[Letter Head of CBL & Associates Properties, Inc.]
[2030 Hamilton Place Blvd.,]
[Chattanooga, TN 37421-6000]
Contact: John N. Foy
Vice Chairman and CFO
(423) 855-0001
CBL REPORTS SECOND QUARTER RESULTS
|X| Increases FFO per share 10.2% for the quarter
|X| Same center portfolio NOI increases 6.1% for the quarter
|X| Acquires Sunrise Mall and its associated center in Brownsville, TX
|X| Announces development plans for Imperial Valley Mall in El Centro, CA
CHATTANOOGA, Tenn. (July 24, 2003) - CBL & Associates Properties, Inc.
(NYSE:CBL) today announced results for the quarter ended June 30, 2003.
Reconciliations of non-GAAP financial measures are included in the financial
tables accompanying this press release.
Funds from operations (FFO) increased 13.5% to $67,406,000 for the quarter
ended June 30, 2003, from $59,372,000 for the second quarter of 2002. FFO per
share on a diluted, fully converted basis increased 10.2% to $1.19 from $1.08 in
the prior-year period. FFO increased 17.3% to $134,703,000 for the first half of
2003 from $114,864,000 in the first half of 2002. FFO per share increased 10.7%
on a diluted, fully converted basis in the first six months to $2.38 from $2.15
per share in the prior-year period.
The Company began to include gains on sales of outparcels in FFO during the
first quarter of 2003 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 second quarter were $0.05 per diluted, fully converted
share versus $0.03 for the same period one year ago.
HIGHLIGHTS
|X| Net income available to common shareholders increased 11.2% in the
second quarter to $21,022,000 from $18,911,000 in the prior-year
period. On a diluted per share basis, net income available to
common shareholders for the second quarter increased 7.9% to $0.68
compared with $0.63 in the prior-year period. Net income available
to common shareholders increased 20.7% in the first half of 2003
to $43,798,000 from $36,295,000 in the first half of 2002. On a
diluted per share basis, net income available to common
shareholders for the first six months increased 11.8% to $1.42
compared with $1.27 in the prior-year period.
|X| Income from operations increased 12.5% in the second quarter of
2003 to $77,884,000 from $69,211,000 in the second quarter of
2002. Income from operations increased 12.3% in the first six
months of 2003 to $156,029,000 from $138,997,000 in the first six
months of 2002.
|X| Revenues increased 11.7% in the second quarter to $165,019,000
from $147,718,000 in the prior-year period. Revenues increased
13.4% in the first six months to $330,992,000 from $291,881,000 in
the comparable period a year ago. This quarter's revenues include
$1,167,000 in lease termination fees received from tenants
compared to $3,838,000 during the same period one year ago.
|X| Same center net operating income for the portfolio improved in
the second quarter by 6.1% compared with 5.5% for the prior-year
period.
|X| Same-store sales for mall tenants of 10,000 square feet or less
for stabilized malls decreased 1.5% for those tenants who have
reported year to date sales compared with a decrease of 1.0% for
the same period one year ago.
1
CBL's chairman and chief executive officer, Charles B. Lebovitz, said, "We
were able to build on leasing momentum gained from a successful ICSC Annual
Convention in May and our annual gathering of retailers in Chattanooga in June
to post strong improvements in mall and total portfolio occupancy on both a
sequential and year-over-year basis. The resulting increases in net operating
income and the ability to manage our balance sheet with favorable interest rates
led to another strong quarter of FFO growth.
"Although we attribute our continued success on the leasing front to the
investments we have made in developing, acquiring and renovating dominant mall
franchises, we cannot discount the contribution from an improved outlook on the
part of retailers. In ongoing discussions with retailers during these important
leasing events this past quarter, we have found they are positive about their
expansion plans for the year and going forward.
"This outlook is evident in our new development and acquisition programs.
We were again very active during the quarter with the opening of two community
centers and the acquisition of one mall and one associated center for a total of
1.3 million square feet. Subsequent to the end of the quarter, we began
construction on a new 57,000-square-foot associated center in Panama City and
announced plans for our first mall development in California, the
768,000-square-foot Imperial Valley Mall. With one new mall together with two
new community centers under construction plus additional opportunities available
for acquisitions, we are encouraged by the contributions expected from
development and acquisitions during the second half of this year and beyond."
OPERATIONAL HIGHLIGHTS
June 30,
----------------------------------
2003 2002
------------- -------------
Portfolio occupancy: 92.4% 91.1%
Mall portfolio 91.7% 89.4%
Stabilized malls (53) 92.2% 89.7%
Non-stabilized malls (2) 77.8% 84.5%
Associated centers 91.7% 95.9%
Community centers 94.0% 94.3%
Comparable mall shop sales (1.5)% (1.0)%
PROJECTS UNDER CONSTRUCTION OPENING DATES
|X| Waterford Commons - Waterford, CT September 2003
|X| The Shoppes at Panama City, Panama City, FL February 2004
|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
2
DEBT
The Company's share of consolidated and unconsolidated debt as of June 30,
2003 and 2002, is as follows (in thousands):
June 30, 2003 June 30, 2002
---------------------------- ----------------------------
Weighted Weighted
Avg. Interest Avg. Interest
Amount Rate(1) Amount Rate(1)
----------- ------------- ----------- -------------
Fixed-rate debt:
Non-recourse loans on operating properties $ 1,992,012 7.05% $ 1,874,525 7.19%
----------- -----------
Variable-rate debt:
Recourse term loans on operating properties 334,956 3.66% 284,004 4.20%
Lines of credit 245,000 2.15% 104,000 5.28%
Construction loans 31,210 2.82% 29,857 4.71%
----------- -----------
Total variable-rate debt 611,166 3.01% 417,861 4.50%
----------- -----------
Total $ 2,603,178 6.10% $ 2,292,386 6.70%
=========== ===========
<FN>
(1) Weighted average interest rate before amortization of deferred financing costs.
</FN>
Debt-to-total-market capitalization ratio as of June 30, 2003, was 50.3%
based on the common stock closing price of $43.00 and a fully converted common
stock share count of 55,832,021 as of the same date. The debt-to-total-market
capitalization ratio as of June 30, 2002, was 49.1%.
EBITDA to interest coverage ratio for the second quarter was 2.81 compared
with 2.73 for the prior-year period.
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 an
operating property at an interest rate of 6.95% as of June 30, 2003, compared
with $170 million of debt fixed through interest rate swap agreements at a
weighted average interest rate of 6.34% as of June 30, 2002. The $611.2 million
of variable rate debt at the end of the quarter included $80 million that has
been fixed through an interest rate swap agreement that expires on August 30,
2003.
On May 1, 2003, the Company acquired Sunrise Mall, a 740,000-square-foot
regional mall, and Sunrise Commons, a 225,500-square-foot associated center, in
Brownsville, Texas, for $40.7 million in cash and the assumption of $40 million
in debt. The acquisition is expected to generate an initial unleveraged return
of 9.0% based on current income. Excluding property management fees and
structural reserves, the initial unleveraged return is approximately 9.4%.
DIVIDENDS
CBL's regular quarterly cash dividend of $0.655 per share for the second
quarter was paid on July 18, 2003, to shareholders of record as of June 30,
2003. The second quarter cash dividend of $0.5625 per share for the Company's 9%
Series A Cumulative Redeemable Preferred Stock and the second quarter cash
dividend of $1.0938 per share for the Company's 8.75% Series B Cumulative
Redeemable Preferred Stock were both paid on June 30, 2003, to shareholders of
record as of June 12, 2003.
OUTLOOK AND GUIDANCE
Based on today's outlook and the Company's second quarter results,
management is comfortable with the upper range of First Call's per share
estimates for 2003 barring any significant disruptions to the economy.
3
INVESTOR CONFERENCE CALL AND SIMULCAST
CBL & Associates Properties, Inc. will conduct a conference call at 10:00
am EDT on July 25, 2003, to discuss the second quarter results. The number to
call for this interactive teleconference is 913-981-5508. A five-day replay of
the conference call will be available by dialing 719-457-0820 and entering the
passcode, 416591. A transcript of the Company's prepared remarks will be filed
as a Form 8-K following the conference call on July 25, 2003.
To receive CBL & Associates Properties, Inc. second 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 second 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 July 25, 2003, beginning at 10:00
a.m. EDT. The online replay will follow shortly after the call and continue
through August 8, 2003.
CBL & Associates Properties, Inc. has 55 enclosed regional malls in its
portfolio of 161 properties in 25 states totaling 59.4 million square feet
including 2.0 million square feet of non-owned shopping centers managed for
third parties. The Company has four projects under construction totaling
approximately 1.6 million square feet, including one mall - Coastal Grand -
Myrtle Beach, SC, one associated center and two community centers plus six mall
renovations. Also, the Company recently announced plans to develop Imperial
Valley Mall in El Centro, CA. In addition to its office in Chattanooga, TN, the
Company 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.
4
CBL & ASSOCIATES PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
2003 2002 2003 2002
---------- ------------ ------------ ----------
Revenues:
Minimum rents $ 104,604 $ 94,982 $ 207,592 $ 185,551
Percentage rents 1,198 1,798 7,528 8,515
Other rents 1,762 1,697 3,791 3,755
Tenant reimbursements 52,251 43,759 102,207 82,345
Management, development and leasing fees 1,406 2,456 2,725 3,754
Other 3,798 3,026 7,149 7,961
---------- ----------- ----------- ----------
Total revenues 165,019 147,718 330,992 291,881
---------- ----------- ----------- ----------
Expenses:
Property operating 28,052 27,177 56,324 49,497
Depreciation and amortization 27,690 23,646 54,002 46,127
Real estate taxes 12,818 11,267 26,811 22,794
Maintenance and repairs 9,616 8,891 20,173 17,453
General and administrative 6,644 5,466 12,997 11,206
Other 2,315 2,060 4,656 5,807
---------- ----------- ----------- ----------
Total expenses 87,135 78,507 174,963 152,884
---------- ----------- ----------- ----------
Income from operations 77,884 69,211 156,029 138,997
Interest Income 592 230 1,165 983
Interest expense (38,363) (34,050) (75,319) (70,837)
Loss on extinguishment of debt (167) (1,240) (167) (3,187)
Gain on sales of real estate assets 3,002 1,789 4,106 2,204
Equity in earnings of unconsolidated affiliates 731 2,015 2,488 4,102
Minority interest in earnings:
Operating partnership (17,979) (16,335) (38,616) (32,532)
Shopping center properties (893) (1,216) (1,433) (2,133)
---------- ----------- ----------- ----------
Income before discontinued operations 24,807 20,404 48,253 37,597
Operating income of discontinued operations (93) 353 (6) 919
Gain on discontinued operations - 164 2,935 1,406
---------- ----------- ----------- ----------
Net income 24,714 20,921 51,182 39,922
Preferred dividends (3,692) (2,010) (7,384) (3,627)
---------- ----------- ----------- ----------
Net income available to common shareholders $ 21,022 $ 18,911 $ 43,798 $ 36,295
========== =========== =========== ==========
Basic per share data:
Income before discontinued operations,
net of preferred dividends $ 0.71 $ 0.63 $ 1.37 $ 1.23
Discontinued operations 0.00 0.02 0.10 0.08
---------- ----------- ----------- ----------
Net income available to common shareholders $ 0.70 $ 0.65 $ 1.47 $ 1.31
========== =========== =========== ==========
Weighted average common shares outstanding 29,886 29,084 29,806 27,728
Diluted per share data:
Income before discontinued operations,
net of preferred dividends $ 0.68 $ 0.61 $ 1.32 $ 1.19
Discontinued operations 0.00 0.02 0.10 0.08
---------- ----------- ----------- ----------
Net income available to common shareholders $ 0.68 $ 0.63 $ 1.42 $ 1.27
========== =========== =========== ==========
Weighted average common and potential dilutive
common shares outstanding 31,066 29,943 30,942 28,541
5
SUMMARIZED UNAUDITED BALANCE SHEET INFORMATION (IN THOUSANDS)
June 30, December 31,
2003 2002
------------- -------------
Cash, restricted cash and cash equivalents $ 25,750 $ 13,355
Total assets 3,949,707 3,795,114
Mortgage and other notes payable 2,540,914 2,402,079
Minority interest 505,088 500,513
Shareholders' equity 755,454 741,190
FUNDS FROM OPERATIONS CALCULATION
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
2003 2002 2003 2002
------------- -------------- ------------- -------------
Net income available to common shareholders $ 21,022 $ 18,911 $ 43,798 $ 36,295
Add: Depreciation and amortization
from consolidated properties 27,690 23,646 54,002 46,127
Depreciation and amortization
from unconsolidated affiliates 1,123 848 2,019 1,772
Depreciation and amortization
from discontinued operations - 214 10 465
Minority interest in earnings of
operating partnership 17,979 16,335 38,616 32,532
Less: Minority investors' share of
depreciation and amortization
in shopping center properties (275) (302) (541) (694)
Gain on disposal of discontinued
operations - (164) (2,935) (1,406)
Depreciation and amortization of non-
real estate assets (133) (116) (266) (227)
------------- -------------- ------------- --------------
Funds from operations $ 67,406 $ 59,372 $ 134,703 $ 114,864
============= ============== ============= ==============
Funds from operations applicable to
Company shareholders $ 36,252 $ 31,914 $ 72,356 $ 60,563
------------- -------------- ------------- --------------
Basic per share data:
Funds from operations $ 1.21 $ 1.10 $ 2.43 $ 2.18
============= ============== ============= ==============
Weighted average common shares
outstanding with operating partnership
units fully converted 55,568 54,107 55,489 52,586
Diluted per share data:
Funds from operations $ 1.19 $ 1.08 $ 2.38 $ 2.15
============= ============== ============= ==============
Weighted average common and potential
dilutive common shares outstanding
with operating partnership units
fully converted 56,748 54,966 56,625 53,399
SUPPLEMENTAL FFO INFORMATION:
Straight-line rental income $ 1,103 $ 948 $ 2,036 $ 1,900
Straight-line rental income per share $ 0.02 $ 0.02 $ 0.04 $ 0.04
Gain on outparcel sales $ 3,002 $ 1,789 $ 4,106 $ 2,204
Gain on outparcel sales per share $ 0.05 $ 0.03 $ 0.07 $ 0.04
6
RECONCILIATION OF COMMON SHARES AND UNITS OUTSTANDING
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
Basic Diluted Basic Diluted
-------------- ------------- ------------ ---------------
2003:
Weighted average shares used to compute earnings per share 29,866 31,066 29,806 30,942
Weighted average operating partnership units 25,702 25,682 25,683 25,683
-------------- ------------- ------------ ---------------
Weighted average shares used to compute FFO per share 55,568 56,748 55,489 56,625
============== ============= ============ ===============
2002:
Weighted average shares used to compute earnings per share 29,084 29,943 27,728 28,541
Weighted average operating partnership units 25,023 25,023 24,858 24,858
-------------- ------------- ------------ ---------------
Weighted average shares used to compute FFO per share 54,107 54,966 52,586 53,399
============== ============= ============ ===============
RECONCILIATION OF COMPANY'S SHARE OF TOTAL DEBT
(Dollars in thousands)
June 30, 2003
---------------------------------------------------------------
Fixed Variable
Rate Rate Total
---------------------- -------------------- -----------------
Consolidated debt $1,973,945 $566,969 $2,540,914
Minority investors' share of consolidated debt (19,857) -- (19,857)
Company's share of unconsolidated affiliates' debt 37,924 44,197 82,121
---------------------- -------------------- -----------------
Company's share of consolidated and unconsolidated debt $1,992,012 $611,166 $2,603,178
====================== ==================== =================
Weighted average interest rate 7.05% 3.01% 6.10%
June 30, 2002
---------------------------------------------------------------
Fixed Variable
Rate Rate Total
---------------------- -------------------- -----------------
Consolidated debt $ 1,807,083 $ 401,800 $ 2,208,883
Minority investors' share of consolidated debt (19,185) (7,595) (26,780)
Company's share of unconsolidated affiliates' debt 86,628 23,655 110,283
---------------------- -------------------- -----------------
Company's share of consolidated and unconsolidated debt $ 1,874,526 $ 417,860 $ 2,292,386
====================== ==================== =================
Weighted average interest rate 7.19% 4.50% 6.70%
7
EBITDA TO INTEREST COVERAGE RATIO
(Dollars in thousands)
Three Months Ended
June 30,
-------------------------------------
2003 2002
------------------ ------------------
EBITDA:
Consolidated net income available to
common shareholders $ 21,022 $ 18,911
Adjustments:
Depreciation and amortization 27,690 23,646
Depreciation and amortization from
unconsolidated affiliates 1,123 848
Depreciation and amortization from
discontinued operations -- 214
Minority investors' share of
depreciation and amortization in
shopping center properties (275) (302)
Interest expense 38,363 34,050
Interest expense from unconsolidated
affiliates 1,923 2,911
Interest expense from discontinued
operations -- 13
Minority investors' share of interest
expense in shopping center properties (363) (445)
Loss on extinguishment of debt 167 1,240
Income taxes 1,046 391
Minority interest in earnings -
Operating Partnership 17,979 16,335
Gain on discontinued operations -- (164)
Preferred dividends 3,692 2,010
------------------ ------------------
Company's share of total EBITDA $ 112,367 $ 99,658
================== ==================
Interest Expense:
Interest expense 38,363 34,050
Interest expense from discontinued
operations -- 13
Interest expense from unconsolidated
affiliates 1,923 2,911
Minority investors' share of interest
expense in shopping center
properties (363) (445)
------------------ ------------------
Company's share of total interest
expense $ 39,923 $ 36,529
================== ==================
EBITDA to interest coverage ratio 2.81 2.73
================== ==================
8
RECONCILIATION OF SAME CENTER NET OPERATING INCOME
(In thousands)
Three Months Ended
June 30,
---------------------------------
2003 2002
----------------- --------------
Company's share of total EBITDA $ 112,367 $ 99,658
General and administrative expenses 6,644 5,466
Management fees and non-property revenues (3,070) (4,156)
Gain on sales of real estate assets (3,002) (1,789)
Income taxes (1,046) (391)
----------------- --------------
Company's share of total NOI 111,893 98,788
NOI of non-comparable centers (14,554) (7,087)
----------------- --------------
Same center NOI $ 97,339 $ 91,701
================= ==============
NOI by property type
Malls $ 80,560 $ 76,494
Associated centers 3,583 4,073
Community centers 10,848 10,189
Other 2,348 945
----------------- --------------
Same center NOI $ 97,339 $ 91,701
================= ==============
9