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EX-12.2 - EXHIBIT 12.2 - CBL & ASSOCIATES PROPERTIES INCexhibit-122x6302017.htm
EX-31.4 - EXHIBIT 31.4 - CBL & ASSOCIATES PROPERTIES INCexhibit-314x6302017.htm
EX-32.3 - EXHIBIT 32.3 - CBL & ASSOCIATES PROPERTIES INCexhibit323-6302017.htm
EX-32.4 - EXHIBIT 32.4 - CBL & ASSOCIATES PROPERTIES INCexhibit-324x6302017.htm
EX-32.2 - EXHIBIT 32.2 - CBL & ASSOCIATES PROPERTIES INCexhibit322-6302017.htm
EX-32.1 - EXHIBIT 32.1 - CBL & ASSOCIATES PROPERTIES INCexhibit-321x6302017.htm
EX-31.3 - EXHIBIT 31.3 - CBL & ASSOCIATES PROPERTIES INCexhibit-313x6302017.htm
EX-31.2 - EXHIBIT 31.2 - CBL & ASSOCIATES PROPERTIES INCexhibit-312x6302017.htm
EX-31.1 - EXHIBIT 31.1 - CBL & ASSOCIATES PROPERTIES INCexhibit-311x6302017.htm
EX-12.4 - EXHIBIT 12.4 - CBL & ASSOCIATES PROPERTIES INCexhibit-124x6302017.htm
EX-12.3 - EXHIBIT 12.3 - CBL & ASSOCIATES PROPERTIES INCexhibit-123x6302017.htm
EX-12.1 - EXHIBIT 12.1 - CBL & ASSOCIATES PROPERTIES INCexhibit-121x6302017.htm

UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2017
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO _______________
 
COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)
COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)
______________
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
(Exact Name of registrant as specified in its charter)
______________
DELAWARE (CBL & ASSOCIATES PROPERTIES, INC.)
 
   62-1545718
DELAWARE (CBL & ASSOCIATES LIMITED PARTNERSHIP)
 
   62-1542285
(State or other jurisdiction of incorporation or organization)     
 
 (I.R.S. Employer Identification Number)
                       
 2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN  37421-6000
(Address of principal executive office, including zip code)
423.855.0001
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 Yes x   
No o
                   
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 Yes x   
No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
CBL & Associates Properties, Inc.
Large accelerated filer x
 
Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Emerging growth company o
 
 
 
 
 
CBL & Associates Limited Partnership
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)
Smaller reporting company o
Emerging growth company o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Acto  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
CBL & Associates Properties, Inc.
 
 Yes o  
No x
CBL & Associates Limited Partnership
 
 Yes o  
No x
As of August 4, 2017, there were 171,097,098 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.




EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2017 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we," "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.
The Company is a real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At June 30, 2017, 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 and Noncontrolling Interests; Note 6 - Mortgage and Other Indebtedness, Net; 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.



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



PART I – FINANCIAL INFORMATION

ITEM 1:   Financial Statements
CBL & Associates Properties, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
ASSETS (1)
June 30,
2017
 
December 31,
2016
Real estate assets:
 
 
 
Land
$
818,550

 
$
820,979

Buildings and improvements
6,687,134

 
6,942,452

 
7,505,684

 
7,763,431

Accumulated depreciation
(2,374,071
)
 
(2,427,108
)
 
5,131,613

 
5,336,323

Held for sale

 
5,861

Developments in progress
94,698

 
178,355

Net investment in real estate assets
5,226,311

 
5,520,539

Cash and cash equivalents
29,622

 
18,951

Receivables:
 
 
 
Tenant, net of allowance for doubtful accounts of $2,091
and $1,910 in 2017 and 2016, respectively
84,472

 
94,676

Other, net of allowance for doubtful accounts of $838
in 2017 and 2016
7,699

 
6,227

Mortgage and other notes receivable
17,414

 
16,803

Investments in unconsolidated affiliates
254,522

 
266,872

Intangible lease assets and other assets
188,293

 
180,572

 
$
5,808,333

 
$
6,104,640

 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 

 
 

Mortgage and other indebtedness, net
$
4,249,440

 
$
4,465,294

Accounts payable and accrued liabilities
244,542

 
280,498

Total liabilities (1)
4,493,982

 
4,745,792

Commitments and contingencies (Note 6 and Note 12)


 


Redeemable noncontrolling interests
13,392

 
17,996

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, 171,094,642 and 170,792,645 issued and 
outstanding in 2017 and 2016, respectively
1,711

 
1,708

Additional paid-in capital
1,972,070

 
1,969,059

Dividends in excess of cumulative earnings
(779,693
)
 
(742,078
)
Total shareholders' equity
1,194,113

 
1,228,714

Noncontrolling interests
106,846

 
112,138

Total equity
1,300,959

 
1,340,852

 
$
5,808,333

 
$
6,104,640

(1)
As of June 30, 2017, includes $655,236 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $451,661 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.

1


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

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
157,609

 
$
167,216

 
$
317,359

 
$
337,845

Percentage rents
1,738

 
2,692

 
4,127

 
7,365

Other rents
3,729

 
4,819

 
7,381

 
9,881

Tenant reimbursements
62,231

 
70,096

 
129,522

 
143,462

Management, development and leasing fees
2,577

 
4,067

 
6,029

 
6,648

Other
1,349

 
6,075

 
2,828

 
12,842

Total revenues
229,233

 
254,965

 
467,246

 
518,043

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 
 
 
Property operating
30,041

 
31,060

 
64,955

 
69,688

Depreciation and amortization
82,509

 
72,205

 
153,729

 
148,711

Real estate taxes
18,687

 
22,834

 
40,770

 
45,862

Maintenance and repairs
11,716

 
11,790

 
25,068

 
26,338

General and administrative
15,752

 
16,475

 
31,834

 
33,643

Loss on impairment
43,203

 
43,493

 
46,466

 
63,178

Other
5,019

 
5,052

 
5,019

 
14,737

Total operating expenses
206,927

 
202,909

 
367,841

 
402,157

Income from operations
22,306

 
52,056

 
99,405

 
115,886

Interest and other income
31

 
251

 
1,435

 
611

Interest expense
(55,065
)
 
(53,187
)
 
(111,266
)
 
(108,418
)
Gain on extinguishment of debt
20,420

 

 
24,475

 
6

Loss on investment
(5,843
)
 

 
(5,843
)
 

Income tax benefit
2,920

 
51

 
3,720

 
588

Equity in earnings of unconsolidated affiliates
6,325

 
64,349

 
11,698

 
96,739

Income (loss) from continuing operations before gain on sales of real estate assets
(8,906
)
 
63,520

 
23,624

 
105,412

Gain on sales of real estate assets
79,533

 
9,577

 
85,521

 
9,577

Net income
70,627

 
73,097


109,145


114,989

Net (income) loss attributable to noncontrolling interests in:
 

 
 
 
 
 
 
Operating Partnership
(5,093
)
 
(8,483
)
 
(8,783
)
 
(13,428
)
Other consolidated subsidiaries
(24,138
)
 
(1,695
)
 
(24,851
)
 
1,432

Net income attributable to the Company
41,396

 
62,919

 
75,511

 
102,993

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

 
$
51,696

 
$
53,065

 
$
80,547

 
 
 
 
 
 
 
 
Basic and diluted per share data attributable to common shareholders:
 
 
 

 
 
 
 
Net income attributable to common shareholders
$
0.18

 
$
0.30

 
$
0.31

 
$
0.47

Weighted-average common and potential dilutive common shares outstanding
171,095

 
170,792

 
171,042

 
170,731

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.265

 
$
0.265

 
$
0.530

 
$
0.530


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

2


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

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
70,627

 
$
73,097

 
$
109,145

 
$
114,989

 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
   Unrealized gain on hedging instruments

 

 

 
877

   Reclassification of hedging effect on earnings

 

 

 
(443
)
Total other comprehensive income

 

 

 
434

 
 
 
 
 
 
 
 
Comprehensive income
70,627

 
73,097

 
109,145

 
115,423

Comprehensive (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
  Operating Partnership
(5,093
)
 
(8,483
)
 
(8,783
)
 
(13,491
)
  Other consolidated subsidiaries
(24,138
)
 
(1,695
)
 
(24,851
)
 
1,432

Comprehensive income attributable to the Company
$
41,396

 
$
62,919

 
$
75,511

 
$
103,364


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


3


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, 2016
$
25,330

 
$
25

 
$
1,705

 
$
1,970,333

 
$
1,935

 
$
(689,028
)
 
$
1,284,970

 
$
114,629

 
$
1,399,599

Net income (loss)
(1,975
)
 

 

 

 

 
102,993

 
102,993

 
13,971

 
116,964

Other comprehensive income
3

 

 

 

 
371

 

 
371

 
60

 
431

Dividends declared - common stock

 

 

 

 

 
(90,520
)
 
(90,520
)
 

 
(90,520
)
Dividends declared - preferred stock

 

 

 

 

 
(22,446
)
 
(22,446
)
 

 
(22,446
)
Issuances of 327,326 shares of common stock
and restricted common stock

 

 
3

 
385

 

 

 
388

 

 
388

Cancellation of 28,407 shares of restricted common stock

 

 

 
(224
)
 

 

 
(224
)
 

 
(224
)
Performance stock units

 

 

 
516

 

 

 
516

 

 
516

Amortization of deferred compensation

 

 

 
1,969

 

 

 
1,969

 

 
1,969

Redemption of Operating Partnership common units

 

 

 

 

 

 

 
(146
)
 
(146
)
Adjustment for noncontrolling interests
1,000

 

 

 
(3,130
)
 
(2,306
)
 

 
(5,436
)
 
4,436

 
(1,000
)
Adjustment to record redeemable
    noncontrolling interests at redemption value
(2,314
)
 

 

 
1,742

 

 

 
1,742

 
572

 
2,314

Contributions from noncontrolling interests

 

 

 

 

 

 

 
10,686

 
10,686

Distributions to noncontrolling interests
(4,211
)
 

 

 

 

 

 

 
(19,163
)
 
(19,163
)
Balance, June 30, 2016
$
17,833

 
$
25

 
$
1,708

 
$
1,971,591

 
$

 
$
(699,001
)
 
$
1,274,323

 
$
125,045

 
$
1,399,368





4


CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Equity
(In thousands, except share data)
(Unaudited)
(Continued)
 
 
 
Equity
 
 
 
Shareholders' Equity
 
 
 
 
 
Redeemable
Noncontrolling
Interests
 
Preferred
 Stock
 
Common
 Stock
 
Additional
 Paid-in
 Capital
 
Dividends in
Excess of
Cumulative
Earnings
 
Total
Shareholders'
Equity
 
Noncontrolling
 Interests
 
Total
 Equity
Balance, January 1, 2017
$
17,996

 
$
25

 
$
1,708

 
$
1,969,059

 
$
(742,078
)
 
$
1,228,714

 
$
112,138

 
$
1,340,852

Net income
485

 

 

 

 
75,511

 
75,511

 
33,149

 
108,660

Dividends declared - common stock

 

 

 

 
(90,680
)
 
(90,680
)
 

 
(90,680
)
Dividends declared - preferred stock

 

 

 

 
(22,446
)
 
(22,446
)
 

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

 

 
3

 
423

 

 
426

 

 
426

Redemptions of Operating Partnership common units

 

 

 

 

 

 
(530
)
 
(530
)
Cancellation of 34,478 shares of restricted
common stock

 

 

 
(304
)
 

 
(304
)
 

 
(304
)
Performance stock units

 

 

 
729

 

 
729

 

 
729

Amortization of deferred compensation

 

 

 
2,275

 

 
2,275

 

 
2,275

Adjustment for noncontrolling interests
1,483

 

 

 
(3,821
)
 

 
(3,821
)
 
2,338

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

 

 
3,709

 

 
3,709

 
577

 
4,286

Deconsolidation of investment

 

 

 

 

 

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

 

 

 

 

 

 
263

 
263

Distributions to noncontrolling interests
(2,286
)
 

 

 

 

 

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

 
$
25

 
$
1,711

 
$
1,972,070

 
$
(779,693
)
 
$
1,194,113

 
$
106,846

 
$
1,300,959


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


5



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

 
Six Months Ended
June 30,
 
2017
 
2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 
Net income
$
109,145

 
$
114,989

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

Depreciation and amortization
153,729

 
148,711

Net amortization of deferred financing costs, debt premiums and discounts
2,126

 
1,476

Net amortization of intangible lease assets and liabilities
(883
)
 
(288
)
Gain on sales of real estate assets
(85,521
)
 
(9,577
)
Loss on investment
5,843

 

Write-off of development projects
5,019

 
33

Share-based compensation expense
3,324

 
2,851

Loss on impairment
46,466

 
63,178

Gain on extinguishment of debt
(24,475
)
 
(6
)
Equity in earnings of unconsolidated affiliates
(11,698
)
 
(96,739
)
Distributions of earnings from unconsolidated affiliates
9,640

 
8,582

Provision for doubtful accounts
2,374

 
2,223

Change in deferred tax accounts
3,750

 
(320
)
Changes in:
 
 
 

Tenant and other receivables
(3,098
)
 
(13,595
)
Other assets
(6,638
)
 
(5,616
)
Accounts payable and accrued liabilities
(3,776
)
 
(1,741
)
Net cash provided by operating activities
205,327

 
214,161

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Additions to real estate assets
(93,535
)
 
(103,322
)
Acquisitions of real estate assets
(79,799
)
 

Additions to restricted cash
(6,315
)
 
(8,064
)
Proceeds from sales of real estate assets
194,632

 
88,583

Additions to mortgage and other notes receivable

 
(3,259
)
Payments received on mortgage and other notes receivable
1,190

 
515

Additional investments in and advances to unconsolidated affiliates
(4,853
)
 
(3,650
)
Distributions in excess of equity in earnings of unconsolidated affiliates
11,573

 
60,060

Changes in other assets
(11,203
)
 
(2,498
)
Net cash provided by investing activities
11,690

 
28,365


6


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

 
Six Months Ended
June 30,
 
2017
 
2016
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from mortgage and other indebtedness
$
494,103

 
$
439,113

Principal payments on mortgage and other indebtedness
(536,406
)
 
(570,838
)
Additions to deferred financing costs
(872
)
 
(79
)
Additions to debt issuance costs

 
(837
)
Prepayment fees on extinguishment of debt
(8,500
)
 

Proceeds from issuances of common stock
102

 
87

Purchase of noncontrolling interests in the Operating Partnership
(530
)
 
(146
)
Contributions from noncontrolling interests
263

 
10,686

Payment of tax withholdings for restricted stock awards
(298
)
 

Distributions to noncontrolling interests
(41,162
)
 
(23,378
)
Dividends paid to holders of preferred stock
(22,446
)
 
(22,446
)
Dividends paid to common shareholders
(90,600
)
 
(90,441
)
Net cash used in financing activities
(206,346
)
 
(258,279
)
 
 
 
 
NET CHANGE IN CASH AND CASH EQUIVALENTS
10,671

 
(15,753
)
CASH AND CASH EQUIVALENTS, beginning of period
18,951

 
36,892

CASH AND CASH EQUIVALENTS, end of period
$
29,622

 
$
21,139

 
 
 
 
SUPPLEMENTAL INFORMATION:
 

 
 

Cash paid for interest, net of amounts capitalized
$
116,349

 
$
109,109


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


7


CBL & Associates Limited Partnership
Condensed Consolidated Balance Sheets
(In thousands, except unit data)
(Unaudited)
ASSETS (1)
June 30,
2017
 
December 31,
2016
Real estate assets:
 
 
 
Land
$
818,550

 
$
820,979

Buildings and improvements
6,687,134

 
6,942,452

 
7,505,684

 
7,763,431

Accumulated depreciation
(2,374,071
)
 
(2,427,108
)
 
5,131,613

 
5,336,323

Held for sale

 
5,861

Developments in progress
94,698

 
178,355

Net investment in real estate assets
5,226,311

 
5,520,539

Cash and cash equivalents
29,622

 
18,943

Receivables:
 

 
 

Tenant, net of allowance for doubtful accounts of $2,091
and $1,910 in 2017 and 2016, respectively
84,472

 
94,676

Other, net of allowance for doubtful accounts of $838
in 2017 and 2016
7,651

 
6,179

Mortgage and other notes receivable
17,414

 
16,803

Investments in unconsolidated affiliates
255,053

 
267,405

Intangible lease assets and other assets
188,173

 
180,452

 
$
5,808,696

 
$
6,104,997

 
 
 
 
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
 

 
 

Mortgage and other indebtedness, net
$
4,249,440

 
$
4,465,294

Accounts payable and accrued liabilities
244,604

 
280,528

Total liabilities (1)
4,494,044

 
4,745,822

Commitments and contingencies (Note 6 and Note 12)


 


 Redeemable common units  
13,392

 
17,996

Partners' capital:
 

 
 

Preferred units
565,212

 
565,212

Common units:
 
 
 
 General partner
7,368

 
7,781

 Limited partners
716,743

 
756,083

Total partners' capital
1,289,323

 
1,329,076

Noncontrolling interests
11,937

 
12,103

Total capital
1,301,260

 
1,341,179

 
$
5,808,696

 
$
6,104,997


(1)
As of June 30, 2017, includes $655,236 of assets related to consolidated variable interest entities that can only be used to settle obligations of the consolidated variable interest entities and $451,661 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.

8


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

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
157,609

 
$
167,216

 
$
317,359

 
$
337,845

Percentage rents
1,738

 
2,692

 
4,127

 
7,365

Other rents
3,729

 
4,819

 
7,381

 
9,881

Tenant reimbursements
62,231

 
70,096

 
129,522

 
143,462

Management, development and leasing fees
2,577

 
4,067

 
6,029

 
6,648

Other
1,349

 
6,075

 
2,828

 
12,842

Total revenues
229,233

 
254,965

 
467,246

 
518,043

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 
 
 
Property operating
30,041

 
31,060

 
64,955

 
69,688

Depreciation and amortization
82,509

 
72,205

 
153,729

 
148,711

Real estate taxes
18,687

 
22,834

 
40,770

 
45,862

Maintenance and repairs
11,716

 
11,790

 
25,068

 
26,338

General and administrative
15,752

 
16,475

 
31,834

 
33,643

Loss on impairment
43,203

 
43,493

 
46,466

 
63,178

Other
5,019

 
5,052

 
5,019

 
14,737

Total operating expenses
206,927

 
202,909

 
367,841

 
402,157

Income from operations
22,306

 
52,056

 
99,405

 
115,886

Interest and other income
31

 
251

 
1,435

 
611

Interest expense
(55,065
)
 
(53,187
)
 
(111,266
)
 
(108,418
)
Gain on extinguishment of debt
20,420

 

 
24,475

 
6

Loss on investment
(5,843
)
 

 
(5,843
)
 

Income tax benefit
2,920

 
51

 
3,720

 
588

Equity in earnings of unconsolidated affiliates
6,325

 
64,349

 
11,698

 
96,739

Income (loss) from continuing operations before gain on sales of real estate assets
(8,906
)
 
63,520

 
23,624

 
105,412

Gain on sales of real estate assets
79,533

 
9,577

 
85,521

 
9,577

Net income
70,627

 
73,097


109,145


114,989

Net (income) loss attributable to noncontrolling interests
(24,138
)
 
(1,695
)
 
(24,851
)
 
1,432

Net income attributable to the Operating Partnership
46,489

 
71,402

 
84,294

 
116,421

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

 
$
60,179

 
$
61,848

 
$
93,975

 
 
 
 
 
 
 
 
Basic and diluted per unit data attributable to common unitholders:
 
 
 

 
 
 
 
Net income attributable to common unitholders
$
0.18

 
$
0.30

 
$
0.31

 
$
0.47

Weighted-average common and potential dilutive common units outstanding
199,371

 
200,045

 
199,326

 
199,986

 
 
 
 
 
 
 
 
Distributions declared per common unit
$
0.273

 
$
0.273

 
$
0.546

 
$
0.546


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

9


CBL & Associates Limited Partnership
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
70,627

 
$
73,097

 
$
109,145

 
$
114,989

 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
   Unrealized gain on hedging instruments

 

 

 
877

Reclassification of hedging effect on earnings

 

 

 
(443
)
Total other comprehensive income

 

 

 
434

 
 
 
 
 
 
 
 
Comprehensive income
70,627

 
73,097

 
109,145

 
115,423

Comprehensive (income) loss attributable to noncontrolling interests
(24,138
)
 
(1,695
)
 
(24,851
)
 
1,432

Comprehensive income of the Operating Partnership
$
46,489

 
$
71,402

 
$
84,294

 
$
116,855


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


10


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, 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)
(2,691
)
 
716

 
(1,975
)
 

 

 
22,446

 
954

 
92,305

 

 
115,705

 
1,259

 
116,964

Other comprehensive income

 
3

 
3

 

 

 

 

 

 
431

 
431

 

 
431

Distributions declared - common units

 
(2,286
)
 
(2,286
)
 

 

 

 
(1,064
)
 
(105,790
)
 

 
(106,854
)
 

 
(106,854
)
Distributions declared - preferred units

 

 

 

 

 
(22,446
)
 

 

 

 
(22,446
)
 

 
(22,446
)
Issuances of common units

 

 

 

 
327

 

 

 
388

 

 
388

 

 
388

Redemption of common units

 

 

 

 
(15
)
 

 

 
(146
)
 

 
(146
)
 

 
(146
)
Cancellation of restricted common stock

 

 

 

 
(28
)
 

 

 
(224
)
 

 
(224
)
 

 
(224
)
Performance stock units

 

 

 

 

 

 
5

 
511

 

 
516

 

 
516

Amortization of deferred compensation

 

 

 

 

 

 
20

 
1,949

 

 
1,969

 

 
1,969

Allocation of partners' capital

 
1,000

 
1,000

 

 

 

 
(55
)
 
(1,491
)
 
437

 
(1,109
)
 

 
(1,109
)
Adjustment to record redeemable
     interests at redemption value
1,784

 
(4,098
)
 
(2,314
)
 

 

 

 
24

 
2,290

 

 
2,314

 

 
2,314

Contributions from noncontrolling interests

 

 

 

 

 

 

 

 

 

 
10,686

 
10,686

Distributions to noncontrolling interests
(1,925
)
 

 
(1,925
)
 

 

 

 

 

 

 

 
(2,829
)
 
(2,829
)
Balance, June 30, 2016
$
2,754

 
$
15,079

 
$
17,833

 
25,050

 
200,032

 
$
565,212

 
$
8,319

 
$
812,175

 
$

 
$
1,385,706

 
$
13,992

 
$
1,399,698





11


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

 
25,050

 
199,085

 
$
565,212

 
$
7,781

 
$
756,083

 
$
1,329,076

 
$
12,103

 
$
1,341,179

Net income
485

 

 

 
22,446

 
631

 
60,732

 
83,809

 
24,851

 
108,660

Distributions declared - common units
(2,286
)
 

 

 

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

 
(106,489
)
Distributions declared - preferred units

 

 

 
(22,446
)
 

 

 
(22,446
)
 

 
(22,446
)
Issuances of common units

 

 
336

 

 

 
426

 
426

 

 
426

Redemptions of common units

 

 

 

 

 
(530
)
 
(530
)
 

 
(530
)
Cancellation of restricted common stock

 

 
(35
)
 

 

 
(304
)
 
(304
)
 

 
(304
)
Performance stock units

 

 

 

 
7

 
722

 
729

 

 
729

Amortization of deferred compensation

 

 

 

 
23

 
2,252

 
2,275

 

 
2,275

Allocation of partners' capital
1,483

 

 

 

 
(52
)
 
(1,457
)
 
(1,509
)
 

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

 

 

 
44

 
4,242

 
4,286

 

 
4,286

Deconsolidation of investment

 

 

 

 

 

 

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

 

 

 

 

 

 

 
263

 
263

Distributions to noncontrolling interests

 

 

 

 

 

 

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

 
25,050

 
199,386

 
$
565,212

 
$
7,368

 
$
716,743

 
$
1,289,323

 
$
11,937

 
$
1,301,260


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


12



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

 
Six Months Ended
June 30,
 
2017
 
2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 
Net income
$
109,145

 
$
114,989

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

Depreciation and amortization
153,729

 
148,711

Net amortization of deferred financing costs, debt premiums and discounts
2,126

 
1,476

Net amortization of intangible lease assets and liabilities
(883
)
 
(288
)
Gain on sales