CBL & ASSOCIATES PROPERTIES INC - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - CBL & ASSOCIATES PROPERTIES INC	exhibit-321x9302016.htm
EX-32.4 - EXHIBIT 32.4 - CBL & ASSOCIATES PROPERTIES INC	exhibit-324x9302016.htm
EX-32.3 - EXHIBIT 32.3 - CBL & ASSOCIATES PROPERTIES INC	exhibit323-9302016.htm
EX-32.2 - EXHIBIT 32.2 - CBL & ASSOCIATES PROPERTIES INC	exhibit322-9302016.htm
EX-31.4 - EXHIBIT 31.4 - CBL & ASSOCIATES PROPERTIES INC	exhibit-314x9302016.htm
EX-31.3 - EXHIBIT 31.3 - CBL & ASSOCIATES PROPERTIES INC	exhibit-313x9302016.htm
EX-31.2 - EXHIBIT 31.2 - CBL & ASSOCIATES PROPERTIES INC	exhibit-312x9302016.htm
EX-31.1 - EXHIBIT 31.1 - CBL & ASSOCIATES PROPERTIES INC	exhibit-311x9302016.htm
EX-12.4 - EXHIBIT 12.4 - CBL & ASSOCIATES PROPERTIES INC	exhibit-124x9302016.htm
EX-12.3 - EXHIBIT 12.3 - CBL & ASSOCIATES PROPERTIES INC	exhibit-123x9302016.htm
EX-12.2 - EXHIBIT 12.2 - CBL & ASSOCIATES PROPERTIES INC	exhibit-122x9302016.htm
EX-12.1 - EXHIBIT 12.1 - CBL & ASSOCIATES PROPERTIES INC	exhibit-121x9302016.htm

Table of Contents

UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016

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

FOR THE TRANSITION PERIOD FROM ____________ TO _______________

COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)

COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)

______________

CBL & ASSOCIATES PROPERTIES, INC.

CBL & ASSOCIATES LIMITED PARTNERSHIP

(Exact Name of registrant as specified in its charter)

______________



DELAWARE (CBL & ASSOCIATES PROPERTIES, INC.)		62-1545718
DELAWARE (CBL & ASSOCIATES LIMITED PARTNERSHIP)		62-1542285
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN 37421-6000

(Address of principal executive office, including zip code)

423.855.0001

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



CBL & Associates Properties, Inc.	Yes x	No o
CBL & Associates Limited Partnership	Yes x	No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



CBL & Associates Properties, Inc.	Yes x	No o
CBL & Associates Limited Partnership	Yes x	No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



CBL & Associates Properties, Inc.
Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller Reporting Company o
CBL & Associates Limited Partnership
Large accelerated filer o	Accelerated filer o	Non-accelerated filer x	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



CBL & Associates Properties, Inc.	Yes o	No x
CBL & Associates Limited Partnership	Yes o	No x

As of November 3, 2016, there were 170,793,828 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2016 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we," "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.

The Company is a real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At September 30, 2016, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 84.8% limited partner interest for a combined interest held by the Company of 85.8%.

As the sole general partner of the Operating Partnership, the Company's subsidiary, CBL Holdings I, Inc., has exclusive control of the Operating Partnership's activities. Management operates the Company and the Operating Partnership as one business. The management of the Company consists of the same individuals that manage the Operating Partnership. The Company's only material asset is its indirect ownership of partnership interests of the Operating Partnership. As a result, the Company conducts substantially all its business through the Operating Partnership as described in the preceding paragraph. The Company also issues public equity from time to time and guarantees certain debt of the Operating Partnership. The Operating Partnership holds all of the assets and indebtedness of the Company and, through affiliates, retains the ownership interests in the Company's joint ventures. Except for the net proceeds of offerings of equity by the Company, which are contributed to the Operating Partnership in exchange for partnership units on a one-for-one basis, the Operating Partnership generates all remaining capital required by the Company's business through its operations and its incurrence of indebtedness.

We believe that combining the two quarterly reports on Form 10-Q for the Company and the Operating Partnership provides the following benefits:


•	enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;


•	eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and


•	creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the differences between the Company and the Operating Partnership, this report provides separate condensed consolidated financial statements for the Company and the Operating Partnership. Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the condensed consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to condensed consolidated financial statements is presented that includes separate discussions for the Company and the Operating Partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.

In order to highlight the differences between the Company and the Operating Partnership, this report includes the following sections that provide separate financial and other information for the Company and the Operating Partnership:


•	condensed consolidated financial statements;


•	certain accompanying notes to condensed consolidated financial statements, including Note 5 - Unconsolidated Affiliates, Redeemable Interests, Noncontrolling Interests and Cost Method Investments; Note 6 - Mortgage and Other Indebtedness; Note 7 - Comprehensive Income; and Note 11 - Earnings per Share and Earnings per Unit;


•	controls and procedures in Item 4 of Part I of this report;


•	information concerning unregistered sales of equity securities and use of proceeds in Item 2 of Part II of this report; and


•	certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4.

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CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

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PART I	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

CBL & Associates Properties, Inc.
	Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015	1

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

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

	Condensed Consolidated Statements of Equity for the Nine Months Ended September 30, 2016 and 2015	4

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

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

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

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2016 and 2015	10

	Condensed Consolidated Statements of Capital for the Nine Months Ended September 30, 2016 and 2015	11

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

CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
	Notes to Unaudited Condensed Consolidated Financial Statements	15
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 4.	Controls and Procedures	66

PART II	OTHER INFORMATION	66

Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults Upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	67
Item 6.	Exhibits	67

	SIGNATURES	68

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PART I – FINANCIAL INFORMATION

ITEM 1: Financial Statements

CBL & Associates Properties, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)



ASSETS ⁽¹⁾	September 30, 2016			December 31, 2015
Real estate assets:
Land	$	839,114		$	876,668
Buildings and improvements	6,906,736			7,287,862
	7,745,850			8,164,530
Accumulated depreciation	(2,370,768		)	(2,382,568		)
	5,375,082			5,781,962
Held for sale	32,250			—
Developments in progress	141,099			75,991
Net investment in real estate assets	5,548,431			5,857,953
Cash and cash equivalents	24,468			36,892
Receivables:
Tenant, net of allowance for doubtful accounts of $1,993 and $1,923 in 2016 and 2015, respectively	95,518			87,286
Other, net of allowance for doubtful accounts of $1,332 and $1,276 in 2016 and 2015, respectively	14,109			17,958
Mortgage and other notes receivable	13,581			18,238
Investments in unconsolidated affiliates	287,791			276,383
Intangible lease assets and other assets	190,423			185,281
	$	6,174,321		$	6,479,991

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness, net	$	4,531,269		$	4,710,628
Accounts payable and accrued liabilities	303,642			344,434
Total liabilities ⁽¹⁾	4,834,911			5,055,062
Commitments and contingencies (Note 6 and Note 12)
Redeemable noncontrolling interests	22,742			25,330
Shareholders' equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding	18			18
6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding	7			7
Common stock, $.01 par value, 350,000,000 shares authorized, 170,790,979 and 170,490,948 issued and outstanding in 2016 and 2015, respectively	1,708			1,705
Additional paid-in capital	1,959,007			1,970,333
Accumulated other comprehensive income	—			1,935
Dividends in excess of cumulative earnings	(754,425		)	(689,028		)
Total shareholders' equity	1,206,315			1,284,970
Noncontrolling interests	110,353			114,629
Total equity	1,316,668			1,399,599
	$	6,174,321		$	6,479,991


(1)	As of September 30, 2016, includes $618,034 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $484,231 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 5.

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
REVENUES:
Minimum rents	$	164,444		$	170,422		$	502,289		$	505,931
Percentage rents	3,225			3,869			10,590			10,418
Other rents	3,866			4,156			13,747			13,748
Tenant reimbursements	69,489			72,461			212,951			214,818
Management, development and leasing fees	4,177			2,754			10,825			8,195
Other	6,520			8,974			19,362			24,278
Total revenues	251,721			262,636			769,764			777,388

OPERATING EXPENSES:
Property operating	35,116			35,859			104,804			107,629
Depreciation and amortization	71,794			74,045			220,505			221,550
Real estate taxes	22,492			23,579			68,354			68,913
Maintenance and repairs	13,236			12,480			39,574			39,103
General and administrative	13,222			12,995			46,865			46,440
Loss on impairment	53,558			884			116,736			3,665
Other	5,576			8,787			20,313			21,191
Total operating expenses	214,994			168,629			617,151			508,491
Income from operations	36,727			94,007			152,613			268,897
Interest and other income	451			579			1,062			6,242
Interest expense	(54,292		)	(56,451		)	(162,710		)	(174,362		)
Gain on extinguishment of debt	(6		)	—			—			256
Gain on investment	—			—			—			16,560
Income tax benefit (provision)	2,386			(448		)	2,974			(2,004		)
Equity in earnings of unconsolidated affiliates	10,478			3,508			107,217			12,212
Income (loss) from continuing operations before gain on sales of real estate assets	(4,256		)	41,195			101,156			127,801
Gain on sales of real estate assets	4,926			3,237			14,503			18,167
Net income	670			44,432			115,659			145,968
Net (income) loss attributable to noncontrolling interests in:
Operating Partnership	1,372			(4,665		)	(12,056		)	(15,783		)
Other consolidated subsidiaries	(983		)	(2,198		)	449			(4,557		)
Net income attributable to the Company	1,059			37,569			104,052			125,628
Preferred dividends	(11,223		)	(11,223		)	(33,669		)	(33,669		)
Net income (loss) attributable to common shareholders	$	(10,164	)	$	26,346		$	70,383		$	91,959

Basic per share data attributable to common shareholders:
Net income (loss) attributable to common shareholders	$	(0.06	)	$	0.15		$	0.41		$	0.54
Weighted-average common shares outstanding	170,792			170,494			170,751			170,470

Diluted per share data attributable to common shareholders:
Net income (loss) attributable to common shareholders	$	(0.06	)	$	0.15		$	0.41		$	0.54
Weighted-average common and potential dilutive common shares outstanding	170,792			170,494			170,751			170,500

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

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

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net income	$	670		$	44,432		$	115,659		$	145,968

Other comprehensive income (loss):
Unrealized holding gain on available-for-sale securities	—			—			—			242
Reclassification to net income of realized gain on available-for-sale securities	—			—			—			(16,560		)
Unrealized gain on hedging instruments	—			975			877			3,074
Reclassification of hedging effect on earnings	—			(518		)	(443		)	(1,687		)
Total other comprehensive income (loss)	—			457			434			(14,931		)

Comprehensive income	670			44,889			116,093			131,037
Comprehensive (income) loss attributable to noncontrolling interests in:
Operating Partnership	1,372			(4,737		)	(12,119		)	(12,769		)
Other consolidated subsidiaries	(983		)	(2,198		)	449			(4,557		)
Comprehensive income attributable to the Company	$	1,059		$	37,954		$	104,423		$	113,711

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

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)



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

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)

(Continued)



				Equity
				Shareholders' Equity
	Redeemable Noncontrolling Interests			Preferred Stock		Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, January 1, 2016	$	25,330		$	25	$	1,705	$	1,970,333		$	1,935		$	(689,028	)	$	1,284,970		$	114,629		$	1,399,599
Net income (loss)	(2,119		)	—		—		—			—			104,052			104,052			13,726			117,778
Other comprehensive income	3			—		—		—			371			—			371			60			431
Purchase of noncontrolling interests in Operating Partnership	—			—		—		—			—			—			—			(11,754		)	(11,754		)
Dividends declared - common stock	—			—		—		—			—			(135,780		)	(135,780		)	—			(135,780		)
Dividends declared - preferred stock	—			—		—		—			—			(33,669		)	(33,669		)	—			(33,669		)
Issuances of 331,324 shares of common stock and restricted common stock	—			—		3		429			—			—			432			—			432
Cancellation of 31,293 shares of restricted common stock	—			—		—		(226		)	—			—			(226		)	—			(226		)
Performance stock units	—			—		—		775			—			—			775			—			775
Amortization of deferred compensation	—			—		—		2,857			—			—			2,857			—			2,857
Adjustment for noncontrolling interests	1,686			—		—		(11,647		)	(2,306		)	—			(13,953		)	12,267			(1,686		)
Adjustment to record redeemable noncontrolling interests at redemption value	3,617			—		—		(3,514		)	—			—			(3,514		)	(103		)	(3,617		)
Contributions from noncontrolling interests	—			—		—		—			—			—			—			11,240			11,240
Distributions to noncontrolling interests	(5,775		)	—		—		—			—			—			—			(29,712		)	(29,712		)
Balance, September 30, 2016	$	22,742		$	25	$	1,708	$	1,959,007		$	—		$	(754,425	)	$	1,206,315		$	110,353		$	1,316,668

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

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

	Nine Months Ended September 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	115,659		$	145,968
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	220,505			221,550
Net amortization of deferred financing costs and debt premiums	2,019			3,745
Net amortization of intangible lease assets and liabilities	(204		)	(613		)
Gain on sales of real estate assets	(14,503		)	(18,167		)
Gain on investment	—			(16,560		)
Write-off of development projects	44			2,183
Share-based compensation expense	4,011			4,323
Loss on impairment	116,736			3,665
Gain on extinguishment of debt	—			(256		)
Equity in earnings of unconsolidated affiliates	(107,217		)	(12,212		)
Distributions of earnings from unconsolidated affiliates	12,337			15,697
Provision for doubtful accounts	3,377			1,663
Change in deferred tax accounts	(1,780		)	(59		)
Changes in:
Tenant and other receivables	(7,759		)	(6,777		)
Other assets	(10,028		)	(5,592		)
Accounts payable and accrued liabilities	6,428			21,324
Net cash provided by operating activities	339,625			359,882

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets	(165,091		)	(160,760		)
Acquisition of real estate assets	—			(191,988		)
(Additions) reductions to restricted cash	(10,020		)	2,132
Proceeds from sales of real estate assets	125,606			33,355
Additions to mortgage and other notes receivable	(3,259		)	—
Payments received on mortgage and other notes receivable	790			1,464
Net proceeds from sales of available-for-sale securities	—			20,755
Additional investments in and advances to unconsolidated affiliates	(21,805		)	(13,314		)
Distributions in excess of equity in earnings of unconsolidated affiliates	74,242			16,979
Changes in other assets	(4,786		)	(8,227		)
Net cash used in investing activities	(4,323		)	(299,604		)

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

	Nine Months Ended September 30,
	2016			2015
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	614,671		$	919,728
Principal payments on mortgage and other indebtedness	(755,579		)	(782,195		)
Additions to deferred financing costs	(1,169		)	(287		)
Proceeds from issuances of common stock	131			149
Purchase of noncontrolling interests in the Operating Partnership	(11,754		)	(286		)
Contributions from noncontrolling interests	11,085			607
Distributions to noncontrolling interests	(35,742		)	(34,345		)
Dividends paid to holders of preferred stock	(33,669		)	(33,669		)
Dividends paid to common shareholders	(135,700		)	(135,481		)
Net cash used in financing activities	(347,726		)	(65,779		)

NET CHANGE IN CASH AND CASH EQUIVALENTS	(12,424		)	(5,501		)
CASH AND CASH EQUIVALENTS, beginning of period	36,892			37,938
CASH AND CASH EQUIVALENTS, end of period	$	24,468		$	32,437

SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	150,512		$	162,390

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

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CBL & Associates Limited Partnership

Condensed Consolidated Balance Sheets

(In thousands, except unit data)

(Unaudited)



ASSETS ⁽¹⁾	September 30, 2016			December 31, 2015
Real estate assets:
Land	$	839,114		$	876,668
Buildings and improvements	6,906,736			7,287,862
	7,745,850			8,164,530
Accumulated depreciation	(2,370,768		)	(2,382,568		)
	5,375,082			5,781,962
Held for sale	32,250			—
Developments in progress	141,099			75,991
Net investment in real estate assets	5,548,431			5,857,953
Cash and cash equivalents	24,462			36,887
Receivables:
Tenant, net of allowance for doubtful accounts of $1,993 and $1,923 in 2016 and 2015, respectively	95,518			87,286
Other, net of allowance for doubtful accounts of $1,332 and $1,276 in 2016 and 2015, respectively	14,060			17,958
Mortgage and other notes receivable	13,581			18,238
Investments in unconsolidated affiliates	288,326			276,946
Intangible lease assets and other assets	190,303			185,162
	$	6,174,681		$	6,480,430

LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness, net	$	4,531,269		$	4,710,628
Accounts payable and accrued liabilities	303,671			344,434
Total liabilities ⁽¹⁾	4,834,940			5,055,062
Commitments and contingencies (Note 6 and Note 12)
Redeemable interests:
Redeemable noncontrolling interests	3,206			5,586
Redeemable common units	19,536			19,744
Total redeemable interests	22,742			25,330
Partners' capital:
Preferred units	565,212			565,212
Common units:
General partner	7,526			8,435
Limited partners	731,301			822,383
Accumulated other comprehensive loss	—			(868		)
Total partners' capital	1,304,039			1,395,162
Noncontrolling interests	12,960			4,876
Total capital	1,316,999			1,400,038
	$	6,174,681		$	6,480,430


(1)	As of September 30, 2016, includes $618,034 of assets related to consolidated variable interest entities that can only be used to settle obligations of the consolidated variable interest entities and $484,231 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Operating Partnership. See Note 5.

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

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CBL & Associates Limited Partnership Condensed Consolidated Statements of Operations (In thousands, except per unit data) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
REVENUES:
Minimum rents	$	164,444		$	170,422		$	502,289		$	505,931
Percentage rents	3,225			3,869			10,590			10,418
Other rents	3,866			4,156			13,747			13,748
Tenant reimbursements	69,489			72,461			212,951			214,818
Management, development and leasing fees	4,177			2,754			10,825			8,195
Other	6,520			8,974			19,362			24,278
Total revenues	251,721			262,636			769,764			777,388

OPERATING EXPENSES:
Property operating	35,116			35,859			104,804			107,629
Depreciation and amortization	71,794			74,045			220,505			221,550
Real estate taxes	22,492			23,579			68,354			68,913
Maintenance and repairs	13,236			12,480			39,574			39,103
General and administrative	13,222			12,995			46,865			46,440
Loss on impairment	53,558			884			116,736			3,665
Other	5,576			8,787			20,313			21,191
Total operating expenses	214,994			168,629			617,151			508,491
Income from operations	36,727			94,007			152,613			268,897
Interest and other income	451			579			1,062			6,242
Interest expense	(54,292		)	(56,451		)	(162,710		)	(174,362		)
Gain on extinguishment of debt	(6		)	—			—			256
Gain on investment	—			—			—			16,560
Income tax benefit (provision)	2,386			(448		)	2,974			(2,004		)
Equity in earnings of unconsolidated affiliates	10,478			3,508			107,217			12,212
Income (loss) from continuing operations before gain on sales of real estate assets	(4,256		)	41,195			101,156			127,801
Gain on sales of real estate assets	4,926			3,237			14,503			18,167
Net income	670			44,432			115,659			145,968
Net (income) loss attributable to noncontrolling interests	(983		)	(2,198		)	449			(4,557		)
Net income (loss) attributable to the Operating Partnership	(313		)	42,234			116,108			141,411
Distributions to preferred unitholders	(11,223		)	(11,223		)	(33,669		)	(33,669		)
Net income (loss) attributable to common unitholders	$	(11,536	)	$	31,011		$	82,439		$	107,742


Basic per unit data attributable to common unitholders:
Net income (loss) attributable to common unitholders	$	(0.06	)	$	0.16		$	0.41		$	0.54
Weighted-average common units outstanding	200,004			199,751			199,992			199,728

Basic and diluted per unit data attributable to common unitholders:
Net income (loss) attributable to common unitholders	$	(0.06	)	$	0.16		$	0.41		$	0.54
Weighted-average common and potential dilutive common units outstanding	200,004			199,751			199,992			199,758

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

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

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CBL & Associates Limited Partnership

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net income	$	670		$	44,432		$	115,659		$	145,968

Other comprehensive income (loss):
Unrealized holding gain on available-for-sale securities	—			—			—			242
Reclassification to net income of realized gain on available-for-sale securities	—			—			—			(16,560		)
Unrealized gain on hedging instruments	—			975			877			3,074
Reclassification of hedging effect on earnings	—			(518		)	(443		)	(1,687		)
Total other comprehensive income (loss)	—			457			434			(14,931		)

Comprehensive income	670			44,889			116,093			131,037
Comprehensive (income) loss attributable to noncontrolling interests	(983		)	(2,198		)	449			(4,557		)
Comprehensive income (loss) of the Operating Partnership	$	(313	)	$	42,691		$	116,542		$	126,480

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

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CBL & Associates Limited Partnership

Condensed Consolidated Statements of Capital

(In thousands)

(Unaudited)



	Redeemable Interests									Number of						Common Units
	Redeemable Noncontrolling Interests			Redeemable Common Units			Total Redeemable Interests			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Income (Loss)			Total Partners' Capital			Noncontrolling Interests			Total Capital
Balance, January 1, 2015	$	6,455		$	31,104		$	37,559		25,050	199,532		$	565,212		$	9,789		$	953,349		$	13,183		$	1,541,533		$	8,908		$	1,550,441
Net income	3,023			842			3,865			—	—		33,669			1,097			105,803			—			140,569			1,534			142,103
Other comprehensive loss	—			(366		)	(366		)	—	—		—			—			—			(14,565		)	(14,565		)	—			(14,565		)
Distributions declared - common units	—			(3,429		)	(3,429		)	—	—		—			(1,600		)	(158,444		)	—			(160,044		)	—			(160,044		)
Distributions declared - preferred units	—			—			—			—	—		(33,669		)	—			—			—			(33,669		)	—			(33,669		)
Issuances of common units	—			—			—			—	273		—			—			639			—			639			—			639
Redemptions of common units	—			—			—			—	(55	)	—			—			(286		)	—			(286		)	—			(286		)
Cancellation of restricted common stock	—			—			—			—	—		—			—			(741		)	—			(741		)	—			(741		)
Performance stock units	—			—			—			—	—		—			5			463			—			468			—			468
Amortization of deferred compensation	—			—			—			—	—		—			35			3,349			—			3,384			—			3,384
Allocation of partners' capital	—			2,258			2,258			—	—		—			(76		)	(2,269		)	—			(2,345		)	—			(2,345		)
Adjustment to record redeemable interests at redemption value	(1,097		)	(8,418		)	(9,515		)	—	—		—			97			9,419			—			9,516			—			9,516
Contributions from noncontrolling interests	—			—			—			—	—		—			—			—			—			—			607			607
Distributions to noncontrolling interests	(2,057		)	—			(2,057		)	—	—		—			—			—			—			—			(4,354		)	(4,354		)
Balance, September 30, 2015	$	6,324		$	21,991		$	28,315		25,050	199,750		$	565,212		$	9,347		$	911,282		$	(1,382	)	$	1,484,459		$	6,695		$	1,491,154

Table of Contents

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Capital

(In thousands)

(Unaudited)

(Continued)



	Redeemable Interests									Number of						Common Units
	Redeemable Noncontrolling Interests			Redeemable Common Units			Total Redeemable Interests			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Loss			Total Partners' Capital			Noncontrolling Interests		Total Capital
Balance, January 1, 2016	$	5,586		$	19,744		$	25,330		25,050	199,748		$	565,212		$	8,435		$	822,383		$	(868	)	$	1,395,162		$	4,876	$	1,400,038
Net income (loss)	(2,763		)	644			(2,119		)	—	—		33,669			839			80,956			—			115,464			2,314		117,778
Other comprehensive income	—			3			3			—	—		—			—						431			431			—		431
Distributions declared - common units	—			(3,429		)	(3,429		)	—	—		—			(1,600		)	(158,422		)	—			(160,022		)	—		(160,022		)
Distributions declared - preferred units	—			—			—			—	—		(33,669		)	—						—			(33,669		)	—		(33,669		)
Issuances of common units	—			—			—			—	331		—			—			432			—			432			—		432
Redemptions of common units	—			—			—			—	(965	)	—			—			(11,754		)	—			(11,754		)	—		(11,754		)
Cancellation of restricted common stock	—

CBL & ASSOCIATES PROPERTIES INC - FORM 10-Q - November 8, 2016

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