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 CBL Properties Reports Results for Third Quarter 2017
   Thursday, November 02, 2017 4:15:10 PM ET

CBL Properties (CBL ) announced results for the third quarter ended September 30, 2017. A description of each supplemental non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is located at the end of this news release.

                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                 Three Months Ended                                                                                                                                                                               Nine Months Ended
                                                                                                                                                                                                                    September 30,                                                                                                                                                                                   September 30,
                                                                                                                                               -------------------------------------------------------------------------------------------------------------------------------------------                                                      -----------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                           2017                             2016                     %                                                          2017                            2016                    %
                                                                                                                                               -----------------------------                                          -----------------------------                                          ---------                                          ----------------------------                                          ----------------------------                                          ---------
Net (loss) income attributable to common shareholders per diluted                                                                              $ (0.01 )                                                              $ (0.06 )                                                               83.3  %                                           $ 0.30                                             $ 0.41                                             (26.8 )%
share
                                                                                                                                               = ===== ====================                                           = ===== ====================                                           ===== ==                                           = ==== ====================                                           = ==== ====================                                           ===== ==
Funds from Operations ("FFO") per diluted share                                           $  0.52                                             $  0.56                                              (7.1 )%                                           $ 1.63                                             $ 1.97                                             (17.3 )%
                                                                                                                                               = ===== ====================                                           = ===== ====================                                           ===== ==                                           = ==== ====================                                           = ==== ====================                                           ===== ==
FFO, as adjusted, per diluted share (1)                                                                                                        $  0.50                                             $  0.57                                             (12.3 )%                                           $ 1.51                                             $ 1.72                                             (12.2 )%
                                                                                                                                               = ===== ====================                                           = ===== ====================                                           ===== ==                                           = ==== ====================                                           = ==== ====================                                           ===== ==
(1)   For a reconciliation of FFO to FFO, as adjusted, for the periods
                         presented, please refer to the footnotes to the Company’s
                         reconciliation of net income attributable to common shareholders to
                         FFO allocable to Operating Partnership common unitholders on page 10
                         of this news release.
                          


KEY TAKEAWAYS:

-- FFO per diluted share, as adjusted, was $0.50 for the third quarter 2017, compared with $0.57 per share for the third quarter 2016. Third quarter 2017 was impacted by approximately $0.02 per share of dilution from asset sales.

-- Total Portfolio Same-center NOI declined 2.6% for the third quarter 2017 and 1.6% for the nine months ended September 30, 2017.

-- Same-center sales per square foot for the stabilized mall portfolio during the third quarter were flat compared with the prior-year quarter. For the twelve months ended September 30, 2017, same-center sales were $373 per square foot.

-- Portfolio occupancy was 93.1% as of September 30, 2017, a 40 bps decline compared with 93.5% as of September 30, 2016 and 150 bps increase from 91.6% as of June 30, 2017. Same-center mall occupancy was 91.8% as of September 30, 2017 compared with 93.0% as of September 30, 2016 and 90.6% as of June 30, 2017.

-- Year-to-date, CBL has completed gross asset sales of $166.25 million (at CBL’s share) including the sale of its remaining 25% interest in River Ridge Mall to its joint venture partner for $9.0 million.

-- During the third quarter, CBL closed on the extension and modification of two unsecured term loans totaling $535 million and completed an offering of $225 million aggregate principal amount of its 5.950% Senior Notes Due 2026.

-- The fourth quarter common dividend was declared at $0.20 per share, which represents an annualized rate of $0.80 per share, corresponding with projected taxable income and preserving an estimated $50 million in annual cash flow.

"This quarter’s results fell below our expectations as our revenues were impacted by additional bankruptcies, store closures and rent concessions," said Stephen Lebovitz, CBL’s president & CEO. "The difficult environment for retailers has put further pressure on our NOI, FFO and lease spreads as we work diligently to mitigate the impact and preserve NOI. As a result, it is necessary to adjust our outlook and guidance for the remainder of the year. Despite the challenges, our portfolio of market dominant properties is resilient as shown by the sequential improvement in occupancy and stabilization in sales during the quarter. We are executing our strategy and successfully replacing underperforming retailers with higher performing tenants and more diverse uses. Year-to-date, only 25% of new leasing has been executed with traditional apparel retailers as we reinvent our properties into suburban town centers that offer unique shopping, more food and beverage, fitness, health and beauty uses, services and more.

"We have continued to enhance our investment grade balance sheet, providing further liquidity and flexibility to navigate the challenges we are facing. This past quarter, we completed the extension of two unsecured term loans at favorable terms, issued $225 million in additional senior unsecured notes and retired two higher-rate secured loans ahead of maturity. As the quality and size of our unencumbered asset pool increases and our credit metrics strengthen, our strong balance sheet provides us with the financial flexibility necessary to execute our business plan."

Net loss attributable to common shareholders for the third quarter 2017 was $2.3 million, or $(0.01) per diluted share, compared with a net loss of $10.2 million, or $(0.06) per diluted share, for the third quarter 2016.

FFO allocable to common shareholders, as adjusted, for the third quarter 2017 was $84.7 million, or $0.50 per diluted share, compared with $98.1 million, or $0.57 per diluted share, for the third quarter 2016. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the third quarter 2017 was $98.7 million compared with $114.9 million for the third quarter 2016. FFO, as adjusted, for the third quarter 2017 was impacted by $0.02 per share of dilution from asset sales.

CBL’s revenues for the third quarter 2017 were impacted by 1) higher than anticipated retailer bankruptcy activity; 2) lower than anticipated rent from restructured leases with retailers undergoing bankruptcy-related reorganization; 3) lower than anticipated rent from renewed leases with certain retailers; and 4) lower than projected contribution from temporary leasing and permanent lease-up of space vacated in bankruptcy.

 
Percentage change in same-center Net Operating Income ("NOI")(1):
 
                              Three Months Ended     Nine Months Ended
                                                                    -------------------                                          -----------------
                                                                                                  September 30, 2017
                                                                    ------------------------------------------------------------------------------
Portfolio same-center NOI                                                    (2.6 )%                                                      (1.6 )%
Mall same-center NOI                                                         (2.8 )%                                                      (2.1 )%
(1)   CBL’s definition of same-center NOI excludes the impact of lease
                         termination fees and certain non-cash items of straight-line rents,
                         write-offs of landlord inducements and net amortization of acquired
                         above and below market leases.
                          

Major variances impacting same-center NOI for the quarter ended September 30, 2017, include:

-- NOI declined $4.5 million, due to a $4.1 million decrease in revenue and a $0.4 million increase in operating expenses.

-- Minimum rents and tenant reimbursements declined $4.1 million during the quarter, primarily related to store closures and rent concessions for tenants in bankruptcy.

-- Percentage rents were flat compared with the prior year quarter.

-- Property operating expenses declined $0.7 million, maintenance and repair expense declined $1.0 million, and real estate tax expenses increased $2.1 million.

PORTFOLIO OPERATIONAL RESULTS

Occupancy:
 
                                   As of June 30,                          As of September 30,
                                                                         ---------------                                          ------------------------------------------------------------
                                                                              2017                                                  2017         2016
                                                                         ---------------                                          ---------                                          ---------
Portfolio occupancy                                                         91.6 %                                                93.1 %                                             93.5 %
   Mall portfolio                                                           90.2 %                                                91.6 %                                             92.6 %
      Same-center malls                                                     90.6 %                                                91.8 %                                             93.0 %
      Stabilized malls                                                      90.5 %                                                91.7 %                                             92.5 %
      Non-stabilized malls (1)                                              81.8 %                                                87.9 %                                             93.6 %
   Associated centers                                                       95.5 %                                                98.2 %                                             96.1 %
   Community centers                                                        97.0 %                                                98.2 %                                             97.5 %
(1)   Represents occupancy for The Outlet Shoppes at Laredo and The Outlet
                         Shoppes of the Bluegrass as of June 30, 2017 and September 30, 2017,
                         and The Outlet Shoppes at Atlanta and The Outlet Shoppes of the
                         Bluegrass as of September 30, 2016.
                          
 
New and Renewal Leasing Activity of Same Small Shop Space Less
Than 10,000 Square Feet:
 
                       % Change in Average Gross Rent Per Square Foot:                           
---------------------------------------------------------------------------------------------------------------- -------------------- ---------------------------------
                                Three Months                      Nine Months Ended
                                                                          Ended
                                                            ------------------------------                                            -------------------------------
                                                                                                        September 30, 2017
                                                            -----------------------------------------------------------------------------------------------------------
Stabilized Malls                                                (13.7 )%                                                                    (4.1 )%
   New leases (1)                                                 0.3  %                                                 10.4  %
   Renewal leases                                               (16.1 )%                                                                    (7.9 )%
(1)   Excluding one lease with a significant negative variance, the
                         increase in stabilized mall new leases was 4.3% and 11.5% for the
                         three and nine months ended September 30, 2017, respectively.
                          
 
Same-Center Sales Per Square Foot for Mall Tenants 10,000
Square Feet or Less:
 
                                                                       Twelve Months Ended September 30,                   
                                                                                            ------------------------------------------------------------------
                                                                                                2017            2016                                                    % Change
                                                                                            ------------                                          ------------                                          ---------------------
Stabilized mall same-center sales per square foot                                               $   373                                               $   380                                                 (1.8 )%
Stabilized mall sales per square foot                                                           $   373                                               $   377                                                 (1.1 )%
                                                                                                                                                                                                         

DIVIDEND

CBL’s Board of Directors has declared a quarterly cash dividend for the Company’s Common Stock of $0.20 per share for the quarter ending December 31, 2017. The dividend is payable on January 16, 2018, to shareholders of record as of December 29, 2017. The dividend represents an annualized rate of $0.80 per share.

"The dividend is an important way that we return value to our shareholders," commented Lebovitz. "Our approach has been to set the dividend at a level that maximizes available cash flow for investing in our properties and debt reduction, while also maintaining consistency. As one of the largest shareholders of CBL, management and the Board are fully vested in maximizing shareholder value. It is with that perspective that we made the difficult decision to reduce the common dividend to an annualized rate of $0.80 per share from $1.06 per share. Based on our updated projections of taxable income, the common dividend is being re-set to a rate that will preserve an estimated $50 million of cash on an annual basis. This enhanced liquidity will help to fund value-adding redevelopment activity and debt reduction."

The Board also declared a quarterly cash dividend of $0.4609375 per depositary share for the quarter ending December 31, 2017, for the Company’s 7.375% Series D Cumulative Redeemable Preferred Stock. The dividend, which equates to an annual dividend payment of $1.84375 per depositary share, is payable on December 29, 2017, to shareholders of record as of December 15, 2017.

The Board also declared a quarterly cash dividend of $0.4140625 per depositary share for the quarter ending December 31, 2017, for the Company’s 6.625% Series E Cumulative Redeemable Preferred Stock. The dividend, which equates to an annual dividend payment of $1.65625 per depositary share, is payable on December 29, 2017, to shareholders of record as of December 15, 2017.

DISPOSITIONS

During the quarter, CBL closed on the sale of its remaining 25% interest in River Ridge Mall in Lynchburg, VA, for $9.0 million, cash.

Year-to-date, CBL has completed the sale of two office buildings, interests in three malls and one outlet center for a gross sales price (at CBL’s share) of $166.25 million.

FINANCING ACTIVITY

On September 1, 2017, CBL’s majority-owned operating partnership subsidiary, CBL & Associates Limited Partnership (the "Operating Partnership"), closed on an offering of $225 million aggregate principal amount of its 5.950% Senior Notes Due 2026 (the "notes"). The notes constitute an additional issuance of the 5.950% Senior Notes due 2026, $400 million aggregate principal amount of which the Operating Partnership issued on December 13, 2016. The $625 million aggregate principal amount of notes mature on December 15, 2026.

In September, CBL retired two secured loans totaling $206 million, including a $144.3 million loan secured by its Tier 1 property, Hanes Mall, in Winston-Salem, NC, which bore an interest rate of 6.99% and was scheduled to mature in October 2018. The loan was retired with a minimal prepayment fee. CBL also retired at par the $61.6 million ($46.2 million at CBL’s 75% share) loan secured by its Tier 1 joint venture outlet center, The Outlet Shoppes at El Paso, in El Paso, TX. The loan was scheduled to mature on December 5, 2017, and bore an interest rate of 7.06%.

In July, CBL completed the extension and modification of two unsecured term loans, which were scheduled to mature in 2018. The first, with a balance of $400 million, was increased to a balance of $490 million until July 2018, when it will be reduced to $300 million for the remainder of its term. New borrowings under this term loan were used to reduce outstanding balances on the Company’s unsecured lines of credit. The new term loan has an initial maturity date of July 2020 with two, one-year extension options (the 2nd option is at the lenders’ sole discretion), for a final maturity of July 2022. The term loan bears an interest rate of 150 basis points over LIBOR, based on CBL’s current investment grade rating of BBB-/Baa3/BBB-. Wells Fargo Bank National Association served as Administrative Agent.

The second unsecured term loan, which had a balance of $50 million and was due to mature in February 2018, was modified to a new $45 million term loan. The new loan has an initial maturity date of June 2021, with an additional one-year extension option available at CBL’s discretion, for a final maturity of June 2022. The term loan bears interest at a rate of 165 basis points over LIBOR. First Tennessee Bank NA served as Administrative Agent.

In April, the $123.3 million loan secured by Acadiana Mall in Lafayette, LA, matured. CBL is in negotiations with the existing lender to modify the terms of the loan and will announce details of the agreement once it has been finalized.

CBL has entered into preliminary discussions with the lender for the loan secured by Hickory Point Mall in Forsyth, IL, to explore a further modification of the loan or conveyance. In 2016, the original loan was modified to extend the term and provide for increased cash flows to fund redevelopment activity. Since that time, the property has experienced continued deterioration in operating metrics. As a result, CBL recorded a $24.5 million impairment to adjust the property’s carrying value during the third quarter.

During the third quarter, Wausau Center in Wausau, WI, was conveyed to the lender in settlement of the $17.7 million non-recourse loan secured by the property. CBL recorded a gain on extinguishment of debt of $6.9 million related to the conveyance.

DEVELOPMENT

On November 14th, CBL and its joint venture partners CHM, LLC, and Browning Development Solutions will celebrate the groundbreaking of The Shoppes at Eagle Point, a 233,000-square-foot grocery-anchored shopping center located in Cookeville, TN. The project is being developed in a 50/50 joint venture with CBL overseeing leasing and development. The project will be anchored by Publix, Academy Sports & Outdoor, Ross Dress for Less, PetSmart, Ulta Beauty as well as a collection of shops and restaurants including Panera Bread, Chipotle Mexican Grille and Shoe Carnival. The grand opening is scheduled for fall 2018.

OUTLOOK AND GUIDANCE

CBL is updating guidance to incorporate third quarter results and a revised outlook for the remainder of 2017. CBL’s revised assumptions for full-year 2017 are as follows:

                                                   Current                                                                Previous                              
-------------------- ------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------- --------------------
  2017 FFO per share, as adjusted         $2.08 - $2.12                                                          $2.18 - $2.24                                                     
-------------------- ------------------------------- --------------------                                           -------------------- -------------------------------------------------------------- --------------------                                           -------------------- ---------------------------------------------------------------- --------------------
  2017 Same-Center NOI Growth                                                   (3.0)% - (2.0)%                                                                                              (2.0)% - 0%                                                       
-------------------- ------------------------------- --------------------                                           -------------------- -------------------------------------------------------------- --------------------                                           -------------------- ---------------------------------------------------------------- --------------------
  G&A                                                                           $61 - 62 million                                                                                             $62 - 64 million                                                  
-------------------- ------------------------------- --------------------                                           -------------------- -------------------------------------------------------------- --------------------                                           -------------------- ---------------------------------------------------------------- --------------------
  Gain on outparcel sales                                                       $12 -14 million                                                                                              $10 - 12 million                                                  
-------------------- ------------------------------- --------------------                                           -------------------- -------------------------------------------------------------- --------------------                                           -------------------- ---------------------------------------------------------------- --------------------
  Occupancy                               75 - 125 bps lower total portfolio occupancy with a decline in         75 - 125 bps lower total portfolio and stabilized mall occupancy  
                                                                                                                                         stabilized mall occupancy near the low end of the range.
-------------------- ------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------- --------------------
                                                                                                                                                                                            

CBL’s updated 2017 FFO, as adjusted, guidance range of $2.08 - $2.12 per diluted share was adjusted to incorporate an approximate $0.05 per share lower expected contribution from same-center NOI; approximately $0.03 per share lower expected contribution from non-same-center properties and sold properties; $0.01 per share lower fee income and approximately $0.02 per share higher expected interest expense compared with previous assumptions. The increase in assumed interest expense is due to additional senior unsecured notes issued in September as well as an increased LIBOR/base-rate assumption, net of interest savings resulting from the early retirement of a secured loan.

                                                                                                      
                                                                                                                         Low                                                                   High
                                                                                                            -----------------------------                                          -----------------------------
Expected diluted earnings per common share                                                                   $ 0.45                                                                 $ 0.49
Adjust to fully converted shares from common shares                                                           (0.06 )                                                                (0.06 )
                                                                                                            ----------------------------                                           ----------------------------
Expected earnings per diluted, fully converted common share                                                    0.39                                                                   0.43
Add: depreciation and amortization                                                                             1.64                                                                   1.64
Less: gain on depreciable property                                                                            (0.24 )                                                                (0.24 )
Add: loss on impairment                                                                                        0.35                                                                   0.35
Add: noncontrolling interest in earnings of Operating Partnership                                              0.07                                                0.07  
                                                                                                            ----------------------------                                           ----------------------------
Expected FFO per diluted, fully converted common share                                                         2.21                                                                   2.25
Adjustment for certain significant items                                                                      (0.13 )                                                                (0.13 )
                                                                                                            ----------------------------                                           ----------------------------
Expected adjusted FFO per diluted, fully converted common share                                              $ 2.08                                              $ 2.12  
                                                                                                            == ==== ====================                                           == ==== ====================
                                                                                                                                                                                            

INVESTOR CONFERENCE CALL AND WEBCAST

CBL Properties will conduct a conference call on Friday, November 3, 2017, at 11:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 9283024. A replay of the conference call will be available through November 10, 2017, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10111623.

The Company will also provide an online webcast and rebroadcast of its third quarter 2017 earnings release conference call. The live broadcast of the quarterly conference call will be available online at cblproperties.com on Friday, November 3, 2017 beginning at 11:00 a.m. ET. The online replay will follow shortly after the call.

To receive the CBL Properties third quarter earnings release and supplemental information, please visit the Invest section of our website at cblproperties.com or contact Investor Relations at (423) 490-8312.

ABOUT CBL PROPERTIES

Headquartered in Chattanooga, TN, CBL Properties owns and manages a national portfolio of market-dominant properties located in dynamic and growing communities. CBL’s portfolio is comprised of 119 properties totaling 74.4 million square feet across 27 states, including 76 high-quality enclosed, outlet and open-air retail centers and 12 properties managed for third parties. CBL continuously strengthens its company and portfolio through active management, aggressive leasing and profitable reinvestment in its properties. For more information, visit cblproperties.com.

NON-GAAP FINANCIAL MEASURES

Funds From Operations

FFO is a widely used non-GAAP 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 as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. The Company’s method of calculating FFO 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 allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as it believes that both are useful performance measures. The Company believes FFO allocable to Operating Partnership common unitholders 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 (loss) attributable to the Company’s common shareholders to FFO allocable to Operating Partnership common unitholders, 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 the Operating Partnership common unitholders. The Company then applies a percentage to FFO of the Operating Partnership common unitholders 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 held by noncontrolling interests during the period.

FFO does not represent cash flows from operations as defined by GAAP, 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.

The Company believes that it is important to identify the impact of certain significant items on its FFO measures for a reader to have a complete understanding of the Company’s results of operations. Therefore, the Company has also presented adjusted FFO measures excluding these items from the applicable periods. Please refer to the reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders on page 10 of this news release for a description of these adjustments.

Same-center Net Operating Income

NOI is a supplemental non-GAAP measure of the operating performance of the Company’s shopping centers and other properties. The Company defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).

The Company computes NOI based on the Operating Partnership’s pro rata share of both consolidated and unconsolidated properties. The Company believes that presenting NOI and same-center NOI (described below) based on its Operating Partnership’s pro rata share of both consolidated and unconsolidated properties is useful since the Company 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’s definition of NOI may be different than that used by other companies and, accordingly, the Company’s calculation of NOI may not be comparable to that of other companies.

Since NOI includes only those revenues and expenses related to the operations of the Company’s shopping center properties, the Company believes that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on the Company’s results of operations. The Company’s calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-off of landlord inducement assets in order to enhance the comparability of results from one period to another. A reconciliation of same-center NOI to net income is located at the end of this earnings release.

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 condensed 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                                                                                                   Nine Months Ended
                                                                                                                                                              September 30,                                                                                                                                             September 30,
                                                                                                            --------------------------------------------------------------------------------------------------------                                                  ---------------------------------------------------------------------------------------------------------
                                                                                                                                        2017                                     2016                                                                        2017                                     2016
                                                                                                            ---------------------------------                                          -------------------------------------                                          ----------------------------------                                          -------------------------------------
REVENUES:
   Minimum rents                                                                                              $ 150,836                                                                      $ 164,444                                                                   $ 468,195                                                                      $ 502,289
   Percentage rents                                                                                               3,000                                                                          3,225                                                                       7,127                                                                         10,590
   Other rents                                                                                                    3,790                                                                          3,866                                                                      11,171                                                                         13,747
   Tenant reimbursements                                                                                         63,055                                                                         69,489                                                                     192,577                                                                        212,951
   Management, development and leasing fees                                                                       2,718                                                                          4,177                                                                       8,747                                                                         10,825
   Other                                                                                                          1,251                                                       6,520                                                    4,079                                                      19,362  
                                                                                                            --------------------------------                                           ------------------------------------                                           ---------------------------------                                           ------------------------------------
      Total revenues                                                                                            224,650                                                     251,721                                                  691,896                                                     769,764  
                                                                                                            --------------------------------                                           ------------------------------------                                           ---------------------------------                                           ------------------------------------
OPERATING EXPENSES:
   Property operating                                                                                            31,295                                                                         35,116                                                                      96,250                                                                        104,804
   Depreciation and amortization                                                                                 71,732                                                                         71,794                                                                     225,461                                                                        220,505
   Real estate taxes                                                                                             21,573                                                                         22,492                                                                      62,343                                                                         68,354
   Maintenance and repairs                                                                                       11,254                                                                         13,236                                                                      36,322                                                                         39,574
   General and administrative                                                                                    13,568                                                                         13,222                                                                      45,402                                                                         46,865
   Loss on impairment                                                                                            24,935                                                                         53,558                                                                      71,401                                                                        116,736
   Other                                                                                                            132                                                       5,576                                                    5,151                                                      20,313  
                                                                                                            --------------------------------                                           ------------------------------------                                           ---------------------------------                                           ------------------------------------
      Total operating expenses                                                                                  174,489                                                     214,994                                                  542,330                                                     617,151  
                                                                                                            --------------------------------                                           ------------------------------------                                           ---------------------------------                                           ------------------------------------
Income from operations                                                                                           50,161                                                                         36,727                                                                     149,566                                                                        152,613
   Interest and other income (loss)                                                                                (200 )                                                                          451                                                                       1,235                                                                          1,062
   Interest expense                                                                                             (53,913 )                                                                      (54,292 )                                                                  (165,179 )                                                                     (162,710 )
   Gain on extinguishment of debt                                                                                 6,452                                                                             (6 )                                                                    30,927                                                                 --
   Loss on investment                                                                                              (354 )                                                               --                                                                      (6,197 )                                                               --
   Income tax benefit                                                                                             1,064                                                                          2,386                                                                       4,784                                                                          2,974
   Equity in earnings of unconsolidated affiliates                                                                4,706                                                      10,478                                                   16,404                                                     107,217  
                                                                                                            --------------------------------                                           ------------------------------------                                           ---------------------------------                                           ------------------------------------
Income (loss) from continuing operations before gain on sales of                                                  7,916                                                                         (4,256 )                                                                    31,540                                                                        101,156
real estate assets
   Gain on sales of real estate assets                                                                            1,383                                                       4,926                                                   86,904                                                      14,503  
                                                                                                            --------------------------------                                           ------------------------------------                                           ---------------------------------                                           ------------------------------------
Net income                                                                                                        9,299                                                                            670                                                                     118,444                                                                        115,659
   Net (income) loss attributable to noncontrolling interests in:
      Operating Partnership                                                                                          81                                                                          1,372                                                                      (8,702 )                                                                      (12,056 )
      Other consolidated subsidiaries                                                                              (415 )                                                                         (983 )                                                                   (25,266 )                                                                          449  
                                                                                                            --------------------------------                                           ------------------------------------                                           ---------------------------------                                           ------------------------------------
Net income attributable to the Company                                                                            8,965                                                                          1,059                                                                      84,476                                                                        104,052
   Preferred dividends                                                                                          (11,223 )                                                                      (11,223 )                                                                   (33,669 )                                                                      (33,669 )
                                                                                                            --------------------------------                                           ------------------------------------                                           ---------------------------------                                           ------------------------------------
Net income (loss) attributable to common shareholders                                                         $  (2,258 )                                                                    $ (10,164 )                                                                 $  50,807                                                   $  70,383  
                                                                                                            === ======= ====================                                           ======= ======= ====================                                           ==== ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                   
Basic and diluted per share data attributable to common
shareholders:
   Net income (loss) attributable to common shareholders                                                      $   (0.01 )                                                                    $   (0.06 )                                                                 $    0.30                                                                      $    0.41
                                                                                                                171,096                                                                        170,792                                                                     171,060                                                                        170,751
   Weighted-average common and potential dilutive common shares
   outstanding
                                                                                                                                                                                                                                                                                                                                                   
   Dividends declared per common share                                                                        $   0.265                                                                      $   0.265                                                                   $   0.795                                                                      $   0.795
                                                                                                                                                                                                                                                                                                                                                                   
 
The Company’s reconciliation of net income (loss) attributable
to common shareholders to FFO allocable to Operating Partnership
common unitholders is as follows:
(in thousands, except per share data)
 
                                                                                                                                                    Three Months Ended                                                                                                       Nine Months Ended
                                                                                                                                                                                             September 30,                                                                                                                                                 September 30,
                                                                                                                                         ------------------------------------------------------------------------------------------------------------                                                  ------------------------------------------------------------------------------------------------------------
                                                                                                                                                         2017                                     2016                                                                           2017                                     2016
                                                                                                                                         -------------------------------------                                          -------------------------------------                                          -------------------------------------                                          -------------------------------------
Net income (loss) attributable to common shareholders                                                                                          $  (2,258 )                                                                    $ (10,164 )                                                                    $  50,807                                                                      $  70,383
Noncontrolling interest in income (loss) of Operating Partnership                                                                                    (81 )                                                                       (1,372 )                                                                        8,702                                                                         12,056
Depreciation and amortization expense of:
   Consolidated properties                                                                                                                        71,732                                                                         71,794                                                                        225,461                                                                        220,505
   Unconsolidated affiliates                                                                                                                       9,633                                                                         10,756                                                                         28,533                                                                         29,090
   Non-real estate assets                                                                                                                           (934 )                                                                         (838 )                                                                       (2,590 )                                                                       (2,397 )
Noncontrolling interests’ share of depreciation and amortization                                                       (2,170 )                                                                       (2,237 )                                                                       (6,791 )                                                                       (6,685 )
Loss on impairment, net of taxes                                                                                                                  24,935                                                                         51,812                                                                         70,185                                                                        114,990
(Gain) loss on depreciable property, net of taxes and                                                                                              1,995                                                      (8,685 )                                                                      (48,761 )                                                                      (44,206 )
noncontrolling interests’ share
                                                                                                                                         --------------  --------------------                                           --------------  --------------------                                           --------------  --------------------                                           --------------  --------------------
FFO allocable to Operating Partnership common unitholders                                                                                        102,852                                                                        111,066                                                                        325,546                                                                        393,736
   Litigation expenses (1)                                                                                                                            17                                                                            601                                                                             69                                                                          2,308
   Nonrecurring professional fees expense (reimbursement) (1)                                                                             --                                                                            662                                                                           (919 )                                                                        1,781
   Loss on investment (2)                                                                                                                            354                                                                 --                                                                          6,197                                                                 --
   Equity in (earnings) losses from disposals of unconsolidated                                                                           --                                                                          1,145                                                                 --                                                                        (54,485 )
   affiliates (3)
   Non-cash default interest expense (4)                                                                                                           1,904                                                                          1,374                                                                          4,398                                                                          1,374
                                                                                                                                                  (6,452 )                                                                            6                                                     (33,902 )                                                               --  
   Gain on extinguishment of debt, net of noncontrolling interests’
   share (5)
                                                                                                                                         --------------  --------------------                                           --------------  --------------------                                           --------------  --------------------                                           --------------  --------------------
FFO allocable to Operating Partnership common unitholders, as                                                                                  $  98,675                                                   $ 114,854                                                   $ 301,389                                                   $ 344,714  
adjusted
                                                                                                                                         ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                       
FFO per diluted share                                                                                                                          $    0.52                                                   $    0.56                                                   $    1.63                                                   $    1.97  
                                                                                                                                         ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                       
FFO, as adjusted, per diluted share                                                                                                            $    0.50                                                   $    0.57                                                   $    1.51                                                   $    1.72  
                                                                                                                                         ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================                                           ======= ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                       
Weighted-average common and potential dilutive common shares                                                                                     199,321                                                                        200,004                                                                        199,325                                                                        199,992
outstanding with Operating Partnership units fully converted
                                                                                                                                                                                                                                                                                                                                                                                       
(1)   Litigation expense and nonrecurring professional fees expense are
                         included in General and Administrative expense in the Consolidated
                         Statements of Operations. Nonrecurring professional fees
                         reimbursement is included in Interest and Other Income (Loss) in the
                         Consolidated Statements of Operations.
(2)                      The three months and nine months ended September 30, 2017 represents
                         a loss on investment related to the write down of the Company’s 25%
                         interest in River Ridge Mall based on the contract price to sell
                         such interest to its joint venture partner. The sale closed in
                         August 2017.
(3)                      The three months ended September 30, 2016 includes $1,145 of equity
                         in losses from the disposals of unconsolidated affiliates. The nine
                         months ended September 30, 2016 also includes $26,363 related to the
                         sale of the Company’s 50% interest in Triangle Town Center and
                         $29,267 related to the foreclosure of the loan secured by Gulf Coast
                         Town Center. These amounts are included in Equity in Earnings of
                         Unconsolidated Affiliates in the Consolidated Statements of
                         Operations.
(4)                      The three months and nine months ended September 30, 2017 includes
                         default interest expense related to Acadiana Mall and Wausau Center.
                         The nine months ended September 30, 2017 also includes default
                         interest expense related to Chesterfield Mall and Midland Mall. The
                         three and nine months ended September 30, 2016 includes default
                         interest expense related to Chesterfield Mall, Midland Mall and
                         Wausau Center.
(5)                      The three months ended September 30, 2017 primarily represents a
                         $6,851 gain on extinguishment of debt related to the non-recourse
                         loan secured by Wausau Center, which was conveyed to the lender in
                         the third quarter of 2017, which was partially offset by a loss on
                         extinguishment of debt related to a prepayment fee of $371 related
                         to the early retirement of a mortgage loan. Additionally, the nine
                         months ended September 30, 2017 also includes a gain on
                         extinguishment of debt related to the non-recourse loan secured by
                         Chesterfield Mall, which was conveyed to the lender in the second
                         quarter of 2017, a loss on extinguishment of debt related to a
                         prepayment fee on the early retirement of the loans secured by The
                         Outlet Shoppes at Oklahoma City, which was sold in the second
                         quarter of 2017, and a gain on extinguishment of debt related to the
                         non-recourse loan secured by Midland Mall, which was conveyed to the
                         lender in the first quarter of 2017.
                          
 
The reconciliation of diluted EPS to FFO per diluted share is as
follows:
 
                                                                                                                         Three Months Ended                                                                                             Nine Months Ended
                                                                                                                                                                  September 30,                                                                                                                                       September 30,
                                                                                                                 ------------------------------------------------------------------------------------------------------                                                  ----------------------------------------------------------------------------------------------
                                                                                                                                 2017                                  2016                                                                     2017                              2016
                                                                                                                 -------------------------------------                                          -------------------------------                                          ------------------------------                                          ------------------------------
Diluted EPS attributable to common shareholders                                                                        $   (0.01 )                                                                $ (0.06 )                                                                $ 0.30                                                                  $ 0.41
Eliminate amounts per share excluded from FFO:
   Depreciation and amortization expense, including amounts from                                                            0.40                                                                     0.40                                                                    1.23                                                                    1.21
   consolidated properties, unconsolidated affiliates, non-real estate
   assets and excluding amounts allocated to noncontrolling interests
   Loss on impairment, net of taxes                                                                                         0.13                                                                     0.26                                                                    0.35                                                                    0.57
                                                                                                                  --                                                 (0.04 )                                                                 (0.25 )                                                                 (0.22 )
   Gain on depreciable property, net of tax and noncontrolling
   interests’ share
                                                                                                                 --------------  --------------------                                           --------  --------------------                                           -------  --------------------                                           -------  --------------------
FFO per diluted share                                                                                                  $    0.52                                               $  0.56                                               $ 1.63                                               $ 1.97  
                                                                                                                 ======= ======= ====================                                           === ===== ====================                                           === ==== ====================                                           === ==== ====================
                                                                                                                                                                                                                                                                                                                                                           
 
The reconciliations of FFO allocable to Operating Partnership
common unitholders to FFO allocable to common shareholders,
including and excluding the adjustments noted above, are as
follows:
 
                                                                                                              Three Months Ended                                                                                               Nine Months Ended
                                                                                                                                                       September 30,                                                                                                                                         September 30,
                                                                                                        --------------------------------------------------------------------------------------------------                                                  ------------------------------------------------------------------------------------------------------
                                                                                                                      2017                                2016                                                                      2017                                  2016
                                                                                                        --------------------------------                                          --------------------------------                                          --------------------------------                                          ------------------------------------
FFO allocable to Operating Partnership common unitholders                                                $ 102,852                                                                 $ 111,066                                                                 $ 325,546                                                                     $ 393,736
Percentage allocable to common shareholders (1)                                                              85.84                    %                                                85.39                    %                                                85.82                    %                                                    85.38                    %
                                                                                                        -------------------------------                                           -------------------------------                                           -------------------------------                                           -----------------------------------
FFO allocable to common shareholders                                                                     $  88,288                                              $  94,839                                              $ 279,384                                                  $ 336,172  
                                                                                                        == ======= ====================                                           == ======= ====================                                           == ======= ====================                                           ====== ======= ====================
                                                                                                                                                                                                                                                                                                                                       
FFO allocable to Operating Partnership common unitholders, as                                            $  98,675                                                                 $ 114,854                                                                 $ 301,389                                                                     $ 344,714
adjusted
Percentage allocable to common shareholders (1)                                                              85.84                    %                                                85.39                    %                                                85.82                    %                                                    85.38                    %
                                                                                                        -------------------------------                                           -------------------------------                                           -------------------------------                                           -----------------------------------
FFO allocable to common shareholders, as adjusted                                                        $  84,703                                              $  98,074                                              $ 258,652                                                  $ 294,317  
                                                                                                        == ======= ====================                                           == ======= ====================                                           == ======= ====================                                           ====== ======= ====================
                                                                                                                                                                                                                                                                                                                                       
(1)   Represents the weighted average number of common shares outstanding
                         for the period divided by the sum of the weighted average number of
                         common 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 16.
                          
                                                                                                                                                                             
SUPPLEMENTAL FFO INFORMATION:
                                                                                                                                                                          Three Months Ended                                                                                                                        Nine Months Ended
                                                                                                                                                                             September 30,                                                                                                                            September 30,
                                                                                                                                         ----------------------------------------------------------------------------                                                  --------------------------------------------------------------------------------------------------
                                                                                                                                                 2017                                                           2016                                                           2017                                                                      2016
                                                                                                                                         ---------------------                                          ---------------------                                          ---------------------                                          -------------------------------------------
Lease termination fees                                                                                                                    $            879                                               $            857                                               $          1,990                                                   $          2,202
   Lease termination fees per share                                                                                                       $ --                                               $ --                                               $           0.01                                                   $           0.01
                                                                                                                                                                                                                                                                                                                                       
Straight-line rental income (including write-offs)                                                                                        $           (409 )                                             $           (319 )                                             $            223                                                   $          1,241
   Straight-line rental income (including write-offs) per share                                                                           $ --                                               $ --                                               $ --                                                   $           0.01
                                                                                                                                                                                                                                                                                                                                       
Gains on outparcel sales                                                                                                                  $          3,605                                               $          4,387                                               $         11,696                                                   $          8,170
   Gains on outparcel sales per share                                                                                                     $           0.02                                               $           0.02                                               $           0.06                                                   $           0.04
                                                                                                                                                                                                                                                                                                                                       
Net amortization of acquired above- and below-market leases                                                                               $          1,046                                               $            783                                               $          3,462                                                   $          2,765
   Net amortization of acquired above- and below-market leases per share                                                                  $           0.01                                               $ --                                               $           0.02                                                   $           0.01
                                                                                                                                                                                                                                                                                                                                       
Net amortization of debt premiums and discounts                                                                                           $           (369 )                                             $          1,162                                               $           (772 )                                                 $          2,000
   Net amortization of debt premiums and discounts per share                                                                              $ --                                               $           0.01                                               $ --                                                   $           0.01
                                                                                                                                                                                                                                                                                                                                       
Income tax benefit                                                                                                                        $          1,064                                               $          2,386                                               $          4,784                                                   $          2,974
   Income tax benefit per share                                                                                                           $           0.01                                               $           0.01                                               $           0.02                                                   $           0.01
                                                                                                                                                                                                                                                                                                                                       
Gain on extinguishment of debt, net of noncontrolling interests’                                               $          6,452                                               $             (6 )                                             $         33,902                                                   $ --
share
                                                                                                                                          $           0.03                                               $ --                                               $           0.17                                                   $ --
   Gain on extinguishment of debt, net of noncontrolling interests’
   share, per share
                                                                                                                                                                                                                                                                                                                                       
Loss on investment                                                                                                                        $           (354 )                                             $ --                                               $         (6,197 )                                                 $ --
   Loss on investment per share                                                                                                           $ --                                               $ --                                               $          (0.03 )                                                 $ --
                                                                                                                                                                                                                                                                                                                                       
Equity in earnings (losses) from disposals of unconsolidated                                                                              $ --                                               $         (1,145 )                                             $ --                                                   $         54,485
affiliates
   Equity in earnings (losses) from disposals of unconsolidated                                                                           $ --                                               $          (0.01 )                                             $ --                                                   $           0.27
   affiliates per share
                                                                                                                                                                                                                                                                                                                                       
Non-cash default interest expense                                                                                                         $         (1,904 )                                             $         (1,374 )                                             $         (4,398 )                                                 $         (1,374 )
   Non-cash default interest expense per share                                                                                            $          (0.01 )                                             $          (0.01 )                                             $          (0.02 )                                                 $          (0.01 )
                                                                                                                                                                                                                                                                                                                                       
Abandoned projects expense                                                                                                                $           (132 )                                             $            (11 )                                             $         (5,151 )                                                 $            (44 )
   Abandoned projects expense per share                                                                                                   $ --                                               $ --                                               $          (0.03 )                                                 $ --
                                                                                                                                                                                                                                                                                                                                       
Interest capitalized                                                                                                                      $            452                                               $            616                                               $          1,676                                                   $          1,612
   Interest capitalized per share                                                                                                         $ --                                               $ --                                               $           0.01                                                   $           0.01
                                                                                                                                                                                                                                                                                                                                       
Litigation expenses                                                                                                                       $            (17 )                                             $           (601 )                                             $            (69 )                                                 $         (2,308 )
   Litigation expenses per share                                                                                                          $ --                                               $ --                                               $ --                                                   $          (0.01 )
                                                                                                                                                                                                                                                                                                                                       
Nonrecurring professional fees (expense) reimbursement                                                                                    $ --                                               $           (662 )                                             $            919                                                   $         (1,781 )
   Nonrecurring professional fees (expense) reimbursement per share                                                                       $ --                                               $ --                                               $ --                                                   $          (0.01 )
                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                   As of September 30,
                                                                                                                                                                                                                                                                       --------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                               2017                                                                      2016
                                                                                                                                                                                                                                                                       ------------------                                             ----------------------------------------
Straight-line rent receivable                                                                                                                                                                                                                                          $          62,681                                              $              67,861
                                                                                                                                                                                                                                                                                                                                                             
 
Same-center Net Operating Income
(Dollars in thousands)
 
                                                                                                                                                  Three Months Ended                                                                                                     Nine Months Ended
                                                                                                                                                                                           September 30,                                                                                                                                               September 30,
                                                                                                                                       ------------------------------------------------------------------------------------------------------------                                                  --------------------------------------------------------------------------------------------------------
                                                                                                                                                       2017                                     2016                                                                         2017                                   2016
                                                                                                                                       -------------------------------------                                          -------------------------------------                                          ---------------------------------                                          -------------------------------------
Net income                                                                                                                                   $   9,299                                                                      $     670                                                                  $ 118,444                                                                      $ 115,659
                                                                                                                                                                                                                                                                                                                                                                                 
Adjustments:
Depreciation and amortization                                                                                                                   71,732                                                                         71,794                                                                    225,461                                                                        220,505
Depreciation and amortization from unconsolidated affiliates                                                                                     9,633                                                                         10,756                                                                     28,533                                                                         29,090
Noncontrolling interests’ share of depreciation and amortization                                                     (2,170 )                                                                       (2,237 )                                                                   (6,791 )                                                                       (6,685 )
in other consolidated subsidiaries
Interest expense                                                                                                                                53,913                                                                         54,292                                                                    165,179                                                                        162,710
Interest expense from unconsolidated affiliates                                                                                                  6,244                                                                          6,109                                                                     18,815                                                                         19,787
Noncontrolling interests’ share of interest expense in other                                                         (1,584 )                                                                       (1,769 )                                                                   (5,160 )                                                                       (5,126 )
consolidated subsidiaries
Abandoned projects expense                                                                                                                         132                                                                             11                                                                      5,151                                                                             44
Gain on sales of real estate assets                                                                                                             (1,383 )                                                                       (4,926 )                                                                  (86,904 )                                                                      (14,503 )
Gain on sales of real estate assets of unconsolidated affiliates                                                                                  (227 )                                                                       (8,018 )                                                                     (189 )                                                                      (93,340 )
Noncontrolling interests’ share of gain on sales of real estate                                              --                                                                 --                                                                     26,639                                                                 --
assets in other consolidated affiliates
Loss on investment                                                                                                                                 354                                                                 --                                                                      6,197                                                                 --
Gain on extinguishment of debt                                                                                                                  (6,452 )                                                                            6                                                                    (30,927 )                                                               --
Noncontrolling interests’ share of loss on extinguishment of debt                                            --                                                                 --                                                                     (2,975 )                                                               --
in other consolidated subsidiaries
Loss on impairment                                                                                                                              24,935                                                                         53,558                                                                     71,401                                                                        116,736
Income tax benefit                                                                                                                              (1,064 )                                                                       (2,386 )                                                                   (4,784 )                                                                       (2,974 )
Lease termination fees                                                                                                                            (879 )                                                                         (857 )                                                                   (1,990 )                                                                       (2,202 )
Straight-line rent and above- and below-market lease amortization                                                                                 (637 )                                                                         (464 )                                                                   (3,685 )                                                                       (4,006 )
Net (income) loss attributable to noncontrolling interests in other                                                                               (415 )                                                                         (983 )                                                                  (25,266 )                                                                          449
consolidated subsidiaries
General and administrative expenses                                                                                                             13,568                                                                         13,222                                                                     45,402                                                                         46,865
Management fees and non-property level revenues                                                                                                 (2,762 )                                                                       (1,379 )                                                                  (10,312 )                                                                      (12,429 )
                                                                                                                                       ------------------------------------                                           ------------------------------------                                           --------------------------------                                           ------------------------------------
Operating Partnership’s share of property NOI                                                                       172,237                                                                        187,399                                                                    532,239                                                                        570,580
Non-comparable NOI                                                                                                                              (4,513 )                                                                      (15,169 )                                                                  (22,766 )                                                                      (52,998 )
                                                                                                                                       ------------------------------------                                           ------------------------------------                                           --------------------------------                                           ------------------------------------
Total same-center NOI (1)                                                                                                                    $ 167,724                                                   $ 172,230                                               $ 509,473                                                   $ 517,582  
                                                                                                                                       ======= ======= ====================                                           ======= ======= ====================                                           === ======= ====================                                           ======= ======= ====================
Total same-center NOI percentage change                                                                                                                              (2.6)%                                                                                                                                                    (1.6)%
                                                                                                                                       =====================================                                                                                                                         =================================
                                                                                                                                                                                                                                                                                                                                                                                 
 
Same-center Net Operating Income
(Continued)
 
                                                                                  Three Months Ended                                                                                                              Nine Months Ended
                                                                                                                           September 30,                                                                                                                                                        September 30,
                                                                    -------------------------------------------------------------------------------------------------------------------                                                 ----------------------------------------------------------------------------------------------------------------------
                                                                                           2017                                        2016                                                                              2017                                          2016
                                                                    ---------------------------------------------------                                          -----------------------------                                          ---------------------------------------------------                                          --------------------------------
Malls                                                                                  $ 152,677                                                                                    $ 157,129                                                              $ 463,020                                                                                    $    472,990
Associated centers                                                                         7,899                                                                                        8,131                                                                 24,390                                                                                          24,162
Community centers                                                                          5,398                                                                                        5,343                                                                 16,579                                                                                          15,533
Offices and other                                                       1,750                                                  1,627                                               5,484                                                     4,897
                                                                    -------------------- ------- ---------------------                                           -------------------- -------                                           -------------------- ------- ---------------------                                           -------------------- ----------
Total same-center NOI (1)                                                              $ 167,724                                                                 $ 172,230                                                              $ 509,473                                                                 $    517,582
                                                                    ==================== ======= =====================                                           ==================== =======                                           ==================== ======= =====================                                           ==================== ==========
                                                                                                                                                                                                                                                                                                                                      
Percentage Change:
Malls                                                                                       (2.8 )%                                                                                                                                                             (2.1 )%
Associated centers                                                                          (2.9 )%                                                                                                                                                              0.9  %
Community centers                                                                            1.0  %                                                                                                                                           6.7  %
Offices and other                                                         7.6  %                                                                                                                       12.0  %
                                                                    -------------------- ------- ---------------------                                                                                                                  -------------------- ------- ---------------------
Total same-center NOI (1)                                                (2.6 )%                                                                                                                                          (1.6 )%
                                                                    ==================== ======= =====================                                                                                                                  ==================== ======= =====================
                                                                                                                                                                                                                                                                                                                                      
(1)   CBL defines NOI as property operating revenues (rental revenues,
                         tenant reimbursements and other income), less property operating
                         expenses (property operating, real estate taxes and maintenance and
                         repairs). Same-center NOI excludes lease termination income,
                         straight-line rent adjustments, amortization of above and below
                         market lease intangibles and write-offs of landlord inducement
                         assets. We include a property in our same-center pool when we own
                         all or a portion of the property as of September 30, 2017, and we
                         owned it and it was in operation for both the entire preceding
                         calendar year and the current year-to-date reporting period ending
                         September 30, 2017. New properties are excluded from same-center
                         NOI, until they meet this criteria. Properties excluded from the
                         same-center pool that would otherwise meet this criteria are
                         properties which are either under major redevelopment, being
                         considered for repositioning or minority interest properties in
                         which we own an interest of 25% or less.
                          
 
Company’s Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
 
                                                                                                                                                                                                                                                                                                             As of September 30, 2017
                                                                                                                                                   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                        Fixed Rate                                               Variable                                                Total per                                    Unamortized                                       Total
                                                                                                                                                                                                                                                                         Rate                                                                                          Debt                                                                              Deferred
                                                                                                                                                                                                                                                                                                                                                                     Schedule                                                                            Financing
                                                                                                                                                                                                                                                                                                                                                                                                                                                           Costs
                                                                                                                                                   -------------------------------------------------                                             -------------------------------------------------                                             -------------------------------------------------                                             ------------------------------                                             -------------------------------------------------
Consolidated debt                                                                                                                                                     $ 3,170,000                                                                                   $ 1,065,450                                                                                   $ 4,235,450                                                                                   $ (19,272 )                                                                $ 4,216,178
Noncontrolling interests’ share of consolidated debt                                                                                           (77,494 )                                                                                      (5,434 )                                                                                     (82,928 )                                                                                       719                                                                      (82,209 )
Company’s share of unconsolidated affiliates’ debt                                               535,134                                                  58,692                                                 593,826                                                (2,357 )                                                 591,469  
                                                                                                                                                   -------------------- --------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------                                           -------------------- ------- ---                                           -------------------- --------- --------------------
Company’s share of consolidated and unconsolidated debt                                                                                    $ 3,627,640                                                                $ 1,118,708                                                                $ 4,746,348                                                                $ (20,910 )                                                                $ 4,725,438  
                                                                                                                                                   ==================== ========= ====================                                           ==================== ========= ====================                                           ==================== ========= ====================                                           ==================== ======= ===                                           ==================== ========= ====================
Weighted-average interest rate                                                                                                                            5.19 %                                                                     2.79 %                                                                     4.63 %
                                                                                                                                                   ==================== ========= ====================                                           ==================== ========= ====================                                           ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                   As of September 30, 2016
                                                                                                                                                   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                        Fixed Rate                                                                                     Variable                                                                                      Total per                                                                          Unamortized                                                                             Total
                                                                                                                                                                                                                                                                         Rate                                                                                          Debt                                                                              Deferred
                                                                                                                                                                                                                                                                                                                                                                     Schedule                                                                            Financing
                                                                                                                                                                                                                                                                                                                                                                                                                                                           Costs
                                                                                                                                                   -------------------------------------------------                                             -------------------------------------------------                                             -------------------------------------------------                                             ------------------------------                                             -------------------------------------------------
Consolidated debt                                                                                                                                                     $ 3,251,443                                                                                   $ 1,294,531                                                                                   $ 4,545,974                                                                                   $ (14,705 )                                                                $ 4,531,269
Noncontrolling interests’ share of consolidated debt                                                                                          (109,701 )                                                                                      (7,537 )                                                                                    (117,238 )                                                                                     1,015                                                                     (116,223 )
Company’s share of unconsolidated affiliates’ debt                                               523,833                                                  73,562                                                 597,395                                                (2,286 )                                                 595,109  
                                                                                                                                                   -------------------- --------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------                                           -------------------- ------- ---                                           -------------------- --------- --------------------
Company’s share of consolidated and unconsolidated debt                                                                                    $ 3,665,575                                                                $ 1,360,556                                                                $ 5,026,131                                                                $ (15,976 )                                                                $ 5,010,155  
                                                                                                                                                   ==================== ========= ====================                                           ==================== ========= ====================                                           ==================== ========= ====================                                           ==================== ======= ===                                           ==================== ========= ====================
Weighted-average interest rate                                                                                                                            5.30 %                                                                     1.96 %                                                                     4.39 %
                                                                                                                                                   ==================== ========= ====================                                           ==================== ========= ====================                                           ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
 
Debt-To-Total-Market Capitalization Ratio as of September 30,
2017
(In thousands, except stock price)
 
                                                                                                Shares            Stock                                Value
                                                                                                                                    Outstanding                                             Price (1)
                                                                                                                                   -----------                                           ------------                                            -------------------------------------------------
Common stock and Operating Partnership units                                                                                           199,316                                                $   8.39                                                              $ 1,672,261
7.375% Series D Cumulative Redeemable Preferred Stock                                                                                    1,815                                                  250.00                                                                  453,750
6.625% Series E Cumulative Redeemable Preferred Stock                                                                                      690                                                  250.00                                               172,500  
                                                                                                                                                                                                                                                 -------------------- --------- --------------------
Total market equity                                                                                                                                                                                                                                                   2,298,511
Company’s share of total debt, excluding unamortized deferred                                                                                                                                                           4,746,348  
financing costs
                                                                                                                                                                                                                                                 -------------------- --------- --------------------
Total market capitalization                                                                                                                                                                                                                                         $ 7,044,859  
                                                                                                                                                                                                                                                 ==================== ========= ====================
Debt-to-total-market capitalization ratio                                                                                                                                                                                                                                  67.4 %
                                                                                                                                                                                                                                                                                 
(1)   Stock price for common stock and Operating Partnership units equals
                         the closing price of the common stock on September 29, 2017. 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                                                                                                                                 Nine Months Ended
                                                                                                                                                               September 30,                                                                                                                                                                           September 30,
                                                                                              --------------------------------------------------------------------------------------------------------------------------------------                                                  --------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Basic                                                Diluted                                                                                      Basic                                                Diluted
                                                                                              --------------------------------------------------                                          --------------------------------------------------                                          --------------------------------------------------                                          --------------------------------------------------
2017:
Weighted-average shares - EPS                                                                                      171,096                                                                                     171,096                                                                                     171,060                                                                                     171,060
Weighted-average Operating Partnership units                                                     28,225                                                28,225                                                28,265                                                28,265  
                                                                                              -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Weighted-average shares- FFO                                                                    199,321                                               199,321                                               199,325                                               199,325  
                                                                                              ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                   
2016:
Weighted-average shares - EPS                                                                                      170,792                                                                                     170,792                                                                                     170,751                                                                                     170,751
Weighted-average Operating Partnership units                                                     29,212                                                29,212                                                29,241                                                29,241  
                                                                                              -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Weighted-average shares- FFO                                                                    200,004                                               200,004                                               199,992                                               199,992  
                                                                                              ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ======= ====================
 
 
 
Dividend Payout Ratio
 
                                                                                                                                                            Three Months Ended                                                                                                                                                                       Nine Months Ended
                                                                                                                                                               September 30,                                                                                                                                                                           September 30,
                                                                                              --------------------------------------------------------------------------------------------------------------------------------------                                                  --------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     2017                                                                                        2016                                                                                        2017                                                                                        2016
                                                                                              -----------------------------------------------                                             -----------------------------------------------                                             -----------------------------------------------                                             -----------------------------------------------
Weighted-average cash dividend per share                                                                         $ 0.27281                                                                                   $ 0.27282                                                                                   $ 0.81843                                                                                   $ 0.81838
FFO, as adjusted, per diluted fully converted share                                                              $    0.50                                                                $    0.57                                                                $    1.51                                                                $    1.72  
                                                                                              -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------- --------------------
Dividend payout ratio                                                                              54.6 %                                                                   47.9 %                                                                   54.2 %                                                                   47.6 %
                                                                                              ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                
 
Consolidated Balance Sheets
(Unaudited; in thousands, except share data)
 
                                                                                                                                    As of
                                                                                                                 -----------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                                                        September 30,                              December 31,
                                                                                                                                  2017                                                                             2016
                                                                                                                 ------------------------------------                                             -----------------------------------
Real estate assets:
   Land                                                                                                                $   811,742                                                                     $   820,979
   Buildings and improvements                                                                                            6,668,312                                                    6,942,452  
                                                                                                                 --------------------------------------                                           -------------------------------------
                                                                                                                         7,480,054                                                                       7,763,431
   Accumulated depreciation                                                                                             (2,411,560 )                                                                    (2,427,108 )
                                                                                                                 --------------------------------------                                           -------------------------------------
                                                                                                                         5,068,494                                                                       5,336,323
   Held for sale                                                                                                    --                                                                           5,861
   Developments in progress                                                                                                100,106                                                      178,355  
                                                                                                                 --------------------------------------                                           -------------------------------------
      Net investment in real estate assets                                                                               5,168,600                                                                       5,520,539
Cash and cash equivalents                                                                                                   31,351                                                                          18,951
Receivables:
                                                                                                                            86,947                                                                          94,676
   Tenant, net of allowance for doubtful accounts of $2,075 and
   $1,910 in 2017 and 2016, respectively
   Other, net of allowance for doubtful accounts of $838 in 2017 and                                                         5,554                                                                           6,227
   2016
Mortgage and other notes receivable                                                                                         19,279                                                                          16,803
Investments in unconsolidated affiliates                                                                                   251,664                                                                         266,872
Intangible lease assets and other assets                                                                                   180,361                                                      180,572  
                                                                                                                 --------------------------------------                                           -------------------------------------
                                                                                                                       $ 5,743,756                                                  $ 6,104,640  
                                                                                                                 ======= ========= ====================                                           ====== ========= ====================
                                                                                                                                                                                                   
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness, net                                                                                   $ 4,216,178                                                                     $ 4,465,294
Accounts payable and accrued liabilities                                                                                   270,046                                                      280,498  
                                                                                                                 --------------------------------------                                           -------------------------------------
   Total liabilities                                                                                                     4,486,224                                                    4,745,792  
                                                                                                                 --------------------------------------                                           -------------------------------------
Commitments and contingencies
Redeemable noncontrolling interests                                                                                         13,076                                                       17,996  
                                                                                                                 --------------------------------------                                           -------------------------------------
Shareholders’ equity:
   Preferred stock, $.01 par value, 15,000,000 shares authorized:
                                                                                                                                18                                                                              18
      7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000
      shares outstanding
                                                                                                                                 7                                                                               7
      6.625% Series E Cumulative Redeemable Preferred Stock, 690,000
      shares outstanding
                                                                                                                             1,711                                                                           1,708
   Common stock, $.01 par value, 350,000,000 shares authorized,
   171,096,895 and 170,792,645 issued and outstanding in 2017 and
   2016, respectively
   Additional paid-in capital                                                                                            1,971,447                                                                       1,969,059
   Dividends in excess of cumulative earnings                                                                             (827,292 )                                                                      (742,078 )
                                                                                                                 --------------------------------------                                           -------------------------------------
                                                                                                                         1,145,891                                                                       1,228,714
      Total shareholders’ equity
Noncontrolling interests                                                                                                    98,565                                                      112,138  
                                                                                                                 --------------------------------------                                           -------------------------------------
   Total equity                                                                                                          1,244,456                                                    1,340,852  
                                                                                                                 --------------------------------------                                           -------------------------------------
                                                                                                                       $ 5,743,756                                                  $ 6,104,640  
                                                                                                                 ======= ========= ====================                                           ====== ========= ====================

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20171102006747r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20171102006747/en/

SOURCE: CBL Properties

CBL Properties 
Katie Reinsmidt, 423-490-8301 
Executive Vice President - Chief Investment Officer 
katie.reinsmidt@cblproperties.com


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