Securities Exchange Act of 1934 -- Form 8-KA
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report (date of earliest event reported):
November 22, 1996
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CBL & ASSOCIATES PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-12494 62-1545718
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
One Park Place, 6148 Lee Highway, Chattanooga, Tennessee 37421
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(Address of principal executive offices)
Registrant's telephone number, including area code:
(423) 855-0001
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CBL & ASSOCIATES PROPERTIES, INC.
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF ST. CLAIR SQUARE-FAIRVIEW HEIGHTS, ILLINOIS
On November 22, 1996, St. Clair Square Limited Partnership (the
"St. Clair Square Limited Partnership"), a majority-owned
subsidiary of CBL & Associates Properties, Inc. (The "Registrant")
acquired St. Clair Mall, a regional shopping mall located near St. Louis,
Missouri, containing approximately 1,044,599 square feet of total
gross leaseable area ("GLA) including 315,656 of mall store GLA
from The Prudential Insurance Company of America ("Prudential")
pursuant to a Purchase and Sales Agreement between Prudential
and St. Clair Square Limited Partnership (the "Purchase Agreement").
The assets acquired included, among other things, real property,
the buildings, improvements, and fixtures located theron,
certain lease interests, personal property and rights related thereto.
The aggregate purchase price, including closing costs, was
approximately $86.6 million and was determined in good faith arms
length negotiations between Registrant and Prudential, an unrelated
third party. In negotiating the purchase price the Registrant
considered, among other facts, the mall's historical and projected
cash flow, the nature and term of existing leases, the current
operating costs, the physical condition of the property, and the
terms and conditions of available financing. There were no
independent appraisals obtained by the Registrant. The purchase
price consisted of $86.6 million in cash. The cash consideration
was paid from proceeds from the Registrant's lines of credit and
proceeds from a promissory note in the amount of $66 million which
St. Clair Limited Partnership placed with Wells Fargo Bank N.A..
The Registrant intends to continue operating the mall as currently
operated and leasing space therein to national and local retailers.
The description contained herein of the transaction described above
does not purport to be complete and is qualified in its entirety by
reference to the Purchase and Sale Agreement, which is filed as an
exhibit to this document.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Report of Independent Public Accountants F-1
Statements of excess revenues over specific
expenses for the nine months ended
September 30, 1995 and 1996(Unaudited) and
for the year ended December 31, 1995 F-2
Notes to Financial Statements F-3
B) PRO FORMA FINANCIAL INFORMATION OF REGISTRANT
Consolidated statement of operations for
the nine months ended September 30, 1996 F-4
Consolidated statement of operations for
the year ended December 31, 1995 F-5
Consolidated balance sheet as of
September 30, 1996 F-6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of CBL & Associates Properties, Inc.
We have audited the accompanying statement of excess revenues
over specific operating expenses of St. Clair Square for the year ended
December 31, 1995. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the statement of
excess revenues over specific operating expenses is free of material mis-
statement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the statement. An audit also in-
cludes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying statement was prepared for the purpose of com-
plying with the rules and regulations of the Securities and Exchange Com-
mission and excludes certain material expenses that would not be comparable
to those resulting from the proposed future operations of the Property
described in Note 2 and is not intended to be a complete presentation of
the Property's revenues and expenses.
In our opinion, the statement referred to above presents fairly,
in all material respects, the excess revenues over specific operating ex-
penses (exclusive of expenses described in Note 2) of St. Clair Square for
the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
Arthur Andersen, LLP
Chattanooga, Tennessee
December 12, 1996
_______________________________________________________________________________
ST. CLAIR SQUARE
STATEMENTS OF EXCESS REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1996 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1995
Nine Nine
Year Ended Months Ended Months Ended
December 31, September 30, September 30,
1995 1995 1996
____________ _____________ _____________
(unaudited) (unaudited)
Revenues:
Rental revenues
Minimum $ 6,593 $ 4,873 $ 5,123
Percentage 664 505 432
Tenant reimbursements 2,749 2,014 2,446
Other property revenues 513 311 279
__________ _________ _________
Total revenues $ 10,519 $ 7,703 $ 8,280
Specific operating expenses (Note 2):
Property operating 914 689 661
Real estate taxes 919 656 797
Maintenance and repairs 1,249 888 1,008
__________ _________ _________
Excess revenues over specific
operating expenses $ 7,437 $ 5,470 $ 5,814
========== ========= =========
F-2
____________________________________________________________________________
ST. CLAIR SQUARE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. DESCRIPTION OF PROPERTY
On November 22, 1996, St. Clair Square Limited Partnership, a majority-
owned subsidiary of CBL & Associates Properties, Inc., acquired St. Clair
Square (the "Property"), a regional shopping mall located near St. Louis,
Missouri, containing approximately 1,044,600 square feet of total gross
leasable area.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying statements of excess revenues over specific operating
expenses are presented on the accrual basis. These statements have been
prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, the statements exclude certain historical expenses not com-
parable to the operations of the Property after acquisition, such as
depreciation and management fees.
Revenue Recognition
Rental revenue attributable to operating leases is recognized on a
straight-line basis over the initial term of the related leases. Certain
tenants are required to pay additional rent if sales volume exceeds
specified amounts. The Property recognizes this additional rent as
revenue when such amounts become determinable.
Tenant Reimbursements
The Property receives reimbursements from tenants for certain costs as
provided in the lease agreements. These costs consist of real estate
taxes, common area maintenance and other recoverable costs. Tenant
reimbursements are recognized as revenue in the period the costs are
incurred.
F-3
___________________________________________________________________________
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited pro forma consolidated statements of operations are presented
as if the acquisition of St. Clair Square had taken place as of the beginning
of each period presented. In management's opinion, all adjustments necessary
to present fairly the effects of the acquisition have been made.
The unaudited pro forma consolidated statements of operations are not
necessarily indicative of what the actual results of operations of CBL &
Associates Properties, Inc. (the "Company") would have been assuming the
Company had acquired St. Clair Square as of the beginning of each period
presented, nor do they purport to represent the results of operations for
future periods.
CBL & ASSOCIATES PROPERTIES, INC
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited And Amounts in Thousands, Except Per Share Amounts)
CBL St. Clair Pro Forma Pro Forma
Historical Square Adjustments Consolidated
_____________ ___________ _____________ ______________
REVENUES:
Rentals:
Minimum $ 67,875 $ 5,123 $ - $ 72,998
Percentage 1,865 432 - 2,297
Other 689 - - 689
Tenant reimbursements 31,555 2,446 - 34,001
Management leasing fees 1,845 - - 1,845
Development fees 7 - - 7
Interest and other 3,004 279 - 3,283
__________ _________ __________ _________
Total revenues 106,840 8,280 - 115,120
__________ _________ __________ _________
EXPENSES:
Property operating 17,424 661 - 18,085
Depreciation and
amortization 18,582 - 1,886(A) 20,468
Real estate taxes 8,258 797 - 9,055
Maintenance and repairs 6,498 1,008 - 7,506
General and
administrative 6,208 - - 6,208
Interest 23,250 - 4,729(B) 27,979
Other 450 - - 450
__________ _________ __________ _________
Total expenses 80,670 2,466 6,615 89,751
__________ _________ __________ _________
INCOME FROM OPERATIONS 26,170 5,814 (6,615) 25,369
GAIN ON SALES OF
REAL ESTATE ASSETS 8,890 - - 8,890
EQUITY IN EARNINGS OF UN-
UNCONSOLIDATED AFFILIATES 709 - - 709
MINORITY INTEREST IN EARNINGS:
Operating partnership (10,971) - 248(C) (10,723)
Shopping Center
properties (385) - - (385)
__________ _________ ___________ __________
INCOME BEFORE EXTRA-
ORDINARY ITEM $ 24,413 $ 5,814 $(6,367) $ 23,860
EXTRAORDINARY LOSS ON
EARLY EXTINGUISHMENT
OF DEBT - - - -
__________ _________ __________ __________
Net income $ 24,413 $ 5,814 $(6,367) $ 23,860
========== ========= ========== ==========
EARNINGS PER COMMON SHARE DATA:
Income before extra-
ordinary item $ 1.17 $ 1.14
Extraordinary loss on
early extinguishment
of debt - -
___________ __________
Net income $ 1.17 $ 1.14
=========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 20,873 20,873
=========== ==========
(A) Reflects depreciation expense on the St. Clair Square acquisition com-
puted on the straight-line method over the estimated useful life of
30 years.
(B) Reflects interest expense associated with the $66,000 mortgage note
payable and the $20,139 of borrowings under the Company's line of
credit agreement, both at LIBOR plus 1.5% (7.32%), in connection with
the acquisition of St. Clair Square.
(C) Reflects the minority interests' share of the income from operations
of St. Clair Square and the pro forma adjustments.
F-4
______________________________________________________________________________
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited And Amounts In Thousands, Except Per Share Amounts)
CBL St. Clair Pro Forma Pro Forma
Historical Square Adjustments Consolidated
_____________ ___________ _____________ ______________
REVENUES:
Rentals:
Minimum $ 82,319 $ 6,593 $ - $ 88,912
Percentage 2,811 664 - 3,475
Other 1,507 - - 1,507
Tenant reimbursements 38,370 2,749 - 41,119
Management leasing fees 2,235 - - 2,235
Development fees 271 - - 271
Interest and other 4,689 513 - 5,202
__________ _________ __________ _________
Total revenues 132,202 10,519 - 142,721
__________ _________ __________ _________
EXPENSES:
Property operating 21,513 914 - 22,427
Depreciation and
amortization 23,407 - 2,515(A) 25,922
Real estate taxes 10,087 919 - 11,006
Maintenance and repairs 8,991 1,249 10,240
General and
administrative 8,049 - - 8,049
Interest 31,951 - 6,615(B) 38,566
Other 605 - - 605
__________ _________ __________ _________
Total expenses 104,603 3,082 9,130 116,815
__________ _________ __________ _________
INCOME FROM OPERATIONS 27,599 7,437 (9,130) 25,906
GAIN ON SALES OF
REAL ESTATE ASSETS 2,213 - - 2,213
EQUITY IN EARNINGS OF UN-
UNCONSOLIDATED AFFILIATES 1,450 - - 1,450
MINORITY INTEREST IN EARNINGS:
Operating partnership (10,527) - 588(C) ( 9,939)
Shopping Center
properties (386) - - (386)
__________ _________ ___________ __________
INCOME BEFORE EXTRA-
ORDINARY ITEM $ 20,349 $ 7,437 $(8,542) $ 19,244
EXTRAORDINARY LOSS
ON EARLY EXTINGUISHMENT
OF DEBT (326) - - (326)
__________ _________ __________ __________
Net income $ 20,023 $ 7,437 $(8,542) $ 18,918
========== ========= ========== ==========
EARNINGS PER COMMON SHARE DATA:
Income before extra-
ordinary item $ 1.14 $ 1.08
Extraordinary loss on
early extinguishment
of debt (0.02) (0.02)
____________ __________
Net income $ 1.12 $ 1.06
============ ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 17,827 17,827
=========== ==========
(A) Reflects depreciation expense on the St. Clair Square acquisition com-
puted on the straight-line method over the estimated useful life of
30 years.
(B) Reflects interest expense associated with the $66,000 mortgage note
payable and the $20,139 of borrowings under the Company's line of
credit agreement, both at LIBOR plus 1.5% (7.68%), in connection with
the acquisition of St. Clair Square. If interest rates under the
mortgage note payable and line of credit agreement fluctuated 0.125%,
interest costs on the pro forma indebtedness would increase or
decrease by approximately $108,000 on an annualized basis.
(C) Reflects the minority interests' share of the income from operations
of St. Clair Square and the pro forma adjustments.
F-5
______________________________________________________________________________
PRO FORMA CONSOLIDATED BALANCE SHEET
The unaudited pro forma consolidated balance sheet is presented as if the
acquisition of St. Clair Square had occurred as of September 30, 1996.
The unaudited pro forma consolidated balance sheet is not necessarily
indicative of what the actual financial position would have been at
September 30, 1996 nor does it purport to represent the future financial
position of the Company.
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited And Dollars In Thousands, Except Per Share Amounts)
Pro Forma
CBL Acquisition Company
Historical Adjustments Pro Forma
__________ ___________ ___________
ASSETS (A)
_______________________________________
REAL ESTATE ASSETS:
Land $ 99,793 $ 11,036 $110,829
Buildings and improvements 732,518 75,436 807,954
__________ __________ __________
832,311 86,472 918,783
Less Accumulated depreciation (107,901) - (107,901)
__________ __________ __________
724,410 86,472 810,882
Developments in progress 107,923 - 107,923
__________ __________ __________
Net Investment in real estate assets 832,333 86,472 918,805
CASH AND CASH EQUIVALENTS 12,694 - 12,694
RECEIVABLES:
Tenant, net of allowance for doubtful
accounts of $450 11,013 - 11,013
Other 1,147 - 1,147
MORTGAGE NOTES RECEIVABLE 42,893 - 42,893
OTHER ASSETS 6,877 - 6,877
__________ __________ __________
$906,957 $ 86,472 $993,429
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
__________________________________________
MORTGAGE AND OTHER NOTES PAYABLE $474,351 $ 86,139 $560,490
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 26,012 333 26,345
_________ _________ __________
Total Liabilities 500,363 86,472 586,835
_________ _________ __________
COMMITMENTS AND CONTINGENCIES
DISTRIBUTIONS AND LOSSES IN EXCESS OF
INVESTMENT IN UNCONSOLIDATED
AFFILIATES 9,159 - 9,159
_________ _________ __________
MINORITY INTEREST 117,775 - 117,775
_________ _________ __________
SHAREHOLDER'S EQUITY:
Preferred stock, $0.01 par value,
5,000,000 shares authorized, none issued
Common stock, $0.01 par value, 95,000,000
shares authorized, 20,895,717 shares issued
and outstanding at September 30, 1996
209 - 209
Excess stock, $0.01 par value,
100,000,000 shares authorized, none issued
- - -
Additional paid-in capital 292,877 - 292,877
Accumulated deficit (13,269) - (13,269)
Deferred compensation (157) - (157)
_________ __________ __________
Total shareholders' equity 279,660 - 279,660
_________ __________ __________
$906,957 $ 86,472 $993,429
======= ========== ==========
(A) Reflects the acquisition of St. Clair Square through the issuance of a
$66,000 mortgage note payable, borrowings of $20,139 under the Company's
line of credit agreement, and the assumption of certain liabilities.
F-6
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EXHIBITS
2.1Purchase and Sale Agreement dated
October 4, 1996 between The Prudential
corporation and St. Clair Square Limited
Partnership, an Illinois limited partnerhsip.
23 Consent of Arthur Andersen LLP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CBL & ASSOCIATES PROPERTIES, INC.
John N. Foy
-----------------------------
John N. Foy
Executive Vice President,
Chief Financial Officer and
Secretary
(Authorized Officer of the
Registrant,
Principal Financial Officer and
Principal Accounting Officer)
Date: January 15, 1996
EXHIBITS INDEX
Exhibit:
2.1 Purchase and Sale Agreement dated October 4,
1996 between The Prudential Insurance Company of
America a New Jersey corporation and St. Clair
Square Limited Partnership, an Illinois limited
partnership.
23 Consent of Arthur Andersen LLP