Unconsolidated Affiliates, Noncontrolling Interests and Cost Method Investments

Unconsolidated Affiliates

At September 30, 2012, the Company had investments in the following 18 entities, which are accounted for using the equity method of accounting:



Joint Venture	Property Name	Company's Interest
CBL/T-C, LLC	CoolSprings Galleria, Oak Park Mall, West County Center and Pearland Town Center	60.3%
CBL-TRS Joint Venture, LLC	Friendly Center, The Shops at Friendly Center and a portfolio of six office buildings	50.0%
CBL-TRS Joint Venture II, LLC	Renaissance Center	50.0%
El Paso Outlet Outparcels, LLC	The Outlet Shoppes at El Paso (vacant land)	50.0%
Governor’s Square IB	Governor’s Plaza	50.0%
Governor’s Square Company	Governor’s Square	47.5%
High Pointe Commons, LP	High Pointe Commons	50.0%
High Pointe Commons II-HAP, LP	High Pointe Commons - Christmas Tree Shop	50.0%
Imperial Valley Mall L.P.	Imperial Valley Mall	60.0%
Imperial Valley Peripheral L.P.	Imperial Valley Mall (vacant land)	60.0%
JG Gulf Coast Town Center LLC	Gulf Coast Town Center	50.0%
Kentucky Oaks Mall Company	Kentucky Oaks Mall	50.0%
Mall of South Carolina L.P.	Coastal Grand—Myrtle Beach	50.0%
Mall of South Carolina Outparcel L.P.	Coastal Grand—Myrtle Beach (Coastal Grand Crossing and vacant land)	50.0%
Port Orange I, LLC	The Pavilion at Port Orange Phase I	50.0%
Triangle Town Member LLC	Triangle Town Center, Triangle Town Commons and Triangle Town Place	50.0%
West Melbourne I, LLC	Hammock Landing Phases I and II	50.0%
York Town Center, LP	York Town Center	50.0%

Although the Company has majority ownership of certain of these joint ventures, it has evaluated these investments and concluded that the other partners or owners in these joint ventures have substantive participating rights, such as approvals of:


•	the pro forma for the development and construction of the project and any material deviations or modifications thereto;


•	the site plan and any material deviations or modifications thereto;


•	the conceptual design of the project and the initial plans and specifications for the project and any material deviations or modifications thereto;


•	any acquisition/construction loans or any permanent financings/refinancings;


•	the annual operating budgets and any material deviations or modifications thereto;


•	the initial leasing plan and leasing parameters and any material deviations or modifications thereto; and


•	any material acquisitions or dispositions with respect to the project.

As a result of the joint control over these joint ventures, the Company accounts for these investments using the equity method of accounting.

Condensed combined financial statement information of these unconsolidated affiliates is as follows:



	As of
ASSETS	September 30, 2012			December 31, 2011
Investment in real estate assets	$	2,226,364		$	2,239,160
Accumulated depreciation	(498,938		)	(447,121		)
	1,727,426			1,792,039
Developments in progress	23,499			19,640
Net investment in real estate assets	1,750,925			1,811,679
Other assets	180,600			190,465
Total assets	$	1,931,525		$	2,002,144

LIABILITIES
Mortgage and other indebtedness	$	1,467,038		$	1,478,601
Other liabilities	47,818			51,818
Total liabilities	1,514,856			1,530,419

OWNERS' EQUITY
The Company	252,048			267,136
Other investors	164,621			204,589
Total owners' equity	416,669			471,725
Total liabilities and owners' equity	$	1,931,525		$	2,002,144



	Total for the Three Months Ended September 30,						Company's Share for the Three Months Ended September 30,
	2012			2011			2012			2011
Revenues	$	61,821		$	37,290		$	32,803		$	20,683
Depreciation and amortization expense	(20,423		)	(12,481		)	(10,828		)	(7,020		)
Interest expense	(21,002		)	(12,903		)	(11,022		)	(7,195		)
Other operating expenses	(18,742		)	(10,842		)	(9,527		)	(5,599		)
Gain on sales of real estate assets	1,271			79			636			120
Net income	$	2,925		$	1,143		$	2,062		$	989



	Total for the Nine Months Ended September 30,						Company's Share for the Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues	$	186,320		$	114,237		$	99,190		$	63,667
Depreciation and amortization expense	(61,907		)	(37,581		)	(32,877		)	(21,132		)
Interest expense	(63,199		)	(39,140		)	(33,289		)	(21,655		)
Other operating expenses	(55,765		)	(33,647		)	(28,474		)	(18,024		)
Gain on sales of real estate assets	1,701			1,744			851			1,366
Net income	$	7,150		$	5,613		$	5,401		$	4,222

In July 2012, JG Gulf Coast Town Center LLC ("Gulf Coast") closed on a three-year $7,000 loan with an institutional lender, secured by the third phase expansion of Gulf Coast Town Center, a shopping center located in Ft. Myers, FL. Interest on the loan is at LIBOR plus a margin of 2.5%. The Company has guaranteed 100.0% of this loan. Proceeds from the loan were distributed to the Company in accordance with the terms of the joint venture agreement and the Company used these funds to reduce the balance on its secured credit facilities.

In the second quarter of 2012, the Company acquired a 50.0% interest in a joint venture, El Paso Outlet Outparcels, LLC, simultaneously with the acquisition of a 75.0% interest in The Outlet Shoppes at El Paso (see Note 4). The Company's investment was $3,864. The remaining 50.0% interest is owned by affiliates of Horizon Group Properties. El Paso Outlet Outparcels, LLC owns land adjacent to The Outlet Shoppes at El Paso. The terms of the joint venture agreement provide that voting rights, capital contributions and distributions of cash flows will be on a pari passu basis in accordance with the ownership percentages.

During the first quarter of 2012, York Town Center, LP ("YTC") closed on a $38,000 ten-year non-recourse loan, secured by York Town Center in York, PA, which bears interest at a fixed rate of 4.90%. Proceeds from the new loan, plus cash on hand, were used to retire an existing loan of $39,379 that was scheduled to mature in March 2012.

Also during the first quarter of 2012, Port Orange I, LLC ("Port Orange") closed on the extension and modification of a construction loan, secured by The Pavilion at Port Orange in Port Orange, FL, to extend the maturity date to March 2014, remove a 1% LIBOR floor, and reduce the capacity from $98,883 to $64,950. Port Orange paid $3,332 to reduce the outstanding balance on the loan to the new capacity amount. There is a one-year extension option remaining on the loan, which is at the joint venture's election, for an outside maturity date of March 2015. Interest on the loan is at LIBOR plus a margin of 3.5%. The Company has guaranteed 100% of the construction loan.

All of the debt on the properties owned by the unconsolidated affiliates is non-recourse, except for West Melbourne, Port Orange, High Pointe Commons, and Gulf Coast. See Note 11 for a description of guarantees the Company has issued related to certain unconsolidated affiliates.

Noncontrolling Interests

Redeemable noncontrolling interests include a noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which the partnership agreement includes redemption provisions that may require the Company to redeem the partnership interest for real property. Redeemable noncontrolling interests also includes the aggregate noncontrolling ownership interest in other consolidated subsidiaries that is held by third parties and for which the related partnership agreements contain redemption provisions at the holder’s election that allow for redemption through cash and/or properties. The total redeemable noncontrolling partnership interests of $40,929 as of September 30, 2012 consisted of noncontrolling interests in the Operating Partnership and in the Company’s consolidated subsidiary that provides security and maintenance services to third parties of $34,714 and $6,215, respectively. At December 31, 2011, the total redeemable noncontrolling partnership interests of $32,271 consisted of noncontrolling interests in the Operating Partnership and in the Company’s consolidated security and maintenance services subsidiary of $26,036 and $6,235, respectively.

The redeemable noncontrolling preferred joint venture interest includes the preferred joint venture units (“PJV units”) issued to the Westfield Group (“Westfield”) for the acquisition of certain properties during 2007. See Note 11 for additional information related to the PJV units. Activity related to the redeemable noncontrolling preferred joint venture interest represented by the PJV units is as follows:



	Nine Months Ended September 30,
	2012			2011
Beginning Balance	$	423,834		$	423,834
Net income attributable to redeemable noncontrolling preferred joint venture interest	15,486			15,436
Distributions to redeemable noncontrolling preferred joint venture interest	(15,486		)	(15,436		)
Ending Balance	$	423,834		$	423,834

In the third quarter of 2012, eleven holders of 533,708 common units of limited partnership interest in the Operating Partnership exercised their conversion rights. The Company elected to issue 533,708 shares of common stock in exchange for the common units in the third quarter of 2012. Additionally, during the third quarter of 2012, JCP Realty, Inc., a wholly owned subsidiary of J.C. Penney Corporation, Inc., which held 1,895,358 common units of limited partnership interest in the Operating Partnership, and another holder of 36,376 common units of limited partnership interest in the Operating Partnership exercised their conversion rights. The Company elected to issue 1,931,734 shares of common stock in exchange for the common units in the fourth quarter of 2012. See Note 15 for additional information related to the registration of these shares for public resale.

Noncontrolling interests include the aggregate noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which each of the noncontrolling limited partners has the right to exchange all or a portion of its partnership interests for shares of the Company’s common stock, or at the Company’s election, their cash equivalent. Noncontrolling interests also includes the aggregate noncontrolling ownership interest in the Company’s other consolidated subsidiaries that is held by third parties and for which the related partnership agreements either do not include redemption provisions or are subject to redemption provisions that do not require classification outside of permanent equity. As of September 30, 2012, the total noncontrolling interests of $148,345 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of $125,552 and $22,793 respectively. The total noncontrolling interests at December 31, 2011 of $207,113 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of $202,833 and $4,280, respectively.

Jacobs Realty Investors Limited Partnership ("JRI"), a holder of 9,757,100 common units of limited partnership interest in the Operating Partnership, exercised its conversion rights in May 2012. The Company elected to issue 9,757,100 shares of common stock in exchange for the common units in June 2012 and registered these shares for public resale by JRI in July 2012 pursuant to JRI's exercise of its contractual registration rights.

In the second quarter of 2012, the Company elected to pay cash of $3,475 to a holder of 194,572 common units of limited partnership interest in the Operating Partnership upon exercise of its conversion rights in the first quarter of 2012.

In the first quarter of 2012, the Company elected to pay cash of $6,359 to three holders of 431,380 common units of limited partnership interest in the Operation Partnership upon exercise of their conversion rights.

Cost Method Investments

The Company owns a 6.2% noncontrolling interest in subsidiaries of Jinsheng, an established mall operating and real estate development company located in Nanjing, China. As of September 30, 2012, Jinsheng owns controlling interests in 12 home furnishing shopping malls.

The Company also holds a secured convertible promissory note secured by 16,565,534 Series 2 Ordinary Shares of Jinsheng (which equates to a 2.275% ownership interest). The secured note is non-interest bearing and was amended by the Company and Jinsheng in July 2012 to extend to January 2013 the Company's right to convert the outstanding amount of the secured note into 16,565,534 Series A-2 Preferred Shares of Jinsheng. The amendment also provides that if Jinsheng should complete an IPO, the secured note will be converted into common shares of Jinsheng immediately prior to the IPO.

The Company accounts for its noncontrolling interest in Jinsheng using the cost method because the Company does not exercise significant influence over Jinsheng and there is no readily determinable market value of Jinsheng’s shares since they are not publicly traded. See Note 3 for information regarding the fair value of the secured note and Note 15 for subsequent events related to the secured note. The noncontrolling interest and the secured note are reflected as investment in unconsolidated affiliates in the accompanying condensed consolidated balance sheets.

Variable Interest Entities

In the second quarter of 2012, the Company entered into a joint venture, Atlanta Outlet Shoppes, LLC ("Atlanta Outlet Shoppes"), with a third party to develop, own, and operate The Outlet Shoppes at Atlanta, an outlet center development located in Woodstock, GA. The Company holds a 75% ownership interest in the joint venture. The Company determined that its investment in this joint venture represents a variable interest in a VIE and that the Company is the primary beneficiary. As a result, the joint venture is presented in the accompanying condensed consolidated financial statements as of September 30, 2012 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest. In August 2012, the joint venture closed on a construction loan with a maximum capacity of $69,823 that bears interest at LIBOR plus a margin of 2.75%. The loan matures in August 2015 and has two one-year extension options available. The Company has guaranteed 100% of this loan. See Note 11 for additional information related to the guarantee.

In the second quarter of 2012, the Company entered into a joint venture, Gettysburg Outlet Center Holding LLC, with a third party to develop, own, and operate The Outlet Shoppes at Gettysburg. The Company holds a 50% ownership interest in this joint venture. The Company determined that its investment in this joint venture represents a variable interest in a VIE and that the Company is the primary beneficiary. As a result, the joint venture is presented in the accompanying condensed consolidated financial statements as of September 30, 2012 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest.

In the second quarter of 2012, the Company entered into a joint venture, El Paso Outlet Center Holding, LLC, with a third party to develop, own, and operate The Outlet Shoppes at El Paso. The Company holds a 75% ownership interest in the joint venture. The Company determined that its investment in this joint venture represents a variable interest in a VIE and that the Company is the primary beneficiary. As a result, the joint venture is presented in the accompanying condensed consolidated financial statements as of September 30, 2012 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest.