CBL & Associates Properties Reports First Quarter 2013 Results Business Wire CHATTANOOGA, Tenn. -- April 29, 2013 CBL & Associates Properties, Inc. (NYSE:CBL): *FFO per diluted share increased 8.2% to $0.53 for the first quarter of 2013, compared with $0.49 for the prior-year period. *Same-center NOI, excluding lease termination fees, increased 1.0% in the first quarter 2013 over the prior-year period. *Portfolio occupancy at March 31, 2013, increased 40 basis points to 92.2% from 91.8% for the prior-year period. *Average gross rent per square foot for stabilized mall leases signed in the first quarter of 2013 increased 10.8% over the prior gross rent per square foot. *Same-store sales increased 4.4% to $355 per square foot for mall tenants 10,000 square feet or less for stabilized malls for the rolling twelve months ended March 31, 2013 compared with the prior-year period. CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the first quarter ended March 31, 2013. A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure is located at the end of this news release. Three Months Ended March 31, 2013 2012 Funds from Operations (“FFO”) per diluted share $0.53 $0.49 “The strong operating performance of our market-dominant mall portfolio in the first quarter coupled with the benefits of our new growth platforms have us well on the path towards achieving our 2013 goals,” said Stephen Lebovitz, CBL’s president and chief executive officer. “We are seeing solid improvement in occupancy, NOI, sales and leasing across the portfolio even with the tougher comparison from a year ago. The acquisition of the remaining interest in Kirkwood Mall (Bismarck, ND) also highlights that our focused growth strategy can yield a strong pipeline of profitable investment opportunities in this environment. We will look to build on this momentum throughout the year. “Our plans for further enhancements to our capital structure with the ultimate goal of an investment grade rating are well underway. Our long-stated preference is for long-term, fixed-rate sources of capital at the most effective pricing, as evidenced by the refinancing of Friendly Center (Greensboro, NC) and Renaissance Center (Durham, NC) at a low ten-year weighted average fixed rate of 3.48%. Raising over $100 million of equity capital in the quarter from the initial activity on our ATM program and the disposition of five non-core office buildings clearly demonstrates our ability to prudently fund our growth. The continued access to these attractive sources of capital and the ample availability on our unsecured credit facilities provide us the flexibility to execute our capital plan and our corporate strategy.” FFO allocable to common shareholders for the first quarter of 2013 was $85,912,000, or $0.53 per diluted share, compared with $72,178,000, or $0.49 per diluted share, for the first quarter of 2012. FFO of the operating partnership for the first quarter of 2013 was $101,623,000, compared with $92,476,000, for the first quarter of 2012. Net income attributable to common shareholders for the first quarter of 2013 was $19,090,000, or $0.12 per diluted share, compared with net income of $15,455,000, or $0.10 per diluted share for the first quarter of 2012. HIGHLIGHTS *Portfolio same-center net operating income (“NOI”), excluding lease termination fees, for the quarter ended March 31, 2013, increased 1.0% compared with an increase of 1.5% for the prior-year period. *Average gross rent per square foot on stabilized mall leases signed during the first quarter of 2013 for tenants 10,000 square feet or less increased 10.8% over the prior gross rent per square foot. *Same-store sales per square foot for mall tenants 10,000 square feet or less for stabilized malls for the rolling twelve months ended March 31, 2013, increased 4.4% to $355 per square foot compared with $340 per square foot in the prior-year period. *Consolidated and unconsolidated variable rate debt of $1,097,660,000, as of March 31, 2013, represented 10.4% of the total market capitalization for the Company, compared with 12.7% as of March 31, 2012, and 20.4% of the Company's share of total consolidated and unconsolidated debt, compared with 22.8% as of March 31, 2012. *Debt-to-total market capitalization was 51.0% as of March 31, 2013, compared with 55.7% as of March 31, 2012. *The ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to interest expense was 2.64 times for the first quarter of 2013, compared with 2.46 times for the first quarter of 2012. PORTFOLIO OCCUPANCY March 31, 2013 2012 Portfolio occupancy 92.2% 91.8% Mall portfolio 91.8% 91.9% Stabilized malls 91.7% 91.8% Non-stabilized malls 99.3% 95.5% Associated centers 93.5% 92.9% Community centers 96.0% 91.0% ACQUISITIONS Subsequent to the quarter end, CBL announced that it had completed the acquisition of the remaining 51% interest in Kirkwood Mall in Bismarck, ND. In December 2012, CBL acquired a 49% non-controlling interest in Kirkwood Mall. In conjunction with the acquisition of the remaining interest, CBL assumed the $40.4 million non-recourse loan secured by the property, which bears a fixed interest rate of 5.75% and matures in April 2018. DISPOSITION ACTIVITY During the first quarter 2013, CBL disposed of five office buildings generating total net proceeds of $43.5 million. FINANCING ACTIVITY During the quarter, CBL closed on a $100.0 million non-recourse loan secured by Friendly Center in Greensboro, NC. The ten-year loan bears a fixed interest rate of 3.4795% and replaced an existing $77.6 million loan that was scheduled to mature in April 2013. CBL also closed a $16.0 million non-recourse loan secured by Renaissance Center Phase II in Durham, NC. The ten-year loan bears a fixed interest rate of 3.4895% and replaced the existing $15.7 million loan that was scheduled to mature in April 2013. CBL owns 50% of Friendly Center and Renaissance Center Phase II. Excess proceeds from the loans were used to retire loans on several office buildings owned in this same joint venture. CAPITAL MARKETS ACTIVITY During the first quarter of 2013, CBL sold 2.7 million common shares, at a weighted average price of $23.58 per share, under its At-The-Market (“ATM”) equity offering program, generating net proceeds of $62.1 million. The proceeds generated from the ATM program were used to reduce the outstanding balances under the Company’s unsecured credit facilities. OUTLOOK AND GUIDANCE Based on first quarter results and today’s outlook, the Company is maintaining 2013 FFO guidance in the range of $2.18 - $2.26 per share. Full-year guidance assumes same-center NOI growth in a range of 1.0% - 3.0%, $2.0 million to $4.0 million of outparcel sales and a 25-50 basis point increase in year-end occupancy. The guidance also assumes the pay-off of the Westfield Preferred Units mid-year using the Company’s lines of credit and cash on hand. The guidance excludes the impact of any future unannounced transactions. The Company expects to update its annual guidance after each quarter's results. Low High Expected diluted earnings per common share $0.63 $0.71 Adjust to fully converted shares from common shares (0.10 ) (0.11 ) Expected earnings per diluted, fully converted common 0.53 0.60 share Add: depreciation and amortization 1.55 1.55 Add: noncontrolling interest in earnings of Operating 0.10 0.11 Partnership Expected FFO per diluted, fully converted common share $2.18 $2.26 INVESTOR CONFERENCE CALL AND SIMULCAST CBL & Associates Properties, Inc. will conduct a conference call at 11:00 a.m. ET on Tuesday, April 30,2013, to discuss its first quarter results. The numbers to call for this interactive teleconference are (800) 736-4594 or (212)231-2901. A seven-day replay of the conference call will be available by dialing (402)977-9140 and entering the passcode 21646863. A transcript of the Company's prepared remarks will be furnished on a Form 8-K following the conference call. To receive the CBL & Associates Properties, Inc., first quarter earnings release and supplemental information please visit our website at cblproperties.com or contact Investor Relations at 423-490-8312. The Company will also provide an online web simulcast and rebroadcast of its 2013 first quarter earnings release conference call. The live broadcast of the quarterly conference call will be available online at cblproperties.com on Tuesday, April 30,2013, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue through May 7, 2013. CBL is one of the largest and most active owners and developers of malls and shopping centers in the United States. CBL owns, holds interests in or manages 158 properties, including 96 regional malls/open-air centers. The properties are located in 31 states and total 92.7 million square feet including 10.5 million square feet of non-owned shopping centers managed for third parties. Headquartered in Chattanooga, TN, CBL has regional offices in Boston (Waltham), MA, Dallas (Irving), TX, and St. Louis, MO. Additional information can be found atcblproperties.com. NON-GAAP FINANCIAL MEASURES Funds From Operations FFO is a widely used measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO allocable to common shareholders as defined above by NAREIT less dividends on preferred stock. The Company’s method of calculating FFO allocable to its common shareholders may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. The Company believes that FFO provides an additional indicator of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of well-maintained real estate assets have historically risen with market conditions, the Company believes that FFO enhances investors’ understanding of its operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of the Company’s properties and interest rates, but also by its capital structure. The Company presents both FFO of its operating partnership and FFO allocable to its common shareholders, as it believes that both are useful performance measures. The Company believes FFO of its operating partnership is a useful performance measure since it conducts substantially all of its business through its operating partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company’s common shareholders and the noncontrolling interest in the operating partnership. The Company believes FFO allocable to its common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to its common shareholders. In the reconciliation of net income attributable to the Company's common shareholders to FFO allocable to its common shareholders, located in this earnings release, the Company makes an adjustment to add back noncontrolling interest in income (loss) of its operating partnership in order to arrive at FFO of its operating partnership. The Company then applies a percentage to FFO of its operating partnership to arrive at FFO allocable to its common shareholders. The percentage is computed by taking the weighted average number of common shares outstanding for the period and dividing it by the sum of the weighted average number of common shares and the weighted average number of operating partnership units outstanding during the period. FFO does not represent cash flows from operations as defined by accounting principles generally accepted in the United States, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating the Company’s operating performance or to cash flow as a measure of liquidity. Same-Center Net Operating Income NOI is a supplemental measure of the operating performance of the Company's shopping centers. The Company defines NOI as operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs). Similar to FFO, the Company computes NOI based on its pro rata share of both consolidated and unconsolidated properties. The Company's definition of NOI may be different than that used by other companies and, accordingly, the Company's NOI may not be comparable to that of other companies. A reconciliation of same-center NOI to net income is located at the end of this earnings release. Since NOI includes only those revenues and expenses related to the operations of its shopping center properties, the Company believes that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates and operating costs and the impact of those trends on the Company's results of operations. Additionally, there are instances when tenants terminate their leases prior to the scheduled expiration date and pay the Company one-time, lump-sum termination fees. These one-time lease termination fees may distort same-center NOI trends and may result in same-center NOI that is not indicative of the ongoing operations of the Company's shopping center properties. Therefore, the Company believes that presenting same-center NOI, excluding lease termination fees, is useful to investors. Pro Rata Share of Debt The Company presents debt based on its pro rata ownership share (including the Company's pro rata share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties) because it believes this provides investors a clearer understanding of the Company's total debt obligations which affect the Company's liquidity. A reconciliation of the Company's pro rata share of debt to the amount of debt on the Company's consolidated balance sheet is located at the end of this earnings release. Information included herein contains "forward-looking statements" within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual events, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. The reader is directed to the Company's various filings with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K, and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included therein, for a discussion of such risks and uncertainties. CBL & Associates Properties, Inc. Consolidated Statements of Operations (Unaudited; in thousands, except per share amounts) Three Months Ended March 31, 2013 2012 REVENUES: Minimum rents $ 170,478 $ 157,510 Percentage rents 4,915 3,452 Other rents 5,297 5,286 Tenant reimbursements 74,359 69,692 Management, development and leasing fees 3,075 2,469 Other 7,853 8,060 Total revenues 265,977 246,469 OPERATING EXPENSES: Property operating 41,078 36,865 Depreciation and amortization 71,555 62,258 Real estate taxes 23,042 22,329 Maintenance and repairs 14,691 12,757 General and administrative 13,424 13,800 Other 6,656 6,758 Total operating expenses 170,446 154,767 Income from operations 95,531 91,702 Interest and other income 727 1,075 Interest expense (59,828 ) (59,831 ) Gain on sales of real estate assets 543 94 Equity in earnings of unconsolidated 2,619 1,266 affiliates Income tax benefit 174 228 Income from continuing operations 39,766 34,534 Operating income (loss) of discontinued (662 ) 1,106 operations Gain on discontinued operations 781 911 Net income 39,885 36,551 Net income attributable to noncontrolling interests in: Operating partnership (3,491 ) (4,362 ) Other consolidated subsidiaries (6,081 ) (6,140 ) Net income attributable to the Company 30,313 26,049 Preferred dividends (11,223 ) (10,594 ) Net income attributable to common shareholders $ 19,090 $ 15,455 Basic per share data attributable to common shareholders: Income from continuing operations, net of $ 0.12 $ 0.09 preferred dividends Discontinued operations - 0.01 Net income attributable to common shareholders $ 0.12 $ 0.10 Weighted average common shares outstanding 161,540 148,495 Diluted earnings per share data attributable to common shareholders: Income from continuing operations, net of $ 0.12 $ 0.09 preferred dividends Discontinued operations - 0.01 Net income attributable to common shareholders $ 0.12 $ 0.10 Weighted average common and potential dilutive 161,540 148,538 common shares outstanding Amounts attributable to common shareholders: Income from continuing operations, net of $ 18,989 $ 13,880 preferred dividends Discontinued operations 101 1,575 Net income attributable to common shareholders $ 19,090 $ 15,455 The Company's calculation of FFO allocable to its shareholders is as follows: (in thousands, except per share data) Three Months Ended March 31, 2013 2012 Net income attributable $ 19,090 $ 15,455 to common shareholders Noncontrolling interest in income of operating 3,491 4,362 partnership Depreciation and amortization expense of: Consolidated properties 71,555 62,258 Unconsolidated 9,948 11,111 affiliates Discontinued operations 107 1,015 Non-real estate assets (474 ) (417 ) Noncontrolling interests' share of (1,607 ) (446 ) depreciation and amortization Loss on impairment of real estate, net of tax - 196 benefit Gain on depreciable (2 ) (493 ) property Gain on discontinued (485 ) (565 ) operations, net of taxes Funds from operations of the operating 101,623 92,476 partnership Funds from operations $ 0.53 $ 0.49 per diluted share Weighted average common and potential dilutive common shares 191,085 190,302 outstanding with operating partnership units fully converted Reconciliation of FFO of the operating partnership to FFO allocable to common shareholders: Funds from operations of the operating $ 101,623 $ 92,476 partnership Percentage allocable to 84.54 % 78.05 % common shareholders ^(1) Funds from operations allocable to common $ 85,912 $ 72,178 shareholders Represents the weighted average number of common shares outstanding for the period divided by the sum of the weighted average number of common (1) shares and the weighted average number of operating partnership units outstanding during the period. See the reconciliation of shares and operating partnership units outstanding on page 9. SUPPLEMENTAL FFO INFORMATION: Lease termination fees $ 813 $ 750 Lease termination fees $ - $ - per share Straight-line rental $ 1,090 $ 410 income Straight-line rental $ 0.01 $ - income per share Gains on outparcel sales $ 543 $ 99 Gains on outparcel sales $ - $ - per share Net amortization of acquired above- and $ 586 $ 142 below-market leases Net amortization of acquired above- and $ - $ - below-market leases per share Net amortization of debt $ 376 $ 452 premiums (discounts) Net amortization of debt premiums (discounts) per $ - $ - share Income tax benefit $ 174 $ 228 Income tax benefit per $ - $ - share Loss on impairment of real estate from $ - $ (293 ) discontinued operations Loss on impairment of real estate from $ - $ - discontinued operations per share Same-Center Net Operating Income (Dollars in thousands) Three Months Ended March 31, 2013 2012 Net income attributable to the Company $ 30,313 $ 26,049 Adjustments: Depreciation and amortization 71,555 62,258 Depreciation and amortization from 9,948 11,111 unconsolidated affiliates Depreciation and amortization from 107 1,015 discontinued operations Noncontrolling interests' share of depreciation and amortization in other (1,607 ) (446 ) consolidated subsidiaries Interest expense 59,828 59,831 Interest expense from unconsolidated 10,072 11,203 affiliates Interest expense from discontinued operations - 230 Noncontrolling interests' share of interest (976 ) (460 ) expense in other consolidated subsidiaries Abandoned projects expense 2 (124 ) Gain on sales of real estate assets (543 ) (94 ) Loss on sales of real estate assets of - 5 unconsolidated affiliates Loss on impairment of real estate from - 293 discontinued operations Income tax benefit (174 ) (228 ) Net income attributable to noncontrolling 3,491 4,362 interest in earnings of operating partnership Gain on discontinued operations (781 ) (911 ) Operating partnership's share of total NOI 181,235 174,094 General and administrative expenses 13,424 13,800 Management fees and non-property level (7,444 ) (7,105 ) revenues Operating partnership's share of property NOI 187,215 180,789 Non-comparable NOI (7,992 ) (3,422 ) Total same-center NOI $ 179,223 $ 177,367 Total same-center NOI percentage change 1.0 % Total same-center NOI $ 179,223 $ 177,367 Less lease termination fees (813 ) (756 ) Total same-center NOI, excluding lease $ 178,410 $ 176,611 termination fees Malls $ 160,726 $ 159,711 Associated centers 8,330 8,064 Community centers 4,695 4,324 Offices and other 4,659 4,512 Total same-center NOI, excluding lease $ 178,410 $ 176,611 termination fees Percentage Change: Malls 0.6 % Associated centers 3.3 % Community centers 8.6 % Offices and other 3.3 % Total same-center NOI, excluding lease 1.0 % termination fees Company's Share of Consolidated and Unconsolidated Debt (Dollars in thousands) As of March 31, 2013 Fixed Rate Variable Rate Total Consolidated debt $ 3,712,645 $ 967,876 $ 4,680,521 Noncontrolling interests' share (89,079 ) - (89,079 ) of consolidated debt Company's share of 658,942 129,784 788,726 unconsolidated affiliates' debt Company's share of consolidated $ 4,282,508 $ 1,097,660 $ 5,380,168 and unconsolidated debt Weighted average 5.40 % 2.39 % 4.79 % interest rate As of March 31, 2012 Fixed Rate Variable Rate Total Consolidated debt $ 3,393,241 $ 1,066,007 $ 4,459,248 Noncontrolling interests' share (29,256 ) (726 ) (29,982 ) of consolidated debt Company's share of 675,356 127,019 802,375 unconsolidated affiliates' debt Company's share of consolidated $ 4,039,341 $ 1,192,300 $ 5,231,641 and unconsolidated debt Weighted average 5.48 % 2.67 % 4.84 % interest rate Debt-To-Total-Market Capitalization Ratio as of March 31, 2013 (In thousands, Shares except stock price) Outstanding Stock Price Value (1) Common stock and operating 192,933 $ 23.60 $ 4,553,219 partnership units 7.375% Series D Cumulative 1,815 250.00 453,750 Redeemable Preferred Stock 6.625% Series E Cumulative 690 250.00 172,500 Redeemable Preferred Stock Total market 5,179,469 equity Company's share of 5,380,168 total debt Total market $ 10,559,637 capitalization Debt-to-total-market 51.0 % capitalization ratio Stock price for common stock and operating partnership units equals the closing (1) price of the common stock on March 28, 2013. The stock prices for the preferred stocks represent the liquidation preference of each respective series. Reconciliation of Shares and Operating Partnership Units Outstanding (In thousands) Three Months Ended March 31, 2013: Basic Diluted Weighted average 161,540 161,540 shares - EPS Weighted average operating 29,545 29,545 partnership units Weighted average 191,085 191,085 shares- FFO 2012: Weighted average 148,495 148,538 shares - EPS Weighted average operating 41,764 41,764 partnership units Weighted average 190,259 190,302 shares- FFO Dividend Payout Three Months Ended Ratio March 31, 2013 2012 Weighted average cash dividend per $ 0.23864 $ 0.21913 share FFO per diluted, fully converted $ 0.53 $ 0.49 share Dividend payout 45.0 % 44.7 % ratio Consolidated Balance Sheets (Unaudited; in thousands, except share data) As of March 31, December 31, 2013 2012 ASSETS Real estate assets: Land $ 905,310 $ 905,339 Buildings and improvements 7,215,147 7,228,293 8,120,457 8,133,632 Accumulated depreciation (2,026,560 ) (1,972,031 ) 6,093,897 6,161,601 Held for sale - 29,425 Developments in progress 164,948 137,956 Net investment in real estate assets 6,258,845 6,328,982 Cash and cash equivalents 66,580 78,248 Receivables: Tenant, net of allowance for doubtful accounts of $2,054 and $1,977 in 2013 76,331 78,963 and 2012, respectively Other, net of allowance for doubtful accounts of $1,283 and $1,270 in 2013 15,571 8,467 and 2012, respectively Mortgage and other notes receivable 22,337 25,967 Investments in unconsolidated affiliates 275,349 259,810 Intangible lease assets and other assets 275,064 309,299 $ 6,990,077 $ 7,089,736 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Mortgage and other indebtedness $ 4,680,521 $ 4,745,683 Accounts payable and accrued liabilities 302,946 358,874 Total liabilities 4,983,467 5,104,557 Commitments and contingencies Redeemable noncontrolling interests: Redeemable noncontrolling partnership 43,615 40,248 interests Redeemable noncontrolling preferred 423,719 423,834 joint venture interest Total redeemable noncontrolling 467,334 464,082 interests Shareholders' equity: Preferred stock, $.01 par value, 15,000,000 shares authorized: 7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares 18 18 outstanding 6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares 7 7 outstanding Common stock, $.01 par value, 350,000,000 shares authorized, 163,387,752 and 161,309,652 issued and 1,634 1,613 outstanding in 2013 and 2012, respectively Additional paid-in capital 1,804,108 1,773,630 Accumulated other comprehensive income 7,850 6,986 Dividends in excess of cumulative (472,184 ) (453,561 ) earnings Total shareholders' equity 1,341,433 1,328,693 Noncontrolling interests 197,843 192,404 Total equity 1,539,276 1,521,097 $ 6,990,077 $ 7,089,736 Contact: CBL & Associates Properties, Inc. Katie Reinsmidt, 423-490-8301 Senior Vice President - Investor Relations/Corporate Investments firstname.lastname@example.org
CBL & Associates Properties Reports First Quarter 2013 Results
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