-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Re1lHV2oyfejhnuggK4GOb562CpZrS5H/liFvhVNJGCi5xMyN30TFV/QWTvcNU5G O0EgrrueaatwOXcvlCJJ2w== 0000910612-04-000099.txt : 20040709 0000910612-04-000099.hdr.sgml : 20040709 20040709172653 ACCESSION NUMBER: 0000910612-04-000099 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040630 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 20040709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CBL & ASSOCIATES PROPERTIES INC CENTRAL INDEX KEY: 0000910612 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 621545718 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12494 FILM NUMBER: 04908724 BUSINESS ADDRESS: STREET 1: 2030 HAMILTON PLACE BVLD, SUITE 500 STREET 2: CBL CENTER CITY: CHATTANOOGA STATE: TN ZIP: 37421 BUSINESS PHONE: 4238550001 MAIL ADDRESS: STREET 1: 2030 HAMILTON PLACE BVLD, SUITE 500 STREET 2: CBL CENTER CITY: CHATTANOOGA STATE: TN ZIP: 37421 8-K 1 form8k.txt FORM 8_K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): April 30, 2003 CBL & ASSOCIATES PROPERTIES, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 1-12494 62-154718 - -------------------------------- ------------------------ ------------------- (State or Other Jurisdiction of (Commission File Number) I.R.S. Employer Incorporation) Identification No.) Suite 500, 2030 Hamilton Place Blvd, Chattanooga, TN 37421 - -------------------------------------------------------------------------------- (Address of principal executive office, including zip code) (423) 855-0001 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 1 ITEM 2. Acquisition or Disposition of Assets CBL & Associates Properties, Inc. (the "Company') acquired six malls and two associated centers during the year ended December 31, 2003. Although none of the properties acquired are individually significant according to the provisions of Rule 3-14 of Regulation S-X of the Securities and Exchange Commission, they are significant in the aggregate. This Current Report on Form 8-K is being filed to provide certain historical and pro forma financial information related to these acquisitions, which are described below. In this Current Report on Form 8-K, dollars are in thousands, except for per share amounts. On April 30, 2003, the Company acquired Sunrise Mall and its associated center, Sunrise Commons, which are located in Brownsville, TX. The total purchase price, including transaction costs, of $80,686 consisted of $40,686 in cash and the assumption of $40,000 of variable-rate debt that matured in May 2004. On September 10, the Company acquired Cross Creek Mall in Fayetteville, NC for a purchase price, including transaction costs, of $116,729, which consisted of $52,484 in cash and the assumption of $64,245 of non-recourse debt that bears interest at a stated rate of 7.4% and matures in April 2012. The Company recorded a debt premium of $10,209, computed using an estimated market interest rate of 5.00%, since the debt assumed was at an above-market interest rate compared to similar debt instruments at the date of acquisition. On October 1, the Company acquired River Ridge Mall in Lynchburg, VA for a purchase price, including transaction costs, of $61,933, which consisted of $38,622 in cash, a short-term note payable of $793 and the assumption of $22,518 of non-recourse debt that bears interest at a stated rate of 8.05% and matures in January 2007. The Company also recorded a debt premium of $2,724, computed using an estimated market interest rate of 4.00%, since the debt assumed was at an above-market interest rate compared to similar debt instruments at the date of acquisition. On October 1, the Company acquired Valley View Mall in Roanoke, VA for a purchase price, including transaction costs, of $86,094, which consisted of $35,351 in cash, a short-term note payable of $5,708 and the assumption of $45,035 of non-recourse debt that bears interest at a weighted-average stated rate of 8.61% and matures in September 2010. The Company also recorded a debt premium of $8,813, computed using an estimated market interest rate of 5.10%, since the debt assumed was at an above-market interest rate compared to similar debt instruments at the date of acquisition. On December 15, the Company acquired Southpark Mall in Colonial Heights, VA for a purchase price, including transaction costs, of $78,031, which consisted of $34,879 in cash, a short-term note payable of $5,116 and the assumption of $38,036 of non-recourse debt that bears interest at a stated rate of 7.00% and matures in May 2012. The Company also recorded a debt premium of $4,544, computed using an estimated market interest rate of 5.10%, since the debt assumed was at an above-market interest rate compared to similar debt instruments at the date of acquisition. Cross Creek Mall, River Ridge Mall, Valley View Mall and Southpark Mall were all purchased from Faison Enterprises or affiliates of Faison Enterprises. On December 30, the Company acquired Harford Mall Business Trust, a Maryland business trust that owns Harford Mall and its associated center, Harford Annex, in Bel Air, MD for a cash purchase price, including transaction costs, of $71,110. 2 ITEM 7. Financial Statements and Exhibits Listed below are the financial statements, pro forma financial information and exhibits filed as part of this report: (a) Financial Statements of Businesses Acquired The combined statements of certain revenues and certain operating expenses of the four regional malls acquired from Faison Enterprises (described under Item 2) as listed in the accompanying Index to Financial Statements and Pro Forma Financial Information are filed as part of this Current Report on Form 8-K. (b) Pro Forma Financial Information The pro forma financial information of CBL & Associates Properties, Inc. listed in the accompanying Index to Financial Statements and Pro Forma Financial Information are filed as part of this Current Report on Form 8-K. (c) Exhibits 23 Consent of Deloitte & Touche LLP 3 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. /s/ 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: July 7, 2004 4 INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION The following historical financial statements and pro forma financial information is presented in accordance with Rule 3-14 and Article 11, respectively, of Regulation S-X of the Securities and Exchange Commission. The historical financial statements have been audited only for certain properties acquired. With respect to the properties acquired from Faison Enterprises, the historical combined financial statement has been audited only for the most recent fiscal year as the transaction did not involve a related party and the registrant, after reasonable inquiry, is not aware of any material factors related to the acquired properties not otherwise disclosed that would cause the reported financial information to not be necessarily indicative of future operating results. In accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission, certain unaudited financial information for properties acquired during 2003 that are not individually significant has also been presented. In addition, as the properties will be directly or indirectly owned by entities that will elect or have elected to be treated as real estate investment trusts (as specified under sections 856-860 of the Internal Revenue Code of 1986) for Federal income tax purposes, a presentation of estimated taxable operating results is not applicable. Page Number FAISON PROPERTIES Independent Auditors' Report 6 Combined Statement of Certain Revenues and Certain Operating Expenses of Faison Properties for the Year Ended December 31, 2002 7 Notes to the Combined Statements of Certain Revenues and Certain Operating Expenses of Faison Properties 8 CBL & ASSOCIATES PROPERTIES, INC. Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2003 10 Consent of Independent Registered Public Accounting Firm 11 5 INDEPENDENT AUDITORS' REPORT To the Board of Directors of CBL & Associates Properties, Inc.: We have audited the accompanying combined statement of certain revenues and certain operating expenses (the "Statement") of Valley View Mall, Cross Creek Mall, Southpark Mall and River Ridge Mall (the "Faison Properties") for the year ended December 31, 2002. This Statement is the responsibility of the management of CBL & Associates Properties, Inc. (the "Company"). Our responsibility is to express an opinion on the Statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the filing of a Form 8-K of the Company) as described in Note 1 to the Statement, and is not intended to be a complete presentation of the Faison Properties' revenues and expenses. In our opinion, such Statement presents fairly, in all material respects, the certain revenues and certain operating expenses described in Note 1 to the Statement for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. /s/ DELOITTE & TOUCHE LLP May 13, 2004 Atlanta, Georgia 6 FAISON PROPERTIES COMBINED STATEMENTS OF CERTAIN REVENUES AND CERTAIN OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2002 AND THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) - --------------------------------------------------------------------------------
Nine Months Ended September 30, 2003 Year Ended (unaudited) December 31, 2002 REVENUES: Rentals: Minimum $ 16,805,041 $ 22,642,509 Percentage 48,468 1,214,982 Other 3,813 4,931 Tenant reimbursements 14,211,878 19,588,800 Other income 133,829 661,119 --------------------------------------------------------- Total revenues 31,203,029 44,112,341 --------------------------------------------------------- EXPENSES: Property operating 6,713,557 8,054,629 Real estate taxes 1,975,614 2,682,024 Maintenance and repairs 5,273,254 6,966,974 --------------------------------------------------------- Total expenses 13,962,425 17,703,627 --------------------------------------------------------- Excess of certain revenues over certain operating expenses $ 17,240,604 $ 26,408,714 ========================================================= See accompanying notes to financial statements.
7 FAISON PROPERTIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2002 AND THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) NOTE 1. ORGANIZATION AND BASIS FOR PRESENTATION The accompanying combined statements of certain revenues and certain operating expenses (the "Statements") relate to Valley View Mall, Cross Creek Mall, Southpark Mall, and River Ridge Mall (the "Faison Properties"). The Faison Properties are affiliated through common ownership and common property management. Valley View Mall is an approximately 787,255-square-foot, two-level regional mall in Roanoke, Virginia. Cross Creek Mall is an approximately 1,054,034-square-foot, super regional mall in Fayetteville, North Carolina. Southpark Mall is an approximately 626,806-square-foot regional mall in Colonial Heights, Virginia. River Ridge Mall is an approximately 784,775-square-foot, one-level regional mall in Lynchburg, Virginia. CBL Associates Properties, Inc., ("CBL") purchased the Faison Properties in four separate transactions, all of which occurred during 2003. The results of operations of the Faison Properties from the dates they were acquired by CBL through December 31, 2003, are included in CBL's historical results of operations for the year ended December 31, 2003. The Statement is prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. Accordingly, the Statements are not representative of the actual operations of the Faison Properties for the periods presented as certain revenues and certain operating expenses have been excluded. Such items include depreciation, amortization, interest expense, management fees and interest income. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition - Rental income comprises minimum rents, expense reimbursements and percentage rent payments. Minimum Rents with fixed increases are recognized on a straight-line bases over the initial terms of the related leases. Expense reimbursements are recognized in the period that the applicable costs are incurred. The Faison Properties account for these leases as operating leases as the Properties have retained substantially all risks and benefits of property ownership. Percentage rent income is recognized when the tenant's reported sales have reached certain levels specified in the respective lease. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying combined financial statements for the nine months ended September 30, 2003 are unaudited; however, they have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in conjunction with the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management of Faison Properties, all adjustments (consisting 8 solely of normal recurring matters) necessary for a fair presentation for the interim period have been included. The results for the interim period ended September 30, 2003, are not necessarily indicative of the results that may be expected for the full year. NOTE 3. LEASING ACTIVITIES The Faison Properties have non-cancelable operating leases with tenants requiring monthly payments of specified minimum rent. A majority of the leases require reimbursement by the tenant of substantially all operating expenses of the Properties. Future minimum rental commitments under the non-cancelable operating leases at December 31, 2002 are as follows: Year Ending December 31: 2003 $ 24,044,417 2004 22,185,716 2005 19,259,763 2006 16,375,278 2007 13,007,451 Thereafter 36,866,948 --------------------------- Total $131,739,573 =========================== 9 CBL & Associates Properties, Inc. Pro Forma Consolidated Statements of Operations For The Year Ended December 31, 2003 (Unaudited and in thousands, except per share amounts)
CBL Faison Other Pro Forma CBL Historical Properties(a) Acquisitions(a) Adjustments(b) Pro Forma ---------- ----------- ------------ -------------- ---------- REVENUES: Minimum rents $428,678 $ 18,190 $ 8,244 $ 1,376(c) $456,488 Percentage rents 12,925 192 833 - 13,950 Other rents 12,635 4 23 - 12,662 Tenant reimbursements 193,592 14,857 4,081 - 212,530 Management, development and leasing fees 5,525 - - - 5,525 Other 14,176 175 141 - 14,492 ---------- ---------- ---------- ---------- ---------- Total revenues $667,531 $ 33,418 $ 13,322 $ 1,376 $715,647 ---------- ---------- ---------- ---------- ---------- EXPENSES: Property operating 103,540 7,265 3,255 - 114,060 Depreciation and amortization 113,481 - - 15,178(d) 128,659 Real estate taxes 51,717 2,107 708 - 54,532 Maintenance and repairs 39,830 5,383 685 - 45,898 General and administrative 30,395 - - - 30,395 Other 11,489 - 136 - 11,625 ---------- ---------- ---------- ---------- ---------- Total expenses 350,452 14,755 4,784 15,178 385,169 ---------- ---------- ---------- ---------- ---------- Income from operations 317,079 18,663 8,538 (13,802) 330,478 Interest income 2,485 - - - 2,485 Interest expense (153,373) - - (12,229)(e) (165,602) Loss on extinguishment of debt (167) - - - (167) Gain on sales of real estate assets 77,775 - - - 77,775 Equity in earnings of unconsolidated affiliates 4,941 - - - 4,941 Minority interest in earnings: Operating partnership (106,532) - - (539)(f) (107,071) Shopping center properties (2,799) - - - (2,799) ---------- ---------- ---------- ---------- ---------- Income before discontinued operations 139,409 18,663 8,538 (26,570) 140,040 Operating income of discontinued operations 688 - - - 688 Gain on discontinued operations 4,042 - - - 4,042 ---------- ---------- ---------- ---------- ---------- Net income 144,139 18,663 8,538 (26,570) 144,770 Preferred dividends (19,633) - - - (19,633) ---------- ---------- ---------- ---------- ---------- Net income available to common shareholders $124,506 $ 18,663 $ 8,538 $(26,570) $125,137 ========== ========== ========== ========== ========== Basic per share data: Income before discontinued operations, net of preferred dividends $ 4.00 $ 4.02 Discontinued operations 0.16 0.16 ---------- ---------- Net income available to common shareholders $ 4.16 $ 4.18 ========== ========== Weighted average common shares outstanding 29,936 29,936 Diluted per share data: Income before discontinued operations, net of preferred dividends $ 3.84 $ 3.86 Discontinued operations 0.15 0.15 ---------- ---------- Net income available to common shareholders $ 3.99 $ 4.01 ========== ========== Weighted average common and potential dilutive common shares outstanding 31,193 31,193 (a) Represents historical results of operations of the acquired properties from January 1, 2003 through the respective date of acquisition of each acquired property. The results of operations for each acquired property are included in CBL's historical results of operations from its respective date of acquisition through December 31, 2003. (b) The pro forma adjustments related to each acquired property have been computed from January 1, 2003 through each property's respective date of acquisition. (c) Reflects the amortization of acquired above- and below-market leases, which are amortized over the remaining terms of the related leases. (d) Represents depreciation and amortization expense related to land, buildings and improvements, tenant improvements and in-place leases. Depreciation is computed on a straight-line basic over estimated lines of 40 years for buildings, 10 to 20 years for certain improvements and 7 to 10 years for equipment and fixtures. Tenant improvements and in-place leases are depreciated over the terms of the related leases. (e) Reflects interest expense on the $169,834 of debt assumed in connection with the properties acquired during 2003, which had a weighted average interest rate of 7.72%. The pro forma adjustment is net of amortization of debt premiums in the amount of $2,656. (f) Reflects the allocation of earnings to the minority interest in the Operating Partnership as a result of the acquired properties.
10 11 Exhibit 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statements Nos. 33-73376, 333-04295, 333-41768, and 333-88914 on Form S-8 and Registration Statements Nos. 33-62830, 333-90395, 333-47041, and 333-97831 on Form S-3 of CBL & Associates Properties, Inc. of our report dated May 13, 2004, on the Combined Statement of Certain Revenues and Certain Operating Expenses of the Faison Properties for the year ended December 31, 2002, appearing in this Current Report on Form 8-K of CBL & Associates Properties, Inc. dated July 7, 2004. /s/ DELOITTE & TOUCHE LLP Atlanta, Georgia July 7, 2004 11 -----END PRIVACY-ENHANCED MESSAGE-----