Exhibit 99.1
[CBL & ASSOCIATES PROPERTIES, INC. LETTERHEAD]
Contact: Katie Knight
Director, Investor Relations
(423) 855-0001
CBL & ASSOCIATES PROPERTIES REPORTS FIRST QUARTER RESULTS
o FFO per share rose 23.6% to $1.52 in the first quarter.
o Same-center NOI for the first quarter rose 10.7%.
o Same store sales improved by 4.5% year-to-date.
o Portfolio occupancy rose to 91.3% in the first quarter.
CHATTANOOGA, Tenn. (May 3, 2005) CBL & Associates Properties, Inc. (NYSE:CBL)
announced results for the first quarter ended March 31, 2005. A description of
each non-GAAP financial measure and the related reconciliation to the comparable
GAAP measure is located at the end of this release.
Net income available to common shareholders for the first quarter ended
March 31, 2005, was $25,371,000 compared with $30,189,000 for the prior-year
period representing a decline of 16.0%. Net income available to common
shareholders per diluted share was $0.78 in the first quarter ended March 31,
2005, compared with $0.96 for the prior-year period, representing a decline of
18.8%. Net income available to common shareholders in the first quarter 2004 of
$0.96 per share included one-time gains from the sale of six community and power
centers to the Galileo America joint venture of $0.32 per share. There was no
gain associated with the sale of four community centers in the final phase of
the Galileo America joint venture which closed in January 2005.
Funds from operations (FFO) increased 27.0% to $88,461,000 for the first
quarter of 2005 from $69,660,000 for the first quarter of 2004. FFO per share on
a diluted fully converted basis increased 23.6% to $1.52 for the first quarter
of 2005 from $1.23 in the prior-year period.
HIGHLIGHTS
o Total revenues increased 22.5% in the first quarter 2005 to
$210,905,000 from $172,159,000 in the prior-year period.
o Same center net operating income for the portfolio improved in the
first quarter of 2005 by 10.7% compared with a 1.7% increase for the
prior-year period. Significant factors positively impacting the first
quarter 2005 NOI growth of $12.2 million over the prior year period
included: i) Approximately $6.1 million related to improvements in bad
debt expense and other charges against revenues; ii) Approximately
$400,000 related to accounting for rent holidays; iii) Approximately
$1.0 million more in percentage rents compared with the first quarter
of 2004 related to malls acquired in 2003.
o Same-store sales for mall tenants of 10,000 square feet or less for
stabilized malls as of March 31, 2005, increased 4.5% for those
tenants who have reported sales compared with a 7.5% increase for the
first quarter of 2004.
o The debt-to-total-market capitalization ratio as of March 31, 2005,
was 44.0% based on the common stock closing price of $71.51 and a
fully converted common stock share count of 57,035,000 as of the same
date. The debt-to-total-market capitalization ratio as of March 31,
2004, was 44.5% based on the common stock closing price of $61.34 and
a fully converted common stock share count of 55,808,000 as of the
same date.
o Variable rate debt of $789,185,000 represents 9.9% of the total market
capitalization for the Company and 22.5% of the Company's share of
total consolidated and unconsolidated debt.
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CBL Reports First Quarter Results
Page 2
May 3, 2005
CBL's Chairman and Chief Executive Officer, Charles B. Lebovitz, said,
"With such a strong, well-balanced first quarter, we are fortunate to be able to
point to many factors that positively influenced our performance. We generated
impressive same-center NOI growth in our existing portfolio from improvements in
several areas including increases in occupancy, specialty leasing and
sponsorship income. Additionally, the impact from continuously redeveloping our
portfolio has led to significant new rental income as we proactively converted
several department stores to large space users and mall shop expansions.
"A year ago, the prevailing theme in the mall industry was the large number
of tenant bankruptcies. We have proven quite convincingly that this challenge
could be converted into opportunities to enhance our tenant base. We have
backfilled over 230,000 square feet of space lost to bankruptcies over the past
two years leading to significant improvement in overall tenant quality and
increases in rental rates. We are now benefiting from a more favorable
environment with more productive tenants, retailers pursuing expansion plans and
a stronger economy overall.
"Much of the current industry discussion has focused on department store
consolidation, select retailers moving to off-mall venues and the appeal of
lifestyle-oriented centers to consumers. We look at these trends as
opportunities to continue to recapture underperforming department store space,
add exterior-oriented restaurants and upscale lifestyle elements to each of our
malls, and convert outparcels and adjoining property into new development
projects. In each instance, these initiatives align perfectly with our focus to
continuously redevelop and retenant our properties in an effort to offer
consumers the most exciting shopping venues available. We expect to continue to
successfully execute these initiatives in 2005 and beyond."
PORTFOLIO OCCUPANCY*
March 31,
2005 2004
------------- -------------
Portfolio occupancy 91.3% 90.8%
Mall portfolio 91.5% 91.0%
Stabilized malls (67) 91.9% 91.5%
Non-stabilized malls (3) 81.8% 81.5%
Associated centers (26) 91.9% 88.7%
Community centers (5) 82.9% 91.6%
<FN>
* Figures exclude the community centers that were contributed into the Galileo
America joint venture.
</FN>
PROPERTY SALES
In January, the Company completed the final phase of the Galileo America
joint venture. The Company transferred two power centers, one community center
and one community center expansion to the joint venture for total consideration
of $58.6 million. The Company recognized an impairment loss of $1.95 million in
the fourth quarter 2004 and an additional impairment loss of $262,000 in the
first quarter 2005 related to the properties in this transaction.
The Company also completed the sale of five community center properties
located throughout Michigan for a total sales price of $12.1 million. The
Company previously took an impairment loss of $617,000 in the fourth quarter of
2004 and took an additional loss of $32,000 in the first quarter 2005 related to
the properties in this transaction.
OUTLOOK AND GUIDANCE
Based on today's outlook and the Company's first quarter results, the
Company is offering guidance for 2005 FFO in the range of $5.88 to $5.96 per
share. The full year guidance assumes NOI growth in the range of 3% to 4% and
excludes the impact of any future acquisitions, termination fee income, gains on
sales of outparcels, or gains on sales of non-operating properties. The Company
expects to update its annual guidance after each quarter's results.
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CBL Reports First Quarter Results
Page 3
May 3, 2005
Low High
----- -----
Expected diluted earnings per common share $2.97 $3.05
Adjust to fully converted shares from common shares (1.31) (1.35)
----- -----
Expected earnings per diluted, fully converted common share 1.66 1.70
Add: depreciation and amortization 2.91 2.91
Add: minority interest in earnings of Operating Partnership 1.31 1.35
----- ------
Expected FFO per diluted, fully converted common share $5.88 $5.96
===== =====
INVESTOR CONFERENCE CALL AND SIMULCAST
CBL & Associates Properties, Inc. will conduct a conference call at 10:00
am EDT on May 4, 2005, to discuss the first quarter results. The number to call
for this interactive teleconference is 913-981-5509. A seven-day replay of the
conference call will be available by dialing 719-457-0820 and entering the
passcode 7513644. A transcript of the Company's prepared remarks will be
furnished on a Form 8-K following the conference call.
To receive the CBL & Associates Properties, Inc., first quarter earnings
release and supplemental information please visit our website at
cblproperties.com or contact Investor Relations at 423-490-8292.
The Company will also provide an online Web simulcast and rebroadcast of
its 2005 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 cblproperties.com, as well as www.streetevents.com and
www.fulldisclosure.com, on May 4, 2005, beginning at 10:00 a.m. EDT. The online
replay will follow shortly after the call and continue through May 18, 2005.
CBL & Associates Properties, Inc. is the fourth largest mall REIT in North
America and the largest owner of malls and shopping centers in the Southeast,
ranked by GLA. CBL owns, holds interests in or manages 167 properties, including
70 enclosed regional malls. The properties are located in 29 states and total
73.5 million square feet including 2.0 million square feet of non-owned shopping
centers managed for third parties. CBL currently has nine projects under
construction totaling approximately 1.5 million square feet. The projects
include two open-air shopping centers located in Ft. Myers, Fl and Memphis
(Southaven, MS), TN, one associated center, three community centers and three
expansions. In addition to its office in Chattanooga, TN, CBL has a regional
office in Boston (Waltham), MA. Additional information can be found at
cblproperties.com
NON-GAAP FINANCIAL MEASURES
Funds From Operations
FFO is a widely used measure of the operating performance of real estate
companies that supplements net income determined in accordance with generally
accepted accounting principles ("GAAP"). The National Association of Real Estate
Investment Trusts defines FFO as net income (computed in accordance with GAAP)
excluding gains or losses on sales of operating properties, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships and
joint ventures. The Company believes that FFO provides an additional indicator
of the operating performance of the Company's properties without giving effect
to real estate depreciation and amortization, which assumes the value of real
estate assets decline predictably over time. Since values of well-maintained
real estate assets have historically risen or fallen with market conditions, the
Company believes that FFO enhances investors' understanding of the Company's
operating performance.
FFO does not represent cash flow from operations as defined by accounting
principles generally accepted in the United States, is not necessarily
indicative of cash available to fund all cash flow needs and should not be
considered as an alternative to net income for purposes of evaluating the
Company's operating performance or to cash flow as a measure of liquidity.
Same-Center Net Operating Income
Net operating income ("NOI") is a supplemental measure of the operating
performance of the Company's shopping centers. The Company defines NOI as
operating revenues (rental revenues, tenant reimbursements and other income)
less property operating expenses (property operating, real estate taxes and
maintenance and repairs).
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CBL Reports First Quarter Results
Page 4
May 3, 2005
Similar to FFO, the Company computes NOI based on its pro rata share of
both consolidated and unconsolidated properties. The Company's definition of NOI
may be different than that used by other companies and, accordingly, the
Company's NOI may not be comparable to that of other companies. A reconciliation
of same-center NOI to net income is located at the end of this earnings release.
Since NOI includes only those revenues and expenses related to the
continuing operations of its shopping center properties, the Company believes
that same-center NOI provides a measure that reflects trends in occupancy rates,
rental rates and operating costs and the impact of those trends on the Company's
results of operations.
Pro Rata Share of Debt
The Company presents debt based on its pro rata ownership share (including
the Company's pro rata share of unconsolidated affiliates and excluding minority
investors' share of consolidated properties) because it believes this provides
investors a clearer understanding of the Company's total debt obligations which
affect the Company's liquidity. A reconciliation of the Company's pro rata share
of debt to the amount of debt on the Company's consolidated balance sheet is
located at the end of this earnings release.
Information included herein contains "forward-looking statements" within
the meaning of the federal securities laws. Such statements are inherently
subject to risks and uncertainties, many of which cannot be predicted with
accuracy and some of which might not even be anticipated. Future events and
actual events, financial and otherwise, may differ materially from the events
and results discussed in the forward-looking statements. The reader is directed
to the Company's various filings with the Securities and Exchange Commission,
including without limitation the Company's Annual Report on Form 10-K and the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference therein, for a discussion of such risks
and uncertainties.
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CBL Reports First Quarter Results
Page 5
May 3, 2005
CBL & ASSOCIATES PROPERTIES, INC.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
Three Months Ended
March 31,
-------------------------
2005 2004
----------- -----------
REVENUES:
Minimum rents $ 130,431 $ 108,450
Percentage rents 8,099 6,685
Other rents 3,125 2,786
Tenant reimbursements 60,786 47,996
Management, development and leasing fees 3,045 1,795
Other 5,419 4,447
----------- -----------
Total revenues 210,905 172,159
----------- -----------
EXPENSES:
Property operating 31,665 27,645
Depreciation and amortization 41,286 32,556
Real estate taxes 15,451 13,081
Maintenance and repairs 12,345 10,194
General and administrative 9,186 8,233
Loss on impairment of real estate assets 262 -
Other 3,430 3,032
----------- -----------
Total expenses 113,625 94,741
----------- -----------
Income from operations 97,280 77,418
Interest income 1,683 880
Interest expense (48,921) (40,434)
Loss on extinguishment of debt (884) -
Gain on sales of real estate assets 2,714 19,825
Equity in earnings of unconsolidated affiliates 3,091 2,864
Minority interest in earnings:
Operating partnership (20,826) (25,034)
Shopping center properties (1,397) (1,238)
----------- -----------
Income before discontinued operations 32,740 34,281
Operating income of discontinued operations 305 329
Loss on discontinued operations (32) (5)
----------- -----------
Net income 33,013 34,605
Preferred dividends (7,642) (4,416)
----------- -----------
Net income available to common shareholders $ 25,371 $ 30,189
=========== ===========
Basic per share data:
Income before discontinued operations, net of
preferred dividends $ 0.80 $ 0.98
Discontinued operations 0.01 0.02
----------- -----------
Net income available to common shareholders $ 0.81 $ 1.00
=========== ===========
Weighted average common shares outstanding 31,224 30,324
Diluted per share data:
Income before discontinued operations, net of
preferred dividends $ 0.77 $ 0.95
Discontinued operations 0.01 0.01
----------- -----------
Net income available to common shareholders $ 0.78 $ 0.96
=========== ===========
Weighted average common and potential dilutive
common shares outstanding 32,397 31,567
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CBL Reports First Quarter Results
Page 6
May 3, 2005
The Company's calculation of FFO is as follows (in thousands, except per share
data):
Three Months Ended
March 31,
------------------------
2005 2004
---------- ----------
Net income available to common shareholders $ 25,371 $ 30,189
Add:
Depreciation and amortization from consolidated properties 41,286 32,556
Depreciation and amortization from unconsolidated affiliates 1,710 1,196
Depreciation and amortization from discontinued operations - 189
Minority interest in earnings of operating partnership 20,826 25,034
Less:
Gain on sales of operating real estate assets (223) (19,081)
Minority investors' share of depreciation and amortization (362) (293)
Loss on discontinued operations 32 5
Depreciation and amortization of non-real estate assets (179) (135)
---------- ----------
Funds from operations $ 88,461 $ 69,660
========== ==========
Funds from operations applicable to Company shareholders $ 48,582 $ 38,082
========== ==========
Basic per share data:
Funds from operations $ 1.56 $ 1.26
========== ==========
Weighted average common shares outstanding with operating
partnership units fully converted 56,854 55,471
Diluted per share data:
Funds from operations $ 1.52 $ 1.23
========== ==========
Weighted average common and potential dilutive common
shares outstanding with operating partnership units
fully converted 58,028 56,713
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees $ 2,249 $ 1,143
Lease termination fees per share $ 0.04 $ 0.02
Straight-line rental income $ 1,767 $ 650
Straight-line rental income per share $ 0.03 $ 0.01
Gains on outparcel sales $ 2,610 $ 1,339
Gains on outparcel sales per share $ 0.04 $ 0.02
Amortization of acquired above- and below-market leases $ 1,164 $ 638
Amortization of acquired above- and below-market
leases per share $ 0.02 $ 0.01
Amortization of debt premiums $ 1,709 $ 973
Amortization of debt premiums per share $ 0.03 $ 0.02
Gain on sales of non operating properties $ 816 $ -
Gain on sales of non operating properties per share $ 0.01 $ -
Loss on impairment of real estate assets $ (262) $ -
Loss on impairment of real estate assets per share $ - $ -
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CBL Reports First Quarter Results
Page 7
May 3, 2005
Same-Center Net Operating Income
(Dollars in thousands)
Three Months Ended
March 31,
----------------------
2005 2004
----------------------
Net income $ 33,013 $ 34,605
Adjustments:
Depreciation and amortization 41,286 32,556
Depreciation and amortization from unconsolidated affiliates 1,710 1,196
Depreciation and amortization from discontinued operations - 189
Minority investors' share of depreciation and amortization in
shopping center properties (362) (293)
Interest expense 48,921 40,434
Interest expense from unconsolidated affiliates 2,522 1,417
Interest expense from discontinued operations - 11
Minority investors' share of interest expense in
shopping center properties (378) (415)
Loss on extinguishment of debt 884 -
Abandoned projects expense 121 441
Gain on sales of real estate assets (2,714) (19,825)
Loss on impairment of real estate assets 262 -
Gain on sales of real estate assets of unconsolidated
affiliates (934) (592)
Minority interest in earnings of operating partnership 20,826 25,034
Loss on discontinued operations 32 5
----------- ----------
Operating partnership's share of total NOI 145,189 114,763
General and administrative expenses 9,186 8,233
Management fees and non-property level revenues (5,539) (4,970)
----------- ----------
Operating partnership's share of property NOI 148,836 118,026
NOI of non-comparable centers (23,128) (4,505)
----------- ----------
Total same center NOI $125,708 $113,521
=========== ==========
Malls $115,896 $104,459
Associated centers 5,706 6,593
Community centers 1,309 512
Other 2,797 1,957
----------- ----------
Total same center NOI $125,708 $113,521
=========== ==========
Percentage Change:
Malls 10.9%
Associated centers -13.5%
Community centers 155.7%
Other 42.9%
-----------
Total same center NOI 10.7%
===========
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CBL Reports First Quarter Results
Page 8
May 3, 2005
Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
March 31, 2005
----------------------------------------------------
Fixed Rate Variable Rate Total
------------------ ---------------------------------
Consolidated debt $ 2,660,174 $ 709,128 $ 3,369,302
Minority investors' share of consolidated debt (52,667) - (52,667)
Company's share of unconsolidated affiliates' debt 107,219 80,057 187,276
------------------ -------------- -----------------
Company's share of consolidated and unconsolidated debt $ 2,714,726 $ 789,185 $ 3,503,911
================== ============== =================
Weighted average interest rate 6.34% 3.70% 5.75%
================== ============== =================
March 31, 2004
----------------------------------------------------
Fixed Rate Variable Rate Total
------------------ -------------- -----------------
Consolidated debt $ 2,369,807 $ 446,075 $ 2,815,882
Minority investors' share of consolidated debt (53,683) - (53,683)
Company's share of unconsolidated affiliates' debt 59,311 98,877 158,188
------------------ -------------- -----------------
Company's share of consolidated and unconsolidated debt $ 2,375,435 $ 544,952 $ 2,920,387
================== ============== =================
Weighted average interest rate 6.56% 2.46% 5.80%
================== ============== =================
Debt-To-Total-Market Capitalization Ratio as of March 31, 2005
(In thousands, except stock price) Shares
Outstanding Stock Price (1) Value
------------------ -------------- -----------------
Common stock and operating partnership units 57,035 $ 71.51 $ 4,078,573
8.75% Series B Cumulative Redeemable Preferred Stock 2,000 50.00 100,000
7.75% Series C Cumulative Redeemable Preferred Stock 460 250.00 115,000
7.375% Series D Cumulative Redeemable Preferred Stock 700 250.00 175,000
-----------------
Total market equity 4,468,573
Company's share of total debt 3,503,911
-----------------
Total market capitalization $ 7,972,484
=================
Debt-to-total-market capitalization ratio 44.0%
=================
<FN>
(1) Stock price for common stock and operating partnership units equals
the closing price of the common stock on March 31, 2005. The stock
price for the preferred stock represents the liquidation preference of
each respective series of preferred stock.
</FN>
Reconciliation of Shares and Operating Partnership Units Outstanding
(In thousands)
Three Months Ended
March 31,
----------------------------------
2005: Basic Diluted
-------------- ------------------
Weighted average shares - EPS 31,224 32,397
Weighted average operating partnership units 25,630 25,631
-------------- ------------------
Weighted average shares - FFO 56,854 58,028
============== ==================
2004:
Weighted average shares - EPS 30,324 31,567
Weighted average operating partnership units 25,147 25,146
-------------- ------------------
Weighted average shares - FFO 55,471 56,713
============== ==================
Dividend Payout Ratio Three Months Ended
March 31,
----------------------------------
2005 2004
-------------- ------------------
Dividend per share $ 0.8125 $ 0.725
FFO per diluted, fully converted share $ 1.52 $ 1.23
-------------- ------------------
Dividend payout ratio 53.5% 58.9%
============== ==================
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CBL Reports First Quarter Results
Page 9
May 3, 2005
Consolidated Balance Sheets
(Preliminary and unaudited, in thousands)
March 31, December 31,
2005 2004
------------ ------------
ASSETS
Real estate assets:
Land $ 659,719 $ 659,782
Buildings and improvements 4,689,107 4,670,462
------------ ------------
5,348,826 5,330,244
Less: accumulated depreciation (612,957) (575,464)
------------ ------------
4,735,869 4,754,780
Real estate assets held for sale - 61,607
Developments in progress 99,976 78,393
------------ ------------
Net investment in real estate assets 4,835,845 4,894,780
Cash and cash equivalents 58,935 25,766
Receivables:
Tenant, net of allowance 34,183 38,409
Other 12,214 13,706
Mortgage notes receivable 29,889 27,804
Investment in unconsolidated affiliates 94,704 84,782
Other assets 113,010 119,253
------------ ------------
$ 5,178,780 $ 5,204,500
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable $ 3,369,302 $ 3,359,466
Mortgage notes payable on real estate assets
held for sale - 12,213
Accounts payable and accrued liabilities 186,365 212,064
------------ ------------
Total liabilities 3,555,667 3,583,743
------------ ------------
Commitments and contingencies
Minority interests 567,110 566,606
------------ ------------
Shareholders' equity:
Preferred stock, $.01 par value 32 32
Common stock, $.01 par value 314 313
Additional paid-in capital 1,027,589 1,025,792
Deferred compensation (2,883) (3,081)
Retained earnings 30,951 31,095
------------ ------------
Total shareholders' equity 1,056,003 1,054,151
------------ ------------
$ 5,178,780 $ 5,204,500
============ ============
<FN>
The balance sheet above is preliminary as of the date of this report. Please
refer to the Company's Quarterly Report on Form 10-Q when filed for a complete
balance sheet as of March 31, 2005.
</FN>
-END-