[Letterhead of CBL & Associates Properties, Inc.]
2030 Hamilton Place Boulevard
Chattanooga, Tn 37421-6000
Contact: John N. Foy
Vice Chairman and CFO
(423) 855-0001
CBL REPORTS FIRST QUARTER RESULTS
|X| Increases FFO per share 11.2% for the quarter
|X| Same center portfolio NOI increases 5.0%
|X| Expands credit facility
|X| Finances Westmoreland Mall at 5.05% for a term of 10 years
CHATTANOOGA, Tenn. (April 23, 2003) - CBL & Associates Properties, Inc.
(NYSE:CBL) today announced results for the quarter ended March 31, 2003.
Reconciliations of non-GAAP financial measures are included in the financial
tables accompanying this press release.
Funds from operations (FFO) increased 21.3% to $67,297,000 for the
quarter ended March 31, 2003, from $55,490,000 for the first quarter of 2002.
FFO per share on a diluted, fully converted basis increased 11.2% to $1.19 from
$1.07 in the prior-year period. The Company has for the first time included
gains on sales of outparcels in FFO to comply with the Securities and Exchange
Commission's rules related to disclosure of non-GAAP financial measures.
NAREIT's definition of FFO continues to include gains on sales of outparcels.
FFO for the prior year period has been restated to include gains on sales of
outparcels. Gains on sales of outparcels for the first quarter were $0.02 versus
$0.01 for the same period one year ago.
HIGHLIGHTS
|X| Net income available to common shareholders increased 31.0% in the
first quarter to $22,776,000 from $17,384,000 in the prior-year
period. On a diluted per share basis, net income available to
common shareholders for the first quarter increased 15.6% to $0.74
compared with $0.64 in the prior-year period.
|X| Income from operations increased 31.3% in the first quarter of 2003
to $41,762,000 from $31,804,000 in the first quarter of 2002.
|X| Revenues increased 14.9% in the first quarter to $166,546,000 from
$144,917,000 in the prior-year period.
|X| Same center net operating income for the portfolio improved in the
first quarter by 5.0% compared with the prior-year period.
|X| Same-store sales for mall tenants of 10,000 square feet or less
for stabilized malls decreased 3.0% for those tenants who have
reported year to date sales compared with a decrease of 1.1% for
the same period a year ago.
CBL's chairman and chief executive officer, Charles B. Lebovitz, said,
"Building on a record level of leasing activity achieved in 2002, we increased
FFO by 21.3% and FFO per share by 11.2% in the first quarter. In addition to the
more visible elements of our growth strategy, such as acquisitions and
development, the retenanting and remerchandising of our properties with more
productive retailers is an important component of our success. This quarter's
results are a clear reflection of the importance of this strategy.
Phone 423 855-0001
Fax 423 490-8634
1
"The retail sales environment continues to be challenging due to the
current state of the economy and other factors such as severe weather and the
effects of the war in Iraq. Last year's first quarter sales benefited from
Easter whereas this year the holiday fell in the second quarter. We are
encouraged, however, that retailers are continuing to look for expansion
opportunities in malls that are updated, well-located and dominant in their
markets. Last week, we announced the replacement of two anchors in our East
Towne and West Towne Malls in Madison, Wisconsin, with Dick's Sporting Goods and
additional mall shops. We were also very pleased to announce the significant
anchor additions at Arbor Place in Atlanta, Georgia, with JC Penney opening this
fall and Rich's-Macy's opening in 2004. Our ongoing investment in the renovation
and redevelopment of our properties is enabling us to take advantage of the
demand for first-class retail space."
OPERATIONAL HIGHLIGHTS
March 31,
---------
2003 2002
------------- -------------
Portfolio occupancy: 91.6% 91.9%
Mall portfolio 90.6% 90.1%
Stabilized malls (52) 91.0% 90.3%
Non-stabilized malls (2) 78.2% 87.3%
Associated centers 90.9% 96.2%
Community centers 94.3% 96.0%
Comparable mall shop sales (3.0)% (1.1)%
PROJECTS UNDER CONSTRUCTION OPENING DATES
|X| The Shoppes at Hamilton Place -
Chattanooga, TN May 2003
|X| Cobblestone Village - St. Augustine, FL May 2003
|X| Waterford Commons - Waterford, CT September 2003
|X| Coastal Grand - Myrtle Beach, SC March 2004
|X| Wilkes-Barre Township MarketPlace -
Wilkes-Barre Township, PA May 2004
PROJECTS UNDER RENOVATION COMPLETION DATES
|X| Parkdale Mall - Beaumont, TX August 2003
|X| Jefferson Mall - Louisville, KY October 2003
|X| Eastgate Mall - Cincinnati, OH November 2003
|X| East Towne Mall - Madison, WI November 2003
|X| West Towne Mall - Madison, WI November 2003
|X| St. Clair Square - Fairview Heights, IL November 2003
DEBT
The Company's share of consolidated and unconsolidated debt as of March 31, 2003
and 2002, is as follows (in millions):
March 31, 2003 March 31, 2002
-------------------------------------------------------
Weighted Weighted
Avg. Interest Avg. Interest
Amount Rate(1) Amount Rate(1)
Fixed-rate debt:
----------- ------------
Non-recourse loans on operating properties $1,961,763 7.09% $1,483,027 7.47%
----------- ------------
Variable-rate debt:
Recourse term loans on operating properties 309,286 3.81% 527,507 3.76%
Lines of credit 186,525 2.31% 232,396 4.89%
Construction loans 32,178 2.98% 26,483 5.60%
----------- ------------
Total variable-rate debt 527,989 3.23% 786,386 4.15%
----------- ------------
Total $2,489,752 6.27% $2,269,413 6.31%
========== ==========
<FN>
(1) Weighted average interest rate before amortization of deferred financing
costs.
</FN>
|X|
2
Debt-to-total-market capitalization ratio as of March 31, 2003, was
50.7% based on the common stock closing price of $40.59 and a
fully converted common stock share count of 55,570,000 as of the
same date. The debt-to-market capitalization ratio as of March 31,
2002, was 53.3%.
|X| EBITDA to interest coverage ratio for the first quarter was 2.90
compared with 2.56 for the prior-year period.
|X| Through the execution of an interest rate swap agreement, the
Company has fixed the interest rate on $80 million of variable
rate recourse debt on operating properties at a weighted average
interest rate of 6.95% as of March 31, 2003, compared with $220
million of debt fixed through interest rate swap agreements at a
weighted average interest rate of 6.39% as of March 31, 2002. The
$80 million of variable rate debt that has been fixed is included
in the $528.0 million of variable rate debt.
On February 28, 2003, CBL completed the sale of Capital Crossing, a
community center in Raleigh, NC, and recognized a gain on discontinued
operations of $2.9 million.
During the quarter, the Company replaced two lines of credit with a new
$255 million secured credit facility bringing the Company's total credit
facilities to $365 million of which $178 was available at the end of the
quarter. The new credit facility, which matures in 2006, has a one-year
extension at the Company's option and bears interest at a rate of 100 basis
points over LIBOR. Six regional malls and three associated centers secure the
credit facility. The facility replaces a $130 million secured line of credit at
an interest rate of 100 basis points over LIBOR and a $105.2 million unsecured
facility priced at 155 basis points over LIBOR.
The Company also closed a 10-year, $85 million, non-recourse loan at an
interest rate of 5.05%. Secured by the 981,503-square-foot Westmoreland Mall and
the 294,188-square-foot Westmoreland Crossing located in Greensburg, PA, the
fixed-rate financing repaid the credit line borrowings used to acquire the
properties in December 2002.
DIVIDENDS
CBL's regular quarterly cash dividend of $0.655 per share for the first
quarter was paid on April 18, 2003, to shareholders of record as of March 31,
2003. The first quarter cash dividend of $0.5625 per share for the Company's 9%
Series A Cumulative Redeemable Preferred Stock and the first quarter cash
dividend of $1.0938 per share for the Company's 8.75% Series B Cumulative
Redeemable Preferred Stock were both paid on March 31, 2003, to shareholders of
record as of March 20, 2003.
OUTLOOK AND GUIDANCE
Based on today's outlook and the Company's first quarter results,
management is comfortable with First Call's consensus per share estimate for
2003 barring any significant disruptions to the economy.
INVESTOR CONFERENCE CALL AND SIMULCAST
CBL & Associates Properties, Inc. will conduct a conference call at
10:00 am EDT on April 24, 2003, to discuss the first quarter results. The number
to call for this interactive teleconference is 719-457-2641. A five-day replay
of the conference call will be available by dialing 719-457-0820 and entering
the passcode, 770395. A transcript of the Company's prepared remarks will be
filed as a Form 8-K following the conference call on April 24, 2003.
To receive CBL & Associates Properties, Inc. first quarter earnings
release and supplemental information please visit our website at
www.cblproperties.com or contact Investor Relations at 423-490-8301.
The Company will also provide an online Web simulcast and rebroadcast
of its 2003 first quarter earnings release conference call. The live broadcast
of CBL's quarterly conference call will be available online at the Company's Web
site at www.cblproperties.com, as well as www.streetevents.com,
www.companyboardroom.com and www.vcall.com on April 24, 2003, beginning at 10:00
a.m. EDT. The online replay will follow shortly after the call and continue
through May 8, 2003.
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CBL & Associates Properties, Inc. has a portfolio of 157 properties,
including 54 enclosed malls, in 25 states totaling 58.1 million square feet
including 2.0 million square feet of non-owned shopping centers managed for
third parties. The Company has five projects under construction totaling
approximately 2.6 million square feet, including one mall - Coastal Grand -
Myrtle Beach, SC, one associated center and three community centers plus six
mall renovations. In addition to its office in Chattanooga, TN, CBL has a
regional office in Boston (Waltham), MA. The Company can be found on the
Internet at www.cblproperties.com.
Information included herein contains "forward-looking statements"
within the meaning of the federal securities laws. Such statements are
inherently subject to risks and uncertainties, many of which cannot be predicted
with accuracy and some of which might not even be anticipated. Future events and
actual events, financial and otherwise, may differ materially from the events
and results discussed in the forward-looking statements. The reader is directed
to the Company's various filings with the Securities and Exchange Commission,
including without limitation the Company's Annual Report on Form 10-K and the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference therein, for a discussion of such risks
and uncertainties.
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-MORE-
CBL & ASSOCIATES PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
Three Months Ended
March 31,
2003 2002
---------- ------------
Revenues:
Minimum rents $ 102,988 $ 90,569
Percentage rents 6,330 6,717
Other rents 2,029 2,058
Tenant reimbursements 49,956 38,587
Management, development and leasing fees 1,319 1,298
Interest and other 3,924 5,688
---------- -----------
Total revenues 166,546 144,917
---------- -----------
Expenses:
Property operating 28,272 22,320
Depreciation and amortization 26,312 22,481
Real estate taxes 13,993 11,527
Maintenance and repairs 10,557 8,562
General and administrative 6,353 5,741
Interest 36,956 36,787
Loss on extinguishment of debt - 1,948
Other 2,341 3,747
---------- -----------
Total expenses 124,784 113,113
---------- -----------
Income from operations 41,762 31,804
Gain on sales of real estate assets 1,104 415
Equity in earnings of unconsolidated affiliates 1,757 2,087
Minority interest in earnings:
Operating partnership (20,637) (16,197)
Shopping center properties (540) (917)
---------- -----------
Income before discontinued operations 23,446 17,192
Operating income of discontinued operations 87 566
Gain on discontinued operations 2,935 1,243
---------- -----------
Net income 26,468 19,001
Preferred dividends (3,692) (1,617)
---------- -----------
Net income available to common shareholders $ 22,776 $ 17,384
========== ===========
Basic per share data:
Income before discontinued operations,
net of preferred dividends $ 0.66 $ 0.59
Discontinued operations 0.10 0.07
---------- -----------
Net income available to common shareholders $ 0.76 $ 0.66
========== ===========
Weighted average common shares outstanding 29,726 26,356
Diluted per share data:
Income before discontinued operations, $ 0.64 $ 0.57
net of preferred dividends
Discontinued operations 0.10 0.07
---------- -----------
Net income available to common shareholders $ 0.74 $ 0.64
========== ===========
Weighted average common and potential dilutive
common shares outstanding 30,803 27,121
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SUMMARIZED UNAUDITED BALANCE SHEET INFORMATION (IN THOUSANDS) March 31, December 31,
2003 2002
--------- ------------
Cash, restricted cash and cash equivalents $ 22,989 $ 13,355
Total assets 3,833,139 3,795,114
Mortgage and other notes payable 2,443,482 2,402,079
Minority interest 523,002 500,513
Shareholders' equity 766,335 741,190
FUNDS FROM OPERATIONS CALCULATION
Three Months Ended
March 31,
2003 2002
--------- ------------
Net income available to common shareholders (a) $ 22,776 $ 17,384
Add: Depreciation and amortization
from consolidated properties 26,312 22,481
Depreciation and amortization
from unconsolidated affiliates 896 924
Depreciation and amortization
from discontinued operations 10 250
Minority interest in earnings of
operating partnership 20,637 16,197
Less:
Minority investors' share of
depreciation and amortization
in shopping center properties (266) (392)
Gain on discontinued operations (2,935) (1,243)
Depreciation and amortization of non-
real estate assets (133) (111)
-------------- ---------------
Funds from operations $ 67,297 $ 55,490
============= ==============
Funds from operations applicable to
Company shareholders $ 36,104 $ 28,649
------------- --------------
Basic per share data:
Funds from operations $ 1.21 $ 1.09
============= ==============
Weighted average common sha
outstanding with operating partnership
units fully converted 55,409 51,048
Diluted per share data:
Funds from operations $ 1.19 $ 1.07
============= ==============
Weighted average common and potential
dilutive common shares outstanding with
operating partnership units fully converted 56,486 51,813
<FN>
(a) Straight-line rents for the three months ended March 31, 2003, were $0.9
million, or $0.02 per share, compared with $1.0 million, or $0.02 per share, for
the same period a year ago.
</FN>
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RECONCILIATION OF COMMON SHARES AND UNITS OUTSTANDING
(In thousands)
Basic Diluted
---------------- ----------------
March 31, 2003:
Weighted average shares used to compute earnings per share 29,726 30,803
Weighted average operating partnership units 25,683 25,683
------ ------
Weighted average shares used to compute FFO per share 55,409 56,486
====== ======
March 31, 2002:
Weighted average shares used to compute earnings per share 26,356 27,121
Weighted average operating partnership units 24,692 24,692
------ ------
Weighted average shares used to compute FFO per share 51,048 51,813
====== ======
RECONCILIATION OF COMPANY'S SHARE OF TOTAL DEBT
(Dollars in thousands)
March 31, 2003
--------------
Fixed Variable
Rate Rate Total
---- ---- -----
Consolidated debt $ 1,943,722 $ 499,760 $ 2,443,482
Minority investors' share of consolidated debt (19,992) - (19,992)
Company's share of unconsolidated affiliates' debt 38,033 28,229 66,262
------ ------ ------
Company's share of consolidated and unconsolidated debt $ 1,961,763 $ 527,989 $ 2,489,752
========= ======= =========
Weighted average interest rate 7.09% 3.23% 6.27%
March 31, 2002
Fixed Variable
Rate Rate Total
------ ------ ------
Consolidated debt 1,415,522 775,521 2,191,043
Minority investors' share of consolidated debt (19,307) (7,665) (26,972)
Company's share of unconsolidated affiliates' debt 86,827 18,541 105,368
------ ------ ------
Company's share of consolidated and unconsolidated debt 1,483,042 786,397 2,269,439
========= ======= =========
Weighted average interest rate 7.47% 4.15% 6.31%
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EBITDA to Interest Coverage Ratio
(Dollars in thousands)
Three Months Ended
March 31,
2003 2002
EBITDA:
Consolidated net income available to common shareholders $ 22,776 $ 17,384
Adjustments:
Depreciation and amortization 26,312 22,481
Depreciation and amortization from unconsolidated affiliates 896 924
Depreciation and amortization from discontinued operations 10 250
Minority investors' share of depreciation and amortization in
shopping center properties (266) (392)
Interest expense 36,956 36,787
Interest expense from unconsolidated affiliates 1,151 1,435
Interest expense from discontinued operations - 60
Minority investors' share of interest expense in
shopping center properties (414) (418)
Loss on extinguishment of debt - 1,948
Income taxes 494 (38)
Minority interest in earnings - Operating Partnership 20,637 16,197
Gain on discontinued operations (2,935) (1,243)
Preferred dividends 3,692 1,617
--------- --------
Company's share of total EBITDA $ 109,309 $ 96,992
========= ========
Interest Expense:
Interest expense $ 36,956 $ 36,787
Interest expense from discontinued operations - 60
Interest expense from unconsolidated affiliates 1,151 1,435
Minority investors' share of interest expense in
shopping center properties (414) (418)
--------- --------
Company's share of total interest expense $ 37,693 $ 37,864
======== ========
EBITDA to interest coverage ratio 2.90 2.56
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Same-Center Net Operating Income
(In thousands)
Three Months Ended
March 31,
2003 2002
Company's share of total EBITDA $ 109,309 $ 96,992
General and administrative expenses 6,353 5,741
Management fees and non-property revenues (1,608) (1,298)
Gain on sales of real estate assets (1,104) (415)
Income taxes (494) 38
Company's share of total NOI 112,456 101,058
NOI of non-comparable centers (11,342) (4,796)
--------- --------
Same center NOI $ 101,114 $ 96,262
========= ========
NOI by Property Type:
Malls $ 84,784 $ 79,914
Associated centers 3,540 3,149
Community centers 11,253 10,772
Other 1,537 2,427
9