The accompanying notes are an integral part of these statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
NOTE 1. ORGANIZATION
CBL & Associates Properties, Inc. (“CBL”), a Delaware corporation, is a self-managed, self-administered, fully-integrated real estate investment trust (“REIT”) that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air centers, community centers and office properties. Its shopping centers are located in 27 states and in Brazil, but are primarily in the southeastern and midwestern United States.
CBL conducts substantially all of its business through CBL & Associates Limited Partnership (the “Operating Partnership”). As of December 31, 2008, the Operating Partnership owned controlling interests in 75 regional malls/open-air centers, 30 associated centers (each located adjacent to a regional mall), eight community centers, one mixed-use center and 13 office buildings, including CBL’s corporate office building. The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a variable interest entity. The Operating Partnership owned non-controlling interests in nine regional malls, three associated centers, four community centers and six office buildings. Because one or more of the other partners have substantive participating rights, the Operating Partnership does not control these partnerships and joint ventures and, accordingly, accounts for these investments using the equity method. The Operating Partnership had two shopping center expansions and four community centers (each of which is owned in a joint venture) under construction as of December 31, 2008. The Operating Partnership also holds options to acquire certain development properties owned by third parties.
CBL is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At December 31, 2008, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.6% general partnership interest in the Operating Partnership and CBL Holdings II, Inc. owned a 55.1% limited partnership interest for a combined interest held by CBL of 56.7%.
The noncontrolling interest in the Operating Partnership is held primarily by CBL & Associates, Inc. and its affiliates (collectively “CBL’s Predecessor”) and by affiliates of The Richard E. Jacobs Group, Inc. (“Jacobs”). CBL’s Predecessor contributed their interests in certain real estate properties and joint ventures to the Operating Partnership in exchange for a limited partner interest when the Operating Partnership was formed in November 1993. Jacobs contributed their interests in certain real estate properties and joint ventures to the Operating Partnership in exchange for limited partner interests when the Operating Partnership acquired the majority of Jacobs’ interests in 23 properties in January 2001 and the balance of such interests in February 2002. At December 31, 2008, CBL’s Predecessor owned a 14.9% limited partner interest, Jacobs owned a 19.6% limited partner interest and various third parties owned an 8.8% limited partner interest in the Operating Partnership. CBL’s Predecessor also owned 7.2 million shares of CBL’s common stock at December 31, 2008, for a combined effective interest of 21.0% in the Operating Partnership.
The Operating Partnership conducts CBL’s property management and development activities through CBL & Associates Management, Inc. (the “Management Company”) to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”). The Operating Partnership owns 100% of both of the Management Company’s preferred stock and common stock.
CBL, the Operating Partnership and the Management Company are collectively referred to herein as “the Company.”
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Material intercompany transactions have been eliminated.
Certain historical amounts have been reclassified to conform to the current year presentation. The financial results of certain properties are reported as discontinued operations in the consolidated financial statements. Except where noted, the information presented in the Notes to Consolidated Financial Statements excludes discontinued operations. See Note 4 for further discussion.
Adoption of Subsequent Accounting Pronouncements and Subsequent Stock Dividend
Effective January 1, 2009, the Company adopted the following accounting pronouncements (discussed in further detail below) which require retrospective application upon adoption:
| • | Statement of Financial Accounting Standards (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51 and |
| • | Financial Accounting Standards Board “(FASB”) Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. |
In April 2009, the Company paid its first quarter dividend on its common stock. The Company issued 4,754,355 shares of its common stock in connection with the dividend, which resulted in an increase of approximately 7.2% in the number of shares outstanding. The Company elected to treat the issuance of its common stock as a stock dividend for earnings per share purposes. Therefore, all share and per share information related to earnings per share for all periods presented have been increased proportionately to reflect the additional common stock issued.
The Company has updated the consolidated financial statements and the related notes thereto, from those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, to reflect the impact of adopting these accounting pronouncements and the impact of the stock dividend. The impact on the Company’s consolidated balance sheets and statements of operations for the periods presented is shown in the tables below entitled “Retrospective Impact of New Accounting Pronouncements and Stock Dividend.”
Effective January 1, 2009, the Company adopted the provisions of SFAS No. 160 which requires that a noncontrolling interest, previously referred to as a minority interest, in a consolidated subsidiary be reported as a separate component of equity and the amount of consolidated net income specifically attributable to a noncontrolling interest be presented separately, net of tax, below net income on the Company’s consolidated statements of operations. SFAS No. 160 also requires that after control of an investment or subsidiary is obtained, a change in ownership interest that does not result in a loss of control should be accounted for as an equity transaction. A change in ownership of a consolidated subsidiary that results in a loss of control and deconsolidation is a significant event that triggers gain or loss recognition, with the establishment of a new fair value basis in any remaining ownership interests.
In connection with the issuance of SFAS No. 160, certain revisions were also made to EITF Topic D-98 (“EITF D-98”), Classification and Measurement of Redeemable Securities. These revisions clarify that noncontrolling interests with redemption provisions outside of the issuer’s control that may be exchanged for consideration other than the issuer’s stock shall be reported within temporary equity at their redemption value. The Company evaluated its noncontrolling interests and determined it has one limited partner in the Operating
Partnership and partners in two other consolidated subsidiaries that can require the Company to redeem their interests in the future with cash or real property. Accordingly, pursuant to the provisions of EITF D-98, the Company’s redeemable noncontrolling interests are recorded for all periods presented at the higher of their redemption values or their values pursuant to ARB No. 51 as of the end of each period, with any changes in value being reflected in retained earnings, or in the event of a deficit, in additional paid-in-capital, and continue to be reported within temporary equity in the Company’s consolidated balance sheets. Subsequent adjustments to the carrying amounts of these redeemable noncontrolling interests to reflect the changes in their redemption values at the end of each reporting period are to be recorded in the same manner. See Note 8 for further information regarding redeemable noncontrolling interests and noncontrolling interests.
Effective January 1, 2009, the Company adopted the provisions of FSP EITF 03-6-1. FSP EITF 03-6-1 requires that unvested share-based payment awards that contain nonforfeitable rights to dividends or their equivalent be treated as participating securities for purposes of inclusion in the computation of earnings per share (“EPS”) pursuant to the two-class method. As a result of the adoption of FSP EITF 03-6-1, the effect of the Company’s outstanding nonvested shares of restricted common stock will be included in both the Company’s basic and diluted per share computations. Prior to the adoption of this pronouncement, the Company’s outstanding nonvested shares of restricted common stock were only included in the Company’s diluted per share computations.
Retrospective Impact of New Accounting Pronouncements and Stock Dividend
| | | | As of December 31, 2008
| |
|---|
| | | | As Previously
Reported
| | Adjustments
for SFAS
No. 160
| | As Adjusted
| |
|---|
| | Balance Sheet: | | | | | | | | | | | |
| | Redeemable noncontrolling interests | | | $ | 815,010 | | $ | (375,338 | ) | $ | 439,672 | |
| | Shareholders’ Equity: | | | | | | | | | | | |
| | Additional paid-in capital | | | | 1,008,883 | | | (14,942 | ) | | 993,941 | |
| | Accumulated other comprehensive income (loss) | | | | (22,594 | ) | | 9,808 | | | (12,786 | ) |
| | Total shareholders’ equity | | | | 793,658 | | | (5,134 | ) | | 788,524 | |
| | Noncontrolling interests | | | | — | | | 380,472 | | | 380,472 | |
| | Total equity | | | | 793,658 | | | 375,338 | | | 1,168,996 | |
| | | | |
| | | | As of December 31, 2007
| |
|---|
| | | | As Previously
Reported
| | Adjustments
for SFAS
No. 160
| | As Adjusted
| |
|---|
| | Balance Sheet: | | | | | | | | | | | |
| | Redeemable noncontrolling interests | | | $ | 920,297 | | $ | (456,852 | ) | $ | 463,445 | |
| | Shareholders’ Equity: | | | | | | | | | | | |
| | Additional paid-in capital | | | | 990,048 | | | (25,372 | ) | | 964,676 | |
| | Accumulated other comprehensive income (loss) | | | | (20 | ) | | 7 | | | (13 | ) |
| | Total shareholders’ equity | | | | 920,548 | | | (25,365 | ) | | 895,183 | |
| | Noncontrolling interests | | | | — | | | 482,217 | | | 482,217 | |
| | Total equity | | | | 920,548 | | | 456,852 | | | 1,377,400 | |
| | For the Year Ended December 31, 2008
|
|---|
| | | | Adjustments
| | |
|---|
| | As Previously
Reported
| | SFAS
No. 160
| | FSP EITF
03-6-1
| | Stock
Dividend
| | As
Adjusted
|
|---|
| Statement of Operations | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 25,980 | | $ | 31,454 | | $ | — | | $ | — | | $ | 57,434 |
| Net income | | | | 31,587 | | | 31,454 | | | — | | | — | | | 63,041 |
| Net income attributable to the Company | | | | — | | | 31,587 | | | — | | | — | | | 31,587 |
| Basic per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
| Income from continuing operations, net of preferred dividends | | | $ | 0.06 | | $ | 0.03 | | $ | — | | $ | — | | $ | 0.09 |
| Discontinued operations | | | | 0.09 | | | (0.03 | ) | | — | | | (0.01 | ) | | 0.05 |
| Net income available to common shareholders | | | $ | 0.15 | | $ | — | | $ | — | | $ | (0.01 | ) | $ | 0.14 |
| Weighted average common shares outstanding | | | | 66,005 | | | — | | | 308 | | | 4,747 | | | 71,060 |
| Diluted per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
| Income from continuing operations, net of preferred dividends | | | $ | 0.06 | | $ | 0.03 | | $ | — | | $ | — | | $ | 0.09 |
| Discontinued operations | | | | 0.09 | | | (0.03 | ) | | — | | | (0.01 | ) | | 0.05 |
| Net income available to common shareholders | | | $ | 0.15 | | $ | — | | $ | — | | $ | (0.01 | ) | $ | 0.14 |
| Weighted average common and potential dilutive common shares outstanding | | | | 66,148 | | | — | | | 269 | | | 4,755 | | | 71,172 |
| | | | | | | | | | | | | | | | | |
| | For the Year Ended December 31, 2007
|
|---|
| | | | Adjustments
| | |
|---|
| | As Previously
Reported
| | SFAS
No. 160
| | FSP EITF
03-6-1
| | Stock
Dividend
| | As
Adjusted
|
|---|
| Statement of Operations | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 81,470 | | $ | 58,461 | | $ | — | | $ | — | | $ | 139,931 |
| Net income | | | | 89,147 | | | 58,461 | | | — | | | — | | | 147,608 |
| Net income attributable to the Company | | | | — | | | 89,147 | | | — | | | — | | | 89,147 |
| Basic per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
| Income from continuing operations, net of preferred dividends | | | $ | 0.79 | | $ | 0.05 | | $ | — | | $ | (0.06 | ) | $ | 0.78 |
| Discontinued operations | | | | 0.12 | | | (0.05 | ) | | (0.01 | ) | | — | | | 0.06 |
| Net income available to common shareholders | | | $ | 0.91 | | $ | — | | $ | (0.01 | ) | $ | (0.06 | ) | $ | 0.84 |
| Weighted average common shares outstanding | | | | 65,323 | | | — | | | 371 | | | 4,703 | | | 70,397 |
| Diluted per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
| Income from continuing operations, net of preferred dividends | | | $ | 0.78 | | $ | 0.05 | | $ | — | | $ | (0.05 | ) | $ | 0.78 |
| Discontinued operations | | | | 0.12 | | | (0.05 | ) | | — | | | (0.01 | ) | | 0.06 |
| Net income available to common shareholders | | | $ | 0.90 | | $ | — | | $ | — | | $ | (0.06 | ) | $ | 0.84 |
| Weighted average common and potential dilutive common shares outstanding | | | | 65,913 | | | — | | | 277 | | | 4,738 | | | 70,928 |
| | | | | | | | | | | | | | | | | |
| | For the Year Ended December 31, 2006
|
|---|
| | | | Adjustments
| | |
|---|
| | As Previously
Reported
| | SFAS
No. 160
| | FSP EITF
03-6-1
| | Stock
Dividend
| | As
Adjusted
|
|---|
| Statement of Operations | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 104,571 | | $ | 74,459 | | $ | — | | $ | — | | $ | 179,030 |
| Net income | | | | 117,501 | | | 74,459 | | | — | | | — | | | 191,960 |
| Net income attributable to the Company | | | | — | | | 117,501 | | | — | | | — | | | 117,501 |
| Basic per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
| Income from continuing operations, net of preferred dividends | | | $ | 1.16 | | $ | 0.09 | | $ | (0.01 | ) | $ | (0.08 | ) | $ | 1.16 |
| Discontinued operations | | | | 0.20 | | | (0.09 | ) | | — | | | (0.01 | ) | | 0.10 |
| Net income available to common shareholders | | | $ | 1.36 | | $ | — | | $ | (0.01 | ) | $ | (0.09 | ) | $ | 1.26 |
| Weighted average common shares outstanding | | | | 63,885 | | | — | | | 444 | | | 4,606 | | | 68,935 |
| Diluted per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
| Income from continuing operations, net of preferred dividends | | | $ | 1.13 | | $ | 0.08 | | $ | — | | $ | (0.08 | ) | $ | 1.13 |
| Discontinued operations | | | | 0.20 | | | (0.08 | ) | | — | | | (0.01 | ) | | 0.11 |
| Net income available to common shareholders | | | $ | 1.33 | | $ | — | | $ | — | | $ | (0.09 | ) | $ | 1.24 |
| Weighted average common and potential dilutive common shares outstanding | | | | 65,269 | | | — | | | 306 | | | 4,777 | | | 70,352 |
Real Estate Assets
The Company capitalizes predevelopment project costs paid to third parties. All previously capitalized predevelopment costs are expensed when it is no longer probable that the project will be completed. Once development of a project commences, all direct costs incurred to construct the project, including interest and real estate taxes, are capitalized. Additionally, certain general and administrative expenses are allocated to the projects and capitalized based on the amount of time applicable personnel work on the development project. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements are capitalized and depreciated over their estimated useful lives.
All acquired real estate assets have been accounted for using the purchase method of accounting and accordingly, the results of operations are included in the consolidated statements of operations from the respective dates of acquisition. The Company allocates the purchase price to (i) tangible assets, consisting of land, buildings and improvements, as if vacant, and tenant improvements, and (ii) identifiable intangible assets and liabilities, generally consisting of above-market leases, in-place leases and tenant relationships, which are included in other assets, and below-market leases, which are included in accounts payable and accrued liabilities. The Company uses estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation techniques to allocate the purchase price to the acquired tangible and intangible assets. Liabilities assumed generally consist of mortgage debt on the real estate assets acquired. Assumed debt is recorded at its fair value based on estimated market interest rates at the date of acquisition.
Depreciation is computed on a straight-line basis over estimated lives of 40 years for buildings, 10 to 20 years for certain improvements and 7 to 10 years for equipment and fixtures. Tenant improvements are capitalized and depreciated on a straight-line basis over the term of the related lease. Lease-related intangibles from acquisitions of real estate assets are amortized over the remaining terms of the related leases. The amortization of above- and below-market leases is recorded as an adjustment to minimum rental revenue, while the amortization of all other lease-related intangibles is recorded as amortization expense. Any difference between the face value of the debt assumed and its fair value is amortized to interest expense over the remaining term of the debt using the effective interest method.
The Company’s acquired intangibles and their balance sheet classifications as of December 31, 2008 and 2007, are summarized as follows:
| | | | | | | | | | | | | |
| | December 31, 2008 | | December 31, 2007 | |
| | | > | | > |
|
| | Cost | | Accumulated
Amortization | | Cost | | Accumulated
Amortization | |
| | | > | | > |
Other assets: | | | | | | | | | | | | | |
Above-market leases | | $ | 71,856 | | $ | (26,096 | ) | $ | 79,566 | | $ | (18,337 | ) |
In-place leases | | | 76,948 | | | (35,384 | ) | | 98,315 | | | (38,725 | ) |
Tenant relationships | | | 56,803 | | | (7,137 | ) | | 49,796 | | | (4,462 | ) |
Accounts payable and accrued liabilities: | | | | | | | | | | | | | |
Below-market leases | | | 103,844 | | | (49,709 | ) | | 122,367 | | | (42,751 | ) |
These intangible assets are related to specific tenant leases. Should a termination occur earlier than the date indicated in the lease, the related intangible assets or liabilities, if any, related to the lease are recorded as expense or income, as applicable. The total net amortization expense of the above acquired intangibles was $7,728, $4,327 and $6,570 in 2008, 2007 and 2006, respectively. The estimated total net amortization expense for the next five succeeding years is $7,012 in 2009, $6,860 in 2010, $5,939 in 2011, $5,720 in 2012 and $5,272 in 2013.
The weighted-average amortization period, in years, for each of these intangible assets as of December 31, 2008 is as follows:
| Weighted-average Amortization Period |
Above-market leases | 10.6 |
In-place leases | 8.3 |
Tenant relationships | 20.3 |
Below-market leases | 7.9 |
Total | 17.1 |
Total interest expense capitalized was $18,457, $19,410 and $15,992 in 2008, 2007 and 2006, respectively.
Carrying Value of Long-Lived Assets
The Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when its estimated future undiscounted cash flows are less than its carrying value. If it is determined that impairment has occurred, the amount of the impairment charge is equal to the excess of the asset’s carrying value over its estimated fair value. The Company’s estimates of undiscounted cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter the assumptions used, the future cash flows estimated in the Company’s impairment analyses may not be achieved.
During 2006, the Company recognized a loss of $274 on the sale of two community centers and a loss of $206 on the sale of land. The aggregate loss of $480 was recorded as a loss on impairment of real estate assets. There were no impairment losses on real estate assets during 2008 and 2007.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less as cash equivalents.
Restricted Cash
Restricted cash of $80,626 and $35,370 was included in other assets at December 31, 2008 and 2007, respectively. Restricted cash consists primarily of cash held in escrow accounts for debt service, insurance, real estate taxes, capital improvements and deferred maintenance as required by the terms of certain mortgage notes payable, as well as contributions from tenants to be used for future marketing activities. As of December 31, 2008, $47,729 of the Company’s restricted cash related to funds held in a trust account for certain construction costs to be incurred in conjunction with one of our development projects.
Allowance for Doubtful Accounts
The Company periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectibility of those balances. The Company’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income. The Company recorded a provision for doubtful accounts of $9.4 million and $1.5 million for the years ended December 31, 2008 and 2007, respectively. The Company recorded a benefit of $1.1 million during the year ended December 31, 2006 due to a decrease in the allowance for doubtful accounts.
Investments in Unconsolidated Affiliates
Initial investments in joint ventures that are in economic substance a capital contribution to the joint venture are recorded in an amount equal to the Company’s historical carryover basis in the real estate contributed. Initial investments in joint ventures that are in economic substance the sale of a portion of the Company’s interest in the real estate are accounted for as a contribution of real estate recorded in an amount equal to the Company’s historical carryover basis in the ownership percentage retained and as a sale of real estate with profit recognized to the extent of the other joint venturers’ interests in the joint venture. Profit recognition assumes the Company has no commitment to reinvest with respect to the percentage of the real estate sold and the accounting requirements of the full accrual method under Statement of Financial Accounting Standards (“SFAS”) No. 66, Accounting for Sales of Real Estate, are met.
The Company accounts for its investment in joint ventures where it owns a non-controlling interest or where it is not the primary beneficiary of a variable interest entity using the equity method of accounting. Under the equity method, the Company’s cost of investment is adjusted for its share of equity in the earnings of the unconsolidated affiliate and reduced by distributions received. Generally, distributions of cash flows from operations and capital events are first made to partners to pay cumulative unpaid preferences on unreturned capital balances and then to the partners in accordance with the terms of the joint venture agreements.
Any differences between the cost of the Company’s investment in an unconsolidated affiliate and its underlying equity as reflected in the unconsolidated affiliate’s financial statements generally result from costs of the Company’s investment that are not reflected on the unconsolidated affiliate’s financial statements, capitalized interest on its investment and the Company’s share of development and leasing fees that are paid by the unconsolidated affiliate to the Company for development and leasing services provided to the unconsolidated affiliate during any development periods. At December 31, 2008 and 2007, the net difference between the Company’s investment in unconsolidated affiliates and the underlying equity of unconsolidated affiliates was $1,435 and $1,126, respectively, which is generally amortized over a period of 40 years.
On a periodic basis, the Company assesses whether there are any indicators that the fair value of the Company's investments in unconsolidated joint ventures may be impaired. An investment is impaired only if the Company’s estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment. The Company's estimates of fair value for each investment are based on a number of assumptions that are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter the Company’s assumptions, the fair values estimated in the impairment analyses may not be realized. See Note 5 for further discussion.
Deferred Financing Costs
Net deferred financing costs of $14,527 and $14,989 were included in other assets at December 31, 2008 and 2007, respectively. Deferred financing costs include fees and costs incurred to obtain financing and are amortized on a straight-line basis to interest expense over the terms of the related notes payable. Amortization expense was $5,731, $4,188 and $4,178 in 2008, 2007 and 2006, respectively. Accumulated amortization was $13,725 and $11,719 as of December 31, 2008 and 2007, respectively.
Marketable Securities
Other assets include marketable securities consisting of corporate equity securities that are classified as available for sale. Unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of accumulated other comprehensive loss in redeemable noncontrolling interests, shareholders’ equity and noncontrolling interests. Realized gains and losses are included in other income. Gains or losses on securities sold are based on the specific identification method.
If a decline in the value of an investment is deemed to be other than temporary, the investment is written down to fair value and an impairment loss is recognized in the current period to the extent of the decline in value. In determining when a decline in fair value below cost of an investment in marketable securities is other than temporary, the following factors, among others, are evaluated:
| • | The probability of recovery. |
| • | The Company’s ability and intent to retain the security for a sufficient period of time for it to recover. |
| • | The significance of the decline in value. |
| • | The time period during which there has been a significant decline in value. |
| • | Current and future business prospects and trends of earnings. |
| • | Relevant industry conditions and trends relative to their historical cycles. |
During 2008 and 2007, the Company recognized other-than-temporary impairments of certain marketable equity securities in the amount of $17,181 and $18,456, respectively, to write down the carrying value of the Company’s investments to their fair value.
The following is a summary of the equity securities held by the Company as of December 31, 2008 and 2007:
| | | | Gross Unrealized | | | |
| | Adjusted Cost | | Gains | | Losses | | Fair Value | |
| | | | | | | | | | | | | |
December 31, 2008 | | $ | 4,207 | | $ | 2 | | $ | - | | $ | 4,209 | |
December 31, 2007 | | $ | 21,388 | | $ | 9 | | $ | (29 | ) | $ | 21,368 | |
Interest Rate Hedging Instruments
The Company recognizes its derivative financial instruments in either Other Assets or Accrued Liabilities, as applicable, in the consolidated balance sheets and measures those instruments at fair value. The accounting for changes in the fair value (i.e., gain or loss) of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship. To qualify as a hedging instrument, a derivative must pass prescribed effectiveness tests, performed quarterly using both qualitative and quantitative methods. The Company had entered into derivative agreements as of December 31, 2008 and 2007 that qualified as hedging instruments and were designated, based upon the exposure being hedged, as cash flow hedges. The fair value of the cash flow hedges as of December 31, 2008 and 2007 was $(15,540) and $0, respectively. To the extent they are effective, changes in the fair values of cash flow hedges are reported in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged item affects earnings. The ineffective portion of the hedge, if any, is recognized in current earnings during the period of change in fair value. The gain or loss on the termination of an effective cash flow hedge is reported in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged item affects earnings. The Company recognized a loss of $61 in 2008 as a component of interest expense due to ineffectiveness on its designated hedging instruments. There was no ineffectiveness in 2007 and 2006. The Company also assesses the credit risk that the counterparty will not perform according to the terms of the contract.
Revenue Recognition
Minimum rental revenue from operating leases is recognized on a straight-line basis over the initial terms of the related leases. Certain tenants are required to pay percentage rent if their sales volumes exceed thresholds specified in their lease agreements. Percentage rent is recognized as revenue when the thresholds are achieved and the amounts become determinable.
The Company receives reimbursements from tenants for real estate taxes, insurance, common area maintenance, and other recoverable operating expenses as provided in the lease agreements. Tenant reimbursements are recognized when earned in accordance with the tenant lease agreements. Tenant reimbursements related to certain capital expenditures are billed to tenants over periods of 5 to 15 years and are recognized as revenue when billed.
The Company receives management, leasing and development fees from third parties and unconsolidated affiliates. Management fees are charged as a percentage of revenues (as defined in the management agreement) and are recognized as revenue when earned. Development fees are recognized as revenue on a pro rata basis over the development period. Leasing fees are charged for newly executed leases and lease renewals and are recognized as revenue when earned. Development and leasing fees received from unconsolidated affiliates during the development period are recognized as revenue only to the extent of the third-party partners’ ownership interest. Development and leasing fees during the development period to the extent of the Company’s ownership interest are recorded as a reduction to the Company’s investment in the unconsolidated affiliate.
Gain on Sales of Real Estate Assets
Gains on sales of real estate assets are recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, the Company’s receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. When the Company has an ownership interest in the buyer, gain is recognized to the extent of the third party partner’s ownership interest and the portion of the gain attributable to the Company’s ownership interest is deferred.
Income Taxes
The Company is qualified as a REIT under the provisions of the Code. To maintain qualification as a REIT, the Company is required to distribute at least 90% of its taxable income to shareholders and meet certain other requirements.
As a REIT, the Company is generally not liable for federal corporate income taxes. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal and state income taxes on its taxable income at regular corporate tax rates. Even if the Company maintains its qualification as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed income. State tax expense was $5,541, $2,546 and $4,580 during 2008, 2007 and 2006, respectively. The increase in state taxes during 2008 is primarily attributable to tax law changes that were implemented in the state of Tennessee effective June 2007 and the states of Michigan and Texas effective January 2008.
The Company has also elected taxable REIT subsidiary status for some of its subsidiaries. This enables the Company to receive income and provide services that would otherwise be impermissible for REITs. For these entities, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if the Company believes all or some portion of the deferred tax asset may not be realized. An increase or decrease in the valuation allowance that results from the change in circumstances that causes a change in our judgment about the realizability of the related deferred tax asset is included in income or expense, as applicable. The Company recorded an income tax provision of $13,495, $8,390 and $5,902 in 2008, 2007 and 2006, respectively. The income tax provision in 2008, 2007 and 2006 consisted of a current income tax provision of $11,627, $9,099 and $5,751, respectively, and a deferred income tax provision (benefit) of $1,868, $(709) and $151, respectively.
The Company had a net deferred tax asset of $2,464 and $4,332 at December 31, 2008 and 2007, respectively. The net deferred tax asset at December 31, 2008 and 2007 is included in other assets and primarily consisted of operating expense accruals and differences between book and tax depreciation. As of December 31,
2008, the Company’s tax years that generally remain subject to examination by its major tax jurisdictions include 2004 and 2005.
Concentration of Credit Risk
The Company’s tenants include national, regional and local retailers. Financial instruments that subject the Company to concentrations of credit risk consist primarily of tenant receivables. The Company generally does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of tenants.
The Company derives a substantial portion of its rental income from various national and regional retail companies; however, no single tenant collectively accounted for more than 3.0% of the Company’s total revenues in 2008, 2007 or 2006.
Earnings Per Share
Effective January 1, 2009, the Company adopted FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. FSP EITF 03-6-1 requires that unvested share-based payment awards that contain nonforfeitable rights to dividends or their equivalent be treated as participating securities for purposes of inclusion in the computation of earnings per share (“EPS”) pursuant to the two-class method. Pursuant to the provisions of FSP EITF 03-6-1, all prior-period EPS data presented has been adjusted accordingly. The adoption of FSP EITF 03-6-1 did not have a material impact on the Company’s reported earnings per share.
In April 2009, the Company paid its quarterly dividend on the Company’s common stock for the quarter ended March 31, 2009 with a combination of cash and shares of the Company’s common stock. The Company issued 4,754,355 shares of its common stock in connection with the dividend, which resulted in an increase of 7.2% in the number of shares outstanding. The Company elected to treat the issuance of its common stock as a stock dividend for per share purposes. Therefore, all share and per share information related to earnings per share for each period presented has been increased proportionately to reflect the additional common stock issued.
Basic earnings per share (“EPS”) is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS assumes the issuance of common stock for all potential dilutive common shares outstanding. The limited partners’ rights to convert their noncontrolling interest in the Operating Partnership into shares of common stock are not dilutive (see Note 8). The following summarizes the impact of potential dilutive common shares on the denominator used to compute earnings per share:
| Year Ended December 31, |
| 2008 | 2007 | 2006 |
Weighted average shares outstanding | 66,005 | 65,323 | 63,885 |
Effect of participating, nonvested stock awards | 308 | 371 | 444 |
Effect of stock dividend | 4,747 | 4,703 | 4,606 |
Denominator – basic earnings per share | 71,060 | 70,397 | 68,935 |
Dilutive effect of: | | | |
Stock dividend | 8 | 35 | 171 |
Stock options | 69 | 456 | 1,189 |
Deemed shares related to deferred compensation arrangements | 35 | 40 | 57 |
Denominator – diluted earnings per share | 71,172 | 70,928 | 70,352 |
Comprehensive Income (Loss)
Comprehensive income (loss) includes all changes in redeemable noncontrolling interests and total equity during the period, except those resulting from investments by shareholders and partners, distributions to shareholders and partners and redemption valuation adjustments. Other comprehensive income (loss) includes
unrealized gains (losses) on available-for-sale securities, interest rate hedge agreements and foreign currency translation adjustments.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
Accounting Pronouncements to be Adopted in Future Reporting Periods
Effective January 1, 2009, the Company adopted the provisions of FASB Staff Position (“FSP”) Financial Accounting Standard (“FAS”) 133-1 and FASB Interpretation (“FIN”) 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No 161. FSP FAS 133-1 and FIN 45-4 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to require disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid instrument. It also amends FIN 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, to require an additional disclosure regarding the current status of the payment/performance risk of a guarantee. Further, it clarifies the effective date of SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, for those entities with non-calendar fiscal year-ends. The provisions of FSP FAS 133-1 and FIN 45-4 that amend SFAS No. 133 and FIN 45 are effective for financial statements issued for fiscal years and interim periods ending after November 15, 2008, with early application encouraged. The Company has concluded that there will be no impact on the Company’s consolidated balance sheets and statements of operations upon the adoption of FSP FAS 133-1 and FIN 45-4.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies the source of accounting principles and the order in which to select the principles to be used in the preparation of financial statements presented in accordance with GAAP in the United States. The FASB concluded that the GAAP hierarchy should reside in the accounting literature because reporting entities are responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS No. 162 is effective sixty days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board Amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The adoption of SFAS No. 162 is not expected to have an impact on the Company’s consolidated financial statements.
Effective January 1, 2009, the Company adopted the provisions of SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. SFAS No. 161 improves financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. SFAS No. 161 requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format and provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. It also requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company has concluded that there will be no impact on the Company’s consolidated balance sheets and statements of operations upon the adoption of SFAS No. 161.
Effective January 1, 2009, the Company adopted the provisions of SFAS No. 141(R), Business Combinations, which changes certain aspects of current business combination accounting. SFAS No. 141(R) requires, among other things, that entities generally recognize 100 percent of the fair values of assets acquired, liabilities assumed and noncontrolling interests in acquisitions of less than a 100 percent controlling interest when the acquisition constitutes a change in control of the acquired entity. Shares issued as consideration for a business
combination are to be measured at fair value on the acquisition date and contingent consideration arrangements are to be recognized at their fair values on the date of acquisition, with subsequent changes in fair value generally reflected in earnings. Pre-acquisition gain and loss contingencies generally are to be recognized at their fair values on the acquisition date and any acquisition-related transaction costs are to be expensed as incurred. SFAS No. 141(R) is effective for business combination transactions for which the acquisition date is in a fiscal year beginning on or after December 15, 2008. The provisions of SFAS No. 141(R) did not have an impact on the Company’s consolidated financial statements upon adoption.
NOTE 3. ACQUISITIONS
The Company includes the results of operations of real estate assets acquired in the consolidated statements of operations from the date of the related acquisition.
2008 Acquisitions
Effective February 1, 2008, the Company entered into a 50/50 joint venture, CBL-TRS Joint Venture II, LLC, affiliated with CBL-TRS Joint Venture, LLC, a 50/50 joint venture entered into by the Company on November 30, 2007 (collectively, “the CBL-TRS joint ventures”), both of which are joint venture partnerships with Teachers’ Retirement System of the State of Illinois (“TRS”). During the first quarter of 2008, the CBL-TRS joint ventures acquired Renaissance Center, located in Durham, NC, for $89,639 and an anchor parcel at Friendly Center, located in Greensboro, NC, for $5,000, to complete the joint ventures’ acquisitions from the Starmount Company or its affiliates (the “Starmount Company”). The aggregate purchase price consisted of $58,121 in cash and the assumption of $36,518 of non-recourse debt that bears interest at a fixed rate of 5.61% and matures in July 2016.
2007 Acquisitions
Westfield Acquisition
The Company closed on two separate transactions with the Westfield Group (“Westfield”) on October 16, 2007, involving four malls located in the St. Louis, MO area. In the first transaction, Westfield contributed three malls to CW Joint Venture, LLC, a Company-controlled entity (“CWJV”), and the Company contributed six malls and three associated centers. Because the terms of CWJV provide for the Company to control CWJV and to receive all of CWJV’s net cash flows after payment of operating expenses, debt service payments, and perpetual preferred joint venture unit distributions, described below, the Company has accounted for the three malls contributed by Westfield as an acquisition. In the second transaction, the Company directly acquired the fourth mall from Westfield.
The purchase price of the three malls contributed to CWJV by Westfield plus the mall that was directly acquired by the Company was $1,035,325. The total purchase price consisted of $164,055 of cash, including transaction costs, the assumption of $458,182 of non-recourse debt that bears interest at a weighted-average fixed interest rate of 5.73% and matures at various dates from July 2011 to September 2016, and the issuance of $404,113 of perpetual preferred joint venture units (“PJV units”) of CWJV, which is net of a reduction for working capital adjustments of $8,975. The Company recorded a total net discount of $4,045, computed using a weighted-average interest rate of 5.78%, since the debt assumed was at a weighted-average below-market interest rate compared to similar debt instruments at the date of acquisition.
In November 2007, Westfield contributed a vacant anchor location at one of the malls to CWJV in exchange for $12,000 of additional PJV units. The Company has also accounted for this transaction as an acquisition.
The PJV units of CWJV pay an annual preferred distribution at a rate of 5.0%. Subsequent to October 16, 2008, Westfield has the right to have all or a portion of the PJV units redeemed by CWJV for, at Westfield’s election, cash or property. The Company will have the right, but not the obligation, to purchase the PJV units
after October 16, 2012 at their liquidation value, plus accrued and unpaid distributions. On the earliest to occur of June 30, 2013, immediately prior to the redemption of the PJV units, or immediately prior to the liquidation of CWJV or Westfield’s PJV units in CWJV, Westfield’s capital account may be increased by a capital contribution adjustment amount (“CCAA”). The CCAA represents the excess, if any, of the fair value of a share of the Company’s common stock on the above-specified date less $32.00 multiplied by 2.6 million shares. However, in no event shall the CCAA be greater than $26,000. The Company accounts for this contingency using the method prescribed for earnings or other performance measure contingencies. As such, should the CCAA provision result in additional consideration to Westfield, the Company will record the current fair value of the consideration issued as a purchase price adjustment at the time the consideration is paid or payable.
The Company is responsible for management and leasing of CWJV’s properties and owns all of the common units of CWJV, entitling it to receive 100% of CWJV’s cash flow after operating expenses, debt service payments and PJV unit distributions. Westfield’s preferred interest in CWJV is included in redeemable noncontrolling preferred joint venture interests in the consolidated balance sheet.
Other Acquisitions
On November 30, 2007, the Company acquired a portfolio of eight community centers located in Greensboro and High Point, NC, and twelve office buildings located in Greensboro and Raleigh, NC and Newport News, VA from the Starmount Company for a total cash purchase price of $183,928.
The Company also entered into a 50/50 joint venture that purchased a portfolio of additional retail and office buildings in North Carolina from the Starmount Company on November 30, 2007. See Note 5 for additional information.
The results of operations of the acquired properties from Westfield and the Starmount Company have been included in the consolidated financial statements since their respective dates of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the respective acquisition dates during the year ended December 31, 2007:
| | Land | | | $ | 99,609 | |
| | Buildings and improvements | | | | 1,098,404 | |
| | Above—market leases | | | | 39,572 | |
| | In—place leases | | | | 31,745 | |
| | Total assets | | | | 1,269,330 | |
| | Mortgage notes payable assumed | | | | (458,182 | ) |
| | Net discount on mortgage notes payable assumed | | | | 4,045 | |
| | Below—market leases | | | | (42,122 | ) |
| | Net assets acquired | | | $ | 773,071 | |
The following unaudited pro forma financial information is for the year ended December 31, 2007. It presents the results of the Company as if each of the 2007 acquisitions had occurred at the beginning of that year. However, the unaudited pro forma financial information does not represent what the consolidated results of operations or financial condition actually would have been if the acquisitions had occurred at the beginning of 2007. The pro forma financial information also does not project the consolidated results of operations for any future period. The pro forma results for the year ended December 31, 2007 are as follows:
| | 2007 | |
Total revenues | | $ | 1,129,089 | |
Total expenses | | | (682,392 | ) |
Income from operations | | $ | 446,697 | |
Income from continuing operations | | $ | 206,182 | |
Net income available to common shareholders | | $ | 125,499 | |
Basic per share data attributable to common shareholders: | | | | |
Income from continuing operations, net of preferred dividends | | $ | 1.72 | |
Net income available to common shareholders | | $ | 1.78 | |
Diluted per share data attributable to common shareholders: | | | | |
Income from continuing operations, net of preferred dividends | | $ | 1.71 | |
Net income available to common shareholders | | $ | 1.77 | |
2006 Acquisitions
The Company did not complete any acquisitions in 2006.
NOTE 4. DISCONTINUED OPERATIONS
During 2008, we completed the sale of seven community centers and two office properties, along with a parcel adjacent to one of the office properties, for an aggregate sales price of $67,098 and recognized gains of $3,814 and a deferred gain of $281 related to these sales, as follows:
In June 2008, the Company sold Chicopee Marketplace III in Chicopee, MA to a third party for a sales price of $7,523 and recognized a gain on the sale of $1,560. The results of operations of this property have been reclassified to discontinued operations for the years ended December 31, 2008 and 2007.
As of March 31, 2008, the Company determined that 19 of the community center and office properties originally acquired during the fourth quarter of 2007 from the Starmount Company met the criteria to be classified as held-for-sale. In conjunction with their classification as held-for-sale, the results of operations from the properties were reclassified to discontinued operations.
In April 2008, the Company completed the sale of five of the community centers located in Greensboro, NC to three separate buyers for an aggregate sales price of $24,325. In June 2008, the Company completed the sale of one of the office properties for $1,200. The Company completed the sale of an additional community center located in Greensboro, NC in August 2008 for $19,500. In December 2008, we completed the sale of an additional office property and adjacent, vacant development land located in Greensboro, NC for $14,550. We recorded gains of $2,254 and a deferred gain of $281 during the year ended December 31, 2008 attributable to these sales. Proceeds received from the dispositions were used to retire a portion of the outstanding balance on the unsecured term facility that was obtained to purchase these properties.
As of December 31, 2008, the Company determined that the properties that had not been sold during the year no longer met the held-for-sale criteria due to the improbability of additional sales related to the depressed real estate market and reclassified the results of operations from the properties to continuing operations for all periods presented, as applicable.
During August 2007, the Company sold Twin Peaks Mall in Longmont, CO to a third party for an aggregate sales price of $33,600 and recognized a gain on the sale of $3,971. During December 2007, the Company sold The Shops at Pineda Ridge in Melbourne, FL to a third party for an aggregate sales price of $8,500 and recognized a gain on the sale of $2,294.
During May 2006, the Company sold three community centers for an aggregate sales price of $42,280 and recognized a gain of $7,215. The Company also sold two community centers in May 2006 for an aggregate sales price of $63,000 and recognized a loss on impairment of real estate assets of $274. All five of these community centers were sold to Galileo America LLC (“Galileo America”) in connection with a put right the Company had
previously entered into with Galileo America. The Company, as tenant, entered into separate master lease agreements with Galileo America, as landlord, covering a total of three spaces in the properties sold to Galileo America. Under each master lease agreement, the Company is obligated to pay Galileo America an agreed-upon minimum annual rent, plus a pro rata share of common area maintenance expenses and real estate taxes, for each designated space for a term of two years from the closing date. The Company had a liability of $0 and $56 at December 31, 2008 and 2007, respectively, for the amounts to be paid over the remaining terms of the master lease obligations.
Total revenues of the centers described above that are included in discontinued operations were $4,416, $5,534 and $11,322 in 2008, 2007 and 2006, respectively. All periods presented have been adjusted to reflect the operations of the centers described above as discontinued operations.
NOTE 5. JOINT VENTURES AND OTHER PARTIALLY OWNED INVESTMENTS
Unconsolidated Affiliates
At December 31, 2008, the Company had investments in the following 23 entities, which are accounted for using the equity method of accounting:
Joint Venture | Property Name | Company’s Interest |
CBL Brazil | Plaza Macaé | 60.0% |
CBL Macapa | Macapa Shopping | 60.0% |
CBL-TRS Joint Venture, LLC | Friendly Center, The Shops at Friendly Center and a portfolio of six office buildings | 50.0% |
CBL-TRS Joint Venture II, LLC | Renaissance Center | 50.0% |
Governor’s Square IB | Governor’s Plaza | 50.0% |
Governor’s Square Company | Governor’s Square | 47.5% |
High Pointe Commons, LP | High Pointe Commons | 50.0% |
Imperial Valley Mall L.P. | Imperial Valley Mall | 60.0% |
Imperial Valley Peripheral L.P. | Imperial Valley Mall (vacant land) | 60.0% |
JG Gulf Coast Town Center | Gulf Coast Town Center | 50.0% |
Kentucky Oaks Mall Company | Kentucky Oaks Mall | 50.0% |
Mall of South Carolina L.P. | Coastal Grand—Myrtle Beach | 50.0% |
Mall of South Carolina Outparcel L.P. | Coastal Grand—Myrtle Beach (vacant land) | 50.0% |
Mall Shopping Center Company | Plaza del Sol | 50.6% |
Parkway Place L.P. | Parkway Place | 50.0% |
Port Orange I, LLC | The Pavilion at Port Orange | 50.0% |
Port Orange II, LLC | The Landing | 50.0% |
TENCO-CBL Servicos Imobiliarios S.A. | Brazilian property management services company | 50.0% |
Triangle Town Member LLC | Triangle Town Center, Triangle Town Commons and Triangle Town Place | 50.0% |
Village at Orchard Hills, LLC | The Village at Orchard Hills | 50.0% |
West Melbourne I, LLC | Hammock Landing Phase I | 50.0% |
West Melbourne II, LLC | Hammock Landing Phase II | 50.0% |
York Town Center, LP | York Town Center | 50.0% |
Condensed combined financial statement information of these unconsolidated affiliates is presented as follows:
| December 31,
| |
|---|
| 2008
| | 2007
| |
|---|
| | ASSETS: | | | | | | |
| | Investment in real estate assets | $ | 1,265,236 | | $ | 1,128,515 | |
| | Less accumulated depreciation | | (160,007 | ) | | (116,430 | ) |
| | | | 1,105,229 | | | 1,012,085 | |
| | Construction in progress | | 159,213 | | | 7,983 | |
| | Net investment in real estate assets | | 1,264,442 | | | 1,020,068 | |
| | Other assets | | 95,428 | | | 86,367 | |
| | Total assets | $ | 1,359,870 | | $ | 1,106,435 | |
| | LIABILITIES: | | | | | | |
| | Mortgage and other notes payable | $ | 1,014,622 | | $ | 875,387 | |
| | Other liabilities | | 47,751 | | | 36,376 | |
| | Total liabilities | | 1,062,373 | | | 911,763 | |
| | OWNERS’ EQUITY: | | | | | | |
| | The Company | | 189,830 | | | 126,071 | |
| | Other investors | | 107,667 | | | 68,601 | |
| | Total owners’ equity | | 297,497 | | | 194,672 | |
| | Total liabilities and owners’ equity | $ | 1,359,870 | | $ | 1,106,435 | |
| Year Ended December 31,
| |
|---|
| 2008
| | 2007
| | 2006
| |
|---|
| | Total revenues | $ | 159,620 | | $ | 105,256 | | $ | 94,785 | |
| | Depreciation and amortization | | (56,312 | ) | | (31,177 | ) | | (26,488 | ) |
| | Other operating expenses | | (52,045 | ) | | (32,579 | ) | | (28,514 | ) |
| | Income from operations | | 51,263 | | | 41,500 | | | 39,783 | |
| | Interest income | | 295 | | | 283 | | | 176 | |
| | Interest expense | | (54,346 | ) | | (36,850 | ) | | (34,731 | ) |
| | Loss on impairment of marketable securities | | (189 | ) | | — | | | — | |
| | Gain on sales of real estate assets | | 5,723 | | | 3,118 | | | 5,244 | |
| | Net income | $ | 2,746 | | $ | 8,051 | | $ | 10,472 | |
Debt on these properties is non-recourse, excluding Parkway Place, West Melbourne and Port Orange. See Note 14 for a description of guarantees the Company has issued related to certain unconsolidated affiliates.
CBL Macapa
In September 2008, the Company entered into a condominium partnership agreement with several individual investors, to acquire a 60% interest in a new retail development in Macapa, Brazil. As of December 31, 2008, the Company had incurred total funding of $233. Cash flows will be distributed on a pari passu basis among the partners. See Note 19 for information related to the divestment of this partnership subsequent to December 31, 2008.
TENCO-CBL Servicos Imobiliarios S.A.
In April 2008, the Company entered into a 50/50 joint venture, TENCO-CBL Servicos Imobiliarios S.A. (“TENCO-CBL”), with TENCO Realty S.A. to form a property management services organization in Brazil. The
Company obtained its 50% interest in the joint venture by immediately contributing cash of $2,000, and agreeing to contribute, as part of the purchase price, any future dividends up to $1,000. TENCO Realty S.A. will be responsible for managing the joint venture. Net cash flow and income (loss) will be allocated 50/50 to TENCO Realty S.A. and the Company. See Note 19 for information related to the divestment of this partnership subsequent to December 31, 2008.
West Melbourne
Effective January 30, 2008, the Company entered into two 50/50 joint ventures, West Melbourne I, LLC and West Melbourne II, LLC, with certain affiliates of Benchmark Development (“Benchmark”) to develop Hammock Landing, an open-air shopping center in West Melbourne, Florida that will be developed in two phases. The Company obtained its 50% interests in the joint ventures by contributing cash of $9,685. The Company will develop and manage Hammock Landing. Under the terms of the joint venture agreement, any additional capital contributions are to be funded on a 50/50 basis. Likewise, the joint ventures’ net cash flows and income (loss) will be allocated 50/50 to Benchmark and the Company. On August 13, 2008, the joint venture obtained a construction loan with an initial capacity of $67,000 and a land loan in the amount of $3,640 of which $31,177 and $3,640, respectively, was outstanding as of December 31, 2008. The construction loan matures in August 2010, bears interest at the London Interbank Offered Rate (“LIBOR”) plus 2% and has two one-year extension options, which are at the Company’s election, for an outside maturity date of August 2012. The land loan matures in August 2010, bears interest at LIBOR plus 2% and has a one-year extension option, which is at the Company’s election, for an outside maturity date of August 2011.
Port Orange
Effective January 30, 2008, the Company entered into two 50/50 joint ventures, Port Orange I, LLC and Port Orange II, LLC, with Benchmark to develop The Pavilion at Port Orange (the “Pavilion”), an open-air shopping center in Port Orange, Florida that will be developed in two phases. The Company obtained its 50% interests in the joint ventures by contributing cash of $13,812. The Company will develop and manage the Pavilion. Under the terms of the joint venture agreement, any additional capital contributions are to be funded on a 50/50 basis. Likewise, the joint ventures’ net cash flows and income (loss) will be allocated 50/50 to Benchmark and the Company. On June 30, 2008, the joint venture obtained a construction loan with a capacity of $112,000 and a land loan in the amount of $8,300 of which $33,384 and $8,300, respectively, was outstanding as of December 31, 2008. The construction loan matures in June 2011, bears interest at LIBOR plus 1.25% and has two one-year extension options, which are at the Company’s election, for an outside maturity date of June 2013. The land loan matures in June 2011, bears interest at LIBOR plus 1.25% and has a one-year extension option, which is at the Company’s election, for an outside maturity date of June 2012.
CBL-TRS Joint Ventures
Effective November 30, 2007, the Company entered into a 50/50 joint venture, CBL-TRS Joint Venture, LLC (“CBL-TRS”), with TRS. CBL-TRS acquired a portfolio of retail and office buildings in North Carolina including Friendly Center and The Shops at Friendly Center in Greensboro and six office buildings located adjacent to Friendly Center. The portfolio was acquired from the Starmount Company. The total purchase price paid by CBL-TRS was $260,679, which consisted of $216,146 in cash, including transaction costs, and the assumption of $44,533 of non-recourse debt at a fixed interest rate of 5.90% that matures in January 2017.
The Company and TRS each contributed cash of $58,045 to CBL-TRS. The Company also made a short-term loan of $100,000 to CBL-TRS that was repaid through financing obtained independently by CBL-TRS. On April 5, 2008, CBL-TRS obtained a $100,000 non-recourse loan with a fixed interest rate of 5.33% and matures on April 5, 2013.
Effective February 1, 2008, the Company entered into a second 50/50 joint venture, CBL-TRS Joint Venture II, LLC (“CBL-TRS II”), with TRS. During the first quarter of 2008, CBL-TRS II acquired Renaissance Center, located in Durham, NC, for $89,639 and an anchor parcel at Friendly Center, located in Greensboro, NC,
for $5,000, to complete the CBL-TRS joint ventures’ acquisitions from the Starmount Company. The aggregate purchase price consisted of $58,121 in cash and the assumption of $36,518 of non-recourse debt that bears interest at a fixed rate of 5.61% and matures in July 2016. The Company and TRS each contributed cash of $29,089. On April 5, 2008, CBL-TRS II obtained a $15,000 non-recourse loan with a fixed interest rate of 5.33% and matures on April 5, 2013.
Under the terms of the joint venture agreements, neither member is required to make additional capital contributions, except as specifically stated in the agreement governing the joint venture. The CBL-TRS joint ventures’ profits and distributions of cash flows are allocated 50/50 to TRS and the Company.
CBL Brazil
In October 2007, the Company entered into a condominium partnership agreement with several individual investors and a former land owner to acquire a 60% interest in a new retail development in Macaé, Brazil. The retail center opened in September 2008. At December 31, 2008, the Company had incurred total funding of $18,510. TENCO-CBL developed and manages the center. Cash flows will be distributed on a pari passu basis among the partners.
Galileo America Joint Venture
In 2003, the Company formed Galileo America, a joint venture with Galileo America, Inc., the U.S. affiliate of Australia-based Galileo America Shopping Trust, to invest in community centers throughout the United States. In 2005, the Company transferred all of its ownership interest in the joint venture to Galileo America. In conjunction with this transfer, the Company sold its management and advisory contracts with Galileo America to New Plan Excel Realty Trust, Inc. (“New Plan”). New Plan retained the Company to manage nine properties that Galileo America had recently acquired from a third party for a term of 17 years beginning on August 10, 2008 and agreed to pay the Company a management fee of $1,000 per year. Subsequent to the date of this agreement, New Plan was acquired by an affiliate of Centro Properties Group (“Centro”). In October 2007, the Company received notification that Centro had determined to exercise its right to terminate the management agreement by paying the Company a termination fee, payable on August 10, 2008. Due to uncertainty regarding the collectibility of the fee, the Company did not recognize the fee as income at that time. In August 2008, the Company received the termination fee of $8,000, including the final installment of an annual advisory fee of $1,000, which has been recorded as management fee income in the accompanying consolidated statement of operations for the year ended December 31, 2008.
Variable Interest Entities
In August 2007, the Company entered into a joint venture agreement with a third party to develop and operate Statesboro Crossing, an open-air shopping center in Statesboro, GA. The Company holds a 50% ownership interest in the joint venture. The Company determined that its investment represents a variable interest in a variable interest entity and that the Company is the primary beneficiary since it is required to fund all of the equity portion of the development costs. The Company earns a preferred return on its investment until it has been returned. As a result, the joint venture is presented in the accompanying financial statements as of December 31, 2008 and 2007 on a consolidated basis, with any interests of the third party reflected as noncontrolling interest. At December 31, 2008 and 2007, this joint venture had total assets of $21,644 and $4,921, respectively, and a mortgage note payable of $15,549 as of December 31, 2008.
In May 2007, the Company entered into a joint venture, Village at Orchard Hills, LLC, with certain third parties to develop and operate The Village at Orchard Hills, a lifestyle center in Grand Rapids Township, MI. The Company holds a 50% ownership interest in the joint venture. The Company determined that its investment represented a variable interest in a variable interest entity and that the Company was the primary beneficiary. As a result, the joint venture was presented in the accompanying financial statements as of December 31, 2007 on a consolidated basis, with the interests of the third parties reflected as noncontrolling interest. During the second quarter of 2008, the Company reconsidered whether this entity was a variable interest entity and determined that it
was not. As a result, the Company ceased consolidating this variable interest entity and began accounting for it as an unconsolidated affiliate using the equity method of accounting during the second quarter of 2008. During the fourth quarter of 2008, the Company suspended the development of this property. As a result, the Company has written down its investment in this joint venture to its net realizable value. At December 31, 2008 and 2007, the Company had a total investment in this project of $700 and $3,000, respectively.
In March 2007, the Company entered into a joint venture agreement with a third party to develop and operate Settlers Ridge, an open-air shopping center in Robinson Township, PA. The Company holds a 60% ownership interest in the joint venture. The Company determined that its investment represents a variable interest in a variable interest entity and that the Company is the primary beneficiary since it is required to fund all of the equity portion of the development costs. The Company earns a preferred return on its investment until it has been returned. The joint venture is presented in the accompanying financial statements on a consolidated basis, with any interests of the third party reflected as noncontrolling interest. At December 31, 2008 and 2007, this joint venture had total assets of $50,042 and $31,549, respectively, and a mortgage note payable of $15,269 and $3,194, respectively.
The Company has a 10% ownership interest and is the primary beneficiary in a joint venture that owns and operates Willowbrook Plaza in Houston, TX, Massard Crossing in Ft. Smith, AR and Pemberton Plaza in Vicksburg, MS. At December 31, 2008 and 2007, this joint venture had total assets of $63,249 and $53,727, respectively, and a mortgage note payable of $36,017 and $36,535, respectively.
In April 2005, the Company formed JG Gulf Coast Town Center LLC, a joint venture with Jacobs to develop Gulf Coast Town Center in Lee County (Ft. Myers/Naples), Florida. Under the terms of the joint venture agreement, the Company initially contributed $40,335 for a 50% interest in the joint venture, the proceeds of which were used to refund the aggregate acquisition and development costs incurred with respect to the project that were previously paid by Jacobs. The Company must also provide any additional equity necessary to fund the development of the property, as well as to fund up to an aggregate of $30,000 of operating deficits of the joint venture. The Company receives a preferred return of 11% on its invested capital in the joint venture and will, after payment of such preferred return and repayment of the Company’s invested capital, share equally with Jacobs in the joint venture’s profits.
In 2007, JG Gulf Coast Town Center obtained a non-recourse mortgage note payable of $190,800, the proceeds of which were used to retire the outstanding borrowings of $143,023 on the construction loan that funded the construction of the property. The net proceeds of $47,777 were first distributed to CBL to the extent of its unreturned capital advances plus accrued and unpaid preferred returns, and then pro rata to the Company and Jacobs.
As of December 31, 2006, the Company determined that this joint venture was a variable interest entity in which it was the primary beneficiary in accordance with FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities and consolidated the joint venture. During the fourth quarter of 2007, the Company reconsidered whether or not this entity was a variable interest entity and determined that it was not. As a result, the Company ceased consolidating this variable interest entity and began accounting for it as an unconsolidated affiliate using the equity method of accounting during the fourth quarter of 2007.
In October 2006, the Company entered into a loan agreement with a third party under which the Company would loan the third party up to $18,000 to fund land acquisition costs and certain predevelopment expenses for the purpose of developing a shopping center. The loan agreement provided that the Company could convert the loan to a 50% ownership interest in the third party at anytime. The Company determined that its loan to the third party represented a variable interest in a variable interest entity and that the Company was the primary beneficiary. As a result, the Company consolidated this entity. During the first quarter of 2008, the Company agreed to receive title to the underlying land as full payment of the $18,000 loan. The transaction had no impact on the Company’s consolidated financial statements.
In October 2006, the Company entered into a loan agreement with a third party under which the Company would loan the third party up to $7,300 to fund land acquisition costs and certain predevelopment expenses for the purpose of developing a shopping center. The loan agreement provides that, in certain circumstances, the Company may convert the loan to a 25% ownership interest in the third party. As of December 31, 2006, the Company determined that its loan to the third party was a variable interest in a variable interest entity and that the Company was the primary beneficiary. As a result, the Company consolidated this entity as of December 31, 2006. During 2007, the Company reconsidered its status as the primary beneficiary of this variable interest entity and determined that it no longer was the primary beneficiary. Therefore, the Company ceased consolidating this variable interest entity and has recorded the loan as a mortgage note receivable. The loan bears interest at 9.0% and was scheduled to mature on October 31, 2008. This receivable is currently being renegotiated and it is anticipated that the Company will obtain ownership of the land securing the note and will ground lease the land to the current mortgagee.
Cost Method Investments
In February 2007, the Company acquired a 6.2% investment interest in subsidiaries of Jinsheng Group (“Jinsheng”), an established mall operating and real estate development company located in Nanjing, China, for $10,125. As of December 31, 2007, Jinsheng owns controlling interests in four home decor shopping malls and two general retail shopping centers.
Jinsheng also issued to the Company a secured convertible promissory note in exchange for cash of $4,875. The note is secured by 16,565,534 Series 2 Ordinary Shares of Jinsheng. The secured note is non-interest bearing and matures upon the earlier to occur of (i) January 22, 2012, (ii) the closing of the sale, transfer or other disposition of substantially all of Jinsheng’s assets, (iii) the closing of a merger or consolidation of Jinsheng or (iv) an event of default, as defined in the secured note. In lieu of the Company’s right to demand payment on the maturity date, at any time commencing upon the earlier to occur of January 22, 2010 or the occurrence of a Final Trigger Event, as defined in the secured note, the Company may, at its sole option, convert the outstanding amount of the secured note into 16,565,534 Series A-2 Preferred Shares of Jinsheng (which equates to a 2.275% ownership interest).
Jinsheng also granted the Company a warrant to acquire 5,461,165 Series A-3 Preferred Shares for $1,875. The warrant expires upon the earlier of January 22, 2010 or the date that Jinsheng distributes, as a dividend, shares of Jinsheng’s successor should Jinsheng complete an initial public offering.
The Company accounts for its investment interest in Jinsheng using the cost method because the Company does not exercise significant influence over Jinsheng and there is no readily determinable market value of Jinsheng’s shares since they are not publicly traded. The Company recorded the secured note at its estimated fair value of $4,513, which reflects a discount of $362 due to the fact that it is non-interest bearing. The discount is amortized to interest income over the term of the secured note using the effective interest method. The investment interest and the secured note are reflected as investment in unconsolidated affiliates in the accompanying consolidated balance sheet. The Company recorded the warrant at its estimated fair value of $362, which is included in other assets in the accompanying consolidated balance sheet. There have been no significant changes to the fair values of the secured note and warrant.
During the first quarter of 2008, the Company became aware that a lender to Jinsheng had declared an event of default under its loan, claiming that the loan proceeds had been improperly advanced to a related party entity owned by Jinsheng's founder. As a result, the lender sought to exercise its rights to register ownership of 100% of the shares of Jinsheng that were pledged as collateral for the loan. The loan was repaid in full, including interest, penalty and other charges, during the second quarter of 2008 and the pledged shares were released by the lender. The Company and its fellow investor subsequently negotiated with Jinsheng’s founder and implemented a restructuring plan during the fourth quarter of 2008 that included, among other things, the settlement of a significant portion of the related party receivable primarily through the contribution to Jinsheng of certain commercial and residential properties. As of December 31, 2008, the Company has determined that its investment in Jinsheng is not impaired.
NOTE 6. MORTGAGE AND OTHER NOTES PAYABLE
| Mortgage and other notes payable consisted of the following: |
| | December 31, 2008
| | December 31, 2007
| |
|---|
| | Amount
| | Weighted
Average
Interest
Rate (1)
| | Amount
| | Weighted
Average
Interest
Rate (1)
| |
|---|
| | Fixed-rate debt: | | | | | | | | | | | | | | |
| | Non-recourse loans on operating properties | | | $ | 4,208,347 | | | 6.13 | % | $ | 4,293,515 | | | 5.93 | % |
| | Secured line of credit (2) | | | | 400,000 | | | 4.45 | % | | 250,000 | | | 4.51 | % |
| | Total fixed-rate debt | | | | 4,608,347 | | | 5.99 | % | | 4,543,515 | | | 5.85 | % |
| | Variable-rate debt: | | | | | | | | | | | | | | |
| | Recourse term loans on operating properties | | | | 262,946 | | | 2.49 | % | | 81,767 | | | 6.15 | % |
| | Unsecured line of credit | | | | 522,500 | | | 1.92 | % | | 490,232 | | | 5.98 | % |
| | Secured lines of credit | | | | 149,050 | | | 1.45 | % | | 326,000 | | | 5.71 | % |
| | Unsecured term facilities | | | | 437,494 | | | 1.88 | % | | 348,800 | | | 5.95 | % |
| | Construction loans | | | | 115,339 | | | 1.74 | % | | 79,004 | | | 6.20 | % |
| | Total variable-rate debt | | | | 1,487,329 | | | 1.95 | % | | 1,325,803 | | | 5.93 | % |
| | Total | | | $ | 6,095,676 | | | 5.01 | % | $ | 5,869,318 | | | 5.87 | % |
(1) | Weighted average interest rate including the effect of debt premiums (discounts), but excluding the amortization of deferred financing costs. |
(2) | The Company has entered into interest rate swaps on notional amounts totaling $400,000 and $250,000 as of December 31, 2008 and 2007, respectively, related to its largest secured line of credit to effectively fix the interest rate on that portion of the line of credit. Therefore, this amount is currently reflected in fixed-rate debt. |
Non-recourse and recourse term loans include loans that are secured by properties owned by the Company that have a net carrying value of $6,370,927 at December 31, 2008.
Unsecured Line of Credit
The Company has an unsecured line of credit with total availability of $560,000 that bears interest at LIBOR plus a margin of 0.75% to 1.20% based on the Company’s leverage ratio, as defined in the agreement to the facility. Additionally, the Company pays an annual fee of 0.1% of the amount of total availability under the unsecured line of credit. The line of credit matures in August 2009 and has two one-year extension options, which are at the Company’s election, for an outside maturity date of August 2011. At December 31, 2008, the outstanding borrowings of $522,500 under the unsecured line of credit had a weighted average interest rate of 1.92%.
Unsecured Term Facilities
In April 2008, the Company entered into a new unsecured term facility with total availability of $228,000 that bears interest at LIBOR plus a margin of 1.50% to 1.80% based on the Company’s leverage ratio, as defined in the agreement to the facility. At December 31, 2008, the outstanding borrowings of $228,000 under the unsecured term facility had a weighted average interest rate of 2.11%. The agreement to the facility contains default provisions customary for transactions of this nature and also contains cross-default provisions for defaults of the Company’s $560,000 unsecured line of credit, the $524,850 secured line of credit and the unsecured term facility with a balance of $209,494 as of December 31, 2008 that was used for the acquisition of certain properties from the Starmount Company or its affiliates. The facility matures in April 2011 and has two one-year extension options, which are at the Company’s election, for an outside maturity date of April 2013. The facility was used to pay down outstanding balances on the Company’s unsecured line of credit.
The Company has an unsecured term facility that was obtained for the exclusive purpose of acquiring certain properties from the Starmount Company or its affiliates. At December 31, 2008, the outstanding borrowings of $209,494 under this facility had a weighted average interest rate of 1.63%. The Company completed its acquisition of the properties in February 2008 and, as a result, no further draws can be made against the facility. The unsecured term facility bears interest at LIBOR plus a margin of 0.95% to 1.40% based on the Company’s leverage ratio, as defined in the agreement to the facility. Net proceeds from a sale, or the Company’s share of excess proceeds from any refinancings, of any of the properties originally purchased with borrowings from this unsecured term facility must be used to pay down any remaining outstanding balance. The agreement to the facility contains default provisions customary for transactions of this nature and also contains cross-default provisions for defaults of the Company’s $560,000 unsecured line of credit, $524,850 secured line of credit and $228,000 unsecured term facility. The facility matures in November 2010 and has two one-year extension options, which are at the Company’s election, for an outside maturity date of November 2012.
Secured Lines of Credit
The Company has four secured lines of credit that are used for construction, acquisition and working capital purposes, as well as issuances of letters of credit. Each of these lines is secured by mortgages on certain of the Company’s operating properties. Borrowings under the secured lines of credit bear interest at LIBOR plus a margin ranging from 0.80% to 0.95% and had a weighted average interest rate of 3.64% at December 31, 2008. The Company also pays a fee based on the amount of unused availability under its largest secured line of credit at a rate of 0.125% of unused availability. The following summarizes certain information about the secured lines of credit as of December 31, 2008:
Total
Available | | Total
Outstanding | | Maturity
Date |
$524,850 | | $524,850 | | February 2009* |
105,000 | | — | | June 2010 |
20,000 | | 20,000 | | March 2010 |
17,200 | | 4,200 | | April 2010 |
$667,050 | | $549,050 | | |
| | | | |
*The facility has one, one-year extension option, which was was exercised in February 2009 for an extended maturity date of February 2010.
The secured lines of credit are collateralized by 23 of the Company’s properties, which had an aggregate net carrying value of $525,291 at December 31, 2008.
Fixed-Rate Debt
As of December 31, 2008, fixed-rate operating loans bear interest at stated rates ranging from 4.55% to 8.69%. Outstanding borrowings under fixed-rate loans include net unamortized debt premiums of $15,018 that were recorded when the Company assumed debt to acquire real estate assets that was at a net above-market interest rate compared to similar debt instruments at the date of acquisition. Fixed-rate loans generally provide for monthly payments of principal and/or interest and mature at various dates from February 2009 through October 2018, with a weighted average maturity of 4.9 years.
During the fourth quarter of 2008, the Company obtained a loan totaling $40,000 secured by Meridian Mall in Lansing, MI that matures in November 2010. While the loan bears interest at LIBOR plus a margin of 3.00%, the Company has entered into a $40,000 pay fixed/receive variable swap to effectively fix the interest rate at 5.175%. The property had a previous loan of $84,588 that was repaid in September 2008 and had a fixed interest rate of 4.52%.
During the third quarter of 2008, the Company obtained two separate loans totaling $251,500. The first loan represents a new $164,000, ten-year non-recourse loan maturing in October 2018 secured by Hanes Mall in Winston-Salem, NC. The loan bears interest at a fixed rate of 6.99% and replaces a previous loan on the property
of $97,600 that had a fixed interest rate of 7.31%. The second loan represents a new $87,500 three-year term loan secured by RiverGate Mall and the Village at Rivergate in Nashville, TN. The loan matures in September 2011 and has two, one-year extension options for an outside maturity date in September 2013 and is 50% recourse. While the loan bears interest at LIBOR plus 2.25%, the Company has entered into an $87,500 pay fixed/receive variable swap to effectively fix the interest rate at 5.85%. The Company also entered into a loan modification agreement to modify and extend its existing $36,600 loan secured by Hickory Hollow Mall and Courtyard at Hickory Hollow Mall in Nashville, TN. The loan was extended for ten years, maturing in October 2018, is fully recourse and bears interest at a fixed rate of 6.00%. The net proceeds from these loans, combined with the loan modification, replaced an existing $153,200 loan bearing an interest rate of 6.77% secured by RiverGate Mall, The Village at Rivergate, Hickory Hollow Mall, and Courtyard at Hickory Hollow.
During the second quarter of 2008, the Company announced that it had entered into a one-year extension of the $39,600, non-recourse loan secured by Oak Hollow Mall in High Point, NC. The extension maintained the fixed interest rate of 7.31% and extended the maturity date to February 2009.
During the second quarter of 2007, the Company obtained two separate ten-year, non-recourse loans totaling $207,520 that bear interest at fixed rates ranging from 5.60% to 5.66%, with a weighted average of 5.61%. The loans are secured by Gulf Coast Town Center and Eastgate Crossing and mature in July 2017 and May 2017, respectively. The proceeds were used to retire two variable rate loans totaling $143,258 and to reduce outstanding balances on the Company’s credit facilities.
During the first quarter of 2007, the Company obtained six separate ten-year, non-recourse loans totaling $417,040 that mature in April 2017 and bear interest at fixed rates ranging from 5.66% to 5.68%, with a weighted average of 5.67%. The loans are secured by Mall of Acadiana, Citadel Mall, The Plaza at Fayette Mall, Layton Hills Mall and its associated center, Hamilton Corner and The Shoppes at St. Clair Square. The proceeds were used to retire $92,050 of mortgage notes payable that were scheduled to mature during the succeeding twelve months and to reduce outstanding balances on the Company’s credit facilities. The mortgage notes payable that were retired consisted of two variable rate term loans totaling $51,825 and three fixed rate loans totaling $40,225. The Company recorded a loss on extinguishment of debt of $227 related to prepayment fees and the write-off of unamortized deferred financing costs associated with the loans that were retired.
Variable-Rate Debt
Recourse term loans for the Company’s operating properties bear interest at variable interest rates indexed to the prime lending rate or LIBOR. At December 31, 2008, interest rates on such recourse loans varied from 1.47% to 3.83%. These loans mature at various dates from January 2009 to February 2011, with a weighted average maturity of 2.4 years, and have various extension options ranging from one to three years.
During 2008, the Company entered into seven construction loans totaling $251,339. Of the seven construction loans, two represent the capacity available for the development of The Pavilion at Port Orange, a community center under development in Port Orange, FL, totaling $120,300 and two represent the capacity available for the development of Hammock Landing, a community center under development in West Melbourne, FL, totaling $70,640. These properties are held in 50/50 joint ventures, but the Company has guaranteed 100% of the debt. See Note 5 for additional information. The remaining three construction loans are attributable to Phase III of Gulf Coast Town Center, a lifestyle addition to West County Center in St. Louis, MO and the development of Statesboro Crossing, a community center located in Statesboro, GA. The stated maturity dates on these loans range from April 2010 through June 2011. However, including available extension options on each of the loans, which are at the Company’s election, the outside maturity dates range from June 2011 through August 2013.
In addition, in December 2008, the Company entered into a loan agreement with the Mississippi Business Finance Corporation (“MBFC”) under which the Company received access to $79,085 from the issuance of Gulf Opportunity Zone Industrial Development Revenue Bonds (“GO ZONE Bonds”) by the MBFC. The GO ZONE Bonds are fully supported by a letter of credit obtained by the Company. The loan accrues interest payable monthly at a variable rate based on the USD-SIFMA Municipal Swap Index. The GO ZONE Bonds are subject to
redemption at the Company’s discretion and mature on December 1, 2038. They will be repaid by the Company in accordance with the terms stipulated in the loan agreement and the bond issuance proceeds must be used to finance the construction of the Company’s interest in a community center development located in the state of Mississippi. As of December 31, 2008, approximately $31,356 had been drawn from the available funds. The balance of the proceeds, approximately $47,729, are currently held in trust and will be released to the Company as further capital expenditures on the development project are incurred. These funds are recorded in other assets as restricted cash in the consolidated balance sheet as of December 31, 2008.
Letters of Credit
At December 31, 2008, the Company had additional unsecured lines of credit with a total commitment of $38,410 that are only used for issuing letters of credit. The letters of credit outstanding under these lines of credit totaled $15,133 at December 31, 2008.
Interest Rate Hedging Instruments
The Company entered into an $80,000 interest rate cap agreement, effective December 4, 2008, to hedge the risk of changes in cash flows on the letter of credit supporting the GO ZONE Bonds equal to the then-outstanding cap notional. The interest rate cap protects the Company from increases in the hedged cash flows attributable to overall changes in the USD-SIFMA Municipal Swap Index above the strike rate of the cap on the debt. The strike rate associated with the interest rate cap is 4.00%. The interest rate cap had a nominal value as of December 31, 2008 and matures on December 3, 2010.
The Company entered into a $40,000 pay fixed/receive variable interest rate swap agreement, effective November 19, 2008, to hedge the interest rate risk exposure on the borrowings of one of its operating properties equal to the swap notional amount. This interest rate swap hedges the risk of changes in cash flows on the Company’s designated forecasted interest payments attributable to changes in 1-month LIBOR, the designated benchmark interest rate being hedged, thereby reducing exposure to variability in cash flows relating to interest payments on the variable-rate debt. The interest rate swap effectively fixes the interest payments on the portion of debt principal corresponding to the swap notional amount at 5.175%. The swap was valued at ($772) as of December 31, 2008 and matures on November 7, 2010.
The Company entered into an $87,500 pay fixed/receive variable interest rate swap agreement, effective October 1, 2008, to hedge the interest rate risk exposure on the borrowings of one of our operating properties equal to the swap notional amount. This interest rate swap hedges the risk of changes in cash flows on our designated forecasted interest payments attributable to changes in 1-month LIBOR, the designated benchmark interest rate being hedged, thereby reducing exposure to variability in cash flows relating to interest payments on the variable-rate debt. The interest rate swap effectively fixes the interest payments on the portion of debt principal corresponding to the swap notional amount at 5.85%. The swap was valued at $(3,787) as of December 31, 2008 and matures on September 23, 2010.
On January 2, 2008, the Company entered into a $150,000 pay fixed/receive variable interest rate swap agreement to hedge the interest rate risk exposure on an amount of borrowings on our largest secured line of credit equal to the swap notional amount. This interest rate swap hedges the risk of changes in cash flows on our designated forecasted interest payments attributable to changes in 1-month LIBOR, the designated benchmark interest rate being hedged, thereby reducing exposure to variability in cash flows relating to interest payments on the variable-rate debt. The interest rate swap effectively fixes the interest payments on the portion of debt principal corresponding to the swap notional amount at 4.353%. The swap was valued at $(3,989) as of December 31, 2008 and matures on December 30, 2009.
On December 31, 2007, the Company entered into a $250,000 pay fixed/receive variable interest rate swap agreement to hedge the interest rate risk exposure on an amount of borrowings on our largest secured line of credit equal to the swap notional amount. This interest rate swap hedges the risk of changes in cash flows on our designated forecasted interest payments attributable to changes in 1-month LIBOR, the designated benchmark
interest rate being hedged, thereby reducing exposure to variability in cash flows relating to interest payments on the variable-rate debt. The interest rate swap effectively fixes the interest payments on the portion of debt principal corresponding to the swap notional amount at 4.505%. The swap was valued at $(7,022) as of December 31, 2008 and matures on December 30, 2009.
Covenants and Restrictions
The secured and unsecured line of credit agreements contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum net worth requirements, and limitations on cash flow distributions. Additionally, certain property-specific mortgage notes payable require the maintenance of debt service coverage ratios on their respective properties. The Company was in compliance with all covenants and restrictions at December 31, 2008.
Thirty-nine malls/open-air centers, nine associated centers, three community centers and the corporate office building are owned by special purpose entities that are included in the Company’s consolidated financial statements. The sole business purpose of the special purpose entities is to own and operate these properties, each of which is encumbered by a commercial-mortgage-backed-securities loan. The real estate and other assets owned by these special purpose entities are restricted under the loan agreements in that they are not available to settle other debts of the Company. However, so long as the loans are not under an event of default, as defined in the loan agreements, the cash flows from these properties, after payments of debt service, operating expenses and reserves, are available for distribution to the Company.
Scheduled Principal Maturities
As of December 31, 2008, the scheduled principal maturities of the Company’s consolidated debt, excluding extensions available at the Company’s option, on all mortgage and other notes payable, including construction loans and lines of credit, are as follows:
| | 2009 | | | $ | 1,640,679 | |
| | 2010 | | | | 793,380 | |
| | 2011 | | | | 621,818 | |
| | 2012 | | | | 547,492 | |
| | 2013 | | | | 458,957 | |
| | Thereafter | | | | 2,018,332 | |
| | | | | | 6,080,658 | |
| | Net unamortized premiums | | | | 15,018 | |
| | | | | $ | 6,095,676 | |
Of the $1,640,679 of scheduled principal maturities in 2009, excluding net unamortized premiums of $522, related to twelve operating properties and the Company’s largest secured and unsecured lines of credit, maturities representing $1,275,738 have extensions available at the Company’s option, leaving approximately $364,941 of maturities in 2009 that must be retired or refinanced. The $364,941 of maturities in 2009 represents non-recourse, property-specific mortgage loans. All of the mortgages are held by life insurance companies, with the exception of a $53,325 commercial mortgage-backed securities loan that matures in December 2009. Of the $311,616 of remaining loans, the Company completed an extension in January 2009 on one loan totaling $19,009 that extended the maturity date until January 2012. This loan has an additional one-year extension option for an outside maturity date of January 2013. The Company also has a loan with a stated February 2009 maturity totaling $38,183 for which it originally had an extension option for an additional five years; however, the Company is currently in discussions with the lender to renegotiate the terms and maturity of the loan on a more favorable basis. The Company closed on the refinancing of a loan totaling $82,203 in March 2009. The Company has three loans totaling $112,512 that are with the same lender and have original maturity dates ranging from March 2009 to October 2009. The Company has obtained an extension of the loan with the March maturity date to May 2009 to provide additional time to complete its negotiations with the lender on all
three of the loans. The Company is also in active refinancing negotiations with the lender of its loan that matures in April 2009 totaling $59,709.
NOTE 7. SHAREHOLDERS’ EQUITY
Common Stock Repurchase Plan
On August 2, 2007, the Company’s board of directors approved a $100,000 common stock repurchase plan effective for twelve months. Under the August 2007 plan, purchases of shares of the Company’s common stock could be made from time to time, subject to market conditions and at prevailing market prices, through open market purchases. Any stock repurchases were to be funded through the Company’s available cash and credit facilities. The Company was not obligated to repurchase any shares of stock under the plan and the Company had the right to terminate the plan at any time. Repurchased shares were deemed retired and were, accordingly, cancelled and no longer considered issued. As of December 31, 2007, the Company had repurchased 148,500 shares at a cost of approximately $5,168. The cost of the repurchased shares was recorded as a reduction in the respective components of shareholders’ equity. No additional repurchases were made during 2008.
Preferred Stock
On June 28, 2007, the Company redeemed its 2,000,000 outstanding shares of 8.75% Series B Cumulative Redeemable Stock (the “Series B Preferred Stock”) for $100,000, representing a liquidation preference of $50.00 per share, plus accrued and unpaid dividends of $2,139. In connection with the redemption of the Series B Preferred Stock, the Company incurred a charge of $3,630 to write off direct issuance costs that were recorded as a reduction of additional paid-in capital when the Series B Preferred Stock was issued. The charge is included in preferred dividends in the accompanying consolidated statement of operations for the year ended December 31, 2007.
On August 22, 2003, the Company issued 4,600,000 depositary shares in a public offering, each representing one-tenth of a share of 7.75% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”) with a par value of $0.01 per share. The Series C Preferred Stock has a liquidation preference of $250.00 per share ($25.00 per depositary share). The dividends on the Series C Preferred Stock are cumulative, accrue from the date of issuance and are payable quarterly in arrears at a rate of $19.375 per share ($1.9375 per depositary share) per annum. The Series C Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption, and is not convertible into any other securities of the Company. The Series C Preferred Stock cannot be redeemed by the Company prior to August 22, 2008. After that date, the Company may redeem shares, in whole or in part, at any time for a cash redemption price of $250.00 per share ($25.00 per depositary share) plus accrued and unpaid dividends. The net proceeds of $111,227 were used to partially fund certain acquisitions and to reduce outstanding borrowings on the Company’s credit facilities.
On December 13, 2004, the Company issued 7,000,000 depositary shares in a public offering, each representing one-tenth of a share of 7.375% Series D Cumulative Redeemable Preferred Stock (the “Series D Preferred Stock”) with a par value of $0.01 per share. The Series D Preferred Stock has a liquidation preference of $250.00 per share ($25.00 per depositary share). The dividends on the Series D Preferred Stock are cumulative, accrue from the date of issuance and are payable quarterly in arrears at a rate of $18.4375 per share ($1.84375 per depositary share) per annum. The Series D Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption, and is not convertible into any other securities of the Company. The Series D Preferred Stock cannot be redeemed by the Company prior to December 13, 2009. After that date, the Company may redeem shares, in whole or in part, at any time for a cash redemption price of $250.00 per share ($25.00 per depositary share) plus accrued and unpaid dividends. The net proceeds of $169,333 were used to reduce outstanding borrowings on the Company’s credit facilities.
Holders of each series of preferred stock will have limited voting rights if dividends are not paid for six or more quarterly periods and in certain other events.
Dividends
On November 4, 2008, the Company announced that it would reduce the quarterly dividend rate, effective with the fourth quarter 2008 declaration, on its common stock to $0.37 per share from $0.545 per share. The quarterly cash dividend equates to an annual dividend of $1.48 per share compared with the previous annual dividend of $2.18 per share. The dividend was paid on January 14, 2009, to shareholders of record as of December 28, 2007. The dividend declared in the fourth quarter of 2008, totaling $24,568, is included in accounts payable and accrued liabilities at December 31, 2008. The total dividend included in accounts payable and accrued liabilities at December 31, 2007 was $36,149.
The allocations of dividends declared and paid for income tax purposes are as follows:
| | Year Ended December 31,
| |
|---|
| | 2008
| | 2007
| | 2006
| |
|---|
| | Dividends declared: | | | | | | | | | | | |
| | Common stock | | | $ | 1.63500 | | $ | 2.06000 | | $ | 1.87750 | |
| | Series B preferred stock | | | $ | — | | $ | 1.09375 | | $ | 4.37500 | |
| | Series C preferred stock | | | $ | 19.375 | | $ | 19.375 | | $ | 19.375 | |
| | Series D preferred stock | | | $ | 18.4375 | | $ | 18.4375 | | $ | 18.4375 | |
| | | | | | | | | | | | | |
| | Allocations: | | | | | | | | | | | |
| | Common stock | | | | | | | | | | | |
| | Ordinary income | | | | 76.58 | % | | 77.86 | % | | 97.56 | % |
| | Capital gains 15% rate | | | | 0.00 | % | | 0.00 | % | | 2.22 | % |
| | Capital gains 25% rate | | | | 0.67 | % | | 1.65 | % | | 0.22 | % |
| | Return of capital | | | | 22.75 | % | | 20.49 | % | | 0.00 | % |
| | Total | | | | 100.00 | % | | 100.00 | % | | 100.00 | % |
| | | | |
| | Preferred stock (1) | | | | | | | | | | | |
| | Ordinary income | | | | 99.14 | % | | 97.93 | % | | 97.56 | % |
| | Capital gains 15% rate | | | | 0.00 | % | | 0.00 | % | | 2.22 | % |
| | Capital gains 25% rate | | | | 0.86 | % | | 2.07 | % | | 0.22 | % |
| | Total | | | | 100.00 | % | | 100.00 | % | | 100.00 | % |
(1) The allocations for income tax purposes are the same for each series of preferred stock for each period presented.
NOTE 8. REDEEMABLE NONCONTROLLING INTERESTS AND NONCONTROLLING INTERESTS
Redeemable Noncontrolling Interest and Noncontrolling Interests in the Operating Partnership
The redeemable noncontrolling interest and noncontrolling interests in the Operating Partnership are represented by common units and special common units of limited partnership interest in the Operating Partnership (the “Operating Partnership Units”) that the Company does not own.
Redeemable noncontrolling interest includes a noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which the partnership agreement includes redemption provisions that may require the Company to redeem the partnership interest for real property. In July 2004, the Company issued 1,560,940 Series S special common units (“S-SCUs”), all of which are outstanding as of December 31, 2008, in connection with the acquisition of Monroeville Mall. Under the terms of the Operating Partnership’s limited partnership agreement, the holder of the S-SCUs has the right to exchange all or a portion of its partnership interest for shares of the Company’s common stock or, at the Company’s election, their cash equivalent. This holder has the additional right to, at any time after the seventh anniversary of the issuance of the S-SCUs, require the Operating Partnership to acquire a qualifying property and distribute it to the holder in
exchange for the S-SCUs. Generally, the acquisition price of the qualifying property cannot be more than the lesser of the consideration that would be received in a normal exchange, as discussed above, or $20,000, subject to certain limited exceptions. Should the consideration that would be received in a normal exchange exceed the maximum property acquisition price as described in the preceding sentence, the excess portion of its partnership interest could be exchanged for shares of the Company’s stock or, at the Company’s election, their cash equivalent. The S-SCUs receive a minimum distribution of $2.53825 per unit per year for the first five years, and receive a minimum distribution of $2.92875 per unit per year thereafter.
Noncontrolling interests include the aggregate noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which each of the noncontrolling limited partners has the right to exchange all or a portion of its partnership interests for shares of the Company’s common stock, or at the Company’s election, their cash equivalent. When an exchange occurs, CBL assumes the noncontrolling limited partner’s ownership interests in the Operating Partnership. The number of shares of common stock received by a noncontrolling limited partner of the Operating Partnership upon exercise of its exchange rights will be equal, on a one-for-one basis, to the number of Operating Partnership Units exchanged by the noncontrolling limited partner. The amount of cash received by the noncontrolling limited partner, if CBL elects to pay cash, will be based on the five-day trailing average of the trading price at the time of exercise of the shares of common stock that would otherwise have been received by the noncontrolling limited partner in the exchange. Neither the noncontrolling limited partnership interests in the Operating Partnership nor the shares of common stock of the Company are subject to any right of mandatory redemption.
At December 31, 2008, holders of 22,913,538 J-SCUs are eligible to exchange their units for shares of common stock or, at the Company’s election, their cash equivalent. The J-SCUs receive a distribution equal to that paid on the common units.
In June 2005, the Company issued 571,700 L-SCUs, all of which are outstanding as of December 31, 2008, in connection with the acquisition of Laurel Park Place. The L-SCUs receive a minimum distribution of $0.7572 per unit per quarter ($3.0288 per unit per year). Upon the earlier to occur of June 1, 2020, or when the distribution on the common units exceeds $0.7572 per unit for four consecutive calendar quarters, the L-SCUs will thereafter receive a distribution equal to the amount paid on the common units.
In November 2005, the Company issued 1,144,924 K-SCUs, all of which are outstanding as of December 31, 2008, in connection with the acquisition of Oak Park Mall, Eastland Mall and Hickory Point Mall. The K-SCUs received a dividend at a rate of 6.0%, or $2.85 per K-SCU, for the first year following the close of the transaction and will receive a dividend at a rate of 6.25%, or $2.96875 per K-SCU, thereafter. When the quarterly distribution on the Operating Partnership’s common units exceeds the quarterly K-SCU distribution for four consecutive quarters, the K-SCUs will receive distributions at the rate equal to that paid on the Operating Partnership’s common units. At any time following the first anniversary of the closing date, the holders of the K-SCUs may exchange them, on a one-for-one basis, for shares of the Company’s common stock or, at the Company’s election, their cash equivalent.
During 2008, holders of 24,226 special common units of noncontrolling limited partnership interest in the Operating Partnership exercised their conversion rights. The Company was requested to exchange common stock for these units, and elected to do so.
During 2007, holders of 220,670 special common units and 2,848 common units of noncontrolling limited partnership interest in the Operating Partnership exercised their conversion rights. The Company elected to exchange cash of $9,502 in exchange for these units.
During 2006, holders elected to exchange 595,041 special common units and 1,480,066 common units. The Company elected to exchange $3,610 of cash and 1,979,644 shares of common stock for these units.
Outstanding rights to convert redeemable noncontrolling interests and noncontrolling interests in the Operating Partnership to common stock were held by the following parties at December 31, 2007 and 2006:
| December 31, |
| 2008 | | 2007 |
The Company | 66,399,494 | | 66,179,747 |
Jacobs | 22,913,538 | | 22,937,764 |
CBL’s Predecessor | 17,396,798 | | 17,493,676 |
Third parties | 10,300,277 | | 10,203,399 |
Total Operating Partnership Units | 117,010,107 | | 116,814,586 |
The assets and liabilities allocated to the Operating Partnership’s redeemable noncontrolling interest and noncontrolling interests are based on their ownership percentages of the Operating Partnership at December 31, 2008 and 2007. The ownership percentages are determined by dividing the number of Operating Partnership Units held by each of the redeemable noncontrolling interest and the noncontrolling interests at December 31, 2008 and 2007 by the total Operating Partnership Units outstanding at December 31, 2008 and 2007, respectively. The redeemable noncontrolling interest ownership percentage in assets and liabilities of the Operating Partnership was 1.3% at December 31, 2008 and 2007. The noncontrolling interest ownership percentage in assets and liabilities of the Operating Partnership was 41.9% and 42.0% at December 31, 2008 and 2007, respectively.
Income is allocated to the Operating Partnership’s redeemable noncontrolling interest and noncontrolling interests based on their weighted average ownership during the year. The ownership percentages are determined by dividing the weighted average number of Operating Partnership Units held by each of the redeemable noncontrolling interest and noncontrolling interests by the total weighted average number of Operating Partnership Units outstanding during the year.
A change in the number of shares of common stock or Operating Partnership Units changes the percentage ownership of all partners of the Operating Partnership. An Operating Partnership Unit is considered to be equivalent to a share of common stock since it generally is exchangeable for shares of the Company’s common stock or, at the Company’s election, their cash equivalent. As a result, an allocation is made between redeemable noncontrolling interest, shareholders’ equity and noncontrolling interests in the Operating Partnership in the accompanying balance sheet to reflect the change in ownership of the Operating Partnership’s underlying equity when there is a change in the number of shares and/or Operating Partnership Units outstanding. During 2008, 2007 and 2006, the Company allocated $476, $1,048 and $941, respectively, from shareholders’ equity to redeemable noncontrolling interest. During 2008, the Company allocated $369 from noncontrolling interest to shareholders’ equity. During 2007 and 2006, the Company allocated $8,330 and $963, respectively, from shareholders’ equity to noncontrolling interest.
The total redeemable noncontrolling interest in the Operating Partnership was $12,072 and $37,319 at December 31, 2008 and 2007, respectively. The total noncontrolling interest in the Operating Partnership was $379,408 and $478,306 at December 31, 2008 and 2007, respectively.
On November 4, 2008, the Operating Partnership declared distributions of $990 and $18,034 to the Operating Partnership’s redeemable noncontrolling limited partners and noncontrolling limited partners, respectively. The distributions were paid on January 14, 2009. This distribution represented a distribution of $0.3700 per unit for each common unit and $0.6346 to $0.7572 per unit for certain special common units in the Operating Partnership. The total distribution is included in accounts payable and accrued liabilities at December 31, 2008.
On November 6, 2007, the Operating Partnership declared distributions of $1,142 and $27,093 to the Operating Partnership’s redeemable noncontrolling limited partners and noncontrolling limited partners, respectively. The distributions were paid on January 15, 2008. This distribution represented a distribution of $0.5450 per unit for each common unit and $0.7322 to $0.7572 per unit for certain special common units in the Operating Partnership. The total distribution is included in accounts payable and accrued liabilities at December 31, 2007.
Redeemable Noncontrolling Interests and Noncontrolling Interests in Other Consolidated Subsidiaries
Redeemable noncontrolling interests includes the aggregate noncontrolling ownership interest in five of the Company’s other consolidated subsidiaries that is held by third parties and for which the related partnership agreements contain redemption provisions at the holder’s election that allow for redemption through cash and/or properties. The total redeemable noncontrolling interests in other consolidated subsidiaries was $427,600 and $426,126 at December 31, 2008 and 2007, respectively.
The redeemable noncontrolling interests in other consolidated subsidiaries includes the third party interest in the Company’s subsidiary that provides security and maintenance services and the PJV units issued to Westfield for the acquisition of certain properties as more fully described in Note 3. Activity related to the redeemable noncontrolling preferred joint venture interest represented by the PJV units is as follows:
| | Year Ended December 31,
| |
|---|
| | 2008
| | 2007
| |
|---|
| | Beginning Balance | | | $ | 420,300 | | $ | — | |
| | Net income attributable to redeemable noncontrolling preferred joint venture interest | | | | 20,268 | | | 4,263 | |
| | Distributions to redeemable noncontrolling preferred joint venture interest | | | | (19,289 | ) | | (76 | ) |
| | Issuance of redeemable noncontrolling preferred joint venture interest | | | | — | | | 416,113 | |
| | Ending Balance | | | $ | 421,279 | | $ | 420,300 | |
Noncontrolling interests includes the aggregate noncontrolling ownership interest in 17 of the Company’s other consolidated subsidiaries that is held by third parties and for which the related partnership agreements either do not include redemption provisions or are subject to redemption provisions that do not require classification outside of permanent equity. The total noncontrolling interests in other consolidated subsidiaries was $1,064 and $3,911 at December 31, 2008 and 2007, respectively.
The assets and liabilities allocated to the redeemable noncontrolling interests and noncontrolling interests in other consolidated subsidiaries are based on the third parties’ ownership percentages in each subsidiary at December 31, 2008 and 2007. Income is allocated to the redeemable noncontrolling interests and noncontrolling interests in other consolidated subsidiaries based on the third parties’ weighted average ownership in each subsidiary during the year.
NOTE 9. MINIMUM RENTS
The Company receives rental income by leasing retail shopping center space under operating leases. Future minimum rents are scheduled to be received under noncancellable tenant leases at December 31, 2008, as follows:
2009 | $ | 614,462 |
2010 | | 538,300 |
2011 | | 472,031 |
2012 | | 403,771 |
2013 | | 340,612 |
Thereafter | | 1,493,925 |
| $ | 3,863,101 |
| | |
| Future minimum rents do not include percentage rents or tenant reimbursements that may become due. |
NOTE 10. MORTGAGE NOTES RECEIVABLE
Mortgage notes receivable are collateralized by first mortgages, wrap-around mortgages on the underlying real estate and related improvements or by assignment of 100% of the partnership interests that own the real estate assets. Interest rates on notes receivable range from 2.2% to 10.0%, with a weighted average interest rate of 6.79% and 5.93% at December 31, 2008 and 2007, respectively. Maturities of notes receivable range from October 2008 to January 2047. The mortgage note receivable with a maturity date of October 2008 has a carrying amount of $8,024 and bears interest at a rate of 9.0%. This receivable is currently being renegotiated and it is anticipated that the Company will obtain ownership of the land securing the note and will ground lease the land to the current mortgagee.
NOTE 11. SEGMENT INFORMATION
The Company measures performance and allocates resources according to property type, which is determined based on certain criteria such as type of tenants, capital requirements, economic risks, leasing terms, and short- and long-term returns on capital. Rental income and tenant reimbursements from tenant leases provide the majority of revenues from all segments. The accounting policies of the reportable segments are the same as those described in Note 2. Information on the Company’s reportable segments is presented as follows:
| | | | | | | | | | | | | | | | |
Year Ended December 31, 2008 | | Malls | | Associated
Centers | | Community Centers | | All
Other (2) | | Total | |
| | | | | | | | | | | | |
Revenues | | $ | 1,020,683 | | $ | 43,471 | | $ | 14,753 | | $ | 59,311 | | $ | 1,138,218 | |
Property operating expenses (1) | | | (356,624 | ) | | (11,439 | ) | | (5,066 | ) | | 21,971 | | | (351,158 | ) |
Interest expense | | | (252,074 | ) | | (9,045 | ) | | (4,300 | ) | | (47,790 | ) | | (313,209 | ) |
Other expense | | | — | | | — | | | — | | | (33,333 | ) | | (33,333 | ) |
Gain on sales of real estate assets | | | 5,227 | | | 28 | | | 1,071 | | | 6,075 | | | 12,401 | |
| | | | | | | | | | | | |
Segment profit | | $ | 417,212 | | $ | 23,015 | | $ | 6,458 | | $ | 6,234 | | $ | 452,919 | |
| | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | | | | | | | | | | | | | | (332,475 | ) |
General and administrative expense | | | | | | | | | | | | | | | (45,241 | ) |
Interest and other income | | | | | | | | | | | | | | | 10,076 | |
Impairment of marketable securities | | | | | | | | | | | | | | | (17,181 | ) |
Equity in earnings of unconsolidated affiliates | | | | | | | | | | | | | | | 2,831 | |
Income tax provision | | | | | | | | | | | | | | | (13,495 | ) |
| | | | | | | | | | | | | | | | |
Income from continuing operations | | | | | | | | | | | | | | $ | 57,434 | |
| | | | | | | | | | | | | | | | |
Total assets | | $ | 6,884,654 | | $ | 343,440 | | $ | 73,508 | | $ | 732,733 | | $ | 8,034,335 | |
Capital expenditures (3) | | $ | 182,049 | | $ | 7,855 | | $ | 23,782 | | $ | 217,237 | | $ | 430,923 | |
| | | | | | | | | | | | | | | | |
Year Ended December 31, 2007 | | Malls | | Associated
Centers | | Community Centers | | All
Other (2) | | Total | |
| | | | | | | | | | | | |
Revenues | | $ | 956,742 | | $ | 43,213 | | $ | 9,009 | | $ | 30,980 | | $ | 1,039,944 | |
Property operating expenses (1) | | | (331,476 | ) | | (10,184 | ) | | (3,075 | ) | | 29,583 | | | (315,152 | ) |
Interest expense | | | (235,162 | ) | | (8,790 | ) | | (3,500 | ) | | (40,432 | ) | | (287,884 | ) |
Other expense | | | — | | | — | | | — | | | (18,525 | ) | | (18,525 | ) |
Gain (loss) on sales of real estate assets | | | 5,219 | | | (11 | ) | | (2,425 | ) | | 12,787 | | | 15,570 | |
| | | | | | | | | | | | |
Segment profit and loss | | $ | 395,323 | | $ | 24,228 | | $ | 9 | | $ | 14,393 | | $ | 433,953 | |
| | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | | | | | | | | | | | | | | (243,522 | ) |
General and administrative expense | | | | | | | | | | | | | | | (37,852 | ) |
Interest and other income | | | | | | | | | | | | | | | 10,923 | |
Impairment of marketable securities | | | | | | | | | | | | | | | (18,456 | ) |
Loss on extinguishment of debt | | | | | | | | | | | | | | | (227 | ) |
Equity in earnings of unconsolidated affiliates | | | | | | | | | | | | | | | 3,502 | |
Income tax provision | | | | | | | | | | | | | | | (8,390 | ) |
| | | | | | | | | | | | | | | | |
Income from continuing operations | | | | | | | | | | | | | | $ | 139,931 | |
| | | | | | | | | | | | | | | | |
Total assets | | $ | 6,876,842 | | $ | 351,003 | | $ | 188,441 | | $ | 688,761 | | $ | 8,105,047 | |
Capital expenditures (3) | | $ | 1,355,257 | | $ | 17,757 | | $ | 133,253 | | $ | 390,208 | | $ | 1,896,475 | |
66
| | | | | | | | | | | | | | | | |
Year Ended December 31, 2006 | | Malls | | Associated
Centers | | Community
Centers | | All
Other (2) | | Total | |
| | | | | | | | | | | | |
Revenues | | $ | 921,813 | | $ | 38,659 | | $ | 7,403 | | $ | 27,627 | | $ | 995,502 | |
Property operating expenses (1) | | | (311,094 | ) | | (9,228 | ) | | (2,356 | ) | | 28,382 | | | (294,296 | ) |
Interest expense | | | (214,709 | ) | | (4,681 | ) | | (2,826 | ) | | (34,851 | ) | | (257,067 | ) |
Other expense | | | — | | | — | | | — | | | (18,623 | ) | | (18,623 | ) |
Gain on sales of real estate assets | | | 4,405 | | | 1,033 | | | 34 | | | 9,033 | | | 14,505 | |
| | | | | | | | | | | | | | | | |
Segment profit and loss | | $ | 400,415 | | $ | 25,783 | | $ | 2,255 | | $ | 11,568 | | | 440,021 | |
| | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | | | | | | | | | | | | | | (228,531 | ) |
General and administrative expense | | | | | | | | | | | | | | | (39,522 | ) |
Interest and other income | | | | | | | | | | | | | | | 9,084 | |
Loss on extinguishment of debt | | | | | | | | | | | | | | | (935 | ) |
Impairment of real estate assets | | | | | | | | | | | | | | | (480 | ) |
Equity in earnings of unconsolidated affiliates | | | | | | | | | | | | | | | 5,295 | |
Income tax provision | | | | | | | | | | | | | | | (5,902 | ) |
| | | | | | | | | | | | | | | | |
Income from continuing operations | | | | | | | | | | | | | | $ | 179,030 | |
| | | | | | | | | | | | | | | | |
Total assets | | $ | 5,823,890 | | $ | 317,708 | | $ | 53,457 | | $ | 323,755 | | $ | 6,518,810 | |
Capital expenditures (3) | | $ | 285,560 | | $ | 42,952 | | $ | 3,606 | | $ | 157,399 | | $ | 489,517 | |
(1) | Property operating expenses include property operating, real estate taxes and maintenance and repairs. |
(2) | The All Other category includes mortgage notes receivable, Office Buildings, the Management Company and the Company’s subsidiary that provides security and maintenance services. |
| (3) | Amounts include acquisitions of real estate assets and investments in unconsolidated affiliates. Developments in progress are included in the All Other category. |
NOTE 12. SUPPLEMENTAL AND NONCASH INFORMATION
The Company paid cash for interest, net of amounts capitalized, in the amount of $319,680, $285,811 and $255,523 during 2008, 2007 and 2006, respectively.
The Company’s noncash investing and financing activities for 2008, 2007 and 2006 were as follows:
| | | | | | | | | | |
| | 2008 | | 2007 | | 2006 | |
| | | | | | | |
Accrued dividends and distributions | | $ | 43,592 | | $ | 64,384 | | $ | 59,305 | |
Additions to real estate assets accrued but not yet paid | | | 18,504 | | | 35,739 | | | 38,543 | |
Conversion of Operating Partnership units into common stock | | | — | | | — | | | 21,983 | |
Notes receivable from sale of real estate assets | | | 11,258 | | | 8,735 | | | 3,366 | |
Reclassification of developments in progress to mortgage and other notes receivable | | | 17,371 | | | — | | | — | |
Payable related to acquired marketable securities | | | — | | | — | | | 1,078 | |
Debt assumed to acquire property interests | | | — | | | 458,182 | | | — | |
Issuance of noncontrolling interest to acquire property interests | | | — | | | 416,443 | | | — | |
Net discount related to debt assumed to acquire property interests | | | — | | | 4,045 | | | — | |
Deconsolidation of joint ventures: | | | | | | | | | | |
Decrease in real estate assets | | | (51,607 | ) | | (181,159 | ) | | — | |
Decrease in mortgage notes payable | | | (9,058 | ) | | (190,800 | ) | | — | |
Increase (decrease) in noncontrolling interest | | | (3,257 | ) | | 2,103 | | | — | |
Increase (decrease) in investment in unconsolidated affiliates | | | 33,776 | | | (7,063 | ) | | — | |
Decrease in accounts payable and accrued liabilities | | | (5,516 | ) | | (475 | ) | | — | |
Consolidation of Imperial Valley Commons: | | | | | | | | | | |
Increase in real estate assets | | | — | | | 17,892 | | | — | |
Decrease in investment in unconsolidated affiliates | | | — | | | (17,892 | ) | | — | |
Deconsolidation of loan to third party: | | | | | | | | | | |
Increase in mortgage notes receivable | | | — | | | 6,527 | | | — | |
Decrease in real estate assets | | | — | | | (6,527 | ) | | — | |
NOTE 13. RELATED PARTY TRANSACTIONS
CBL’s Predecessor and certain officers of the Company have a significant noncontrolling interest in the construction company that the Company engaged to build substantially all of the Company’s development properties. The Company paid approximately $179,517, $235,539 and $221,151 to the construction company in 2008, 2007 and 2006, respectively, for construction and development activities. The Company had accounts payable to the construction company of $17,924 and $28,955 at December 31, 2008 and 2007, respectively.
The Management Company provides management, development and leasing services to the Company’s unconsolidated affiliates and other affiliated partnerships. Revenues recognized for these services amounted to $9,694, $3,584 and $3,219 in 2008, 2007 and 2006, respectively.
NOTE 14. CONTINGENCIES
The Company is currently involved in certain litigation that arises in the ordinary course of business. It is management’s opinion that the pending litigation will not materially affect the financial position or results of operations of the Company.
Additionally, management believes that, based on environmental studies completed to date, any exposure to environmental cleanup will not materially affect the financial position and results of operations of the Company.
As discussed in Note 3 above, the PJV units of CWJV pay an annual preferred distribution at a rate of 5.0%. Subsequent to October 16, 2008, Westfield has the right to have all or a portion of the PJV units redeemed by CWJV for, at Westfield’s election, cash or property. The Company will have the right, but not the obligation, to purchase the PJV units after October 16, 2012 at their liquidation value, plus accrued and unpaid distributions. On the earliest to occur of June 30, 2013, immediately prior to the redemption of the PJV units, or immediately prior to the liquidation of CWJV or Westfield’s PJV units in CWJV, Westfield’s capital account may be increased by a capital contribution adjustment amount (“CCAA”). The CCAA represents the excess, if any, of the fair value of a share of the Company’s common stock on the above-specified date less $32.00 multiplied by 2.6 million shares. However, in no event shall the CCAA be greater than $26,000. The Company accounts for this contingency using the method prescribed for earnings or other performance measure contingencies. As such, should the CCAA provision result in additional consideration to Westfield, the Company will record the current fair value of the consideration issued as a purchase price adjustment at the time the consideration is paid or payable.
Guarantees
We may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on our investment in the joint venture. We may receive a fee from the joint venture for providing the guaranty. Additionally, when we issue a guaranty, the terms of the joint venture agreement typically provide that we may receive indemnification from the joint venture.
We own a parcel of land that we are ground leasing to a third party developer for the purpose of developing a shopping center. We have guaranteed 27% of the third party’s construction loan and bond line of credit (the “loans”) of which the maximum guaranteed amount is $31,554. The total amount outstanding at December 31, 2008 on the loans was $35,710 of which we have guaranteed $9,642. We recorded an obligation of $315 in our consolidated balance sheet as of December 31, 2008 and 2007 to reflect the estimated fair value of the guaranty.
We have guaranteed 100% of the construction loan of West Melbourne, an unconsolidated affiliate in which the Company owns a 50% interest, of which the maximum guaranteed amount is $67,000. West Melbourne is currently developing Hammock Landing, an open-air shopping center in West Melbourne, FL. The
total amount outstanding at December 31, 2008 on the loan was $31,177. The guaranty will expire upon repayment of the debt. The loan matures in August 2010. We have recorded an obligation of $670 in the accompanying condensed consolidated balance sheet as of December 31, 2008 to reflect the estimated fair value of this guaranty.
We have guaranteed 100% of the construction loan of Port Orange, an unconsolidated affiliate in which the Company owns a 50% interest, of which the maximum guaranteed amount is $112,000. Port Orange is currently developing The Pavilion at Port Orange, an open-air shopping center in Port Orange, FL. The total amount outstanding at December 31, 2008 on the loan was $33,384. The guaranty will expire upon repayment of the debt. The loan matures in June 2011. We have recorded an obligation of $1,120 in the accompanying condensed consolidated balance sheet as of December 31, 2008 to reflect the estimated fair value of this guaranty.
We have guaranteed the lease performance of York Town Center, LP (“YTC”), an unconsolidated affiliate in which we own a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. We have guaranteed YTC’s performance under this agreement up to a maximum of $22,000, which decreases by $800 annually until the guaranteed amount is reduced to $10,000. The guaranty expires on December 31, 2020. The maximum guaranteed obligation was $20,400 million as of December 31, 2008. We entered into an agreement with our joint venture partner under which the joint venture partner has agreed to reimburse us 50% of any amounts we are obligated to fund under the guaranty. We did not record an obligation for this guaranty because we determined that the fair value of the guaranty is not material.
Performance Bonds
The Company has issued various bonds that it would have to satisfy in the event of non-performance. The total amount outstanding on these bonds was $45,447 and $40,169 at December 31, 2008 and 2007, respectively.
Ground Leases
The Company is the lessee of land at certain of its properties under long-term operating leases, which include scheduled increases in minimum rents. The Company recognizes these scheduled rent increases on a straight-line basis over the initial lease terms. Most leases have initial terms of at least 20 years and contain one or more renewal options, generally for a minimum of five- or 10-year periods. Lease expense recognized in the consolidated statements of operations for 2008, 2007 and 2006 was $2,807, $1,441 and $1,323, respectively.
The future obligations under these operating leases at December 31, 2008, are as follows:
2009 | $ 2,428 |
2010 | 2,433 |
2011 | 2,539 |
2012 | 2,470 |
2013 | 2,511 |
Thereafter | 77,586 |
| $ 89,967 |
NOTE 15. FAIR VALUE MEASUREMENTS
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. In February 2008, the FASB issued FSP 157-2
which delays the effective date of SFAS No. 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. The Company adopted the provisions of SFAS No. 157 for financial assets and financial liabilities on January 1, 2008.
In accordance with SFAS No. 157, the Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy based on whether the inputs to valuation techniques are observable or unobservable. The fair value hierarchy, as defined by SFAS No. 157, contains three levels of inputs that may be used to measure fair value as follows:
Level 1 – Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.
Level 2 – Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.
Level 3 – Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability. Market valuations must often be determined using discounted cash flow methodologies, pricing models or similar techniques based on the Company’s assumptions and best judgment.
The following table sets forth information regarding the Company’s financial instruments that are measured at fair value in the Consolidated Balance Sheet as of December 31, 2008:
| | | | Fair Value Measurements at Reporting Date Using
| |
|---|
| | Fair Value at December 31,
2008
| | Quoted Prices in Active Markets
for Identical Assets (Level 1)
| | Significant Other
Observable Inputs (Level 2)
| | Significant Unobservable
Inputs (Level 3)
| |
|---|
| Assets: | | | | | | | | | | | | | | |
| Available-for-sale securities | | | $ | 4,209 | | $ | 4,209 | | $ | — | | $ | — | |
| Privately held debt and equity securities | | | | 4,875 | | | — | | | — | | | 4,875 | |
| | | |
| Liabilities: | | | | | | | | | | | | | | |
| Interest rate hedge instruments | | | $ | 15,540 | | $ | — | | $ | 15,540 | | $ | — | |
Other assets in the consolidated balance sheets include marketable securities consisting of corporate equity securities that are classified as available for sale. Net unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of accumulated other comprehensive loss in redeemable noncontrolling interests, shareholders’ equity and noncontrolling interests. During 2008, it was determined that certain marketable securities were impaired on an other-than-temporary basis. Due to this, the Company recognized total write-downs of $17,181 during the year ended December 31, 2008 to reduce the carrying value of those investments to their total fair value of $4,207. During the year ended December 31, 2008, the Company did not recognize any realized gains and losses related to sales or disposals of marketable securities. The fair value of the Company’s available-for-sale securities is based on quoted market prices and, thus, is classified under Level 1.
The Company holds a convertible note receivable from, and a warrant to acquire shares of, Jinsheng Group, in which the Company also holds a cost-method investment. See Note 4 for additional information. The convertible note receivable is non-interest bearing and is secured by shares of the private entity. Since the convertible note receivable is non-interest bearing and there is no active market for the entity’s debt, the Company performed an analysis on the note considering credit risk and discounting factors to determine the fair value. The warrant was valued using estimated share price and volatility variables in a Black Scholes model. Due to the
significant estimates and assumptions used in the valuation of the note and warrant, the Company has classified these under Level 3. During the year ended December 31, 2008, there were no changes in the fair values of the note and warrant.
The Company uses interest rate swaps and caps to mitigate the effect of interest rate movements on its variable-rate debt. The interest rate hedge instruments are accounted for in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and related amendments. The Company currently has four interest rate swaps and one interest rate cap included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets that qualify as hedging instruments and are designated as cash flow hedges. The swaps and cap have predominantly met the effectiveness test criteria since inception and changes in their fair values are, thus, primarily reported in other comprehensive loss and will be reclassified into earnings in the same period or periods during which the hedged item affects earnings. The Company has engaged a third party firm to calculate the valuations for its interest rate swaps. The fair values of the Company’s interest rate hedges, classified under Level 2, are determined using a proprietary model which is based on prevailing market data for contracts with matching durations, current and anticipated LIBOR or other interest basis information, consideration of the Company’s credit standing, credit risk of the counterparties and reasonable estimates about relevant future market conditions.
SFAS No. 157 requires separate disclosure of assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a nonrecurring basis. As of December 31, 2008, no assets or liabilities were measured at fair value on a nonrecurring basis.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company adopted SFAS No. 159 on January 1, 2008, and has elected not to apply the fair value option.
The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments. Based on the interest rates for similar financial instruments, the carrying value of mortgage notes receivable is a reasonable estimate of fair value. The fair value of mortgage and other notes payable was $5,506,725 and $5,640,130 at December 31, 2008 and 2007, respectively. The fair value was calculated by discounting future cash flows for the notes payable using estimated market rates at which similar loans would be made currently.
NOTE 16. SHARE-BASED COMPENSATION
The Company maintains the CBL & Associates Properties, Inc. Amended and Restated Stock Incentive Plan, as amended, which permits the Company to issue stock options and common stock to selected officers, employees and directors of the Company up to a total of 10,400,000 shares. The compensation committee of the board of directors (the “Committee”) administers the plan.
Historically, the Company accounted for its stock-based compensation plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB No. 25”), and related interpretations. Effective January 1, 2003, the Company elected to begin recording the expense associated with stock options granted after January 1, 2003, on a prospective basis in accordance with the fair value and transition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – An Amendment of FASB Statement No. 123.
Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment, using the modified-prospective-transition method. Under that transition method, compensation cost recognized during the year ended December 31, 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value
estimated in accordance with the original provisions of SFAS No. 123 and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). Under SFAS No. 123(R), share-based payments are not recorded as shareholders’ equity until the related compensation expense is recognized. Accordingly, the Company reclassified $8,895 from the deferred compensation line item in shareholders’ equity to additional-paid in capital as of January 1, 2006. Results for prior periods were not restated.
The compensation cost that has been charged against income for the plan was $3,961, $5,985 and $5,632 for 2008, 2007 and 2006, respectively. Compensation cost resulting from share-based awards is recorded at the Management Company, which is a taxable entity. The income tax benefit resulting from stock-based compensation of $7,472 and $9,104 in 2008 and 2007, respectively, has been reflected as a financing cash flow in the consolidated statements of cash flows. Compensation cost capitalized as part of real estate assets was $844, $786 and $947 in 2008, 2007 and 2006, respectively.
Stock Options
Stock options issued under the plan allow for the purchase of common stock at the fair market value of the stock on the date of grant. Stock options granted to officers and employees vest and become exercisable in equal installments on each of the first five anniversaries of the date of grant and expire 10 years after the date of grant. Stock options granted to independent directors are fully vested upon grant; however, the independent directors may not sell, pledge or otherwise transfer their stock options during their board term or for one year thereafter. No stock options have been granted since 2002.
The Company’s stock option activity for the year ended December 31, 2008 is summarized as follows:
| Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term | | Aggregate Intrinsic Value |
Outstanding at January 1, 2008 | 652,030 | | $ 15.71 | | | | |
Exercised | (44,015) | | $ 13.26 | | | | |
Outstanding at December 31, 2008 | 608,015 | | $ 15.89 | | 2.6 | | $ - |
Vested and exercisable at December 31, 2008 | 608,015 | | $ 15.89 | | 2.6 | | $ - |
| | | | | | | |
The total intrinsic value of options exercised during 2008, 2007 and 2006 was $488, $17,581 and $19,898, respectively.
Stock Awards
Under the plan, common stock may be awarded either alone, in addition to, or in tandem with other stock awards granted under the plan. The Committee has the authority to determine eligible persons to whom common stock will be awarded, the number of shares to be awarded and the duration of the vesting period, as defined. Generally, an award of common stock vests either immediately at grant, in equal installments over a period of five years or in one installment at the end of periods up to five years. The Committee may also provide for the issuance of common stock under the plan on a deferred basis pursuant to deferred compensation arrangements. The fair value of common stock awarded under the plan is determined based on the market price of the Company’s common stock on the grant date and the related compensation expense is recognized over the vesting period on a straight-line basis.
A summary of the status of the Company’s stock awards as of December 31, 2008, and changes during the year ended December 31, 2008, is presented below:
| Shares | | Weighted Average Grant-Date Fair Value |
Nonvested at January 1, 2008 | 298,330 | | $ 36.73 |
Granted | 174,080 | | $ 20.44 |
Vested | (200,420) | | $ 26.75 |
Forfeited | (14,150) | | $ 33.26 |
Nonvested at December 31, 2008 | 257,840 | | $ 33.60 |
| | | |
The weighted average grant-date fair value of shares granted during 2008, 2007 and 2006 was $20.44, $34.66 and $39.73, respectively. The total fair value of shares vested during 2008, 2007 and 2006 was $3,952, $6,064 and $6,753, respectively.
As of December 31, 2008, there was $6,052 of total unrecognized compensation cost related to nonvested stock awards granted under the plan, which is expected to be recognized over a weighted average period of 2.4 years.
NOTE 17. EMPLOYEE BENEFIT PLANS
Postretirement Benefits
Effective March 1, 2008, the Company adopted an unfunded plan to provide medical insurance coverage for up to two years to any retirees with thirty or more years of service and no eligibility for any other group health plan coverage or Medicare. The Company accounts for the plan pursuant to SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions. The Company elected to account for the obligation using the transition methodology. During the year ended December 31, 2008, the Company incurred a total charge of $225 related to the plan. Election of the transition methodology resulted in an unrecognized transition cost of $421 as of December 31, 2008.
During 2008, the Company incurred expenses of approximately $3.0 million related to certain benefits and severance packages granted to several senior officers upon their retirement and severance expenses granted to certain Development and other personnel impacted by the Company’s staff reduction plan.
401(k) Plan
The Management Company maintains a 401(k) profit sharing plan, which is qualified under Section 401(a) and Section 401(k) of the Code to cover employees of the Management Company. All employees who have attained the age of 21 and have completed at least 90 days of service are eligible to participate in the plan. The plan provides for employer matching contributions on behalf of each participant equal to 50% of the portion of such participant’s contribution that does not exceed 2.5% of such participant’s compensation for the plan year. Additionally, the Management Company has the discretion to make additional profit-sharing-type contributions not related to participant elective contributions. Total contributions by the Management Company were $1,138, $1,172 and $1,157 in 2008, 2007 and 2006, respectively.
Employee Stock Purchase Plan
The Company maintains an employee stock purchase plan that allows eligible employees to acquire shares of the Company’s common stock in the open market without incurring brokerage or transaction fees. Under the plan, eligible employees make payroll deductions that are used to purchase shares of the Company’s common stock. The shares are purchased at the prevailing market price of the stock at the time of purchase.
Deferred Compensation Arrangements
The Company has entered into agreements with certain of its officers that allow the officers to defer receipt of selected salary increases and/or bonus compensation for periods ranging from 5 to 10 years. For certain officers, the deferred compensation arrangements provide that when the salary increase or bonus compensation is earned and deferred, shares of the Company’s common stock issuable under the Amended and Restated Stock Incentive Plan are deemed set aside for the amount deferred. The number of shares deemed set aside is determined by dividing the amount of compensation deferred by the fair value of the Company’s common stock on the deferral date, as defined in the arrangements. The shares set aside are deemed to receive dividends equivalent to those paid on the Company’s common stock, which are then deemed to be reinvested in the Company’s common stock in accordance with the Company’s dividend reinvestment plan. When an arrangement terminates, the Company will issue shares of the Company’s common stock to the officer equivalent to the number of shares deemed to have accumulated under the officer’s arrangement. The Company accrues compensation expense related to these agreements as the compensation is earned during the term of the agreement.
In October 2008, the Company issued 7,308 shares of common stock to an officer as a result of the termination of that officer’s deferred compensation agreement.
In December 2007, the Company issued 2,683 shares of common stock to an officer as a result of the termination of that officer’s deferred compensation agreement.
At December 31, 2008 and 2007, respectively, there were 51,251 and 47,601 shares that were deemed set aside in accordance with these arrangements.
For other officers, the deferred compensation arrangements provide that their bonus compensation is deferred in the form of a note payable to the officer. Interest accumulates on these notes at 5.0%. When an arrangement terminates, the note payable plus accrued interest is paid to the officer in cash. At December 31, 2008 and 2007, respectively, the Company had notes payable, including accrued interest, of $276 and $224 related to these arrangements.
NOTE 18. OPERATING PARTNERSHIP
Condensed consolidated financial statement information for the Operating Partnership is presented as follows:
| | | | | | | |
| | December 31, | |
| | | |
| | 2008 | | 2007 | |
| | | | | |
ASSETS: | | | | | | | |
Net investment in real estate assets | | $ | 7,321,480 | | $ | 7,402,278 | |
Other assets | | | 1,169,093 | | | 1,006,993 | |
| | | | | | | |
Total assets | | $ | 8,490,573 | | $ | 8,409,271 | |
| | | | | | | |
LIABILITIES: | | | | | | | |
Mortgage and other notes payable | | $ | 6,095,676 | | $ | 5,869,318 | |
Other liabilities | | | 305,262 | | | 358,566 | |
| | | | | | | |
Total liabilities | | | 6,400,938 | | | 6,227,884 | |
| | | | | | | |
Redeemable noncontrolling interests | | | 427,600 | | | 426,127 | |
| | | | | | | |
Partners’ capital | | | 1,660,737 | | | 1,751,165 | |
Noncontrolling interests | | | 1,298 | | | 4,095 | |
| | | | | | | |
Total partners’ capital and noncontrolling interests | | | 1,662,035 | | | 1,755,260 | |
| | | | | | | |
Total liabilities, redeemable noncontrolling interests, partners’ capital and noncontrolling interests | | $ | 8,490,573 | | $ | 8,409,271 | |
| | | | | | | |
| | | | | | | | | | |
| | Year Ended December 31, | |
| | | |
| | 2008 | | 2007 | | 2006 | |
| | | | | | | |
| | | | | | | | | | |
Total revenues | | $ | 1,138,218 | | $ | 1,039,927 | | $ | 995,380 | |
Depreciation and amortization | | | (332,475 | ) | | (243,522 | ) | | (228,453 | ) |
Other operating expenses | | | (429,256 | ) | | (370,953 | ) | | (349,194 | ) |
| | | | | | | | | | |
Income from operations | | | 376,487 | | | 425,452 | | | 417,733 | |
Interest and other income | | | 10,073 | | | 10,919 | | | 9,078 | |
Interest expense | | | (313,207 | ) | | (287,881 | ) | | (257,065 | ) |
Loss on extinguishment of debt | | | — | | | (227 | ) | | (935 | ) |
Impairment of marketable securities | | | (17,181 | ) | | (18,456 | ) | | — | |
Gain on sales of real estate assets | | | 12,401 | | | 15,570 | | | 14,505 | |
Equity in earnings of unconsolidated affiliates | | | 2,831 | | | 3,502 | | | 5,295 | |
Income tax provision | | | (13,495 | ) | | (8,390 | ) | | (5,902 | ) |
| | | | | | | | | | |
Income from continuing operations | | | 57,909 | | | 140,489 | | | 182,709 | |
Operating income of discontinued operations | | | 1,809 | | | 1,621 | | | 4,538 | |
Gain on discontinued operations | | | 3,798 | | | 6,056 | | | 8,392 | |
| | | | | | | | | | |
Net income | | | 63,516 | | | 148,166 | | | 195,639 | |
Noncontrolling interest in earnings of other consolidated subsidiaries | | | (23,959 | ) | | (12,215 | ) | | (4,136 | ) |
| | | | | | | | | | |
Net income attributable to partners of operating partnership | | $ | 39,557 | | $ | 135,951 | | $ | 191,503 | |
| | | | | | | | | | |
NOTE 19. SUBSEQUENT EVENTS
In January 2009, the Company entered into a $129,000 interest rate cap agreement, effective February 1, 2009, to hedge the risk of changes in cash flows on an amount of the Company’s debt principal equal to the outstanding cap notional. The interest rate cap protects the Company from increases in the hedged cash flows attributable to overall changes in 1-month LIBOR above the strike rate of the cap on the debt. The strike rate associated with the interest rate cap is 3.25%. The interest rate cap matures on July 12, 2010. This interest rate cap was not designated as a hedge instrument.
In February 2009, the Company negotiated a divestment agreement with its Macapa partners obligating the Company to fund an additional $592 to reimburse the other partners for previously incurred land acquisition costs in exchange for the termination of any future obligations on the part of the Company to fund development costs, and to provide the other partners the option to purchase the Company’s interest in this partnership for an amount equal to its investment balance.
In February 2009, the Company negotiated the exercise of its put option right to divest of its portion of the investment in the TENCO-CBL Servicos Imobiliarios S.A. pursuant to the joint venture’s governing agreement, under which agreement TENCO Realty S.A. will pay the Company $250 on March 31, 2009, pay monthly installments beginning January 2010 totaling $252 annually with an interest rate of 10% and pay the remaining principal in the form of a balloon payment totaling approximately $1,250 on December 31, 2011.
In February 2009, the Company announced that its dividend for the first quarter of 2009 of $0.37 per share will be paid in a combination of cash and shares of its common stock as part of the Company’s effort to continue to maximize liquidity. The Company intends that the aggregate cash component will not exceed 40% of the aggregate dividend amount. The Company anticipates that this will generate additional available cash of approximately $19.0 million. The board of directors will evaluate the nature and amount of the Company’s dividends each quarter, but if it were to be determined to maintain quarterly dividends consistent with that for the first quarter of 2009, it is estimated that additional available cash of approximately $70.0 million on an annual basis would be generated.
In June 2009, the Company completed an offering of 66,630,000 shares of its $0.01 par value common stock at $6.00 per share. The net proceeds of approximately $381,838 were used to repay outstanding borrowings under the Company’s credit facilities and for general corporate purposes.
NOTE 20. QUARTERLY INFORMATION (UNAUDITED)
The following quarterly information differs from previously reported results since the results of operations of certain long-lived assets disposed of subsequent to each quarter end in 2008 have been reclassified to discontinued operations for all periods presented.
| | | | | | | | | | | | | | | | |
Year Ended December 31, 2008 | | First
Quarter | | Second
Quarter | | Third
Quarter | | Fourth
Quarter | | Total (1) | |
| | |
Total revenues | | $ | 280,931 | | $ | 272,484 | | $ | 285,405 | | $ | 299,398 | | $ | 1,138,218 | |
Income from operations | | | 95,934 | | | 98,770 | | | 101,084 | | | 80,223 | | | 376,011 | |
Income (loss) from continuing operations | | | 22,134 | | | 24,743 | | | 17,181 | | | (6,624 | ) | | 57,434 | |
Discontinued operations | | | 283 | | | 4,165 | | | 802 | | | 357 | | | 5,607 | |
Net income (loss) | | | 22,417 | | | 28,908 | | | 17,983 | | | (6,267 | ) | | 63,041 | |
Net income(loss) attributable to the Company | | | 11,626 | | | 15,121 | | | 9,440 | | | (4,600 | ) | | 31,587 | |
Net income (loss) available to common shareholders | | | 6,172 | | | 9,665 | | | 3,986 | | | (10,055 | ) | | 9,768 | |
Basic per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations, net of preferred dividends | | $ | 0.08 | | $ | 0.10 | | $ | 0.05 | | $ | (0.14 | ) | $ | 0.09 | |
Net income (loss) available to common shareholders | | $ | 0.09 | | $ | 0.14 | | $ | 0.06 | | $ | (0.14 | ) | $ | 0.14 | |
| | | | | | | | | | | | | | | | |
Diluted per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations, net of preferred dividends | | $ | 0.08 | | $ | 0.10 | | $ | 0.05 | | $ | (0.14 | ) | $ | 0.09 | |
Net income (loss) available to common shareholders | | $ | 0.09 | | $ | 0.14 | | $ | 0.06 | | $ | (0.14 | ) | $ | 0.14 | |
| | | | | | | | | | | | | | | | |
Year Ended December 31, 2007 | | First
Quarter | | Second
Quarter | | Third
Quarter | | Fourth
Quarter | | Total (1) | |
| | |
Total revenues | | $ | 249,018 | | $ | 246,289 | | $ | 250,999 | | $ | 293,638 | | $ | 1,039,944 | |
Income from operations | | | 99,572 | | | 97,797 | | | 101,128 | | | 126,396 | | | 424,893 | |
Income from continuing operations | | | 39,288 | | | 34,700 | | | 33,141 | | | 32,802 | | | 139,931 | |
Discontinued operations | | | 48 | | | 590 | | | 4,809 | | | 2,230 | | | 7,677 | |
Net income | | | 39,336 | | | 35,290 | | | 37,952 | | | 35,030 | | | 147,608 | |
Net income attributable to the Company | | | 25,043 | | | 22,688 | | | 22,543 | | | 18,873 | | | 89,147 | |
Net income available to common shareholders | | | 17,401 | | | 11,465 | | | 17,088 | | | 13,418 | | | 59,372 | |
Basic per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
Income from continuing operations, net of preferred dividends | | $ | 0.25 | | $ | 0.16 | | $ | 0.20 | | $ | 0.17 | | $ | 0.78 | |
Net income available to common shareholders | | $ | 0.25 | | $ | 0.16 | | $ | 0.24 | | $ | 0.19 | | $ | 0.84 | |
| | | | | | | | | | | | | | | | |
Diluted per share data attributable to common shareholders: | | | | | | | | | | | | | | | | |
Income from continuing operations, net of preferred dividends | | $ | 0.24 | | $ | 0.16 | | $ | 0.20 | | $ | 0.17 | | $ | 0.78 | |
Net income available to common shareholders | | $ | 0.25 | | $ | 0.16 | | $ | 0.24 | | $ | 0.19 | | $ | 0.84 | |
(1) The sum of quarterly earnings per share may differ from annual earnings per share due to rounding.
Schedule II
CBL & Associates Properties, Inc.
Valuation and Qualifying Accounts
(in thousands)
| | Year Ended December 31, | |
| | 2008 | | | | 2007 | | | | 2006 | |
Allowance for doubtful accounts: | | | | | | | | | | | | | | |
Balance, beginning of year | | $ | 1,126 | | | | $ | 1,128 | | | | $ | 3,439 | |
Additions (reductions) in allowance charged to expense | | | 9,372 | | | | | 1,288 | | | | | (1,097 | ) |
Bad debts charged against allowance | | | (8,588 | ) | | | | (1,290 | ) | | | | (1,214 | ) |
Balance, end of year | | $ | 1,910 | | | | $ | 1,126 | | | | $ | 1,128 | |
SCHEDULE III
CBL & ASSOCIATES PROPERTIES, INC.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2008
(In Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost(A) | | | | | Gross Amounts at Which Carried at Close of Period | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Description /Location | | (B)
Encumbrances | | Land | | Buildings and
Improvements | | Costs
Capitalized
Subsequent to
Acquisition | | Sales of
Outparcel
Land | | Land | | Buildings and
Improvements | | Total (C) | | (D)
Accumulated
Depreciation | | Date of
Construction
/ Acquisition | |
| | | | | | | | | | | | | | | | | | | | | | |
MALLS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Alamance Crossing, Burlington, NC | | $ | 74,413 | | $ | 20,853 | | $ | 62,799 | | $ | 14,000 | | $ | (1,802 | ) | $ | 19,051 | | $ | 76,799 | | $ | 95,850 | | $ | 3,724 | | 2007 | |
Arbor Place, Douglasville, GA | | | 71,148 | | | 7,862 | | | 95,330 | | | 19,327 | | | — | | | 7,862 | | | 114,657 | | | 122,519 | | | 32,744 | | 1998-1999 | |
Asheville Mall, Asheville, NC | | | 64,634 | | | 7,139 | | | 58,747 | | | 35,528 | | | (805 | ) | | 6,334 | | | 94,275 | | | 100,609 | | | 24,662 | | 1998 | |
Bonita Lakes Mall, Meridian, MS | | | 23,319 | | | 4,924 | | | 31,933 | | | 6,389 | | | (985 | ) | | 4,924 | | | 37,337 | | | 42,261 | | | 12,837 | | 1997 | |
Brookfield Square, Brookfield, WI | | | 100,028 | | | 8,996 | | | 84,250 | | | 39,214 | | | — | | | 9,187 | | | 123,273 | | | 132,460 | | | 19,733 | | 2001 | |
Burnsville Center, Burnsville, MN | | | 63,414 | | | 12,804 | | | 71,355 | | | 43,533 | | | (1,157 | ) | | 16,102 | | | 110,433 | | | 126,535 | | | 28,092 | | 1998 | |
Cary Towne Center, Cary, NC | | | 82,203 | | | 23,688 | | | 74,432 | | | 22,064 | | | — | | | 23,701 | | | 96,483 | | | 120,184 | | | 19,182 | | 2001 | |
Chapel Hill Mall, Akron, OH | | | 74,743 | | | 6,578 | | | 68,043 | | | 12,325 | | | — | | | 6,578 | | | 80,368 | | | 86,946 | | | 9,659 | | 2004 | |
CherryVale Mall, Rockford, IL | | | 89,360 | | | 11,892 | | | 63,973 | | | 47,559 | | | (1,667 | ) | | 11,608 | | | 110,149 | | | 121,757 | | | 18,205 | | 2001 | |
Chesterfield Mall, Chesterfield, MO | | | 137,951 | | | 11,083 | | | 282,140 | | | (437 | ) | | — | | | 11,083 | | | 281,703 | | | 292,786 | | | 12,091 | | 2007 | |
Citadel Mall, Charleston, SC | | | 73,535 | | | 11,443 | | | 44,008 | | | 11,207 | | | (1,289 | ) | | 10,607 | | | 54,762 | | | 65,369 | | | 11,297 | | 2001 | |
College Square, Morristown, TN (E) | | | — | | | 2,954 | | | 17,787 | | | 22,212 | | | (27 | ) | | 2,927 | | | 39,999 | | | 42,926 | | | 13,234 | | 1987-1988 | |
Columbia Place, Columbia, SC | | | 30,118 | | | 10,808 | | | 52,348 | | | 9,906 | | | (423 | ) | | 10,385 | | | 62,254 | | | 72,639 | | | 11,320 | | 2002 | |
CoolSprings Galleria, Nashville, TN | | | 123,305 | | | 13,527 | | | 86,755 | | | 48,120 | | | — | | | 13,527 | | | 134,875 | | | 148,402 | | | 53,807 | | 1989-1991 | |
Cross Creek Mall, Fayetteville, NC | | | 64,351 | | | 19,155 | | | 104,353 | | | 9,718 | | | — | | | 19,155 | | | 114,071 | | | 133,226 | | | 19,344 | | 2003 | |
Eastland Mall, Bloominton, IL | | | 59,400 | | | 5,746 | | | 75,893 | | | 2,518 | | | — | | | 6,057 | | | 78,100 | | | 84,157 | | | 9,411 | | 2005 | |
East Towne Mall, Madison, WI | | | 76,163 | | | 4,496 | | | 63,867 | | | 38,565 | | | (366 | ) | | 4,130 | | | 102,432 | | | 106,562 | | | 19,159 | | 2002 | |
Eastgate Mall, Cincinnati, OH | | | 61,075 | | | 13,046 | | | 44,949 | | | 24,289 | | | (879 | ) | | 12,167 | | | 69,238 | | | 81,405 | | | 13,848 | | 2001 | |
Fashion Square, Saginaw, MI | | | 54,474 | | | 15,218 | | | 64,970 | | | 10,008 | | | — | | | 15,218 | | | 74,978 | | | 90,196 | | | 16,259 | | 2001 | |
Fayette Mall, Lexington, KY | | | 88,662 | | | 20,707 | | | 84,267 | | | 40,955 | | | 11 | | | 20,718 | | | 125,222 | | | 145,940 | | | 22,877 | | 2001 | |
Frontier Mall, Cheyenne, WY (E) | | | — | | | 2,681 | | | 15,858 | | | 14,175 | | | — | | | 2,681 | | | 30,033 | | | 32,714 | | | 14,052 | | 1984-1985 | |
Foothills Mall, Maryville, TN (E) | | | — | | | 4,536 | | | 14,901 | | | 10,990 | | | — | | | 4,536 | | | 25,891 | | | 30,427 | | | 13,525 | | 1996 | |
Georgia Square, Athens, GA (E) | | | — | | | 2,982 | | | 31,071 | | | 30,883 | | | (31 | ) | | 2,951 | | | 61,954 | | | 64,905 | | | 26,022 | | 1982 | |
Greenbriar Mall, Chesapeake, VA | | | 82,421 | | | 3,181 | | | 107,355 | | | 4,946 | | | (626 | ) | | 2,555 | | | 112,301 | | | 114,856 | | | 13,829 | | 2004 | |
Hamilton Place, Chattanooga, TN | | | 113,420 | | | 2,422 | | | 40,757 | | | 26,471 | | | (441 | ) | | 1,981 | | | 67,228 | | | 69,209 | | | 28,077 | | 1986-1987 | |
Hanes Mall, Winston-Salem, NC | | | 163,730 | | | 17,176 | | | 133,376 | | | 38,541 | | | (948 | ) | | 16,808 | | | 171,337 | | | 188,145 | | | 33,470 | | 2001 | |
Harford Mall, Bel Air, MD (E) | | | — | | | 8,699 | | | 45,704 | | | 20,677 | | | — | | | 8,699 | | | 66,381 | | | 75,080 | | | 7,448 | | 2003 | |
78
SCHEDULE III
CBL & ASSOCIATES PROPERTIES, INC.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2008
(In Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost(A) | | | | | Gross Amounts at Which Carried at Close of Period | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Description /Location | | (B)
Encumbrances | | Land | | Buildings and
Improvements | | Costs
Capitalized
Subsequent to
Acquisition | | Sales of
Outparcel
Land | | Land | | Buildings and
Improvements | | Total (C) | | (D)
Accumulated
Depreciation | | Date of
Construction
/ Acquisition | |
| | | | | | | | | | | | | | | | | | | | | | |
Hickory Hollow Mall, Nashville, TN | | | 34,194 | | | 13,813 | | | 111,431 | | | 18,935 | | | — | | | 15,163 | | | 129,016 | | | 144,179 | | | 33,385 | | 1998 | |
Hickory Point, Decatur, IL | | | 31,817 | | | 10,732 | | | 31,728 | | | 7,641 | | | (292 | ) | | 10,440 | | | 39,369 | | | 49,809 | | | 6,509 | | 2005 | |
Honey Creek Mall, Terre Haute, IN | | | 30,623 | | | 3,108 | | | 83,358 | | | 7,694 | | | — | | | 3,108 | | | 91,052 | | | 94,160 | | | 11,156 | | 2004 | |
JC Penney Store, Maryville, TN (E) | | | — | | | — | | | 2,650 | | | — | | | — | | | — | | | 2,650 | | | 2,650 | | | 1,612 | | 1983 | |
Janesville Mall, Janesville, WI | | | 10,152 | | | 8,074 | | | 26,009 | | | 5,442 | | | — | | | 8,074 | | | 31,451 | | | 39,525 | | | 9,082 | | 1998 | |
Jefferson Mall, Louisville, KY | | | 39,634 | | | 13,125 | | | 40,234 | | | 19,420 | | | — | | | 13,125 | | | 59,654 | | | 72,779 | | | 11,613 | | 2001 | |
The Lakes Mall, Muskegon, MI (E) | | | — | | | 3,328 | | | 42,366 | | | 8,684 | | | — | | | 3,328 | | | 51,050 | | | 54,378 | | | 13,738 | | 2000-2001 | |
Lakeshore Mall, Sebring, FL | | | — | | | 1,443 | | | 28,819 | | | 4,875 | | | (169 | ) | | 1,274 | | | 33,694 | | | 34,968 | | | 13,517 | | 1991-1992 | |
Laurel Park, Livonia, MI | | | 53,848 | | | 13,289 | | | 92,579 | | | 7,556 | | | — | | | 13,289 | | | 100,135 | | | 113,424 | | | 13,228 | | 2005 | |
Layton Hills Mall, Layton, UT | | | 105,111 | | | 20,464 | | | 99,836 | | | 2,651 | | | (275 | ) | | 20,189 | | | 102,487 | | | 122,676 | | | 14,086 | | 2005 | |
Madison Square, Huntsville, AL (E) | | | — | | | 17,596 | | | 39,186 | | | 19,721 | | | — | | | 17,596 | | | 58,907 | | | 76,503 | | | 10,896 | | 1984 | |
Mall del Norte, Laredo, TX | | | 113,400 | | | 21,734 | | | 142,049 | | | 42,339 | | | — | | | 21,734 | | | 184,388 | | | 206,122 | | | 22,630 | | 2004 | |
Mall of Acadiana, Lafayette, LA | | | 147,061 | | | 22,511 | | | 145,769 | | | 2,776 | | | — | | | 22,511 | | | 148,545 | | | 171,056 | | | 25,321 | | 2005 | |
Meridian Mall, Lansing, MI | | | 40,000 | | | 529 | | | 103,678 | | | 64,928 | | | — | | | 2,232 | | | 166,903 | | | 169,135 | | | 41,538 | | 1998 | |
Midland Mall, Midland, MI | | | 36,886 | | | 10,321 | | | 29,429 | | | 5,775 | | | — | | | 10,321 | | | 35,204 | | | 45,525 | | | 8,388 | | 2001 | |
Mid Rivers Mall, St. Peters, MO | | | 82,052 | | | 16,384 | | | 170,582 | | | 4,257 | | | — | | | 16,384 | | | 174,839 | | | 191,223 | | | 7,677 | | 2007 | |
Monroeville Mall, Pittsburgh, PA | | | 122,636 | | | 21,263 | | | 177,214 | | | 13,123 | | | — | | | 21,271 | | | 190,329 | | | 211,600 | | | 24,326 | | 2004 | |
Northpark Mall, Joplin, MO | | | 38,473 | | | 9,977 | | | 65,481 | | | 27,380 | | | — | | | 10,962 | | | 91,876 | | | 102,838 | | | 11,961 | | 2004 | |
Northwoods Mall, Charleston, SC | | | 56,744 | | | 14,867 | | | 49,647 | | | 16,414 | | | (1,844 | ) | | 13,023 | | | 66,061 | | | 79,084 | | | 13,583 | | 2001 | |
Oak Hollow Mall, High Point, NC | | | 38,183 | | | 5,237 | | | 54,775 | | | (904 | ) | | — | | | 5,237 | | | 53,871 | | | 59,108 | | | 19,941 | | 1994-1995 | |
Oak Park Mall, Overland Park, KS | | | 276,051 | | | 23,119 | | | 318,759 | | | 5,910 | | | — | | | 23,119 | | | 324,669 | | | 347,788 | | | 34,477 | | 2005 | |
Old Hickory Mall, Jackson, TN | | | 31,428 | | | 15,527 | | | 29,413 | | | 4,260 | | | — | | | 15,527 | | | 33,673 | | | 49,200 | | | 7,406 | | 2001 | |
Panama City Mall, Panama City, FL | | | 37,740 | | | 9,017 | | | 37,454 | | | 15,808 | | | — | | | 12,168 | | | 50,111 | | | 62,279 | | | 8,147 | | 2002 | |
Parkdale Mall, Beaumont, TX | | | 50,129 | | | 23,850 | | | 47,390 | | | 42,291 | | | (307 | ) | | 23,543 | | | 89,681 | | | 113,224 | | | 14,530 | | 2001 | |
Park Plaza Mall, Little Rock, AR | | | 41,208 | | | 6,297 | | | 81,638 | | | 31,901 | | | — | | | 6,304 | | | 113,532 | | | 119,836 | | | 15,261 | | 2004 | |
Pemberton Square, Vicksburg, MS | | | — | | | 1,191 | | | 14,305 | | | 519 | | | (947 | ) | | 244 | | | 14,824 | | | 15,068 | | | 7,731 | | 1986 | |
Post Oak Mall, College Station, TX (E) | | | — | | | 3,936 | | | 48,948 | | | 319 | | | (327 | ) | | 3,608 | | | 49,268 | | | 52,876 | | | 18,356 | | 1984-1985 | |
Randolph Mall, Asheboro, NC | | | 13,703 | | | 4,547 | | | 13,927 | | | 7,775 | | | — | | | 4,547 | | | 21,702 | | | 26,249 | | | 4,583 | | 2001 | |
79
SCHEDULE III
CBL & ASSOCIATES PROPERTIES, INC.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2008
(In Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost(A) | | | | | Gross Amounts at Which Carried at Close of Period | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Description /Location | | (B)
Encumbrances | | Land | | Buildings and
Improvements | | Costs
Capitalized
Subsequent to
Acquisition | | Sales of
Outparcel
Land | | Land | | Buildings and
Improvements | | Total (C) | | (D)
Accumulated
Depreciation | | Date of
Construction
/ Acquisition | |
| | | | | | | | | | | | | | | | | | | | | | |
Regency Mall, Racine, WI | | | 31,078 | | | 3,384 | | | 36,839 | | | 12,257 | | | — | | | 4,188 | | | 48,292 | | | 52,480 | | | 10,373 | | 2001 | |
Richland Mall, Waco, TX (E) | | | — | | | 9,342 | | | 34,793 | | | 6,552 | | | — | | | 9,355 | | | 41,332 | | | 50,687 | | | 7,458 | | 2002 | |
Rivergate Mall, Nashville, TN | | | 87,500 | | | 17,896 | | | 86,767 | | | 18,310 | | | — | | | 17,896 | | | 105,077 | | | 122,973 | | | 28,729 | | 1998 | |
River Ridge Mall, Lynchburg, VA | | | — | | | 4,824 | | | 59,052 | | | (1,496 | ) | | — | | | 4,825 | | | 57,555 | | | 62,380 | | | 7,878 | | 2003 | |
South County Center, St. Louis, MO | | | 77,304 | | | 15,754 | | | 159,249 | | | 936 | | | — | | | 15,754 | | | 160,185 | | | 175,939 | | | 7,003 | | 2007 | |
Southaven Town Center, Southaven, MS | | | 44,782 | | | 8,255 | | | 29,380 | | | 5,877 | | | — | | | 8,577 | | | 34,935 | | | 43,512 | | | 4,725 | | 2005 | |
Southpark Mall, Colonial Heights, VA | | | 36,124 | | | 9,501 | | | 73,262 | | | 20,226 | | | — | | | 9,503 | | | 93,486 | | | 102,989 | | | 10,760 | | 2003 | |
Stroud Mall, Stroudsburg, PA | | | 30,208 | | | 14,711 | | | 23,936 | | | 9,744 | | | — | | | 14,711 | | | 33,680 | | | 48,391 | | | 9,375 | | 1998 | |
St. Clair Square, Fairview Heights, IL | | | 59,709 | | | 11,027 | | | 75,620 | | | 28,463 | | | — | | | 11,027 | | | 104,083 | | | 115,110 | | | 28,482 | | 1996 | |
Sunrise Mall, Brownsville, TX (E) | | | — | | | 11,156 | | | 59,047 | | | 1,459 | | | — | | | 11,156 | | | 60,506 | | | 71,662 | | | 12,790 | | 2003 | |
Towne Mall, Franklin, OH | | | — | | | 3,101 | | | 17,033 | | | 569 | | | (641 | ) | | 2,460 | | | 17,602 | | | 20,062 | | | 3,864 | | 2001 | |
Turtle Creek Mall, Hattiesburg, MS (E) | | | — | | | 2,345 | | | 26,418 | | | 7,920 | | | — | | | 3,535 | | | 33,148 | | | 36,683 | | | 13,647 | | 1993-1995 | |
Valley View Mall, Roanoke, VA | | | 44,269 | | | 15,985 | | | 77,771 | | | 13,617 | | | — | | | 15,999 | | | 91,374 | | | 107,373 | | | 10,994 | | 2003 | |
Volusia Mall, Daytona, FL | | | 51,785 | | | 2,526 | | | 120,242 | | | 4,044 | | | — | | | 2,526 | | | 124,286 | | | 126,812 | | | 15,424 | | 2004 | |
Walnut Square, Dalton, GA (E) | | | — | | | 50 | | | 15,138 | | | 6,836 | | | — | | | 50 | | | 21,974 | | | 22,024 | | | 13,053 | | 1984-1985 | |
Wausau Center, Wausau, WI | | | 11,695 | | | 5,231 | | | 24,705 | | | 16,233 | | | (5,231 | ) | | — | | | 40,938 | | | 40,938 | | | 8,438 | | 2001 | |
West County Center, Des Peres, MO | | | 172,814 | | | 4,957 | | | 346,819 | | | 654 | | | — | | | 4,957 | | | 347,473 | | | 352,430 | | | 13,157 | | 2007 | |
West Towne Mall, Madison, WI | | | 107,581 | | | 9,545 | | | 83,084 | | | 34,698 | | | — | | | 9,545 | | | 117,782 | | | 127,327 | | | 22,758 | | 2002 | |
WestGate Mall, Spartanburg, SC | | | 49,228 | | | 2,149 | | | 23,257 | | | 42,129 | | | (432 | ) | | 1,742 | | | 65,361 | | | 67,103 | | | 23,785 | | 1995 | |
Westmoreland Mall, Greensburg, PA | | | 73,685 | | | 4,621 | | | 84,215 | | | 11,435 | | | — | | | 4,621 | | | 95,650 | | | 100,271 | | | 16,710 | | 2002 | |
York Galleria, York, PA | | | 48,267 | | | 5,757 | | | 63,316 | | | 8,301 | | | — | | | 5,757 | | | 71,617 | | | 77,374 | | | 17,363 | | 1995 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
MIXED-USE: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pearland Town Center, Pearland, TX | | | 110,915 | | | 16,300 | | | 108,615 | | | — | | | — | | | 16,300 | | | 108,615 | | | 124,915 | | | 1,721 | | 2008 | |
Pearland Office, Pearland, TX | | | 7,562 | | | — | | | 7,849 | | | — | | | — | | | — | | | 7,849 | | | 7,849 | | | — | | 2004 | |
Pearland Outparcel, Pearland, TX | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | 1989 | |
Pearland Hotel, Pearland, TX | | | 8,298 | | | — | | | 16,149 | | | — | | | — | | | — | | | 16,149 | | | 16,149 | | | 216 | | 1987 | |
80
SCHEDULE III
CBL & ASSOCIATES PROPERTIES, INC.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2008
(In Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost(A) | | | | | Gross Amounts at Which Carried at Close of Period | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Description /Location | | (B)
Encumbrances | | Land | | Buildings and
Improvements | | Costs
Capitalized
Subsequent to
Acquisition | | Sales of
Outparcel
Land | | Land | | Buildings and
Improvements | | Total (C) | | (D)
Accumulated
Depreciation | | Date of
Construction
/ Acquisition | |
| | | | | | | | | | | | | | | | | | | | | | |
|
Pearland Residential, Pearland, TX | | | — | | | — | | | 9,666 | | | — | | | — | | | — | | | 9,666 | | | 9,666 | | | 112 | | 1989 | |
ASSOCIATED CENTERS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Annex at Monroeville, Monroeville, PA | | | — | | | 716 | | | 29,496 | | | 352 | | | — | | | 717 | | | 29,847 | | | 30,564 | | | 4,099 | | 2004 | |
Bonita Crossing, Meridian, MS | | | 7,307 | | | 794 | | | 4,786 | | | 8,173 | | | — | | | 794 | | | 12,959 | | | 13,753 | | | 3,402 | | 1997 | |
Chapel Hill Suburban, Akron, OH | | | — | | | 925 | | | 2,520 | | | 1,036 | | | — | | | 925 | | | 3,556 | | | 4,481 | | | 609 | | 2004 | |
CoolSprings Crossing, Nashville, TN (E) | | | — | | | 2,803 | | | 14,985 | | | 4,354 | | | — | | | 3,554 | | | 18,588 | | | 22,142 | | | 7,634 | | 1991-1993 | |
The Courtyard at Hickory Hollow, Nashville, TN | | | 1,976 | | | 3,314 | | | 2,771 | | | 420 | | | — | | | 3,314 | | | 3,191 | | | 6,505 | | | 799 | | 1998 | |
The District at Monroeville, Monroeville, PA | | | — | | | 932 | | | — | | | 18,529 | | | — | | | 934 | | | 18,527 | | | 19,461 | | | 3,143 | | 2004 | |
EastGate Crossing, Cincinnati, OH | | | 16,368 | | | 707 | | | 2,424 | | | 3,573 | | | — | | | 707 | | | 5,997 | | | 6,704 | | | 762 | | 2001 | |
Foothills Plaza, Maryville, TN (E) | | | — | | | 132 | | | 2,132 | | | 638 | | | — | | | 148 | | | 2,754 | | | 2,902 | | | 1,653 | | 1984-1988 | |
Foothills Plaza Expansion, Maryville, TN (E) | | | — | | | 137 | | | 1,960 | | | 240 | | | — | | | 141 | | | 2,196 | | | 2,337 | | | 1,104 | | 1984-1988 | |
Frontier Square, Cheyenne, WY (E) | | | — | | | 346 | | | 684 | | | 236 | | | (86 | ) | | 260 | | | 920 | | | 1,180 | | | 466 | | 1985 | |
Georiga Square Cinema, Athens, GA (E) | | | — | | | 100 | | | 1,082 | | | 177 | | | — | | | 100 | | | 1,259 | | | 1,359 | | | 907 | | 1984 | |
Gunbarrel Pointe, Chattanooga, TN (E) | | | — | | | 4,170 | | | 10,874 | | | 285 | | | — | | | 4,170 | | | 11,159 | | | 15,329 | | | 2,306 | | 2000 | |
Hamilton Corner, Chattanooga, TN | | | 16,662 | | | 630 | | | 5,532 | | | 5,896 | | | — | | | 734 | | | 11,324 | | | 12,058 | | | 3,422 | | 1986-1987 | |
Hamilton Crossing, Chattanooga, TN | | | — | | | 4,014 | | | 5,906 | | | 6,048 | | | (1,370 | ) | | 2,644 | | | 11,954 | | | 14,598 | | | 3,560 | | 1987 | |
Hamilton Place Leather One, Chattanooga, TN | | | — | | | 1,110 | | | 1,866 | | | 1 | | | — | | | 1,110 | | | 1,867 | | | 2,977 | | | 561 | | 2007 | |
Harford Annex, Bel Air, MD (E) | | | — | | | 2,854 | | | 9,718 | | | 7 | | | — | | | 2,854 | | | 9,725 | | | 12,579 | | | 1,217 | | 2003 | |
The Landing at Arbor Place, Douglasville, GA | | | 8,031 | | | 4,993 | | | 14,330 | | | 457 | | | (748 | ) | | 4,245 | | | 14,787 | | | 19,032 | | | 4,682 | | 1998-1999 | |
Layton Convenience Center, Layton Hills, UT | | | — | | | — | | | 8 | | | 391 | | | — | | | — | | | 399 | | | 399 | | | 27 | | 2005 | |
Layton Hills Plaza, Layton Hills, UT | | | — | | | — | | | 2 | | | 256 | | | — | | | — | | | 258 | | | 258 | | | 55 | | 2005 | |
Madison Plaza, Huntsville, AL (E) | | | — | | | 473 | | | 2,888 | | | 3,648 | | | — | | | 473 | | | 6,536 | | | 7,009 | | | 2,296 | | 1984 | |
The Plaza at Fayette Mall, Lexington, KY | | | 43,414 | | | 9,531 | | | 27,646 | | | 4,083 | | | — | | | 9,531 | | | 31,729 | | | 41,260 | | | 2,591 | | 2006 | |
81
SCHEDULE III
CBL & ASSOCIATES PROPERTIES, INC.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2008
(In Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost(A) | | | | | Gross Amounts at Which Carried at Close of Period | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Description /Location | | (B)
Encumbrances | | Land | | Buildings and
Improvements | | Costs
Capitalized
Subsequent to
Acquisition | | Sales of
Outparcel
Land | | Land | | Buildings and
Improvements | | Total (C) | | (D)
Accumulated
Depreciation | | Date of
Construction
/ Acquisition | |
| | | | | | | | | | | | | | | | | | | | | | |
|
Parkdale Crossing, Beaumont, TX | | | 7,915 | | | 2,994 | | | 7,408 | | | 1,937 | | | (355 | ) | | 2,639 | | | 9,345 | | | 11,984 | | | 1,449 | | 2002 | |
Pemberton Plaza, Vicksburg, MS | | | 1,905 | | | 1,284 | | | 1,379 | | | 111 | | | — | | | 1,284 | | | 1,490 | | | 2,774 | | | 279 | | 2004 | |
The Shoppes At Hamilton Place, Chattanooga, TN | | | — | | | 4,894 | | | 11,700 | | | 350 | | | — | | | 4,894 | | | 12,050 | | | 16,944 | | | 1,673 | | 2003 | |
Sunrise Commons, Brownsville, TX (E) | | | — | | | 1,013 | | | 7,525 | | | (153 | ) | | — | | | 1,013 | | | 7,372 | | | 8,385 | | | 1,074 | | 2003 | |
The Shoppes at Panama City, Panama City, FL | | | — | | | 1,010 | | | 8,294 | | | — | | | — | | | 1,010 | | | 8,294 | | | 9,304 | | | 993 | | 2004 | |
The Shoppes at St. Clair, St. Louis, MO | | | 22,001 | | | 8,250 | | | 23,623 | | | 90 | | | (5,044 | ) | | 3,206 | | | 23,713 | | | 26,919 | | | 1,841 | | 2007 | |
The Terrace, Chattanooga, TN | | | — | | | 4,166 | | | 9,929 | | | (186 | ) | | — | | | 4,166 | | | 9,743 | | | 13,909 | | | 2,877 | | 1997 | |
The Village at Rivergate, Nashville, TN | | | — | | | 2,641 | | | 2,808 | | | 2,872 | | | — | | | 2,641 | | | 5,680 | | | 8,321 | | | 1,443 | | 1998 | |
West Towne Crossing, Madison, WI | | | — | | | 1,151 | | | 2,955 | | | 427 | | | — | | | 1,151 | | | 3,382 | | | 4,533 | | | 610 | | 1998 | |
WestGate Crossing, Spartanburg, SC | | | 9,155 | | | 1,082 | | | 3,422 | | | 4,608 | | | — | | | 1,082 | | | 8,030 | | | 9,112 | | | 2,393 | | 1997 | |
Westmoreland Crossing, Greensburg, PA | | | — | | | 2,898 | | | 21,167 | | | 7,141 | | | — | | | 2,898 | | | 28,308 | | | 31,206 | | | 4,014 | | 2002 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
COMMUNITY CENTERS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cobblestone Village, Palm Coast, FL | | | — | | | 5,196 | | | 12,070 | | | (94 | ) | | — | | | 5,196 | | | 11,976 | | | 17,172 | | | 383 | | 2007 | |
Lakeview Pointe, Stillwater, OK | | | 15,600 | | | 3,730 | | | 19,513 | | | 344 | | | (463 | ) | | 3,267 | | | 19,857 | | | 23,124 | | | 1,271 | | 2006 | |
Massard Crossing, Ft. Smith, AR | | | 5,577 | | | 2,879 | | | 5,176 | | | 183 | | | — | | | 2,879 | | | 5,359 | | | 8,238 | | | 994 | | 2004 | |
Milford Marketplace, Milford, CT | | | 19,009 | | | 318 | | | 21,992 | | | 1,448 | | | — | | | 318 | | | 23,440 | | | 23,758 | | | 1,175 | | 2007 | |
Oak Hollow Square, High Point, NC | | | — | | | 8,609 | | | 9,097 | | | 7 | | | — | | | 8,609 | | | 9,104 | | | 17,713 | | | 917 | | 2007 | |
Westridge Square, Greensboro, NC | | | — | | | 13,403 | | | 15,837 | | | (39 | ) | | — | | | 13,403 | | | 15,798 | | | 29,201 | | | 713 | | 2007 | |
Willowbrook Land, Houston, TX | | | — | | | — | | | — | | | 10,367 | | | — | | | — | | | 10,367 | | | 10,367 | | | 514 | | 2007 | |
Willowbrook Plaza, Houston, TX | | | 28,535 | | | 15,079 | | | 27,376 | | | 353 | | | (149 | ) | | 14,930 | | | 27,729 | | | 42,659 | | | 5,052 | | 2004 | |
Statesboro Crossing, Statesboro, GA | | | 15,549 | | | — | | | 21,312 | | | — | | | — | | | — | | | 21,312 | | | 21,312 | | | 116 | | 2008 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OFFICES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CBL Center, Chattanooga, TN | | | 13,677 | | | 140 | | | 24,675 | | | (169 | ) | | — | | | 140 | | | 24,506 | | | 24,646 | | | 8,046 | | 2001 | |
82
SCHEDULE III
CBL & ASSOCIATES PROPERTIES, INC.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2008
(In Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Initial Cost(A) | | | | | Gross Amounts at Which Carried at Close of Period | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Description /Location | | (B)
Encumbrances | | Land | | Buildings and
Improvements | | Costs
Capitalized
Subsequent to
Acquisition | | Sales of
Outparcel
Land | | Land | | Buildings and
Improvements | | Total (C) | | (D)
Accumulated
Depreciation | | Date of
Construction
/ Acquisition | |
| | | | | | | | | | | | | | | | | | | | | | |
CBL Center II, Chattanooga, TN | | | 11,599 | | | — | | | 13,648 | | | — | | | — | | | — | | | 13,648 | | | 13,648 | | | 402 | | 2008 | |
Lake Point Office Building, Greensboro, NC | | | — | | | 1,435 | | | 14,261 | | | 190 | | | — | | | 1,435 | | | 14,451 | | | 15,886 | | | 862 | | 2007 | |
Oak Branch Business Center, Greensboro, NC | | | — | | | 535 | | | 2,192 | | | — | | | — | | | 535 | | | 2,192 | | | 2,727 | | | 233 | | 2007 | |
One Oyster Point, Newport News, VA | | | — | | | 1,822 | | | 3,623 | | | 9 | | | — | | | 1,822 | | | 3,632 | | | 5,454 | | | 302 | | 2007 | |
Peninsula Business Center I, Newport News, VA | | | — | | | 887 | | | 1,440 | | | 5 | | | — | | | 887 | | | 1,445 | | | 2,332 | | | 195 | | 2007 | |
Peninsula Business Center II, Newport News, VA | | | — | | | 1,654 | | | 873 | | | 18 | | | — | | | 1,654 | | | 891 | | | 2,545 | | | 212 | | 2007 | |
Richland Office Plaza, Waco, TX (E) | | | — | | | 532 | | | 481 | | | — | | | — | | | 532 | | | 481 | | | 1,013 | | | 98 | | 2002 | |
Sun Trust Bank Building, Greensboro, NC | | | — | | | 941 | | | 18,417 | | | 122 | | | — | | | 941 | | | 18,539 | | | 19,480 | | | 819 | | 2007 | |
Two Oyster Point, Newport News, VA | | | — | | | 1,543 | | | 3,974 | | | 1 | | | — | | | 1,543 | | | 3,975 | | | 5,518 | | | 263 | | 2007 | |
840 Greenbrier Circle, Chesapeake, VA | | | — | | | 2,096 | | | 3,091 | | | 136 | | | — | | | 2,096 | | | 3,227 | | | 5,323 | | | 383 | | 2007 | |
850 Greenbrier Circle, Chesapeake, VA | | | — | | | 3,154 | | | 6,881 | | | 269 | | | — | | | 3,154 | | | 7,150 | | | 10,304 | | | 584 | | 2007 | |
1500 Sunday Drive, Raleigh, NC | | | — | | | 813 | | | 8,872 | | | (120 | ) | | — | | | 813 | | | 8,752 | | | 9,565 | | | 533 | | 2007 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DISPOSALS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
706 Green Valley Road, Greensboro, NC | | | — | | | 1,346 | | | 10,906 | | | — | | | (12,252 | ) | | — | | | — | | | — | | | — | | 2007 | |
708 Green Valley Road, Greensboro, NC | | | — | | | 1,011 | | | — | | | — | | | (1,011 | ) | | — | | | — | | | — | | | — | | 2007 | |
Brassfield Shopping Center, Greensboro, NC | | | — | | | — | | | 1,900 | | | — | | | (1,900 | ) | | — | | | — | | | — | | | — | | 2007 | |
Cauldwell Court, Greensboro, NC | | | — | | | 222 | | | 1,848 | | | — | | | (2,070 | ) | | — | | | — | | | — | | | — | | 2007 | |
Chicopee Marketplace, Chicopee, MA | | | — | | | 97 | | | 5,357 | | | — | | | (5,454 | ) | | — | | | — | | | — | | | — | | 2007 | |
Garden Square, Greensboro, NC | | | — | | | 2,175 | | | 2,677 | | | — | | | (4,852 | ) | | — | | | — | | | — | | | — | | 2007 | |
Hunt Village, Greensboro, NC | | | — | | | 644 | | | 655 | | | — | | | (1,299 | ) | | — | | | — | | | — | | | — | | 2007 | |
New Garden Crossing, Greensboro, NC | | | — | | | 7,546 | | | 9,661 | | | — | | | (17,207 | ) | | — | | | — | | | — | | | — | | 2007 | |
Northwest Centre, Greensboro, NC | | | — | | | 1,259 | | | 11,181 | | | — | | | (12,440 | ) | | — | | | — | | | — | | | — | | 2007 | |
Westridge Suites, Greensboro, NC | | | — | | | 336 | | | 779 | | | — | | | (1,115 | ) | | — | | | — | | | — | | | — | | 2007 | |
83
|
SCHEDULE III |
|
CBL & ASSOCIATES PROPERTIES, INC. |
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION |
At December 31, 2008
(In Thousands) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Initial Cost(A) | | | | Gross Amounts at Which Carried at
Close of Period | | | | | | |
| | | | | | | | | | | | | | |
Description /Location | | (B)
Encumbrances | | Land | | Buildings and
Improvements | | Costs
Capitalized
Subsequent to
Acquisition | | Sales of
Outparcel
Land | | Land | | Buildings and
Improvements | | Total (C) | | (D)
Accumulated
Depreciation | | Date of
Construction
/ Acquisition | |
| | | | | | | | | | | | | | | | | | | | | | |
|
OTHER: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other real estate assets | | | — | | | 22,472 | | | 981 | | | 3,493 | | | (11,797 | ) | | 10,674 | | | 4,475 | | | 15,149 | | | 764 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Developments in progress consisting of construction and development properties (F) | | | 1,595,652 | | | — | | | — | | | — | | | — | | | — | | | 225,815 | | | 225,815 | | | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 6,095,676 | | $ | 940,230 | | $ | 6,234,663 | | $ | 1,332,457 | | $ | (101,512 | ) | $ | 902,504 | | $ | 7,729,149 | | $ | 8,631,653 | | $ | 1,310,173 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
(A) | Initial cost represents the total cost capitalized including carrying cost at the end of the first fiscal year in which the property opened or was acquired. |
(B) | Encumbrances represent the mortgage note payable balance including debt premium or discount at December 31, 2008 |
(C) | The aggregate cost of land and buildings and improvements for federal income tax purposes is approximately $7.027 billion. |
(D) | Depreciation for all properties is computed over the useful life which is generally 40 years for buildings, 10-20 years for certain improvements and 7-10 years for equipment and fixtures. |
(E) | Property is pledged as collateral on the secured lines of credit used for development properties. |
(F) | Includes non-property mortgages and credit line mortgages. |
84
CBL & ASSOCIATES PROPERTIES, INC.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
The changes in real estate assets and accumulated depreciation for the years ending December 31, 2008, 2007, and 2006 are set forth below (in thousands):
| | | | | | | | | | |
| | Year Ended December 31, | |
| | |
| | 2008 | | 2007 | | 2006 | |
| | | | | | | |
| | | | | | | | | | |
REAL ESTATE ASSETS: | | | | | | | | | | |
Balance at beginning of period | | $ | 8,505,045 | | $ | 7,018,548 | | $ | 6,672,335 | |
Additions during the period: | | | | | | | | | | |
Additions and improvements | | | 393,616 | | | 540,419 | | | 469,558 | |
Acquisitions of real estate assets | | | — | | | 1,209,795 | | | — | |
Deductions during the period: | | | | | | | | | | |
Deconsolidation of real estate assets as a result of FIN 46(R) | | | (51,607 | ) | | (179,977 | ) | | — | |
Cost of sales and retirements | | | (170,305 | ) | | (61,997 | ) | | (121,984 | ) |
Transfers to intangible lease assets | | | (31,320 | ) | | — | | | — | |
Accumulated depreciation on assets held for sale (A) | | | — | | | (19,527 | ) | | (438 | ) |
Abandoned projects | | | (13,776 | ) | | (2,216 | ) | | (923 | ) |
| | | | | | | | | | |
Balance at end of period | | $ | 8,631,653 | | $ | 8,505,045 | | $ | 7,018,548 | |
| | | | | | | | | | |
| | | | | | | | | | |
ACCUMULATED DEPRECIATION: | | | | | | | | | | |
Balance at beginning of period | | $ | 1,102,767 | | $ | 924,297 | | $ | 727,907 | |
Depreciation expense | | | 310,697 | | | 228,576 | | | 209,875 | |
Deconsolidation of real estate assets as a result of FIN 46(R) | | | — | | | (5,949 | ) | | — | |
Accumulated depreciation on assets held for sale (A) | | | — | | | (19,527 | ) | | (438 | ) |
Accumulated depreciation on real estate assets sold | | | — | | | (1,278 | ) | | — | |
Accumulated depreciation on real estate assets retired | | | (103,291 | ) | | (23,352 | ) | | (13,047 | ) |
| | | | | | | | | | |
Balance at end of period | | $ | 1,310,173 | | $ | 1,102,767 | | $ | 924,297 | |
| | | | | | | | | | |
| |
(A) | Reflects the reclassification of accumulated depreciation against the cost of the assets to reflect assets held for sale at net carrying value. |
85
|
Schedule IV |
|
CBL & ASSOCIATES PROPERTIES, INC. |
MORTGAGE NOTES RECEIVABLE ON REAL ESTATE |
AT DECEMBER 31, 2008 |
(In thousands) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Name Of Center/Location | | Interest
Rate | | Final
Maturity
Date | | Monthly
Payment
Amount (1) | | Balloon
Payment
At
Maturity | | Prior
Liens | | Face
Amount
Of
Mortgage | | Carrying
Amount
Of
Mortgage
(2) | | Principal
Amount Of
Mortgage
Subject To
Delinquent
Principal
Or Interest | |
| | | | | | | | | | | | | | | | | | |
FIRST MORTGAGES: | | | | | | | | | | | | | | | | | | | | | | | | | |
Coastal Grand-MyrtleBeach Myrtle Beach, SC | | | 7.75% | | | Oct-2014 | | $ | 58 | (3) | $ | 9,000 | | | None | | $ | 9,000 | | $ | 9,000 | | $ | — | |
One Park Place Chattanooga, TN | | | 6.58% | | | Apr-2012 | | | 23 | | | 2,064 | | | None | | | 3,118 | | | 2,486 | | | — | |
Village Square Houghton Lake, MI and Village at Wexford Cadillac, MI | | | 5.25% | | | Mar-2010 | | | 11 | (3) | | 2,627 | | | None | | | 2,627 | | | 2,627 | | | — | |
Madison Grandview Development Company, LLC Madison, MS | | | 9.00% | | | Oct-2008 | (6) | | 60 | | | 8,024 | | | None | | | 8,786 | | | 8,024 | | | 8,024 | |
The Shops at Pineda Ridge Melbourne, FL | | | 5.75% | | | Mar-2010 | | | 4 | | | 3,735 | | | None | | | 3,735 | | | 3,735 | | | — | |
Brookfield Square - Flemings Brookfield, WI | | | 6.00% | | | Oct-2010 | | | 16 | | | 3,250 | | | None | | | 3,250 | | | 3,250 | | | — | |
West County - Former Lord & Taylor Des Peres, MO | | | 8.00% | | | Jan-2028 | | | — | | | 9,523 | | | None | | | 10,200 | | | 9,523 | | | — | |
Shoppes at St. Clair Square - Business District Fairview Heights, IL | | | variable | | | Aug-2028 | | | 7 | (4) | | 1,316 | | | None | | | 1,316 | | | 1,316 | | | — | |
Shoppes at St. Clair Square - Tax Increment Financing Fairview Heights, IL | | | variable | | | Dec-2029 | | | 60 | (5) | | 3,500 | | | None | | | 3,728 | | | 3,500 | | | — | |
Mid Rivers Mall, LLC St. Peters, MO | | | 7.00% | | | Jun-2028 | | | — | | | 1,398 | | | None | | | 1,398 | | | 1,398 | | | — | |
Gulf Coast Town Center Ft. Myers, FL | | | 6.32% | | | Mar-2017 | | | — | | | 2,059 | | | None | | | 3,000 | | | 2,059 | | | — | |
CBL Lee’s Summit Peripheral, LLC Lee Summit, MO | | | variable | | | Dec-2018 | | | 13 | (3) | | 4,119 | | | None | | | 4,119 | | | 4,119 | | | — | |
CBL Lee’s Summit Peripheral, LLC Lee Summit, MO | | | variable | | | Mar-2018 | | | 10 | (3) | | 3,150 | | | None | | | 3,150 | | | 3,150 | | | — | |
CBL-706 Building, LLC Greensboro, NC | | | 6.00% | | | Dec-2011 | | | 6 | (3) | | 1,100 | | | None | | | 1,100 | | | 1,100 | | | — | |
OTHER | | | 6.00% - 9.50% | | | Aug-2010/
Jan-2047 | | | 18 | | | 3,144 | | | None | | | 6,848 | | | 3,674 | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | $ | 286 | | $ | 58,009 | | | | | $ | 65,375 | | $ | 58,961 | | $ | 8,024 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
|
(1) Equal monthly installments comprised of principal and interest unless otherwise noted. |
(2) The aggregate carrying value for federal income tax purposes was $58,961 at December 31, 2008. |
(3) Payment represents interest only. |
(4) Represents sum of semi-annual interest only payments received in 2008 calculated to report as a monthly amount. As noted above the interest rate is variable; thus, interest will vary accordingly. |
(5) Represents sum of semi-annual principal and interest payments received in 2008 calculated to report as a monthly amount. $19 represents the calculated monthly payments received from the district that were applied to principal. This does not represent a fixed payment. Principal payments are discretionary until the maturity date of note. As noted above, the interest rate is variable; thus, interest will vary accordingly. |
(6) Note matured in October 2008 and the Company is currently in negotiations with the mortgagee. It is anticipated that the Company will obtain ownership of the land and ground lease to the mortgagee. |
86
The changes in mortgage notes receivable were as follows (in thousands):
| Year Ended December 31,
| |
|---|
| 2008
| | 2007
| | 2006
| |
|---|
| Beginning balance | | $ | 135,157 | | $ | 21,559 | | $ | 18,117 | |
| Additions | | | 29,359 | | | 118,195 | | | 3,666 | |
| Payments | | | (105,555 | ) | | (4,617 | ) | | (224 | ) |
| Ending balance | | $ | 58,961 | | $ | 135,137 | | $ | 21,559 | |
EXHIBIT INDEX
Exhibit Number | Description |
3.1 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, dated May 10, 2005 (q) |
3.2 | Amended and Restated Certificate of Incorporation of the Company, as amended through May 10, 2005 (q) |
3.3 | Amended and Restated Bylaws of the Company, as amended effective November 6, 2007 (aa) |
4.1 | See Amended and Restated Certificate of Incorporation of the Company, as amended, and Amended and Restated Bylaws of the Company relating to the Common Stock, Exhibits 3.1, 3.2 and 3.3 above |
4.2 | Certificate of Designations, dated June 25, 1998, relating to the 9.0% Series A Cumulative Redeemable Preferred Stock (f) |
4.3 | Certificate of Designation, dated April 30, 1999, relating to the Series 1999 Junior Participating Preferred Stock (f) |
4.4 | Terms of Series J Special Common Units of the Operating Partnership, pursuant to Article 4.4 of the Second Amended and Restated Partnership Agreement of the Operating Partnership (f) |
4.5 | Certificate of Designations, dated June 11, 2002, relating to the 8.75% Series B Cumulative Redeemable Preferred Stock (g) |
4.6 | Acknowledgement Regarding Issuance of Partnership Interests and Assumption of Partnership Agreement (i) |
4.7 | Certificate of Designations, dated August 13, 2003, relating to the 7.75% Series C Cumulative Redeemable Preferred Stock (h) |
4.8 | Certificate of Correction of the Certificate of Designations relating to the 7.75% Series C Cumulative Redeemable Preferred Stock (l) |
4.9 | Certificate of Designations, dated December 10, 2004, relating to the 7.375% Series D Cumulative Redeemable Preferred Stock (l) |
4.10 | Terms of the Series S Special Common Units of the Operating Partnership, pursuant to the Third Amendment to the Second Amended and Restated Partnership Agreement of the Operating Partnership (m) |
4.11 | Terms of the Series L Special Common Units of the Operating Partnership, pursuant to the Fourth Amendment to the Second Amended and Restated Partnership Agreement of the Operating Partnership (q) |
4.12 | Terms of the Series K Special Common Units of the Operating Partnership, pursuant to the First Amendment to the Third Amended and Restated Partnership Agreement of the Operating Partnership (s) |
Exhibit Number | Description |
10.1.1 | Third Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated June 15, 2005 (p) |
10.1.2 | First Amendment to Third Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of November 16, 2005 (s) |
10.2.1 | Rights Agreement by and between the Company and BankBoston, N.A., dated as of April 30, 1999 (c) |
10.2.2 | Amendment No. 1 to Rights Agreement by and between the Company and SunTrust Bank (successor to BankBoston), dated January 31, 2001 (f) |
10.3 | Property Management Agreement between the Operating Partnership and the Management Company (a) |
10.4 | Property Management Agreement relating to Retained Properties (a) |
10.5.1 | CBL & Associates Properties, Inc. Amended and Restated Stock Incentive Plan† (j) |
10.5.2 | Form of Non-Qualified Stock Option Agreement for all participants† (i) |
10.5.3 | Form of Stock Restriction Agreement for restricted stock awards† (i) |
10.5.4 | Form of Stock Restriction agreement for restricted stock awards with annual installment vesting† (j) |
10.5.5 | Amendment No. 1 to CBL & Associates Properties, Inc. Amended and Restated Stock Incentive Plan† (m) |
10.5.6 | Amendment No. 2 to CBL & Associates Properties, Inc. Amended and Restated Stock Incentive Plan† (m) |
10.5.7 | Form of Senior Executive Deferred Compensation Arrangements, dated as of January 1, 2004, between the Company and Charles B. Lebovitz, Stephen D. Lebovitz, John N. Foy and Ben Landress† (u) |
10.5.8 | Form of Stock Restriction Agreement for restricted stock awards in 2004 and 2005† (o) |
10.5.9 | Form of Stock Restriction Agreement for restricted stock awards in 2006 and subsequent years† (v) |
10.6 | Form of Indemnification Agreements between the Company and the Management Company and their officers and directors (a) |
10.7.1 | Employment Agreement for Charles B. Lebovitz (a)† |
10.7.2 | Employment Agreement for John N. Foy (a)† |
10.7.3 | Employment Agreement for Stephen D. Lebovitz (a)† |
10.7.4 | Summary Description of CBL & Associates Properties, Inc. Director Compensation Arrangements(cc)† |
Exhibit Number | Description |
10.7.5 | Summary Description of November 5, 2007 Compensation Committee Action Approving 2008 Executive Base Salary Levels† (aa) |
10.7.6 | Summary Description of November 5, 2007 Compensation Committee Action Approving 2008 Executive Bonus Opportunities† (aa) |
10.7.7 | Letter Agreement, dated March 3, 2008, between the Company and Eric P. Snyder (dd) † |
10.7.8 | Summary Description of November 3, 2008 Compensation Committee Action Revising 2008 Executive Bonus Opportunities † |
10.8 | Subscription Agreement relating to purchase of the Common Stock and Preferred Stock of the Management Company (a) |
10.9.1 | Option Agreement relating to certain Retained Properties (a) |
10.9.2 | Option Agreement relating to Outparcels (a) |
10.10.1 | Property Partnership Agreement relating to Hamilton Place (a) |
10.10.2 | Property Partnership Agreement relating to CoolSprings Galleria (a) |
10.11.1 | Acquisition Option Agreement relating to Hamilton Place (a) |
10.11.2 | Acquisition Option Agreement relating to the Hamilton Place Centers (a) |
10.12.1 | Unsecured Credit Agreement by and among the Operating Partnership and Wells Fargo Bank, N.A., et al., dated as of August 27, 2004 (k) |
10.12.2 | First Amendment to Unsecured Credit Agreement by and among the Operating Partnership and Wells Fargo Bank, N.A., et al., dated as of September 21, 2005 (r) |
10.12.3 | Second Amendment to Unsecured Credit Agreement by and among the Operating Partnership and Wells Fargo Bank, N.A., et al., dated as of February 14, 2006 (u) |
10.12.4 | Amended and Restated Unsecured Credit Agreement by and among the Operating Partnership and the Company, and Wells Fargo Bank, National Association, et al., dated as of August 22, 2006 (x) |
10.12.5 | First Amendment to Amended and Restated Unsecured Credit Agreement by and among the Operating Partnership and the Company, and Wells Fargo Bank, National Association, et al., dated as of November 30, 2007 (cc) |
10.13 | Loan agreement between Rivergate Mall Limited Partnership, The Village at Rivergate Limited Partnership, Hickory Hollow Mall Limited Partnership, and The Courtyard at Hickory Hollow Limited Partnership and Midland Loan Services, Inc., dated July 1, 1998 (b) |
10.14.1 | Master Contribution Agreement, dated as of September 25, 2000, by and among the Company, the Operating Partnership and the Jacobs entities (d) |
Exhibit Number | Description |
10.14.2 | Amendment to Master Contribution Agreement, dated as of September 25, 2000, by and among the Company, the Operating Partnership and the Jacobs entities (t) |
10.15.1 | Share Ownership Agreement by and among the Company and its related parties and the Jacobs entities, dated as of January 31, 2001 (e) |
10.15.2 | Voting and Standstill Agreement dated as of September 25, 2000 (t) |
10.15.3 | Amendment, effective as of January 1, 2006, to Voting and Standstill Agreement dated as of September 25, 2000 (u) |
10.16.1 | Registration Rights Agreement by and between the Company and the Holders of SCU’s listed on Schedule A thereto, dated as of January 31, 2001 (e) |
10.16.2 | Registration Rights Agreement by and between the Company and Frankel Midland Limited Partnership, dated as of January 31, 2001 (e) |
10.16.3 | Registration Rights Agreement by and between the Company and Hess Abroms Properties of Huntsville, dated as of January 31, 2001 (e) |
10.16.4 | Registration Rights Agreement by and between the Company and the Holders of Series S Special Common Units of the Operating Partnership listed on Schedule A thereto, dated July 28, 2004 (m) |
10.16.5 | Form of Registration Rights Agreements between the Company and Certain Holders of Series K Special Common Units of the Operating Partnership, dated as of November 16, 2005 (s) |
10.17.1 | Sixth Amended and Restated Credit Agreement by and among the Operating Partnership and Wells Fargo Bank, National Association, et al., dated February 28, 2003 (m) |
10.17.2 | First Amendment to Sixth Amended and Restated Credit Agreement between the Operating Partnership and Wells Fargo Bank, National Association, et al., dated May 3, 2004 (m) |
10.17.3 | Second Amendment to Sixth Amended and Restated Credit Agreement between the Operating Partnership and Wells Fargo Bank, National Association, et al., dated September 21, 2005 (r) |
10.17.4 | Third Amendment to Sixth Amended and Restated Credit Agreement between the Operating Partnership and Wells Fargo Bank, National Association, et al., dated February 14, 2006 (u) |
10.17.5 | Fourth Amendment to Sixth Amended and Restated Credit Agreement between CBL & Associates Limited Partnership and Wells Fargo Bank, National Association, et al., dated August 29, 2006 (y) |
10.17.6 | Fifth Amendment to Sixth Amended and Restated Credit Agreement between CBL & Associates Limited Partnership and Wells Fargo Bank, National Association, et al., dated September 24, 2007 (bb) |
Exhibit Number | Description |
10.17.7 | Sixth Amendment to Sixth Amended and Restated Credit Agreement between CBL & Associates Limited Partnership and Wells Fargo Bank, National Association, et al., dated November 30, 2007 (cc) |
10.18.1 | Amended and Restated Loan Agreement between the Operating Partnership, The Lakes Mall, LLC, Lakeshore Sebring Limited Partnership and First Tennessee Bank National Association, dated December 30, 2004 (m) |
10.18.2 | Amended and Restated Loan Agreement between the Operating Partnership, The Lakes Mall, LLC, Lakeshore Sebring Limited Partnership and First Tennessee Bank National Association, dated July 29, 2004 (m) |
10.18.3 | Amended and Restated Loan Agreement between the Operating Partnership, The Lakes Mall, LLC, Lakeshore/Sebring Limited Partnership and First Tennessee Bank National Association, dated March 9, 2005 (n) |
10.18.4 | Amended and Restated Loan Agreement between the Operating Partnership, The Lakes Mall, LLC, Lakeshore/Sebring Limited Partnership and First Tennessee Bank National Association, dated December 16, 2005 (u) |
10.18.5 | Amended and Restated Loan Agreement between the Operating Partnership, The Lakes Mall, LLC, Lakeshore/Sebring Limited Partnership and First Tennessee Bank National Association, dated June 6, 2006 (w) |
10.18.6 | Amended and Restated Loan Agreement between the Operating Partnership, The Lakes Mall, LLC, Lakeshore/Sebring Limited Partnership and First Tennessee Bank National Association, dated May 15, 2007 (z) |
10.18.7 | Amended and Restated Loan Agreement between the Operating Partnership, The Lakes Mall, LLC, Lakeshore/Sebring Limited Partnership and First Tennessee Bank National Association, dated December 31, 2007 (cc) |
10.18.8 | Amended and Restated Loan Agreement between the Operating Partnership, The Lakes Mall, LLC, Lakeshore/Sebring Limited Partnership and First Tennessee Bank National Association, dated April 30, 2008 (ee) |
10.19 | Amended and Restated Limited Liability Company Agreement of JG Gulf Coast Town Center LLC by and between JG Gulf Coast Member LLC, an Ohio limited liability company and CBL/Gulf Coast, LLC, a Florida limited liability company, dated April 27, 2005 (q) |
10.20.1 | Contribution Agreement and Joint Escrow Instructions between the Company and the owners of Oak Park Mall named therein, dated as of October 17, 2005 (s) |
10.20.2 | First Amendment to Contribution Agreement and Joint Escrow Instructions between the Company and the owners of Oak Park Mall named therein, dated as of November 8, 2005 (s) |
10.20.3 | Contribution Agreement and Joint Escrow Instructions between the Company and the owners of Eastland Mall named therein, dated as of October 17, 2005 (s) |
Exhibit Number | Description |
10.20.4 | First Amendment to Contribution Agreement and Joint Escrow Instructions between the Company and the owners of Eastland Mall named therein, dated as of November 8, 2005 (s) |
10.20.5 | Purchase and Sale Agreement and Joint Escrow Instructions between the Company and the owners of Hickory Point Mall named therein, dated as of October 17, 2005 (s) |
10.20.6 | Purchase and Sale Agreement and Joint Escrow Instructions between the Company and the owner of Eastland Medical Building, dated as of October 17, 2005 (s) |
10.20.7 | Letter Agreement, dated as of October 17, 2005, between the Company and the other parties to the acquisition agreements listed above for Oak Park Mall, Eastland Mall, Hickory Point Mall and Eastland Medical Building (s) |
10.21.1 | Master Transaction Agreement by and among REJ Realty LLC, JG Realty Investors Corp., JG Manager LLC, JG North Raleigh L.L.C., JG Triangle Peripheral South LLC, and the Operating Partnership, effective October 24, 2005 (u) |
10.21.2 | Amended and Restated Limited Liability Company Agreement of Triangle Town Member, LLC by and among CBL Triangle Town Member, LLC and REJ Realty LLC, JG Realty Investors Corp. and JG Manager LLC, effective as of November 16, 2005 (u) |
10.22.1 | Contribution Agreement among Westfield America Limited Partnership, as Transferor, and CW Joint Venture, LLC, as Transferee, and CBL & Associates Limited Partnership, dated August 9, 2007 (bb) |
10.22.2 | Contribution Agreement among CBL & Associates Limited Partnership, as Transferor, St. Clair Square, GP, Inc. and CW Joint Venture, LLC, as Transferee, and Westfield America Limited Partnership, dated August 9, 2007 (bb) |
10.22.3 | Purchase and Sale Agreement between Westfield America Limited Partnership, as Transferor, and CBL & Associates Limited Partnership, as Transferee, dated August 9, 2007 (bb) |
10.23 | Unsecured Credit Agreement, dated November 30, 2007, by and among CBL & Associates Limited Partnership, as Borrower, and CBL & Associates Properties, Inc., as Parent, Wells Fargo Bank, National Association, as administrative agent, U.S. Bank National Association, Bank of America, N.A., and Aareal Bank AG (cc) |
10.24.1 | Unsecured Term Loan Agreement, dated April 22, 2008, by and among CBL & Associates Limited Partnership, as Borrower, and CBL & Associates Properties, Inc., as Parent, Wells Fargo Bank, National Association, as Administrative Agent and Lead Arranger, Accrual Capital Corporation, as Syndication Agent, U.S. Bank National Association and Fifth Third Bank (ee) |
10.24.2 | Joinder in Unsecured Term Loan Agreement, dated April 30, 2008, by and among CBL & Associates Limited Partnership, as Borrower, and CBL & Associates Properties, Inc., as Parent, Wells Fargo Bank, National Association, as Administrative Agent and Lead Arranger, and Raymond James Bank FSB (ee) |
Exhibit Number | Description |
10.24.3 | Joinder in Unsecured Term Loan Agreement, dated May 7, 2008, by and among CBL & Associates Limited Partnership, as Borrower, and CBL & Associates Properties, Inc., as Parent, Wells Fargo Bank, National Association, as Administrative Agent and Lead Arranger, and Regions Bank (ee) |
10.25 | Loan Agreement by and among Meridian Mall Limited Partnership, as Borrower, CBL & Associates Limited Partnership, as Guarantor, and CBL & Associates Properties, Inc., as Parent, and Wells Fargo Bank, National Association, as administrative agent, et al. |
12 | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends |
14.1 | Second Amended And Restated Code Of Business Conduct And Ethics Of CBL & Associates Properties, Inc., CBL & Associates Management, Inc. And Their Affiliates (aa) |
21 | Subsidiaries of the Company |
23 | Consent of Deloitte & Touche LLP |
31.1 | Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 | Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(a) | Incorporated by reference to Post-Effective Amendment No. 1 to the Company's Registration Statement on Form S-11 (No. 33-67372), as filed with the Commission on January 27, 1994.* |
(b) | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.* |
(c) | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on May 4, 1999.* |
(d) | Incorporated by reference from the Company’s Current Report on Form 8-K/A, filed on October 27, 2000.* |
(e) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on February 6, 2001.* |
(f) | Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001.* |
(g) | Incorporated by reference from the Company’s Current Report on Form 8-K, dated June 10, 2002, filed on June 17, 2002.* |
(h) | Incorporated by reference from the Company’s Registration Statement on Form 8-A, filed on August 21, 2003.* |
(i) | Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.* |
(j) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.* |
(k) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on October 21, 2004.* |
(l) | Incorporated by reference from the Company’s Registration Statement on Form 8-A, filed on December 10, 2004.* |
(m) | Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.* |
(n) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.* |
(o) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on May 13, 2005.* |
(p) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on June 21, 2005.* |
(q) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.* |
(r) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.* |
(s) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on November 22, 2005.* |
(t) | Incorporated by reference from the Company’s Proxy Statement dated December 19, 2000 for the Special Meeting of Shareholders held January 19, 2001.* |
(u) | Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.* |
(v) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on May 24, 2006.* |
(w) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.* |
(x) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on August 25, 2006.* |
(y) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on September 1, 2006.* |
(z) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007* |
(aa) | Incorporated by reference from the Company’s Current Report on Form 8-K, filed on November 9, 2007.* |
95
(bb) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007* |
(cc) | Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.* |
(dd) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008* |
(ee) | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended june 30, 2008* |
† | A management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of this report. |
* Commission File No. 1-12494
