Exhibit 99.1
[CBL & ASSOCIATES PROPERTIES, INC. LETTERHEAD]
Contact: Katie Reinsmidt
Director, Investor Relations
(423) 855-0001
CBL & ASSOCIATES PROPERTIES REPORTS FIRST QUARTER RESULTS
o FFO per share rose 9.2 % to $0.83 in the first quarter.
o Same-center NOI for the first quarter rose 3.6%.
o Same store sales improved by 2.8% in first quarter.
o Portfolio occupancy was 91.3% as of March 31, 2006.
CHATTANOOGA, Tenn. (May 01, 2006) - CBL & Associates Properties, Inc. (NYSE:CBL)
announced results for the first quarter ended March 31, 2006. A description of
each non-GAAP financial measure and the related reconciliation to the comparable
GAAP measure is located at the end of this news release. Per share amounts have
been adjusted to reflect the two-for-one split of the Company's common shares,
effective June 16, 2005.
Net income available to common shareholders for the first quarter ended
March 31, 2006, was $20,613,000 compared with $25,371,000 for the prior-year
period, representing a decline of 18.8%. Net income available to common
shareholders per diluted share was $0.32 in the first quarter ended March 31,
2006, compared with $0.39 for the prior-year period, representing a decline of
17.9%. The decline in net income available to common shareholders was primarily
a result of increased depreciation expense and interest expense from new
properties acquired.
Funds from operations (FFO) increased 9.2% to $96,567,000 for the first
quarter of 2006 from $88,461,000 for the first quarter of 2005. FFO per share on
a diluted, fully converted basis increased 9.2% to $0.83 for the first quarter
of 2006 from $0.76 in the prior-year period.
HIGHLIGHTS
|X| Total revenues increased 14.3% in the first quarter 2006 to
$245,319,000 from $214,711,000 in the prior-year period.
|X| Same center net operating income (NOI) for the portfolio improved for
the quarter ended March 31, 2006, by 3.6%, compared with a 10.7%
increase for the prior-year period. The prior year period included a
significant increase resulting from the recovery of bad debt expense
and other charges against revenue.
|X| Same-store sales for mall tenants of 10,000 square feet or less for
stabilized malls as of March 31, 2006, increased 2.8% to $332 per
square foot for those tenants who have reported sales, compared with a
4.5% increase for the prior year period.
|X| The debt-to-total-market capitalization ratio as of March 31, 2006,
was 46.4% based on the common stock closing price of $42.45 and a
fully converted common stock share count of 115,669,000 shares as of
the same date. The debt-to-total-market capitalization ratio as of
March 31, 2005, was 44.0% based on the split-adjusted common stock
closing price of $35.76 and a fully converted common stock share count
of 114,070,000 shares as of the same date.
|X| Consolidated and unconsolidated variable rate debt of $1,157,994,000
represents 11.7% of the total market capitalization for the Company
and 25.2% of the Company's share of total consolidated and
unconsolidated debt.
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CBL Reports First Quarter Results
Page 2
May 1, 2006
CBL's Chairman and Chief Executive Officer, Charles B. Lebovitz, said, "The
year-over-year improvement in our first quarter FFO was driven by contributions
from new developments opened last year, growth from the over $1.0 billion in
acquisitions completed in 2005 and lease termination income. Notwithstanding the
impact from lease terminations and store closures, the overall portfolio
continues to produce solid growth consistent with our expectations.
We are encouraged by the current state of the retail industry as well as
the healthy economy in our markets and have high expectations for the balance of
the year. We have a total of eight malls scheduled for remodeling in 2006, our
largest number in several years. Given the demonstrated positive impact these
improvements have had on producing additional NOI growth at our previously
remodeled malls, we look forward to the completion of these projects this fall.
New development will also play a major role for us in 2006 as we anticipate
opening approximately 2.0 million square feet of new developments,
redevelopments, lifestyle element additions and department store conversions. In
each case, we expect to generate strong initial returns that will lead to
continuing growth in future years. Although acquisitions are expected to make
less of a contribution than they have in the past, we will continue to seek new
opportunities that are consistent with our investment criteria and strategic
objectives."
PORTFOLIO OCCUPANCY
March 31,
2006 2005
-------- --------
Portfolio occupancy 91.3% 91.3%
Mall portfolio 91.1% 91.5%
Stabilized malls 91.3% 91.9%
Non-stabilized malls 88.2% 81.8%
Associated centers 92.0% 91.9%
Community centers 91.9% 82.9%
SIGNIFICANT EVENTS
CBL announced that it has exercised its right to sell Wilkes - Barre
Township Marketplace in Wilkes - Barre Township, PA, and Springdale Center in
Mobile, AL, to Galileo America LLC ("Galileo") for $63.0 million, in cash. In
addition, the Company announced that it intends to exercise its right to sell
three community centers (Fashion Square in Orange Park, FL, Chicopee Marketplace
in Chicopee, MA, and Cobblestone Village at Royal Palm in West Palm Beach, FL)
to Galileo for approximately $43.5 million. The sale of the five centers is
expected to close in May 2006.
As a result, the Company has classified these five properties as held for
sale on the consolidated balance sheet as of March 31, 2006, and has reflected
their results of operations as discontinued operations in the consolidated
statements of operations for all periods presented.
In March, CBL announced the opening of a new regional leasing, management
and marketing office in Dallas, Texas. The new location is the second regional
office for CBL.
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CBL Reports First Quarter Results
Page 3
May 1, 2006
OUTLOOK AND GUIDANCE
Based on today's outlook, the Company's first quarter results, higher
interest rate assumptions due to the recent rise in rates, and the expected sale
of five community centers in the second quarter, the Company is providing
guidance for 2006 FFO in the range of $3.29 to $3.34 per share. The full year
guidance assumes same center NOI growth in the range of 2.5% to 3.5% and
excludes the impact of any future unannounced acquisitions, gains on sales of
outparcels, future lease termination fees and gains on sales of non-operating
properties. The Company expects to update its annual guidance after each
quarter's results.
Low High
-------- --------
Expected diluted earnings per common share $1.37 $1.42
Adjust to fully converted shares from common shares (0.62) (0.64)
-------- --------
Expected earnings per diluted, fully converted common share 0.75 0.78
Add: depreciation and amortization 1.98 1.98
Less: gain on sale of completed centers (0.05) (0.05)
Add: minority interest in earnings of Operating Partnership 0.61 0.63
-------- --------
Expected FFO per diluted, fully converted common share $3.29 $3.34
======== ========
INVESTOR CONFERENCE CALL AND SIMULCAST
CBL & Associates Properties, Inc. will conduct a conference call at 10:00
a.m. EDT on May 2, 2006, to discuss the first quarter results. The number to
call for this interactive teleconference is 913-981-5519. A seven-day replay of
the conference call will be available by dialing 719-457-0820 and entering the
passcode 6381477. 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 2006 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.earnings.com,
on May 2, 2006, beginning at 10:00 a.m. EDT. The online replay will follow
shortly after the call and continue through May 16, 2006.
CBL is one of the largest and most experienced owners and developers of
malls and shopping centers in the country. CBL owns, holds interests in or
manages 132 properties, including 79 regional malls/open-air centers. The
properties are located in 27 states and total 74.2 million square feet including
2.0 million square feet of non-owned shopping centers managed for third parties.
CBL currently has ten projects under construction totaling 2.3 million square
feet including Phase II of Gulf Coast Town Center in Ft. Myers, FL; two open-air
shopping centers; two community centers, two associated centers and three
expansions. In addition to its two regional offices in Dallas, TX and Boston
(Waltham), MA, CBL's corporate office is located in Chattanooga, TN. 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.
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CBL Reports First Quarter Results
Page 4
May 1, 2006
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).
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.
Reclassification
Certain prior period amounts in the consolidated statements of operations
have been reclassified to present marketing fund revenues and expenses on a
gross basis in accordance with Emerging Issues Task Force Issue No. 99-19,
Reporting Revenue Gross as a Principal versus Net as an Agent. As a result, the
following amounts in the consolidated statements of operations have changed from
the previously reported amounts for the three months ended March 31, 2005:
tenant reimbursements have increased by $4,765,000, other revenues have
decreased by $790,000, and property operating expenses have increased by
$3,975,000. This reclassification did not change previously reported amounts of
net income available to common shareholders.
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 1, 2006
CBL & Associates Properties, Inc.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
Three Months Ended
March 31,
-------------------------
2006 2005
----------- -----------
REVENUES:
Minimum rents $ 152,152 $ 130,295
Percentage rents 6,353 8,090
Other rents 3,880 3,125
Tenant reimbursements 75,991 65,526
Management, development and leasing fees 1,077 3,046
Other 5,866 4,629
----------- -----------
Total revenues 245,319 214,711
----------- -----------
EXPENSES:
Property operating 40,737 35,638
Depreciation and amortization 54,766 41,275
Real estate taxes 19,265 15,421
Maintenance and repairs 12,693 12,319
General and administrative 9,587 9,186
Loss on impairment of real estate assets - 262
Other 4,169 3,430
----------- -----------
Total expenses 141,217 117,531
----------- -----------
Income from operations 104,102 97,180
Interest income 1,732 1,683
Interest expense (63,929) (48,921)
Loss on extinguishment of debt - (884)
Gain on sales of real estate assets 900 2,714
Equity in earnings of unconsolidated affiliates 2,068 3,091
Minority interest in earnings:
Operating partnership (18,129) (20,826)
Shopping center properties (588) (1,397)
----------- -----------
Income before discontinued operations 26,156 32,640
Operating income of discontinued operations 2,099 405
Loss on discontinued operations - (32)
----------- -----------
Net income 28,255 33,013
Preferred dividends (7,642) (7,642)
----------- -----------
Net income available to common shareholders $ 20,613 $ 25,371
=========== ===========
Basic per share data:
Income before discontinued operations, net of preferred dividends $ 0.30 $ 0.40
Discontinued operations 0.03 0.01
----------- -----------
Net income available to common shareholders $ 0.33 $ 0.41
=========== ===========
Weighted average common shares outstanding 62,655 62,448
Diluted per share data:
Income before discontinued operations, net of preferred dividends $ 0.29 $ 0.39
Discontinued operations 0.03 -
----------- -----------
Net income available to common shareholders $ 0.32 $ 0.39
=========== ===========
Weighted average common and potential dilutive
common shares outstanding 64,323 64,794
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CBL Reports First Quarter Results
Page 6
May 1, 2006
The Company's calculation of FFO is as follows (in thousands, except per share
data):
Three Months Ended
March 31,
-------------------------
2006 2005
----------- -----------
Net income available to common shareholders $ 20,613 $ 25,371
Add:
Depreciation and amortization from consolidated properties 54,766 41,275
Depreciation and amortization from unconsolidated affiliates 3,278 1,710
Depreciation and amortization from discontinued operations 515 11
Minority interest in earnings of operating partnership 18,129 20,826
Less:
Gain on sales of operating real estate assets - (223)
Minority investors' share of depreciation and amortization (539) (362)
Loss on discontinued operations - 32
Depreciation and amortization of non-real estate assets (195) (179)
----------- -----------
Funds from operations $ 96,567 $ 88,461
=========== ===========
Funds from operations applicable to Company shareholders $ 52,545 $ 48,582
=========== ===========
Basic per share data:
Funds from operations $ 0.84 $ 0.78
=========== ===========
Weighted average common shares outstanding with operating partnership
units fully converted 115,147 113,709
Diluted per share data:
Funds from operations $ 0.83 $ 0.76
=========== ===========
Weighted average common and potential dilutive common shares
outstanding with operating partnership units fully converted 116,815 116,055
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees $ 5,868 $ 2,249
Lease termination fees per share $ 0.05 $ 0.02
Straight-line rental income $ 965 $ 1,767
Straight-line rental income per share $ 0.01 $ 0.02
Gains on outparcel sales $ 1,633 $ 2,610
Gains on outparcel sales per share $ 0.01 $ 0.02
Amortization of acquired above- and below-market leases $ 2,602 $ 1,164
Amortization of acquired above- and below-market leases per share $ 0.02 $ 0.01
Amortization of debt premiums $ 1,842 $ 1,709
Amortization of debt premiums per share $ 0.02 $ 0.01
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 1, 2006
Same-Center Net Operating Income
(Dollars in thousands)
Three Months Ended
March 31,
-------------------------
2006 2005
----------- -----------
Net income $ 28,255 $ 33,013
Adjustments:
Depreciation and amortization 54,766 41,275
Depreciation and amortization from unconsolidated affiliates 3,278 1,710
Depreciation and amortization from discontinued operations 515 11
Minority investors' share of depreciation and amortization in
shopping center properties (539) (362)
Interest expense 63,929 48,921
Interest expense from unconsolidated affiliates 4,394 2,522
Minority investors' share of interest expense in
shopping center properties (1,162) (378)
Loss on extinguishment of debt - 884
Abandoned projects expense (5) 121
Gain on sales of real estate assets (900) (2,714)
Loss on impairment of real estate assets - 262
Gain on sales of real estate assets of unconsolidated affiliates (733) (934)
Minority interest in earnings of operating partnership 18,129 20,826
Loss on discontinued operations - 32
- -
Operating partnership's share of total NOI 169,927 145,189
General and administrative expenses 9,587 9,186
Management fees and non-property level revenues (4,661) (5,539)
----------- -----------
Operating partnership's share of property NOI 174,853 148,836
NOI of non-comparable centers (22,718) (1,945)
----------- -----------
Total same center NOI $ 152,135 $ 146,891
=========== ===========
Malls $ 140,194 $ 136,245
Associated centers 6,698 6,272
Community centers 1,588 1,410
Other 3,655 2,964
----------- -----------
Total same center NOI $ 152,135 $ 146,891
=========== ===========
Percentage Change:
Malls 2.9%
Associated centers 6.8%
Community centers 12.6%
Other 23.3%
-----------
Total same center NOI 3.6%
===========
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CBL Reports First Quarter Results
Page 8
May 1, 2006
Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
March 31, 2006
-----------------------------------------------
Fixed Rate Variable Rate Total
-------------- ------------- ----------------
Consolidated debt $ 3,262,444 $ 1,131,444 $ 4,393,888
Minority investors' share of consolidated debt (51,686) - (51,686)
Company's share of unconsolidated affiliates' debt 225,238 26,550 251,788
-------------- ------------- ----------------
Company's share of consolidated and unconsolidated debt $ 3,435,996 $ 1,157,994 $ 4,593,990
============== ============= ================
Weighted average interest rate 5.99% 5.55% 5.88%
============== ============= ================
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%
============== ============= ================
Debt-To-Total-Market Capitalization Ratio as of March 31, 2006
(In thousands, except stock price) Shares
Outstanding Stock Price (1) Value
-------------- -------------------------------
Common stock and operating partnership units 115,669 $ 42.45 $44,910,149
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 5,300,149
Company's share of total debt 4,593,990
----------------
Total market capitalization $ 9,894,139
================
Debt-to-total-market capitalization ratio 46.4%
================
(1) Stock price for common stock and operating partnership units equals the
closing price of the common stock on March 31, 2006. The stock price for
the preferred stock represents the liquidation preference of each
respective series of preferred stock.
Reconciliation of Shares and Operating Partnership Units Outstanding
(In thousands)
Three Months Ended
March 31,
-----------------------------
2006: Basic Diluted
------------- --------------
Weighted average shares - EPS 62,655 64,323
Weighted average operating partnership units 52,492 52,492
------------- --------------
Weighted average shares - FFO 115,147 116,815
============= ==============
2005:
Weighted average shares - EPS 62,448 64,794
Weighted average operating partnership units 51,261 51,261
------------- --------------
Weighted average shares - FFO 113,709 116,055
============= ==============
Dividend Payout Ratio Three Months Ended
March 31,
-----------------------------
2006 2005
------------- --------------
Dividend per share $ 0.4639 $ 0.4094
FFO per diluted, fully converted share $ 0.83 $ 0.76
------------- --------------
Dividend payout ratio 55.9% 53.9%
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CBL Reports First Quarter Results
Page 9
May 1, 2006
Consolidated Balance Sheets
(Preliminary and unaudited, in thousands)
March 31, December 31,
2006 2005
------------- -------------
ASSETS
Real estate assets:
Land $ 766,431 $ 776,989
Buildings and improvements 5,680,097 5,698,669
------------- -------------
6,446,528 6,475,658
Less: accumulated depreciation (774,049) (727,907)
------------- -------------
5,672,479 5,747,751
Real estate assets held for sale 98,073 63,168
Developments in progress 170,137 133,509
------------- -------------
Net investment in real estate assets 5,940,689 5,944,428
Cash and cash equivalents 41,490 28,838
Receivables:
Tenant, net of allowance 57,274 55,056
Other 9,726 6,235
Mortgage notes receivable 18,077 18,117
Investments in unconsolidated affiliates 81,442 84,138
Other assets 209,354 215,510
------------- -------------
$ 6,358,052 $ 6,352,322
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable $ 4,393,888 $ 4,341,055
Accounts payable and accrued liabilities 284,190 320,270
------------- -------------
Total liabilities 4,678,078 4,661,325
------------- -------------
Commitments and contingencies
Minority interests 586,436 609,475
------------- -------------
Shareholders' equity:
Preferred Stock, $.01 par value, 15,000,000 shares authorized:
8.75% Series B Cumulative Redeemable Preferred Stock, 20 20
2,000,000 shares outstanding
7.75% Series C Cumulative Redeemable Preferred Stock, 5 5
460,000 shares outstanding
7.375% Series D Cumulative Redeemable Preferred Stock, 7 7
700,000 shares outstanding
Common Stock, $.01 par value, 180,000,000 shares authorized, 642 625
64,243,646 and 62,512,816 issued and outstanding in 2006 and
2005, respectively
Additional paid-in capital 1,047,701 1,028,869
Accumulated other comprehensive income 1,095 288
Retained earnings 44,068 51,708
------------- -------------
Total shareholders' equity 1,093,538 1,081,522
------------- -------------
$ 6,358,052 $ 6,352,322
============= =============
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