8-K 1 q420038ka.txt 8K Securities Exchange Act of 1934 -- Form 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: FEBRUARY 5, 2004 ------------------------------------------------------------------------------- CBL & ASSOCIATES PROPERTIES, INC. ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-12494 62-1545718 ------------------------------------------------------------------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification Number) incorporation) 2030 Hamilton Place Boulevard, Chattanooga, TN 37421 ------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: ------------------------------------------------------------------------------- (423) 855-0001 1 ITEM 7. Exhibits Exhibit Number Description 99.1 Earnings Release - Fourth Quarter Ended December 31, 2003 99.2 Analyst Conference Call Script - Fourth Quarter Ended December 31, 2003 99.3 Supplemental information - Fourth Quarter Ended December 31, 2003 ITEM 12. Results of Operations and Financial Condition On February 3, 2004, CBL & Associates Properties, Inc. (the "Company) reported its results for the fourth quarter and year ended December 31, 2003. The Company's earnings release for the fourth quarter and year ended December 31, 2003 is attached as Exhibit 99.1. On February 3, 2004, the Company held a conference call to discuss the fourth quarter and year-to-date results. The transcript of the conference call is attached as Exhibit 99.2. The Company is has posted to its website certain supplemental financial and operating information related to the fourth quarter and full year of 2003, which is attached as Exhibit 99.3. The information in this Form 8-K and the Exhibits attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. 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. /c/ John N. Foy ---------------------------------------------- John N. Foy Vice Chairman, Chief Financial Officer and Treasurer (Authorized Officer of the Registrant, Principal Financial Officer and Principal Accounting Officer) Date: February 5, 2004 99.1 Earnings Release - Fourth Quarter Ended December 31, 2003 [Letterhead of CBL & Associates Properties, Inc.] Contact: John N. Foy Vice Chairman and CFO (423) 855-0001 CBL REPORTS FOURTH QUARTER AND 2003 RESULTS |X| Generates a total return of 48% to shareholders in 2003 |X| Increases FFO per share 9.6 % for the quarter and 10.9% for the year |X| Same center NOI increases 6.0% for the quarter and 5.0% for the year |X| Same store sales increase 1.1% for the year |X| Achieves Mall Sales of $300 per square foot for 2003 CHATTANOOGA, Tenn. (February 3, 2004) CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the fourth quarter and the year ended December 31, 2003. 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 increased 199% in the fourth quarter of 2003 to $60,483,000 from $20,227,000 in the prior-year period. On a diluted per share basis, net income available to common shareholders for the fourth quarter of 2003 increased 191% to $1.92 compared with $0.66 in the prior-year period. Net income available to common shareholders increased 68% for the year ended 2003 to $124,506,000 from $73,987,000 for the prior year and increased 60% to $3.99 per diluted share from $2.49 per diluted share for the prior year. The increase in net income and net income per share includes the gain of $71,886,000 on the sale of interests in 41 community centers to our joint venture with Galileo America REIT during the fourth quarter. The net income available to common shareholders on a diluted per share basis excluding this gain on sale was $0.68 for the fourth quarter 2003 and $2.76 for the year ended 2003. Funds from operations (FFO) increased 11.8% to $71,085,000 for the fourth quarter of 2003 from $63,598,000 for the fourth quarter of 2002. FFO per share on a diluted, fully converted basis increased 9.6% to $1.25 for the fourth quarter of 2003 from $1.14 in the prior-year period. FFO increased 15.3% to $271,588,000 for the year from $235,474,000 in the prior-year. FFO per share increased 10.9% on a diluted, fully converted basis for 2003 to $4.79 from $4.32 per share in 2002. The gain from the Galileo transaction did not impact FFO since gains from the sale of operating properties are excluded from FFO. The Company began to include gains on sales of outparcels in FFO during the first quarter of 2003 to comply with the Securities and Exchange Commission's rules related to disclosure of non-GAAP financial measures since NAREIT's definition of FFO includes gains on sales of outparcels. FFO has been restated for the prior-year periods to include gains on sales of outparcels. Gains on sales of outparcels for the fourth quarter of 2003 were $0.02 per diluted, fully converted share compared with $0.00 for the fourth quarter one year ago and $0.11 for the year, compared with $0.05 for the prior year. HIGHLIGHTS |X| Income from operations increased 8.8% in the fourth quarter of 2003 to $83,657,000 from $76,910,000 in the fourth quarter of 2002. For the year, income from operations increased 11.6%, to $317,079,000 compared with $284,213,000 the previous year. |X| Revenues increased 14.5% in the fourth quarter of 2003 to $178,163,000 from $155,610,000 in the prior-year period. Revenues increased 13.7% for the year ended 2003 to $667,531,000 from $586,970,000 in 2002. Revenues for the fourth quarter of 2003 include $2,479,000 in lease termination fees received from tenants compared with $258,000 received during the same period one year ago. For the year, lease termination fees were $4,573,000 compared with $5,888,000 for the prior year. -MORE- |X| As a result of the application of Statement of Financial Accounting Standards ("SFAS") Nos. 141 and 142 during the fourth quarter of 2003, the Company's FFO includes $251,000 of revenues related to the market value of leases of acquired properties. Interest expense in the fourth quarter was reduced by $678,000 related to the amortization of debt premiums associated with above market-rate debt assumed for the acquired properties. For 2003, the Company's results include $311,000 of revenues related to the market value of leases, and interest expense includes a reduction of $646,000 related to the debt premiums. The impact of these items was not significant for either the fourth quarter or the full year 2002 since the related acquisitions occurred late in December 2002. |X| Same center net operating income for the portfolio improved in the fourth quarter of 2003 by 6.0% compared with a 1.2% increase for the prior-year period. For the year, same center net operating income for the portfolio improved by 5.0% compared with a 3.1% increase for 2002. |X| Same-store sales for mall tenants of 10,000 square feet or less for stabilized malls increased 1.1% for the year for those tenants who have reported sales compared with a decrease of 1.6% for 2002. |X| The debt-to-total-market capitalization ratio as of December 31, 2003, was 46.0% based on the common stock closing price of $56.50 and a fully converted common stock share count of 55,546,000 as of the same date. The debt-to-total-market capitalization ratio as of December 31, 2002, was 50.5% based on the common stock closing price of $40.05. CBL's chairman and chief executive officer, Charles B. Lebovitz, said "This past year we produced a record total return of 48% to our shareholders, bringing our average return for the last three years to more than 38%. Our success has resulted from our long-term, company-wide commitment to leasing, managing, developing and acquiring strong regional malls and shopping centers to maximize their value. "The 6% same center NOI growth and positive turnaround in same store sales during the quarter reflect our hard work to improve occupancy and to find more productive retailers as well as our investment to renovate and add value to our properties. Our acquisition program was very active in 2003 with six regional malls and one associated center added containing 4.8 million square feet for a total consideration of $494 million. In addition, our new development program added 770,000 square feet to our portfolio. "We also made a strategic decision last year to contribute ownership interests in 51 of our community centers to a joint venture with Australia-based Galileo America Shopping Trust. This transaction has provided us with further financial flexibility to reinvest in properties where we can enhance their value. This venture also opens new capital markets for us as well as continues to strengthen our balance sheet. We recognized that the sale of these centers would result in a short-term impact to FFO in 2004, but we are confident that our development and acquisition programs will make an even greater contribution to our growth in the years ahead."
PORTFOLIO OCCUPANCY AND SALES* December 31, ---------------------------------- 2003 2002 ------------- ------------- Portfolio occupancy: 93.3% 93.5% Mall portfolio 94.2% 93.5% Stabilized malls (57) 94.4% 94.1% Non-stabilized malls (2) 87.7% 78.5% Associated centers (22) 88.6% 95.2% Community centers (17) 91.9% 91.4% Comparable mall shop sales - year to date 1.1 % (1.6)% *Figures do not include the community centers that were included in Phase I of the Galileo joint venture transaction.
-MORE- ACQUISITIONS During the fourth quarter the Company acquired four regional malls. The acquisitions included the 784,000-square-foot River Ridge Mall in Lynchburg, VA, the 787,000-square-foot Valley View Mall in Roanoke, VA, and the 627,000-square-foot Southpark Mall in Colonial Heights, VA. On December 30, 2003, the Company acquired Harford Mall, a 500,000-square-foot regional mall, and Harford Annex, a 108,000-square-foot associated center, in Bel Air, MD, neither of which are included in the Company's fourth quarter 2003 results. PROPERTY SALES In October 2003, CBL completed Phase I of the joint venture formed with Galileo America REIT that will include the sale of interests in 51 community centers. CBL has sold interests in 47 community centers to date, including six in Phase II that was completed subsequent to the fourth quarter. The third and final phase will be comprised of interests in four community centers to be sold in January 2005. Pursuant to a long-term agreement, CBL is a 10% joint venture partner and will be the exclusive manager for all of Galileo's properties in the United States and will be entitled to management, leasing, acquisition, disposition and financing fees. Net cash proceeds to CBL from all three phases are expected to total approximately $387 million, and the transaction is expected to generate gains on a GAAP basis of approximately $99 million. During the fourth quarter the Company sold three additional community centers: Colleton Square in Walterboro, SC; Orange Plaza in Roanoke, VA; and East Towne Crossing in Knoxville, TN, for a combined gain of $474,000. OUTLOOK AND GUIDANCE In order to fully take into account the annual net loss of $0.58 per diluted share of FFO resulting from the sale of interests in 47 community centers contributed to the joint venture with Galileo America REIT and the additional three community centers sold in the fourth quarter of 2003 to other parties, the Company is adjusting guidance for 2004 funds from operations to a range of $4.60 to $4.65 per diluted share. The full-year guidance is based on budgeted NOI growth in the range of 1% to 2% in 2004 and does not include the impact of any future acquisitions. The Company expects to update its annual guidance after each quarter's results.
Low High ------- ------ Expected diluted earnings per common share $1.37 $1.40 Add: real estate depreciation and amortization 2.06 2.06 Add: joint venture depreciation and amortization 0.08 0.08 Add: minority interest 1.09 1.11 ------- ------ Expected FFO per diluted common share $ 4.60 $4.65 ======= ======
INVESTOR CONFERENCE CALL AND SIMULCAST CBL & Associates Properties, Inc. will conduct a conference call at 9:00 am EST on February 4, 2004, to discuss the fourth quarter results. The number to call for this interactive teleconference is 913-981-5508. A five-day replay of the conference call will be available by dialing 719-457-0820 and entering the passcode, 728815. A transcript of the Company's prepared remarks will be filed as a Form 8-K following the conference call. To receive CBL & Associates Properties, Inc. fourth quarter earnings release and supplemental information please visit our website at www.cblproperties.com or contact Investor Relations at 423-490-8292. The Company will also provide an online Web simulcast and rebroadcast of its 2004 fourth quarter earnings release conference call. The live broadcast of CBL's quarterly conference call will be available online at the Company's Web site at www.cblproperties.com, as well as www.streetevents.com and www.fulldisclosure.com on February 4, 2004, beginning at 9:00 a.m. EST. The online replay will follow shortly after the call and continue through February 18, 2004. 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) -MORE- 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 declines 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 The Company believes that net operating income ("NOI") is a useful 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 company's 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 affects 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. CBL & Associates Properties, Inc. is one of the top five owners of shopping centers in North America and the largest owner of malls and shopping centers in the Southeast. CBL owns or holds interests and manages 159 properties, including 60 enclosed regional malls. The properties are located in 26 states and total 62.5 million-square-feet including 2.0 million-square-feet of non-owned shopping centers managed for third parties. CBL has eight projects under construction totaling approximately 2.7 million-square-feet including two malls -- Coastal Grand in Myrtle Beach, SC, and Imperial Valley Mall in El Centro, CA. The other centers under construction include one associated center, two 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 www.cblproperties.com. Information included herein contains "forward-looking statements" within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual events, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. The reader is directed to the Company's various filings with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated by reference therein, for a discussion of such risks and uncertainties. -MORE- CBL Reports Fourth Quarter Results Page 5 February 3, 2004 CBL & Associates Properties, Inc. Consolidated Statements of Operations (Unaudited; in thousands, except per share amounts)
Three Months Ended Year Ended December 31, December 31, ---------------------------------------------------- 2003 2002 2003 2002 ----------- ----------- ------------ ------------ REVENUES: Minimum rents $ 115,496 $ 101,589 $ 428,678 $ 381,384 Percentage rents 3,172 2,757 12,925 13,360 Other rents 7,220 5,983 12,635 11,013 Tenant reimbursements (1) 47,261 40,736 193,592 160,062 Management, development and leasing fees 1,579 1,638 5,525 7,146 Other 3,435 2,907 14,176 14,005 ----------- ----------- ------------ ------------ Total revenues 178,163 155,610 667,531 586,970 ----------- ----------- ------------ ------------ EXPENSES: Property operating (1) 26,879 24,745 103,540 92,777 Depreciation and amortization 31,340 24,061 113,481 94,018 Real estate taxes 11,890 12,578 51,717 47,190 Maintenance and repairs 10,097 8,472 39,830 35,133 General and administrative 10,170 6,626 30,395 23,332 Other 4,130 2,218 11,489 10,307 ----------- ----------- ------------ ------------ Total expenses 94,506 78,700 350,452 302,757 ----------- ----------- ------------ ------------ Income from operations 83,657 76,910 317,079 284,213 Interest income 681 30 2,485 1,853 Interest expense (40,003) (35,708) (153,373) (143,105) Loss on extinguishment of debt - (511) (167) (3,910) Gain on sales of real estate assets 72,832 102 77,775 2,804 Equity in earnings of unconsolidated affiliates 1,531 1,760 4,941 8,215 Minority interest in earnings: Operating partnership (50,681) (17,119) (106,532) (64,251) Shopping center properties (761) (783) (2,799) (3,306) ----------- ----------- ------------ ------------ Income before discontinued operations 67,256 24,681 139,409 82,513 Operating income of discontinued operations 319 345 688 2,021 Gain on discontinued operations 474 (1,199) 4,042 372 ----------- ----------- ------------ ------------ Net income 68,049 23,827 144,139 84,906 Preferred dividends (7,566) (3,600) (19,633) (10,919) ----------- ----------- ------------ ------------ Net income available to common shareholders $ 60,483 $ 20,227 $ 124,506 $ 73,987 =========== =========== ============ ============ Basic per share data: Income before discontinued operations, net of preferred divided $ 1.98 $ 0.71 $ 4.00 $ 2.50 Discontinued operations 0.03 (0.03) 0.16 0.08 ----------- ----------- ------------ ------------ Net income available to common shareholders $ 2.01 $ 0.68 $ 4.16 $ 2.58 =========== =========== ============ ============ Weighted average common shares outstanding 30,101 29,626 29,936 28,690 Diluted per share data: Income before discontinued operations, net of preferred divided $ 1.89 $ 0.69 $ 3.84 $ 2.41 Discontinued operations 0.03 (0.03) 0.15 0.08 ----------- ----------- ------------ ------------ Net income available to common shareholders $ 1.92 $ 0.66 $ 3.99 $ 2.49 =========== =========== ============ ============ Weighted average common and potential dilutive common shares outstanding 31,511 30,657 31,193 29,668 (1) The amounts for the prior year periods have been reclassified to conform with the current year presentation. This reclassification did not impact income from operations or net income available to common shareholders.
CBL Reports Fourth Quarter Results Page 6 February 3, 2004 CBL & Associates Properties, Inc. The Company's calculation of FFO is as follows ( In thousands):
Three Months Ended Year Ended December 31, December 31, ------------------------ ------------------------- 2003 2002 2003 2002 ----------- ----------- ----------- ------------ Net income available to common shareholders $ 60,483 $ 20,227 $ 124,506 $ 73,987 Add: Depreciation and amortization from consolidated properties 31,340 24,061 113,481 94,018 Depreciation and amortization from unconsolidated affiliates 1,306 1,353 4,307 4,490 Depreciation and amortization from discontinued operations 48 124 309 941 Minority interest in earnings of operating partnership 50,681 17,119 106,532 64,251 Less: Gain on disposal of operating real estate assets (71,886) - (71,886) - Minority investors' share of depreciation and amortization (288) (347) (1,111) (1,348) (Gain) loss on disposal of discontinued operations (474) 1,199 (4,042) (372) Depreciation and amortization of non-real estate assets (125) (138) (508) (493) ----------- ----------- ----------- ------------ Funds from operations $ 71,085 $ 63,598 $ 271,588 $ 235,474 =========== =========== =========== ============ Funds from operations applicable to Company shareholders $ 38,676 $ 34,457 $ 146,552 $ 126,127 =========== =========== =========== ============ Basic per share data: Funds from operations $ 1.28 $ 1.16 $ 4.90 $ 4.40 =========== =========== =========== ============ Weighted average common shares outstanding with operating partnership units fully converted 55,324 54,682 55,477 53,563 Diluted per share data: Funds from operations $ 1.25 $ 1.14 $ 4.79 $ 4.32 =========== =========== =========== ============ Weighted average common and potential dilutive common shares outstanding with operating partnership units fully converted 56,734 55,712 56,735 54,541 SUPPLEMENTAL FFO INFORMATION: Straight-line rental income $ 555 $ 1,144 $ 3,703 $ 4,348 Straight-line rental income per share $ 0.01 $ 0.02 $ 0.07 $ 0.08 Gain on outparcel sales $ 1,392 $ 102 $ 6,058 $ 2,483 Gain on outparcel sales per share $ 0.02 $ - $ 0.11 $ 0.05 Rental revenue recognized under SFAS Nos. 141 and 142 $ 251 $ - $ 333 $ - Rental revenue recognized under SFAS Nos. 141 and 142 per share $ - $ - $ 0.01 $ - Amortization of debt premium $ 678 $ - $ 678 $ - Amortization of debt premium per share $ 0.01 $ - $ 0.01 $ -
CBL Reports Fourth Quarter Results Page 7 February 3, 2004 Same-Center Net Operating Income (Dollars in thousands)
Quarter Ended Year Ended December 31, December 31, ------------------- -------------------- 2003 2002 2003 2002 --------- -------- --------- --------- Net income $ 68,049 $ 23,827 $ 144,139 $ 84,906 Adjustments: Depreciation and amortization 31,340 24,061 113,481 94,018 Depreciation and amortization from unconsolidated affiliates 1,306 1,353 4,307 4,490 Depreciation and amortization from discontinued operations 48 124 309 941 Minority investors' share of depreciation and amortization in shopping center properties (288) (347) (1,111) (1,348) Interest expense 40,003 35,708 153,373 143,105 Interest expense from unconsolidated affiliates 2,075 2,849 8,563 7,647 Interest expense from discontinued operations - 1 - 106 Minority investors' share of interest expense in shopping center properties (397) (373) (1,650) (1,579) Loss on extinguishment of debt - 511 167 3,910 Abandoned projects expense 1,903 178 2,056 236 Sales of completed centers (71,886) - (71,886) - Minority interest in earnings - Operating Partnership 50,681 17,119 106,532 64,251 Gain on discontinued operations (474) 1,199 (4,042) (372) --------- -------- --------- --------- Operating Partnership share of total NOI 122,360 106,210 454,238 400,311 General and administrative expenses 10,170 6,626 30,395 23,332 Management fees and non-property level revenues (5,218) (1,618) (18,674) (8,871) Gain on sale of real estate assets (946) (102) (5,889) (2,804) --------- -------- --------- --------- Operating Partnership's share of property NOI 126,366 111,116 460,070 411,968 NOI of non-comparable centers (24,920) (15,326) (97,392) (66,416) --------- -------- --------- --------- Same center NOI $ 101,446 $ 95,790 $ 362,678 $345,552 ========= ======== ========= ========= Malls NOI $ 93,086 $ 87,168 $ 331,206 $314,211 Associated centers NOI 3,415 3,639 13,887 14,287 Community centers NOI 2,224 2,798 9,947 10,932 Other NOI 2,720 2,185 7,636 6,122 --------- -------- --------- --------- $ 101,445 $ 95,790 $ 362,676 $345,552 ========= ======== ========= ========= Percentage Change: Malls NOI 6.8% 5.4% Associated centers NOI -6.2% -2.8% Community centers NOI -20.5% -9.0% Other NOI 24.5% 24.7% ----------- ---------- Total same center NOI 6.0% 5.0% =========== ==========
CBL Reports Fourth Quarter Results Page 8 February 3, 2004 Company's Share of Consolidated and Unconsolidated Debt (Dollars in thousands)
December 31, 2003 ------------------------------------------- Fixed Rate Variable Rate Total ------------- -------------- ------------ Consolidated debt $ 2,256,544 $ 481,558 $ 2,738,102 Minority investors' share of consolidated debt (19,577) - (19,577) Company's share of unconsolidated affiliates' debt 57,615 76,036 133,651 ------------- -------------- ------------ Company's share of consolidated and unconsolidated debt $ 2,294,582 $ 557,594 $ 2,852,176 ============= ============== ============ Weighted average interest rate 6.64% 2.39% 5.81% ============= ============== ============
December 31, 2002 ------------------------------------------- Fixed Rate Variable Rate Total ------------- -------------- ------------ Consolidated debt $ 1,867,915 $ 534,164 $ 2,402,079 Minority investors' share of consolidated debt (20,127) (1,796) (21,923) Company's share of unconsolidated affiliates' debt 38,269 28,229 66,498 ------------- -------------- ------------ Company's share of consolidated and unconsolidated debt $ 1,886,057 $ 560,597 $ 2,446,654 ============= ============== ============ Weighted average interest rate 7.19% 3.39% 6.31% ============= ============== ============
Debt-To-Total-Market Capitalization Ratio as of December 31, 2003 (In thousands, except stock price)
Shares Outstanding Stock Price (1) Value ------------- -------------- ------------ Common stock and operating partnership units 55,546 $ 56.50 $ 3,138,349 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 ------------ Total market equity 3,353,349 Company's share of total debt 2,852,456 ------------ Total market capitalization $ 6,205,805 ============ Debt-to-total-market capitalization ratio 46.0% ============ (1) Stock price for common stock and operating partnership units equals the closing price of the common stock on December 31, 2003. The stock price for the preferred stock represents the face value of each respective series of preferred stock.
Reconciliation of Shares and Operating Partnership Units Outstanding (In thousands)
Three Months Ended Year Ended December 31, December 31, ---------------------------- ---------------------------- 2003: Basic Diluted Basic Diluted ------------ ------------- -------------- ------------ Weighted average shares - EPS 30,101 31,511 29,936 31,193 Weighted average operating partnership units 25,223 25,223 25,541 25,542 ------------ ------------- -------------- ------------ Weighted average shares- FFO 55,324 56,734 55,477 56,735 ============ ============= ============== ============ 2002: Weighted average shares - EPS 29,626 30,657 28,690 29,688 Weighted average operating partnership units 25,056 25,055 24,873 24,853 ------------ ------------- -------------- ------------ Weighted average shares- FFO 54,682 55,712 53,563 54,541 ============ ============= ============== ============
Dividend Payout Ratio
Three Months Ended Year Ended December 31, December 31, ---------------------------- ---------------------------- 2003 2002 2003 2002 ------------ ------------- -------------- ------------ Dividend per share $ 0.655 $ 0.655 $ 2.69 $ 2.32 FFO per diluted, fully converted share $ 1.25 $ 1.14 $ 4.79 $ 4.32 ------------ ------------- -------------- ------------ Dividend payout ratio 52.4% 57.5% 56.2% 53.7% ============ ============= ============== ============
CBL Reports Fourth Quarter Results Page 9 February 3, 2004 Consolidated Balance Sheets (Preliminary and unaudited, in thousands)
December 31, ---------------------------- 2003 2002 ----------- ----------- ASSETS Real estate assets: Land $ 578,310 $ 570,818 Buildings and improvements 3,678,074 3,394,787 ----------- ----------- 4,256,384 3,965,605 Less: accumulated depreciation (467,614) (434,840) ----------- ----------- 3,788,770 3,530,765 Real estate assets held for sale 64,354 - Developments in progress 59,096 80,720 ----------- ----------- Net investment in real estate 3,912,220 3,611,485 Cash, restricted cash and cash equivalents 20,332 13,355 Cash in escrow 78,476 - Receivables: Tenant, net of allowance 42,165 37,994 Other 3,033 3,692 Mortgage notes receivable 36,169 23,074 Investment in unconsolidated affiliates 96,450 68,232 Other assets 75,465 37,282 ----------- ----------- $ 4,264,310 $ 3,795,114 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage and other notes payable $ 2,709,348 $ 2,402,079 Mortgage notes payable on real estate assets held for sale 28,754 - Accounts payable and accrued liabilities 161,478 151,332 ----------- ----------- Total liabilities 2,899,580 2,553,411 ----------- ----------- Commitments and contingencies Minority interests 526,993 500,513 ----------- ----------- Shareholders' equity: Preferred Stock, $.01 par value 25 47 Common Stock, $.01 par value 303 298 Additional paid-in capital 818,051 765,686 Accumulated other comprehensive loss - (2,397) Deferred compensation (1,607) - Accumulated deficit 20,965 (22,444) ----------- ----------- Total shareholders' equity 837,737 741,190 ----------- ----------- $ 4,264,310 $ 3,795,114 =========== =========== The balance sheet above is preliminary as of the date of this report. Please to refer the Company's Annual Report on Form 10-K when filed for a complete balance sheet as of December 31, 2003
99.2 Analyst Conference Call Script - Fourth Quarter Ended December 31, 2003 CBL & ASSOCIATES PROPERTIES, INC. Conference Call, Fourth Quarter 2003 February 4, 2004 @ 9:00 AM EDT Thank you and good morning. We appreciate your participation in today's conference call to discuss our results for 2003. With me today are John Foy, the Company's Vice Chairman and Chief Financial Officer, and Kelly Sargent, Director of Investor Relations who will first read our Safe Harbor disclosure. This conference call 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 results, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. During our discussion today, references made to per share are based upon a fully diluted converted share. We direct you 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 "Management's Discussion and Analysis of Financial Condition and Results of Operations" included therein for a discussion of such risks and uncertainties. I would like to note that a transcript of today's comments including the earnings release, a preliminary balance sheet and additional supplemental schedules, will be furnished to the SEC as a Form 8-K and will be available on our website. This call is also available for replay on the Internet through a link on our website at cblproperties.com. This conference call is the property of CBL & Associates Properties, Inc. Any redistribution, retransmission or rebroadcast of this call without the express written consent of CBL is strictly prohibited. During this conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. A description of each non-GAAP financial measure and a reconciliation of each non-GAAP financial measure to the comparable GAAP financial measure was included in the earnings release that will be in the Form 8-K. This quarter our supplemental information was released last evening with our earnings release and was as posted to our web site. It is our intention to continuing supplying this information prior to the conference call. Thank you, Kelly. 2003 was a very productive year for us, yielding strong results in our regional mall portfolio. Highlights for the fourth quarter and year include: 1. FFO for the quarter increased 9.6% to $1.25 per share. 2. For the year, FFO increased 10.9% to $4.79 per share. 3. Same center NOI increased 6% for the fourth quarter and increased 5% for the year. 4. We acquired six malls and one associated center containing over 4.8 million square feet for a total investment of almost $494 million with an average cap rate of 8.58%. 5. During 2003, we opened over 770,000 square feet of new developments and renovated six regional malls. 6. We issued $115 million of Perpetual Preferred Stock with a coupon of 7.75%. We also redeemed $67 million of Perpetual Preferred A Stock at a coupon rate of 9%. 7. We closed on Phase I of the sale of community centers to the joint venture we formed with Galileo America REIT and subsequent to the quarter we closed on Phase II of the transaction, leaving only eleven community centers in our portfolio. Four additional centers will be sold to Galileo in January 2005. 8. Our total return to shareholders in 2003 was 48% which included a 41% appreciation in our stock plus an 11% increase in our dividends declared in October. Developments 2004 will be a very busy year for us on the development front with over 2 million square feet of new projects scheduled to open. Our largest mall development to date is Coastal Grand in Myrtle Beach, SC -- only 42 days away from its Grand Opening on Wednesday, March 17, 2004. Leasing has made good progress and we are currently 86% leased and committed. We are looking forward to opening over 100 stores at Coastal Grand including anchors Belk, Dillard's and Sears as well as Dick's Sporting Goods, Bed Bath & Beyond and a 14-screen Cinemark theater. For more information on the mall, please visit the mall's web site at www.coastalgrand.com. We invite you to join us for this exciting Grand Opening event. On January 14 we held the groundbreaking ceremonies for Imperial Valley Mall, our first west coast development. The mall will be located in El Centro, CA and is scheduled to open in March 2005. This 741,000 square foot mall is owned in a joint venture with the MG Herring Group, of which we will own 60%. Four department stores including Sears, Robinsons-May, JC Penney and Dillard's, as well as a 14-screen UltraStar Cinema will anchor the new development. Other projects under construction include the 312,000 square foot Charter Oak Marketplace in Hartford, CT, anchored by a Wal-Mart and Marshall's. Wilkes Barre Township Marketplace in Wilkes Barre Township, PA a 281,000 square foot center anchored by Wal-Mart and a 26,500 square foot expansion at Garden City Plaza in Garden City, KS. All three of these development projects will be sold to the Galileo joint venture in the third phase of the transaction that will close in January 2005. In addition, we have The Shoppes at Panama City under construction, an associated center located adjacent to Panama City Mall. We also have two expansions in progress, East Towne and West Towne Malls in Madison, WI. Both include a new Dick's Sporting Goods as well as additional mall shop space and are scheduled to open this November. In addition to these projects under construction, we have several additional projects in our development pipeline and in various phases of pre-development. Expanding and adding anchor stores to our malls continues to be a priority for us. At Arbor Place Mall in Atlanta, GA, JC Penney opened last October, and construction has started for the new 140,000 square foot Rich's-Macy's scheduled to open later this fall. Dillard's at Northwoods Mall in Charleston, SC, started their 30,000 square-foot expansion to be completed by November of this year in conjunction with our overall renovation of the mall. Upgrading and renovating our malls is a key component to their continued dominance within their markets. In 2003 we completed six renovations for a cost of approximately $61 million, excluding deferred maintenance costs of $19.8 million. This year we will complete three mall renovations, Panama City Mall, Cherryvale Mall and Northwoods Mall, at an estimated cost of $22.5 million. By the end of this year, we will have completed all but two of the scheduled renovations associated with the 21-mall portfolio we acquired in 2001. Leasing & Occupancy We accomplished record leasing in 2003 totalling to 4.7 million square feet compared with 3.9 million square feet in 2002. During the year we entered into approximately 1.3 million square feet of new leases and renewed approximately 1.5 million square feet of existing tenants compared to 1.4 million square feet of new leases and 1.2 million square feet of renewal leasing in 2002. For the new developments, we leased 1.9 million square feet compared to 1.3 million in 2002. During 2003 bankruptcies resulted in 63 stores closing, containing 171,000 square feet and representing $5.1 million in annual gross rentals. This year we anticipate a more challenging leasing environment with the recent announcements of bankruptcy filings and store closings. Last week we were notified of 24 KB Toy stores out of a total of 51 in our portfolio that are closing. These stores represent 96,300 square feet and will result in a loss of $2.7 million in gross annual rentals. Yesterday Gadzook's announced that they have filed for bankruptcy. In the CBL portfolio we have 38 stores and have been notified that 10 stores will be closing. The closing of these 10 stores represents 24,000 square feet and almost $1 million in annual gross rentals. This past year we also experienced the closing of 12 cafeterias representing 114,000 square feet and resulting in an annual loss of $1.5 million. Although we are confident we will release the cafeteria locations at increased rents, it will take several months to do so plus time to reconfigure the space for new tenants. We expect the first cafeteria replacements to open this summer. In addition to the closed stores and bankruptcies we have several tenants requesting rent relief, including music and book stores which we will work with in an effort to maintain an appealing mix of retailer categories in our malls. At the end of the fourth quarter, total portfolio occupancy was 93.3%. In the former Jacobs malls, occupancy improved by 150 basis points to 94.2% from 92.7% one year ago. This year marks the third anniversary of our acquisition of the former Jacobs portfolio that has proven to be an outstanding acquisition for our company. We have improved occupancy from 87.4% when the acquisitions were first announced - an improvement of 680 basis points. We have also upgraded the tenant mix significantly in these properties and added numerous boxes. Other areas where we have improved the performance of these malls is in specialty leasing and sponsorship income. Occupancy for the associated centers was 88.6% at the end of the quarter. The occupancy is negatively impacted by three centers as follows: a vacancy of a 68,000 square foot former Ames store at Westmoreland Crossing in Greeensburg, PA; the loss of a 36,000 square foot Just For Feet store at the Village at Rivergate in Nashville, TN; and the 46,000 square foot Appliance Factory Warehouse at Hamilton Corner in Chattanooga, TN. Each of these centers is under redevelopment with replacement prospects that should open in late 2004 or early 2005. For the year, the stabilized mall portfolio initial base rents increased 6.6% and increased 9.0% based on average rents. In the associated centers, leasing spreads decreased 0.3% on initial rents and increased 2.4% on the average rents. In the remaining community centers, rents increased 2.5% on initial rents and increased 3.3% on the average rent. For additional leasing spread information, please refer to the supplemental schedules. Retail Sales For the first time in three years we are pleased to report positive retail sales in our portfolio. For mall stores of 10,000 square feet and less, same store sales for 2003 increased 1.1% for those tenants that have reported resulting in average sales of $300 per square foot for the mall portfolio for 2003. We are encouraged that comparable mall shop sales have been positive for the last six months with an increase of 2.7%. We are optimistic that this trend will continue through 2004. Occupancy costs as a percentage of sales at our malls was 12.2% for the year compared with 12.0% one year ago. I will now turn the call over to John Foy to discuss our financial results. Dispositions/Acquisitions We have now completed Phase I and II of the Galileo joint venture that included the sale of 47 community centers and raised $318 million in cash proceeds. We are pleased with the results of this venture and the portfolio continues to perform well. Our expectation for future growth of this venture is one the reasons we entered into this transaction. During the fourth quarter we sold three additional community centers for a combined gain of $474,000. The eleven remaining community centers properties currently held in the CBL portfolio will be sold as the opportunity to realize value occurs. Our ability to react to opportunities on a timely basis allowed us to acquire Harford Mall in Bel-Air, MD at a favorable cap rate of 8.4%. This again is a value added project we have acquired. The acquisitions market today is competitive, but we will continue to apply our disciplined and conservative approach to opportunities in order to enhance shareholder value. Financial Review During the fourth quarter, operating performance improved, resulting in FFO per share growth of 9.6%. Of this increase, 52% was represented by external growth. The external growth resulted from one new mall opening, the acquisition of the remaining partnership interests in four properties, and the acquisition of five regional malls. Of the past years FFO increase, 48% was from internal growth attributable to stable occupancy levels, increases in rental revenue and tenant reimbursements. Our cost recovery ratio was 99.2% for the year compared with 91.4% for last year. Our cost recovery ratio improved for the year somewhat due to the partial recovery of renovations and remodelings of our malls and maintaining high occupancy levels. We expect that our cost recovery ratio for 2004 will be in the mid 90's. As we stated in our earnings release, 2003 same-center NOI growth was 5.0% for the total portfolio, driven by the high occupancy levels, tenant reimbursements and specialty leasing. The breakdown for the year by property type is as follows: 1. Same-Center mall NOI increased 5.4%. 2. Associated centers experienced a 2.8% decrease, which amounts to a decrease of $400,000 and was attributable to vacancies we referred to earlier and also bad debt expense. 3. Community center NOI decreased 9%. This calculation only includes those centers remaining in the CBL portfolio and not the centers that were sold to Galileo. Our debt to market capitalization at the end of the fourth quarter was 46%, compared to 50.5% a year ago, giving us financial flexibility on our balance sheet. In addition, our floating rate debt accounts for less than 20% of our total debt and represents only 9% of our total market capitalization. The variable rate debt includes construction loans, lines of credit and short-term loans on operating properties. The dividend payout ratio remains at a conservative 60% at year-end. These measures reflect our conservative approach to the business and position us to take advantage of opportunities that may arise. Also please note that our financial coverage ratios have improved as a result of the Galileo transaction. Our EBITDA coverage ratio was 2.94 for the fourth quarter of 2003 compared to 2.79 for the same period in 2002. (Note this is a correction from the previously disclosed 2002 ratio of 2.83 and for the year). Conclusion Also, before we open the call for Q&A, I would like to share our thoughts and our outlook: 1. In our earnings release, we adjusted our guidance for 2004 from a range of $4.85-5.00 per share to a range of $4.60-4.65 per share. We made this adjustment for two reasons: 1. the impact of the $0.58 per share of FFO lost due to the sale of 50 community centers in 2003 and the extended timeframe to redeploy the net proceeds and 2. the lowering of our budgeted NOI growth from 3-5% to 1-2%. In retrospect, our assumptions last quarter were overly optimistic regarding the redeployment of the capital raised in the Galileo transaction. While the sale of our community centers has a negative impact on FFO in the short term, as the proceeds are redeployed into new developments and acquisitions, we are confident that the transaction will ultimately be more accretive to our shareholders. 2. We continue to focus on enhancing the strength of our existing mall portfolio. We are adding a number of boxes at various malls such as Barnes & Noble and Linens & Things, which takes away income during construction but will improve NOI and occupancy results as these stores open. 3. We are encouraged with the level of activity in our development program. Not only will we open 2.0 million square feet of new projects this year, but also we have a strong pipeline of projects going forward. 4. As we stated in our earnings release, our guidance did not incorporate additional acquisitions. However, we continue to pursue new acquisition opportunities. While cap rates in the market have moved down, we still feel that we can acquire regional malls in today's world that provide significant opportunities for immediate accretion as well as strong growth into the future. 5. Let me conclude by saying that our cautious approach to 2004 in no way lessens our commitment to our shareholders or our confidence in our business. We appreciate your confidence and support. Stephen and I will now answer your questions. Operator: Open for Q&A. Final Comment: Thank you again for joining us today and we again invite you to join us for the Coastal Grand - Grand Opening and ribbon cutting event on Wednesday, March 17 at 9:00 AM. Exhibit 99.3 Supplemental information CBL & Associates Properties, Inc. Supplemental Financial and Operating Information For the Quarter Ended December 31, 2004 1 CBL & Associates Properties, Inc. Supplemental Financial and Operating Information For the Year Ended December 31, 2003 Consolidated Statements of Operations (Unaudited; in thousands, except per share amounts)
Three Months Ended Year Ended December 31, December 31, ---------------------------------------------------- 2003 2002 2003 2002 ----------- ----------- ------------ ------------ REVENUES: Minimum rents $ 115,496 $ 101,589 $ 428,678 $ 381,384 Percentage rents 3,172 2,757 12,925 13,360 Other rents 7,220 5,983 12,635 11,013 Tenant reimbursements (1) 47,261 40,736 193,592 160,062 Management, development and leasing fees 1,579 1,638 5,525 7,146 Other 3,435 2,907 14,176 14,005 ----------- ----------- ------------ ------------ Total revenues 178,163 155,610 667,531 586,970 ----------- ----------- ------------ ------------ EXPENSES: Property operating (1) 26,879 24,745 103,540 92,777 Depreciation and amortization 31,340 24,061 113,481 94,018 Real estate taxes 11,890 12,578 51,717 47,190 Maintenance and repairs 10,097 8,472 39,830 35,133 General and administrative 10,170 6,626 30,395 23,332 Other 4,130 2,218 11,489 10,307 ----------- ----------- ------------ ------------ Total expenses 94,506 78,700 350,452 302,757 ----------- ----------- ------------ ------------ Income from operations 83,657 76,910 317,079 284,213 Interest income 681 30 2,485 1,853 Interest expense (40,003) (35,708) (153,373) (143,105) Loss on extinguishment of debt - (511) (167) (3,910) Gain on sales of real estate assets 72,832 102 77,775 2,804 Equity in earnings of unconsolidated affiliates 1,531 1,760 4,941 8,215 Minority interest in earnings: Operating partnership (50,681) (17,119) (106,532) (64,251) Shopping center properties (761) (783) (2,799) (3,306) ----------- ----------- ------------ ------------ Income before discontinued operations 67,256 24,681 139,409 82,513 Operating income of discontinued operations 319 345 688 2,021 Gain on discontinued operations 474 (1,199) 4,042 372 ----------- ----------- ------------ ------------ Net income 68,049 23,827 144,139 84,906 Preferred dividends (7,566) (3,600) (19,633) (10,919) ----------- ----------- ------------ ------------ Net income available to common shareholders $ 60,483 $ 20,227 $ 124,506 $ 73,987 =========== =========== ============ ============ Basic per share data: Income before discontinued operations, net of preferred divided $ 1.98 $ 0.71 $ 4.00 $ 2.50 Discontinued operations 0.03 (0.03) 0.16 0.08 ----------- ----------- ------------ ------------ Net income available to common shareholders $ 2.01 $ 0.68 $ 4.16 $ 2.58 =========== =========== ============ ============ Weighted average common shares outstanding 30,101 29,626 29,936 28,690 Diluted per share data: Income before discontinued operations, net of preferred divided $ 1.89 $ 0.69 $ 3.84 $ 2.41 Discontinued operations 0.03 (0.03) 0.15 0.08 ----------- ----------- ------------ ------------ Net income available to common shareholders $ 1.92 $ 0.66 $ 3.99 $ 2.49 =========== =========== ============ ============ Weighted average common and potential dilutive common shares outstanding 31,511 30,657 31,193 29,668 (1) The amounts for the prior year periods have been reclassified to conform with the current year presentation. This reclassification did not impact income from operations or net income available to common shareholders.
CBL & Associates Properties, Inc. Supplemental Financial and Operating Information For the Year Ended December 31, 2003 The Company's calculation of FFO is as follows ( In thousands):
Three Months Ended Year Ended December 31, December 31, ------------------------ ------------------------- 2003 2002 2003 2002 ----------- ----------- ----------- ------------ Net income available to common shareholders $ 60,483 $ 20,227 $ 124,506 $ 73,987 Add: Depreciation and amortization from consolidated properties 31,340 24,061 113,481 94,018 Depreciation and amortization from unconsolidated affiliates 1,306 1,353 4,307 4,490 Depreciation and amortization from discontinued operations 48 124 309 941 Minority interest in earnings of operating partnership 50,681 17,119 106,532 64,251 Less: Gain on disposal of operating real estate assets (71,886) - (71,886) - Minority investors' share of depreciation and amortization (288) (347) (1,111) (1,348) (Gain) loss on disposal of discontinued operations (474) 1,199 (4,042) (372) Depreciation and amortization of non-real estate assets (125) (138) (508) (493) ----------- ----------- ----------- ------------ Funds from operations $ 71,085 $ 63,598 $ 271,588 $ 235,474 =========== =========== =========== ============ Funds from operations applicable to Company shareholders $ 38,676 $ 34,457 $ 146,552 $ 126,127 =========== =========== =========== ============ Basic per share data: Funds from operations $ 1.28 $ 1.16 $ 4.90 $ 4.40 =========== =========== =========== ============ Weighted average common shares outstanding with operating partnership units fully converted 55,324 54,682 55,477 53,563 Diluted per share data: Funds from operations $ 1.25 $ 1.14 $ 4.79 $ 4.32 =========== =========== =========== ============ Weighted average common and potential dilutive common shares outstanding with operating partnership units fully converted 56,734 55,712 56,735 54,541 SUPPLEMENTAL FFO INFORMATION: Straight-line rental income $ 555 $ 1,144 $ 3,703 $ 4,348 Straight-line rental income per share $ 0.01 $ 0.02 $ 0.07 $ 0.08 Gain on outparcel sales $ 1,392 $ 102 $ 6,058 $ 2,483 Gain on outparcel sales per share $ 0.02 $ - $ 0.11 $ 0.05 Rental revenue recognized under SFAS Nos. 141 and 142 $ 251 $ - $ 333 $ - Rental revenue recognized under SFAS Nos. 141 and 142 per share $ - $ - $ 0.01 $ - Amortization of debt premium $ 678 $ - $ 678 $ - Amortization of debt premium per share $ 0.01 $ - $ 0.01 $ -
CBL & Associates Properties, Inc. Supplemental Financial and Operating Information For the Year Ended December 31, 2003 Same-Center Net Operating Income (Dollars in thousands)
Quarter Ended Year Ended December 31, December 31, ------------------- -------------------- 2003 2002 2003 2002 --------- -------- --------- --------- Net income $ 68,049 $ 23,827 $ 144,139 $ 84,906 Adjustments: Depreciation and amortization 31,340 24,061 113,481 94,018 Depreciation and amortization from unconsolidated affiliates 1,306 1,353 4,307 4,490 Depreciation and amortization from discontinued operations 48 124 309 941 Minority investors' share of depreciation and amortization in shopping center properties (288) (347) (1,111) (1,348) Interest expense 40,003 35,708 153,373 143,105 Interest expense from unconsolidated affiliates 2,075 2,849 8,563 7,647 Interest expense from discontinued operations - 1 - 106 Minority investors' share of interest expense in shopping center properties (397) (373) (1,650) (1,579) Loss on extinguishment of debt - 511 167 3,910 Abandoned projects expense 1,903 178 2,056 236 Sales of completed centers (71,886) - (71,886) - Minority interest in earnings - Operating Partnership 50,681 17,119 106,532 64,251 Gain on discontinued operations (474) 1,199 (4,042) (372) --------- -------- --------- --------- Operating Partnership share of total NOI 122,360 106,210 454,238 400,311 General and administrative expenses 10,170 6,626 30,395 23,332 Management fees and non-property level revenues (5,218) (1,618) (18,674) (8,871) Gain on sale of real estate assets (946) (102) (5,889) (2,804) --------- -------- --------- --------- Operating Partnership's share of property NOI 126,366 111,116 460,070 411,968 NOI of non-comparable centers (24,920) (15,326) (97,392) (66,416) --------- -------- --------- --------- Same center NOI $ 101,446 $ 95,790 $ 362,678 $345,552 ========= ======== ========= ========= Malls NOI $ 93,086 $ 87,168 $ 331,206 $314,211 Associated centers NOI 3,415 3,639 13,887 14,287 Community centers NOI 2,224 2,798 9,947 10,932 Other NOI 2,720 2,185 7,636 6,122 --------- -------- --------- --------- $ 101,445 $ 95,790 $ 362,676 $345,552 ========= ======== ========= ========= Percentage Change: Malls NOI 6.8% 5.4% Associated centers NOI -6.2% -2.8% Community centers NOI -20.5% -9.0% Other NOI 24.5% 24.7% ----------- ---------- Total same center NOI 6.0% 5.0% =========== ==========
CBL & Associates Properties, Inc. Supplemental Financial and Operating Information For the Year Ended December 31, 2003 Company's Share of Consolidated and Unconsolidated Debt (Dollars in thousands)
December 31, 2003 ------------------------------------------- Fixed Rate Variable Rate Total ------------- -------------- ------------ Consolidated debt $ 2,256,544 $ 481,558 $ 2,738,102 Minority investors' share of consolidated debt (19,577) - (19,577) Company's share of unconsolidated affiliates' debt 57,615 76,036 133,651 ------------- -------------- ------------ Company's share of consolidated and unconsolidated debt $ 2,294,582 $ 557,594 $ 2,852,176 ============= ============== ============ Weighted average interest rate 6.64% 2.39% 5.81% ============= ============== ============
December 31, 2002 ------------------------------------------- Fixed Rate Variable Rate Total ------------- -------------- ------------ Consolidated debt $ 1,867,915 $ 534,164 $ 2,402,079 Minority investors' share of consolidated debt (20,127) (1,796) (21,923) Company's share of unconsolidated affiliates' debt 38,269 28,229 66,498 ------------- -------------- ------------ Company's share of consolidated and unconsolidated debt $ 1,886,057 $ 560,597 $ 2,446,654 ============= ============== ============ Weighted average interest rate 7.19% 3.39% 6.31% ============= ============== ============
Debt-To-Total-Market Capitalization Ratio as of December 31, 2003 (In thousands, except stock price)
Shares Outstanding Stock Price (1) Value ------------- -------------- ------------ Common stock and operating partnership units 55,546 $ 56.50 $ 3,138,349 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 ------------ Total market equity 3,353,349 Company's share of total debt 2,852,456 ------------ Total market capitalization $ 6,205,805 ============ Debt-to-total-market capitalization ratio 46.0% ============ (1) Stock price for common stock and operating partnership units equals the closing price of the common stock on December 31, 2003. The stock price for the preferred stock represents the face value of each respective series of preferred stock.
CBL & Associates Properties, Inc. Supplemental Financial and Operating Information For the Year Ended December 31, 2003 Reconciliation of Shares and Operating Partnership Units Outstanding (In thousands)
Three Months Ended Year Ended December 31, December 31, ---------------------------- ---------------------------- 2003: Basic Diluted Basic Diluted ------------ ------------- -------------- ------------ Weighted average shares - EPS 30,101 31,511 29,936 31,193 Weighted average operating partnership units 25,223 25,223 25,541 25,542 ------------ ------------- -------------- ------------ Weighted average shares- FFO 55,324 56,734 55,477 56,735 ============ ============= ============== ============ 2002: Weighted average shares - EPS 29,626 30,657 28,690 29,688 Weighted average operating partnership units 25,056 25,055 24,873 24,853 ------------ ------------- -------------- ------------ Weighted average shares- FFO 54,682 55,712 53,563 54,541 ============ ============= ============== ============
Dividend Payout Ratio
Three Months Ended Year Ended December 31, December 31, ---------------------------- ---------------------------- 2003 2002 2003 2002 ------------ ------------- -------------- ------------ Dividend per share $ 0.655 $ 0.655 $ 2.69 $ 2.32 FFO per diluted, fully converted share $ 1.25 $ 1.14 $ 4.79 $ 4.32 ------------ ------------- -------------- ------------ Dividend payout ratio 52.4% 57.5% 56.2% 53.7% ============ ============= ============== ============
Consolidated Balance Sheets (Preliminary and unaudited, in thousands)
December 31, 2003 2002 ---------- ---------- ASSETS Real estate assets: Land $ 578,310 $ 570,818 Buildings and improvements 3,678,074 3,394,787 ---------- ---------- 4,256,384 3,965,605 Less: accumulated depreciation (467,614) (434,840) ---------- ---------- 3,788,770 3,530,765 Real estate assets held for sale 64,354 - Developments in progress 59,096 80,720 ---------- ---------- Net investment in real estate 3,912,220 3,611,485 Cash, restricted cash and cash equivalents 20,332 13,355 Cash in escrow 78,476 - Receivables: Tenant, net of allowance 42,165 37,994 Other 3,033 3,692 Mortgage notes receivable 36,169 23,074 Investment in unconsolidated affiliates 96,450 68,232 Other assets 75,465 37,282 ---------- ---------- $ 4,264,310 $ 3,795,114 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage and other notes payable $ 2,709,348 $ 2,402,079 Mortgage notes payable on real estate assets held for sale 28,754 - Accounts payable and accrued liabilities 161,478 151,332 ---------- ---------- Total liabilities 2,899,580 2,553,411 ---------- ---------- Commitments and contingencies Minority interests 526,993 500,513 ---------- ---------- Shareholders' equity: Preferred Stock, $.01 par value, 25 47 Common Stock, $.01 par value 303 298 Additional paid-in capital 818,051 765,686 Accumulated other comprehensive loss - (2,397) Deferred compensation (1,607) - Accumulated deficit 20,965 (22,444) ---------- ---------- Total shareholders' equity 837,737 741,190 ---------- ---------- $ 4,264,310 $ 3,795,114 =========== ===========
The balance sheet above is preliminary as of the date of this report. Please refer the Company's Annual Report on Form 10-K when filed for a complete balance sheet as of December 31, 2003 CBL & Associates Properties, Inc. Supplemental Financial and Operating Information For the Year Ended December 31, 2003 The Company presents the ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to interest because the Company believes that the EBITDA to interest coverage ratio, along with cash flow from operating activities, investing activities and financing activities, provides investors an additional indicator of the Company's ability to incur and service debt. Ratio of EBITDA to Interest Expense (Dollars in thousands) Quarter Ended December 31, --------------------------- 2003 2002 ---------- ---------- EBITDA: Net Income $ 68,049 $ 23,827 Adjustments: Depreciation and amortization 31,340 24,061 Depreciation and amortization from unconsolidated affiliates 1,306 1,353 Depreciation and amortization from discontinued operations 48 124 Minority investors' share of depreciation and amortization in shopping center properties (288) (347) Interest expense 40,003 35,708 Interest expense from unconsolidated affiliates 2,075 2,849 Interest expense from discontinued operations - 1 Minority investors' share of interest expense in shopping center properties (397) (373) Income taxes 131 256 Loss on extinguishment of debt - 511 Abandoned projects expense 1,903 178 Sales of Completed Centers (71,886) - Minority interest in earnings - Operating Partnership 50,681 17,119 Gain on discontinued operations (474) 1,199 ---------- ---------- Company's share of total EBITDA $ 122,491 $ 106,466 ============= ========== Interest Expense: Interest expense $ 40,003 $ 35,708 Interest expense from discontinued operations - 1 Interest expense from unconsolidated affiliates 2,075 2,849 Minority investors' share of interest expense in shopping center properties (397) (373) ---------- ---------- Company's share of total interest expense $ 41,681 $ 38,185 ============= ========== Ratio of EBITDA to Interest Expense 2.94 2.79 ============= ==========
Reconciliation of EBITDA to Cash Flows From Operating Activities (In thousands) Quarter Ended December 31, --------------------------- 2003 2002 ---------- ---------- Company's share of total EBITDA $ 122,491 $ 106,466 Interest expense (40,003) (35,708) Minority interest's share of interest expense 397 373 Income taxes (131) (256) Amortization of deferred financing costs and non real estate Depreciation 1,664 1,542 Amortization of debt premiums (646) - Depreciation and interest expense from unconsolidated affiliates (3,381) (4,202) Minority investors' share of depreciation and amortization in 288 347 shopping center properties Minority interest in earnings - shopping center properties 761 783 Gains on outparcel sales (946) (102) Issuances of stock under incentive plan 259 1,075 Amortization of deferred compensation 93 - Deferred compensation 349 2,194 Changes in assets and liabilities 20,844 4,858 ---------- ---------- Cash flows from operating activities $ 102,039 $ 77,370 ============= ==========
CBL & Associates Properties, Inc. Supplemental Financial and Operating Information December 31, 2003
Schedule of Mortgage and Other Notes Payable as of December 31, 2003 (Dollars In thousands ) Maturity Interest 12/31/03 Balance Property Location Date Rate Balance Fixed Variable -------- -------- ---- ---- ------- ----- -------- Asheboro, NC Randolph Mall Jul-12 6.500% $ 15,328 $ 15,328 $ - Asheville, NC Asheville Mall Sep-11 6.980% 69,541 69,541 - Beaumont, TX Parkdale Mall Oct-10 5.010% 56,712 56,712 - Beaumont, TX Parkdale Crossing Oct-10 5.010% 8,955 8,955 - Brookfield, IL Brookfield Square May-05 7.498% 71,742 71,742 - Brownsville, TX Sunrise Mall May-04 4.900% 40,000 40,000 - Burnsville, MN Burnsville Center Aug-10 8.000% 70,923 70,923 - Cary , NC Cary Towne Ctr Mar-09 6.850% 88,310 88,310 - Charleston, SC Citadel Mall May-07 7.390% 31,767 31,767 - Chattanooga, TN Hamilton Corner Aug-11 10.125% 2,503 2,503 - Chattanooga, TN Hamilton Place Mar-07 7.000% 65,448 65,448 - Chattanooga, TN CBL Center Aug-12 6.250% 14,763 14,763 - Cincinnati, OH Eastgate Mall Dec-03 2.625% 41,125 - 41,125 Cincinnati, OH Eastgate Crossing Apr-07 6.380% 10,394 10,394 - Colonial Heights, VA Southpark Mall May-12 5.100% 47,695 47,695 - Columbia, SC Columbia Mall Oct-13 5.450% 33,839 33,839 - Dalton, GA Walnut Square Feb-08 10.125% 486 486 - Douglasville, GA Arbor Place Mall Jul-12 6.510% 79,570 79,570 - Douglasville, GA The Landing At Arbor Jul-12 6.510% 8,982 8,982 - Fairview Heights, IL St. Claire Square Apr-09 7.000% 68,892 68,892 - Fayetteville, NC Cross Creek Mall Apr-12 5.000% 73,975 73,975 - Greensburg PA Westmoreland Mall Jan-13 5.050% 83,703 83,703 - Hattiesburg, MS Turtle Creek Mall Mar-06 7.400% 31,082 31,082 - Highpoint, NC Oak Hollow Mall Feb-08 7.310% 45,960 45,960 - Jackson, TN Old Hickory Mall Jul-12 6.510% 35,148 35,148 - Janesville WI Janesville Mall Apr-16 8.375% 14,255 14,255 - Lansing MI Meridian Mall Oct-08 4.520% 95,479 95,479 - Lexington KY Fayette Mall Jul-11 7.000% 95,470 95,470 - Lexington KY Fayette Mall DevelopmentDec-04 2.770% 8,550 - 8,550 Louisville, KY Jefferson Mall Jul-12 6.510% 44,325 44,325 - Lynchburg, VA River Ridge Mall Jan-07 4.000% 24,978 24,978 - Madison, WI East Towne Mall Jan-07 8.010% 27,791 27,791 - Madison, WI West Towne Mall Jan-07 8.010% 42,966 42,966 - Meridian, MS Bonita Lakes Mall Oct-09 6.820% 27,178 27,178 - Meridian, MS Bonita Lakes Crossing Oct-09 6.820% 8,516 8,516 - Midland MI Midland Mall Jun-03 2.620% 30,000 - 30,000 Morristown, TN College Square Sep-13 6.750% 12,301 12,301 - N Charleston SC Northwoods Mall Jul-12 6.510% 63,461 63,461 - Nashua, NH Willow Springs Plaza Aug-07 9.750% 2,871 2,871 - Nashville, TN Coolsprings Galleria Sep-10 8.290% 60,322 60,322 - Nashville, TN Hickory Hollow Mall Aug-08 6.770% 89,500 89,500 - Nashville, TN Courtyard At Hickory Aug-08 6.770% 4,167 4,167 - Nashville, TN Rivergate Mall Aug-08 6.770% 72,334 72,334 - Nashville, TN Village At Rivergate Aug-08 6.770% 3,417 3,417 - Panama City, FL Panama City Mall Aug-12 7.300% 40,144 40,144 - Portland, ME Bj'S Plaza Dec-11 10.400% 2,578 2,578 - Racine, WI Regency Mall Jul-12 6.510% 34,757 34,757 - Roanoke, VA Valley View Mall Sep-10 5.100% 54,396 54,396 - Rockford, IL Cherryvale Mall Jul-06 7.375% 45,727 45,727 - Saginaw, MI Fashion Square Jul-12 6.510% 60,923 60,923 - Spartanburg, SC Westgate Mall Jul-12 6.500% 55,063 55,063 - Spartanburg, SC Westgate Crossing Jul-10 8.420% 9,659 9,659 - Stroud, PA Stroud Mall Dec-10 8.420% 31,794 31,794 - Uvalde, TX Uvalde Plaza Feb-08 10.625% 446 446 - Waterford, CT Waterford Commons Jun-04 2.770% 25,883 - 25,883 Wausau WI Wausau Center Dec-10 6.700% 13,621 13,621 - Winston-Salem NC Hanes Mall Jul-08 7.310% 111,516 111,516 - York, PA York Galleria Dec-10 8.340% 50,875 50,875 - --------- --------- -------- SUBTOTAL 2,362,102 2,256,544 105,558 Weighted average interest rate 6.45% 6.63% 2.67% CONSTRUCTION LOANS None - - - --------- --------- -------- SUBTOTAL - - - LINES OF CREDIT 2.2285% 376,000 - 376,000 --------- --------- -------- TOTAL BALANCE SHEET 2,738,102 2,256,544 481,558 Weighted average interest rate 5.87% 6.63% 2.33% Plus CBL Share Of Unconsolidated Affiliates Clarksville, TN Governors Square Sep-16 8.230% 15,419 15,419 - Del Rio, TX Plaza Del Sol Nov-02 9.150% 1,980 1,980 - El Centro, CA Imperial Valley Mall Dec-06 2.840% 418 (1) - 418 Ft Smith AR Massard Crossing Feb-12 7.540% 591 591 - Galileo Portfolio Various 5.171% 20,270 20,270 - Houston, TX Willowbrook Plaza Feb-12 7.540% 3,022 3,022 - Huntsville, AL Parkway Place Dec-04 2.620% 29,235 (2) - 29,235 Myrtle Beach, SC Coastal Grand May-06 2.938% 46,384 (3) - 46,384 Paducah, KY Kentucky Oaks Jun-07 9.000% 16,132 16,132 - Vicksburg, MS Pemberton Plaza Feb-12 7.540% 202 202 - --------- --------- -------- TOTAL 133,651 57,615 76,036 --------- --------- -------- Less Minority Interest Minority Interests' Share Chattanooga, TN CBL Center 8.0000% 6.2500% (1,181) (1,181) - Chattanooga, TN Hamilton Corner 10.0000% 10.1250% (250) (250) - Chattanooga, TN Hamilton Place 10.0000% 7.0000% (6,545) (6,545) - Highpoint, NC Oak Hollow Mall 25.0000% 7.3100% (11,490) (11,490) - Uvalde, TX Uvalde Plaza 25.0000% 10.6250% (111) (111) --------- --------- -------- (19,577) (19,577) - --------- --------- -------- TOTAL OBLIGATIONS $ 2,852,176 $ 2,294,582 $ 557,594 ============= =========== ========== Weighted average interest rate 5.81% 6.65% 2.39% Total Debt of Unconsolidated Affiliates Clarksville, TN Governors Square Sep-16 8.230% 32,461 32,461 - Del Rio, TX Plaza Del Sol Aug-10 9.150% 3,959 3,959 - El Centro, CA Imperial Valley Mall Dec-06 2.840% 418 418 Ft Smith, AR Massard Crossing Feb-12 7.540% 5,907 5,907 - Galileo Portfolio Various 5.171% 202,702 202,702 - Houston, TX Willowbrook Plaza Feb-12 7.540% 30,222 30,222 - Huntsville, AL Parkway Place Dec-03 2.620% 58,470 - 58,470 Myrtle Beach, SC Coastal Grand May-06 2.938% 46,384 - 46,384 Paducah, KY Kentucky Oaks Jun-07 9.000% 32,263 32,263 - Vicksburg, MS Pemberton Plaza Feb-12 7.540% 2,018 2,018 - --------- --------- -------- TOTAL $ 414,804 $ 309,532 $ 105,272 ============= =========== ========== Weighted average interest rate 5.45% 6.37% 2.76% Premiums on Assumed Debt Premium Fayetteville, NC Cross Creek Mall $ 9,951 Lynchburg, VA River Ridge Mall 2,523 Colonial Heights, VA Southpark Mall 4,544 Roanoke, VA Valley View Mall 8,627 --------- $ 25,644 ============== (1) The Company has guaranteed 100% of the debt of this unconsolidated affiliate although it has only a 60% ownership interest. The amount shown reflects 100% of the outstanding debt balance. (2) The Company has guaranteed 50% of the debt of this unconsolidated affiliate although it has only a 45% ownership interest. The amount shown reflects 50% of the outstanding debt balance. (3) The Company has guaranteed 100% of the debt of this unconsolidated affiliate although it has only a 50% ownership interest. The amount shown reflects 100% of the outstanding debt balance.
CBL & Associates Properties, Inc. Supplemental Financial and Operating Information December 31, 2003 Comparable New and Renewal Leasing Activity as of December 31, 2003
New New Square Prior PSF PSF Base % Change PSF Base % Change Property Type Feet Base Rent Rent - Initial Initial Rent - Average Average --------------------- ------------ ------------- -------------- -------------- ---------------------------- --------------------- ------------ ------------- -------------- -------------- --------------- ----------- Quarter: Stabilized malls 475,000 $ 23.22 $ 23.32 0.4% $ 23.77 2.4% Associated centers 12,000 14.01 15.14 8.1% 16.24 15.9% Community centers 69,000 10.51 10.90 3.7% 10.92 3.9% Year To Date: Stabilized malls 1,594,000 22.47 23.95 6.6% 24.50 9.0% Associated centers 73,000 13.66 13.62 -0.3% 13.99 2.4% Community centers 328,000 11.40 11.69 2.5% 11.78 3.3% Comparable Stabilized Mall Leasing Activity as of December 31, 2003 New New Square Prior PSF PSF Base % Change PSF Base % Change Stabilized Malls Feet Base Rent Rent - Initial Initial Rent - Average Average --------------------- ------------ ------------- -------------- -------------- ---------------------------- Quarter: New leases 133,000 $ 24.10 $ 24.17 0.3% $ 25.10 4.1% Renewal leases 342,000 22.88 22.99 0.5% 23.26 1.7% Year To Date: New leases 581,000 23.58 27.42 16.3% 28.45 20.7% Renewal leases 1,008,000 21.75 22.01 1.2% 22.30 2.5%
Total Leasing Activity Compared to Tenants Vacating as of December 31, 2003
Leased Vacated Leased Average Base Vacated Average Base Property Type Sq. Ft. Rent PSF Sq. Ft. Rent PSF --------------------- ------------ ------------- -------------- -------------- Quarter: Malls 642,000 $ 23.27 156,000 $ 22.46 Associated centers 14,000 15.20 27,000 10.00 Community centers 143,000 9.34 33,000 15.42 Year To Date: Malls 2,053,000 $ 23.87 801,000 $ 21.09 Associated centers 110,000 13.34 113,000 8.97 Community centers 710,000 9.20 140,000 12.00
Average Annual Base Rents Per Square Foot By Property Type December 31, ---------------------------- 2003 2002 ------------ -------------- Stabilized malls $ 25.03 $ 23.54 Non-stabilized malls 25.82 22.78 Associated centers 9.90 9.87 Community centers 9.15 9.61
CBL & Associates Properties, Inc. Supplemental Financial and Operating Information December 31, 2003 Capital Expenditures for Quarter and Year Ended December 31, 2003 (In thousands)
Quarter Year -------------- ------------ Tenant allowances $ 10,699 $ 34,973 -------------- ------------ Renovations: * Parking lot and parking lot lighting 3,925 9,743 Roof repairs and replacements 579 4,566 Other capital expenditures 2,087 54,200 -------------- ------------ Total renovations expenditures 6,591 68,509 -------------- ------------ Deferred maintenance: * Parking lot and parking lot lighting 1,131 3,088 Roof repairs and replacements 1,352 5,100 Other capital expenditures 2,957 12,773 -------------- ------------ Total deferred maintenance expenditures 5,440 20,961 -------------- ------------ Total capital expenditures $ 22,730 $ 124,443 ============== ============
The capital expenditures incurred for maintenance such as parking lot repairs, parking lot lighting and roofs are classified as deferred maintenance expenditures. These expenditures are billed to tenants as common area maintenance expense and the majority is recovered over a five to fifteen year period. Renovation capital expenditures are for remodelings and upgrades for enhancing our competitive position in the market area. A portion of these expenditures covering items such as new floor coverings, painting, lighting and new seating areas are also recovered through tenant billings. The costs of other items such as new entrances, new ceilings and skylights are not recovered from tenants. We estimate that 30% of our renovation expenditures are recoverable from our tenants over a ten to fifteen year period. The third category of capital expenditures is tenant allowances, sometimes made to third-generation tenants. Tenant allowances are recovered through minimum rents from the tenants over the term of the lease. * The year-to-date amounts for total renovation expenditures and total deferred maintenance expenditures reflect a reclassification of previously reported amounts between these two categories. Deferred Leasing Costs Capitalized (In thousands) Year Ended December 31, ----------------------------- 2003 2002 -------------- ------------ -------------- ------------ Quarter ended: March 31, $ 490 $ 45 June 30, 333 466 September 30, 431 710 December 31, 312 370 -------------- ------------ -------------- ------------ $ 1,566 $ 1,591 ============== ============
CBL & Associates Properties, Inc. Supplemental Financial and Operating Information December 31, 2003 Properties Under Development at December 31, 2003 (Dollars in millions)
Gross CBL's Cost Cost Leasable or Share of Spent Opening Initial Property Location Area Cost To Date Date Yield ---------------------------------- ------------------------ ------------- ------------- ---------- ------------- ------ New Mall Developments: Coastal Grand Myrtle Beach, SC 908,000 $ 60.4 $ 42.4 March-04 9% (50/50 joint venture) Imperial Valley Mall El Centro, CA 741,000 44.2 6.2 May-05 10% (60/40 joint venture) Mall Expansions: Arbor Place Rich's-Macy's Douglasville, GA 140,000 10.0 3.6 November-04 0% East Towne Mall Madison, WI 139,000 20.5 8.6 November-04 7% West Towne Mall Madison, WI 94,000 16.2 4.5 November-04 9% Associated Centers: The Shoppes at Panama City Panama City, FL 56,000 9.6 9.9 February-04 9% Community Centers: Garden City Plaza Expansion Garden City, KS 26,500 2.4 1.0 March-04 11% Wilkes-Barre Township Marketplace Wilkes-Barre Township, PA 281,000 9.8 6.8 March-04 9% Charter Oak Marketplace Hartford, CT 312,000 13.3 2.4 November-04 10% ------------- ------------- ---------- 2,697,500 $ 186.4 $ 85.4 ============= ============= ==========