-----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, MTK0zIIr2Ar+TY0Zq7zo/iVLT73yHy8box/jdIJjQ7rNSsNlodON+7PK9yecw8zX EoD4LF6XL3J/Vcur085Khg== 0000910612-05-000102.txt : 20050720 0000910612-05-000102.hdr.sgml : 20050720 20050720164550 ACCESSION NUMBER: 0000910612-05-000102 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050720 ITEM INFORMATION: Other Events FILED AS OF DATE: 20050720 DATE AS OF CHANGE: 20050720 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: 05964246 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 form8kgalileo.txt FORM 8K SALE OF INTEREST TO GALILEO UNITED STATES 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): July 19, 2005 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 8.01 Other Events On July 19, 2005, CBL & Associates Properties, Inc. (the "Company") announced that it has entered into definitive agreements whereby the Company will transfer its 8.4% equity interest in Galileo America, LLC ("Galileo"), a joint venture between the Company and Galileo America Inc., to Galileo. Additionally, the Company's management and advisory contracts with Galileo will be purchased by New Plan Excel Realty Trust, Inc. (NYSE: NXL), a shopping center REIT. The Company will receive a total consideration of approximately $100.0 million related to these transactions, which are expected to close in August. The Company's press release announcing these transactions is attached as Exhibit 99.1. On July 20, 2005, the Company held a conference call to discuss the transactions announced in the press release. The transcript of the conference call is attached as Exhibit 99.2. Item 9.01 Financial Statements and Exhibits (a) Financial Statements of Businesses Acquired Not applicable (b) Pro Forma Financial Information Not applicable (c) Exhibits 99.1 Press Release - CBL & Associates Properties Enters into Definitive Agreements to Sell Joint Venture Interest and Management and Advisory Contracts with Galileo America 99.2 Investor Conference Call Script - July 20, 2005 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 hereunto 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 20, 2005 EX-99 3 exhibit991.txt EXHIBIT 99.1 PRESS RELEASE EXHIBIT 99.1 [LETTERHEAD OF CBL & ASSOCIATES PROPERTIES, INC.] Investor Media Contact: Katie Knight Contact: Deborah Gibb Director of Investor Relations Director of Corporate Relations (423) 490-8301 (423) 490-8315 CBL & ASSOCIATES PROPERTIES ENTERS INTO DEFINITIVE AGREEMENTS TO SELL JOINT VENTURE INTEREST AND MANAGEMENT AND ADVISORY CONTRACTS WITH GALILEO AMERICA CHATTANOOGA, Tenn. (July 19, 2005) - CBL & Associates Properties, Inc. (NYSE: CBL) today announced that it has entered into definitive agreements whereby CBL will transfer its 8.4% equity interest in Galileo America, LLC ("Galileo"), a joint venture between CBL and Galileo America Inc., to Galileo. Additionally, CBL's management and advisory contracts with Galileo will be purchased by New Plan Excel Realty Trust, Inc. (NYSE: NXL), a shopping center REIT. CBL will receive a total consideration of approximately $100.0 million related to these transactions, which are expected to close in August. Galileo was formed in November 2003 as a joint venture between CBL and Galileo America, Inc., the U.S. affiliate of the Australia-based, Galileo Shopping America Trust (ASX: GSA). Galileo was established to acquire community and neighborhood shopping centers in the United States. CBL transferred 90% of its ownership interests in 51 community and neighborhood shopping centers to Galileo in three phases and entered into exclusive long-term management and advisory contracts for the centers owned or acquired by Galileo. CBL's current interest in the joint venture is 8.4%. CBL has agreed to transfer all management and advisory contracts with Galileo to New Plan for a consideration of $22.0 million in cash. CBL is expected to receive, at the third anniversary of the closing, an additional $7.0 million in cash related to the transfer to New Plan of CBL's future rights to manage nine properties that were recently acquired by Galileo. CBL expects to recognize a gain on the sale of the management and advisory contracts of $22.0 million in the third quarter of 2005. This gain will be included in both net income determined in accordance with generally accepted accounting principles ("GAAP") and Funds From Operations ("FFO"). CBL will pay $1.9 million to transfer its remaining master lease obligations with Galileo to New Plan and expects to record a gain on sale of real estate of approximately $2.0 million in the third quarter resulting from the transfer. This $2.0 million gain will be included in GAAP net income, and of this amount $1.0 million will be recorded in FFO. CBL has also entered into an agreement to transfer to Galileo its 8.4% equity interest in the joint venture in exchange for Galileo's interest in Springdale Center in Mobile, AL, and Wilkes - Barre Township Marketplace in Wilkes - Barre Township, PA. New Plan will assume management and leasing of these two properties. Additionally, CBL will have the right to put its interest in these two properties to Galileo at any time for one year following the closing for $60.0 million in cash, as well as additional property at Springdale Center currently held in a ground lease by CBL for $3.0 million, in cash. CBL will realize an economic gain of $40.8 million from the sale of the equity interest. CBL is currently reviewing the applicable accounting standards to determine when this amount will be recognized in GAAP net income. This gain will be included in GAAP net income, but excluded from FFO. The Springdale and Wilkes - - Barre properties are being valued at a 7.5% cap rate. CBL will also receive from Galileo an $8.0 million acquisition fee at the closing of Galileo's acquisition of properties from New Plan as well as $1.0 million per year over the three years, following closing, for advisory services to be provided to Galileo. CBL expects to record the $8.0 million as fee income in the third quarter of 2005, which will be included in both GAAP net income and FFO. The total impact to FFO in the third quarter of 2005 resulting from these transactions is estimated at $31.0 million, or $0.26 per fully diluted, converted share. CBL intends to use the proceeds from the sale of the management and advisory contracts to reduce outstanding balances on the Company's lines of credit. The sale of CBL's equity interest in Galileo and the management and advisory contracts are expected to produce, in aggregate, an annual loss in FFO of approximately $0.07 per fully diluted, converted common share. However, this loss will be offset by the acquisition of Springdale Center and Wilkes - Barre Township Marketplace, which will produce approximately $0.04 annually in FFO per fully diluted, converted common share. Additionally, CBL expects to realize approximately $0.03 per fully diluted, converted share in annual G&A and interest expense savings. CBL also expects to record a one-time charge to G&A in the third quarter of $0.02 per fully diluted, converted share for compensation expense, which will be offset by settlement of fee income with Galileo. Commenting on the transactions, Charles B. Lebovitz, Chairman and Chief Executive Officer said, "Our two-year joint venture with Galileo proved valuable for both CBL and Galileo. We believe that today's strategic transaction is opportunistic and maximizes value for our shareholders. With a wide variety of retail formats currently under development, CBL is successfully serving and looks forward to continuing to serve all aspects of our retail partners' growing needs. We are excited that our increasing pipeline of community and power centers, regional malls and open-air lifestyle centers is one of the strongest in our Company's history." CBL & Associates Properties will conduct a conference call on Wednesday, July 20, 2005, at 11:30 a.m. EDT to further discuss this announcement and will provide an online Web simulcast and rebroadcast of this conference call. The number to call for this interactive teleconference is (212) 231-6006. A replay of the conference call will be available until July 27, 2005, by dialing (402) 977-9140 and entering the passcode, 21252691. The live Web simulcast of the conference call will be available online at the Company's Web site at cblproperties.com, as well as http://phx.corporate-ir.net/phoenix.zhtml?p=iro l-eventDetails&c=106929&eventID=1104748. The online replay will follow shortly after the call and continue through August 3, 2005. -MORE- CBL Enters into Agreement to Sell Joint Venture Interest and Management and Advisory Contracts with Galileo America Page 2 July 19, 2005 Non GAAP Financial Measures CBL Enters into Agreement to Sell Joint Venture Interest and Management and Advisory Contracts with Galileo America Page 3 July 19, 2005 -END- FFO is a widely used measure of the operating performance of real estate companies that supplements net income determined in accordance with generally accepted accounting principles ("GAAP"). The National Association of Real Estate Investment Trusts defines FFO as net income (computed in accordance with GAAP) excluding gains or losses on sales of operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO provides an additional indicator of the operating performance of the Company's properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets decline predictably over time. Since values of well-maintained real estate assets have historically risen or fallen with market conditions, the Company believes that FFO enhances investors' understanding of the Company's operating performance. 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 measure of liquidity. The following table provides a reconciliation of the amounts of FFO per fully diluted, converted share discussed above with the comparable earnings per share amounts where those amounts are different. Annual Loss in FFO Net of Impact to Savings FFO in Q3 '05 ------- ------------- Expected diluted earnings per common share $ (0.02) $ 0.26 Adjust to fully converted shares from common shares 0.01 (0.12) -------- --------- Expected earnings per fully diluted, converted common share (0.01) 0.14 Add: depreciation and amortization (0.02) - Add: minority interest in earnings of Operating Partnership (0.01) 0.12 -------- --------- Expected FFO per fully diluted, converted common share $ (0.04) $ 0.26 ======== =========
CBL is not able to provide a reconciliation of the annual increase of $0.04 per fully diluted, converted share of FFO from Springdale Center and Wilkes - Barre Township Marketplace. This is because CBL is currently reviewing the applicable accounting standards related to this component of the transaction and, as a result, cannot determine the amounts of depreciation and amortization expense and the related impact on minority interest in earnings to allow for reconciliation to the comparable amounts of earnings per share. CBL & Associates Properties, Inc. is the fourth largest mall REIT in North America and the largest owner of malls and shopping centers in the Southeast, ranked by GLA. CBL owns, holds interests in or manages 173 properties, including 72 enclosed regional malls. The properties are located in 30 states and total 75.7 million square feet including 2.0 million square feet of non-owned shopping centers managed for third parties. CBL currently has seven projects under construction totaling approximately 1.5 million square feet. The projects include two open-air shopping centers located in Ft. Myers, FL, and Memphis (Southaven, MS), TN, three community centers and two expansions. In addition to its office in Chattanooga, TN, CBL has a regional office in Boston (Waltham), MA. Additional information can be found at 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. EX-99 4 exhibit992.txt EXHIBIT 99.2 CONFERENCE CALL SCRIPT July 20, 2005 11:30am EDT CBL/GSA/NXL Conference Call John: Good morning and thank you for joining us today to discuss our recently announced transactions with Galileo America, LLC and New Plan Excel Realty Trust. Stephen Lebovitz, President is joining us by phone from New York where he is attending the ICSC Trustee meeting and with me here today is Katie Knight, Director of Investor Relations. I will now hand the call over to Katie for the reading of the safe harbor statement. Katie: 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. A transcript of today's comments will be furnished to the SEC on Form 8-K and will be available on our website. This call will also be 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 measure and a reconciliation of each non-GAAP financial measure to the comparable GAAP financial measure will be included in the press release on the Form 8-K. John: Thank you, Katie. I will begin by making a few brief comments then I will open it up for Q&A. We announced that we have entered into a definitive agreement to transfer our 8.4% equity interest and our management and advisory contracts with Galileo America, LLC. We expect to receive a total consideration of $100.0 million from these transactions and anticipate closing in August. The total estimated impact to FFO in the third quarter 2005 from gains and fee income is approximately $0.26 per share. On an annual basis, the aggregate loss in FFO resulting from the sale of our management and advisory contracts and equity interest is estimated at $0.07 per share but will be offset by the acquisition of Wilkes - Barre Township and Springdale Center as well as interest expense and G&A expense savings, thus being FFO neutral. Details of the transactions are elaborated in the press release that was issued last night so we will not go into specifics of the transaction. We have enjoyed a mutually beneficial relationship with Galileo over these past two years. We originally structured the Galileo partnership in such a way that we were free to make decisions based on what we felt was in the best interest of CBL shareholders. We believe this transaction does exactly that. We have been presented with an opportunity to receive a price that we believe is definitely beneficial for our shareholders. Although, the transaction is initially revenue neutral, we intend to redeploy the capital into our active development and redevelopment program as well as opportunistic investments. We believe that through these investments we can create more value for our shareholders and sustain long-term growth. The sale of our Galileo interests do not in any way signal or imply our exit from the community center business. We will remain very active in the development of community and power centers as well as malls, open-air centers, lifestyle centers, and other retail formats. Additionally, we would expect to continue to look to Galileo as a potential buyer of any community and power center projects should we decide to sell. We have structured the deal to allow for this in the near term. For one-year following the close of the transfer of our interest, we will have the right to put Fashion Square in Orange Park, FL, Cobblestone Village at Royal Palm in West Palm Beach, FL, and Chicopee Marketplace in Chicopee, MA, to Galileo for a purchase price that will be computed using a cap rate of 7.5%. For one-year following the expiration of the put right Galileo will have a Right Of First Offer to purchase these community center developments at a price that will be computed using a cap rate of 7.5%. We appreciate the outstanding working relationship we have enjoyed with the Galileo team. They are true professionals in every respect. To our friends at New Plan, we wish them well in every endeavor. Now, I would be happy to answer any questions you may have. -----END PRIVACY-ENHANCED MESSAGE-----