 4,539 Aug-2008 42,342 Aug-2003(9)
Cosby Station....... 100% 8.500% 3,959 337 490 Sep-2014 -- Sep-2001(25)
East Ridge Crossing. 100% 10.125% 689 70 324 May-2003 -- Jan-2001(26)
Fifty-Eight Crossing 100% 10.125% 664 67 312 May-2003 -- Jan-2001(26)
Greenport Towne Center 100% 9.000% 4,165 375 529 Sep-2014 -- --(27)
Henderson Square.... 100% 7.500% 6,313 473 750 Apr-2014 -- May-2005(28)
Jean Ribaut......... 100% 7.375% 3,661 270 440 Nov-2013 4,019 --(23)
Longview Crossing... 100% 10.250% 405 42 128 Aug-2010 -- Aug-2000(19)
36
Ownership
Share of Estimated Earliest
Company Annual, Balloon Date at
and Annual Principal all Annual Payment Which Loans
Center Pledged Operating Interest Balance as of Interest Debt Maturity Due on Can Be
As Collateral Partnership Rate 12/31/00(1) Payment(2) Service Date Maturity Prepaid(3)
- --------------------------- ----------- ------------ --------------- ------------ ---------- ------------ ----------- --------------
North Haven Crossing 100% 9.550% 6,740 644 1,225 Oct-2008 -- Oct-1998(30)
Northwoods Plaza.... 100% 9.750% 1,178 115 171 Jun-2012 -- --(31)
Perimeter Place..... 100% 10.625% 1,378 146 278 Jan-2008 -- Jan-2008(22)
Sand Lake Corners... 100% 7.846%(4) 14,000 1,098 1,098 Jun-2001 14,012 --
Seacoast Shopping Center 100% 9.750% 5,452 532 721 Sep-2002 5,110 Oct-1997(32)
Shenandoah Crossing. 100% 10.250% 509 52 83 Aug-2010 -- Aug-2000(19)
Springhurst Towne Center 100% 6.650% 22,532 1,498 2,179 Aug-2018 19,714 Aug-2004(35)
Suburban Plaza...... 100% 7.875% 8,546 673 870 Jan-2004 6,042 --(36)
Sutton Plaza........ 100% 7.860%(4) 12,039 894 894 Aug-2002 12,039 --
34th St. Crossing(33) 100% 10.625% 1,433 152 234 Dec-2010 -- Dec-2000(34)
Uvalde Plaza........ 75% 10.625% 660 70 133 Feb-2008 -- Feb-2008(22)
Valley Commons...... 100% 10.250% 879 90 142 Oct-2010 -- Oct-2000(19)
Willow Springs Plaza 100% 9.750% 4,567 445 934 Aug-2007 601 Aug-1997(32)
--------------
Community Centers Subtotal: 159,661
--------------
Construction Properties:
Asheville Mall Expansion 100% 7.947%(4) 24,322 1,933 1,933 Apr-2002 24,322 --
Coastal Way......... 100% 8.071%(4) 7,572 611 611 Dec-2002 7,572 --
Chesterfield Crossing 100% 7.811%(4) 7,093 554 554 Dec-2002 7,083 --
Creekwood Crossing.. 100% 8.140%(4) 10,303 839 839 Jul-2002 10,303 --
Gunbarrel Pointe.... 100% 8.125%(4) 12,087 982 982 Jan-2002 12,087 --
The Lakes Mall...... 90% 7.985%(4) 13,536 1,081 1,081 Mar-2002 9,739 --
Meridian Mall Expansion 100% 7.735%(4) 9,739 753 753 Aug-2003 --
--------------
Construction Properties Subtotal: 84,652
---------------
Other:
Park Place.......... 95% 10.000% 952 95 459 Apr-2003 -- --(9)
Other............... 75% 9.500% 167 15 18 Jun-2004 -- --
Credit Lines........ 100% 7.69%(37) 146,000 (37) 11,236 11,236 Various 146,000 --
--------------
Total: $ 1,522,893
==============
Operating Partnership's Share of Total: $ 1,451,564 (38)
(1) The amount listed includes 100% of the loan amount even though the Company
and the Operating Partnership may own less than 100% of the property.
(2) Interest has been computed by multiplying the annual interest rate by the
outstanding principal balance as of December 31, 2000.
(3) Unless otherwise noted, loans are prepayable at any time.
(4) The interest rate is floating at various spreads over LIBOR priced at the
rates in effect at December 31, 2000.
(5) Prepayment premium is greater of 1% or modified yield maintenance.
(6) Prepayment premium is the greater of 1% or yield maintenance after October
1, 2000.
(7) Prepayment premium is based on yield maintenance (not less than 1%) for any
prepayment prior to January, 1997; thereafter, the prepayment premium is
5%, decreasing by 1% per year to a minimum of 1%; there is no prepayment
premium during the last 120 days of the loan term.
(8) Prepayment premium is based on the greater of yield maintenance or 2%.
(9) Prepayment premium is the greater of 1% or yield maintenance.
(10) Prepayment premium is based on yield maintenance; there is no prepayment
premium after October 1, 2001.
(11) Prepayment premium is the greater of 1% or yield maintenance, none last 120
days.
(12) The loan is secured by a first mortgage lien on the land and improvements
comprising the Goody's anchor store and no other property.
(13) Prepayment premium is the greater of 1% or yield maintenance; there is no
prepayment premium after November 1, 2007.
(14) Interest is floating at 1 1/2% over prime priced at December 31, 2000. The
maturity date is 90 days after notice.
(15) Loan is closed to prepayment for the term. Lender shall adjust the interest
rate every 5th year of the loan. If borrower does not except the new rate
loan may be prepaid at that time without prepayment penalty.
(16) Prepayment penalty is based on yield maintenance.
(17) Prepayment premium is the greater of 1% or yield maintenance; there is no
prepayment premium during the last 120 days of the loan term.
(18) Prepayment premium is the greater of 1% or yield maintenance; there is no
prepayment premium after November 1, 2003.
(19) Prepayment premium is 5%, decreasing by 1% per year to a minimum of 2%
there is no prepayment premium during the last 120 days of the loan term.
(20) Lender has option to accelerate loan between March 1, 2001 and February 28,
2002; March 1, 2006 and February 28, 2007; and March 1, 2011 and February
28, 2012.
(21) Prepayment premium is 7%, decreasing by 1% per year to a minimum of 3%.
(22) Loan may not be prepaid.
(23) Open at 21/2% declining1/2of 1% per year beginning December 1999 to a
minimum of 1%.
(24) Lender may accelerate loan on July 1, 2007 unless Food Lion exercises an
extension option.
(25) Prepayment premium of 7% decreasing by 1% per year to a minimum of 2%;
there is no prepayment premium during the last six months of the loan term.
(26) Prepayment premium is 5%, decreasing 1% per year to a minimum of 1%; there
is no prepayment premium during the last two years of the loan term.
(27) Prepayment premium is the greater of 10% or 1/12 of the annual yield
difference before October 2014. Thereafter the prepayment premium is 1%.
(28) Loan may be prepaid after 9 years. The prepayment premium is the greater of
1% or yield maintenance.
(29) Lender may accelerate loan after January 1, 2008 unless Food Lion exercises
an extension option beyond January 1, 2008.
(30) Prepayment premium is the greater of 2% or yield maintenance before
October, 1998, afterwards it is the greater of 1% or yield maintenance.
(31) Prepayment premium is based on yield maintenance; there is no loan
prepayment premium during the last 120 days of the loan term.
(32) Prepayment premium is the greater of 1% or yield maintenance; there is no
loan prepayment premium during the last 90 days of the term.
(33) The note is secured by rent payable by the Food Lion Anchor store.
37
(34) Prepayment premium is 5%, decreasing by 1% per year to a minimum of 2%.
There is no loan prepayment premium during the last 90 days of the loan
term.
(35) The loan has a rate reset option in August of 2004, 2009 and 2014. The
loan can be prepaid in these years if the Company elects not to accept the
rate reset. The prepayment premium is the greater of 1% or yield
maintenance.
(36) Prepayment penalty is 7.875% until November 2001 then yield maintenance,
none last 120 days.
(37) Interest rates on the credit lines are at various spreads over LIBOR whose
weighted average interest rate is 7.69% with various maturities through
2004.
(38) Represents non-recourse indebtedness on Properties and reflects the less
than 100% ownership of the Company and the Operating Partnership with
respect to certain Properties subject to such indebtedness.
ITEM 3. LEGAL PROCEEDINGS.
The Company and the Operating Partnership are not currently involved in any
material litigation nor, to management's knowledge, is any material litigation
currently threatened against the Company, the Operating Partnership, the
Property Partnerships or the Properties, other than litigation arising in the
ordinary course of business, most of which is expected to be covered under
liability insurance policies held by the Company or the Operating Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On January 19, 2001 the Company held a special meeting of shareholders in
connection with the Jacobs transaction, at which special meeting the
shareholders:
- approved the issuance by the Operating Partnership to
Jacobs of up to 13.94 million special common units
(SCUs)(18,343,624 votes were cast for the proposal,
384,048 votes were cast against the proposal and 41,652
votes were withheld).
- adopted an amendment to the Company's certificate of
incorporation which, among other things, modified the
Company's share ownership limit to permit the Lebovitz
Group (as defined in the Company's certificate of
incorporation) and the Jacobs Group (as defined in the
proposed amendment) to beneficially or constructively
own in the aggregate up to 37.99% of the outstanding
shares of common stock of the Company (186,311,871
votes were cast for the proposal, 394,981 votes were
cast against the proposal and 62,473 votes were
withheld).
38
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
(a) Market Information
The principal United States market in which the Common Stock is traded is
the New York Stock Exchange.
The following table sets forth the high and low sales prices for the Common
Stock for each quarter of the Company's two most recent fiscal years.
2000 Quarter Ended High Low
- ---------------------------------- ---------------- -------------
March 31...................... $22.8750 $20.1250
June 30....................... 25.6875 20.5625
September 30.................. 25.8750 23.8750
December 31................... 25.3750 22.5000
1999 Quarter Ended High Low
- ---------------------------------- ---------------- -------------
March 31...................... $25.9375 $22.1250
June 30....................... 26.3750 22.6875
September 30.................. 27.0000 22.8125
December 31................... 24.7500 19.4375
(b) Holders
The approximate number of shareholders of record of the Common Stock was
651 as of March 20, 2001.
(c) Dividends
The following table sets forth the frequency and amounts of dividends
declared and paid for each quarter of the Company's two most recent fiscal
years.
Quarter Ended 2000 1999
- ---------------------------------- ----------- -----------
March 31..................... $ 0.5100 $ 0.4875
June 30...................... 0.5100 0.4875
September 30................. 0.5100 0.4875
December 31.................. 0.5100 0.4875
Future dividend distributions are subject to the Company's actual results
of operations, economic conditions and such other factors as the Board of
Directors of the Company deems relevant. The Company's actual results of
operations will be affected by a number of factors, including the revenues
received from the Properties, the operating expenses of the Company, the
Operating Partnership and the Property Partnerships, interest expense, the
ability of the anchors and tenants at the Properties to meet their obligations
and unanticipated capital expenditures.
39
ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected
fianacial data of the Company, which should be read in conjunction with the
finacial statments and notes therto.
Selected Financial Data
(In thousands, except per share data)
CBL & Associates Properties, Inc.
------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- --------- ----------
TOTAL REVENUES $356,488 $317,603 $254,640 $177,604 $146,805
TOTAL EXPENSES 280,027 250,139 203,001 135,200 111,012
---------- ---------- ---------- --------- ----------
INCOME FROM OPERATIONS 76,461 67,464 51,639 42,404 35,793
GAIN ON SALES OF REAL ESTATE ASSETS 15,989 8,357 4,183 6,040 13,614
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATES 3,684 3,263 2,379 1,916 1,831
MINORITY INTEREST IN EARNINGS:
Operating Partnership (28,507) (23,264) (16,258) (13,819) (15,468)
Shopping center properties (1,538) (1,225) (645) (508) (527)
---------- ---------- ---------- --------- ----------
INCOME BEFORE EXTRAORDINARY ITEM 66,089 54,595 41,298 36,033 35,243
EXTRAORDINARY LOSS ON EXTINGUISHMENT
OF DEBT (367) - (799) (1,092) (820)
---------- ---------- ---------- --------- ----------
NET INCOME 65,722 54,595 40,499 34,941 34,423
PREFERRED DIVIDENDS (6,468) (6,468) (3,234) - -
---------- ---------- ---------- --------- ----------
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS $ 59,254 $ 48,127 $ 37,265 $ 34,941 $ 34,423
========== ========== ========== ========= ==========
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary item $ 2.40 $ 1.95 $ 1.58 $ 1.51 $ 1.69
========== ========== ========== ========= ==========
Net income $ 2.38 $ 1.95 $ 1.55 $ 1.46 $ 1.65
========== ========== ========== ========= ==========
Weighted average common shares outstanding 24,881 24,647 24,079 23,895 20,890
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary item $ 2.38 $ 1.94 $ 1.56 $ 1.49 $ 1.68
---------- ---------- ---------- --------- ----------
Net income $ 2.37 $ 1.94 $ 1.53 $ 1.45 $ 1.64
========== ========== ========== ========= ==========
Weighted average common shares and potential 25,021 24,834 24,340 24,151 21,022
dilutive common shares outstanding
Dividends declared per share $ 2.04 $ 1.95 $ 1.86 $ 1.77 $ 1.68
December 31,
------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA:
Net investment in real estate assets $2,040,614 $1,960,554 $1,805,788 $1,142,324 $ 987,260
Total assets 2,115,565 2,018,838 1,855,347 1,245,025 1,025,925
Total debt 1,424,337 1,360,753 1,208,204 741,413 590,295
Minority interest 174,665 170,750 168,040 123,897 114,425
Shareholders' equity 434,825 419,887 415,782 330,853 272,804
OTHER DATA:
Cash flows provided by (used in):
Operating activities $ 117,814 $ 114,196 $ 89,123 $ 60,852 $ 54,789
Investing activities (127,073) (212,141) (571,332) (245,884) (218,016)
Financing activities 7,369 99,192 484,912 183,858 164,496
Funds from operations (FFO) 1
of the Operating Partnership 132,034 116,273 93,492 76,184 62,398
FFO applicable to the Company 79,495 78,304 64,941 54,597 43,052
(1) Please refer to Management's Discussion and Analysis of Financial
Condition and Results of Operations for the definition of FFO. FFO does
not represent cash flow from operations as defined by accounting
principles generally accepted in the United States and is not
necessarily indicative of the cash available to fund all cash
requirements. FFO is recomputed to exclude the add-back of development
costs charged to net income.
40
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with CBL & Associates
Properties, Inc. Consolidated Financial Statements and Notes thereto.
Information included herein may contain "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 results, financial and otherwise, may differ materially from the events
and results discussed in the forward-looking statements. We direct you to the
Company's other filings with the Securities and Exchange Commission, and
elsewere in this Annual Report on Form 10-K for a discussion of such risks and
uncertainties.
GENERAL BACKGROUND
On November 3, 1993, CBL & Associates Properties, Inc. (the "Company")
completed an initial public offering of 15,400,000 shares of common stock priced
at $19.50 per share (the "Offerings"). In connection with the Offerings, CBL &
Associates, Inc. and its affiliates contributed their interests in properties to
CBL & Associates Limited Partnership (the "Operating Partnership"). The Company
is indirectly the sole general partner and as of December 31, 2000, the majority
owner, of the Operating Partnership. As a result, the CBL & Associates
Properties, Inc. Consolidated Financial Statements and Notes thereto reflect the
consolidated financial results of the Operating Partnership, which included at
December 31, 2000, the operations of a portfolio of properties consisting of 26
regional malls, 15 associated centers, two power centers, 70 community centers,
an office building, joint venture investments in four regional malls and one
associated center, and income from seven mortgages (the"Properties"). As of
December 31, 2000, the Operating Partnership had under construction two malls,
one community center, one office building, one mall expansion, and owns options
to acquire certain shopping center development sites. The consolidated financial
statements also include the results of CBL & Associates Management, Inc. (the
"Management Company").
The Company classifies its regional malls into two categories - stabilized
malls which have completed their initial lease-up and new malls which are in
their initial lease-up phase. As of December 31, 2000 the new mall category was
comprised of Springdale Mall in Mobile, Alabama, which was acquired in September
1997 and is being redeveloped and retenanted; Bonita Lakes Mall in Meridian,
Mississippi, which opened in October 1997; Parkway Place in Huntsville, Alabama,
which was acquired in December 1998 and is currently being redeveloped; and
Arbor Place Mall in Atlanta (Douglasville), Georgia, which opened in October
1999.
On September 25, 2000, the Company entered into a series of agreements with
Jacobs Realty Investors Limited Partnership and certain of its affiliates and
partners ("Jacobs") pursuant to which the Company agreed to acquire from Jacobs
interests in 21 malls and two associated centers for total consideration of
approximately $1.3 billion. The transaction closed on January 31, 2001.
Additionally, in a separate transaction, the Company acquired the remaining 50%
interest in Madison Square Mall in Huntsville, Alabama. The purchase price was
comprised of $124.5 million in cash including closing costs of approximately $12
million; the assumption of $745.5 million in non-recourse mortgage debt; and the
issuance of approximately 12.2 million special common units (SCUs) in the
Operating Partnership. The cash portion was funded from a new $212 million
credit facility provided by a consortium of banks led by Wells Fargo. The
Company will close on the remainder of the Jacobs transaction in 2002, at which
time it will assume an additional $25.7 million of non-recourse mortgage debt
and issue an additional 499,733 SCUs.
41
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SALES
Mall shop sales, for those tenants who have reported, in the 26 stabilized
malls in the Company's portfolio, remained relatively the same on a comparable
per square foot basis as shown below:
Year Ended December 31,
----------------------------------
2000 1999
-------- -------
Sales per square foot $283.00 $283.75
Total sales volume in the mall portfolio, including new malls, increased
1.9% to $1.690 billion in 2000 from $1.659 billion in 1999.
The weighted average occupancy costs as a percentage of sales for the years
ended December 31, 2000, 1999 and 1998, for the stabilized malls (excluding
malls acquired in 1999 and 1998 from those years) were 11.9%, 11.5% and 11.1%,
respectively.
OCCUPANCY
Occupancy for the Company's overall portfolio increased, with a breakdown
by asset category as follows:
At December 31,
-------------------------------
2000 1999
----- -----
Stabilized malls 94.5% 94.5%
New malls (1) 90.4 91.8
Associated centers 94.9 93.2
Community centers 97.8 97.7
----- -----
Total portfolio 95.7% 95.6%
===== =====
(1) Excludes Parkway Place which is under redevelopment.
AVERAGE BASE RENTS
Average base rents for the Company's three portfolio categories was as
follows:
At December 31,
--------------------------------------------------
Percentage
2000 1999 Increase
-------- ------- ----------
Malls (1)........................... $21.57 $20.73 4.1%
Associated centers.................. 9.88 9.78 1.0
Community centers................... 8.85 8.32 6.4
(1) Excludes Parkway Place which is under redevelopment.
42
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LEASE ROLLOVERS
For spaces previously occupied, the Company achieved the following results
from rollover leasing for the year ended December 31, 2000, over and above the
base and percentage rent paid by the previous tenant:
Per Square Per Square
Foot Rent Foot Rent Percentage
Prior Lease (1) New Lease (2) Increase
--------------- ------------- -----------
Malls.............................. $23.36 $25.75 10.2%
Associated centers................. 9.88 11.09 12.2
Community centers.................. 10.34 11.53 11.5
(1) - Rental achieved for spaces previously occupied at the end of the lease including
percentage rent.
(2) - Average base rent over the term of the lease.
In 2000 and 1999, revenues from the malls represented 77.3% and 76.9%,
respectively, of total revenues from consolidated and unconsolidated properties;
revenues from associated centers represented 4.1% and 3.7%; revenues from
community centers represented 17.5% and 17.8%; and revenues from mortgages and
the office building represented 1.1% and 1.6%. Accordingly, revenues and results
of operations are disproportionately impacted by the malls' achievements.
The shopping center business is somewhat seasonal in nature with tenant
sales achieving the highest levels during the fourth quarter because of the
holiday season. The malls earn most of their "temporary" rents (rents from
short-term tenants) during the holiday period. Thus, occupancy levels and
revenue production are generally the highest in the fourth quarter of each year.
Results of operations realized in any one quarter may not be indicative of the
results likely to be experienced over the course of the entire year.
COMPARISON OF RESULTS OF OPERATIONS FOR 2000 TO THE RESULTS OF OPERATIONS
FOR 1999
Total revenues in 2000 increased by $38.9 million, or 12.2%, to $356.5
million compared with $317.6 million in 1999. Of this increase, minimum rents
increased by $22.4 million, or 11.1%, to $225.5 million compared with $203.0
million in 1999, percentage rents increased by $1.4 million, or 19.1%, to $8.8
million compared with $7.4 million in 1999; other rents increased by $0.8
million, or 14.8%, to $6.2 million compared with $5.4 million in 1999; and
tenant reimbursements increased by $17.0 million, or 18.9%, to $106.8 million
compared with $89.8 million in 1999.
Approximately $22.3 million of the increase in revenues resulted from the
ten new centers opened or acquired during 1999 and 2000. The centers opened or
acquired in 1999 and contributing to 2000 increases are Arbor Place Mall in
Atlanta (Douglasville) Georgia; The Landing at Arbor Place in Atlanta
(Douglasville) Georgia; York Galleria, in York, Pennsylvania; Sand Lake Corner
in Orlando, Florida; and Fiddler's Run in Morganton, North Carolina, which were
sold in 2000. The six new centers opened or acquired in 2000 are fully described
in the Developments, Acquisitions and Expansions section of the annual report.
Improved occupancies and operations and increased rents in the Company's
operating portfolio generated approximately $21.8 million of the increased
revenues, with the largest increases derived from Rivergate Mall in Nashville,
Tennessee, and Meridian Mall in Lansing, Michigan. These increases were offset
by a decrease in revenues of $2.2 million from 13 community centers sold in 2000
and a decrease of $3.1 million in management and development fees relating to a
one time fee earned in the Company's co-development program in 1999.
Management, development and leasing fees decreased in 2000 by $3.6 million,
or 46.7%, to $4.2 million compared with $7.8 million in 1999. Most of the
decrease was due to a one-time fees totaling $3.1 million earned in the
co-development program in 1999. The balance of the decrease was due to the
reduction in continuing co-development fees. Interest and other income increased
in 2000 by $0.9 million, or 21.4%, to $5.1 million compared with $4.2 million in
1999. This increase resulted primarily from the ten new centers opened or
acquired over the past 24 months and interest income on the proceeds from
community center sales held in escrow during the year.
43
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Property operating expenses, including real estate taxes and maintenance
and repairs, increased in 2000 by $10.7 million, or 11.1%, to $106.9 million
compared with $96.2 million in 1999. This increase is primarily the result of
the ten new centers opened or acquired over the past 24 months. The Company's
cost recovery ratio, which includes redistribution of utilities, increased to
99.1% in 2000 compared with 93.3% in 1999 due to increases in occupancy at the
end of 1999 and continued through calendar year 2000.
Depreciation and amortization increased in 2000 by $7.1 million, or 13.2%,
to $60.6 million compared with $53.5 million in 1999. This increase resulted
primarily from depreciation and amortization on the ten new centers opened or
acquired over the past 24 months and the Company's capital investment in
operating properties.
Interest expense increased in 2000 by $12.1 million, or 14.7%, to $94.6
million compared with $82.5 million in 1999. This increase is primarily due to
increased interest expense on the ten new centers opened or acquired over the
past 24 months offset by reductions in interest expense on debt retired with the
proceeds from the sales of properties.
General and administrative expenses increased in 2000 by $1.6 million, or
9.6%, to $17.8 million compared with $16.2 million in 1999. A portion of this
increase was due to increases in general overhead in preparation to assume
management of The Richard E. Jacobs Group's interest's in 21 malls and two
associated centers that were subsequently acquired in January 2001.
Gain on sales of real estate assets was $16.0 million in 2000 compared with
$8.4 million in 1999. The majority of the gain in 2000 is from the $10.5 million
gain on 13 community centers sold in 2000. The centers sold were: Centerview
Plaza in China Grove, North Carolina; Clark's Pond in South Portland, Maine;
Dorchester Crossing in Charleston, South Carolina; Fiddler's Run in Morganton,
North Carolina; Genesis Square in Crossville, Tennessee; Hollins Plantation in
Roanoke, Virginia; Karns Korner in Knoxville, Tennessee; Lakeshore Station in
Gainsville, Georgia; Sparta Crossing in Sparta, Tennessee; Sterling Creek
Commons in Portsmouth, Virginia; Tyler Square in Radford, Virginia; University
Crossing in Pueblo, Colorado; and Wildwood Plaza in Salem, Virginia. Additional
gains were generated by outparcel and pad sales at two centers under development
in 2000, Creekwood Crossing in Bradenton, Florida and The Lakes Mall in
Muskegon, Michigan, as well as outparcel sales at Sand Lake Corners in Orlando,
Florida, which opened in 1999.
COMPARISON OF RESULTS OF OPERATIONS FOR 1999 TO THE RESULTS OF OPERATIONS
FOR 1998
Total revenues in 1999 increased by $63.0 million, or 24.7%, to $317.6
million compared with $254.6 million in 1998. Of this increase, minimum rents
increased by $36.4 million, or 21.8%, to $203.0 million compared with $166.6
million in 1998, percentage rents increased by $2.6 million, or 54.8%, to $7.4
million compared with $4.8 million in 1998, other rents increased by $1.4
million, or 35.8%, to $5.4 million compared with $4.0 million in 1998; and
tenant reimbursements increased by $15.9 million, or 21.6%, to $89.8 million
compared with $73.8 million in 1998.
Approximately $11.3 million of the increase in revenues resulted from the
five new centers opened or acquired during 1999, and $35.9 million of the
increase in revenues resulted from the ten new centers opened or acquired during
the past 24 months. The centers opened in 1998 and contributing to 1999
increases are Sterling Creek Commons in Portsmouth, Virginia, and 641,000 square
feet of expansions. The centers acquired in 1998 and contributing to 1999
increases are Stroud Mall in Stroudsburg, Pennsylvania; Hickory Hollow Mall,
Rivergate Mall, Courtyard at Hickory Hollow, Village at Rivergate, and Lions
Head Village, all in Nashville, Tennessee; Meridian Mall in Lansing, Michigan;
and Janesville Mall in Janesville, Wisconsin. The five new centers opened or
acquired in 1999 are Arbor Place Mall in Atlanta (Douglasville), Georgia; The
Landing at Arbor Place in Atlanta (Douglasville), Georgia; Sand Lake Corners in
Orlando, Florida; and Fiddler's Run in Morganton, North Carolina. Fiddler's Run
was sold in March 2000 almost a year after it had opened. Improved occupancies
and operations and increased rents in the Company's operating portfolio
generated approximately $12.4 million of the increased revenues, with the
largest increases from Hamilton Place in Chattanooga, Tennessee, and St. Clair
Square in Fairview Heights, Illinois. New revenues of $3.4 million were from
one-time fees earned in the Company's co-development program.
44
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management, development and leasing fees increased in 1999 by $5.1 million,
or 188.9%, to $7.8 million compared with $2.7 million in 1998. Most of the
increase was due to one-time fees totaling $3.4 million earned in the
co-development program. The balance of the increase was provided from the
Company's managed properties and development operations. Interest and other
income increased in 1999 by $1.5 million, or 55.0%, to $4.2 million compared
with $2.7 million in 1998. This increase resulted primarily from the 15 new
centers opened or acquired over the past 24 months.
Property operating expenses, including real estate taxes and maintenance
and repairs, increased in 1999 by $16.0 million, or 20.0%, to $96.2 million
compared with $80.2 million in 1998. This increase is primarily the result of
the 15 new centers opened or acquired over the past 24 months. The Company's
cost recovery ratio increased to 93.3% in 1999 compared with 92.1% in 1998.
Depreciation and amortization increased in 1999 by $10.0 million, or 23.0%,
to $53.5 million compared with $43.5 million in 1998. This increase resulted
primarily from depreciation and amortization on the 15 new centers opened or
acquired over the past 24 months.
Interest expense increased in 1999 by $15.2 million, or 22.5%, to $82.5
million compared with $67.3 million in 1998. This increase is primarily due to
increased interest expense on the 15 new centers opened or acquired over the
past 24 months.
General and administrative expenses increased in 1999 by $4.4 million, or
36.9%, to $16.2 million compared with $11.8 million in 1998. This increase was
due to increases in state tax expense, payroll, and general overhead.
Gain on sales of real estate assets was $8.4 million in 1999 compared with
$4.2 million in 1998. The majority of the gain in 1999 is from outparcel and pad
sales at centers under development in 1999: Chesterfield Crossing in Richmond,
Virginia; Arbor Place Mall and The Landing at Arbor Place in Atlanta
(Douglasville), Georgia; and Sand Lake Corners in Orlando, Florida. The gain on
sales in 1999 also includes gain on the sale of two centers, North Park Plaza in
Richmond, Virginia, and a free-standing Regal Cinema in Jacksonville, Florida.
LIQUIDITY AND CAPITAL RESOURCES
The principal uses of the Company's liquidity and capital resources have
historically been for property development, acquisitions, expansion and
renovation programs, and debt repayment. To maintain its qualification as a real
estate investment trust under the Internal Revenue Code, the Company currently
is required to distribute to its shareholders at least 90% of its "Real Estate
Investment Trust Taxable Income" as defined in the Internal Revenue Code of
1986, as amended (the "Code").
As of December 31, 2000, the Company had $93.6 million available in
unfunded construction loans to be used for completion of construction projects
and replenishment of working capital previously used for construction.
Additionally, as of December 31, 2000, the Company had obtained revolving credit
lines and term loans totaling $240 million, of which $99.0 million was
available. Also, as a publicly traded company, the Company has access to capital
through both the public equity and debt markets. The Company has filed a shelf
registration statement authorizing shares of the Company's common stock,
preferred stock, and warrants to purchase shares of the Company's common stock
with an aggregate public offering price of up to $350 million, with $278 million
available as of December 31, 2000. The Company anticipates that the combination
of these sources will, for the foreseeable future, provide adequate liquidity to
enable it to continue its capital programs substantially as in the past and make
distributions to its shareholders in accordance with the Code's requirements
applicable to real estate investment trusts.
45
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management expects to refinance the majority of the mortgage notes payable
maturing over the next five years with replacement loans.
The Company's capital structure at December 31, 2000, included property
specific mortgages, which are generally non-recourse, revolving lines of credit,
common stock, preferred stock, and a minority interest in the Operating
Partnership. The minority interest in the Operating Partnership represented the
25.5% ownership interest in the Operating Partnership held on December 31, 2000
by certain of the Company's current and former executive and senior officers .
Additionally, these current and former executive and senior officers and the
Company's directors own approximately 2.0 million shares of the outstanding
common stock of the Company, for a combined total interest in the Operating
Partnership on December 31, 2000 of approximately 30.9%. Ownership interests
issued to fund acquisitions in 1998 and 1999 represented on December 31, 2000 a
6.5% interest in the Operating Partnership. Assuming the exchange of all limited
partnership interests in the Operating Partnership for common stock, there would
have been approximately 36.9 million shares of common stock outstanding with a
market value of approximately $933.9 million at December 31, 2000 (based on the
closing price of the Company's common stock of $25.3125 per share on December
31, 2000). The Company's total market equity is $992.8 million at December 31,
2000, including 2.9 million shares of preferred stock (based on the closing
price of its preferred stock of $20.50 per share on December 31, 2000). The
Company's current and former executive and senior officers' ownership interests
had a market value of approximately $288.3 million at December 31, 2000.
Mortgage debt consists of debt on certain consolidated properties as well
as debt on four properties in which the Company owns non-controlling interests,
accounted for under the equity method of accounting. At December 31, 2000, the
Company's share of funded mortgage debt on its consolidated properties (adjusted
for minority investors' interests in seven properties) was $883.2 million and
its pro rata share of mortgage debt on unconsolidated properties (accounted for
under the equity method) was $42.8 million for total fixed-rate debt obligations
of $926.0 million with a weighted average interest rate of 7.5%. Consolidated
and unconsolidated variable-rate debt accounted for $525.6 million with a
weighted average interest rate of 7.2% (after application of swap instruments).
Total debt obligations amounted to $1.452 billion. Variable-rate debt accounted
for approximately 36.2% of the Company's total debt and 21.5% of its total
capitalization. Through the execution of interest rate swap agreements, the
Company has fixed the interest rates on $473.0 million of variable-rate debt at
a weighted average interest rate of 7.1%. Of the Company's remaining
variable-rate debt of $52.6 million, interest rate caps in place of $50.0
million leave $2.6 million of debt subject to variable rates on construction
properties and no debt subject to variable rates on operating properties. There
were no fees charged to the Company related to these swap agreements. The
Company's interest rate swap and cap agreements in place at December 31, 2000,
are as follows:
Amount Fixed LIBOR
(in millions) Swap/Cap Component Effective Date Expiration Date
------------- -------- ----------- -------------- ---------------
$100 swap 6.405% 01/27/2000 01/29/2001
75 swap 6.610% 02/24/2000 02/24/2001
50 swap 5.700% 06/11/1998 06/15/2001
38 swap 5.730% 06/26/1998 06/30/2001
80 swap 5.490% 09/01/1998 09/01/2001
80 swap 5.830% 12/22/2000 08/30/2003
50 cap 7.500% 09/29/2000 10/01/2001
Subsequent to year end, the Company executed new interest rate swap
agreements totaling $140 million at a weighted-average LIBOR interest rate of
5.051%.
The outstanding balance of $146 million on the Company's credit facilities
had a weighted- average interest rate of 7.7% (before applied swap instruments)
at December 31, 2000. Each of the credit facilities includes covenants that
require the Company to maintain minimum net worth levels, maintain interest and
debt coverage ratios, maintain total obligations to capitalized value ratios,
and maintain limitations on variable-rate debt. The credit facilities also
require that the Company's senior management continue to consist of certain
individuals and to
46
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
maintain certain levels of minority ownership in the Operating Partnership.
The First Tennessee Bank credit facility provides that if the Company completes
an offering of its securities, not less than 75% of the net proceeds of any such
offering will be applied for the benefit of the Operating Partnership. The
following table sets forth the Company's credit facilities at December 31, 2000
(in millions):
Credit Facility Amount Current Balance Maturity
- ---------------- -------- --------------- -----------
SunTrust $10 $10 April 2002
SouthTrust 20 20 March 2004
First Tennessee 80 25 June 2002
Wells Fargo 130 91 September 2002
During 2000 the Company closed permanent loans of $174 million at a
weighted average interest rate of 8.24%. The details of those loans are: in June
a $9.9 million loan on Westgate Crossing in Spartanburg, South Carolina, at an
interest rate of 8.42%; in July a $5.2 million loan on Plaza Del Sol Mall in Del
Rio, Texas, at an interest rate of 9.15% (the Company's share of this loan was
$2.6 million); in August a $74.5 million loan on Burnsville Center in
Burnsville, Minnesota, at an interest rate of 8.0%; in November a loan of $32.5
million on Stroud Mall in Stroudsburg, Pennsylvania, at an interest rate of
8.42%; and also in November a $52.0 million loan on York Galleria in York,
Pennsylvania, at an interest rate of 8.34%. The proceeds of these loans were
used to repay existing variable rate indebtedness and to fund distribution to
equity partners.
Based on the debt (including construction projects) and the market value of
equity described above, the Company's debt to total market capitalization (debt
plus market value equity) ratio was 59.4% at December 31, 2000, compared to
63.0% at December 31, 1999.
On January 31, 2001, the Company, assumed in connection with the Jacobs
acquisition total debt obligations of $745.5 million, including permanent debt
of $661.5 million (adjusted for minority interest in one property);
variable-rate debt of $12.5 million; and its pro rata share of mortgage debt on
unconsolidated properties (accounted for under the equity method) of $71.5
million. In addition, the Company closed a $212 million unsecured credit
facility provided by a consortium of banks led by Wells Fargo. The outstanding
balance under this facility was $115 million at February 28, 2001. Of the
revolving component of this facility, $97 million is still available and will be
used to fund capital improvements in certain of the acquired properties.
DEVELOPMENT, EXPANSIONS AND ACQUISITIONS
During 2000, the Company opened and acquired approximately 1,236,000 square
feet of new retail properties consisting of the following:
Project Name Location Total GLA Anchors
- ---------------------------- ----------------------------- ---------- -----------------------
ACQUISITION
Marketplace at Flower Mound Dallas (Flower Mound), Texas 119,000 AMC Theater, Winn Dixie
OPENINGS
Sutton Plaza Expansion Mt. Olive, New Jersey 28,000 A & P Food Market
Coastal Way Spring Hill, Florida 177,000 Belk, Sears
Sand Lake Corners Expansion Orlando, Florida 38,000 Staples
Chesterfield Crossing Richmond, Virginia 406,000 Home Depot, Wal*Mart
Gunbarrel Pointe Chattanooga, Tennessee 195,000 Goody's, Target
47
Asheville Mall Expansion Asheville, North Carolina 143,000 Belk, Dillards
Meridian Mall Lansing (Okemos), Michigan 85,000 Jacobson's
Springdale Mall Mobile, Alabama 45,000 Carmike
As of February 28, 2001, the Company had approximately 1,901,000 square
feet under construction consisting of:
Project Name Location Total GLA Opening Date
- --------------------------- ----------------------------- ---------- ---------------
Meridian Mall Expansion Lansing (Okemos), Michigan 93,000 March 2001
Gunbarrel Pointe - Kohls Chattanooga, Tennessee 87,000 March 2001
Creekwood Crossing Bradenton, Florida 404,000 April 2001
The Lakes Mall Muskegon, Michigan 558,000 August 2001
CBL Center Chattanooga, Tennessee 128,000 January 2002
Parkway Place Mall Huntsville, Alabama 631,000 October 2002
On January 31, 2001, the Company acquired Jacobs interests in 21 malls and
two associated centers. The total gross leasable area of the 23 properties was
19.2 million square feet, or an average gross leasable area of 914,000 square
feet per mall. The gross leasable area of the mall stores in the Jacobs
properties was approximately 5.9 million square feet. The malls are located in
middle markets predominantly in the Southeast and the Midwest. Additionaly, the
Company acquired the remaing 50% interest in Madison Square Mall in Huntsville,
Alabama.
The Company has also entered into a number of option agreements for the
development of future regional malls and community centers. Except for these
projects and as further described below, the Company currently has no other
capital commitments.
It is management's expectation that the Company will continue to have
access to the capital resources necessary to expand and grow its business.
Future development and acquisition activities will be undertaken by the Company
as suitable opportunities arise. Such activities are not expected to be
undertaken unless adequate sources of financing are available and a satisfactory
budget with targeted returns on investment has been internally approved.
The Company will fund its major development, expansion and acquisition
activity with its traditional sources of construction and permanent debt
financing as well as from other debt and equity financings, including public
financings, and its credit facilities.
OTHER CAPITAL EXPENDITURES
Management prepares an annual capital expenditures budget for each property
which is intended to provide for all necessary recurring capital improvements
and maintenance items. Management believes that its annual operating reserve for
maintenance and recurring capital improvements as well as reimbursements from
tenants will provide the necessary funding for such requirements. The Company
intends to distribute approximately 50% to 90% of its funds from operations with
the remaining 10% to 50% to be held as a reserve for capital expenditures and
continued growth opportunities.
Major tenant finish costs for currently vacant space are expected to be
funded with working capital, operating reserves, or revolving lines of credit.
Funds invested for tenant finish costs are expected to earn a return on that
investment.
48
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the year ended December 31, 2000, revenue generating capital
expenditures, or tenant allowances for improvements, were $10.0 million. These
capital expenditures generate a return through increased rents from these
tenants over the term of their leases. Revenue enhancing capital expenditures,
or remodeling and renovation costs, were $7.4 million, the majority of which was
for the renovation of Asheville Mall in Asheville, North Carolina, and three
community centers. Revenue neutral capital expenditures, such as parking lot and
roof repairs that are recovered from the tenants, were $9.6 million in 2000.
Environmental Matter
The Company believes that the Properties, with the exception of Parkway
Place in Huntsville, Alabama, are in compliance in all material respects with
all federal, state and local ordinances and regulations regarding the handling,
discharge, and emission of hazardous or toxic substances. At Parkway Place
asbestos abatement will occur in portions of the existing mall during demolition
which will be completed by the end of the second quarter of 2001. The Company
has not been notified by any governmental authority and is not otherwise aware
of any material noncompliance, liability, or claim relating to hazardous or
toxic substances in connection with any of its present or former properties. The
Company has not recorded in its financial statements any material liability in
connection with environmental matters.
Cash Flows
Cash flows provided by operating activities for 2000 increased by $3.6
million, or 3.2%, to $117.8 million from $114.2 million in 1999. This increase
was primarily due to increases in cash provided from the operations of ten new
centers opened or acquired in the last 24 months offset by decreases in cash
flow from the sales of properties. Cash flows used in investing activities for
2000 decreased by $85.1 million, or 40.1%, to $127.1 million compared with
$212.1 million in 1999. This decrease was primarily due to the smaller number of
acquisitions in 2000 compared with the number of acquisitions in 1999. Cash
flows provided by financing activities for 2000 decreased by $91.8 million, or
92.6%, to $7.4 million from $99.2 million in 1999. This decrease is primarily
due to decreased borrowings related to the acquisition program and the
retirement of debt with proceeds from sales of the properties.
Impact of Inflation
In the last three years, inflation has not had a significant impact on the
Company because of the relatively low inflation rate. Substantially all tenant
leases do, however, contain provisions designed to protect the Company from the
impact of inflation. Such provisions include clauses enabling the Company to
receive percentage rentals based on tenants' gross sales, which generally
increase as prices rise, and/or escalation clauses, which generally increase
rental rates during the terms of the leases. In addition, many of the leases are
for terms of less than ten years which may enable the Company to replace
existing leases with new leases at higher base and/or percentage rentals if
rents from the existing leases are below the then-existing market rate. Most of
the leases require the tenants to pay their share of operating expenses,
including common area maintenance, real estate taxes and insurance, thereby
reducing the Company's exposure to increases in costs and operating expenses
resulting from inflation.
New Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended, ("SFAS No. 133")
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement; and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.
49
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company has determined that a portion of its derivative instruments
(swap agreements and an interest rate cap agreement) in place are ineffective as
defined by SFAS No. 133. The terms of ineffective derivative instruments expire
in 2001, thus while the Company may experience some volatility in earnings in
interim periods, there will be no effect to current earnings in the Company's
financial statements for the year ended December 31, 2001. If the Company had
implemented SFAS No. 133 as of December 31, 2000, ineffective derivative
instruments would have increased total assets by $514,000 and would have
increased net income by $514,000. Effective derivative instruments would have
increased liabilities by $262,000 and comprehensive income, also recorded on the
balance sheet, would have decreased by $262,000.
Funds from Operations
Management believes that Funds from Operations ("FFO") provides an
additional indicator of the financial performance of the Properties. FFO is
defined by the Company as net income (loss) before depreciation of real estate
assets, gains or losses on sales of real estate and gains or losses on
investments in marketable securities. FFO also includes the Company's share of
FFO in unconsolidated properties and excludes minority interests' share of FFO
in consolidated properties other than the Operating Partnership. The Company
computes FFO in accordance with the National Association of Real Estate
Investment Trusts ("NAREIT") recommendation concerning finance costs and
non-real estate depreciation. The Company excludes gains or losses on outparcel
sales, even though NAREIT permits their inclusion when calculating FFO. Gains or
losses on outparcel sales would have added to FFO $5.4 million in 2000 compared
with $8.4 million in 1999.
The use of FFO as an indicator of financial performance is influenced not
only by the operations of the Properties, but also by the capital structure of
the Operating Partnership and the Company. Accordingly, management expects that
FFO will be one of the significant factors considered by the Board of Directors
in determining the amount of cash distributions the Operating Partnership will
make to its partners (including the Company). Management also believes that FFO
is a widely used measure of the operating performance of REITs and provides a
relevant basis for comparison among companies. FFO does not represent cash flow
from operations as defined by accounting principles generally accepted in the
United States ("GAAP"), is not necessarily indicative of cash from operations
available to fund all cash flow needs, and should not be considered as an
alternative to net income for purposes of evaluating the Company's operating
performance or to cash flows as a measure of liquidity.
Effective January 1, 2000, NAREIT clarified FFO to include all operating
results - recurring and non-recurring - except those results defined as
"extraordinary items" under accounting principles generally accepted in the
United States. The Company implemented this clarification in the first quarter
of 2000 and no longer adds back to FFO development costs charged to net income.
This amount was $127,000 for the year ended December 31, 2000. For comparatice
purposes, the Company has recomputed its 1999 FFO herein to exclude the add-back
of development costs charged to net income of $1,674,000.
In 2000, FFO increased by $15.8 million, or 13.6%, to $132.0 million
compared with $116.3 million in 1999. The increase in FFO was primarily
attributable to the continuing increase in revenues and income from operations
from ten new developments and acquisitions, and increases in occupancy levels
and higher rents in the Company's stabilized portfolio offset by FFO decreases
from the sales of thirteen properties.
50
CBL & ASSOCIATS PROPERTIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company's calculation of FFO is as follows (in thousands):
Three Months Ended Year Ended
December 31, December 31,
---------------------------------------------------------------
2000 1999 2000 1999
------------- --------------- -------------- ---------------
Income from operations............................ $ 20,622 $ 17,765 $ 76,461 $ 67,464
ADD:
Depreciation and amortization
from consolidated properties................. 15,644 14,676 60,646 53,551
Income from operations of
unconsolidated affiliates . ................. 1,099 844 3,684 3,263
Depreciation and amortization from
unconsolidated affiliates.................... 288 368 1,511 1,619
SUBTRACT:
Minority investors' share of income
from operations.............................. (516) (284) (1,538) (1,225)
Minority investors' share of depreciation
and amortization.............................. (245) (212) (981) (920)
Depreciation and amortization of non-real
estate assets and finance costs.............. (301) (276) (1,281) (1,011)
Preferred dividends............................... (1,617) (1,617) (6,468) (6,468)
------------- --------------- -------------- ---------------
TOTAL FUNDS FROM OPERATIONS....................... $ 34,974 $ 31,264 $ 132,034 $ 116,273
============= =============== ============== ===============
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has managed the market risk for its variable rate debt with
derivative financial instruments. The derivative instruments are described in
the Liquidity and Capital Resources section in Item 7 above and in Note 8 to the
Financial Statements.
The fair value of the Company's long term debt is estimated based on
discounted cash flows at interest rates that management believes reflects the
risks associated with long term debt of similar risk and duration.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to the Index to Financial statements contained in Item 14
on page 56.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Incorporated herein by reference from the Company's definitive proxy
statement filed on March 29, 2001 with the Securities and Exchange Commission
(the "Commission") with respect to its Annual Meeting of Stockholders to be held
on May 2, 2001.
51
ITEM 11. EXECUTIVE COMPENSATION.
Incorporated herein by reference from the Company's definitive proxy
statement filed on March 29, 2001 with the Commission with respect to its Annual
Meeting of Stockholders to be held on May 2, 2001.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated herein by reference from the Company's definitive proxy
statement filed on March 29, 2001 with the Commission with respect to its Annual
Meeting of Stockholders to be held on May 2, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated herein by reference from the Company's definitive proxy
statement filed on March 29, 2001 with the Commission with respect to its Annual
Meeting of Stockholders to be held on May 2, 2001.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(1) Financial Statements Page Number
Report of Independent Public Accountants 59
CBL & Associates Properties, Inc. Consolidated Balance
Sheets as of December 31, 2000 and 1999. 60
CBL & Associates Properties, Inc. Consolidated
Statements of Operations for the Years Ended
December 31, 2000, 1999 and 1998 61
CBL & Associates Properties, Inc. Consolidated
Statements of Shareholders' Equity for the Years
Ended December 31, 2000, 1999 and 1998 62
CBL & Associates Properties, Inc. Consolidated
Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998 63
Notes to Financial Statements 64
(2) Financial Statement Schedules
Schedule II Allowance For Credit Losses 78
Schedule III Real Estate and Accumulated Depreciation 79
Schedule IV Mortgage Loans on Real Estate 88
Financial Statement Schedules not listed herein are either not required or
are not present in amounts sufficient to require submission of the schedule or
the information required to be included therein is included in the Company's
Consolidated Financial Statements in item 14 or are reported elsewhere.
52
(3) Exhibits
Exhibit
Number Description
3.1 -- Amended and Restated Certificate of Incorporation of the Company(a)
3.2 -- Certificate of Amendment to the Amended & Restated Certificate
of Incorporation of the Company (b)
3.3 -- Amended and Restated Bylaws of the Company(a)
4 -- See Amended and Restated Certificate of Incorporation of the
Company, relating to the Common Stock(a)
10.1 -- Partnership Agreement of the Operating Partnership(a)
10.2 -- Property Management Agreement between the Operating Partnership
and the Management Company(a)
10.3 -- Property Management Agreement relating to Retained Properties(a)
10.4.1 -- CBL & Associates Properties, Inc. 1993 Stock Incentive Plan(a)+
10.4.2 -- Non-Qualified Stock Option Agreement, dated May 10, 1994, for
Charles B. Lebovitz+
10.4.3 -- Non-Qualified Stock Option Agreement, dated May 10, 1994, for
John N. Foy+
10.4.4 -- Non-Qualified Stock Option Agreement, dated May 10, 1994, for
Ben S. Landress+
10.4.5 -- Non-Qualified Stock Option Agreement, dated May 10, 1994, for
Stephen D. Lebovitz+
10.4.6 -- Stock Restriction Agreement, dated December 28, 1994, for
Charles B. Lebovitz+
10.4.7 -- Stock Restriction Agreement, dated December 2, 1994, for
John N. Foy+
10.4.8 -- Stock Restriction Agreement, dated December 2, 1994, for
Ben S. Landress+
10.4.9 -- Stock Restriction Agreement, dated December 2, 1994, for
Stephen D. Lebovitz+
10.5 -- Indemnification Agreements between the Company and the Management
Company and their officers and directors(a)
10.6.1 -- Employment Agreement for Charles B. Lebovitz(a)+
10.6.2 -- Employment Agreement for John N. Foy(a)+
10.6.3 -- Employment Agreement for Ben S. Landress(a)+
53
10.6.4 -- Employment Agreement for Stephen D. Lebovitz(a)+
10.7 -- Subscription Agreement relating to purchase of the Common
Stock and Preferred Stock of the Management Company(a)
10.8 -- Option Agreement relating to certain Retained Properties(a)
10.9 -- Option Agreement relating to Outparcels(a)
10.10.1 -- Property Partnership Agreement relating to Hamilton Place(a)
10.10.2 -- Property Partnership Agreement relating to CoolSprings
Galleria(a)
10.11.1 -- Acquisition Option Agreement relating to Hamilton Place(a)
10.11.2 -- Acquisition Option Agreement relating to the Hamilton Place
Centers(a)
10.12.3 -- Acquisition Option Agreement relating to the Office Building(a)
10.13 -- Loan agreement with South Trust Bank dated January 15 , 1998.(d)
10.14 -- Amended and restated Loan Agreement between CBL & Associates
Properties , Inc. and First Tennessee Bank National Association
Dated June 12, 1998 (e)
10.15 -- First Amendment To Third Amended And Restated Credit Agreement and
Third Amended And Restated Credit Agreement between CBL &
Associates Properties, Inc. and Wells Fargo Bank, National
Association, dated August 4, 1998 (e)
10.16 -- Master Contribution Agreement, dated as of September 25, 2000, by
and among the Registrant, CBL & Associates Limited Partnership,
Jacobs Realty Investors Limited Partnership, Richard E. Jacobs,
solely as Trustee for the Richard E. Jacobs Revocable Living
Trust, and Richard E. Jacobs, Solely as Trustee for the David H.
Jacobs Marital Trust. (f)
10.17 -- Press Release of the Registrant, dated January 31, 2001. (g)
10.18 -- First Amendment to Second Amended and Restated Agreement of
Limited Partnership of CBL & Associates Limited Partnership. (g)
10.19 -- Terms of Series J Special Common Units of CBL & Associates Limited
Partnership, pursuant to Article 4.4 of the Second Amended and
Restated Partnership Agreement of CBL & Associates Limited
Partnership. (g)
10.20 -- Certificate of Amendment of Amended and Restated Certificate of
Incorporation of the Registrant. (g)
10.21 -- Share Ownership Agreement, dated as if January 31, 2001, by
and among the Registrant, CBL & Associates, Inc., LebFam, Inc.
Charles B. Lebovitz, Stephen D. Lebovitz; Jacobs Realty Investors
Limited Partnership, Richard E. Jacobs, solely as trustee for the
Richard E. Jacobs Revocable Living Trust and Richard E. Jacobs
solely as trustee for the David H. Jacobs Marital Trust. (g)
54
10.22 -- Registration Rights Agreement, dated as of January 31, 2001 by
and between the Registrant and the Holders of SCU's listed on
Schedule 1 thereto. (g)
10.23 -- Registration Rights Agreement, dated as of January 31, 2001 by
and between the Registrant and Frankel Midland Limited
Partnership. (i)
10.24 -- Registration Rights Agreement, dated as of January 31, 2001 by
and between the Registrant and Hess Abroms Properties of
Huntsville. (g)
10.25 -- Loan Agreement, as of the January 31, 2001, by and between CBL
& Associates Limited Partnership, Wells Fargo Bank, National
Association, Fleet National Bank, U.S. Bank National Association,
Commerzbank AG, New York And Grand Cayman Branches, and Keybank
National Association, together certain other lenders parties
thereto pursuant to Section 8.6 thereof. (g)
21 -- Subsidiaries of the Company
23 -- Consent of Arthur Andersen LLP
24 -- Power of Attorney
(a) Incorporated by reference to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-11(No. 33-67372), as filed
with the Commission on January 27, 1994.
(b) Incorporated by reference to Exhibit B to the Company's Definitive
Schedule 14A, Dated April 1, 1996.
(c) Incorporated by reference to Amendment No. 2 to the Company's
Registration Statement on Form S-11 (No. 33-67372), as filed with the
Commission on October 26, 1993.
(d) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998.
(e) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998.
(f) Incorporated by reference from the Registrant's Form 8-K, filed on
October 27, 2000.
(g) Incorporated by reference to the Company's 8K filed on
February 6, 2001.
+ A management contract or compensatory plan or arrangement required to
be filed pursuant to Item 14(c) of this report.
(4) Reports on Form 8-K
55
An 8-K disclosing the results of a special meeting of shareholders, in
connection with the Jacobs transaction, (Item 5: other events) was filed on
January 19, 2001.
The outline from the Company's February 1, 2001 conference call with
analysts regarding earnings (Item 5) was filed on February 1, 2001.
A summary of the Jacobs transaction together with certain of the material
agreements associated with the closing of the transaction on January 31, 2001
was filed on February 6, 2001
56
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized. CBL & ASSOCIATES
PROPERTIES, INC. (Registrant)
By: /s/ Charles B. Lebovitz
------------------------------------------
Charles B. Lebovitz
Chairman of the Board,
and Chief Executive Officer
Dated: April 2, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Charles B. Lebovitz Chairman of the Board April 2, 2001
- ------------------------ and Chief
Charles B. Lebovitz Executive Officer
(Principal Executive Officer)
/s/ John N. Foy Vice Chairman of the Board, April 2, 2001
- ------------------------ Chief Financial Officer and
John N. Foy Treasurer (Principal Financial
Officer and Principal Accounting
Officer)
/s/ Stephen D. Lebovitz Director, President April 2, 2001
- ------------------------ and Secretary
Stephen D. Lebovitz
/s/ Claude M.Ballard Director April 2, 2001
- ------------------------
Claude M. Ballard
/s/ Leo Fields Director April 2, 2001
- ------------------------
Leo Fields
/s/ William J.Poorvu Director April 2, 2001
- ------------------------
William J. Poorvu
/s/ Winston W. Walker Director April 2, 2001
- ------------------------
Winston W. Walker
/s/ Gary L. Bryenton Director April 2, 2001
- ------------------------
Gary L. Bryenton
/s/ Martin J. Cleary Director April 2, 2001
- ------------------------
Martin J. Cleary
*By: /s/ Charles B. Lebovitz
------------------------
Charles B. Lebovitz Attorney-in-Fact April 2, 2001
57
INDEX TO FINANCIAL STATEMENTS
Report of Independent Public Accountants 59
CBL & Associates Properties, Inc. Consolidated Balance
Sheets as of December 31, 2000 and 1999 60
CBL & Associates Properties, Inc. Consolidated Statements
of Operations for the Years Ended
December 31, 2000, 1999 and 1998 61
CBL & Associates Properties, Inc. Consolidated Statements
of Shareholders' Equity for the Years Ended
December 31, 2000, 1999 and 1998 62
CBL & Associates Properties, Inc. Consolidated Statements
of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998 63
Notes to Financial Statements 64
Schedule II Allowance For Credit Losses 78
Schedule III Real Estate and Accumulated Depreciation 79
Schedule IV Mortgage Loans on Real Estate 88
58
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of CBL & Associates Properties, Inc.:
We have audited the accompanying consolidated balance sheets of CBL &
ASSOCIATES PROPERTIES, INC. (a Delaware corporation) and subsidiaries as of
December 31, 2000 and 1999, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CBL & Associates Properties,
Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements are presented for the purpose of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
January 31, 2001
59
CBL & Associates Properties, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
December 31,
-------------------------
2000 1999
----------- ----------
ASSETS
REAL ESTATE ASSETS:
Land $ 290,366 $ 284,881
Buildings and improvements 1,919,619 1,834,020
----------- ----------
2,209,985 2,118,901
Less: accumulated depreciation (271,046) (223,548)
----------- ----------
1,938,939 1,895,353
Developments in progress 101,675 65,201
----------- ----------
Net investment in real estate assets 2,040,614 1,960,554
CASH AND CASH EQUIVALENTS 5,184 7,074
RECEIVABLES:
Tenant, net of allowance for doubtful accounts of
$1,854 in 2000 and 1999 29,641 21,557
Other 3,472 1,536
MORTGAGE NOTES RECEIVABLE 8,756 9,385
OTHER ASSETS 27,898 18,732
----------- ----------
$2,115,565 $2,018,838
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
MORTGAGE AND OTHER NOTES PAYABLE $1,424,337 $1,360,753
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 78,228 64,236
----------- ----------
Total liabilities 1,502,565 1,424,989
----------- ----------
COMMITMENTS AND CONTINGENCIES (NOTES 4 AND 14)
DISTRIBUTIONS AND LOSSES IN EXCESS OF
INVESTMENT IN UNCONSOLIDATED AFFILIATES 3,510 3,212
----------- ----------
MINORITY INTERESTS 174,665 170,750
----------- ----------
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized, 2,875,000
shares issued and outstanding in 2000 and 1999 29 29
Common stock, $.01 par value, 95,000,000 shares authorized, 25,067,287
and 24,755,793 shares issued and outstanding in 2000 and 1999, respectively 251 251
Additional paid-in capital 462,480 455,875
Accumulated deficit (27,935) (36,265)
----------- ----------
Total shareholders' equity 434,825 419,887
----------- ----------
$2,115,565 $2,018,838
=========== ==========
The accompanying notes are an integral part of these balance sheets.
60
CBL & Associates Properties, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
Year Ended December 31,
---------------------------------------------
2000 1999 1998
---------- ---------- ----------
REVENUES:
Rentals:
Minimum $225,460 $203,022 $166,630
Percentage 8,760 7,356 4,751
Other 6,246 5,442 4,007
Tenant reimbursements 106,764 89,774 73,837
Management, development and leasing fees 4,170 7,818 2,711
Interest and other 5,088 4,191 2,704
---------- ---------- ----------
Total revenues 356,488 317,603 254,640
---------- ---------- ----------
EXPENSES:
Property operating 57,301 50,832 41,942
Depreciation and amortization 60,646 53,551 43,547
Real estate taxes 30,398 27,580 23,360
Maintenance and repairs 19,192 17,783 14,860
General and administrative 17,766 16,214 11,841
Interest 94,597 82,505 67,329
Other 127 1,674 122
---------- ---------- ----------
Total expenses 280,027 250,139 203,001
---------- ---------- ----------
INCOME FROM OPERATIONS 76,461 67,464 51,639
GAIN ON SALES OF REAL ESTATE ASSETS 15,989 8,357 4,183
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES 3,684 3,263 2,379
MINORITY INTEREST IN EARNINGS:
Operating Partnership (28,507) (23,264) (16,258)
Shopping center properties (1,538) (1,225) (645)
---------- ---------- ----------
INCOME BEFORE EXTRAORDINARY ITEM 66,089 54,595 41,298
EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT (367) - (799)
---------- ---------- ----------
NET INCOME 65,722 54,595 40,499
PREFERRED DIVIDENDS (6,468) (6,468) (3,234)
---------- ---------- ----------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 59,254 $48,127 $37,265
========== ========== ==========
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary item $ 2.40 $ 1.95 $ 1.58
Extraordinary loss on extinguishment of debt (0.02) - (0.03)
---------- ---------- ----------
Net income $ 2.38 $ 1.95 $ 1.55
========== ========== ==========
Weighted average common shares outstanding 24,881 24,647 24,079
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary item $ 2.38 $ 1.94 $ 1.56
Extraordinary loss on extinguishment of debt (0.01) - (0.03)
---------- ---------- ----------
Net income $ 2.37 $ 1.94 $ 1.53
========== ========== ==========
Weighted average common shares and potential dilutive
common shares outstanding 25,021 24,834 24,340
The accompanying notes are an integral part of these statements.
61
CBL & Associates Properties, Inc.
Consolidated Statements of Shareholders' Equity
(In thousands, except share data)
Additional
Preferred Common Paid-in Accumulated Deferred
Stock Stock Capital Deficit Compensation Total
--------- --------- ---------- ----------- ------------ ----------
BALANCE, December 31, 1997 $ - $ 241 $359,541 $(28,433) $ (496) $330,853
Net income - - - 40,499 - 40,499
Dividends, $1.86 per common share - - - (45,067) - (45,067)
Dividends, $2.25 per preferred share - - - (3,234) - (3,234)
Issuance of 439,623 shares of common stock - 4 6,726 - (649) 6,081
Issuance of 2,875,000 shares of
preferred stock through a public offering 29 - 69,758 - - 69,787
Minority interest in Operating Partnership - - 14,436 - - 14,436
Exercise of stock options - 1 1,791 - - 1,792
Amortization of deferred compensation - - - - 635 635
----- ---- ------- ------- ----- -------
BALANCE, December 31, 1998 29 246 452,252 (36,235) (510) 415,782
Net income - - - 54,595 - 54,595
Dividends, $1.95 per common share - - - (48,157) - (48,157)
Dividends, $2.25 per preferred share - - - (6,468) - (6,468)
Issuance of 93,661 shares of common stock - 1 2,154 - - 2,155
Exercise of stock options - 1 1,469 - - 1,470
Amortization of deferred compensation - - - - 510 510
----- ---- ------- ------- ----- -------
BALANCE, December 31, 1999 29 248 455,875 (36,265) 0 419,887
Net income - - - 65,722 - 65,722
Dividends, $2.04 per common share - - - (50,924) - (50,924)
Dividends, $2.25 per preferred share - - - (6,468) - (6,468)
Issuance of 152,311 shares of common stock - 2 3,343 - - 3,345
Exercise of stock options - 1 3,262 - - 3,263
----- ---- ------- ------- ----- -------
BALANCE, December 31, 2000 $ 29 $251 $462,480 $(27,935) $ 0 $434,825
===== ==== ======== ======== ===== ========
The accompanying notes are an integral part of these statements.
62
CBL & Associates Properties, Inc.
Consolidated Statements of Cash Flows
(In thousands)
Year Ended December 31,
----------------------------------------
2000 1999 1998
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $65,722 $54,595 $40,499
Adjustments to reconcile net income to net cash provided by operating
activities:
Minority interest in earnings 30,045 24,489 16,903
Depreciation 47,329 44,245 36,948
Amortization 14,581 10,485 7,774
Extraordinary loss on extinguishment of debt 367 - 799
Gain on sales of real estate assets (15,989) (8,357) (4,183)
Equity in earnings of unconsolidated affiliates (3,684) (3,263) (2,379)
Issuance of stock under incentive plan 1,634 914 287
Amortization of deferred compensation - 510 635
Write-off of development projects 127 1,674 122
Distributions from unconsolidated affiliates 9,256 10,547 3,862
Distributions to minority investors (25,327) (23,645) (18,543)
Changes in assets and liabilities:
Tenant and other receivables (10,020) (3,680) (4,395)
Other assets (2,156) (1,211) (4,275)
Accounts payable and accrued liabilities 5,929 6,893 15,069
---------- ---------- ----------
Net cash provided by operating activities 117,814 114,196 89,123
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets (139,884) (147,894) (110,991)
Acquisitions of real estate assets (11,089) (69,027) (503,820)
Capitalized interest (6,288) (6,749) (5,175)
Other capital expenditures (24,654) (29,830) (21,652)
Deposits in escrow - - 66,108
Proceeds from sales of real estate assets 67,865 50,373 9,596
Additions to mortgage notes receivable (825) (1,690) (1,619)
Payments received on mortgage notes receivable 1,454 1,423 3,403
Additional investments in and advances to unconsolidated affiliates (5,247) (4,927) (5,012)
Additions to other assets (8,405) (3,820) (2,170)
---------- ---------- ----------
Net cash used in investing activities (127,073) (212,141) (571,332)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other notes payable 256,220 237,716 642,788
Principal payments on mortgage and other notes payable (192,636) (85,167) (175,997)
Additions to deferred financing costs (3,568) (2,075) (2,665)
Proceeds from issuance of common stock 1,711 1,241 334
Proceeds from issuance of preferred stock - - 69,855
Purchase of minority interest (761) - (3,012)
Proceeds from exercise of stock options 3,263 1,470 1,792
Prepayment penalties on extinguishment of debt (184) - (676)
Dividends paid (56,676) (53,993) (47,507)
---------- ---------- ----------
Net cash provided by financing activities 7,369 99,192 484,912
---------- ---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,890) 1,247 2,703
CASH AND CASH EQUIVALENTS, beginning of period 7,074 5,827 3,124
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 5,184 $ 7,074 $ 5,827
========== ========== ==========
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest, net of amounts $94,405 $81,181 $67,599
capitalized
========== ========== ==========
The accompanying notes are an integral part of these statements.
63
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
CBL & Associates Properties, Inc. (the "Company"), a Delaware corporation,
is engaged in the development, acquisition, and operation of regional shopping
malls and community centers, primarily in the Southeast and select markets in
the Northeast and Midwest regions of the United States. The Company is the 100%
owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings
II, Inc., which are the sole general partner and majority owner, respectively,
of CBL & Associates Limited Partnership (the "Operating Partnership"). As a
result, the Company conducts its business through the Operating Partnership,
which at December 31, 2000, owns controlling interests in a portfolio of
properties consisting of 26 regional malls; 15 associated centers, each of which
is part of a regional shopping mall complex; two power centers; 70 community
centers; and one office building. Additionally, the Operating Partnership owns
non-controlling interests in four regional malls and one associated center. The
Operating Partnership has two malls and one community center currently under
construction and has options to acquire certain development properties owned by
third parties. At December 31, 2000, CBL Holdings I, Inc. owned a 2.5% general
partnership interest and CBL Holdings II, Inc. owned a 65.4% limited partnership
interest in the Operating Partnership for a combined interest held by the
Company of 67.9%.
The minority interest in the Operating Partnership is held primarily by CBL
& Associates, Inc. and its affiliates (collectively "CBL") who contributed their
interests in certain real estate properties and joint ventures to the Operating
Partnership in exchange for a limited partnership interest in connection with
the formation of the Operating Partnership in November 1993. At December 31,
2000, CBL owns a 25.5% limited partnership interest in the Operating Partnership
(Note 10).
To comply with certain technical requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), the Operating Partnership carries out the
Company's property management and development activities through CBL &
Associates Management, Inc. (the "Management Company"). The Operating
Partnership holds 100% of the preferred stock and 5% of the common stock of the
Management Company, with CBL holding the remaining 95% of the common stock.
Through the ownership of the preferred stock, the Operating Partnership receives
substantially all of the cash flow and, therefore, enjoys substantially all of
the economic benefits of the Management Company's operations. Due to the
Company's ability, as sole general partner, to control the Operating Partnership
and the Operating Partnership's rights to substantially all of the economic
benefits of the Management Company, the accounts of each entity are included in
the accompanying consolidated financial statements. The Company, the Operating
Partnership, and the Management Company are referred to collectively as the
"Company".
All significant intercompany balances and transactions have been eliminated
in the consolidated presentation.
On January 31, 2001, the Company completed the first stage of the
acquisition of The Richard E. Jacobs Group's interests in 21 malls and two
associated centers for total consideration of approximately $1.26 billion,
including the acquisition of minority interests in certain properties. The
purchase price is comprised of $124.5 million in cash including closing costs of
approximately $12 million; the assumption of $745.5million in non-recourse
mortgage debt; and the issuance of 12,056,692 special common units of the
Operating Partnership with a face value of $32.25 per unit and a fair value of
$27.25 per unit. The cash portion was funded from a new $212 million unsecured
credit facility provided by a consortium of banks led by Wells Fargo. The
Company will close on the second stage in 2002, which will consist of cash of
$0.3 million, the assumption of $25.7 million in non-recourse mortgage debt, and
the issuance of 499,733 special common units of the Operating Partnership with a
face value of $32.25 per unit. In a separate transaction, the Company issued an
additional 603,344 special common units of the Operating Partnership to purchase
the remaining 50% interest in Madison Square Mall in Huntsville, Alabama.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Real Estate Assets
Costs directly related to the development of real estate assets, including
overhead costs directly attributable to property development, are capitalized.
Interest costs incurred during the development and construction period are
capitalized.
64
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Ordinary repairs and maintenance are expensed as incurred. Major
replacements and improvements are capitalized and depreciated over their
estimated useful lives. Depreciation is computed on a straight-line basis
generally over 40 years for buildings and improvements and seven to ten years
for equipment and fixtures. Tenant improvements are capitalized and depreciated
on a straight-line basis over the life of the related lease.
Long-Lived Assets
The Company periodically evaluates the carrying value of long-lived assets
to be held and used when events or changes in circumstances warrant such a
review. The carrying value of a long-lived asset is considered impaired when the
projected undiscounted future cash flow of such asset is less than its carrying
value. Management believes that no material impairment existed at December 31,
2000, and accordingly, no loss was recognized.
Cash and Cash Equivalents
Cash and cash equivalents include all cash and cash equivalent investments
with original maturities of three months or less, primarily consisting of demand
deposits in banks.
Deferred Financing Costs
Deferred financing costs are included in other assets in the accompanying
consolidated balance sheets, include fees and costs incurred to obtain long-term
financing, and are being amortized over the terms of the respective mortgage
notes payable. Unamortized deferred financing costs are written off when
mortgage notes payable are retired before the maturity date.
Deferred Transaction Costs
Deferred transaction costs of $5.4 million are included in other assets in
the accompanying consolidated balance sheet at December 31, 2000, and include
fees and costs incurred in connection with the acquisition of The Richard E.
Jacobs Group's interests in 21 malls and two associated centers. These costs
will be capitalized as part of the value assigned to these assets.
Revenue Recognition
Rental revenue attributable to operating leases is recognized on a
straight-line basis over the initial term of the related leases. Certain tenants
are required to pay additional rent if sales volume exceeds specified amounts.
The Company recognizes this additional rent as revenue when such amounts become
determinable. A substantial portion of the Company's rental income is derived
from various national and regional retail companies.
Tenant Reimbursements
The Company receives reimbursements from tenants for certain costs as
provided in the lease agreements. These costs consist of real estate taxes,
common area maintenance, and other recoverable costs. Tenant reimbursements are
recognized as revenue in the period the costs are incurred.
Management, Development and Leasing Fees
Management fees are charged as a percentage of rentals and are recognized
as revenue as they are earned. Leasing fees are charged for newly executed
leases. These fees are recognized as revenues as they are earned. Development
fees are recognized as revenue on a pro rata basis over the development period.
Gain on Sales of Real Estate Assets
Gain on sales of real estate assets is recognized at the time title to the
asset is transferred to the buyer, subject to the adequacy of the buyer's
initial and continuing investment and the assumption by the buyer of all future
ownership risks of the asset.
65
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes
The Company is qualified as a real estate investment trust under Sections
856 through 860 of the Code and applicable treasury regulations. In order to
maintain qualification as a real estate investment trust, the Company is
currently required to distribute at least 90% of its taxable income to
shareholders and meet certain other asset and income tests as well as other
requirements. As a real estate investment trust, the Company will generally not
be liable for federal corporate income taxes. Thus, no provision for federal
income taxes has been included in the accompanying consolidated financial
statements. If the Company fails to qualify as a real estate investment trust in
any taxable year, the Company will be subject to federal income tax on its
taxable income at regular corporate tax rates. Even if the Company maintains its
qualification for taxation as a real estate investment trust, the Company may be
subject to certain state and local taxes on its income and property, and to
federal income and excise taxes on its undistributed income. State income taxes
were not significant in 2000, 1999 and 1998.
Derivative Financial Instruments
Interest rate cap and swap agreements, which are principally used by the
Company in the management of interest rate exposure, are accounted for on an
accrual basis. Amounts to be paid or received under interest rate cap and swap
agreements are recorded in interest expense in the period in which they accrue.
See Note 8 for additional information.
Concentration of Credit Risk
The Company's tenants consist of national, regional and local retailers.
Financial instruments which subject the Company to concentrations of credit risk
consist primarily of tenant leases. The Company does not generally obtain
collateral or other security to support financial instruments subject to credit
risk but monitors the credit standing of tenants.
Earnings Per Share
Basic earnings per share ("EPS") excludes dilution and is computed by
dividing earnings available to common shareholders by the weighted-average
number of unrestricted common shares outstanding for the period. Diluted EPS
assumes the issuance of common stock for all potential dilutive common shares
outstanding. The limited partners' rights to convert their minority interest in
the Operating Partnership into shares of common stock are not dilutive (Note
10). The difference in basic and diluted EPS is due to the assumed exercise of
outstanding stock options and restricted stock resulting in 140,000, 187,000 and
261,000 additional potential dilutive common shares in 2000, 1999 and 1998,
respectively.
Stock-Based Compensation
The Company accounts for its stock-based compensation plans under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB No. 25). Effective in 1996, the Company adopted the disclosure
option of Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation." SFAS No. 123 requires companies that
do not choose to account for stock-based compensation as prescribed by the
statement to disclose the pro forma effects on net income and earnings per share
as if SFAS No. 123 had been adopted. Additionally, certain other disclosures are
required with respect to stock-based compensation and the assumptions used to
determine the pro forma effects of SFAS No. 123. See Note 12 for the required
disclosures.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.
66
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. UNCONSOLIDATED AFFILIATES
The Company has investments in five partnerships and joint ventures, all of
which are reflected on the equity method of accounting in the accompanying
consolidated financial statements and consist of the following at December 31,
2000:
Partnership Property Name Company's Interest
------------------------------- ------------------- -------------------
Governor's Square IB Governor's Plaza 50.0%
Governor's Square Company Governor's Square 47.5%
Madison Square Associates, Ltd. Madison Square 50.0%
Mall Shopping Center Company Plaza del Sol 50.6%
Parkway Place L.P. Parkway Place 50.0%
Condensed combined financial statement information of the partnerships and
joint ventures is presented as follows (in thousands):
December 31,
2000 1999
------------------ ----------------
ASSETS:
Net investment in real estate assets $ 85,135 $ 75,185
Other assets 4,445 3,066
------------------ ----------------
Total assets $ 89,580 $ 78,251
================== ================
LIABILITIES:
Mortgage notes payable $ 108,582 $ 92,733
Other liabilities 2,317 1,946
------------------ ----------------
Total liabilities 110,899 94,679
------------------ ----------------
OWNERS' DEFICIT:
Company (3,510) (3,212)
Other investors (17,809) (13,216)
------------------ ----------------
Total owners' deficit (21,319) (16,428)
------------------ ----------------
Total liabilities and owners' deficit $ 89,580 $ 78,251
================== ================
Year Ended December 31,
-------------------------------------------------------
2000 1999 1998
------------------ ---------------- -----------------
Revenues $ 27,294 $ 26,859 $ 22,530
Depreciation expense 3,080 3,253 2,913
Other operating expenses 8,255 8,398 6,849
Interest expense 8,397 8,757 7,935
Gain on sale of real estate assets 186 - -
------------------ ---------------- -----------------
Net income $ 7,748 $ 6,451 $ 4,833
================== ================ =================
Company's share of net income $ 3,684 $ 3,263 $ 2,379
================== ================ =================
In general, contributions and distributions of capital or cash flows and
allocations of income and expense are made on a pro rata basis in proportion to
the equity interest held by each general or limited partner.
67
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. MORTGAGE AND OTHER NOTES PAYABLE
Mortgage and other notes payable consist of the following at December 31,
2000 and 1999 (in thousands):
2000 1999
------------------ ----------------
Permanent loans $ 1,193,685 $ 1,196,829
Construction loans 84,652 7,924
Lines of credit 146,000 156,000
------------------ ----------------
$ 1,424,337 $ 1,360,753
================== ================
Permanent Loans
Permanent loans consist of loans secured by properties held by the Company
at December 31, 2000, with an asset carrying amount of $1,891,446,000. At
December 31, 2000, permanent loans totaling $904,357,000 bear interest at fixed
rates ranging from 6.65% to 10.625%. Permanent loans totaling $289,328,000 bear
interest at variable interest rates indexed to the prime lending rate or London
Interbank Offered Rate ("LIBOR") (7.56% to 9.50% at December 31, 2000).
Permanent loans mature at various dates from 2001 through 2016.
Construction Loans
At December 31, 2000, the Company had construction loans on seven
properties. The total commitment under the construction loans is $156,104,000,
of which $84,652,000 is outstanding at December 31, 2000. The construction loans
mature in 2002 and 2003, and bear interest at variable interest rates indexed to
the prime lending rate or LIBOR (7.74% to 8.14% at December 31, 2000).
Lines of Credit
The Company maintains line of credit agreements with banks for
construction, acquisition, and working capital purposes. At December 31, 2000,
the Company had $240,000,000 available under its line of credit agreements, of
which $146,000,000 was outstanding. The lines expire at various dates from 2002
through 2004 and bear interest at variable rates indexed to the prime lending
rate or LIBOR (weighted average interest rate 7.70% at December 31, 2000). At
December 31, 2000, outstanding letters of credit total approximately $1,235,000.
The line of credit agreements contain, among other restrictions, certain
restrictive covenants including the maintenance of certain coverage ratios and a
minimum net worth and limitations on distributions. The Company was in
compliance with all debt covenants on its lines of credit at December 31, 2000.
Debt Maturities
As of December 31, 2000, the scheduled principal payments on all mortgage
and other notes payable, including construction loans and lines of credit, are
as follows (in thousands):
2001 $ 188,632
2002 249,237
2003 126,519
2004 119,882
2005 22,268
Thereafter 717,799
$ 1,424,337
68
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. MORTGAGE NOTES RECEIVABLE
Substantially all mortgage notes receivable are collateralized by
wrap-around mortgages which are first mortgages on the underlying real estate
and related improvements. Interest rates on these notes receivable range from
8.0% to 11.0% at December 31, 2000.
6. MINIMUM RENTS
Tenant leases are usually for 5 to 20 year periods and generally provide
for renewals and annual rentals which are subject to upward adjustments based on
tenant sales volume. Future minimum rents are scheduled to be received under
noncancellable tenant leases at December 31, 2000, as follows (in thousands):
2001 $ 210,313
2002 191,610
2003 176,566
2004 158,118
2005 131,865
Thereafter 638,662
No single tenant collectively accounts for more than 10% of the Company's
total revenues.
7. SHAREHOLDERS' EQUITY
In June 1998, the Company completed a public offering of 2,875,000 shares
of 9% Series A Cumulative Redeemable Preferred Stock (the "Series A Preferred
Stock") at a price to the public of $25.00 per share, including 715,875 shares
purchased by an affiliate of Wells Fargo Bank. The net proceeds of $69.8 million
were used to repay variable-rate indebtedness incurred in the Company's
development and acquisition programs. The dividends on the Series A Preferred
Stock are cumulative and accrue from the date of issue and are payable quarterly
in arrears commencing on September 30, 1998, at a rate of $2.25 per share per
annum. The Series A Preferred Stock has no stated maturity, is not subject to
any sinking fund or mandatory redemption and is not redeemable prior to July 1,
2003. On or after July 1, 2003, the Company may redeem the Series A Preferred
Stock, in whole or in part, at any time for a cash redemption price of $25.00
per share, plus dividends accrued and unpaid.
8. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
well defined interest rate risks.
Under interest rate swap agreements, the Company agrees with other parties
to exchange, at specified intervals, the difference between fixed rate and
variable rate interest amounts calculated by reference to an agreed-upon
notional amount. Under these agreements, the Company receives interest payments
at a rate equal to LIBOR (6.56% at December 31, 2000) and pays interest at fixed
rates shown below.
69
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has the following interest rate swaps in place at December 31,
2000, totaling $423 million:
Notional Amount Fixed LIBOR
(in millions) Component Effective Date Expiration Date
--------------- ------------ --------------- ---------------
$100 6.405% 01/27/00 01/29/01
75 6.610% 02/24/00 02/24/01
50 5.700% 06/11/98 06/15/01
38 5.730% 06/26/98 06/30/01
80 5.490% 09/01/98 09/01/01
80 5.830% 12/22/00 08/30/03
The Company has a $50 million interest rate cap on LIBOR based variable
rate debt at 7.5% terminating October 1, 2001. The Company also obtained a $50
million interest rate swap with a fixed LIBOR component of 5.737% effective
January 3, 2001, and expiring June 1, 2002.
The Company is exposed to credit losses in the event of nonperformance by
the counterparties to its interest rate swap and cap agreements and
nonderivative financial assets but has no off-balance sheet credit risk of
accounting loss. The Company anticipates, however, that counterparties will be
able to fully satisfy their obligations under the contracts. The Company does
not obtain collateral or other security to support financial instruments subject
to credit risk but monitors the credit standing of counterparties.
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended, ("SFAS No. 133")
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement and requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.
The Company will implement SFAS No.133 beginning January 1, 2001, and it
will recognize as separate assets and liabilities only those derivatives
embedded in hybrid instruments issued, acquired, or substantively modified by
the entity on or after the selected transition date.
The Company has determined that a portion of its derivative instruments
(swap agreements and an interest rate cap agreement) in place are ineffective as
defined by SFAS No. 133. The terms of ineffective derivative instruments expire
in 2001; thus, while the Company may experience some volatility in earnings in
interim periods, there will be no effect to current earnings in the Company's
financial statements for the year ended December 31, 2001. If the Company had
implemented SFAS No. 133 as of December 31, 2000, ineffective derivative
instruments would have increased total assets by $514,000 and would have
increased net income by $514,000. Effective derivative instruments would have
increased liabilities by $262,000 and comprehensive income, also recorded on the
balance sheet, would have decreased by $262,000.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, receivables, accounts
payable, and accrued liabilities are reasonable estimates of their fair values
because of the short maturity of these financial instruments. Based on the
interest rates for similar financial instruments, the carrying value of mortgage
notes receivable is a reasonable estimation of fair value. The carrying value of
mortgage and other notes payable, based on borrowing rates currently available
to the Company, is a reasonable estimation of fair value at December 31, 2000
and 1999. The fair value of the interest rate swap and cap agreements, which
represents the cash requirement if the existing agreements had been settled at
year end, was not significant at December 31, 2000 and 1999.
70
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. CONVERSION RIGHTS
Pursuant to the Operating Partnership agreement, the limited partners were
granted rights to convert their partnership interests in the Operating
Partnership into shares of common stock, subject to certain limits, and to sell
to the Company after November 3, 1996, part or all of their partnership interest
in the Operating Partnership in exchange for shares of common stock or their
cash equivalent at the Company's election, as defined.
The Operating Partnership acquired properties from CBL in exchange for
1,336 and 63,904 limited partnership units in the Operating Partnership during
2000 and 1998, respectively. In October 1999 the Company issued 79,715 limited
partnership units valued at $1,928,000 to a third party in exchange for land.
During 1998, the Operating Partnership issued 2,749,888 limited partnership
units in the Operating Partnership valued at $68.3 million to third parties in
exchange for seven properties.
In November 2000, the Company purchased 34,463 limited partnerships units
valued at $761,000 from a third party. In July 1998, the Company purchased
122,008 limited partnership units valued at $3.0 million from a former executive
and minority investor in the Operating Partnership. Also during 1998, a third
party converted 388,022 limited partnership units to common stock.
At December 31, 2000 and 1999, there remained outstanding rights to convert
CBL's minority interest in the Operating Partnership to 9,419,088 and 9,417,752
shares of common stock, respectively. At December 31, 2000 and 1999, there
remained outstanding rights to convert third parties' minority interests in the
Operating Partnership to 2,407,000 and 2,442,000 shares of common stock,
respectively.
11. 401(K) PROFIT SHARING PLAN
The Management Company maintains a 401(k) profit sharing plan, which is
qualified under Section 401(a) and Section 401(k) of the Code to cover employees
of the Management Company. All employees who have attained the age of 21 and
have completed at least one year of service are eligible to participate in the
plan. The plan provides for employer matching contributions on behalf of each
participant equal to 50% of the portion of such participant's contribution which
does not exceed 2.5% of such participant's compensation for the plan year.
Additionally, the Management Company has the discretion to make additional
profit-sharing-type contributions not related to participant elective
contributions. Total contributions by the Management Company were not
significant for 2000, 1999, and 1998.
12. STOCK INCENTIVE PLAN
The Company maintains the CBL & Associates Properties, Inc. 1993 Stock
Incentive Plan, as amended (the "Plan") which permits the issuance of stock
options and common stock to selected officers, employees and directors of the
Company, up to 2,800,000 shares of common stock. The Plan is administered by the
Compensation Committee of the Board of Directors (the "Committee").
Stock options issued under the Plan allow for the purchase of common stock
at the fair market value of the stock at the date of grant. Stock options
granted to officers and employees under the Plan vest and become exercisable in
installments on each of the first five anniversaries of the date of grant and
expire ten years after the date of grant. Stock options granted to directors are
fully vested upon grant, but may not be sold, pledged or otherwise transferred
in any manner during the director's term or for one year thereafter.
The Company accounts for its stock-based compensation plans under APB No.
25, under which no compensation expense has been recognized for stock options
granted as all employee options have been granted with an exercise price equal
to the fair value of the Company's common stock on the date of grant. For SFAS
No. 123 purposes, the fair value of each employee option grant has been
estimated as of the date of grant using the Black-Sholes option pricing model
and the following weighted average assumptions for 2000, 1999 and 1998,
respectively:
71
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2000 1999 1998
------------------ ---------------- -----------------
Risk-free interest rate 6.65% 5.25% 5.90%
Dividend yield 8.98% 8.33% 8.09%
Expected volatility 17.00% 16.00% 16.00%
Expected life 6.0 years 7.2 years 7.2 years
Using these assumptions, the fair value of the employee stock options
granted in 2000, 1999 and 1998 is $500,000, $468,000 and $468,000, respectively,
which would be amortized as compensation expense over the vesting period of the
options. Had compensation cost for the plan been determined in accordance with
SFAS No. 123, utilizing the assumptions detailed above, the Company's pro forma
net income and net income per share would have been as follows for the years
ended December 31, 2000, 1999, and 1998, respectively (in thousands, except per
share data):
2000 1999 1998
------------------ ---------------- -----------------
Net income available to common shareholders:
As reported $ 59,254 $ 48,127 $ 37,265
Pro forma 58,585 47,458 36,692
Net income per share:
Basic as reported $ 2.38 $ 1.95 $ 1.55
Pro forma basic 2.35 1.93 1.52
Diluted as reported 2.37 1.94 1.53
Pro forma diluted 2.34 1.91 1.51
The pro forma effect on net income in this disclosure is not representative
of the pro forma effect on net income in future years because it does not take
into consideration pro forma compensation expense related to grants made prior
to 1995.
A summary of the Company's stock option activity for 2000, 1999 and 1998 is
as follows: Weighted- Average Shares Option Price Exercise Price
Weighted-Average
Shares Option Price Exercise Price
--------- ------------------- ----------------
Outstanding at December 31, 1997 1,691,600 $19.5625 - $25.6250 $21.11
Granted 319,000 $24.0940 - $25.5938 24.10
Exercised (87,350) $19.5625 - $25.6250 20.52
---------
Outstanding at December 31, 1998 1,923,250 $19.5625 - $25.6250 21.64
Granted 382,500 $20.7200 - $24.5625 24.49
Exercised (71,200) $19.5625 - $23.6250 20.63
Lapsed (27,500) $19.6250 - $24.0940 22.40
---------
Outstanding at December 31, 1999 2,207,050 $19.5625 - $25.6250 22.16
Granted 377,000 $23.7190 - $25.5625 23.73
Exercised (159,183) $19.5625 - $23.6250 20.50
Lapsed (60,050) $19.5625 - $24.5000 22.25
---------
Outstanding at December 31, 2000 2,364,817 $19.5625 - $25.5620 $22.51
=========
72
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted-average fair value of options granted during 2000, 1999, and
1998 was $1.54, $1.22 and $1.49, respectively.
Shares subject to options outstanding at December 31, 2000, have a
weighted-average remaining contractual life of 6.6 years. Of the options
outstanding at December 31, 2000, 1,284,067 are currently exercisable with a
weighted-average exercise price of $21.47 per share.
Under the Plan, common stock may be awarded either alone, in addition to,
or in tandem with other stock awards granted under the Plan. The Committee has
the authority to determine eligible persons to whom common stock will be
awarded, the number of shares to be awarded, and the duration of the vesting
period, as defined.
During 2000, the Company issued 72,329 shares of common stock under the
Plan with a weighted-average grant-date fair value of $22.59 per share, of which
36,606 shares of common stock were immediately vested. The remaining 35,723
shares of common stock vest at various dates from 2001 to 2005.
During 1999, the Company issued 38,989 shares of common stock under the
Plan with a weighted-average grant-date fair value of $23.44 per share, of which
6,533 shares of common stock were immediately vested. The remaining 32,456
shares of common stock vest at various dates from 2000 to 2006.
During 1998, the Company issued 37,333 shares of common stock under the
Plan with a weighted-average grant-date fair value of $25.19 per share, of which
10,789 shares of common stock were immediately vested. The remaining 26,544
shares of common stock vest at various dates from 1999 to 2003.
13. RELATED PARTY TRANSACTIONS
CBL and certain officers of the Company have a significant minority
interest in the construction company that has been engaged by the Company in the
building of substantially all of the Company's properties.
The Management Company provides management and leasing services to
affiliated partnerships and joint ventures not controlled by the Company.
Revenue recognized for these services amounted to $1,166,000, $1,086,000 and
$1,034,000 in 2000, 1999 and 1998, respectively.
14. COMMITMENTS AND CONTINGENCIES
The Company is currently involved in certain litigation arising in the
ordinary course of business. In the opinion of management, the pending
litigation will not materially affect the financial statements of the Company.
Additionally, based on environmental studies completed to date on the real
estate properties, management believes exposure related to environmental cleanup
will be immaterial to the consolidated financial position and consolidated
results of operations of the Company.
The Company has entered into standby purchase agreements with third-party
developers (the "Developers") for the construction, development and potential
ownership of two community centers in Texas (the "Co-Development Projects"). The
Developers have utilized these standby purchase agreements to assist in
obtaining financing to fund the construction of the Co-Development Projects. The
standby purchase agreements, which expire in 2001, are dependent upon certain
completion requirements, rental levels, the inability of the Developers to
obtain adequate permanent financing, and the inability to sell the
Co-Development Project before the Company has to fund its equity contribution or
purchase the Co-Development Project. In return for its commitment to purchase a
Co-Development Project pursuant to a standby purchase agreement, the Company
receives a fee as well as a participation interest in each Co-Development
Project. The outstanding amount of standby purchase agreements at December 31,
2000, is $51.4 million.
73
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. DIVIDENDS
The allocations of dividends declared and paid for income tax purposes are
as follows:
Year Ended December 31,
-------------------------------------------------------
2000 1999 1998
---------------- ----------------- ------------------
Dividends per common share $ 2.04 $ 1.95 $ 1.86
Allocations:
Ordinary income 92.16% 88.00% 86.86%
Capital gain 20% 3.80% 0.00% 0.30%
Capital gain 25% 4.04% 0.00% 0.30%
Return of capital 0.00% 12.00% 12.54%
---------------- ----------------- ------------------
Total 100.00% 100.00% 100.00%
================ ================= ==================
74
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. SEGMENT INFORMATION
Management of the Company measures performance and allocates resources
according to property type, which are determined based on differences such as
nature of tenants, capital requirements, economic risks, and leasing terms. Rent
income and tenant reimbursements from tenant leases provide the majority of
revenues from all segments. Information on management's reportable segments is
presented as follows (in thousands):
Mall Associated Community
YEAR ENDED DECEMBER 31, 2000 Properties Properties Properties All Other Total
- -------------------------------- ------------ ------------ ----------- ------------ -----------
Revenues $267,150 $14,831 $66,649 $ 7,858 $ 356,488
Property operating expenses (1) (90,889) (2,675) (14,451) 1,124 (106,891)
Interest expense (74,105) (3,804) (13,240) (3,448) (94,597)
Gain (loss) on sales of real estate (400) - 10,617 5,772 15,989
assets
------------ ------------ ----------- ------------ ----------
Segment profit $101,756 $ 8,352 $49,575 $11,306 170,989
============ ============ =========== ============
Depreciation and amortization (60,646)
General and administrative and other (17,893)
Equity in earnings and minority
interest adjustment (26,361)
----------
Income before extraordinary item $ 66,089
==========
Total assets $1,450,948 $120,178 $453,749 $90,690 $2,115,565
Capital expenditures $ 83,411 $13,053 $64,223 $13,240 $ 173,927
YEAR ENDED DECEMBER 31, 1999
Revenues $ 234,207 $12,288 $60,223 $10,885 $ 317,603
Property operating expenses 1 (83,672) (2,404) (11,311) 1,192 (96,195)
Interest expense (62,678) (2,693) (12,540) (4,594) (82,505)
Gain (loss) on sales of real estate (1,273) - 1,208 8,422 8,357
assets
------------ ------------ ----------- ------------ ----------
Segment profit $ 86,584 $7,191 $37,580 $15,905 147,260
============ ============ =========== ============
Depreciation and amortization (53,551)
General and administrative and other (17,888)
Equity in earnings and minority
interest adjustment (21,226)
------------
Income before extraordinary item $ 54,595
============
Total assets $1,400,793 $103,424 $451,165 $63,456 $ 2,018,838
Capital expenditures $ 142,789 $7,426 $25,003 $26,040 $ 201,258
YEAR ENDED DECEMBER 31, 1998
Revenues $185,305 $10,063 $53,890 $5,382 $ 254,640
Property operating expenses 1 (66,250) (1,870) (10,740) (1,302) (80,162)
Interest expense (49,616) (1,771) (11,957) (3,985) (67,329)
Gain on sales of real estate assets 42 - 151 3,990 4,183
------------ ------------ ----------- ------------ -----------
Segment profit $ 69,481 $6,422 $31,344 $4,085 111,332
============ ============ =========== ============
Depreciation and amortization (43,547)
General and administrative and other (11,963)
Equity in earnings and minority
interest adjustment (14,524)
------------
Income before extraordinary item $ 41,298
============
Total assets $1,249,204 $81,570 $412,228 $112,345 $ 1,855,347
Capital expenditures $ 577,492 $21,193 $33,695 $62,498 $ 694,878
(1) Property operating expenses include property operating, real estate taxes
and maintenance and repairs.
75
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. OPERATING PARTNERSHIP
Condensed consolidated financial statement information for the Operating
Partnership is presented as follows (in thousands):
December 31,
------------------------------
2000 1999
----------- -----------
ASSETS:
Net investment in real estate assets $2,040,614 $1,960,554
Other assets 74,485 57,940
----------- -----------
Total assets $2,115,099 $2,018,494
=========== ===========
LIABILITIES:
Mortgage and other notes payable $1,424,337 $1,360,753
Other liabilities 65,443 52,168
----------- -----------
Total liabilities 1,489,780 1,412,921
Distributions and losses in excess of investment in 2,972 2,920
unconsolidated affiliates
Minority interest 1,301 1,226
OWNERS' EQUITY 621,046 601,427
----------- -----------
Total liabilities and owners' equity $2,115,099 $2,018,494
=========== ===========
Year Ended December 31,
-------------------------------------------------
2000 1999 1998
----------- ----------- -----------
Revenues $356,488 $317,603 $254,640
Depreciation and amortization expense 60,646 53,551 43,547
Other operating expenses 218,545 195,882 159,101
----------- ----------- -----------
Operating income 77,297 68,170 51,992
Gain on sales of real estate assets 15,989 8,357 4,183
Equity in earnings of unconsolidated affiliates 3,684 3,263 2,379
Minority investors' interest (1,538) (1,225) (645)
----------- ----------- -----------
Income before extraordinary item 95,432 78,565 57,909
Extraordinary loss on extinguishment of debt (367) - (799)
----------- ----------- -----------
Net income $95,065 $78,565 $57,110
=========== =========== ===========
76
CBL & ASSOCIATS PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. QUARTERLY INFORMATION (UNAUDITED) (in thousands, except per share
amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter Total (1)
-------- -------- ------- ------- ---------
2000
Total revenues $88,009 $86,857 $88,621 $93,001 $356,488
Income from operations 18,967 18,215 18,657 20,622 76,461
Income before extraordinary item 15,967 17,112 16,252 16,758 66,089
Net income available to common
shareholders 14,350 15,358 14,551 14,995 59,254
Basic per share data:
Income before extraordinary item $ 0.58 $ 0.62 $ 0.59 $ 0.61 $ 2.40
Net income $ 0.58 $ 0.62 $ 0.58 $ 0.60 $ 2.38
Diluted per share data:
Income before extraordinary item $ 0.58 $ 0.62 $ 0.58 $ 0.60 $ 2.38
Net income $ 0.58 $ 0.62 $ 0.58 $ 0.60 $ 2.37
1999
Total revenues $74,548 $74,191 $81,722 $87,142 $317,603
Income from operations 15,033 15,737 18,929 17,765 67,464
Income before extraordinary item 13,746 14,556 14,197 12,096 54,595
Net income available to common
shareholders 12,129 12,939 12,580 10,479 48,127
Basic per share data:
Income before extraordinary item $ 0.49 $ 0.53 $ 0.58 $ 0.42 $ 1.95
Net income $ 0.49 $ 0.53 $ 0.51 $ 0.42 $ 1.95
Diluted per share data:
Income before extraordinary item $ 0.49 $ 0.52 $ 0.50 $ 0.42 $ 1.94
Net income $ 0.49 $ 0.52 $ 0.50 $ 0.42 $ 1.94
(1) The sum of quarterly earnings per share amounts may differ from annual
earnings per share due to rounding.
77
CBL & Associates Properties, Inc.
Schedule II Allowance for Credit Losses (in thousands)
Balance of
Allowance at Provision Bad Debts Balance of
Year Ended Beginning of For Credit Charged Against Allowance at
December 31, Year Losses Allowance End of Year
- ----------------------------------------- ----------------- ----------------- ------------------ -----------------
1998................................. $1,300 $941 $(291) $1,950
1999................................. 1,950 341 (437) 1,854
2000................................. 1,854 1380 (1380) 1,854
78
CBL & ASSOCIATES PROPERTIES, INC. SCHEDULE III
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
(Dollars in Thousands)
Gross Amounts at Which Carried at
Initial Cost (A) Close of Period
---------------------- ---------------------------------------------
Costs
Capitalized
Buildings Subsequent Buildings Date of
(B) and to and Accumulated Contruction
Description Encumbrances Land Improvements Improvements Land Improvements Total(C) Depreciation(D) /Purchase
- -------------------- ---------- -------- ---------- -------- -------- --------- ------------------ ------------
MALLS
Arbor Place.......... $99,300 $7,637 $95,330 $9,758 $7,637 $105,087 $112,724 $5,098 1998-1999
Atlanta, GA
Asheville Mall....... 75,322 7,139 58,747 23,747 6,675 82,958 89,633 4,324 1998
Asheville, NC
Bonita Lakes Mall.... 28,936 4,924 31,933 4,545 4,924 36,477 41,401 4,635 1997
Meridian, MS
Burnsville Center... 74,184 12,804 69,167 4,175 12,804 73,342 86,146 5,477 1998
Burnsville, MN
College Square....... 14,726 2,954 17,787 8,707 2,927 26,521 29,448 7,053 1987-1988
Morristown, TN
Coolsprings Galleria. 64,654 13,527 86,755 22,466 13,527 109,221 122,748 23,821 1989-1991
Nashville, TN
Frontier Mall........ 1,960 2,681 15,858 8,123 2,681 23,981 26,662 7,831 1984-1985
Cheyenne, WY
Foothills Mall....... ---- 4,537 15,226 5,861 4,537 21,089 25,626 4,340 1996
Maryville, TN
Georgia Square....(E) ---- 2,982 31,071 6,474 2,959 37,568 40,527 11,426 1982
Athens, GA
Hamilton Place...... 70,251 2,880 42,211 12,401 2,439 55,053 57,492 15,146 1986-1987
Chattanooga, TN
Hickory Hollow Mall.. 93,775 13,813 111,431 2,034 13,813 113,465 127,278 7,166 1998
Nashville, TN
JCP.............. (E) ---- ---- 2,650 $0 ---- 2,650 2,650 1,082 1983
Maryville, TN
Janesville Mall...... 16,010 8,074 26,009 (962) 8,074 25,046 33,120 1,637 1998
Janesville, WI
Lakeshore Mall....(E) ---- 1,443 28,819 3,479 1,274 32,467 33,741 6,717 1991-1992
Sebring, FL
Meridian Mall........ 89,739 529 103,678 9,091 529 112,769 113,298 6,409 1998
Lansing, MI
Oak Hollow Mall...... 49,585 4,344 52,904 2,495 4,344 55,399 59,743 9,340 1994-1995
High Point, NC
Pemberton Square..(E) ---- 1,191 14,305 572 244 15,824 16,068 5,487 1986
Vicksburg, MS
Post Oak Mall.... (E) ---- 3,936 48,948 (9,790) 3,608 39,488 43,096 8,332 1984-1985
College Station, TX
Rivergate Mall....... 75,789 17,896 86,767 11,752 17,896 98,519 116,415 6,078 1998
Nashville, TN
79
Gross Amounts at Which Carried at
Initial Cost (A) Close of Period
---------------------- ---------------------------------------------
Costs
Capitalized
Buildings Subsequent Buildings Date of
(B) and to and Accumulated Contruction
Description Encumbrances Land Improvements Improvements Land Improvements Total(C) Depreciation(D) /Purchase
- -------------------- ---------- -------- ---------- -------- -------- --------- ------------------ ------------
Springdale Mall...... 21,661 19,538 6,676 5,669 19,543 12,340 31,883 883 1997
Mobile, AL
Stroud Mall.......... 32,500 14,711 23,936 1,299 14,711 25,235 39,946 1,705 1998
Stroudsburg, PA
St. Clair Square..... 73,047 11,028 75,581 3,732 11,027 79,314 90,341 8,112 1996
Fairview Heights, IL
Turtle Creek Mall.... 32,868 2,345 26,418 7,606 3,535 32,834 36,369 7,980 1993-1995
Hattiesburg, MS
Twin Peaks....... (E) ---- 1,873 22,022 16,363 1,828 38,430 40,258 12,534 1984
Longmont,CO
Walnut Square.... (E) 1,118 50 15,138 4,320 50 19,458 19,508 8,014 1984-1985
Dalton,GA
Westgate Mall........ 46,724 2,150 23,257 38,004 1,742 61,669 63,411 8,895 1995
Spartanburg, SC
York Galleria........ 52,000 5,757 63,316 214 5,757 63,531 69,288 2,264 1995
York, PA
ASSOCIATED CENTERS
Bonita Crossing...... 9,067 794 4,786 7,149 794 11,935 12,729 829 1997
Meridian, MS
Coolsprings Xing..(E) ---- 2,803 14,985 1,786 3,554 16,020 19,574 3,583 1991-1993
Nashville, TN
Courtyard at 4,366 3,314 2,771 109 3,314 2,881 6,195 175 1998
Hickory Hollow.....
Nashville, TN
Foothills Plaza...(E) ---- 132 2,123 520 141 2,634 2,775 1,060 1984-1988
Maryville, TN
Foothills Plaza ---- 137 1,960 153 148 2,102 2,250 620 1984-1988
Expansion............
Maryville, TN
Frontier Square...... ---- 346 684 82 260 852 1,112 281 1985
Cheyenne, WY
General Cinema....... 12 100 1,082 14 100 1,096 1,196 575 1984
Athens, GA
Gunbarrel Pointe..... 12,087 4,170 10,874 --- 4,170 10,875 15,045 71 2000
Chattanooga, TN
Hamilton Corner...... 3,063 960 3,670 423 734 4,319 5,053 1,262 1986-1987
Chattanooga, TN
80
Gross Amounts at Which Carried at
Initial Cost (A) Close of Period
---------------------- ---------------------------------------------
Costs
Capitalized
Buildings Subsequent Buildings Date of
(B) and to and Accumulated Contruction
Description Encumbrances Land Improvements Improvements Land Improvements Total(C) Depreciation(D) /Purchase
- -------------------- ---------- -------- ---------- -------- -------- --------- ------------------ ------------
Hamilton Crossing.... ---- 4,014 5,906 (904) 2,644 6,372 9,016 1,850 1987
Chattanooga, TN
Hamilton Place ---- 322 408 57 322 465 787 28 1998
Outparcel............
Chattanooga, TN
The Landing at 11,162 4,993 14,330 526 4,993 14,856 19,849 712
Arbor Place........
Atlanta, GA
Madison Plaza........ 1,545 473 2,888 187 473 3,075 3,548 1,159 1984
Hunstville, AL
Pemberton Plaza...... ---- ---- 662 893 ---- 1,556 1,556 381 1986
Vicksburg, MS
The Terrace.......... 10,147 4,166 9,729 1 4,166 9,730 13,896 925 1997
Chattanooga, TN
Village at Rivergate. 3,580 2,641 2,808 474 2,641 3,282 5,923 211 1998
Nashville, TN
Westgate Crossing.... 9,876 1,082 3,422 6,332 1,082 9,755 10,837 979 1997
Spartanburg, SC
COMMUNITY CENTERS
Anderson Plaza....... ---- 198 1,316 1,558 198 2,873 3,071 710 1983
Greenwood, SC
Bartow Plaza......... ---- 224 2,010 225 224 2,235 2,459 623 1989
Bartow, FL
Beach Xing........... ---- 725 1,749 30 623 1,881 2,504 603 1984
Myrtle Beach, SC
Bennington........... 510 256 1,754 652 175 2,487 2,662 829 1988
Roanoke, VA
BJ's Wholesale....... 3,112 170 4,735 13 170 4,748 4,918 1,105 1991
Portland, ME
Briarcliff Sq........ 1,556 299 1,936 32 267 2,000 2,267 569 1989
Oak Ridge, TN
Buena Vista Plaza.... ---- 980 1,943 (819) 754 1,350 2,104 262 1988-1989
Columbus, GA
Bullock Plaza........ ---- 98 1,493 93 98 1,586 1,684 545 1986
Statesboro, GA
Capital Crossing..... ---- 1,908 756 2,264 2,544 2,385 4,929 293 1995
Raleigh, NC
Cedar Bluff.......... 1,129 412 2,128 883 412 3,011 3,423 960 1987
Knoxville, TN
81
Gross Amounts at Which Carried at
Initial Cost (A) Close of Period
---------------------- ---------------------------------------------
Costs
Capitalized
Buildings Subsequent Buildings Date of
(B) and to and Accumulated Contruction
Description Encumbrances Land Improvements Improvements Land Improvements Total(C) Depreciation(D) /Purchase
- -------------------- ---------- -------- ---------- -------- -------- --------- ------------------ ------------
Cedar Springs Crossing ---- 206 1,845 129 206 1,974 2,180 585 1988
Cedar Springs, MI
Chesterfield Crossing 7,093 1,580 11,243 --- 1,580 11,243 12,823 64
Richmond, VA
Chester Plaza........ 0 165 720 12 165 732 897 63 1997
Chester, VA
Chestnut Hills....(E) ---- 600 1,775 328 600 2,103 2,703 429 1992
Murray, KY
Coastal Way.......... 7,572 3,356 9,335 --- 3,356 9,335 12,691 85
Spring Hill, FL
Colleton Square...... 909 190 1,349 9 156 1,392 1,548 483 1986
Walterboro, SC
Collins Park Commons. 727 25 1,858 24 25 1,882 1,907 540 1989
Plant City, FL
Conway Plaza......... ---- 110 1,071 794 ---- 1,976 1,976 667 1984
Conway, SC
Cortlandt Towne Center 51,949 17,010 80,809 46 15,112 82,753 97,865 6,237 1996
Cortlandt, NY
Cosby Station........ 3,959 999 4,516 597 999 5,113 6,112 839 1993-1994
Douglasville, GA
County Park Plaza.(E) ---- 196 1,500 379 140 1,935 2,075 524 1980
Scottsboro, AL
Devonshire Place..... ---- 371 3,449 2,489 520 5,789 6,309 674 1995-1996
Cary, NC
E Ridge Xing......... 689 832 2,494 1,505 731 4,099 4,830 921 1988
East Ridge, TN
Eastowne Xing.....(E) ---- 867 2,765 1,852 786 4,698 5,484 1,102 1989
Knoxville, TN
Fifty Eight Xing..... 664 839 2,360 (55) 743 2,401 3,144 742 1988
Chattanooga, TN
Garden City Plaza.(E) ---- 1,056 2,569 629 580 3,674 4,254 1,350 1984
Garden City, KS
Girvin Plaza......... ---- 898 1,998 997 702 3,191 3,893 527 1989-1990
Jacksonville, FL
Greenport Towne Center 4,165 659 6,161 (220) 659 5,941 6,600 1,001 1993-1994
Hudson, NY
Hampton Plaza........ ---- 973 2,689 44 965 2,741 3,706 700 1989-1990
Tampa, FL
82
Gross Amounts at Which Carried at
Initial Cost (A) Close of Period
---------------------- ---------------------------------------------
Costs
Capitalized
Buildings Subsequent Buildings Date of
(B) and to and Accumulated Contruction
Description Encumbrances Land Improvements Improvements Land Improvements Total(C) Depreciation(D) /Purchase
- -------------------- ---------- -------- ---------- -------- -------- --------- ------------------ ------------
Henderson Square..... 6,313 428 8,074 69 241 8,330 8,571 1,223 1994-1995
Henderson, NC
Jasper Square.....(E) ---- 235 1,423 1,763 235 3,186 3,421 814 1986
Jasper, AL
Jean Ribaut Kmart(E) ---- 317 2,065 765 340 2,807 3,147 598 1983-1984
Beaufort, SC
Jean Ribaut Square... 3,661 505 4,007 1,392 505 5,400 5,905 1,831 1983
Beaufort, SC
Keystone............. ---- 938 2,216 (16) 825 2,313 3,138 767 1989
Tampa, FL
Kingston Overlook.(E) ---- 1,693 5,664 1,983 2,105 7,235 9,340 727 1996
Knoxville, TN
Lady's Island.....(E) ---- 300 2,323 325 292 2,652 2,944 545 1992
Beaufort, SC
LaGrange Commons..... ---- 835 5,765 633 835 6,397 7,232 667 1995-1996
LaGrange, NY
Lionshead Village.... ---- 3,674 4,153 2,770 3,674 6,923 10,597 299 1998
Nashville, TN
Longview Xing........ 405 ---- 1,308 432 ---- 1,739 1,739 403 1988
Longview, NC
Lunenburg Crossing... ---- 1,020 2,308 (14) 1,019 2,294 3,313 355 1993-1994
Lunenburg, MA
Marketplace at
Flower Mound....... ---- 2,269 8,820 --- 2,269 8,820 11,089 165
Flowermound, TX
Massard Crossing..(E) ---- 843 5,726 (196) 843 5,530 6,373 549 1997
Fort Smith, AR
North Haven Crossing. 6,740 3,229 8,061 4 3,229 8,065 11,294 1,530 1992-1993
North Haven, CT
Northcreek Plaza..... ---- 98 1,201 51 97 1,253 1,350 271 1983
Greenwood, SC
Northridge Plaza..(E) ---- 1,087 2,970 2,008 1,244 4,821 6,065 1,785 1984
Hilton Head, SC
Northwoods Plaza..... 1,178 496 1,403 106 496 1,509 2,005 328 1995
Albemarle, NC
Oaks Crossing........ ---- 571 2,885 (1,318) 655 1,483 2,138 507 1988
Otsego, MI
Orange Plaza......... ---- 395 2,111 125 395 2,237 2,632 477 1992
Roanoke, VA
83
Gross Amounts at Which Carried at
Initial Cost (A) Close of Period
---------------------- ---------------------------------------------
Costs
Capitalized
Buildings Subsequent Buildings Date of
(B) and to and Accumulated Contruction
Description Encumbrances Land Improvements Improvements Land Improvements Total(C) Depreciation(D) /Purchase
- -------------------- ---------- -------- ---------- -------- -------- --------- ------------------ ------------
Park Place........... 952 ---- 3,590 836 231 4,194 4,425 1,625 1984
Chattanooga, TN
Park Village......... ---- 586 2,874 79 520 3,019 3,539 763 1990
Lakeland, FL
Perimeter Place...... 1,378 764 2,049 326 770 2,369 3,139 896 1985
Chattanooga, TN
Rawlinson Place..... ---- 279 1,573 82 292 1,642 1,934 542 1987
Rock Hill, SC
Rhett @ Remount...... ---- 67 1,877 883 67 2,760 2,827 973 1992
Charleston, SC
Salem Crossing....... ---- 2,385 7,094 (316) 2,385 6,777 9,162 645 1997
Virginia Beach, VA
Sand Lake Corners.... 14,000 3,182 15,952 2,513 3,054 18,592 21,646 647 1998-1999
Orlando, FL
Sattler Square....(E) ---- 792 4,155 277 705 4,519 5,224 1,252 1988-1989
Big Rapids, MI
Seacoast Shopping
Center............. 5,452 1,374 4,164 2,483 1,195 6,826 8,021 1,531 1991
Seabrook, NH
Shenandoah Crossing.. 509 122 1,382 64 115 1,453 1,568 437 1988
Roanoke, VA
Signal Hills Village. ---- ---- 579 484 ---- 1,063 1,063 321 1983-1984
Statesville, NC
Southgate Xing....... ---- ---- 1,002 25 ---- 1,027 1,027 358 1984-1985
Bristol, TN
Springhurst Towne 22,532 7,424 30,672 6,173 7,463 36,806 44,269 2,848 1997
Center...............
Louisville, KY
Springs Crossing..... ---- ---- 1,422 932 ---- 2,354 2,354 653 1987
Hickory, NC
Statesboro Square.(E) ---- 237 1,643 142 227 1,795 2,022 655 1986
Statesboro, GA
Stone East Plaza..(E) ---- 266 1,635 254 217 1,938 2,155 748 1987
Kingsport, TN
Strawbridge MK Place. ---- 1,969 2,492 --- 1,969 2,492 4,461 249 1997
Strawbridge, VA
Suburban Plaza....... 8,546 3,223 3,796 3,239 3,223 7,035 10,258 1,181 1995
Knoxville, TN
Sutton Plaza......... 12,039 1,042 4,671 10,441 2,582 13,573 16,155 717 1997
Mt. Olive, NJ
84
Gross Amounts at Which Carried at
Initial Cost (A) Close of Period
---------------------- ---------------------------------------------
Costs
Capitalized
Buildings Subsequent Buildings Date of
(B) and to and Accumulated Contruction
Description Encumbrances Land Improvements Improvements Land Improvements Total(C) Depreciation(D) /Purchase
- -------------------- ---------- -------- ---------- -------- -------- --------- ------------------ ------------
Townshire Center..... ---- ---- ---- 27 ---- 27 27 4 1997
Bryan, TX
Uvalde Plaza......... 660 574 1,506 (230) 319 1,532 1,851 514 1987
Uvalde, TX
Valley Commons....... 879 342 1,819 623 342 2,442 2,784 747 1988
Salem, VA
Valley Crossing...(E) ---- 2,390 6,471 5,099 3,034 10,927 13,961 2,566 1988
Hickory, NC
Village at Wexford... ---- 555 3,009 112 501 3,175 3,676 851 1989-1990
Cadillac, MI
Village Square....... ---- 750 3,591 (871) 142 3,328 3,470 968 1989-1990
Houghton Lake, MI
Willow Springs....... 4,567 2,917 6,107 5,007 2,917 11,114 14,031 1,976 1991
Nashua, NH
34th St Xing......... 1,433 1,102 2,743 85 1,023 2,907 3,930 832 1989
St. Petersburg, FL
DISPOSITIONS
Centerview Plaza..... ---- 246 1,584 (1,830) ---- ---- ---- ---- 1986
China Grove, NC
Clark's Pond......... ---- 2,739 ---- (2,739) ---- ---- ---- ---- 1994
Portland, ME
Dorchester Xing...... ---- 493 1,483 (1,976) ---- ---- ---- ---- 1985
Charleston, SC
Fiddler's Run........ ---- 1,319 13,793 (15,112) ---- ---- ---- ----
Morganton, NC
Genesis Square....... ---- 227 1,435 (1,662) ---- ---- ---- ---- 1990
Crossville, TN
Hollins Plantation ---- 229 1,845 (2,074) ---- ---- ---- ---- 1985
Plaza................
Roanoke, VA
Karnes Corner........ ---- 206 1,360 (1,566) ---- ---- ---- ---- 1987
Knoxville, TN
Lakeshore Station.... ---- 200 401 (601) ---- ---- ---- ---- 1993-1994
Gainesville, GA
Sparta Crossing...... ---- 180 1,463 (1,643) ---- ---- ---- ---- 1989
Sparta, TN
Sterling Creek Commons ---- 732 3,048 (3,780) ---- ---- ---- ---- 1998
Portsmouth, VA
85
Gross Amounts at Which Carried at
Initial Cost (A) Close of Period
---------------------- ---------------------------------------------
Costs
Capitalized
Buildings Subsequent Buildings Date of
(B) and to and Accumulated Contruction
Description Encumbrances Land Improvements Improvements Land Improvements Total(C) Depreciation(D) /Purchase
- -------------------- ---------- -------- ---------- -------- -------- --------- ------------------ ------------
Tyler Square......... ---- 196 2,021 (2,217) ---- ---- ---- ---- 1986
Radford, VA
University Crossing.. ---- 545 1,216 (1,761) ---- ---- ---- ---- 1985
Pueblo, CO
Wildwood Plaza....... ---- 429 1,082 (1,511) ---- ---- ---- ---- 1985
Salem, VA
OTHER
Land................. ---- ---- ---- 2,764 893 1,871 2,764 412
High Point, NC
Willowbrook Land..... ---- 4,543 ---- --- 4,543 ---- 4,543
Houston, TX
Developments in 170,005 2,955 ---- (2,297) 227 ---- 227 775 ----
Progress Consisting
of Construction and
Development
Properties (F)
---------- -------- ---------- -------- -------- --------- ---------- --------
TOTALS $1,424,337 $303,906 $1,660,436 $246,073 $290,366 $1,919,619 $2,209,985 $271,046
========== ======== ========== ======== ======== ========== ========== ========
(A) Initial cost represents the total cost capitalized
including carrying cost at the end of the first fiscal
year in which the property opened or was acquired.
(B) Encumbrances represent the mortgage notes payable balance at December 31, 2000.
(C) The aggregate cost of land and buildings and improvements for federal income tax purposes is
approximately $2.120 billion.
(D) Depreciation for all properties is computed over the
useful life which is generally forty years.
(E) Property is pledged as collateral on the secured lines of
credit used for development properties.
(F) Includes non-property mortgages and credit line mortgages.
86
CBL & ASSOCIATES PROPERTIES, INC.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
The changes in real estate assets and accumulated depreciation for the
years ending December 31, 2000, 1999, and 1998 (dollars in thousands).
2000 1999 1998
--------------- ---------------- ---------------
REAL ESTATE ASSETS:
Balance at beginning of period $2,184,102 $1,982,843 $1,287,965
Additions during the period:
Additions and improvements 173,916 180,094 130,728
Acquisitions of real estate assets 11,089 69,027 499,795
Acquisitions of real estate assets with -- -- 69,889
limited partnership interest
Deductions during the period:
Cost of sales (57,320) (46,188) (5,412)
Write-off of development projects (127) (1,674) (122)
--------------- ---------------- ---------------
Balance at end of period $2,311,660 $2,184,102 $1,982,843
=============== ================ ==============
ACCUMULATED DEPRECIATION:
Balance at beginning of period $223,548 $177,055 $145,641
Accumulated depreciation on properties sold (6,193) (6,640) (11,324)
Depreciation expense 53,691 53,133 42,738
--------------- ---------------- ---------------
Balance at end of period $271,046 $223,548 $177,055
=============== ================ ==============
87
Schedule IV
CBL & ASSOCIATES PROPERTIES, INC.
MORTGAGE LOANS ON REAL ESTATE
AT DECEMBER 31, 2000
(Dollars in thousands)
Principal
Amount of
Carrying Mortgages
Monthly Balloon Face Amount Subject to
Final Payment Payment Amount of Delinquent
Interest Maturity Amount at Prior of Mortgage Principal
Name of Center/Location Rate Date (1) Maturity Liens Mortgage (2) or Interest
- -------------------------------- ---------- ----------- ----------- ----------- -------- ----------- ----------- ---------------
Bi-Lo South 9.50% 12/06 $22 $87 None $1,206 $1,206 $0
Cleveland, TN
Gaston Square 11.00% 12/01 15 1,665 None 1,665 1,665 0
Gastonia, NC
Inlet Crossing 11.00% 12/01 27 1,443 None 1,443 1,443 60
Myrtle Beach, SC
Olde Brainerd Centre 9.50% 12/06 4 14 None 14 14 0
Chattanooga, TN
Signal Hills Plaza 11.00% 12/01 20 2,049 None 2,049 2,049 132
Statesville, NC
Soddy Daisy Plaza 9.50% 12/06 4 45 None 172 172 0
Soddy Daisy, TN
University Crossing 8.75% 02/10 7 399 None 650 650 0
Pueblo, CO
Other 10.00% 02/01-
09/07 0 1,741 1,557 1,557 0
----------- ----------- ----------- ----------- ---------------
$96 $7,443 $8,756 $8,756 $192
=========== =========== =========== =========== ===============
(1) Equal monthly installments comprised of principal and interest unless otherwise noted.
(2) The aggregate carrying value for federal income tax purposes is approximately $8,756 at December 31, 2000.
CBL & ASSOCIATES PROPERTIES, INC.
---------------------------------------------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
--------------------- -------------------- --------------------
Beginning Balance $9,385 $9,118 $11,678
Additions 825 1,690 1,620
Payments (1,454) (1,423) (4,180)
--------------------- -------------------- --------------------
Ending Balance $8,756 $9,385 $9,118
===================== ==================== ====================
88
EXHIBIT INDEX
Exhibit
Number Description
3.1 -- Amended and Restated Certificate of Incorporation of the Company(a)
3.2 -- Certificate of Amendment to the Amended & Restated Certificate
of Incorporation of the Company (b)
3.3 -- Amended and Restated Bylaws of the Company(a)
4 -- See Amended and Restated Certificate of Incorporation of the
Company, relating to the Common Stock(a)
10.1 -- Partnership Agreement of the Operating Partnership(a)
10.2 -- Property Management Agreement between the Operating Partnership
and the Management Company(a)
10.3 -- Property Management Agreement relating to Retained Properties(a)
10.4.1 -- CBL & Associates Properties, Inc. 1993 Stock Incentive Plan(a)+
10.4.2 -- Non-Qualified Stock Option Agreement, dated May 10, 1994, for
Charles B. Lebovitz+
10.4.3 -- Non-Qualified Stock Option Agreement, dated May 10, 1994, for
John N. Foy+
10.4.4 -- Non-Qualified Stock Option Agreement, dated May 10, 1994, for
Ben S. Landress+
10.4.5 -- Non-Qualified Stock Option Agreement, dated May 10, 1994, for
Stephen D. Lebovitz+
10.4.6 -- Stock Restriction Agreement, dated December 28, 1994, for
Charles B. Lebovitz+
10.4.7 -- Stock Restriction Agreement, dated December 2, 1994, for
John N. Foy+
10.4.8 -- Stock Restriction Agreement, dated December 2, 1994, for
Ben S. Landress+
10.4.9 -- Stock Restriction Agreement, dated December 2, 1994, for
Stephen D. Lebovitz+
10.5 -- Indemnification Agreements between the Company and the Management
Company and their officers and directors(a)
10.6.1 -- Employment Agreement for Charles B. Lebovitz(a)+
10.6.2 -- Employment Agreement for John N. Foy(a)+
10.6.3 -- Employment Agreement for Ben S. Landress(a)+
10.6.4 -- Employment Agreement for Stephen D. Lebovitz(a)+
89
10.7 -- Subscription Agreement relating to purchase of the Common
Stock and Preferred Stock of the Management Company(a)
10.8 -- Option Agreement relating to certain Retained Properties(a)
10.9 -- Option Agreement relating to Outparcels(a)
10.10.1 -- Property Partnership Agreement relating to Hamilton Place(a)
10.10.2 -- Property Partnership Agreement relating to CoolSprings
Galleria(a)
10.11.1 -- Acquisition Option Agreement relating to Hamilton Place(a)
10.11.2 -- Acquisition Option Agreement relating to the Hamilton Place
Centers(a)
10.12.3 -- Acquisition Option Agreement relating to the Office Building(a)
10.13 -- Loan agreement with South Trust Bank dated January 15 , 1998.(d)
10.14 -- Amended and restated Loan Agreement between CBL & Associates
Properties , Inc. and First Tennessee Bank National Association
Dated June 12, 1998 (e)
10.15 -- First Amendment To Third Amended And Restated Credit Agreement and
Third Amended And Restated Credit Agreement between CBL &
Associates Properties, Inc. and Wells Fargo Bank, National
Association, dated August 4, 1998 (e)
10.16 -- Master Contribution Agreement, dated as of September 25, 2000, by
and among the Registrant, CBL & Associates Limited Partnership,
Jacobs Realty Investors Limited Partnership, Richard E. Jacobs,
solely as Trustee for the Richard E. Jacobs Revocable Living
Trust, and Richard E. Jacobs, Solely as Trustee for the David H.
Jacobs Marital Trust. (f)
10.17 -- Press Release of the Registrant, dated January 31, 2001. (g)
10.18 -- First Amendment to Second Amended and Restated Agreement of
Limited Partnership of CBL & Associates Limited Partnership. (g)
10.19 -- Terms of Series J Special Common Units of CBL & Associates Limited
Partnership, pursuant to Article 4.4 of the Second Amended and
Restated Partnership Agreement of CBL & Associates Limited
Partnership. (g)
10.20 -- Certificate of Amendment of Amended and Restated Certificate of
Incorporation of the Registrant. (g)
10.21 -- Share Ownership Agreement, dated as if January 31, 2001, by
and among the Registrant, CBL & Associates, Inc., LebFam, Inc.
Charles B. Lebovitz, Stephen D. Lebovitz; Jacobs Realty Investors
Limited Partnership, Richard E. Jacobs, solely as trustee for the
Richard E. Jacobs Revocable Living Trust and Richard E. Jacobs
solely as trustee for the David H. Jacobs Marital Trust. (g)
90
10.22 -- Registration Rights Agreement, dated as of January 31, 2001 by
and between the Registrant and the Holders of SCU's listed on
Schedule 1 thereto. (g)
10.23 -- Registration Rights Agreement, dated as of January 31, 2001 by
and between the Registrant and Frankel Midland Limited
Partnership. (g)
10.24 -- Registration Rights Agreement, dated as of January 31, 2001 by
and between the Registrant and Hess Abroms Properties of
Huntsville. (g)
10.25 -- Loan Agreement, as of the January 31, 2001, by and between CBL
& Associates Limited Partnership, Wells Fargo Bank, National
Association, Fleet National Bank, U.S. Bank National Association,
Commerzbank AG, New York And Grand Cayman Branches, and Keybank
National Association, together certain other lenders parties
thereto pursuant to Section 8.6 thereof. (g)
21 -- Subsidiaries of the Company 91
23 -- Consent of Arthur Andersen LLP 96
24 -- Power of Attorney 97
(a) Incorporated by reference to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-11(No. 33-67372), as filed
with the Commission on January 27, 1994.
(b) Incorporated by reference to Exhibit B to the Company's Definitive
Schedule 14A, Dated April 1, 1996.
(c) Incorporated by reference to Amendment No. 2 to the Company's
Registration Statement on Form S-11 (No. 33-67372), as filed with the
Commission on October 26, 1993.
(d) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998.
(e) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998.
(f) Incorporated by reference to the Company's Form 8-K, filed on
October 27, 2000.
(g) Incorporated by reference to the Company's Form 8-K filed on
February 6, 2001.
+ A management contract or compensatory plan or arrangement required to
be filed pursuant to Item 14(c) of this report.
(4) Reports on Form 8-K
An 8-K disclosing the results of a special meeting of shareholders, in
connection with the Jacobs transaction, (Item 5: other events) was filed on
January 19, 2001.
The outline from the Company's February 1, 2001 conference call with
analysts regarding earnings (Item 5) was filed on February 1, 2001.
A summary of the Jacobs transaction together with certain of the material
agreements associated with the closing of the transaction on January 31, 2001
was filed on February 6, 2001
91
SUBSIDIARIES OF THE COMPANY
STATE OF
INCORPORATION OR
SUBSIDIARY FORMATION
Albemarle Partners Limited Partnership North Carolina
APWM, LLC Georgia
Arbor Place GP, Inc. Georgia
Arbor Place Limited Partnership Georgia
Asheville, LLC North Carolina
BJ/Portland Limited Partnership Maine
Bonita Lakes Mall Limited Partnership Mississippi
Bursnville Minnesota, LLC Minnesota
Cadillac Associates Limited Partnership Tennessee
Capital Crossing Limited Partnership North Carolina
Cary Limited Partnership North Carolina
CBL & Associates Limited Partnership Delaware
CBL & Associates Management, Inc. Delaware
CBL/34th Street St. Petersburg Limited Partnership Florida
CBL/Bartow Limited Partnership Florida
CBL/Brushy Creek Limited Partnership Florida
CBL/Buena Vista Limited Partnership Georgia
CBL/Cedar Bluff Crossing Limited Partnership Tennessee
CBL/Foothills Plaza Partnership Tennessee
CBL/GP, Inc. Wyoming
CBL/GP I, Inc. Tennessee
CBL/GP II, Inc. Wyoming
CBL/GP III, Inc. Mississippi
CBL/GP V, Inc. Tennessee
CBL/GP VI, Inc. Tennessee
CBL/GP Cary, Inc. North Carolina
CBL Holdings I, Inc. Delaware
CBL Holdings II, Inc. Delaware
CBL/Karns Corner Limited Partnership Tennessee
CBL/Low Limited Partnership Wyoming
CBL Morristown, LTD. Tennessee
CBL/Nashua Limited Partnership New Hampshire
CBL/North Haven, Inc. Connecticut
CBL/Perimeter Place Limited Partnership Tennessee
CBL/Plant City Limited Partnership Florida
CBL/Plantation Plaza, L.P. Virginia
CBL/Rawlinson Place Limited Partnership Tennessee
CBL/Springs Crossing Limited Partnership Tennessee
CBL/Stroud, Inc. Pennsylvania
CBL/Suburban, Inc. Tennessee
92
STATE OF
INCORPORATION OR
SUBSIDIARY FORMATION
CBL/Tampa Keystone Limited Partnership Florida
CBL Terrace Limited Partnership Tennessee
CBL/Uvalde, Ltd. Texas
CBL/York, Inc. Pennsylvania
Chester Square Limited Partnership Virginia
Chesterfield Crossing, LLC Virginia
Coastal Way, L.C. Florida
Cobblestone Village at St. Augustine, LLC Florida
College Station Partners, Ltd. Texas
CoolSprings Crossing Limited Partnership Tennessee
Cortlandt Town Center, Inc. New York
Cortlandt Town Center Limited Partnership New York
Cosby Station Limited Partnership Georgia
Courtyard at Hickory Hollow Limited Partnership Delaware
Creekwood Gateway, LLC Florida
Crossville Associates Limited Partnership Tennessee
CV at North Columbus, LLC Georgia
Development Options, Inc. Wyoming
East Ridge Partners, L.P. Tennessee
East Towne Crossing Limited Partnership Tennessee
ERMC II Tennessee
ERMC IV Tennessee
ERMC V Tennessee
Fifty-Eight Partners, L.P. Tennessee
Foothills Mall, Inc. Tennessee
Foothills Mall Associates, LP Tennessee
Frontier Mall Associates Limited Partnership Wyoming
Georgia Square Associates, Ltd. Georgia
Georgia Square Partnership Georgia
Governor's Square Company Ohio
Governor's Square Company IB Ohio
Gunbarrel Commons, LLC Tennessee
Henderson Square Limited Partnership North Carolina
Hickory Hollow Courtyard, Inc. Delaware
Hickory Hollow Mall, Inc. Delaware
Hickory Hollow Mall Limited Partnership Delaware
High Point Development Limited Partnership North Carolina
High Point Development Limited Partnership II North Carolina
Hudson Plaza Limited Partnership New York
Houston Willowbrook LLC Texas
Jarnigan Road Limited Partnership Tennessee
Janesville Mall Limited Partnership Wisconsin
Janesville Wisconsin, Inc. Wisconsin
93
STATE OF
INCORPORATION OR
SUBSIDIARY FORMATION
Joplin-Low Limited Partnership Missouri
Kingston Overlook Limited Partnership Tennessee
LaGrange Commons Limited Partnership New York
Lakeshore Gainesville Limited Partnership Georgia
Lakeshore/Sebring Limited Partnership Florida
Leaseco, Inc. New York
Lebcon Associates Tennessee
Lebcon I, Ltd. Tennessee
Lee Partners Tennessee
Lion's Head Limited Partnership Tennessee
Longview Associates Limited Partnership North Carolina
Lunenburg Crossing Limited Partnership Massachusetts
Madison Plaza Associates, Ltd. Alabama
Madison Square Associates, Ltd. Alabama
Mall Shopping Center Company, L.P. Texas
Maryville Department Stores Associates Tennessee
Maryville Partners, L.P. Tennessee
Meridian Mall Company, Inc. Michigan
Meridian Mall Limited Partnership Michigan
Montgomery Partners, L.P. Tennessee
Massard Crossing Limited Partnership Arkansas
NewLease Corp. Tennessee
North Haven Crossing Limited Partnership Connecticut
Oak Ridge Associates Limited Partnership Tennessee
Park Village Limited Partnership Florida
Parkway Place, Inc. Alabama
Parkway Place Limited Parntership Alabama
Portland/HQ Limited Partnership Maine
Post Oak Mall Associates Limited Partnership Texas
Property Taxperts, LLC Nevada
RC Jacksonville, LC Florida
RC Strawbridge Limited Partnership Virginia
Rivergate Mall, Inc. Delaware
Rivergate Mall Limited Partnership Delaware
Salem Crossing Limited Partnership Virginia
Sand Lake Corners, LC Florida
Sand Lake Corners Limited Partnership Florida
Scottsboro Associates, Ltd. Alabama
Seacoast Shopping Center Limited Partnership New Hampshire
Shopping Center Finance Corp. Wyoming
Springdale/Mobile GP, Inc. Alabama
Springdale/Mobile GP II, Inc. Alabama
Springdale/Mobile Limited Partnership Alabama
94
STATE OF
INCORPORATION OR
SUBSIDIARY FORMATION
Springdale/Mobile Limited Partnership II Alabama
Springhurst Limited Partnership Kentucky
St. Clair Square GP, Inc. Illinois
St. Clair Square Limited Partnership Illinois
Sterling Creek Commons Limited Partnership Virginia
Stone East Partners, Ltd. Tennessee
Stoney Brook Landing LLC Kentucky
Stroud Mall LLC Pennsylvania
Suburban Plaza Limited Partnership Tennessee
Sutton Plaza GP, Inc. New Jersey
Sutton Plaza Limited Partnership New Jersey
The Marketplace at Mill Creek, LLC Georgia
The Lakes Mall, LLC Michigan
The Landing at Arbor Place Limited Partnership Georgia
The Galleria Associates, L.P. Tennessee
Turtle Creek Limited Partnership Mississippi
Twin Peaks Mall Associates, Ltd. Colorado
Valley Crossing Associates Limited Partnership North Carolina
Vicksburg Mall Associates, Ltd. Mississippi
Village at Rivergate, Inc. Delaware
Village at Rivergate Limited Partnership Delaware
Walnut Square Associates Limited Partnership Wyoming
Westgate Crossing Limited Partnership North Carolina
Westgate Mall Limited Partnership South Carolina
York Galleria Limited Partnership Virginia
Brookfield Square Joint Venture Ohio
Cary Venture Limited Partnership Delaware
CBL/Brookfield I, LLC Delaware
CBL/Brookfield II, LLC Delaware
CBL/Cary I, LLC Delaware
CBL/Cary II, LLC Delaware
CBL/Cherryvale I, LLC Delaware
CBL/Citadel I, LLC Delaware
CBL/Citadel II, LLC Delaware
CBL/Columbia I, LLC Delaware
CBL/Columbia II, LLC Delaware
CBL/Eastgate I, LLC Delaware
CBL/Eastgate II, LLC Delaware
CBL/Fayette I, LLC Delaware
CBL/Fayette II, LLC Delaware
CBL/J I, LLC Delaware
CBL/J II, LLC Delaware
95
STATE OF
INCORPORATION OR
SUBSIDIARY FORMATION
CBL/ Jefferson I, LLC Delaware
CBL/Jefferson II, LLC Delaware
CBL/Kentucky Oaks, LLC Delaware
CBL/Madison I, LLC Delaware
CBL/Midland I, LLC Delaware
CBL/Midland II, LLC Delaware
CBL/Northwoods I, LLC Delaware
CBL/Northwoods II, LLC Delaware
CBL/Old Hickory I, LLC Delaware
CBL/Old Hickory II, LLC Delaware
CBL/Parkdale, LLC Texas
CBL/Regency I, LLC Delaware
CBL/Regency II, LLC Delaware
CBL/Towne Mall I, LLC Delaware
CBL/Towne Mall II, LLC Delaware
CBL/Wausau I, LLC Delaware
CBL/Wausau II, LLC Delaware
CBL/Wausau III, LLC Delaware
CBL/Wausau IV, LLC Delaware
CBL/Weston I, LLC Delaware
CBL/Weston II, LLC Delaware
Charleston Joint Venture Ohio
Columbia Joint Venture Ohio
Eastgate Company Ohio
JC Randolph, LLC Ohio
JG Saginaw, LLC Ohio
JG Winston-Salem, LLC Ohio
Jefferson Mall Company Ohio
Kentucky Oaks Mall Company Ohio
Lexington Joint Venture Ohio
Madison Joint Venture Ohio
Midland Joint Venture Michigan
North Charleston Joint Venture Ohio
Old Hickory Mall Venture Tennessee
Parkdale Mall Associates Texas
Racine Joint Venture Ohio
Towne Mall Ohio
Wausau Joint Venture Ohio
96
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-K, into CBL & Associates Properties,
Inc.'s previously filed Registration Statements on Form S-3 (File No. 333-47041)
and Form S-8 (File No. 33-73376).
ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
March 29, 2001
97
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Charles B. Lebovitz, John N. Foy and Stephen D.
Lebovitz and each of them, with full power to act without the other, his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report of CBL & Associates Properties, Inc. on
Form 10-K for the fiscal year ended December 31, 2000, including one or more
amendments to such Form 10-K, which amendments may make such changes as such
person deems appropriate, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary fully to all intents and purposes as he might or could
do in person thereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power-of-Attorney on
the date set opposite his respective name.
Signature Title Date
/s/ Charles B. Lebovitz Chairman of the Board March 29, 2001
- ------------------------ and Chief
Charles B. Lebovitz Executive Officer
(Principal Executive Officer)
/s/ John N. Foy Vice Chairman of the Board, March 29, 2001
- ------------------------ Chief Financial Officer and
John N. Foy Treasurer (Principal Financial
Officer and Principal Accounting
Officer)
/s/ Stephen D. Lebovitz Director, President March 29, 2001
- ------------------------ and Secretary
Stephen D. Lebovitz
/s/ Claude M.Ballard Director March 29, 2001
- ------------------------
Claude M. Ballard
/s/ Leo Fields Director March 29, 2001
- ------------------------
Leo Fields
/s/ William J.Poorvu Director March 29, 2001
- ------------------------
William J. Poorvu
/s/ Winston W. Walker Director March 29, 2001
- ------------------------
Winston W. Walker
/s/ Gary L. Bryenton Director March 29, 2001
- ------------------------
Gary L. Bryenton
/s/ Martin J. Cleary Director March 29, 2001
- ------------------------
Martin J. Cleary
98