CBL & ASSOCIATES PROPERTIES INC - FORM 10-Q - November 9, 2018

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EX-32.4 - EXHIBIT 32.4 - CBL & ASSOCIATES PROPERTIES INCexhibit-324x9302018.htm
EX-32.3 - EXHIBIT 32.3 - CBL & ASSOCIATES PROPERTIES INCexhibit323-9302018.htm
EX-32.2 - EXHIBIT 32.2 - CBL & ASSOCIATES PROPERTIES INCexhibit322-9302018.htm
EX-32.1 - EXHIBIT 32.1 - CBL & ASSOCIATES PROPERTIES INCexhibit-321x9302018.htm
EX-31.4 - EXHIBIT 31.4 - CBL & ASSOCIATES PROPERTIES INCexhibit-314x9302018.htm
EX-31.3 - EXHIBIT 31.3 - CBL & ASSOCIATES PROPERTIES INCexhibit-313x9302018.htm
EX-31.2 - EXHIBIT 31.2 - CBL & ASSOCIATES PROPERTIES INCexhibit-312x9302018.htm
EX-31.1 - EXHIBIT 31.1 - CBL & ASSOCIATES PROPERTIES INCexhibit-311x9302018.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 SEPTEMBER 30, 2018
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO _______________
 
COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)
COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)
______________
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
(Exact Name of registrant as specified in its charter)
______________
DELAWARE (CBL & ASSOCIATES PROPERTIES, INC.)
 
   62-1545718
DELAWARE (CBL & ASSOCIATES LIMITED PARTNERSHIP)
 
   62-1542285
(State or other jurisdiction of incorporation or organization)     
 
 (I.R.S. Employer Identification Number)
                       
 2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN  37421-6000
(Address of principal executive office, including zip code)
423.855.0001
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 Yes x   
No o
                   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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
Smaller reporting company o
Emerging growth company o
 
 
 
 
 
CBL & Associates Limited Partnership
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
Emerging growth company o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
CBL & Associates Properties, Inc.
 
 Yes o  
No x
CBL & Associates Limited Partnership
 
 Yes o  
No x
As of November 2, 2018, there were 172,669,152 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 September 30, 2018 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we," "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.
The Company is a real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At September 30, 2018, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 85.6% limited partner interest for a combined interest held by the Company of 86.6%.
As the sole general partner of the Operating Partnership, the Company's subsidiary, CBL Holdings I, Inc., has exclusive control of the Operating Partnership's activities. Management operates the Company and the Operating Partnership as one business. The management of the Company consists of the same individuals that manage the Operating Partnership. The Company's only material asset is its indirect ownership of partnership interests of the Operating Partnership. As a result, the Company conducts substantially all its business through the Operating Partnership as described in the preceding paragraph. The Company also issues public equity from time to time and guarantees certain debt of the Operating Partnership. The Operating Partnership holds all of the assets and indebtedness of the Company and, through affiliates, retains the ownership interests in the Company's joint ventures. Except for the net proceeds of offerings of equity by the Company, which are contributed to the Operating Partnership in exchange for partnership units on a one-for-one basis, the Operating Partnership generates all remaining capital required by the Company's business through its operations and its incurrence of indebtedness.
We believe that combining the two quarterly reports on Form 10-Q for the Company and the Operating Partnership provides the following benefits:
•
enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;
•
eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
•
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
To help investors understand the differences between the Company and the Operating Partnership, this report provides separate condensed consolidated financial statements for the Company and the Operating Partnership. Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the condensed consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to condensed consolidated financial statements is presented that includes separate discussions for the Company and the Operating Partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.
In order to highlight the differences between the Company and the Operating Partnership, this report includes the following sections that provide separate financial and other information for the Company and the Operating Partnership:
•
condensed consolidated financial statements;
•
certain accompanying notes to condensed consolidated financial statements, including Note 6 - Unconsolidated Affiliates and Noncontrolling Interests; Note 7 - Mortgage and Other Indebtedness, Net; and Note 10 - Earnings per Share and Earnings per Unit;
•
controls and procedures in Item 4 of Part I of this report;
•
information concerning unregistered sales of equity securities and use of proceeds in Item 2 of Part II of this report; and
•
certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4.


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)
September 30,
2018
 
December 31,
2017
Real estate assets:
 
 
 
Land
$
818,436

 
$
813,390

Buildings and improvements
6,544,019

 
6,723,194

 
7,362,455

 
7,536,584

Accumulated depreciation
(2,514,904
)
 
(2,465,095
)
 
4,847,551

 
5,071,489

Held for sale
14,807

 
—

Developments in progress
73,530

 
85,346

Net investment in real estate assets
4,935,888

 
5,156,835

Cash and cash equivalents
20,695

 
32,627

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

 
83,552

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

 
7,570

Mortgage and other notes receivable
8,171

 
8,945

Investments in unconsolidated affiliates
275,884

 
249,192

Intangible lease assets and other assets
166,177

 
166,087

 
$
5,491,019

 
$
5,704,808

 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 

 
 

Mortgage and other indebtedness, net
$
4,115,808

 
$
4,230,845

Accounts payable and accrued liabilities
247,490

 
228,650

Total liabilities (1)
4,363,298

 
4,459,495

Commitments and contingencies (Note 7 and Note 11)


 


Redeemable noncontrolling interests
6,228

 
8,835

Shareholders' equity:
 
 
 
Preferred stock, $.01 par value, 15,000,000 shares authorized:
 
 
 
7.375% Series D Cumulative Redeemable Preferred
      Stock, 1,815,000 shares outstanding
18

 
18

6.625% Series E Cumulative Redeemable Preferred
      Stock, 690,000 shares outstanding
7

 
7

Common stock, $.01 par value, 350,000,000 shares
authorized, 172,663,873 and 171,088,778 issued and
outstanding in 2018 and 2017, respectively
1,727

 
1,711

Additional paid-in capital
1,967,882

 
1,974,537

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

 
1,140,004

Noncontrolling interests
79,275

 
96,474

Total equity
1,121,493

 
1,236,478

 
$
5,491,019

 
$
5,704,808

(1)
As of September 30, 2018, includes $621,616 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $414,923 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 6.
The accompanying notes are an integral part of these condensed consolidated statements.

1

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,
 
2018
 
2017
 
2018
 
2017
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
142,248

 
$
150,836

 
$
441,097

 
$
468,195

Percentage rents
2,429

 
3,000

 
6,610

 
7,127

Other rents
2,347

 
3,790

 
6,898

 
11,171

Tenant reimbursements
55,374

 
63,055

 
172,601

 
192,577

Management, development and leasing fees
2,658

 
2,718

 
8,022

 
8,747

Other
1,822

 
1,251

 
6,448

 
4,079

Total revenues
206,878

 
224,650

 
641,676

 
691,896

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 
 
 
Property operating
30,004

 
31,295

 
92,357

 
96,250

Depreciation and amortization
71,945

 
71,732

 
217,261

 
225,461

Real estate taxes
19,433

 
21,573

 
61,737

 
62,343

Maintenance and repairs
11,475

 
11,254

 
36,713

 
36,322

General and administrative
16,051

 
13,568

 
47,845

 
45,402

Loss on impairment
14,600

 
24,935

 
84,644

 
71,401

Other
38

 
132

 
377

 
5,151

Total operating expenses
163,546

 
174,489

 
540,934

 
542,330

Income from operations
43,332

 
50,161

 
100,742

 
149,566

Interest and other income (loss)
283

 
(200
)
 
714

 
1,235

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

 
6,452

 
—

 
30,927

Gain (loss) on investments
—

 
(354
)
 
387

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

 
1,846

 
4,784

Equity in earnings of unconsolidated affiliates
1,762

 
4,706

 
9,869

 
16,404

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

 
(49,606
)
 
31,540

Gain on sales of real estate assets
7,880

 
1,383

 
15,998

 
86,904

Net income (loss)
(2,971
)
 
9,299


(33,608
)

118,444

Net (income) loss attributable to noncontrolling interests in:
 

 
 
 
 
 
 
Operating Partnership
1,628

 
81

 
8,978

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

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

 
(24,261
)
 
84,476

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

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

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

 
171,096

 
172,426

 
171,060

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.200

 
$
0.265

 
$
0.600

 
$
0.795


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

2

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

 
$
25

 
$
1,708

 
$
1,969,059

 
$
(742,078
)
 
$
1,228,714

 
$
112,138

 
$
1,340,852

Net income
481

 
—

 
—

 
—

 
84,476

 
84,476

 
33,487

 
117,963

Dividends declared - common stock
—

 
—

 
—

 
—

 
(136,021
)
 
(136,021
)
 
—

 
(136,021
)
Dividends declared - preferred stock
—

 
—

 
—

 
—

 
(33,669
)
 
(33,669
)
 
—

 
(33,669
)
Issuances of 342,008 shares of common stock
and restricted common stock
—

 
—

 
3

 
471

 
—

 
474

 
—

 
474

Cancellation of 37,758 shares of restricted common stock
—

 
—

 
—

 
(327
)
 
—

 
(327
)
 
—

 
(327
)
Performance stock units
—

 
—

 
—

 
1,115

 
—

 
1,115

 
—

 
1,115

Amortization of deferred compensation
—

 
—

 
—

 
3,135

 
—

 
3,135

 
—

 
3,135

Redemptions of Operating Partnership common units
—

 
—

 
—

 
—

 
—

 
—

 
(593
)
 
(593
)
Adjustment for noncontrolling interests
2,224

 
—

 
—

 
(5,635
)
 
—

 
(5,635
)
 
3,413

 
(2,222
)
Adjustment to record redeemable
    noncontrolling interests at redemption value
(4,196
)
 
—

 
—

 
3,629

 
—

 
3,629

 
566

 
4,195

Deconsolidation of investment
—

 
—

 
—

 
—

 
—

 
—

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

 
—

 
—

 
—

 
—

 
—

 
263

 
263

Distributions to noncontrolling interests
(3,429
)
 
—

 
—

 
—

 
—

 
—

 
(48,477
)
 
(48,477
)
Balance, September 30, 2017
$
13,076

 
$
25

 
$
1,711

 
$
1,971,447

 
$
(827,292
)
 
$
1,145,891

 
$
98,565

 
$
1,244,456





3

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Equity
(In thousands, except share data)
(Unaudited)
(Continued)
 
 
 
Equity
 
 
 
Shareholders' Equity
 
 
 
 
 
Redeemable
Noncontrolling
Interests
 
Preferred
 Stock
 
Common
 Stock
 
Additional
 Paid-in
 Capital
 
Dividends in
Excess of
Cumulative
Earnings
 
Total
Shareholders'
Equity
 
Noncontrolling
 Interests
 
Total
 Equity
Balance, January 1, 2018
$
8,835

 
$
25

 
$
1,711

 
$
1,974,537

 
$
(836,269
)
 
$
1,140,004

 
$
96,474

 
$
1,236,478

Net loss
(515
)
 
—

 
—

 
—

 
(24,261
)
 
(24,261
)
 
(8,832
)
 
(33,093
)
Cumulative effect of accounting change (Note 2)
—

 
—

 
—

 
—

 
11,433

 
11,433

 
—

 
11,433

Cumulative effect of accounting change (Note 3)
—

 
—

 
—

 
—

 
58,947

 
58,947

 
—

 
58,947

Dividends declared - common stock
—

 
—

 
—

 
—

 
(103,597
)
 
(103,597
)
 
—

 
(103,597
)
Dividends declared - preferred stock
—

 
—

 
—

 
—

 
(33,669
)
 
(33,669
)
 
—

 
(33,669
)
Issuances of 716,290 shares of common stock
and restricted common stock
—

 
—

 
7

 
810

 
—

 
817

 
—

 
817

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

 
—

 
9

 
3,050

 
—

 
3,059

 
(3,059
)
 
—

Redemptions of Operating Partnership common units
—

 
—

 
—

 
—

 
—

 
—

 
(2,246
)
 
(2,246
)
Cancellation of 56,533 shares of restricted
common stock
—

 
—

 
—

 
(249
)
 
—

 
(249
)
 
—

 
(249
)
Performance stock units
—

 
—

 
—

 
993

 
—

 
993

 
—

 
993

Forfeiture of performance stock units
—

 
—

 
—

 
(250
)
 
—

 
(250
)
 
—

 
(250
)
Amortization of deferred compensation
—

 
—

 
—

 
2,846

 
—

 
2,846

 
—

 
2,846

Adjustment for noncontrolling interests
3,033

 
—

 
—

 
(15,329
)
 
—

 
(15,329
)
 
12,296

 
(3,033
)
Adjustment to record redeemable
     noncontrolling interests at redemption value
(1,696
)
 
—

 
—

 
1,474

 
—

 
1,474

 
222

 
1,696

Contributions from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
7,859

 
7,859

Distributions to noncontrolling interests
(3,429
)
 
—

 
—

 
—

 
—

 
—

 
(23,439
)
 
(23,439
)
Balance, September 30, 2018
$
6,228

 
$
25

 
$
1,727

 
$
1,967,882

 
$
(927,416
)
 
$
1,042,218

 
$
79,275

 
$
1,121,493


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


4


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

 
Nine Months Ended
September 30,
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 
Net income (loss)
$
(33,608
)
 
$
118,444

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

Depreciation and amortization
217,261

 
225,461

Net amortization of deferred financing costs, debt premiums and discounts
5,451

 
2,904

Net amortization of intangible lease assets and liabilities
198

 
(1,235
)
Gain on sales of real estate assets
(15,998
)
 
(86,904
)
(Gain) loss on investments
(387
)
 
6,197

Write-off of development projects
377

 
5,151

Share-based compensation expense
4,310

 
4,569

Loss on impairment
84,644

 
71,401

Gain on extinguishment of debt
—

 
(30,927
)
Equity in earnings of unconsolidated affiliates
(9,869
)
 
(16,404
)
Distributions of earnings from unconsolidated affiliates
12,574

 
16,361

Provision for doubtful accounts
3,273

 
3,353

Change in deferred tax accounts
(2,706
)
 
2,911

Changes in:
 
 
 

Tenant and other receivables
3,493

 
(4,893
)
Other assets
(4,640
)
 
(12,368
)
Accounts payable and accrued liabilities
16,034

 
32,929

Net cash provided by operating activities
280,407

 
336,950

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Additions to real estate assets
(107,981
)
 
(149,302
)
Acquisitions of real estate assets
(3,301
)
 
(79,799
)
Proceeds from sales of real estate assets
70,419

 
201,291

Proceeds from disposal of investment
—

 
9,000

Additions to mortgage and other notes receivable
—

 
(4,118
)
Payments received on mortgage and other notes receivable
775

 
3,443

Additional investments in and advances to unconsolidated affiliates
(2,243
)
 
(17,199
)
Distributions in excess of equity in earnings of unconsolidated affiliates
33,909

 
15,743

Changes in other assets
(5,903
)
 
(14,471
)
Net cash used in investing activities
(14,325
)
 
(35,412
)

5

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

 
Nine Months Ended
September 30,
 
2018
 
2017
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from mortgage and other indebtedness
$
530,679

 
$
1,097,006

Principal payments on mortgage and other indebtedness
(649,904
)
 
(1,159,144
)
Additions to deferred financing costs
(238
)
 
(5,003
)
Prepayment fees on extinguishment of debt
—

 
(8,871
)
Proceeds from issuances of common stock
117

 
150

Purchases of noncontrolling interests in the Operating Partnership
(2,246
)
 
(593
)
Contributions from noncontrolling interests
7,859

 
263

Payment of tax withholdings for restricted stock awards
(271
)
 
(322
)
Distributions to noncontrolling interests
(27,156
)
 
(51,925
)
Dividends paid to holders of preferred stock
(33,669
)
 
(33,669
)
Dividends paid to common shareholders
(103,280
)
 
(135,941
)
Net cash used in financing activities
(278,109
)
 
(298,049
)
 
 
 
 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(12,027
)
 
3,489

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

 
65,069

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
56,145

 
$
68,558

 
 
 
 
Reconciliation from condensed consolidated statements of cash flows to condensed consolidated balance sheets:
Cash and cash equivalents
$
20,695

 
$
31,351

Restricted cash (1):
 
 
 
Restricted cash
4,681

 
944

Mortgage escrows
30,769

 
36,263

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
56,145

 
$
68,558

 
 
 
 
SUPPLEMENTAL INFORMATION:
 

 
 

Cash paid for interest, net of amounts capitalized
$
136,301

 
$
150,816

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


6

CBL & Associates Limited Partnership
Condensed Consolidated Balance Sheets
(In thousands, except unit data)
(Unaudited)
ASSETS (1)
September 30,
2018
 
December 31,
2017
Real estate assets:
 
 
 
Land
$
818,436

 
$
813,390

Buildings and improvements
6,544,019

 
6,723,194

 
7,362,455

 
7,536,584

Accumulated depreciation
(2,514,904
)
 
(2,465,095
)
 
4,847,551

 
5,071,489

Held for sale
14,807

 
—

Developments in progress
73,530

 
85,346

Net investment in real estate assets
4,935,888

 
5,156,835

Cash and cash equivalents
20,695

 
32,627

Receivables:
 

 
 

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

 
83,552

Other, net of allowance for doubtful accounts of $838 in 2017
7,061

 
7,520

Mortgage and other notes receivable
8,171

 
8,945

Investments in unconsolidated affiliates
276,418

 
249,722

Intangible lease assets and other assets
166,057

 
165,967

 
$
5,491,385

 
$
5,705,168

 
 
 
 
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
 

 
 

Mortgage and other indebtedness, net
$
4,115,808

 
$
4,230,845

Accounts payable and accrued liabilities
247,607

 
228,720

Total liabilities (1)
4,363,415

 
4,459,565

Commitments and contingencies (Note 7 and Note 11)


 


 Redeemable common units  
6,228

 
8,835

Partners' capital:
 

 
 

Preferred units
565,212

 
565,212

Common units:
 
 
 
 General partner
5,540

 
6,735

 Limited partners
539,191

 
655,120

Total partners' capital
1,109,943

 
1,227,067

Noncontrolling interests
11,799

 
9,701

Total capital
1,121,742

 
1,236,768

 
$
5,491,385

 
$
5,705,168

(1)
As of September 30, 2018, includes $621,616 of assets related to consolidated variable interest entities that can only be used to settle obligations of the consolidated variable interest entities and $414,923 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Operating Partnership. See Note 6.

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

7

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,
 
2018
 
2017
 
2018
 
2017
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
142,248

 
$
150,836

 
$
441,097

 
$
468,195

Percentage rents
2,429

 
3,000

 
6,610

 
7,127

Other rents
2,347

 
3,790

 
6,898

 
11,171

Tenant reimbursements
55,374

 
63,055

 
172,601

 
192,577

Management, development and leasing fees
2,658

 
2,718

 
8,022

 
8,747

Other
1,822

 
1,251

 
6,448

 
4,079

Total revenues
206,878

 
224,650

 
641,676

 
691,896

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 
 
 
Property operating
30,004

 
31,295

 
92,357

 
96,250

Depreciation and amortization
71,945

 
71,732

 
217,261

 
225,461

Real estate taxes
19,433

 
21,573

 
61,737

 
62,343

Maintenance and repairs
11,475

 
11,254

 
36,713

 
36,322

General and administrative
16,051

 
13,568

 
47,845

 
45,402

Loss on impairment
14,600

 
24,935

 
84,644

 
71,401

Other
38

 
132

 
377

 
5,151

Total operating expenses
163,546

 
174,489

 
540,934

 
542,330

Income from operations
43,332

 
50,161

 
100,742

 
149,566

Interest and other income (loss)
283

 
(200
)
 
714

 
1,235

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

 
6,452

 
—

 
30,927

Gain (loss) on investments
—

 
(354
)
 
387

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

 
1,846

 
4,784

Equity in earnings of unconsolidated affiliates
1,762

 
4,706

 
9,869

 
16,404

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

 
(49,606
)
 
31,540

Gain on sales of real estate assets
7,880

 
1,383

 
15,998

 
86,904

Net income (loss)
(2,971
)
 
9,299


(33,608
)

118,444

Net (income) loss attributable to noncontrolling interests
(24
)
 
(415
)
 
369

 
(25,266
)
Net income (loss) attributable to the Operating Partnership
(2,995
)
 
8,884

 
(33,239
)
 
93,178

Distributions to preferred unitholders
(11,223
)
 
(11,223
)
 
(33,669
)
 
(33,669
)
Net income (loss) attributable to common unitholders
$
(14,218
)
 
$
(2,339
)
 
$
(66,908
)
 
$
59,509

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

Weighted-average common and potential dilutive common units outstanding
199,432

 
199,321

 
199,630

 
199,325

 
 
 
 
 
 
 
 
Distributions declared per common unit
$
0.209

 
$
0.273

 
$
0.627

 
$
0.819


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

8

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

 
25,050

 
199,085

 
$
565,212

 
$
7,781

 
$
756,083

 
$
1,329,076

 
$
12,103

 
$
1,341,179

Net income
 
481

 
—

 
—

 
33,669

 
607

 
58,421

 
92,697

 
25,266

 
117,963

Distributions declared - common units
 
(3,429
)
 
—

 
—

 
—

 
(1,600
)
 
(158,124
)
 
(159,724
)
 
—

 
(159,724
)
Distributions declared - preferred units
 
—

 
—

 
—

 
(33,669
)
 
—

 
—

 
(33,669
)
 
—

 
(33,669
)
Issuances of common units
 
—

 
—

 
342

 
—

 
—

 
474

 
474

 
—

 
474

Redemptions of common units
 
—

 
—

 
(73
)
 
—

 
—

 
(593
)
 
(593
)
 
—

 
(593
)
Cancellation of restricted common stock
 
—

 
—

 
(38
)
 
—

 
—

 
(327
)
 
(327
)
 
—

 
(327
)
Performance stock units
 
—

 
—

 
—

 
—

 
11

 
1,104

 
1,115

 
—

 
1,115

Amortization of deferred compensation
 
—

 
—

 
—

 
—

 
32

 
3,103

 
3,135

 
—

 
3,135

Allocation of partners' capital
 
2,224

 
—

 
—

 
—

 
(68
)
 
(2,191
)
 
(2,259
)
 
—

 
(2,259
)
Adjustment to record redeemable interests at redemption value
 
(4,196
)
 
—

 
—

 
—

 
43

 
4,152

 
4,195

 
—

 
4,195

Deconsolidation of investment
 
—

 
—

 
—

 
—

 
—

 
—

 
—

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

 
—

 
—

 
—

 
—

 
—

 
—

 
263

 
263

Distributions to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(24,774
)
 
(24,774
)
Balance, September 30, 2017
 
$
13,076

 
25,050

 
199,316

 
$
565,212

 
$
6,806

 
$
662,102

 
$
1,234,120

 
$
10,626

 
$
1,244,746





9

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

 
25,050

 
199,297

 
$
565,212

 
$
6,735

 
$
655,120

 
$
1,227,067

 
$
9,701

 
$
1,236,768

Net income (loss)
(515
)
 
—

 
—

 
33,669

 
(682
)
 
(65,711
)
 
(32,724
)
 
(369
)
 
(33,093
)
Cumulative effect of accounting change (Note 2)
—

 
—

 
—

 
—

 
117

 
11,316

 
11,433

 
—

 
11,433

Cumulative effect of accounting change (Note 3)
—

 
—

 
—

 
—

 
605

 
58,342

 
58,947

 
—

 
58,947

Distributions declared - common units
(3,429
)
 
—

 
—

 
—

 
(1,207
)
 
(120,436
)
 
(121,643
)
 
—

 
(121,643
)
Distributions declared - preferred units
—

 
—

 
—

 
(33,669
)
 
—

 
—

 
(33,669
)
 
—

 
(33,669
)
Issuances of common units
—

 
—

 
715

 
—

 
—

 
817

 
817

 
—

 
817

Redemptions of common units
—

 
—

 
(527
)
 
—

 
—

 
(2,246
)
 
(2,246
)
 
—

 
(2,246
)
Cancellation of restricted common stock
—

 
—

 
(57
)
 
—

 
—

 
(249
)
 
(249
)
 
—

 
(249
)
Performance stock units
—

 
—

 
—

 
—

 
10

 
983

 
993

 
—

 
993

Forfeiture of performance stock units
—

 
—

 
—

 
—

 
(3
)
 
(247
)
 
(250
)
 
—

 
(250
)
Amortization of deferred compensation
—

 
—

 
—

 
—

 
29

 
2,817

 
2,846

 
—

 
2,846

Allocation of partners' capital
3,033

 
—

 
—

 
—

 
(81
)
 
(2,994
)
 
(3,075
)
 
—

 
(3,075
)
Adjustment to record redeemable interests at redemption value
(1,696
)
 
—

 
—

 
—

 
17

 
1,679

 
1,696

 
—

 
1,696

Contributions from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
7,859

 
7,859

Distributions to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(5,392
)
 
(5,392
)
Balance, September 30, 2018
$
6,228

 
25,050

 
199,428

 
$
565,212

 
$
5,540

 
$
539,191

 
$
1,109,943

 
$
11,799

 
$
1,121,742


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


10


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

 
Nine Months Ended
September 30,
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 
Net income (loss)
$
(33,608
)
 
$
118,444

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

Depreciation and amortization
217,261

 
225,461

Net amortization of deferred financing costs, debt premiums and discounts
5,451

 
2,904

Net amortization of intangible lease assets and liabilities
198

 
(1,235
)
Gain on sales of real estate assets
(15,998
)
 
(86,904
)
(Gain ) loss on investments
(387
)
 
6,197

Write-off of development projects
377

 
5,151

Share-based compensation expense
4,310

 
4,569

Loss on impairment
84,644

 
71,401

Gain on extinguishment of debt
—

 
(30,927
)
Equity in earnings of unconsolidated affiliates
(9,869
)
 
(16,404
)
Distributions of earnings from unconsolidated affiliates
12,569

 
16,362

Provision for doubtful accounts
3,273

 
3,353

Change in deferred tax accounts
(2,706
)
 
2,911

Changes in:
 

 
 

Tenant and other receivables
3,493

 
(4,893
)
Other assets
(4,640
)
 
(12,368
)
Accounts payable and accrued liabilities
16,039

 
32,935

Net cash provided by operating activities
280,407