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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CBL and Associates Properties Inc | NYSE:CBL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.14 | 0.65% | 21.71 | 21.84 | 21.52 | 21.72 | 72,195 | 01:00:00 |
Improved Operating Metrics; Full-Year Same-Center NOI Guidance Range Maintained
CBL Properties (NYSE:CBL) announced results for the second quarter ended June 30, 2019. A description of each supplemental non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is located at the end of this news release.
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
%
2019
2018
%
Net loss attributable to common shareholders per diluted share
$
(0.20
)
$
(0.20
)
—
%
$
(0.49
)
$
(0.26
)
(88.5
)%
Funds from Operations ("FFO") per diluted share
$
0.34
$
0.46
(26.1
)%
$
0.56
$
0.88
(36.4
)%
FFO, as adjusted, per diluted share (1)
$
0.34
$
0.46
(26.1
)%
$
0.64
$
0.88
(27.3
)%
(1) For a reconciliation of FFO to FFO, as adjusted, for the periods presented, please refer to the footnotes to the Company's reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders on page 10 of this news release.
KEY TAKEAWAYS:
"We are pleased to see improved performance this quarter in several key areas across our portfolio. Our second quarter results were in-line with expectations with adjusted FFO per share of $0.34 and same-center NOI declining 5.7%," commented Stephen Lebovitz, chief executive officer. "Lease spreads showed a nice improvement and same-center sales increased over 4% during the second quarter. With our operating metrics on-track, we are reiterating our annual guidance for same-center NOI. At the same time, we are updating FFO per share guidance for the year primarily to incorporate dilution from recent sales transactions, which we exclude from guidance until announced, as well as lower projected gains on outparcel sales.
"The progress we have made on our redevelopment program is energizing our market-dominant properties and our company. As we have said, we have over 20 replacements committed, under construction or open for the 40 closed anchors in our portfolio and are making additional progress every day. The new tenants we are adding, including restaurants, entertainment, service, value and non-retail uses such as medical, office, hotels and residential, drives additional traffic, sales and NOI.
"Our free cash flow of over $200 million is the primary source for funding these redevelopments. Disciplined capital allocation remains a priority, and we are stretching our dollars through joint ventures and ground leases. We have also had strong results year-to-date from our disposition program, with over $145 million of transactions announced or closed year-to-date. We have no major unsecured maturities until December 2023, and the refinancings closed earlier this year have extended our debt maturity profile, providing significant runway to execute our strategy to stabilize and transform our properties.”
Net loss attributable to common shareholders for the second quarter 2019 was $35.4 million, or a loss of $0.20 per diluted share, compared with a net loss of $35.0 million, or a loss of $0.20 per diluted share, for the second quarter 2018. Net loss for the second quarter 2019 was impacted by a $33.3 million loss on impairment of real estate to write down the carrying value of Eastgate Mall to the property's estimated fair value. The impairment was primarily a result of declines in projected future cash flows.
FFO allocable to common shareholders, as adjusted, for the second quarter 2019 was $59.4 million, or $0.34 per diluted share, compared with $80.2 million, or $0.46 per diluted share, for the second quarter 2018. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the second quarter 2019 was $68.5 million compared with $92.8 million for the second quarter 2018.
Percentage change in same-center Net Operating Income ("NOI")(1):
Three Months Ended June 30, 2019
Six Months Ended June 30, 2019
Portfolio same-center NOI
(5.7)%
(5.3)%
Mall same-center NOI
(6.9)%
(6.1)%
(1) CBL's definition of same-center NOI excludes the impact of lease termination fees and certain non-cash items of straight-line rents, write-offs of landlord inducements and net amortization of acquired above and below market leases.
Major variances impacting same-center NOI for the quarter ended June 30, 2019, include:
PORTFOLIO OPERATIONAL RESULTS
Occupancy(1):
As of June 30,
2019
2018
Portfolio occupancy
90.2%
91.1%
Mall portfolio
88.1%
89.2%
Same-center malls
88.1%
89.4%
Stabilized malls
88.3%
89.5%
Non-stabilized malls (2)
78.0%
71.9%
Associated centers
96.3%
97.9%
Community centers
97.6%
96.9%
(1) Occupancy for malls represents percentage of mall store gross leasable area under 20,000 square feet occupied. Occupancy for associated and community centers represents percentage of gross leasable area occupied.
(2) Represents occupancy for The Outlet Shoppes at Laredo.
New and Renewal Leasing Activity of Same Small Shop Space Less Than 10,000 Square Feet:
% Change in Average Gross Rent Per Square Foot:
Three Months Ended June 30, 2019
Six Months Ended June 30, 2019
Stabilized Malls
(3.8
)%
(7.1
)%
New leases
(1.4
)%
4.6
%
Renewal leases
(4.2
)%
(9.0
)%
Same-Center Sales Per Square Foot for Mall Tenants 10,000 Square Feet or Less:
Twelve Months Ended June 30,
2019
2018
% Change
Stabilized mall same-center sales per square foot
$
381
$
378
0.8%
Stabilized mall sales per square foot
$
381
$
376
1.3%
DISPOSITIONS
Year-to-date, CBL has closed on $120.2 million in asset sales, including the sale of a community center, an office building and a hotel.
In June, CBL completed the sale of the Courtyard by Marriott at Pearland Town Center in Pearland, TX, for $15.1 million, cash.
In July, CBL sold an office building in Chesapeake, VA, for $10.5 million. CBL also completed the sale in July of The Forum at Grandview, a 215,000-square-foot community center located in Madison, MS, for $31.75 million, cash.
CBL has entered into an agreement with its existing joint venture partner, Horizon Group Properties ("Horizon"), whereby Horizon will purchase a 25% interest in The Outlet Shoppes at El Paso for cash of $9.2 million and the assumption of 25% interest in the existing loan (representing approximately $18.5 million as of August 2019). Following the completion of the sale, CBL and Horizon will each own a 50% interest, and Horizon will continue to lease and manage the asset. CBL anticipates closing on the transaction in August.
Property
Location
Date Closed
Gross Sales Price (M)
Cary Towne Center(1)
Cary, NC
January
$
31.5
Honey Creek Mall (1)
Terre Haute, IN
April
$
14.6
The Shoppes at Hickory Point
Forsyth, IL
April
$
2.5
Courtyard by Marriott at Pearland Town Center
Pearland, TX
June
$
15.1
The Forum at Grandview
Madison, MS
July
$
31.8
850 Greenbrier Circle
Chesapeake, VA
July
$
10.5
Various parcels
Various
Various
$
14.2
Total Closed Year-to-Date
$
120.2
25% interest in The Outlet Shoppes at El Paso (2)
El Paso, TX
Pending
$
27.7
Total
$
147.9
(1) 100% of sale proceeds utilized to retire existing secured loans.
(2) Gross amount shown above is comprised of $9.2 million in equity and 25% interest in loan balance at closing of $18.5 million assuming closing occurs in August. Actual gross proceeds may vary with the timing of the close.
FINANCING ACTIVITY
In April, CBL closed a new $50 million non-recourse loan secured by Volusia Mall for a term of five years at a fixed interest rate of 4.56%. CBL concurrently retired the existing cross-collateralized loans secured by Honey Creek Mall in Terre Haute, IN, and Volusia Mall in Daytona Beach, FL, which aggregated to $64.0 million and bore an interest rate of 8%. CBL used proceeds from the new loan as well as the sale of Honey Creek Mall to retire the maturing loans.
In July, the foreclosure of Triangle Town Center was completed and the related debt was extinguished.
ANCHOR REPLACEMENT PROGRESS
Anchor replacements recently opened or pending include (complete list and additional information can be found in the financial supplement):
Property
Prior Tenant
New Tenant(s)
Status
Cherryvale Mall
Bergner's
Choice Home Center
Open
Eastland Mall
JCPenney
H&M, Planet Fitness
Open
Jefferson Mall
Macy's
Round1
Open
Northwoods Mall
Sears
Burlington
Open
Kentucky Oaks Mall
Sears
Burlington, Ross Dress for Less
Open
West Towne
Sears
Dave & Busters, Total Wine
Open
Hanes Mall
Shops
Dave & Busters
Open
Parkdale Mall
Macy's
Dick's, Five Below, HomeGoods
Open
Brookfield Square
Sears
Marcus Theaters, Whirlyball
Opening fall 2019
Laurel Park Place
Carson's
Dunham's Sports
Under construction - Opening Q4 '19
Meridian Mall
Younkers
High Caliber Karts
Under construction - Opening Q4 '19
Dakota Square
Herberger's
Ross Dress for Less
Under construction - Opening Q4 '19
Stroud Mall
Boston
Shoprite
Under construction - Opening Q4 '19
Kentucky Oaks Mall
Elder Beerman
HomeGoods
Under construction - Opening Q4 '19
Hamilton Place
Sears
Dick's Sporting Goods, Dave & Busters, ALoft Hotel, office
Under Construction - Opening 2020
Cherryvale Mall
Sears
Tilt
Under construction - Opening Q1/Q2 '20
Imperial Valley
Sears
Hobby Lobby
Construction in 2019
Westmoreland Mall
BonTon
Stadium Live! Casino
Construction in 2019
Stroud Mall
Sears
To be Announced Furniture Store
Construction in 2019
York Galleria
Sears
Penn National Casino
Construction in 2019
Richland Mall
Sears
Dillard's
Opening Est. 2020
South County Center
Sears
Round1
Opening TBD
Hanes Mall
Sears
Novant Health
Opening TBD
West Towne Mall
Sears
To be Announced Retailer
Opening TBD
OUTLOOK AND GUIDANCE
CBL is updating FFO, as adjusted, per share guidance to incorporate $0.04 per share dilution from dispositions completed and announced, $0.06 per share lower anticipated gains on outparcel sales and $0.01 per share of higher anticipated general and administrative expense related to ongoing litigation. CBL has reduced its projection for outparcel sales gains in part due to a shift in expectation to more ground leased outparcels versus sales as well as the shift in timing of certain sales to 2020. CBL now anticipates achieving 2019 FFO, as adjusted, in the range of $1.30 - $1.35 per diluted share. Guidance incorporates a reserve in the range of $5.0 - $15.0 million (the "Reserve") for potential future unbudgeted loss in rent from tenant bankruptcies, store closures or lease modifications that may occur in 2019. Based on bankruptcy and leasing activity year-to-date, including the impact of any co-tenancy, CBL currently expects to utilize approximately $8 - $10 million of the Reserve.
Key assumptions underlying guidance are as follows:
Low
High
2019 FFO, as adjusted, per share (includes the Reserve)
1.30
1.35
2019 Change in Same-Center NOI ("SC NOI") (Includes the Reserve)
(7.75)%
(6.25)%
Reserve for unbudgeted lost rents included in SC NOI and FFO
$15.0 million
$5.0 million
Updated expectation for gains on outparcel sales
$2.0 million
$4.0 million
Reconciliation of GAAP net income (loss) to 2019 FFO, as adjusted, per share guidance:
Low
High
Expected diluted earnings per common share
$
(0.60
)
$
(0.55
)
Adjust to fully converted shares from common shares
0.08
0.08
Expected earnings per diluted, fully converted common share
(0.52
)
(0.47
)
Add: depreciation and amortization
1.51
1.51
Less: gain on depreciable property
(0.02
)
(0.02
)
Add: loss on impairment
0.33
0.33
Add: noncontrolling interest in loss of Operating Partnership
(0.08
)
(0.08
)
Expected FFO, as adjusted, per diluted, fully converted common share
$
1.22
$
1.27
Add: Litigation settlement
0.44
0.44
Adjustment for certain significant items
(0.36
)
(0.36
)
Expected adjusted FFO per diluted, fully converted common share
$
1.30
$
1.35
INVESTOR CONFERENCE CALL AND WEBCAST
CBL Properties will host a conference call on Thursday, August 1, 2019, at 11:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 9046905. A replay of the conference call will be available through August 8, 2019, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10131564.
The Company will also provide an online webcast and rebroadcast of its second quarter 2019 earnings release conference call. The live broadcast of the quarterly conference call will be available online at cblproperties.com on Thursday, August 1, 2019, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call.
To receive the CBL Properties second quarter earnings release and supplemental information, please visit the Invest section of our website at cblproperties.com.
ABOUT CBL PROPERTIES
Headquartered in Chattanooga, TN, CBL Properties owns and manages a national portfolio of market-dominant properties located in dynamic and growing communities. CBL’s portfolio is comprised of 108 properties totaling 68.2 million square feet across 26 states, including 68 high-quality enclosed, outlet and open-air retail centers and 9 properties managed for third parties. CBL continuously strengthens its company and portfolio through active management, aggressive leasing and profitable reinvestment in its properties. For more information visit cblproperties.com.
ADOPTION OF NEW LEASE ACCOUNTING STANDARD
The Company adopted Accounting Standards Codification ("ASC") 842, Leases, effective January 1, 2019, which resulted in the Company revising the presentation of rental revenues in its consolidated statements of operations. In the past, certain components of rental revenues were shown separately in the consolidated statements of operations. Upon the adoption of ASC 842, these amounts have been combined into a single line item. Please see the Company’s Supplemental Financial and Operating Information located in the Invest section of the Company’s website for more information regarding the components of rental revenues.
NON-GAAP FINANCIAL MEASURES
Funds From Operations
FFO is a widely used non-GAAP measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. The Company’s method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The Company believes that FFO provides an additional indicator of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of well-maintained real estate assets have historically risen with market conditions, the Company believes that FFO enhances investors’ understanding of its operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of the Company’s properties and interest rates, but also by its capital structure.
The Company presents both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as it believes that both are useful performance measures. The Company believes FFO allocable to Operating Partnership common unitholders is a useful performance measure since it conducts substantially all of its business through its Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company’s common shareholders and the noncontrolling interest in the Operating Partnership. The Company believes FFO allocable to its common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to its common shareholders.
In the reconciliation of net income (loss) attributable to the Company's common shareholders to FFO allocable to Operating Partnership common unitholders, located in this earnings release, the Company makes an adjustment to add back noncontrolling interest in income (loss) of its Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders. The Company then applies a percentage to FFO of the Operating Partnership common unitholders to arrive at FFO allocable to its common shareholders. The percentage is computed by taking the weighted-average number of common shares outstanding for the period and dividing it by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units held by noncontrolling interests during the period.
FFO does not represent cash flows from operations as defined by GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating the Company’s operating performance or to cash flow as a measure of liquidity.
The Company believes that it is important to identify the impact of certain significant items on its FFO measures for a reader to have a complete understanding of the Company's results of operations. Therefore, the Company has also presented adjusted FFO measures excluding these items from the applicable periods. Please refer to the reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders on page 10 of this news release for a description of these adjustments.
Same-center Net Operating Income
NOI is a supplemental non-GAAP measure of the operating performance of the Company's shopping centers and other properties. The Company defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).
The Company computes NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated properties. The Company believes that presenting NOI and same-center NOI (described below) based on its Operating Partnership’s pro rata share of both consolidated and unconsolidated properties is useful since the Company conducts substantially all of its business through its Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company's common shareholders and the noncontrolling interest in the Operating Partnership. The Company's definition of NOI may be different than that used by other companies and, accordingly, the Company's calculation of NOI may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to the operations of the Company's shopping center properties, the Company believes that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on the Company's results of operations. The Company’s calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-off of landlord inducement assets in order to enhance the comparability of results from one period to another. A reconciliation of same-center NOI to net income is located at the end of this earnings release.
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 noncontrolling interests' 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 condensed 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" included therein, for a discussion of such risks and uncertainties.
CBL & Associates Properties, Inc.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
REVENUES (1):
Rental revenues
$
185,393
$
207,568
$
376,373
$
420,297
Management, development and leasing fees
2,586
2,643
5,109
5,364
Other
5,398
4,387
9,925
9,137
Total revenues
193,377
214,598
391,407
434,798
OPERATING EXPENSES:
Property operating
(26,532
)
(29,527
)
(55,512
)
(62,353
)
Depreciation and amortization
(64,478
)
(73,566
)
(134,270
)
(145,316
)
Real estate taxes
(19,148
)
(20,456
)
(39,067
)
(42,304
)
Maintenance and repairs
(11,298
)
(12,059
)
(24,074
)
(25,238
)
General and administrative
(14,427
)
(13,490
)
(36,434
)
(31,794
)
Loss on impairment
(41,608
)
(51,983
)
(66,433
)
(70,044
)
Litigation settlement
—
—
(88,150
)
—
Other
(34
)
(245
)
(34
)
(339
)
Total operating expenses
(177,525
)
(201,326
)
(443,974
)
(377,388
)
OTHER INCOME (EXPENSES):
Interest and other income
356
218
845
431
Interest expense
(52,482
)
(54,203
)
(106,480
)
(107,970
)
Gain on extinguishment of debt
—
—
71,722
—
Gain on investments
—
387
—
387
Gain on sales of real estate assets
5,527
3,747
5,755
8,118
Income tax benefit (provision)
(813
)
2,235
(952
)
2,880
Equity in earnings of unconsolidated affiliates
1,872
4,368
5,180
8,107
Total other expenses
(45,540
)
(43,248
)
(23,930
)
(88,047
)
Net loss
(29,688
)
(29,976
)
(76,497
)
(30,637
)
Net loss attributable to noncontrolling interests in:
Operating Partnership
5,454
5,685
13,212
7,350
Other consolidated subsidiaries
57
494
132
393
Net loss attributable to the Company
(24,177
)
(23,797
)
(63,153
)
(22,894
)
Preferred dividends
(11,223
)
(11,223
)
(22,446
)
(22,446
)
Net loss attributable to common shareholders
$
(35,400
)
$
(35,020
)
$
(85,599
)
$
(45,340
)
Basic and diluted per share data attributable to common shareholders:
Net loss attributable to common shareholders
$
(0.20
)
$
(0.20
)
$
(0.49
)
$
(0.26
)
Weighted-average common and potential dilutive common shares outstanding
173,473
172,662
173,363
172,304
(1) See "Adoption of New Lease Accounting Standard" on page 7 for further information on the presentation of rental revenues in accordance with the new standard adopted effective January 1, 2019.
The Company's reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows:
(in thousands, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Net loss attributable to common shareholders
$
(35,400
)
$
(35,020
)
$
(85,599
)
$
(45,340
)
Noncontrolling interest in loss of Operating Partnership
(5,454
)
(5,685
)
(13,212
)
(7,350
)
Depreciation and amortization expense of:
Consolidated properties
64,478
73,566
134,270
145,316
Unconsolidated affiliates
11,462
10,338
22,128
20,739
Non-real estate assets
(902
)
(917
)
(1,799
)
(1,838
)
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries
(2,648
)
(2,122
)
(4,805
)
(4,288
)
Loss on impairment
41,608
51,983
66,433
70,044
Gain on depreciable property, net of taxes
(4,599
)
—
(4,841
)
(2,236
)
FFO allocable to Operating Partnership common unitholders
68,545
92,143
112,575
175,047
Litigation settlement, net of taxes (1)
—
—
87,667
—
Gain on investments, net of taxes (2)
—
(287
)
—
(287
)
Non-cash default interest expense (3)
—
916
542
1,832
Gain on extinguishment of debt (4)
—
—
(71,722
)
—
FFO allocable to Operating Partnership common unitholders, as adjusted
$
68,545
$
92,772
$
129,062
$
176,592
FFO per diluted share
$
0.34
$
0.46
$
0.56
$
0.88
FFO, as adjusted, per diluted share
$
0.34
$
0.46
$
0.64
$
0.88
Weighted-average common and potential dilutive common shares outstanding with Operating Partnership units fully converted
200,231
199,767
200,122
199,731
(1) The six months ended June 30, 2019 is comprised of the accrued maximum expense related to the proposed settlement of a class action lawsuit.
(2) The three months and six months ended June 30, 2018 includes a gain on investment related to the land contributed by the Company to the Self Storage at Mid Rivers 50/50 joint venture.
(3) The six months ended June 30, 2019 includes default interest expense related to Acadiana Mall and Cary Towne Center. The three months and six months ended June 30, 2018 includes default interest expense related to Acadiana Mall.
(4) The six months ended June 30, 2019 includes a gain on extinguishment of debt related to the non-recourse loan secured by Acadiana Mall, which was conveyed to the lender in the first quarter of 2019, and a gain on extinguishment of debt related to the non-recourse loan secured by Cary Towne Center, which was sold in the first quarter of 2019.
The reconciliation of diluted EPS to FFO per diluted share is as follows:
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Diluted EPS attributable to common shareholders
$
(0.20
)
$
(0.20
)
$
(0.49
)
$
(0.26
)
Eliminate amounts per share excluded from FFO:
Depreciation and amortization expense, including amounts from consolidated properties, unconsolidated affiliates, non-real estate assets and excluding amounts allocated to noncontrolling interests
0.36
0.40
0.75
0.80
Loss on impairment
0.20
0.26
0.32
0.35
Gain on depreciable property, net of taxes
(0.02
)
—
(0.02
)
(0.01
)
FFO per diluted share
$
0.34
$
0.46
$
0.56
$
0.88
The reconciliations of FFO allocable to Operating Partnership common unitholders to FFO allocable to common shareholders, including and excluding the adjustments noted above, are as follows:
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
FFO allocable to Operating Partnership common unitholders
$
68,545
$
92,143
$
112,575
$
175,047
Percentage allocable to common shareholders (1)
86.64
%
86.43
%
86.63
%
86.27
%
FFO allocable to common shareholders
$
59,387
$
79,639
$
97,524
$
151,013
FFO allocable to Operating Partnership common unitholders, as adjusted
$
68,545
$
92,772
$
129,062
$
176,592
Percentage allocable to common shareholders (1)
86.64
%
86.43
%
86.63
%
86.27
%
FFO allocable to common shareholders, as adjusted
$
59,387
$
80,183
$
111,806
$
152,346
(1) Represents the weighted average number of common shares outstanding for the period divided by the sum of the weighted average number of common shares and the weighted average number of Operating Partnership units outstanding during the period. See the reconciliation of shares and Operating Partnership units outstanding on page 16.
SUPPLEMENTAL FFO INFORMATION:
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Lease termination fees
$
1,073
$
2,744
$
2,090
$
9,005
Lease termination fees per share
$
0.01
$
0.01
$
0.01
$
0.05
Straight-line rental income
$
717
$
(725
)
$
954
$
(4,358
)
Straight-line rental income per share
$
—
$
—
$
—
$
(0.02
)
Gains on outparcel sales, net of taxes
$
315
$
4,338
$
933
$
6,485
Gains on outparcel sales per share, net of taxes per share
$
—
$
0.02
$
—
$
0.03
Net amortization of acquired above- and below-market leases
$
691
$
1,387
$
1,499
$
2,192
Net amortization of acquired above- and below-market leases per share
$
—
$
0.01
$
0.01
$
0.01
Net amortization of debt premiums and discounts
$
325
$
306
$
649
$
413
Net amortization of debt premiums and discounts per share
$
—
$
—
$
—
$
—
Income tax benefit (provision)
$
(813
)
$
2,235
$
(952
)
$
2,880
Income tax benefit (provision) per share
$
—
$
0.01
$
—
$
0.01
Gain on extinguishment of debt
$
—
$
—
$
71,722
$
—
Gain on extinguishment of debt per share
$
—
$
—
$
0.36
$
—
Gain on investments, net of taxes
$
—
$
287
$
—
$
287
Gain on investments, net of taxes per share
$
—
$
—
$
—
$
—
Non-cash default interest expense
$
—
$
(916
)
$
(542
)
$
(1,832
)
Non-cash default interest expense per share
$
—
$
—
$
—
$
(0.01
)
Abandoned projects expense
$
(34
)
$
(245
)
$
(34
)
$
(339
)
Abandoned projects expense per share
$
—
$
—
$
—
$
—
Interest capitalized
$
619
$
951
$
1,182
$
1,538
Interest capitalized per share
$
—
$
—
$
0.01
$
0.01
Litigation settlement, net of taxes
$
—
$
—
$
(87,667
)
$
—
Litigation settlement, net of taxes per share
$
—
$
—
$
(0.44
)
$
—
As of June 30,
2019
2018
Straight-line rent receivable
$
54,494
$
57,402
Same-center Net Operating Income
(Dollars in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Net loss
$
(29,688
)
$
(29,976
)
$
(76,497
)
$
(30,637
)
Adjustments:
Depreciation and amortization
64,478
73,566
134,270
145,316
Depreciation and amortization from unconsolidated affiliates
11,462
10,338
22,128
20,739
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries
(2,648
)
(2,122
)
(4,805
)
(4,288
)
Interest expense
52,482
54,203
106,480
107,970
Interest expense from unconsolidated affiliates
6,586
6,344
13,156
12,298
Noncontrolling interests' share of interest expense in other consolidated subsidiaries
(1,717
)
(2,186
)
(3,483
)
(4,037
)
Abandoned projects expense
34
245
34
339
Gain on sales of real estate assets
(5,527
)
(3,747
)
(5,755
)
(8,118
)
(Gain) loss on sales of real estate assets of unconsolidated affiliates
3
(592
)
(627
)
(592
)
Gain on investment
—
(387
)
—
(387
)
Gain on extinguishment of debt
—
—
(71,722
)
—
Loss on impairment
41,608
51,983
66,433
70,044
Litigation settlement
—
—
88,150
—
Income tax (benefit) provision
813
(2,235
)
952
(2,880
)
Lease termination fees
(1,073
)
(2,744
)
(2,090
)
(9,005
)
Straight-line rent and above- and below-market lease amortization
(1,408
)
(662
)
(2,453
)
2,166
Net loss attributable to noncontrolling interests in other consolidated subsidiaries
57
494
132
393
General and administrative expenses
14,427
13,490
36,434
31,794
Management fees and non-property level revenues
(4,118
)
(3,632
)
(6,784
)
(7,481
)
Operating Partnership's share of property NOI
145,771
162,380
293,953
323,634
Non-comparable NOI
(2,799
)
(10,714
)
(8,583
)
(22,205
)
Total same-center NOI (1)
$
142,972
$
151,666
$
285,370
$
301,429
Total same-center NOI percentage change
(5.7)%
(5.3
)%
Same-center Net Operating Income
(Continued)
Three Months Ended June 30,
Six Months Ended June 30,
2017
2016
2019
2018
Malls
$
127,790
$
137,263
$
255,364
$
272,058
Associated centers
8,166
7,959
16,293
15,962
Community centers
5,778
5,409
11,261
10,804
Offices and other
1,238
1,035
2,452
2,605
Total same-center NOI (1)
$
142,972
$
151,666
$
285,370
$
301,429
Percentage Change:
Malls
(6.9)%
(6.1
)%
Associated centers
2.6%
2.1
%
Community centers
6.8%
4.2
%
Offices and other
19.6%
(5.9
)%
Total same-center NOI (1)
(5.7)%
(5.3
)%
(1) CBL defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income), less property operating expenses (property operating, real estate taxes and maintenance and repairs). Same-center NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-offs of landlord inducement assets. We include a property in our same-center pool when we own all or a portion of the property as of June 30, 2019, and we owned it and it was in operation for both the entire preceding calendar year and the current year-to-date reporting period ending June 30, 2019. New properties are excluded from same-center NOI, until they meet this criteria. Properties excluded from the same-center pool that would otherwise meet this criteria are properties which are either under major redevelopment or being considered for repositioning, where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender.
Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
As of June 30, 2019
Fixed Rate
Variable Rate
Total per Debt Schedule
Unamortized Deferred Financing Costs
Total
Consolidated debt
$
2,946,440
$
938,989
$
3,885,429
$
(19,490
)
$
3,865,939
Noncontrolling interests' share of consolidated debt
(93,451
)
—
(93,451
)
747
(92,704
)
Company's share of unconsolidated affiliates' debt
544,829
79,251
624,080
(2,360
)
621,720
Company's share of consolidated and unconsolidated debt
$
3,397,818
$
1,018,240
$
4,416,058
$
(21,103
)
$
4,394,955
Weighted-average interest rate
5.10
%
4.73
%
5.01
%
As of June 30, 2018
Fixed Rate
Variable Rate
Total per Debt Schedule
Unamortized Deferred Financing Costs
Total
Consolidated debt
$
3,099,680
$
1,089,189
$
4,188,869
$
(16,516
)
$
4,172,353
Noncontrolling interests' share of consolidated debt
(76,413
)
(5,387
)
(81,800
)
642
(81,158
)
Company's share of unconsolidated affiliates' debt
555,880
82,180
638,060
(2,177
)
635,883
Company's share of consolidated and unconsolidated debt
$
3,579,147
$
1,165,982
$
4,745,129
$
(18,051
)
$
4,727,078
Weighted-average interest rate
5.16
%
3.57
%
4.77
%
Total Market Capitalization as of June 30, 2019
(In thousands, except stock price)
Shares Outstanding
Stock
Price (1)
Value
Common stock and Operating Partnership units
200,230
$
1.04
$
208,239
7.375% Series D Cumulative Redeemable Preferred Stock
1,815
250.00
453,750
6.625% Series E Cumulative Redeemable Preferred Stock
690
250.00
172,500
Total market equity
834,489
Company's share of total debt, excluding unamortized deferred financing costs
4,416,058
Total market capitalization
$
5,250,547
(1) Stock price for common stock and Operating Partnership units equals the closing price of the common stock on June 28, 2019. The stock prices for the preferred stocks represent the liquidation preference of each respective series.
Reconciliation of Shares and Operating Partnership Units Outstanding
(In thousands)
Three Months Ended June 30,
Six Months Ended June 30,
Basic
Diluted
Basic
Diluted
2019:
Weighted-average shares - EPS
173,473
173,473
173,363
173,363
Weighted-average Operating Partnership units
26,758
26,758
26,759
26,759
Weighted-average shares - FFO
200,231
200,231
200,122
200,122
2018:
Weighted-average shares - EPS
172,662
172,662
172,304
172,304
Weighted-average Operating Partnership units
27,105
27,105
27,427
27,427
Weighted-average shares - FFO
199,767
199,767
199,731
199,731
Consolidated Balance Sheets
(Unaudited; in thousands, except share data)
As of
June 30, 2019
December 31, 2018
ASSETS
Real estate assets:
Land
$
756,946
$
793,944
Buildings and improvements
6,153,444
6,414,886
6,910,390
7,208,830
Accumulated depreciation
(2,477,552
)
(2,493,082
)
4,432,838
4,715,748
Held for sale
44,574
30,971
Developments in progress
47,666
38,807
Net investment in real estate assets
4,525,078
4,785,526
Cash and cash equivalents
20,483
25,138
Receivables:
Tenant, net of allowance for doubtful accounts of $2,337 in 2018
72,485
77,788
Other, net of allowance for doubtful accounts of $838 in 2018
8,450
7,511
Mortgage and other notes receivable
6,326
7,672
Investments in unconsolidated affiliates
270,860
283,553
Intangible lease assets and other assets
144,458
153,665
$
5,048,140
$
5,340,853
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness, net
$
3,865,939
$
4,043,180
Accounts payable and accrued liabilities
260,265
218,217
Liabilities related to assets held for sale
663
43,716
Total liabilities
4,126,867
4,305,113
Commitments and contingencies
Redeemable noncontrolling interests
2,687
3,575
Shareholders' equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding
18
18
6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding
7
7
Common stock, $.01 par value, 350,000,000 shares authorized, 173,471,893 and 172,656,458 issued and outstanding in 2019 and 2018, respectively
1,735
1,727
Additional paid-in capital
1,966,549
1,968,280
Dividends in excess of cumulative earnings
(1,104,504
)
(1,005,895
)
Total shareholders' equity
863,805
964,137
Noncontrolling interests
54,781
68,028
Total equity
918,586
1,032,165
$
5,048,140
$
5,340,853
View source version on businesswire.com: https://www.businesswire.com/news/home/20190731005842/en/
Katie Reinsmidt, Executive Vice President - Chief Investment Officer, 423.490.8301, katie.reinsmidt@cblproperties.com
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