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):  September 16, 2013

CBL & ASSOCIATES PROPERTIES, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	1-12494	62-1545718
(State or Other Jurisdiction of Incorporation)	(Commission File  Number)	(I.R.S. Employer Identification No.)
2030 Hamilton Place Blvd., Suite 500, 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.

In connection with Post-Effective Amendment No. 3, filed on September 16, 2013, to a shelf registration statement effective on July 3, 2012, and subsequently amended by Post-Effective Amendments No. 1 and No.2, filed on September 20, 2012 and March 1, 2013, respectively, CBL & Associates Properties, Inc. is disclosing certain financial and related information of its subsidiary, CBL & Associates Limited Partnership (the "Operating Partnership"). The Operating Partnership's consolidated financial statements and the related Management's Discussion and Analysis of Financial Condition and Results of Operations are filed as exhibits to this report and are incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a)	Financial Statements of Businesses Acquired
	Not applicable
(b)	Pro Forma Financial Information
	Not applicable
(c)	Shell Company Transactions
	Not applicable
(d)	Exhibits

Exhibit Number	Description
99.1	Consolidated Financial Statements of CBL & Associates Limited Partnership as of December 31, 2012 and 2011, and for each of the three years in the period ended December 31, 2012
99.2	Management's Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2012 and 2011, and for each of the three years in the period ended December 31, 2012
99.3	Consolidated Financial Statements of CBL & Associates Limited Partnership as of June 30, 2013 and December 31, 2012, and for the six month periods ended June 30, 2013 and 2012
99.4	Management's Discussion and Analysis of Financial Condition and Results of Operations as of June 30, 2013 and December 31, 2012, and for the six month periods ended June 30, 2013 and 2012

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/ Farzana K. Mitchell

___________________________________

Farzana K. Mitchell

Executive Vice President -

Chief Financial Officer and Treasurer

Date: September 16, 2013

EX-99.1

EXHIBIT 99.1

CBL & ASSOCIATES LIMITED PARTNERSHIP

TABLE OF CONTENTS

(1)	Consolidated Financial Statements	Page Number
	Report of Independent Registered Public Accounting Firm	2
	Consolidated Balance Sheets as of December 31, 2012 and 2011	3
	Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011 and 2010	4
	Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2012, 2011 and 2010	5
	Consolidated Statements of Partners' Capital and Noncontrolling Interests for the Years Ended December 31, 2012,2011 and 2010	6
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010	8
	Notes to Consolidated Financial Statements	10
(2)	Consolidated Financial Statement Schedules
	Schedule II Valuation and Qualifying Accounts	54
	Schedule III Real Estate and Accumulated Depreciation	55
	Schedule IV Mortgage Loans on Real Estate	61
	Financial statement schedules not listed herein are either not required or are not present in amounts sufficient to require submission of the schedule or the information required to be included therein is included in our consolidated financial statements in Item 15 or are reported elsewhere.

1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of CBL & Associates Limited Partnership

Chattanooga, TN:

We have audited the accompanying consolidated balance sheets of CBL & Associates Limited Partnership and subsidiaries (the "Partnership") as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, changes in partners' capital and noncontrolling interests, and cash flows for each of the three years in the period ended December 31, 2012.  Our audits also included the financial statement schedules listed in the Table of Contents at Exhibit 99.1. These financial statements and financial statement schedules are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinions.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of CBL & Associates Limited Partnership and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.  Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

September 16, 2013

2

CBL & Associates Limited Partnership

Consolidated Balance Sheets

(In thousands, except unit data)

	December 31,
ASSETS	2012			2011
Real estate assets:
Land	$	905,339		$	851,303
Buildings and improvements	7,228,293			6,777,776
	8,133,632			7,629,079
Accumulated depreciation	(1,972,031		)	(1,762,149		)
	6,161,601			5,866,930
Held for sale	29,425			14,033
Developments in progress	137,956			124,707
Net investment in real estate assets	6,328,982			6,005,670
Cash and cash equivalents	78,244			56,077
Receivables:
Tenant, net of allowance for doubtful accounts of $1,977 and $1,760      in 2012 and 2011, respectively	78,963			74,160
Other, net of allowance for doubtful accounts of $1,270 and $1,400      in 2012 and 2011, respectively	8,467			11,592
Mortgage and other notes receivable	25,967			34,239
Investments in unconsolidated affiliates	260,363			305,250
Intangible lease assets and other assets	309,239			232,571
	$	7,090,225		$	6,719,559
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness	$	4,745,683		$	4,489,355
Accounts payable and accrued liabilities	358,800			303,578
Total liabilities	5,104,483			4,792,933
Commitments and contingencies (Note 14)
Redeemable interests:
Redeemable noncontrolling interests	6,413			6,235
Redeemable common units	33,835			26,036
Redeemable noncontrolling preferred joint venture interest	423,834			423,834
Total redeemable interests	464,082			456,105
Partners' capital:
Preferred units	565,212			509,719
Common units:
General partner	9,904			10,178
Limited partners	877,363			944,633
Accumulated other comprehensive income	5,685			1,711
Total partners' capital	1,458,164			1,466,241
Noncontrolling interests	63,496			4,280
Total capital	1,521,660			1,470,521
	$	7,090,225		$	6,719,559

The accompanying notes are an integral part of these consolidated statements.

3

CBL & Associates Limited Partnership

Consolidated Statements of Operations

(In thousands, except per unit data)

	Year Ended December 31,
	2012			2011			2010
REVENUES:
Minimum rents	$	662,018		$	667,090		$	663,156
Percentage rents	17,995			17,149			17,367
Other rents	22,659			22,427			22,535
Tenant reimbursements	287,866			301,510			305,095
Management, development and leasing fees	10,772			6,935			6,416
Other	31,367			34,851			29,249
Total revenues	1,032,677			1,049,962			1,043,818
OPERATING EXPENSES:
Property operating	145,590			148,715			143,785
Depreciation and amortization	265,192			270,828			279,936
Real estate taxes	90,368			91,586			94,650
Maintenance and repairs	52,387			55,301			54,536
General and administrative	51,251			44,750			43,383
Loss on impairment of real estate	24,379			51,304			1,156
Other	25,078			28,898			25,523
Total operating expenses	654,245			691,382			642,969
Income from operations	378,432			358,580			400,849
Interest and other income	3,955			2,582			3,910
Interest expense	(244,432		)	(267,072		)	(281,102		)
Gain on extinguishment of debt	265			1,029			—
Gain on investments	45,072			—			888
Gain on sales of real estate assets	2,286			59,396			2,887
Equity in earnings (losses) of unconsolidated affiliates	8,313			6,138			(188		)
Income tax (provision) benefit	(1,404		)	269			6,417
Income from continuing operations	192,487			160,922			133,661
Operating income (loss) of discontinued operations	(18,906		)	24,073			(35,828		)
Gain (loss) on discontinued operations	938			(1		)	379
Net income	174,519			184,994			98,212
Net income attributable to noncontrolling interests	(23,652		)	(25,217		)	(25,001		)
Net income attributable to the Operating Partnership	150,867			159,777			73,211
Distributions to preferred unitholders	(47,511		)	(42,376		)	(32,619		)
Net income attributable to common unitholders	$	103,356		$	117,401		$	40,592
Basic per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	0.62		$	0.52		$	0.35
Discontinued operations	(0.08		)	0.10			(0.14		)
Net income attributable to common unitholders	$	0.54		$	0.62		$	0.21
Weighted average common units outstanding	190,223			190,335			190,001
Diluted per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	0.62		$	0.52		$	0.35
Discontinued operations	(0.08		)	0.10			(0.14		)
Net income attributable to common unitholders	$	0.54		$	0.62		$	0.21
Weighted average common and potential dilutive common units outstanding	190,268			190,380			190,042
Amounts attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	117,975		$	98,646		$	66,409
Discontinued operations	(14,619		)	18,755			(25,817		)
Net income attributable to common unitholders	$	103,356		$	117,401		$	40,592

The accompanying notes are an integral part of these consolidated statements.

4

CBL & Associates Limited Partnership

Consolidated Statements of Comprehensive Income

(In thousands)

	Year Ended December 31,
	2012			2011			2010
Net income	$	174,519		$	184,994		$	98,212
Other comprehensive income (loss):
Unrealized holding gain (loss) on available-for-sale securities	4,426			(214		)	8,402
Reclassification to net income of realized (gain) loss on available-for-sale securities	(224		)	22			114
Unrealized gain (loss) on hedging instruments	(207		)	(5,521		)	2,742
Unrealized loss on foreign currency translation adjustment	—			—			(156		)
Reclassification to net income of realized loss on foreign currency adjustment	—			—			169
Total other comprehensive income (loss)	3,995			(5,713		)	11,271
Comprehensive income	178,514			179,281			109,483
Comprehensive income attributable to noncontrolling interests	(23,652		)	(25,217		)	(25,001		)
Comprehensive income of the Operating Partnership	$	154,862		$	154,064		$	84,482

The accompanying notes are an integral part of these consolidated statements.

5

CBL & Associates Limited Partnership

Consolidated Statements of Partner's Capital and Noncontrolling Interests

(in thousands, except unit data)

	Redeemable Interests														Common Units
	Redeemable Partnership Interests			Redeemable Common Units			Total Redeemable Partnership Interests			Preferred Units	Common Units	Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Income (Loss)			Total Partner's Capital			Noncontrolling Interests			Total Partner's Capital and Noncontrolling Interests
Balance, December 31, 2009	$	6,495		$	16,194		$	22,689		11,600	189,837	$	280,372		$	12,297		$	1,138,296		$	(4,199	)	$	1,426,766		$	675		$	1,427,441
Net income	4,000			333			4,333			-	-	32,619			435			39,824			-			72,878			331			73,209
Other comprehensive income (loss)	-			(304		)	(304		)	-	-	-			-			-			11,575			11,575			-			11,575
Issuance of Series D preferred units	-			-			—			11,150	-	229,347			-			-			-			229,347			-			229,347
Distributions declared - common units	-			(4,571		)	(4,571		)	-	-	-			(1,883		)	(172,516		)	-			(174,399		)	-			(174,399		)
Distributions declared - preferred units	-			-			—			-	-	(32,619		)	-			-			-			(32,619		)	-			(32,619		)
Issuance of 130,367 common units	-			-			—			-	130	-			-			214			-			214			-			214
Cancellation of 17,790 common units	-			-			—			-	(18)	-			-			(175		)	-			(175		)	-			(175		)
Contributions from CBL related to exercises of stock options	-			-			—			-	116	-			-			1,456			-			1,456			-			1,456
Accrual under deferred compensation arrangements	-			-			—			-	-	-			-			41			-			41			-			41
Amortization of deferred compensation	-			18			18			-	-	-			24			2,169			-			2,193			-			2,193
Additions to deferred financing costs	-			-			—			-	-	-			—			34			-			34			-			34
Income tax effect of share-based compensation	-			(10		)	(10		)	-	-	-			(19		)	(1,786		)	-			(1,805		)	-			(1,805		)
Allocation of partner's capital	-			3,121			3,121			-	-	-			(13		)	(3,108		)	-			(3,121		)	-			(3,121		)
Adjustment to record redeemable interests at redemption value	1,139			13,289			14,428			-	-	-			(156		)	(14,272		)	-			(14,428		)	-			(14,428		)
Distributions to noncontrolling interests	(5,325		)	-			(5,325		)	-	-	-			-			-			-			—			(158		)	(158		)
Contributions from noncontrolling interests	-			-			—			-	-	-			-			-			-			—			5,234			5,234
Balance, December 31, 2010	$	6,309		$	28,070		$	34,379		22,750	190,065	$	509,719		$	10,685		$	990,177		$	7,376		$	1,517,957		$	6,082		$	1,524,039

Net income	3,982			958			4,940			-	-	42,376		1,255		115,185		-			158,816			593			159,409
Other comprehensive income loss	-			(48)			(48		)	-	-	-		-		-		(5,665		)	(5,665		)	-			(5,665		)
Distributions declared - common units	-			(4,457)			(4,457		)	-	-	-		(1,771)		(162,616)		-			(164,387		)	-			(164,387		)
Distributions declared - preferred units	-			-			—			-	-	(42,376)		-		-		-			(42,376		)	-			(42,376		)
Issuance of 190,812 common units	-			-			—			-	190	-		-		278		-			278			-			278
Cancellation of 16,082 common units	-			-			—			-	(16)	-		-		(125)		-			(125		)	-			(125		)
Contributions from CBL related to exercises of stock options	-			-			—			-	141	-		-		1,955		-			1,955			-			1,955
Accrual under deferred compensation arrangements	-			-			—			-	-	-		1		55		-			56			-			56
Amortization of deferred compensation	-			16			16			-	-	-		17		1,596		-			1,613			-			1,613
Allocation of partner's capital	-			2,989			2,989			-	-	-		(21)		(2,968)		-			(2,989		)	-			(2,989		)
Adjustment to record redeemable interests at redemption value	384			(1,492		)	(1,108		)	-	-	-		12		1,096		-			1,108			-			1,108
Distributions to noncontrolling interests	(4,440		)	-			(4,440		)	-	-	-		-		-		-			—			(4,433		)	(4,433		)
Contributions from noncontrolling interests	-			-			—			-	-	-		-		-		-			—			2,038			2,038
Balance, December 31, 2011	$	6,235		$	26,036		$	32,271		22,750	190,380	$	509,719	$	10,178	$	944,633	$	1,711		$	1,466,241		$	4,280		$	1,470,521

6

CBL & Associates Limited Partnership

Consolidated Statements of Partner's Capital and Noncontrolling Interests

(Continued)

(in thousands, except unit data)

	Redeemable Interests														Common Units
	Redeemable Partnership Interests			Redeemable Common Units			Total Redeemable Partnership Interests			Preferred Units	Common Units	Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Income (Loss)		Total Partner's Capital			Noncontrolling Interests			Total Partner's Capital and Noncontrolling Interests
Balance, December 31, 2011	$	6,235		$	26,036		$	32,271		22,750	190,380	$	509,719		$	10,178		$	944,633		$	1,711	$	1,466,241		$	4,280		$	1,470,521
Net income	3,597			848			4,445			-	-	43,738			1,616			104,665			-		150,019			(647		)	149,372
Other comprehensive income	-			21			21			-	-	-			-			-			3,974		3,974			-			3,974
Issuance of 690,000 shares of Series E preferred units	-			-			—			6,900	-	166,720			-			-			-		166,720			-			166,720
Redemption of Series C preferred units	-			-			—			(4,600)	-	(111,227		)	(41		)	(3,732		)	-		(115,000		)	-			(115,000		)
Redemption of common units	-			-			—			-	(627)	-			-			(9,429		)	-		(9,429		)	-			(9,429		)
Issuance of 854,838 common units	-			-			—			-	855	-			-			14,730			-		14,730			-			14,730
Distributions declared - common units	-			(4,685		)	(4,685		)	-	-	-			(1,771		)	(167,995		)	-		(169,766		)	-			(169,766		)
Distributions declared - preferred units	-			-			—			-	-	(43,738		)	-			-			-		(43,738		)	-			(43,738		)
Cancellation of restricted common stock	-			-			—			-	(39)	-			-			(633		)	-		(633		)	-			(633		)
Contributions from CBL related to exercises of stock options	-			-			—			-	244	-			-			4,454			-		4,454			-			4,454
Accrual under deferred compensation arrangements	-			-			—			-	-	-			1			43			-		44			-			44
Amortization of deferred compensation	-			32			32			-	-	-			41			3,790			-		3,831			-			3,831
Accelerated vesting of share-based compensation	-			(6		)	(6		)	-	-	-			(8		)	(711		)	-		(719		)	-			(719		)
Issuance of 42,484 common units under deferred compensation arrangement	-			-			—			-	42	-			-			(615		)	-		(615		)	-			(615		)
Allocation of partner's capital	-			3,171			3,171			-	-	-			(18		)	(3,153		)	-		(3,171		)	-			(3,171		)
Adjustment to record redeemable noncontrolling interests at redemption value	360			8,418			8,778			-	-	-			(94		)	(8,684		)	-		(8,778		)	-			(8,778		)
Distributions to noncontrolling interests	(3,779		)	-			(3,779		)	-	-	-			-			-			-		—			(2,423		)	(2,423		)
Contributions from noncontrolling interest	-			-			—			-	-	-			-			-			-		—			7,120			7,120
Acquire controlling interests in shopping center properties	-			-			—			-	-	-			-			-			-		—			55,166			55,166
Balance, December 31, 2012	$	6,413		$	33,835		$	40,248		25,050	190,855	$	565,212		$	9,904		$	877,363		$	5,685	$	1,458,164		$	63,496		$	1,521,660

The accompanying notes are an integral part of these consolidated statements.

7

CBL & Associates Limited Partnership

Consolidated Statements of Cash Flows

(In thousands)

	Year Ended December 31,
	2012			2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	174,519		$	184,994		$	98,212
Adjustments to reconcile net income to net cash provided by     operating activities:
Depreciation and amortization	268,634			276,370			291,772
Amortization of deferred finance costs and debt premiums (discounts)	7,896			10,239			7,414
Net amortization of intangible lease assets and liabilities	(1,263		)	(906		)	(1,384		)
Gain on sales of real estate assets	(5,323		)	(59,396		)	(2,887		)
Realized foreign currency loss	—			—			169
(Gain) loss on discontinued operations	(938		)	1			(379		)
Write-off of development projects	(39		)	94			392
Share-based compensation expense	3,740			1,783			2,313
Income tax effect of share-based compensation	—			—			(1,815		)
Net realized (gain) loss on sale of available-for-sale securities	(224		)	22			114
Write-down of mortgage and other notes receivable	—			1,900			—
Gain on investments	(45,072		)	—			(888		)
Loss on impairment of real estate from continuing operations	24,379			51,304			1,156
Loss on impairment of real estate from discontinued operations	26,461			7,425			39,084
Gain on extinguishment of debt	(265		)	(1,029		)	—
Gain on extinguishment of debt from discontinued operations	—			(31,434		)	—
Equity in (earnings) losses of unconsolidated affiliates	(8,313		)	(6,138		)	188
Distributions of earnings from unconsolidated affiliates	17,074			9,586			4,959
Provision for doubtful accounts	1,523			1,743			2,891
Change in deferred tax accounts	3,095			(5,695		)	2,031
Changes in:
Tenant and other receivables	(2,150		)	(6,025		)	(6,648		)
Other assets	1,801			6,084			(1,215		)
Accounts payable and accrued liabilities	15,646			905			(5,664		)
Net cash provided by operating activities	481,181			441,827			429,815
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets	(217,827		)	(205,379		)	(143,586		)
Acquisitions of real estate assets	(96,099		)	(11,500		)	—
(Additions) reductions to restricted cash	(1,063		)	(14,719		)	20,987
Additions to cash held in escrow	(15,000		)	—			—
Purchase of partners' interest in unconsolidated affiliates	(14,280		)	—			(15,773		)
Proceeds from sales of real estate assets	76,950			244,647			138,614
Additions to mortgage and other notes receivable	(3,584		)	(15,173		)	—
Payments received on mortgage notes receivable	3,002			7,479			1,609
Purchases of available-for-sale securities	—			—			(9,610		)
Additional investments in and advances to unconsolidated affiliates	(8,809		)	(35,499		)	(23,604		)
Distributions in excess of equity in earnings of unconsolidated affiliates	43,160			17,907			31,776
Changes in other assets	(13,133		)	(15,408		)	(5,971		)
Net cash used in investing activities	(246,683		)	(27,645		)	(5,558		)

8

CBL & Associates Limited Partnership

Consolidated Statements of Cash Flows

(Continued)

(In thousands)

	Year Ended December 31,
	2012			2011			2010
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	1,869,140		$	1,933,770		$	893,378
Principal payments on mortgage and other indebtedness	(1,884,935		)	(2,086,461		)	(1,336,436		)
Additions to deferred financing costs	(7,384		)	(19,629		)	(4,855		)
Proceeds from issuances of common units	172			179			153
Proceeds from issuances of preferred units	167,078			—			229,347
Redemption of common units	(9,863		)	—			—
Redemption of preferred units	(115,000		)	—			—
Contributions from CBL related to exercises of stock options	4,454			1,955			1,456
Income tax effect of share-based compensation	—			—			1,815
Contributions from noncontrolling interests	7,120			2,079			5,234
Distributions to noncontrolling interests	(26,899		)	(29,518		)	(26,001		)
Distributions to preferred unitholders	(43,738		)	(42,376		)	(35,670		)
Distributions to common unitholders	(172,476		)	(168,994		)	(149,821		)
Net cash used in financing activities	(212,331		)	(408,995		)	(421,400		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	22,167			5,187			2,857
CASH AND CASH EQUIVALENTS, beginning of period	56,077			50,890			48,033
CASH AND CASH EQUIVALENTS, end of period	$	78,244		$	56,077		$	50,890

The accompanying notes are an integral part of these consolidated statements.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except unit and share data)

NOTE 1. ORGANIZATION

     CBL & Associates Limited Partnership (the "Operating Partnership") is a Delaware limited partnership that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air centers, associated centers, community centers and office properties.  Its properties are located in 27 states, but are primarily in the southeastern and midwestern United States. CBL & Associates Properties, Inc. ("CBL"), a Delaware corporation, is a self-managed, self-administered, fully-integrated real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. CBL is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At December 31, 2012, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned a 83.5% limited partner interest for a combined interest held by CBL of 84.5%.

The remaining interest in the Operating Partnership is held primarily by CBL & Associates, Inc., its shareholders and affiliates and certain senior officers of the Company, all of which contributed their interests in certain real estate properties and joint ventures to the Operating Partnership in exchange for a limited partner interest when the Operating Partnership was formed in November 1993 (collectively “CBL’s Predecessor”). At December 31, 2012, CBL’s Predecessor owned a 9.5% limited partner interest and various third parties owned a 6.0% limited partner interest in the Operating Partnership.  CBL’s Predecessor also owned 3.1 million shares of CBL’s common stock at December 31, 2012, for a combined effective interest of 11.2% in the Operating Partnership.

As of December 31, 2012, the Operating Partnership owned controlling interests in 77 regional malls/open-air and outlet centers (including one mixed-use center), 28 associated centers (each located adjacent to a regional mall), six community centers and 13 office buildings, including the Operating Partnership’s corporate office building. The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a variable interest entity ("VIE").  At December 31, 2012, the Operating Partnership owned noncontrolling interests in nine regional malls/ open-air centers, four associated centers, four community centers and seven office buildings. Because one or more of the other partners have substantive participating rights, the Operating Partnership does not control these partnerships and joint ventures and, accordingly, accounts for these investments using the equity method. The Operating Partnership had controlling interests in one outlet center, owned in a 75%/25% joint venture, under construction at December 31, 2012. The Operating Partnership also had controlling interests in one community center, one mall expansion and two mall redevelopments under construction at December 31, 2012.  The Operating Partnership also holds options to acquire certain development properties owned by third parties.

The Operating Partnership conducts CBL’s property management and development activities through its wholly-owned subsidiary, CBL & Associates Management, Inc. (the “Management Company”), to comply with certain requirements of the Internal Revenue Code of 1986, as amended ("Internal Revenue Code").

The Operating Partnership and its consolidated subsidiaries, including the Management Company, are collectively referred to herein as "the Operating Partnership."

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

     The accompanying consolidated financial statements of the Operating Partnership have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  All intercompany transactions have been eliminated.

Certain historical amounts have been reclassified to conform to the current year presentation.  The financial results of certain Properties are reported as discontinued operations in the consolidated financial statements.  Except where noted, the information presented in the Notes to Consolidated Financial Statements excludes discontinued operations. In March 2013, the Operating Partnership sold three office buildings for total net proceeds of approximately $12,983. Since the Operating Partnership has issued financial statements for interim periods subsequent to the periods presented in these financial statements in which the results of operations of these Properties have been reflected as discontinued operations, the financial statements and other disclosures herein have been revised to reclassify amounts related to these sales as discontinued operations.

10

Accounting Guidance Adopted

     In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). The objective of ASU 2011-04 is to align fair value measurements and related disclosure requirements under GAAP and International Financial Reporting Standards (“IFRSs”), thus improving the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. For public entities, this guidance was effective for interim and annual periods beginning after December 15, 2011 and should be applied prospectively. The adoption of ASU 2011-04 did not have a material impact on the Operating Partnership's consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). The objective of this accounting update is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in capital. ASU 2011-05 requires that all non-owner changes in capital be presented either in a single continuous statement of comprehensive income or in two separate but continuous statements of net income and other comprehensive income. For public entities, this guidance was effective for interim and annual periods beginning after December 15, 2011 and should be applied retrospectively. In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (“ASU 2011-12”). This guidance defers the changes in ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income ("AOCI"). Other requirements of ASU 2011-05 are not affected by ASU 2011-12. The guidance in ASU 2011-12 was effective at the same time as ASU 2011-05 so that entities would not be required to comply with the presentation requirements in ASU 2011-05 that ASU 2011-12 deferred. The adoption of this guidance changed the presentation format of the Operating Partnership's consolidated financial statements but did not have an impact on the amounts reported in those statements.

In December 2011, the FASB issued ASU No. 2011-10, Derecognition of in Substance Real Estate - a Scope Clarification (“ASU 2011-10”). This guidance applies to the derecognition of in substance real estate when the parent ceases to have a controlling financial interest in a subsidiary that is in substance real estate because of a default by the subsidiary on its nonrecourse debt. Under ASU 2011-10, the reporting entity should apply the guidance in Accounting Standards Codification ("ASC") 360-20, Property, Plant and Equipment - Real Estate Sales, to determine whether it should derecognize the in substance real estate. Generally, the requirements to derecognize in substance real estate would not be met before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. Thus, even if the reporting entity ceases to have a controlling financial interest under ASC 810-10, Consolidation - Overall, it would continue to include the real estate, debt, and the results of the subsidiary's operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. ASU 2011-10 should be applied on a prospective basis to deconsolidation events occurring after the effective date. For public companies, this guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. Early adoption is permitted. The Operating Partnership elected to adopt ASU 2011-10 effective January 1, 2012. The adoption of this guidance did not have an impact on the Operating Partnership's consolidated financial statements.

Accounting Pronouncements Not Yet Effective

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02"). The objective of ASU 2013-02 is to improve reporting of reclassifications out of AOCI by presenting information about such reclassifications and their corresponding effect on net income primarily in one place either on the face of the financial statements or in the notes. ASU 2013-02 requires an entity to disclose information by component for significant amounts reclassified out of AOCI if the amounts reclassified are required to be reclassified under GAAP to net income in their entirety in the same reporting period. For amounts not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. ASU 2013-02 established the effective date and guidance for the presentation of reclassification adjustments which ASU 2011-12 deferred. For public companies, this guidance is effective on a prospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2012. ASU 2013-02 does not change the calculation of net income or comprehensive income and will not have an impact on the amounts reported in the Operating Partnership's consolidated financial statements.

Real Estate Assets

     The Operating Partnership capitalizes predevelopment project costs paid to third parties. All previously capitalized predevelopment costs are expensed when it is no longer probable that the project will be completed. Once development of a project commences, all direct costs incurred to construct the project, including interest and real estate taxes, are capitalized. Additionally, certain general and administrative expenses are allocated to the projects and capitalized based on the amount of time applicable personnel work on the development project. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements are capitalized and depreciated over their estimated useful lives.

11

     All acquired real estate assets have been accounted for using the acquisition method of accounting and accordingly, the results of operations are included in the consolidated statements of operations from the respective dates of acquisition. The Operating Partnership allocates the purchase price to (i) tangible assets, consisting of land, buildings and improvements, as if vacant, and tenant improvements, and (ii) identifiable intangible assets and liabilities, generally consisting of above-market leases, in-place leases and tenant relationships, which are included in other assets, and below-market leases, which are included in accounts payable and accrued liabilities. The Operating Partnership uses estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation techniques to allocate the purchase price to the acquired tangible and intangible assets. Liabilities assumed generally consist of mortgage debt on the real estate assets acquired. Assumed debt is recorded at its fair value based on estimated market interest rates at the date of acquisition.

     Depreciation is computed on a straight-line basis over estimated lives of 40 years for buildings, 10 to 20 years for certain improvements and 7 to 10 years for equipment and fixtures. Tenant improvements are capitalized and depreciated on a straight-line basis over the term of the related lease. Lease-related intangibles from acquisitions of real estate assets are generally amortized over the remaining terms of the related leases. The amortization of above- and below-market leases is recorded as an adjustment to minimum rental revenue, while the amortization of all other lease-related intangibles is recorded as amortization expense. Any difference between the face value of the debt assumed and its fair value is amortized to interest expense over the remaining term of the debt using the effective interest method.

     The Operating Partnership’s intangibles and their balance sheet classifications as of December 31, 2012 and 2011, are summarized as follows:

	December 31, 2012					December 31, 2011
	Cost		Accumulated Amortization			Cost		Accumulated Amortization
Intangible lease assets and other assets:
Above-market leases	$	69,360	$	(37,454	)	$	55,642	$	(33,954	)
In-place leases	117,631		(46,767		)	54,838		(36,753		)
Tenant relationships	27,880		(3,350		)	27,318		(2,853		)
Accounts payable and accrued liabilities:
Below-market leases	104,012		(57,625		)	66,627		(51,755		)

These intangibles are related to specific tenant leases.  Should a termination occur earlier than the date indicated in the lease, the related intangible assets or liabilities, if any, related to the lease are recorded as expense or income, as applicable.  The increase in net carrying value of intangibles from December 31, 2011 to December 31, 2012 was primarily due to the 2012 acquisitions of Dakota Square Mall, The Outlet Shoppes at Gettysburg and The Outlet Shoppes at El Paso as described in Note 3. The total net amortization expense of the above intangibles was $10,550, $7,137 and $8,224 in 2012, 2011 and 2010, respectively.  The estimated total net amortization expense for the next five succeeding years is $17,488 in 2013, $13,921 in 2014, $10,885 in 2015, $6,541 in 2016 and $4,848 in 2017.

     Total interest expense capitalized was $2,671, $4,955 and $3,334 in 2012, 2011 and 2010, respectively.

Carrying Value of Long-Lived Assets

The Operating Partnership evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances warrant such a review.  The carrying value of a long-lived asset is considered impaired when its estimated future undiscounted cash flows are less than its carrying value. The Operating Partnership estimates fair value using the undiscounted cash flows expected to be generated by each property, which are based on a number of assumptions such as leasing expectations, operating budgets, estimated useful lives, future maintenance expenditures, intent to hold for use and capitalization rates. If it is determined that impairment has occurred, the amount of the impairment charge is equal to the excess of the asset’s carrying value over its estimated fair value.  These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates and costs to operate each property.  As these factors are difficult to predict and are subject to future events that may alter the assumptions used, the future cash flows estimated in the Company’s impairment analyses may not be achieved. See Note 4 and Note 15 for information related to the impairment of long-lived assets for 2012, 2011 and 2010.

Cash and Cash Equivalents

The Operating Partnership considers all highly liquid investments with original maturities of three months or less as cash equivalents.

12

Restricted Cash

     Restricted cash of $42,880 and $41,817 was included in intangible lease assets and other assets at December 31, 2012 and 2011, respectively.  Restricted cash consists primarily of cash held in escrow accounts for debt service, insurance, real estate taxes, capital improvements and deferred maintenance as required by the terms of certain mortgage notes payable, as well as contributions from tenants to be used for future marketing activities.  The Operating Partnership’s restricted cash included $110 and $117 as of December 31, 2012 and 2011, respectively, related to funds held in a trust account for certain construction costs associated with our developments. 

Allowance for Doubtful Accounts

     The Operating Partnership periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are realizable based on factors affecting the collectibility of those balances. The Operating Partnership’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.  The Operating Partnership recorded a provision for doubtful accounts of $1,532, $1,676 and $2,722 for 2012, 2011 and 2010, respectively.

Investments in Unconsolidated Affiliates

     The Operating Partnership evaluates its joint venture arrangements to determine whether they should be recorded on a consolidated basis.  The percentage of ownership interest in the joint venture, an evaluation of control and whether a VIE exists are all considered in the Operating Partnership’s consolidation assessment.

     Initial investments in joint ventures that are in economic substance a capital contribution to the joint venture are recorded in an amount equal to the Operating Partnership’s historical carryover basis in the real estate contributed. Initial investments in joint ventures that are in economic substance the sale of a portion of the Operating Partnership’s interest in the real estate are accounted for as a contribution of real estate recorded in an amount equal to the Operating Partnership’s historical carryover basis in the ownership percentage retained and as a sale of real estate with profit recognized to the extent of the other joint venturers’ interests in the joint venture. Profit recognition assumes the Operating Partnership has no commitment to reinvest with respect to the percentage of the real estate sold and the accounting requirements of the full accrual method are met.

     The Operating Partnership accounts for its investment in joint ventures where it owns a noncontrolling interest or where it is not the primary beneficiary of a VIE using the equity method of accounting. Under the equity method, the Operating Partnership’s cost of investment is adjusted for its share of equity in the earnings of the unconsolidated affiliate and reduced by distributions received. Generally, distributions of cash flows from operations and capital events are first made to partners to pay cumulative unpaid preferences on unreturned capital balances and then to the partners in accordance with the terms of the joint venture agreements.

     Any differences between the cost of the Operating Partnership’s investment in an unconsolidated affiliate and its underlying equity as reflected in the unconsolidated affiliate’s financial statements generally result from costs of the Operating Partnership’s investment that are not reflected on the unconsolidated affiliate’s financial statements, capitalized interest on its investment and the Operating Partnership’s share of development and leasing fees that are paid by the unconsolidated affiliate to the Operating Partnership for development and leasing services provided to the unconsolidated affiliate during any development periods. At December 31, 2012 and 2011, the net difference between the Operating Partnership’s investment in unconsolidated affiliates and the underlying equity of unconsolidated affiliates was $11,674 and $2,456, respectively, which is generally amortized over a period of 40 years.

     On a periodic basis, the Operating Partnership assesses whether there are any indicators that the fair value of the Operating Partnership's investments in unconsolidated affiliates may be impaired. An investment is impaired only if the Operating Partnership’s estimate of the fair value of the investment is less than the carrying value of the investment and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment. The Operating Partnership's estimates of fair value for each investment are based on a number of assumptions that are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter the Operating Partnership’s assumptions, the fair values estimated in the impairment analyses may not be realized.

     No impairments of investments in unconsolidated affiliates were recorded in 2012, 2011 and 2010.  See Note 5 for further discussion.

13

Deferred Financing Costs

     Net deferred financing costs of $24,821 and $27,674 were included in intangible lease assets and other assets at December 31, 2012 and 2011, respectively. Deferred financing costs include fees and costs incurred to obtain financing and are amortized on a straight-line basis to interest expense over the terms of the related indebtedness. Amortization expense was $10,391, $12,933 and $12,223 in 2012, 2011 and 2010, respectively. Accumulated amortization was $8,932 and $17,781 as of December 31, 2012 and 2011, respectively.

Marketable Securities

     Intangible lease assets and other assets include marketable securities consisting of corporate equity securities, mortgage / asset-backed securities, mutual funds and bonds that are classified as available for sale. Unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of AOCI (loss) in redeemable common units and partners’ capital. Realized gains and losses are recorded in other income. Gains or losses on securities sold are based on the specific identification method.  The Operating Partnership recognized net realized gains on sales of available-for-sale securities of $224 in 2012 and net realized losses on sales of available-for-sale securities of $22 and $114 in 2011 and 2010, respectively. 

     If a decline in the value of an investment is deemed to be other than temporary, the investment is written down to fair value and an impairment loss is recognized in the current period to the extent of the decline in value. In determining when a decline in fair value below cost of an investment in marketable securities is other than temporary, the following factors, among others, are evaluated: 

• The probability of recovery.

• The Operating Partnership’s ability and intent to retain the security for a sufficient period of time for it to recover.

• The significance of the decline in value.

• The time period during which there has been a significant decline in value.

• Current and future business prospects and trends of earnings.

• Relevant industry conditions and trends relative to their historical cycles.

• Market conditions.

There were no other-than-temporary impairments of marketable securities incurred during 2012, 2011 and 2010.

The following is a summary of the marketable securities held by the Operating Partnership as of December 31, 2012 and 2011:

			Gross Unrealized
	Adjusted Cost		Gains		Losses			Fair Value
December 31, 2012:
Common stocks	$	4,195	$	12,361	$	—		$	16,556
Government and government      sponsored entities	11,123		—		—			11,123
	$	15,318	$	12,361	$	—		$	27,679
December 31, 2011:
Common stocks	$	4,207	$	9,480	$	(5	)	$	13,682
Mutual funds	928		23		—			951
Mortgage/asset-backed securities	1,717		10		(4		)	1,723
Government and government      sponsored entities	15,058		45		(1,542		)	13,561
Corporate bonds	636		26		—			662
International bonds	33		1		—			34
	$	22,579	$	9,585	$	(1,551	)	$	30,613

Interest Rate Hedging Instruments

     The Operating Partnership recognizes its derivative financial instruments in either accounts payable and accrued liabilities or intangible lease assets and other assets, as applicable, in the consolidated balance sheets and measures those instruments at fair

14

value.  The accounting for changes in the fair value (i.e., gain or loss) of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship. To qualify as a hedging instrument, a derivative must pass prescribed effectiveness tests, performed quarterly using both qualitative and quantitative methods. The Operating Partnership has entered into derivative agreements as of December 31, 2012 and 2011 that qualify as hedging instruments and were designated, based upon the exposure being hedged, as cash flow hedges.  The fair value of these cash flow hedges as of December 31, 2012 and 2011 was $5,805 and $5,617, respectively, and is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets. To the extent they are effective, changes in the fair values of cash flow hedges are reported in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged item affects earnings. The ineffective portion of the hedge, if any, is recognized in current earnings during the period of change in fair value. The gain or loss on the termination of an effective cash flow hedge is reported in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged item affects earnings.  The Operating Partnership also assesses the credit risk that the counterparty will not perform according to the terms of the contract.

     See Notes 6 and 15 for additional information regarding the Operating Partnership’s interest rate hedging instruments.

Revenue Recognition

Minimum rental revenue from operating leases is recognized on a straight-line basis over the initial terms of the related leases. Certain tenants are required to pay percentage rent if their sales volumes exceed thresholds specified in their lease agreements. Percentage rent is recognized as revenue when the thresholds are achieved and the amounts become determinable.

     The Operating Partnership receives reimbursements from tenants for real estate taxes, insurance, common area maintenance, and other recoverable operating expenses as provided in the lease agreements.  Tenant reimbursements are recognized when earned in accordance with the tenant lease agreements.  Tenant reimbursements related to certain capital expenditures are billed to tenants over periods of 5 to 15 years and are recognized as revenue in accordance with underlying lease terms.

     The Operating Partnership receives management, leasing and development fees from third parties and unconsolidated affiliates. Management fees are charged as a percentage of revenues (as defined in the management agreement) and are recognized as revenue when earned. Development fees are recognized as revenue on a pro rata basis over the development period. Leasing fees are charged for newly executed leases and lease renewals and are recognized as revenue when earned. Development and leasing fees received from an unconsolidated affiliate during the development period are recognized as revenue only to the extent of the third-party partner’s ownership interest. Development and leasing fees during the development period to the extent of the Operating Partnership’s ownership interest are recorded as a reduction to the Operating Partnership's investment in the unconsolidated affiliate.

Gains on Sales of Real Estate Assets

Gains on sales of real estate assets are recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, the Operating Partnership’s receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. When the Operating Partnership has an ownership interest in the buyer, gain is recognized to the extent of the third party partner’s ownership interest and the portion of the gain attributable to the Operating Partnership’s ownership interest is deferred.

Income Taxes

The Operating Partnership is generally not liable for federal corporate income taxes as income or loss is reported in the tax returns of its partners. The Operating Partnership has elected taxable REIT subsidiary status for some of its subsidiaries. For these entities, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if the Operating Partnership believes all or some portion of the deferred tax asset may not be realized. An increase or decrease in the valuation allowance that results from the change in circumstances that causes a change in our judgment about the realizability of the related deferred tax asset is included in income or expense, as applicable.  State tax expense was $3,795, $4,062 and $4,663 during 2012, 2011 and 2010, respectively.

      The Operating Partnership recorded an income tax provision of $1,404 in 2012 and an income tax benefit of $269 and $6,417 in 2011 and 2010 respectively. The income tax provision in 2012 consisted of a current income tax benefit of $1,691 and a deferred income tax provision of $3,095.  The income tax benefit in 2011 consisted of a current income tax provision of $5,426 and a deferred income tax benefit of $5,695.  The income tax benefit in 2010 consisted of a current income tax benefit of $8,448 and a deferred income tax provision of $2,031,

     The Operating Partnership had a net deferred tax asset of $6,607 and $8,012 at December 31, 2012 and 2011, respectively. The net deferred tax asset at December 31, 2012 and 2011 is included in intangible lease assets and other assets and primarily consisted of operating expense accruals and differences between book and tax depreciation.  As of December 31, 2012, tax years

15

that generally remain subject to examination by the Operating Partnership’s major tax jurisdictions include 2009, 2010, 2011 and 2012.

The Operating Partnership reports any income tax penalties attributable to its properties as property operating expenses and any corporate-related income tax penalties as general and administrative expenses in its statement of operations.  In addition, any interest incurred on tax assessments is reported as interest expense.  The Operating Partnership reported nominal interest and penalty amounts in 2012, 2011 and 2010.

Concentration of Credit Risk

     The Operating Partnership’s tenants include national, regional and local retailers. Financial instruments that subject the Operating Partnership to concentrations of credit risk consist primarily of tenant receivables. The Operating Partnership generally does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of tenants.

     The Operating Partnership derives a substantial portion of its rental income from various national and regional retail companies; however, no single tenant collectively accounted for more than 3.2% of the Operating Partnership’s total revenues in 2012, 2011 or 2010.

Earnings Per Unit

     Basic earnings per Operating Partnership unit ("EPU") is computed by dividing net income available to common unitholders by the weighted-average number of common units outstanding for the period. Diluted EPU assumes the issuance of common units for all potential dilutive common units outstanding.

     The following summarizes the impact of potential dilutive common units on the denominator used to compute EPU:

	Year Ended December 31,
	2012	2011	2010
Denominator – basic	190,223	190,335	190,001
Stock Options	3	3	2
Deemed units related to deferred compensation arrangements	42	42	39
Denominator – diluted	190,268	190,380	190,042

There was no anti-dilutive effect of stock options in 2012. The dilutive effect of stock options of 23,000 and 61,000 shares for the years ended December 31, 2011, and 2010, respectively, were excluded from the computations of diluted EPU because the effect of including the stock options would have been anti-dilutive.

     See Note 7 for information regarding significant CBL equity offerings that affected the Operating Partnership's per unit amounts for each period presented.

Comprehensive Income

     Comprehensive income includes all changes in redeemable common units and total capital during the period, except those resulting from investments by unitholders and partners, distributions to unitholders and partners and redemption valuation adjustments. Other comprehensive income (loss) (“OCI/L”) includes changes in unrealized gains (losses) on available-for-sale securities, interest rate hedge agreements and foreign currency translation adjustments.  

The components of accumulated other comprehensive income (loss) as of December 31, 2012 and 2011 are as follows:

	December 31, 2012
	As reported in:
	Redeemable Common Units		Partners' Capital			Total
Net unrealized gain (loss) on hedging agreements	$	373	$	(6,319	)	$	(5,946	)
Net unrealized gain on available-for-sale securities	353		12,005			12,358
Accumulated other comprehensive income	$	726	$	5,686		$	6,412

16

	December 31, 2011
	As reported in:
	Redeemable Common Units		Partners' Capital			Total
Net unrealized gain (loss) on hedging agreements	$	377	$	(6,116	)	$	(5,739	)
Net unrealized gain on available-for-sale securities	328		7,828			8,156
Accumulated other comprehensive income	$	705	$	1,712		$	2,417

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") 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 reported period. Actual results could differ from those estimates.

NOTE 3. ACQUISITIONS

The Operating Partnership includes the results of operations of real estate assets acquired in the consolidated statements of operations from the date of the related acquisition.

2012 Acquisitions

In December 2012, the Operating Partnership acquired a 49.0% joint venture interest in Kirkwood Mall in Bismarck, ND. The Operating Partnership paid $39,754 for its 49.0% share, which was based on a total value of $121,500 including a $40,368 non-recourse loan. The Operating Partnership executed an agreement to acquire the remaining 51.0% interest within 90 days subject to the lender's approval to assume the loan, which bears interest of 5.75% and matures in April 2018. As the loan bears interest at an above-market rate, the Operating Partnership recorded a debt premium of $2,970, computed using an estimated market interest rate of 4.25%. The Operating Partnership acquired the remaining 51% noncontrolling interest subsequent to December 31, 2012. See Note 19 for additional information.

In May 2012, the Operating Partnershipacquired Dakota Square Mall in Minot, ND. The purchase price of $91,475 consisted of $32,474 in cash and the assumption of a $59,001 non-recourse loan that bears interest at a fixed rate of 6.23% and matures in November 2016. The Operating Partnership recorded a debt premium of $3,040, computed using an estimated market interest rate of 4.75%, since the debt assumed was at an above-market interest rate compared to similar debt instruments at the date of acquisition.

In April 2012, the Operating Partnership and its noncontrolling interest partner exercised their rights under the terms of a mezzanine loan agreement with the borrower, which owned The Outlet Shoppes at Gettysburg in Gettysburg, PA, to convert the mezzanine loan into a member interest in the outlet shopping center. After conversion, the Operating Partnership owns a 50.0% interest in the outlet center. The investment of $24,837 consisted of a $4,522 converted mezzanine loan and the assumption of $20,315 of debt. The $40,631 of debt, of which the Operating Partnership's share is 50.0%, bears interest at a fixed rate of 5.87% and matures in February 2016.

In April 2012, the Operating Partnership acquired a 75.0% joint venture interest in The Outlet Shoppes at El Paso, an outlet shopping center located in El Paso, TX for $31,592 and a 50.0% joint venture interest in outparcel land adjacent to The Outlet Shoppes at El Paso (see Note 5) for $3,864 for a total of $35,456. The amount paid for the Operating Partnership's 75.0% and 50.0% interests was based on a total value of $116,775 including a non-recourse loan of $66,924, which bears interest at a fixed rate of 7.06% and matures in December 2017. The debt assumed was at an above-market rate compared to similar debt instruments at the date of acquisition, so the Operating Partnership recorded a debt premium of $7,700 (of which $5,775 represents the Operating Partnership's 75.0% share), computed using an estimated market interest rate of 4.75%. The entity that owned The Outlet Shoppes at El Paso used a portion of the cash proceeds to repay a $9,150 mezzanine loan provided by the Operating Partnership. After considering the repayment of the mezzanine loan to the Operating Partnership, the net consideration paid by the Operating Partnership in connection with this transaction was $28,594.

17

The following table summarizes the preliminary allocation of the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for acquisitions listed above as of December 31, 2012:     

Land	$	41,878
Buildings and improvements	309,827
Investments in unconsolidated affiliates	3,864
Tenant improvements	13,603
Above-market leases	11,069
In-place leases	49,521
Total assets	429,762
Mortgage note payable assumed	(206,924		)
Debt premium	(13,710		)
Below-market leases	(36,627		)
Noncontrolling interest	(60,295		)
Net assets acquired	$	112,206

In December 2012, the Operating Partnership acquired the remaining 40.0% interests in Imperial Valley Mall L.P., Imperial Valley Peripheral L.P. and Imperial Valley Commons L.P. in El Centro, CA from its joint venture partner. Imperial Valley Commons, L.P. was classified as a VIE prior to the acquisition of the remaining 40.0% interest and was accounted for on a consolidated basis. The Operating Partnership recorded a gain on investment of $45,072 related to the acquisition of the joint venture partner's interest. Imperial Valley Mall L.P. and Imperial Valley Peripheral L.P. were unconsolidated affiliates accounted for using the equity method of accounting. As of the purchase date, all three joint ventures are accounted for on a consolidated basis in the Operating Partnership's operations. The interests were acquired for total consideration of $36,518, which consists of $15,500 in cash and $21,018 related to the assumption of the joint venture partner's share of the loan secured by Imperial Valley Mall. The following table summarizes the preliminary allocation of the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for Imperial Valley Mall as of December 31, 2012:

Land	$	46,188
Buildings and improvements	68,723
Tenant improvements	1,826
Above-market leases	4,382
In-place leases	17,591
Total assets	138,710
Mortgage note payable assumed	(52,546		)
Debt premium	(1,624		)
Below-market leases	(3,546		)
Value of Operating Partnership's interest in joint ventures	(65,494		)
Net assets acquired	$	15,500

The Operating Partnership has not yet finalized its allocation of the purchase price of Kirkwood Mall and Imperial Valley Mall, included in the tables above, as it is awaiting certain valuation information for assets acquired and liabilities assumed to complete its allocations. A final determination of the purchase price allocation will be made in 2013. The pro forma effect of the 2012 acquisitions described above was not material.

18

2011 Acquisition

In September 2011, the Operating Partnership purchased Northgate Mall located in Chattanooga, TN, for a total cash purchase price of $11,500 plus transaction costs of $672. The results of operations of Northgate Mall are included in the consolidated financial statements beginning on the date of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date:

Land	$	2,330
Buildings and improvements	8,220
Above-market leases	2,030
In-place leases	1,570
Total assets	14,150
Below-market leases	(2,650		)
Net assets acquired	$	11,500

2010 Acquisition

In October 2010, the Operating Partnership acquired the remaining 50% interest in Parkway Place in Huntsville, AL, from its joint venture partner. The interest was acquired for total consideration of $38,775, which consisted of $17,831 in a combination of cash paid by the Operating Partnership and a distribution from the joint venture to the joint venture partner and the assumption of the joint venture partner’s share of the loan secured by Parkway Place with a principal balance of $20,944 at the time of purchase.

NOTE 4. DISCONTINUED OPERATIONS

The results of operations of the Properties described below, as well as any gains or impairment losses related to these Properties, are included in discontinued operations for all periods presented, as applicable. In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the consolidated financial statements herein have been revised to reflect the operations of three office buildings that were sold in the first quarter of 2013 as discontinued operations because the interim condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K reflect these properties as discontinued operations.

In March 2013, the Operating Partnership sold three office buildings. One office building, 1500 Sunday Drive, located in Raleigh, NC, was sold for a gross sales price of $8,300 less commissions and customary closing costs for a net sales price of $7,862. The Operating Partnership recorded a $549 loss related to the sale of this office building in the first quarter of 2013. Additionally, the Operating Partnership sold its Peninsula I and II office buildings, located in Newport News, VA, for a gross sales price of $5,250 less commissions and customary closing costs for a net sales price of $5,121. The Operating Partnership recorded a gain of $598 attributable to the sale of the Peninsula I and II buildings in the first quarter of 2013. Net proceeds from these sales were used to reduce the outstanding borrowings on the Operating Partnership's credit facilities.

In January 2013, the Operating Partnership sold its Lake Point and SunTrust Bank office buildings, located in Greensboro, NC, for a gross sales price of $30,875 less commissions and customary closing costs for a net sales price of $30,490. Net proceeds from the sale were used to reduce the outstanding borrowings on the Operating Partnership's credit facilities. These office buildings were classified as held for sale as of December 31, 2012. In the first quarter of 2013, the Operating Partnership recorded a gain of $823 attributable to the sale.

In December 2012, the Operating Partnership sold Willowbrook Plaza, a community center located in Houston, TX, for a gross sales price of $24,450 less commissions and customary closing costs for a net sales price of $24,171. Proceeds from the sale were used to reduce the outstanding borrowings on the Operating Partnership's credit facilities. In accordance with the Operating Partnership's quarterly impairment review process, the Operating Partnership recorded a loss on impairment of real estate of $17,743 during the third quarter of 2012 to write down the book value of this property to its then estimated fair value.

In October 2012, the Operating Partnership sold Towne Mall, located in Franklin, OH and Hickory Hollow Mall, located in Antioch, TN. Towne Mall sold for a gross sales price of $950 less commissions and customary closings costs for a net sales price of $892. Hickory Hollow Mall sold for a gross sales price of $1,000 less commissions and customary closing costs for a net sales price of $966. Net proceeds from the sale of both malls were used to reduce the outstanding borrowings on the Operating Partnership's credit facilities. In the third quarter of 2012, the Operating Partnership recorded a loss on impairment of real estate of $419 and $8,047, respectively, to write down the book value of both Properties to the expected net sales price.

19

In July 2012, the Operating Partnership sold Massard Crossing, a community center located in Fort Smith, AR, for a gross sales price of $7,803 less commissions and customary closing costs for a net sales price of $7,432. Proceeds from the sale were used to reduce the outstanding borrowings on the Operating Partnership's credit facilities. The Operating Partnership recorded a gain of $98 attributable to the sale in the third quarter of 2012.

In March 2012, the Operating Partnership completed the sale of the second phase of Settlers Ridge, a community center located in Robinson Township, PA, for a gross sales price of $19,144 less commissions and customary closing costs for a net sales price of $18,951. Proceeds from the sale were used to reduce the outstanding borrowings on the Operating Partnership's credit facilities. The Operating Partnership recorded a gain of $883 attributable to the sale in the first quarter of 2012. The Operating Partnership recorded a loss on impairment of real estate of $4,457 in the second quarter of 2011 to write down the book value of this property to its then estimated fair value. There were no results of operations for this property for the year ended December 31, 2010 as it was under development during that period.

In January 2012, the Operating Partnership sold Oak Hollow Square, a community center located in High Point, NC, for a gross sales price of $14,247. Net proceeds of $13,796 were used to reduce the outstanding balance on the Operating Partnership's unsecured term loan. The Operating Partnership recorded a loss on impairment of real estate of $255 in the first quarter of 2012 related to the true-up of certain estimated amounts to actual amounts. The Operating Partnership recorded a loss on impairment of real estate of $729 in the fourth quarter of 2011 to write down the book value of this property to the estimated net sales price.

In November 2011, the Operating Partnership completed the sale of Westridge Square, a community center located in Greensboro, NC, for a sales price of $26,125 less commissions and customary closing costs for a net sales price of $25,768. Proceeds from the sale were used to reduce the outstanding borrowings on the unsecured term facility used to acquire the Starmount Properties.

In February 2011, the Operating Partnership completed the sale of Oak Hollow Mall in High Point, NC, for a gross sales price of $9,000. Net proceeds from the sale were used to retire the outstanding principal balance and accrued interest of $40,281 on the non-recourse loan secured by the property in accordance with the lender’s agreement to modify the outstanding principal balance and accrued interest to equal the net sales price for the property and, as a result, the Operating Partnership recorded a gain on the extinguishment of debt of $31,434 in the first quarter of 2011. The Operating Partnership also recorded a loss on impairment of real estate in the first quarter of 2011 of $2,746 to write down the book value of the property to the net sales price. In the second quarter of 2010, the Operating Partnership recorded a loss on impairment of real estate of $25,435 related to the property to write down its depreciated book value to its then estimated fair value.

In October 2010, the Operating Partnership completed the sale of Pemberton Square, a mall located in Vicksburg, MS, for a sales price of $1,863 less commissions and customary closing costs for a net sales price of $1,782.  The Operating Partnership recorded a gain of $379 attributable to the sale in the fourth quarter of 2010.  Proceeds from the sale were used to reduce the outstanding borrowings on the Operating Partnership’s credit facilities.  

In December 2010, the Operating Partnership completed the sale of Milford Marketplace, a community center located in Milford, CT, and the conveyance of its ownership interest in the first phase of Settlers Ridge, a community center located in Robinson Township, PA, for a sales price of $111,835 less commissions and customary closing costs for a net sales price of $110,709.  The Operating Partnership recorded a loss on impairment of real estate of $12,363 in the fourth quarter of 2010 to reflect the fair value of the Properties at the time of the sale.  Net proceeds from the sale, after repayment of a construction loan, were used to reduce the outstanding borrowings on the Operating Partnership’s credit facilities.  

In December 2010, the Operating Partnership completed the sale of Lakeview Pointe, a community center located in Stillwater, OK, for a sales price of $21,000 less commissions and customary closing costs for a net sales price of $20,631.  The Operating Partnership recorded a loss on impairment of real estate of $1,302 in the fourth quarter of 2010 to reflect the fair value of the property at the time of sale.  Net proceeds from the sale, after repayment of a construction loan, were used to reduce the outstanding borrowings on the Operating Partnership’s secured credit facilities.  

Total revenues of the centers and office buildings described above that are included in discontinued operations were $14,078, $21,547 and $34,337 in 2012, 2011 and 2010, respectively.  The total net investment in real estate assets at the time of sale for the office buildings sold during 2013 was $42,607. There were no outstanding loans on the office buildings that were sold in 2013. The total net investment in real estate assets at the time of sale for the centers sold during 2012 was $51,184.  There were no outstanding loans on any of the centers sold during 2012. Discontinued operations for the years ended December 31, 2012, 2011 and 2010 also include true-ups of estimated expense to actual amounts for Properties sold during previous years.

See Note 19 for information on properties sold sold subsequent to December 31, 2012.

20

NOTE 5. UNCONSOLIDATED AFFILIATES AND COST METHOD INVESTMENTS

Unconsolidated Affiliates

At December 31, 2012, the Operating Partnership had investments in the following 16 entities, which are accounted for using the equity method of accounting:

Joint Venture	Property Name	Operating Partnership'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	%
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 Operating Partnership had majority ownership of certain joint ventures during 2012, 2011 and 2010, it evaluated the investments and concluded that the other partners or owners in these joint ventures had 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 Operating Partnership accounts for these investments using the equity method of accounting.

21

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

	December 31,
	2012			2011
ASSETS:
Investment in real estate assets	$	2,143,187		$	2,239,160
Accumulated depreciation	(492,864		)	(447,121		)
	1,650,323			1,792,039
Developments in progress	21,809			19,640
Net investment in real estate assets	1,672,132			1,811,679
Other assets	175,540			190,465
Total assets	$	1,847,672		$	2,002,144
LIABILITIES:
Mortgage and other indebtedness	1,456,622			1,478,601
Other liabilities	48,538			51,818
Total liabilities	1,505,160			1,530,419
OWNERS' EQUITY:
The Operating Partnership	196,694			267,136
Other investors	145,818			204,589
Total owners' equity	342,512			471,725
Total liabilities and owners’ equity	1,847,672			2,002,144

	Year Ended December 31,
	2012			2011			2010 (1)
Revenues	$	251,628		$	177,222		$	154,078
Depreciation and amortization	(82,534		)	(58,538		)	(53,951		)
Other operating expenses	(76,567		)	(53,417		)	(48,723		)
Income from operations	92,527			65,267			51,404
Interest income	1,365			1,420			1,112
Interest expense	(84,421		)	(59,972		)	(55,161		)
Gain on sales of real estate assets	2,063			1,744			1,492
Income from discontinued operations	—			—			166
Net income (loss)	$	11,534		$	8,459		$	(987	)

(1) The results of operations of Plaza del Sol, which was sold in June 2010, have been reflected as discontinued operations.

2012 Financings

In December 2012, a subsidiary of CBL/T-C, LLC obtained a 10-year $190,000 non-recourse loan, secured by West County Center in Des Peres, MO, that bears a fixed interest rate of 3.4% and matures in December 2022. Net proceeds of $189,687 were used to retire the outstanding borrowings of $142,235 under the previous loan and the excess proceeds were distributed 50/50 to the Operating Partnership and its partner.

In the third quarter of 2012, JG Gulf Coast Town Center LLC ("Gulf Coast") closed on a three-year $7,000 loan with a bank, 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 Operating Partnership has guaranteed 100% of this loan. Proceeds from the loan were distributed to the Operating Partnership in accordance with the terms of the joint venture agreement and the Operating Partnership used these funds to reduce the balance on its credit facilities.

During the first quarter of 2012, York Town Center, LP ("YTC") closed on a $38,00010-year non-recourse loan, secured by York Town Center in York, PA, which bears interest at a fixed rate of 4.9% and matures in February 2022. 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.

22

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 Operating Partnership has guaranteed 100% of the construction loan.

All of the debt on the Properties owned by the unconsolidated affiliates listed above is non-recourse, except for West Melbourne, Port Orange, High Pointe Commons and Gulf Coast. See Note 14 for a description of guarantees the Operating Partnership has issued related to certain unconsolidated affiliates.

See Note 19 for events related to joint venture operating property loans subsequent to December 31, 2012

Imperial Valley Mall L.P, Imperial Valley Peripheral L.P., Imperial Valley Commons L.P.

In December 2012, the Operating Partnership acquired the remaining 40.0% interests in Imperial Valley Mall L.P. and Imperial Valley Peripheral L.P., which owns vacant land adjacent to Imperial Valley Mall in El Centro, CA, from its joint venture partner. The results of operations of Imperial Valley Mall L.P. and Imperial Valley Peripheral L.P. through the acquisition date are included in the table above using the equity method of accounting. From the date of acquisition, the results of operations of Imperial Valley Mall L.P. and Imperial Valley Peripheral L.P. are accounted for on a consolidated basis. The Operating Partnership also acquired the joint venture partner's 40.0% interest in Imperial Valley Commons L.P., a VIE that owns land adjacent to Imperial Valley Mall. Imperial Valley Commons L.P. was consolidated as a VIE as of December 31, 2011 and continues to be accounted for on a consolidated basis as a wholly-owned entity as of December 31, 2012. See Note 3 for further information.

El Paso Outlet Outparcels, LLC

In April 2012, the Operating Partnership 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 3). The Operating Partnership'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.

CBL/T-C, LLC

In October 2011, the Operating Partnership entered into a joint venture, CBL/T-C with TIAA-CREF. The Operating Partnership contributed its interests in CoolSprings Galleria and West County Center, as well as a partial interest in Oak Park Mall, and TIAA-CREF contributed cash of $222,242. The contributed interests were encumbered by a total of $359,334 in mortgage loans. CBL/T-C used a portion of the contributed cash to acquire Pearland Town Center and the remaining interest in Oak Park Mall from the Operating Partnership for an aggregate purchase price, including transaction costs, of $381,730, consisting of $207,410 in cash and the assumption of a mortgage loan of $174,320. The Operating Partnership received $5,526 of cash from CBL/T-C for reimbursement of pre-formation expenditures. The Operating Partnership used $204,210 of the proceeds, net of closing costs and expenses, received from these transactions to repay outstanding borrowings on its secured lines of credit.

The Operating Partnership and TIAA-CREF each own a 50% interest with respect to the CoolSprings Galleria, Oak Park Mall and West County Center Properties. The terms of the joint venture agreement provide that, with respect to these Properties, voting rights, capital contributions and distributions of cash flows will be on a pari passu basis in accordance with ownership percentages. The Operating Partnership and TIAA-CREF own 88% and 12% interests, respectively, in Pearland Town Center. The terms of the joint venture agreement provide that all major decisions, as defined, pertaining to Pearland Town Center require the approval of holders of 90% of the interests in Pearland Town Center and that capital contributions will be made on a pro rata basis in accordance with ownership percentages. The terms of the joint venture also provide that distributions of cash from Pearland Town Center will be made first to TIAA-CREF until it has received a preferred return equal to 8.0%, second to the Operating Partnership until it has received a preferred return equal to 8.0% and then to the Operating Partnership and TIAA-CREF pro rata according to ownership interests. Beginning on the second anniversary of CBL/T-C's formation, after TIAA-CREF receives its preferred return, TIAA-CREF will receive distributions until its aggregate unreturned contributions are reduced to $6,000, before any cash distributions are eligible to be made to the Operating Partnership. Also beginning on the second anniversary of CBL/T-C's formation, after TIAA-CREF has received its preferred return and its unreturned contributions are reduced to $6,000, and after the Operating Partnership receives its preferred return, all remaining cash distributions will be made to the Operating Partnership until its aggregate unreturned contributions are reduced to $44,000. Once the Operating Partnership's aggregate unreturned

23

contributions are reduced to $44,000, all remaining distributions will be made to the Operating Partnership and TIAA-CREF on a pro rata basis according to the ownership percentages.

The terms of the joint venture also provide that between the second and third anniversaries of CBL/T-C's formation, the Operating Partnership may elect to purchase TIAA-CREF's interest in Pearland Town Center for a purchase price equal to the greater of (i) the fair value of TIAA-CREF's interest in Pearland Town Center as determined by an appraisal or (ii) TIAA-CREF's invested capital plus a preferred return equal to 8.0%.

The Operating Partnership has accounted for the formation of CBL/T-C as the sale of a partial interest in the combined CoolSprings Galleria, Oak Park Mall and West County Center Properties and recognized a gain on sale of real estate of $54,327 in 2011, which included the impact of a reserve for future capital expenditures that the Operating Partnership must fund related to parking decks at West County Center in the amount of $26,439. The Operating Partnership recorded its investment in CBL/T-C under the equity method of accounting at $116,397, which represented its combined remaining 50% cost basis in the CoolSprings Galleria, Oak Park Mall and West County Center Properties.

The Operating Partnership determined that CBL/T-C's interest in Pearland Town Center represents a variable interest in such specified assets of a VIE and have accounted for the Pearland Town Center property separately from the combined CoolSprings Galleria, Oak Park Mall and West County Center Properties discussed above. The Operating Partnership determined that, because it has the option to acquire TIAA-CREF's interest in Pearland Town Center in the future, it did not qualify as a partial sale and therefore, has accounted for the $18,264 contributed by TIAA-CREF attributable to Pearland Town Center as a financing. This amount is included in mortgage and other indebtedness in the accompanying consolidated balance sheets. Under the financing method, the Operating Partnership continues to account for Pearland Town Center on a consolidated basis.

Parkway Place L.P.

In October 2010, the Operating Partnership acquired the remaining 50% interest in Parkway Place in Huntsville, AL, from its joint venture partner. The interest was acquired for total consideration of $38,775, which consisted of $17,831 in a combination of cash paid by the Operating Partnership and a distribution from the joint venture to the joint venture partner and the assumption of the joint venture partner’s share of the loan secured by Parkway Place with a principal balance of $20,944 at the time of purchase.  The Operating Partnership recognized a gain on investment of $888 upon acquisition related to the excess of the fair value of the Operating Partnership’s existing investment over its carrying value at the time of purchase.  The results of operations of Parkway Place through the purchase date are included in the table above.  From the date of purchase, the results of operations of Parkway Place from the date of purchase are reflected on a consolidated basis.

Mall Shopping Center Company

In June 2010, the Operating Partnership’s 50.6% owned unconsolidated joint venture, Mall Shopping Center Company, sold Plaza del Sol in Del Rio, TX.  The joint venture recognized a gain of $1,244 from the sale, of which the Operating Partnership’s share was $75, net of the excess of its basis over its underlying equity in the amount of $554.  The results of operations of Mall Shopping Center Company have been reclassified to discontinued operations in the table above for the year ended December 31, 2010.

CBL Macapa

In September 2008, the Operating Partnership entered into a condominium partnership agreement with several individual investors to acquire a 60% interest in a new retail development in Macapa, Brazil.  In December 2009, the Operating Partnership entered into an agreement to sell its 60% interest to one of the individual investors for a gross sales price of $1,263, less closing costs for a net sales price of $1,201.  The sale closed in March 2010.  Upon closing, the buyer paid $200 and gave the Operating Partnership two notes receivable totaling $1,001, both with an interest rate of 10%, for the remaining balance of the purchase price.  There was no gain or loss on this sale.  On April 22, 2010, the buyer paid the first note of $300, due on April 23, 2010, plus applicable interest.  Upon maturity of the second note of $701, due on June 8, 2010, the buyer requested additional time for payment.  The Operating Partnership and buyer agreed to revised terms regarding the second note of which the buyer pays monthly installments of $45 from July 2010 to June 2011, with a final balloon installment of $161 due in July 2011.  Interest on the revised note is payable at maturity. In late 2011, the Operating Partnership agreed that if buyer repaid the outstanding principal balance of the note, then the accrued and unpaid interest would be forgiven. As of December 31, 2012, the buyer had paid $579 of the outstanding balance of $657. The Operating Partnership had not recognized any of the accrued and unpaid interest as income due to the uncertainty that the amount would be collected.

24

Cost Method Investments

     The Operating Partnership owns a 6.2% noncontrolling interest in subsidiaries of Jinsheng Group (“Jinsheng”), an established mall operating and real estate development Operating Partnership located in Nanjing, China. As of December 31, 2012, Jinsheng owns controlling interests in eight home furnishing shopping malls.

     The Operating Partnership also holds a secured convertible promissory note secured by 16,565,534 Series 2 Ordinary Shares of Jinsheng. The secured note is non-interest bearing and was amended by the Operating Partnership and Jinsheng in July 2012 to extend to January 22, 2013 the Operating Partnership's right to convert the outstanding amount of the secured note into 16,565,534 Series A-2 Preferred Shares of Jinsheng (which equates to a 2.275% ownership interest). The amendment also provides that if Jinsheng should complete an initial public offering ("IPO"), the secured note will be converted into common shares of the public Operating Partnership immediately prior to the initial public offering. In October 2012, the Operating Partnership exercised its right to demand payment of the secured note, which has a face amount of $4,875. Subsequent to December 31, 2012, the Operating Partnership and Jinsheng amended the note to extend the maturity date and the note was paid in May 2013. See Note 19 for additional information.

The Operating Partnership accounts for its noncontrolling interest in Jinsheng using the cost method because the Operating Partnership 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. The Operating Partnership initially recorded the secured note at its estimated fair value of $4,513, which reflects a discount of $362 due to the fact that it is non-interest bearing.  The discount was amortized to interest income over the term of the secured note using the effective interest method through March 2009, at which time the Operating Partnership recorded an other-than-temporary impairment charge to reduce the secured note to its estimated fair value of $2,475 due to a decline in expected cash flows. The decrease resulted from declining occupancy rates and sales due to the then downturn of the real estate market in China.  See Note 15 for information regarding the fair value of the secured note at December 31, 2012.  The noncontrolling interest and the secured note are reflected as investment in unconsolidated affiliates in the accompanying consolidated balance sheets.

25

NOTE 6. MORTGAGE AND OTHER INDEBTEDNESS

Mortgage and other indebtedness consisted of the following:

	December 31, 2012				December 31, 2011
	Amount		Weighted Average Interest Rate(1)		Amount		Weighted Average Interest Rate (1)
Fixed-rate debt:
Non-recourse loans on operating properties (2)	$	3,776,245	5.43	%	$	3,637,979	5.55	%
Recourse term loans on operating properties	—		—	%	77,112		5.89	%
Financing method obligation (3)	18,264				18,264
Total fixed-rate debt	3,794,509		5.43	%	3,733,355		5.54	%
Variable-rate debt:
Non-recourse term loans on operating properties	123,875		3.36	%	168,750		3.03	%
Recourse term loans on operating properties	97,682		1.78	%	124,439		2.29	%
Construction loans	15,366		2.96	%	25,921		3.25	%
Unsecured lines of credit (4)	475,626		2.07	%	—		—	%
Secured lines of credit	10,625		2.46	%	27,300		3.03	%
Unsecured term loans	228,000		1.82	%	409,590		1.67	%
Total variable-rate debt	951,174		2.20	%	756,000		2.18	%
Total	$	4,745,683	4.79	%	$	4,489,355	4.99	%

(1) Weighted-average interest rate includes the effect of debt premiums (discounts), but excludes amortization of deferred financing costs.

(2) The Operating Partnership had four interest rate swaps on notional amounts totaling $113,885 as of December 31, 2012 and $117,700 as of December 31, 2011 related to its variable-rate loans on operating Properties to effectively fix the interest rates on the respective loans.  Therefore, these amounts are reflected in fixed-rate debt at December 31, 2012 and 2011.

(3) This amount represents the noncontrolling partner's equity contribution related to Pearland Town Center that is accounted for as a financing due to certain terms of the CBL/T-C joint venture agreement. See Note 5 for further information.

(4) The Operating Partnership converted two of its credit facilities from secured facilities to unsecured facilities in November 2012.

Non-recourse and recourse term loans include loans that are secured by Properties owned by the Operating Partnership that have a net carrying value of $4,653,227 at December 31, 2012.

Unsecured Lines of Credit

In November 2012, the Operating Partnership closed on the modification and extension of its $525,000 and $520,000 secured credit facilities. Under the terms of the agreements, of which Wells Fargo Bank, NA serves as the administrative agent for the lender groups, the two secured credit facilities were converted to two unsecured credit facilities ("Facility A" and "Facility B") with an increase in capacity on each to $600,000 for a total capacity of $1,200,000. The Operating Partnership paid aggregate fees of approximately $4,259 in connection with the extension and modification of the facilities. Facility A matures in November 2015 and has a one-year extension option for an outside maturity date of November 2016. Facility B matures in November 2016 and has a one-year extension option for an outside maturity date of November 2017. The extension options on both facilities are at the Operating Partnership's election, subject to continued compliance with the terms of the facilities, and have a one-time extension fee of 0.20% of the commitment amount of each credit facility. Both unsecured facilities bear interest at an annual rate equal to one-month, three-month, or six-month LIBOR plus a range of 155 to 210 basis points based on the Operating Partnership's leverage ratio. The Operating Partnership also pays annual unused facility fees, on a quarterly basis, at rates of either 0.25% or 0.35% based on any unused commitment of each facility. In the event the Operating Partnership obtains an investment grade rating by either Standard & Poor's or Moody's, the Operating Partnership may make a one-time irrevocable election to use its credit rating to determine the interest rate on each facility. If the Operating Partnership were to make such an election, the interest rate on each facility would bear interest at an annual rate equal to one-month, three-month, or six-month LIBOR plus a spread of 100 to 175 basis points. Once the Operating Partnership elects to use its credit rating to determine the interest rate on each facility, it will begin to pay an annual facility fee that ranges from 0.15% to 0.35% of the total capacity of each facility rather than the annual unused commitment fees as described above. The Operating Partnership uses its lines of credit for mortgage retirement, working capital, construction and acquisition purposes, as well as issuances of letters of credit. The two unsecured lines of credit had a weighted average interest rate of 2.07% at December 31, 2012. The following summarizes certain information about the unsecured lines of credit as of December 31, 2012:

26

	Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date
Facility A	600,000		300,297		(1)	November 2015	November 2016
Facility B	600,000		175,329			November 2016	November 2017
	$	1,200,000	$	475,626

(1) There was an additional $601 outstanding on this facility as of December 31, 2012 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit.

See Note 19 for subsequent event related to the unsecured lines of credit.

Secured Line of Credit

In June 2012, the Operating Partnership closed on the extension and modification of its $105,000 secured credit facility. The facility's maturity date was extended to June 2015 and has a one-year extension option, which is at the Operating Partnership's election and subject to continued compliance with the terms of the facility, for an outside maturity date of June 2016. The facility bears interest at an annual rate equal to one-month LIBOR plus a margin of 175 to 275 basis points based on the Operating Partnership's leverage ratio. The line is secured by mortgages on certain of the Operating Partnership’s operating Properties and is used for mortgage retirement, working capital, construction and acquisition purposes. The secured line of credit had a weighted average interest rate of 2.46% at December 31, 2012. The Operating Partnership also pays a non-usage fee based on the amount of unused availability under its secured line of credit at 0.15% of unused availability. The $105,000 secured credit facility had $10,625 outstanding at December 31, 2012.

The secured line of credit is collateralized by six of the Operating Partnership’s Properties, or certain parcels thereof, which had an aggregate net carrying value of $130,786 at December 31, 2012.

See Note 19 for subsequent event related to the secured line of credit.

Unsecured Term Loans

The Operating Partnership has an unsecured term loan of $228,000 that bears interest at LIBOR plus a margin of 1.50% to 1.80% based on the Operating Partnership’s leverage ratio, as defined in the loan agreement.  At December 31, 2012, the outstanding borrowings of $228,000 under the unsecured term loan had a weighted average interest rate of 1.82%.  In 2012, the Operating Partnership exercised its one-year extension option to extend the maturity date from April 2012 to April 2013. The Operating Partnership intends to retire this loan at the maturity date.

The Operating Partnership had an unsecured term loan that bore interest at LIBOR plus a margin ranging from 0.95% to 1.40%, based on the Operating Partnership's leverage ratio. The loan was obtained in February 2008 for the exclusive purpose of acquiring certain Properties from the Starmount Operating Partnership or its affiliates. The Operating Partnership retired the $127,209 unsecured term loan at its maturity in November 2012 with borrowings from its credit facilities.

See Note 19 for subsequent events related to unsecured term loans.

Letters of Credit

At December 31, 2012, the Operating Partnership had additional secured and unsecured lines of credit with a total commitment of $14,000 that can only be used for issuing letters of credit. The letters of credit outstanding under these lines of credit totaled $1,475 at December 31, 2012.

Fixed-Rate Debt

As of December 31, 2012, fixed-rate loans on operating Properties bear interest at stated rates ranging from 4.54% to 8.50%. Outstanding borrowings under fixed-rate loans include net unamortized debt premiums of $12,830 that were recorded when the Operating Partnership assumed debt to acquire real estate assets that was at a net above-market interest rate compared to similar debt instruments at the date of acquisition. Fixed-rate loans generally provide for monthly payments of principal and/or interest and mature at various dates through July 2022, with a weighted average maturity of 4.90 years.

27

2012 Activity

In the fourth quarter of 2012, the Operating Partnership retired a non-recourse loan with a principal balance of $106,895, secured by Monroeville Mall in Monroeville, PA, with borrowings from the Operating Partnership's credit facilities. The loan was scheduled to mature in January 2013.

During the third quarter of 2012, the Operating Partnership retired a $44,480 loan, which was secured by a regional mall, with borrowings from the Operating Partnership's credit facilities. The loan was scheduled to mature in 2012. The Operating Partnership recorded a gain on extinguishment of debt of $178 related to the early retirement of this debt.

During the second quarter of 2012, the Operating Partnership closed on five 10-year non-recourse commercial mortgage-backed securities ("CMBS") loans totaling $342,190. The loans bear interest at fixed rates ranging from 4.750% to 5.099% with a total weighted average interest rate of 4.946%. These loans are secured by WestGate Mall in Spartanburg, SC; Southpark Mall in Colonial Heights, VA; Jefferson Mall in Louisville, KY; Fashion Square Mall in Saginaw, MI and Arbor Place in Douglasville, GA. Proceeds were used to pay down the Operating Partnership's credit facilities and to retire an existing loan with a balance of $30,763 secured by Southpark Mall.

Additionally, during the second quarter of 2012, the Operating Partnership closed on a $22,00010-year non-recourse loan with an insurance company at a fixed interest rate of 5.00% secured by CBL Centers I and II in Chattanooga, TN. The new loan was used to pay down the Operating Partnership's credit facilities, which had been used in April 2012 and February 2012 to retire the balances on the maturing loans on CBL Centers II and I which had principal outstanding balances of $9,078 and $12,818, respectively.

During the first quarter of 2012, the Operating Partnership closed on a $73,00010-year non-recourse CMBS loan secured by Northwoods Mall in Charleston, SC, which bears a fixed interest rate of 5.075%. Proceeds were used to reduce outstanding balances on the Operating Partnership's credit facilities.

Also during the first quarter of 2012, the Operating Partnership retired 14 operating property loans with an aggregate principal balance of $381,568 that were secured by Arbor Place, The Landing at Arbor Place, Fashion Square, Hickory Hollow Mall, The Courtyard at Hickory Hollow, Jefferson Mall, Massard Crossing, Northwoods Mall, Old Hickory Mall, Pemberton Plaza, Randolph Mall, Regency Mall, WestGate Mall and Willowbrook Plaza with borrowings from its secured credit facilities. See Note 4 related to the sale of Massard Crossing, Hickory Hollow Mall and Willowbrook Plaza in 2012.

In the first quarter of 2012, the lender of the non-recourse mortgage loan secured by Columbia Place in Columbia, SC notified the Operating Partnership that the loan had been placed in default. Columbia Place generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $27,265 at December 31, 2012, and a contractual maturity date of September 2013. The lender on the loan receives the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments.

See Note 19 for events related to operating property loans subsequent to December 31, 2012.

2011 Activity

During the fourth quarter of 2011, the Operating Partnership closed on a $140,000ten-year non-recourse mortgage loan secured by Cross Creek Mall in Fayetteville, NC, which bears a fixed interest rate of 4.54%. The Operating Partnership also closed on a $60,000ten-year non-recourse CMBS loan with a fixed interest rate of 5.73% secured by The Outlet Shoppes at Oklahoma City in Oklahoma City, OK. Proceeds were used to retire existing loans with a principal balance of $56,823 and $39,274, respectively, and to pay down the Operating Partnership's secured credit facilities.

During the third quarter of 2011, the Operating Partnership closed on twoten-year, non-recourse mortgage loans totaling $128,800, including a $50,800 loan secured by Alamance Crossing in Burlington, NC and a $78,000 loan secured by Asheville Mall in Asheville, NC. The loans bear interest at fixed rates of 5.83% and 5.80%, respectively. Proceeds were used to repay existing loans with principal balances of $51,847 and $61,346, respectively, and to pay down the Operating Partnership's secured credit facilities.

During the second quarter of 2011, the Operating Partnership closed on two separate ten-year, non-recourse mortgage loans totaling $277,000, including a $185,000 loan secured by Fayette Mall in Lexington, KY and a $92,000 loan secured by Mid Rivers Mall in St. Charles, MO. The loans bear interest at fixed rates of 5.42% and 5.88%, respectively. Proceeds were used to repay existing loans with principal balances of $84,733 and $74,748, respectively, and to pay down the Operating Partnership’s secured credit facilities. In addition, the Operating Partnership retired a loan with a principal balance of $36,317 that was secured by Panama City Mall in Panama City, FL with borrowings from its secured credit facilities.

28

During the first quarter of 2011, the Operating Partnership closed on five separate non-recourse mortgage loans totaling $268,905. These loans have ten-year terms and include a $95,000 loan secured by Parkdale Mall and Parkdale Crossing in Beaumont, TX; a $99,400 loan secured by Park Plaza in Little Rock, AR; a $44,100 loan secured by EastGate Mall in Cincinnati, OH; a $19,800 loan secured by Wausau Center in Wausau, WI; and a $10,605 loan secured by Hamilton Crossing in Chattanooga, TN. The loans bear interest at a weighted average fixed rate of 5.64% and are not cross-collateralized. Proceeds were used to pay down the Operating Partnership's secured credit facilities.

Variable-Rate Debt

Recourse term loans for the Operating Partnership’s operating Properties bear interest at variable interest rates indexed to the LIBOR rate. At December 31, 2012, interest rates on such recourse loans varied from 1.21% to 3.36%. These loans mature at various dates from February 2013 to December 2016, with a weighted average maturity of 2.87 years, and several have extension options of up to one year.

2012 Activity

During the third quarter of 2012, the Operating Partnership retired a $77,500 loan, secured by RiverGate Mall in Nashville, TN, with borrowings from the Operating Partnership's secured credit facilities. The loan was scheduled to mature in September 2012.

During the second quarter of 2012, the Operating Partnership entered into a 75%/25% joint venture, Atlanta Outlet Shoppes, LLC, with a third party to develop, own and operate The Outlet Shoppes at Atlanta, an outlet center development located in Woodstock, GA. 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 275 basis points. The loan matures in August 2015 and has two one-year extensions available, which are at our option. The Operating Partnership has guaranteed 100% of this loan.

Also during the second quarter of 2012, the Operating Partnership closed on the extension and modification of a recourse loan secured by Statesboro Crossing in Statesboro, GA to extend the maturity date to February 2013 and reduce the amount available under the loan from $20,911 to equal the outstanding balance of $13,568. The interest rate remained at one-month LIBOR plus a spread of 1.00%. This loan was retired subsequent to December 31, 2012. See Note 19 for further information.

2011 Activity

During the fourth quarter of 2011, the borrowing amount on a non-recourse loan secured by St. Clair Square in Fairview Heights, IL was increased from $69,375 to $125,000 and extended for a five-year period from December 2011 to December 2016, with a reduction in the interest rate to LIBOR plus 300 basis points. Additionally, the Operating Partnership closed a $58,000 recourse mortgage loan secured by The Promenade in D'lberville, MS with a three-year initial term and two two-year extensions. The loan bears interest of 75% of LIBOR plus 175 basis points. The Operating Partnership also closed on the extension of a $3,300 loan secured by Phase II of Hammock Landing in West Melbourne, FL. The loan's maturity date was extended to November 2013 at its existing interest rate of LIBOR plus a margin of 2.00%.

During the first quarter of 2011, the Operating Partnership closed on four separate loans totaling $120,165. These loans have five-year terms and include a $36,365 loan secured by Stroud Mall in Stroud, PA; a $58,100 loan secured by York Galleria in York, PA; a $12,100 loan secured by Gunbarrel Pointe in Chattanooga, TN; and a $13,600 loan secured by CoolSprings Crossing in Nashville, TN. These four loans have partial-recourse features totaling $7,540 at December 31, 2011, which decreases as the aggregate principal amount outstanding on the loans is amortized. The loans bear interest at LIBOR plus a margin of 2.40% and are not cross-collateralized. Proceeds were used to pay down the Operating Partnership's secured credit facilities. The Operating Partnership has interest rate swaps in place for the full term of each five-year loan to effectively fix the interest rates. As a result, these loans bear interest at a weighted average fixed rate of 4.57%. See Interest Rate Hedge Instruments below for additional information.

Construction Loan

In the third quarter of 2012, the Operating Partnership retired a $2,023 land loan, secured by The Forum at Grandview in Madison, MS, with borrowings from the Operating Partnership's secured credit facilities. The loan was scheduled to mature in September 2012.

29

Covenants and Restrictions

The agreements to the unsecured and secured lines of credit contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum net worth requirements, minimum unencumbered asset and interest ratios, maximum secured indebtedness ratios and limitations on cash flow distributions.  The Operating Partnership believes that it was in compliance with all covenants and restrictions at December 31, 2012.

The following presents the Operating Partnership's compliance with key unsecured debt covenant compliance ratios as of December 31, 2012:

Ratio	Required	Actual
Debt to total asset value	< 60%	52.6%
Ratio of unencumbered asset value to unsecured indebtedness	> 1.60x	3.13x
Ratio of unencumbered NOI to unsecured interest expense	> 1.75x	11.41x
Ratio of EBITDA to fixed charges (debt service)	> 1.50x	2.00x

The agreements to the two $600,000 unsecured credit facilities described above, each with the same lead lender, contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000 or any non-recourse indebtedness greater than $150,000 (for the Operating Partnership's ownership share) of CBL, the Operating Partnership or any Subsidiary, as defined, will constitute an event of default under the agreements to the credit facilities. The credit facilities also restrict the Operating Partnership's ability to enter into any transaction that could result in certain changes in its, or CBL's, ownership or structure as described under the heading “Change of Control/Change in Management” in the agreements to the credit facilities. The obligations of the Operating Partnership under the agreement also will be unconditionally guaranteed, jointly and severally, by any subsidiary of the Operating Partnership to the extent such subsidiary becomes a material subsidiary and is not otherwise an excluded subsidiary, as defined in the agreement. See Note 19 for event related to debt covenants subsequent to December 31, 2012.

The agreement to the $228,000 unsecured term loan described above, with the same lead lender as the unsecured credit facilities, contains default and cross-default provisions customary for transactions of this nature (with applicable customary grace periods) in the event (i) there is a default in the payment of any indebtedness owed by the Operating Partnership to any institution which is a part of the lender group for the unsecured term loan, or (ii) there is any other type of default with respect to any indebtedness owed by the Operating Partnership to any institution which is a part of the lender group for the unsecured term loan and such lender accelerates the payment of the indebtedness owed to it as a result of such default.  The unsecured term loan agreement provides that, upon the occurrence and continuation of an event of default, payment of all amounts outstanding under the unsecured term loan and those facilities with which the agreement references cross-default provisions may be accelerated and the lenders' commitments may be terminated.  Additionally, any default in the payment of any recourse indebtedness greater than 1% of gross asset value or default in the payment of any non-recourse indebtedness greater than 3% of gross asset value of CBL, the Operating Partnership and Significant Subsidiaries, as defined, regardless of whether the lending institution is a part of the lender group for the unsecured term loan, will constitute an event of default under the agreement to the unsecured term loan.

Several of the Operating Partnership’s malls/open-air centers, associated centers and community centers, in addition to the corporate office building are owned by special purpose entities that are included in the Operating Partnership’s consolidated financial statements. The sole business purpose of the special purpose entities is to own and operate these Properties. The real estate and other assets owned by these special purpose entities are restricted under the loan agreements in that they are not available to settle other debts of the Operating Partnership. However, so long as the loans are not under an event of default, as defined in the loan agreements, the cash flows from these Properties, after payments of debt service, operating expenses and reserves, are available for distribution to the Operating Partnership.

30

Scheduled Principal Payments

As of December 31, 2012, the scheduled principal amortization and balloon payments of the Operating Partnership’s consolidated debt, excluding extensions available at the Operating Partnership’s option, on all mortgage and other indebtedness, including construction loans and lines of credit, are as follows:

2013	$	503,171
2014	714,874
2015	559,012
2016	779,514
2017	552,682
Thereafter	1,623,600
	4,732,853
Net unamortized premiums	12,830
	$	4,745,683

Of the $503,171 of scheduled principal payments in 2013, $202,812 relates to the maturing principal balances of six operating property loans, $228,000 relates to one unsecured term loan and $72,359 represents scheduled principal amortization. Two maturing operating property loans with principal balances totaling $26,200 outstanding as of December 31, 2012 have extensions available at the Operating Partnership’s option, leaving approximately $404,612 of loan maturities in 2013 that the Operating Partnership intends to retire or refinance.  Subsequent to December 31, 2012, the Operating Partnership retired two operating property loans with an aggregate balance of $77,121 as of December 31, 2012.

The Operating Partnership has extension options available, at its election and subject to continued compliance with the terms of the facilities, related to the maturities of its unsecured and secured credit facilities. The credit facilities may be used to retire loans maturing in 2013 as well as to provide additional flexibility for liquidity purposes.

Interest Rate Hedging Instruments

     The Operating Partnership records its derivative instruments in its consolidated balance sheets at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the derivative has been designated as a hedge and, if so, whether the hedge has met the criteria necessary to apply hedge accounting.

The Operating Partnership’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.  To accomplish these objectives, the Operating Partnership primarily uses interest rate swaps and caps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Operating Partnership making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

     The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in accumulated other comprehensive income (loss) (“AOCI/L”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.  Such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

In the first quarter of 2012, the Operating Partnership entered into a $125,000 interest rate cap agreement (amortizing to $122,375) to hedge the risk of changes in cash flows on the borrowings of one of its properties equal to the cap notional. The interest rate cap protects the Operating Partnership from increases in the hedged cash flows attributable to overall changes in 3-month LIBOR above the strike rate of the cap on the debt. The strike rate associated with the interest rate cap is 5.0%. The cap matures in January 2014.

31

As of December 31, 2012, the Operating Partnership had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative	Number of Instruments	Notional Amount
Interest Rate Cap	1	$	123,875
Interest Rate Swaps	4	$	113,885

The following tables provide further information relating to the Operating Partnership’s interest rate derivatives that were designated as cash flow hedges of interest rate risk as of December 31, 2012 and 2011:

Instrument Type	Location in Consolidated Balance Sheet	Notional Amount	Designated Benchmark Interest Rate	Strike Rate		Fair Value at 12/31/12			Fair Value at 12/31/11			Maturity Date
Cap	Intangible lease assets and other assets	$ 123,875 (amortizing to $122,375)	3-month LIBOR	5.000	%	$	—		$	—		Jan 2014
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$ 55,057 (amortizing to $48,337)	1-month LIBOR	2.149	%	$	(2,775	)	$	(2,674	)	Apr 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$ 34,469 (amortizing to $30,276)	1-month LIBOR	2.187	%	(1,776		)	(1,725		)	Apr 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$ 12,887 (amortizing to $11,313)	1-month LIBOR	2.142	%	(647		)	(622		)	Apr 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$ 11,472 (amortizing to $10,083)	1-month LIBOR	2.236	%	(607		)	(596		)	Apr 2016
						$	(5,805	)	$	(5,617	)

HedgingInstrument	Gain (Loss) Recognized in OCI/L (Effective Portion)								Location of Losses Reclassified from AOCI/L into Earnings (Effective Portion)	Loss Recognized in Earnings (Effective Portion)									Location of Gain (Loss) Recognized in Earnings (Ineffective Portion)	Gain Recognized in Earnings (Ineffective Portion)
	2012			2011			2010			2012			2011			2010				2012		2011		2010
Interest rate contracts	$	(207	)	$	(5,521	)	$	2,742	Interest Expense	$	(2,267	)	$	(1,904	)	$	(2,883	)	Interest Expense	$	—	$	—	$	23

As of December 31, 2012, the Operating Partnership expects to reclassify approximately $2,219 of losses currently reported in accumulated other comprehensive income to interest expense within the next twelve months due to the amortization of its outstanding interest rate contracts.  Fluctuations in fair values of these derivatives between December 31, 2012 and the respective dates of termination will vary the projected reclassification amount.

See Notes 2 and 15 for additional information regarding the Operating Partnership’s interest rate hedging instruments.

32

NOTE 7. PARTNERS’ CAPITAL

Partners in the Operating Partnership hold their ownership through common and special common units of limited partnership interest, hereinafter referred to as "common units." Each limited partner has the right to exchange all or a portion of its common units for shares of CBL's common stock, or at CBL's election, their cash equivalent. When an exchange for common stock occurs, CBL assumes the limited partner's common units in the Operating Partnership. The number of shares of common stock received by a limited partner of the Operating Partnership upon exercise of its exchange rights will be equal, on a one-for-one basis, to the number of common units exchanged by the limited partner. If CBL elects to pay cash, the amount of cash paid by the Operating Partnership to redeem the limited partner's common units will be based on the five-day trailing average of the trading price at the time of exercise of the shares of common stock that would otherwise have been received by the limited partner in the exchange. Neither the common units in the Operating Partnership nor the shares of common stock of CBL are subject to any right of mandatory redemption. A common unit and a share of CBL's common stock have essentially the same economic characteristics, as they effectively participate equally in the net income and distributions of the Operating Partnership. For each share of common stock issued by CBL, the Operating Partnership has issued a corresponding number of common units to CBL in exchange for the proceeds from the stock issuance. The Operating Partnership had 190,855,239 and 190,380,616 common units outstanding as of December 31, 2012 and 2011, respectively.

The assets and liabilities allocated to the Operating Partnership's redeemable common units and common units are based on their ownership percentages of the Operating Partnership at December 31, 2012 and 2011. The ownership percentages are determined by dividing the number of common units held by each of the holders of redeemable common units and holders of common units at December 31, 2012 and 2011 by the total common units outstanding at December 31, 2012 and 2011, respectively

Income is allocated to the Operating Partnership's redeemable common units and common units based on their weighted average ownership during the year. The ownership percentages are determined by dividing the weighted average number of the redeemable common units and common units held by each of the partners by the total weighted average number of common units outstanding during the year.

A change in the number of common units changes the percentage ownership of all partners of the Operating Partnership. As a result, an allocation is made between redeemable common units and common units in the Operating Partnership in the accompanying balance sheet to reflect the change in ownership of the Operating Partnership's underlying equity when there is a change in the number of common units outstanding. During 2012, 2011 and 2010, the Operating Partnership allocated $3,197, $3,005 and $3,139, respectively, from partners' capital to redeemable common units.

The total redeemable common units in the Operating Partnership was $33,835 and $26,036 at December 31, 2012 and 2011, respectively.

Preferred Units

CBL's authorized preferred stock consists of 15,000,000 shares at $0.01 par value per share. The Operating Partnership issues an equivalent number of preferred units to CBL in exchange for the contribution of the proceeds from CBL to the Operating Partnership when CBL issues preferred stock.

In October 2012, CBL completed an underwritten public offering of 6,900,000 depositary shares, each representing 1/10th of a share of its newly designated Series E Preferred Stock at $25.00 per depositary share. CBL contributed the net proceeds from the offering of $166,636 to the Operating Partnership in exchange for 690,000 Series E Preferred Units of the Operating Partnership. A portion of the net proceeds were used to redeem all of the Operating Partnership's Series C Preferred Units, which were held by CBL, for an aggregate liquidation preference of $115,000 plus $891 related to accrued and unpaid dividends for an aggregate redemption amount of $115,891. The remaining net proceeds of $50,745 were used to reduce outstanding balances on the Operating Partnership's credit facilities. The Operating Partnership will pay cumulative distributions on the Series E Preferred Units from the date of original issuance in the amount of $16.5625 per preferred unit each year, which is equivalent to 6.625% of the $250.00 liquidation preference per preferred unit. The Operating Partnership may not redeem the Series E Preferred Units before October 12, 2017, except in limited circumstances to preserve CBL's REIT status or in connection with a change of control. On or after October 12, 2017, the Operating Partnership may, at its option, redeem the Series E Preferred Units in whole at any time or in part from time to time by paying $250.00 per preferred unit, plus any accrued and unpaid dividends up to, but not including, the date of redemption. The Series E Preferred Units generally have no stated maturity and will not be subject to any sinking fund or mandatory redemption. The Series E Preferred Units are not convertible into any of CBL's securities, except under certain circumstances in connection with a change of control. Owners of the Series E Preferred

33

Units generally have no voting rights except under distribution default.

The Operating Partnership had 1,815,000 7.375% Series D Preferred Units outstanding as of December 31, 2012 and 2011. The Series D Preferred Units were issued to CBL in exchange for the net proceeds received by CBL in a series of offerings of an aggregate of 18,150,000 depositary shares, each representing 1/10^th of a share of CBL's 7.375% Series D Preferred Stock. The Series D Preferred Units have a liquidation preference of $250.00 per preferred unit. The distributions on the Series D Preferred Units are cumulative, accrue from the date of issuance and are payable quarterly in arrears at a rate of $18.4375 per preferred unit per annum. The Series D Preferred Units have no stated maturity, are not subject to any sinking fund or mandatory redemption, and are not convertible into any other securities of CBL. The Operating Partnership may redeem preferred units, in whole or in part, at any time for a cash redemption price of $250.00 per share plus accrued and unpaid dividends.

On November 5, 2012, the Operating Partnership redeemed all 460,000 Series C Preferred Units for $115,891. The Operating Partnership recorded a charge to distributions to preferred unitholders of $3,773 upon redemption to write off direct issuance costs related to the Series C Preferred Units.

Redeemable Common Units

Redeemable common units include a partnership interest in the Operating Partnership for which the partnership agreement includes redemption provisions that may require the Operating Partnership to redeem the partnership interest for real property. In July 2004, the Operating Partnership issued 1,560,940 Series S special common units (“S-SCUs”), all of which are outstanding as of December 31, 2012, in connection with the acquisition of Monroeville Mall. Under the terms of the Operating Partnership's limited partnership agreement, the holder of the S-SCUs has the right to exchange all or a portion of its partnership interest for shares of CBL's common stock or, at CBL's election, their cash equivalent. The holder has the additional right to, at any time after the seventh anniversary of the issuance of the S-SCUs, require the Operating Partnership to acquire a qualifying property and distribute it to the holder in exchange for the S-SCUs. Generally, the acquisition price of the qualifying property cannot be more than the lesser of the consideration that would be received in a normal exchange, as discussed above, or $20,000, subject to certain limited exceptions. Should the consideration that would be received in a normal exchange exceed the maximum property acquisition price as described in the preceding sentence, the excess portion of its partnership interest could be exchanged for shares of CBL's stock or, at CBL's election, their cash equivalent. The S-SCUs received a minimum distribution of $2.53825 per unit per year for the first five years, and receive a minimum distribution of $2.92875 per unit per year thereafter.

Common Units

Series L Special Common Units

In June 2005, the Operating Partnership issued 571,700 L-SCUs, all of which are outstanding as of December 31, 2012, in connection with the acquisition of Laurel Park Place. The L-SCUs receive a minimum distribution of $0.7572 per unit per quarter ($3.0288 per unit per year). Upon the earlier to occur of June 1, 2020, or when the distribution on the common units exceeds $0.7572 per unit for four consecutive calendar quarters, the L-SCUs will thereafter receive a distribution equal to the amount paid on the common units. In December 2012, the Operating Partnership issued 622,278 common units valued at $14,000 to acquire the remaining 30% noncontrolling interest in Laurel Park Place. The $14,000 value of the noncontrolling interest was recorded as a deferred purchase liability in Accounts Payable and Accrued Liabilities on the consolidated balance sheet upon the original acquisition of Laurel Park Place in 2005.

Series K Special Common Units

In November 2005, the Operating Partnership issued 1,144,924 K-SCUs, all of which are outstanding as of December 31, 2012, in connection with the acquisition of Oak Park Mall, Eastland Mall and Hickory Point Mall. The K-SCUs received a dividend at a rate of 6.0%, or $2.85 per K-SCU, for the first year following the close of the transaction and receive a dividend at a rate of 6.25%, or $2.96875 per K-SCU, thereafter. When the quarterly distribution on the Operating Partnership's common units exceeds the quarterly K-SCU distribution for four consecutive quarters, the K-SCUs will receive distributions at the rate equal to that paid on the Operating Partnership's common units. At any time following the first anniversary of the closing date, the holders of the K-SCUs may exchange them, on a one-for-one basis, for shares of CBL's common stock or, at CBL's election, their cash equivalent.

Series J Special Common Units

During 2011, a holder of 125,100 J-SCU's exercised its conversion rights. CBL was requested to exchange common

34

stock for these units, and elected to do so. Additionally during 2011, the Operating Partnership converted 15,435,754 J-SCUs, which represented all of the outstanding J-SCUs, to common units pursuant to its rights to do so. Prior to the conversion, the J-SCUs received a minimum distribution equal to $0.3628125 per unit per quarter ($1.45125 per unit per year), subject to certain adjustments if the distribution on the common units was equal to or less than $0.21875 for four consecutive quarters. After March 31, 2011, the common units issued in the conversion receive a distribution equal to that paid on all other common units.

Common Unit Issuances, Exchanges and Redemptions

During 2012, holders of 12,690,628 common units of limited partnership interest in the Operating Partnership exercised their conversion rights. CBL elected to pay cash of $3,965 for 224,628 common units and to issue 12,466,000 shares of common stock in exchange for the remaining common units.

During the fourth quarter of 2011, holders of 401,324 common units of limited partnership interest in the Operating

Partnership exercised their conversion rights. CBL elected to pay cash of $5,869 for these units in the first quarter of 2012.

During 2010, holders of 9,807,013 J-SCUs exercised their conversion rights. CBL was requested to exchange common stock for these units, and elected to do so.

See Note 19 for information on at-the-market equity offering program (the "ATM program") that began subsequent to December 31, 2012.

Distributions

On November 28, 2012, the Operating Partnership declared distributions of $1,143 and $42,547 to the Operating Partnership's redeemable common units and common units, respectively. The distributions were paid on January 16, 2013. This distribution represented a distribution of $0.22 per unit for each common unit and $0.7322 to $0.7572 per unit for certain special common units in the Operating Partnership. The total distribution is included in accounts payable and accrued liabilities at December 31, 2012.

On November 30, 2011, the Operating Partnership declared distributions of $1,143 and $40,574 to the Operating Partnership's redeemable common units and common units, respectively. The distributions were paid on January 16, 2012. This distribution represented a distribution of $0.22 per unit for each common unit and $0.7322 to $0.7572 per unit for certain special common units in the Operating Partnership. The total distribution is included in accounts payable and accrued liabilities at December 31, 2011.

NOTE 8. REDEEMABLE INTERESTS AND NONCONTROLLING INTERESTS

Redeemable noncontrolling interests includes the aggregate noncontrolling ownership interest in five of the Operating Partnership’s 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 redeemable noncontrolling interests includes the third party interest in the Operating Partnership's subsidiary that provides security and maintenance services. The total redeemable noncontrolling interest was $430,247 and $430,069 at December 31, 2012 and 2011, respectively.

Redeemable noncontrolling preferred joint venture interest includes the perpetual preferred joint venture units (“PJV units”) issued to Westfield Group (“Westfield”) for its preferred interest in CW Joint Venture, LLC, an Operating Partnership-controlled entity (“CWJV”), consisting of four of the Operating Partnership’s consolidated subsidiaries.  Activity related to the redeemable noncontrolling preferred joint venture interest represented by the PJV units is as follows: 

	Year Ended December 31,
	2012			2011
Beginning Balance	$	423,834		$	423,834
Net income attributable to redeemable noncontrolling      preferred joint venture interest	20,686			20,637
Distributions to redeemable noncontrolling      preferred joint venture interest	(20,686		)	(20,637		)
Ending Balance	$	423,834		$	423,834

35

See Note 14 for additional information regarding the PJV units.

The Operating Partnership had 26 and 18 consolidated subsidiaries at December 31, 2012 and 2011, respectively, that had interests 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. The total noncontrolling interests in consolidated subsidiaries was $63,496 and $4,280 at December 31, 2012 and 2011, respectively.

The assets and liabilities allocated to the redeemable noncontrolling interests and noncontrolling interests are based on the third parties’ ownership percentages in each subsidiary at December 31, 2012 and 2011. Income is allocated to the redeemable noncontrolling interests and noncontrolling interests based on the third parties’ weighted average ownership in each subsidiary during the year.

Variable Interest Entities

Kirkwood Mall Mezz, LLC

On December 27, 2012, the Operating Partnership entered into a joint venture, Kirkwood Mall Mezz, LLC, to acquire a 49% ownership interest in Kirkwood Mall located in Bismarck, ND. The Operating Partnership executed an agreement to acquire the remaining 51% interest within 90 days subject to lender approval to assume $40,368 of non-recourse debt. See Note 3 for additional information. The Operating Partnership determined that its investment in this joint venture represents a variable interest in a VIE and that the Operating Partnership is the primary beneficiary since under the terms of the agreement the Operating Partnership's equity investment is at risk while the third party has a fixed price for which it will sell its remaining 51% equity interest to the Operating Partnership. As a result, the joint venture is presented in the accompanying consolidated financial statements as of December 31, 2012 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest. At December 31, 2012, this joint venture had total assets of $102,936 and a mortgage note payable of $40,368.

Gettysburg Outlet Holding, LLC

In the second quarter of 2012, the Operating Partnership 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 Operating Partnership holds a 50% ownership interest in this joint venture. The Operating Partnership determined that its investment in this joint venture represents a variable interest in a VIE and that the Operating Partnership is the primary beneficiary since it has the power to direct activities of the joint venture that most significantly impact the joint venture's economic performance. As a result, the joint venture is presented in the accompanying consolidated financial statements as of December 31, 2012 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest. At December 31, 2012, this joint venture had total assets of $45,047 and a mortgage note payable of $40,170.

El Paso Outlet Center Holding, LLC

In the second quarter of 2012, the Operating Partnership 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 Operating Partnership holds a 75% ownership interest in the joint venture. The Operating Partnership determined that its investment in this joint venture represents a variable interest in a VIE and that the Operating Partnership is the primary beneficiary since it has the power to direct activities of the joint venture that most significantly impact the joint venture's economic performance. As a result, the joint venture is presented in the accompanying consolidated financial statements as of December 31, 2012 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest. At December 31, 2012, this joint venture had total assets of $121,499 and a mortgage note payable of $66,367.

Imperial Valley Commons, L.P.

In December 2012, the Operating Partnership completed its acquisition of the 40% noncontrolling interest in Imperial Valley Commons, L.P. The Operating Partnership previously had a 60% ownership interest in the joint venture with a third party for the potential development of Imperial Valley Commons, a community retail shopping center in El Centro, CA.  The Operating Partnership determined that its investment represented a variable interest in a VIE and that the Operating Partnership was the primary beneficiary since it had the ability to direct the activities of the joint venture that most significantly impacted the joint venture’s economic performance.  As a result, the joint venture was presented in the accompanying consolidated financial statements as of December 31, 2011 on a consolidated basis, with any interests of the third party reflected as noncontrolling interest.  At December 31, 2011, this joint venture had total assets of $26,680 and was not encumbered. Following the Operating Partnership's acquisition of the noncontrolling interest in December 2012, this subsidiary is now wholly-owned, and is no longer a VIE

36

PPG Venture I Limited Partnership

The Operating Partnership had a 10% ownership interest and was the primary beneficiary in the PPG Venture I Limited Partnership. As a result, the Operating Partnership consolidated this joint venture. In 2011, the joint venture owned and operated Willowbrook Plaza in Houston, TX, Massard Crossing in Ft. Smith, AR and Pemberton Plaza in Vicksburg, MS. Willowbrook Plaza and Massard Crossing were sold in 2012. See Note 4 for additional information related to these dispositions. At December 31, 2011, this joint venture had total assets of $49,373 and a mortgage note payable of $34,349. Pemberton Plaza was distributed out of the joint venture to the Operating Partnership prior to December 31, 2012 and the joint venture was dissolved in January 2013.

NOTE 9. MINIMUM RENTS

The Operating Partnership receives rental income by leasing retail shopping center space under operating leases. Future minimum rents are scheduled to be received under non-cancellable tenant leases at December 31, 2012, as follows:

2013	$	606,929
2014	531,262
2015	469,128
2016	398,254
2017	325,306
Thereafter	1,071,570
	$	3,402,449

Future minimum rents do not include percentage rents or tenant reimbursements that may become due.

NOTE 10. MORTGAGE AND OTHER NOTES RECEIVABLE

Each of the Operating Partnership's mortgage notes receivable is collateralized by either a first mortgage, a second mortgage or by an assignment of 100% of the partnership interests that own the real estate assets.  Other notes receivable include amounts due from tenants or government sponsored districts and unsecured notes received from third parties as whole or partial consideration for property or investments.  Interest rates on mortgage and other notes receivable range from 2.7% to 12.0%, with a weighted average interest rate of 7.33% and 8.76% at December 31, 2012 and 2011, respectively. Maturities of these notes receivable range from May 2014 to January 2047.

In May 2012, Woodstock GA Investments, LLC, a joint venture in which the Operating Partnership owns a 75.0% interest, entered into a $6,581 loan agreement with an entity that owns an interest in land in Woodstock, GA, adjacent to the site of The Outlet Shoppes at Atlanta. The Operating Partnership owns a 75.0% interest in The Outlet Shoppes at Atlanta through its joint venture Atlanta Outlet Shoppes, LLC. The note receivable bears interest of 10.0% through its maturity date in May 2014 and is secured by the entity's interest in the adjacent land.

In September 2011, the Operating Partnership and a noncontrolling interest investor purchased a mezzanine loan with a face amount of $5,879 for $5,300, which represented a discount of $579. The borrower under the mezzanine loan was an entity that owned The Outlet Shoppes at Gettysburg, an outlet shopping center located in Gettysburg, PA. The loan bore interest at the greater of LIBOR plus 900 basis points or 10% and matured on February 11, 2016. The terms of the mezzanine loan agreement provided that the Operating Partnership and its noncontrolling interest investor could, subject to approval of the senior lender, convert the mezzanine loan into equity of the borrower. Upon conversion, the Operating Partnership and noncontrolling investor would own 50.0% and 12.6%, respectively, of the borrower. The terms also provided that the Operating Partnership could elect to acquire an additional 10% interest in borrower for a total interest of 60%. In April 2012, the Operating Partnership and its noncontrolling interest partner exercised their rights under the terms of the agreement with the borrower and converted the mezzanine loan into a member interest in the outlet shopping center. See Note 3 for additional information.

In December 2011, the Operating Partnership entered into a loan agreement pursuant to which the Operating Partnership loaned $9,150 to an entity that owned The Outlet Shoppes at El Paso, an outlet shopping center located in El Paso, TX. The note receivable bore interest of 13.0% through June 9, 2013, and thereafter, at the greater of 13.0% or LIBOR plus 900 basis points. The loan matured upon the earlier of (i) 60 days prior to the maturity date of the senior loan on the outlet shopping center or (ii) the date on which the senior loan was fully repaid. The terms of the loan agreement provided that if the Operating Partnership did

37

not elect to acquire a 75% interest in the borrower, the Operating Partnership could convert the loan into a non-voting common interest in the borrower, subject to the approval of the senior lender. In April 2012, the Operating Partnership acquired a 75.0% interest in the outlet shopping center and the borrower used a portion of the proceeds to repay the $9,150 mezzanine loan to the Operating Partnership. See Note 3 for additional information.

The Operating Partnership reviews its mortgage and other notes receivable to determine if the balances are realizable based on factors affecting the collectibility of those balances.  Factors may include credit quality, timeliness of required periodic payments, past due status and management discussions with obligors. During the first quarter of 2011, the Operating Partnership was notified that a receivable due in March 2011 of $3,735 would not be repaid.  The receivable was secured by land and, as such, the Operating Partnership recorded an allowance for credit losses of $1,500 in other expense and wrote down the amount of the note receivable to the estimated fair value of the land.  The Operating Partnership did not accrue any interest on the receivable for the three months ended March 31, 2011 and has written off any interest that was accrued and outstanding on the loan.  The Operating Partnership gained title to the land during the third quarter of 2011 and reclassified the balance of the note receivable to land.  During the third quarter of 2011 the Operating Partnership wrote off a note receivable from a tenant in the amount of $400.  A rollforward of the allowance for credit losses for the year ended December 31, 2011 is as follows: 

Beginning Balance, January 1, 2011	$	—
Additions in allowance charged to expense	1,900
Reduction for charges against allowance	(1,900		)
Ending Balance, December 31, 2011	$	—

As of December 31, 2012, the Operating Partnership believes that its mortgage and other notes receivable balance of $25,967 is fully collectible.

See subsequent event related to Woodstock GA Investments, LLC note receivable in Note 19.

38

NOTE 11. SEGMENT INFORMATION

The Operating Partnership measures performance and allocates resources according to property type, which is determined based on certain criteria such as type of tenants, capital requirements, economic risks, leasing terms, and short- and long-term returns on capital. Rental income and tenant reimbursements from tenant leases provide the majority of revenues from all segments. The accounting policies of the reportable segments are the same as those described in Note 2. Information on the Operating Partnership’s reportable segments is presented as follows:

Year Ended December 31, 2012	Malls			Associated Centers			Community Centers			All Other (1)			Total
Revenues	$	929,423		$	42,380		$	11,966		$	48,908		$	1,032,677
Property operating expenses (2)	(296,298		)	(10,480		)	(4,084		)	22,517			(288,345		)
Interest expense	(216,217		)	(8,453		)	(2,568		)	(17,194		)	(244,432		)
Other expense	—			—			—			(25,078		)	(25,078		)
Gain on sales of real estate assets	1,188			202			677			219			2,286
Segment profit	$	418,096		$	23,649		$	5,991		$	29,372		$	477,108
Depreciation and amortization expense													(265,192		)
General and administrative expense													(51,251		)
Interest and other income													3,955
Gain on extinguishment of debt													265
Loss on impairment of real estate (4)													(24,379		)
Gain on investment													45,072
Equity in earnings of unconsolidated affiliates													8,313
Income tax provision													(1,404		)
Income from continuing operations													$	192,487
Total assets	$	6,213,801		$	302,225		$	203,261		$	370,938		$	7,090,225
Capital expenditures (3)	$	608,190		$	6,630		$	13,884		$	76,319		$	705,023

Year Ended December 31, 2011	Malls			Associated Centers			Community Centers			All Other (1)			Total
Revenues	$	951,152		$	41,505		$	10,639		$	46,665		$	1,049,961
Property operating expenses (2)	(304,479		)	(10,689		)	(2,978		)	22,544			(295,602		)
Interest expense	(233,777		)	(8,841		)	(3,894		)	(20,560		)	(267,072		)
Other expense	—			—			—			(28,898		)	(28,898		)
Gain (loss) on sales of real estate assets	(13,329		)	306			1,135			71,284			59,396
Segment profit	$	399,567		$	22,281		$	4,902		$	91,035		517,785
Depreciation and amortization expense													(270,828		)
General and administrative expense													(44,750		)
Interest and other income													2,582
Gain on extinguishment of debt													1,029
Loss on impairment of real estate (4)													(51,304		)
Equity in earnings of unconsolidated affiliates													6,138
Income tax benefit													269
Income from continuing operations (4)													$	160,921
Total assets	$	5,954,414		$	308,858		$	265,675		$	190,612		$	6,719,559
Capital expenditures (3)	$	265,478		$	213,364		$	21,452		$	16,984		$	517,278

39

Year Ended December 31, 2010	Malls			Associated Centers			Community Centers			All Other (1)			Total
Revenues	$	953,893		$	40,311		$	8,140		$	41,474		$	1,043,818
Property operating expenses (2)	(306,168		)	(10,528		)	(1,948		)	25,673			(292,971		)
Interest expense	(228,346		)	(7,794		)	(2,609		)	(42,353		)	(281,102		)
Other expense	—			—			—			(25,523		)	(25,523		)
Gain (loss) on sales of real estate assets	1,754			—			1,144			(11		)	2,887
Segment profit	$	421,133		$	21,989		$	4,727		$	(740	)	447,109
Depreciation and amortization expense													(279,936		)
General and administrative expense													(43,383		)
Interest and other income													3,910
Gain on investment													888
Loss on impairment of real estate (4)													(1,156		)
Equity in losses of unconsolidated affiliates													(188		)
Income tax benefit													6,417
Income from continuing operations (4)													$	133,661
Total assets	$	6,561,098		$	325,395		$	67,252		$	552,809		$	7,506,554
Capital expenditures (3)	$	98,277		$	7,931		$	25,050		$	53,856		$	185,114

(1) The All Other category includes mortgage and other notes receivable, office buildings, the Management Company and the Operating Partnership’s subsidiary that provides security and maintenance services.

(2) Property operating expenses include property operating, real estate taxes and maintenance and repairs.

(3) Amounts include acquisitions of real estate assets and investments in unconsolidated affiliates.  Developments in progress are included in the All Other category.

(4) The referenced amounts for the years ended December 31, 2011 and 2010 have been restated. See Note 2 for more information. Loss on impairment of real estate for the year ended December 31, 2012 consisted of $20,315 related to malls, $3,000 related to associated centers and $1,064 related to all other. Loss on impairment of real estate for the year ended December 31, 2011 consisted of $50,683 related to malls and $621 related to all other.  Loss on impairment of real estate for the year ended December 31, 2010 consisted of $1,156 related to all other.  

NOTE 12. SUPPLEMENTAL AND NONCASH INFORMATION

The Operating Partnership paid cash for interest, net of amounts capitalized, in the amount of $233,220, $265,430 and $278,783 during 2012, 2011 and 2010, respectively.

The Operating Partnership’s noncash investing and financing activities for 2012, 2011 and 2010 were as follows:

	2012			2011			2010
Accrued distributions payable	$	43,689		$	41,717		$	41,833
Additions to real estate assets accrued but not yet paid	22,468			21,771			19,125
Issuance of common units	14,000			—			—
Addition to real estate assets from conversion of note receivable	4,522			—			—
Assumption of mortgage notes payable in acquisitions	220,634			—			—
Consolidation of joint venture:
Decrease in investment in unconsolidated affiliates	(15,643		)	—			(15,175		)
Increase in real estate assets	111,407			—			33,706
Increase in intangible lease and other assets	18,426			—			3,240
Increase in mortgage and other indebtedness	54,169			—			21,753
Deconsolidation of joint ventures:
Decrease in real estate assets	—			365,971			—
Decrease in intangible lease and other assets	—			26,798			—
Decrease in mortgage notes payable	—			(266,224		)	—
Increase in investment in unconsolidated affiliates	—			(123,651		)	—
Decrease in accounts payable and accrued liabilities	—			(4,395		)	—
Additions to real estate assets from forgiveness of mortgage note receivable	—			2,235			—
Notes receivable from sale of interest in unconsolidated affiliate	—			—			1,001
Distribution of real estate assets from unconsolidated affiliate	—			—			12,210
Issuance of additional redeemable noncontrolling preferred joint venture interests	—			—			2,146
Reclassification of mortgage and other notes receivable to other assets	—			—			7,269

40

NOTE 13. RELATED PARTY TRANSACTIONS

Certain executive officers of CBL and members of the immediate family of Charles B. Lebovitz, Chairman of the Board of CBL, collectively have a significant noncontrolling interest in EMJ Corporation ("EMJ"), a construction company that the Operating Partnership engaged to build substantially all of the Operating Partnership’s development Properties. The Operating Partnership paid approximately $49,153, $59,668 and $36,922 to EMJ in 2012, 2011 and 2010, respectively, for construction and development activities. The Operating Partnership had accounts payable to EMJ of $2,096 and $6,721 at December 31, 2012 and 2011, respectively.

Certain executive officers of CBL also collectively had a significant noncontrolling interest in Electrical and Mechanical Group, Inc. (“EMG”), a company to which EMJ subcontracted a portion of its services for the Operating Partnership.  The Operating Partnership had also engaged EMG directly for certain services. EMJ paid approximately $15, $981 and $1,189 to EMG in 2012, 2011 and 2010, respectively, for such subcontracted services. The Operating Partnership paid approximately, $0, $86 and $203, respectively, directly to EMG in 2012, 2011 and 2010 for services which EMG performed directly for the Operating Partnership. EMG was dissolved in 2012.

The Management Company provides management, development and leasing services to the Operating Partnership’s unconsolidated affiliates and other affiliated partnerships. Revenues recognized for these services amounted to $7,531, $4,822 and $4,835 in 2012, 2011 and 2010, respectively.

NOTE 14. CONTINGENCIES

On March 11, 2010, TPD, a subsidiary of the Operating Partnership, filed a lawsuit in the Circuit Court of Harrison County, Mississippi, against M Hanna, Gallet & Associates, Inc., LA Ash, Inc., EMJ and JEA (f/k/a Jacksonville Electric Authority), seeking damages for alleged property damage and related damages occurring at a shopping center development in D'Iberville, Mississippi. EMJ filed an answer and counterclaim denying liability and seeking to recover from TPD the retainage of approximately $327 allegedly owed under the construction contract. Kohl's was granted permission to intervene in the lawsuit and, on April 13, 2011, filed a cross-claim against TPD alleging that TPD is liable to Kohl's for unspecified damages resulting from the actions of the defendants and for the failure to perform the obligations of TPD under a Site Development Agreement with Kohl's. Kohl's also made a claim against the Operating Partnership which guaranteed the performance of TPD under the Site Development Agreement. The case is at the discovery stage.

TPD also has filed claims under several insurance policies in connection with this matter, and there are three pending lawsuits relating to insurance coverage. On October 8, 2010, First Mercury filed an action in the United States District Court for the Eastern District of Texas against M Hanna and TPD seeking a declaratory judgment concerning coverage under a liability insurance policy issued by First Mercury to M Hanna. That case was dismissed for lack of federal jurisdiction and refiled in Texas state court. On June 13, 2011, TPD filed an action in the Chancery Court of Hamilton County, Tennessee against National Union and EMJ seeking a declaratory judgment regarding coverage under a liability insurance policy issued by National Union to EMJ and recovery of damages arising out of National Union's breach of its obligations. In March 2012, Zurich American and Zurich American of Illinois, which also have issued liability insurance policies to EMJ, intervened in that case and the case is set for trial on October 29, 2013. On February 14, 2012, TPD filed claims in the United States District Court for the Southern District of Mississippi against Factory Mutual Insurance Company and Federal Insurance Company seeking a declaratory judgment concerning coverage under certain builders risk and property insurance policies issued by those respective insurers to the Operating Partnership.

Certain executive officers of CBL and members of the immediate family of Charles B. Lebovitz, Chairman of the Board of CBL, collectively have a significant noncontrolling interest in EMJ, a major national construction company that the Operating Partnership engaged to build a substantial number of the Operating Partnership's Properties. EMJ is one of the defendants in the Harrison County, MS and Hamilton County, TN cases described above.

The Operating Partnership also is currently involved in certain litigation that arises in the ordinary course of business. The Operating Partnership does not believe that the pending litigation will have a materially adverse effect on the Operating Partnership's financial position or results of operations.

Additionally, management believes that, based on environmental studies completed to date, any exposure to environmental cleanup will not materially affect the financial position and results of operations of the Operating Partnership.

The Operating Partnership consolidates its investment in a joint venture, CW Joint Venture, LLC ("CWJV") with Westfield.  The terms of the joint venture agreement require that CWJV pay an annual preferred distribution at a rate of 5.0%, which increased to 6.0% on July 1, 2013, on the preferred liquidation value of the PJV units of CWJV that are held by Westfield.  Westfield has the right to have all or a portion of the PJV units redeemed by CWJV with property owned by CWJV,

41

and subsequent to October 16, 2012, with either cash or property owned by CWJV, in each case for a net equity amount equal to the preferred liquidation value of the PJV units. At any time after January 1, 2013, Westfield may propose that CWJV acquire certain qualifying property that would be used to redeem the PJV units at their preferred liquidation value. If CWJV does not redeem the PJV units with such qualifying property (a “Preventing Event”), then the annual preferred distribution rate on the PJV units increases to 9.0% beginning July 1, 2013. The Operating Partnership will have the right, but not the obligation, to offer to redeem the PJV units from January 31, 2013 through January 31, 2015 at their preferred liquidation value, plus accrued and unpaid distributions. The Operating Partnership amended the joint venture agreement with Westfield in September 2012 to provide that, if the Operating Partnership exercises its right to offer to redeem the PJV units on or before August 1, 2013, then the preferred liquidation value will be reduced by $10,000 so long as Westfield does not reject the offer and the redemption closes on or before September 30, 2013. If the Operating Partnership fails to make such an offer, the annual preferred distribution rate on the PJV units increases to 9.0% for the period from July 1, 2013 through June 30, 2016, at which time it decreases to 6.0% if a Preventing Event has not occurred.  If, upon redemption of the PJV units, the fair value of the Operating Partnership’s common stock is greater than $32.00 per share, then such excess (but in no case greater than $26,000 in the aggregate) shall be added to the aggregate preferred liquidation value payable on account of the PJV units.  The Operating Partnership accounts for this contingency using the method prescribed for earnings or other performance measure contingencies.  As such, should this contingency result in additional consideration to Westfield, the Operating Partnership will record the current fair value of the consideration issued as a purchase price adjustment at the time the consideration is paid or payable.

See Note 19 for subsequent events related to TPD and Westfield.    

Guarantees

The Operating Partnership may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on the Operating Partnership’s investment in the joint venture. The Operating Partnership may receive a fee from the joint venture for providing the guaranty. Additionally, when the Operating Partnership issues a guaranty, the terms of the joint venture agreement typically provide that the Operating Partnership may receive indemnification from the joint venture or have the ability to increase its ownership interest.

The Operating Partnership owns a parcel of land in Lee's Summit, MO that it is ground leasing to a third party development company. The third party developed and operates a shopping center on the land parcel. The Operating Partnership has guaranteed 27% of the third party’s construction loan and bond line of credit (the “loans”) of which the maximum guaranteed amount, representing 27% of capacity, is approximately $15,183. In the third quarter of 2012, the loans were modified and extended to December 2012. In August 2012, proceeds from a bond issuance were applied to reduce $10,357 of the outstanding balance on the bond line of credit. Additionally, $1,000 of the construction loan was repaid. The total amount outstanding at December 31, 2012 on the loans was $49,345 of which the Operating Partnership has guaranteed $13,323. The Operating Partnership included an obligation of $192 in the accompanying consolidated balance sheets as of December 31, 2012 and 2011 to reflect the estimated fair value of the guaranty. The loan matured in December 2012. The third party developer is working with the lender to extend the maturity date of the loan. The Operating Partnership has not increased its accrual for the contingent obligation as the Operating Partnership does not believe that this contingent obligation is probable.

     The Operating Partnership has guaranteed 100% of the construction and land loans of West Melbourne I, LLC (“West Melbourne”), an unconsolidated affiliate in which the Operating Partnership owns a 50% interest, of which the maximum guaranteed amount is $45,352.  West Melbourne developed and operates Hammock Landing, a community center in West Melbourne, FL. The total amount outstanding on the loans at December 31, 2012 was $45,352. The guaranty will expire upon repayment of the debt.  The land loan and the construction loan, each representing $2,921 and $42,431, respectively, of the amount outstanding at December 31, 2012, mature in November 2013.   The construction loan has a one-year extension option available. The Operating Partnership recorded an obligation of $478 in the accompanying consolidated balance sheets as of December 31, 2012 and 2011 to reflect the estimated fair value of this guaranty.

The Operating Partnership has guaranteed 100% of the construction loan of Port Orange, an unconsolidated affiliate in which the Operating Partnership owns a 50% interest, of which the maximum guaranteed amount is $63,030.  Port Orange developed and operates The Pavilion at Port Orange, a community center in Port Orange, FL.  The total amount outstanding at December 31, 2012 on the loan was $63,030. The guaranty will expire upon repayment of the debt.  The loan matures in March 2014 and has a one-year extension option available. The Operating Partnership has included an obligation of $961 in the accompanying consolidated balance sheets as of December 31, 2012 and 2011 to reflect the estimated fair value of this guaranty.

The Operating Partnership has guaranteed the lease performance of YTC, an unconsolidated affiliate in which it owns a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms

42

of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. The Operating Partnership has guaranteed YTC’s performance under this agreement up to a maximum of $22,000, which decreases by $800 annually until the guaranteed amount is reduced to $10,000. The guaranty expires on December 31, 2020.  The maximum guaranteed obligation was $17,200 as of December 31, 2012.  The Operating Partnership entered into an agreement with its joint venture partner under which the joint venture partner has agreed to reimburse the Operating Partnership 50% of any amounts it is obligated to fund under the guaranty.  The Operating Partnership did not record an obligation for this guaranty because it determined that the fair value of the guaranty was not material as of December 31, 2012 and 2011.

In July 2012, the Operating Partnership guaranteed 100% of a term loan for Gulf Coast, an unconsolidated affiliate in which the Operating Partnership owns a 50% interest, of which the maximum guaranteed amount is $6,786.  The loan is for the third phase expansion of Gulf Coast Town Center, a shopping center located in Ft. Myers, FL. The total amount outstanding as of December 31, 2012 on the loan was $6,786. The guaranty will expire upon repayment of the debt. The loan matures in July 2015. The Operating Partnership did not record an obligation for this guaranty because it determined that the fair value of the guaranty was not material as of December 31, 2012.

See Note 19 for subsequent events related to guarantees.

Performance Bonds

The Operating Partnership has issued various bonds that it would have to satisfy in the event of non-performance. The total amount outstanding on these bonds was $29,211 and $11,156 at December 31, 2012 and 2011, respectively.

Ground Leases

The Operating Partnership is the lessee of land at certain of its Properties under long-term operating leases, which include scheduled increases in minimum rents.  The Operating Partnership recognizes these scheduled rent increases on a straight-line basis over the initial lease terms.  Most leases have initial terms of at least 20 years and contain one or more renewal options, generally for a minimum of five- or 10-year periods.  Lease expense recognized in the consolidated statements of operations for 2012, 2011 and 2010 was $1,169, $1,967 and $1,718, respectively.

The future obligations under these operating leases at December 31, 2012, are as follows:

2013	$	775
2014	783
2015	790
2016	806
2017	807
Thereafter	28,411
	$	32,372

NOTE 15. FAIR VALUE MEASUREMENTS

The Operating Partnership has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosure, ("ASC 820") based on whether the inputs to valuation techniques are observable or unobservable.  The fair value hierarchy contains three levels of inputs that may be used to measure fair value as follows:

Level 1 – Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.

     Level 2 – Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.

Level 3 – Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability.  Market valuations must often be determined using

43

discounted cash flow methodologies, pricing models or similar techniques based on the Operating Partnership’s assumptions and best judgment.

The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions and risk of nonperformance.

Fair Value Measurements on a Recurring Basis

The following tables set forth information regarding the Operating Partnership’s financial instruments that are measured at fair value on a recurring basis in the accompanying consolidated balance sheets as of December 31, 2012 and 2011:

		Fair Value Measurements at Reporting Date Using
	Fair Value at December 31, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	27,679	16,556	—	11,123
Privately held debt and equity securities	2,475	—	—	2,475
Interest rate cap	—	—	—	—
Liabilities:
Interest rate swaps	5,805	—	5,805	—

			Fair Value Measurements at Reporting Date Using
	Fair Value at December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	$	30,613	$	18,784	$	—	$	11,829
Privately held debt and equity securities	2,475		—		—		2,475
Liabilities:
Interest rate swaps	$	5,617	$	—	$	5,617	$	—

The Operating Partnership recognizes transfers in and out of every level at the end of each reporting period. There were no transfers between Levels 1 and 2 during the years ended December 31, 2012 and 2011.

Intangible lease assets and other assets in the consolidated balance sheets include marketable securities consisting of corporate equity securities, mortgage/asset-backed securities, mutual funds and bonds that are classified as available for sale.  Net unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of AOCI in redeemable common units and partners' capital.  The Operating Partnership recognized realized gains of $224 related to sales of marketable securities during the year ended December 31, 2012. The Operating Partnership recognized realized losses of $22 and $114 related to sales of marketable securities during the years ended December 31, 2011 and 2010, respectively.  During the years ended December 31, 2012, 2011 and 2010, the Operating Partnership did not recognize any write-downs for other-than-temporary impairments.  The fair value of the Operating Partnership’s available-for-sale securities is based on quoted market prices and, thus, is classified under Level 1.  Tax increment financing bonds ("TIF bonds") are classified as Level 3. See Note 2 for a summary of the available-for-sale securities held by the Operating Partnership.

     The Operating Partnership uses interest rate swaps and caps to mitigate the effect of interest rate movements on its variable-rate debt.  The Operating Partnership had four interest rate swaps and one interest rate cap as of December 31, 2012 that qualify as hedging instruments and are designated as cash flow hedges.  The interest rate cap is included in intangible lease assets and other assets and the interest rate swaps are reflected in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.  The swaps and cap have predominantly met the effectiveness test criteria since inception and changes in their fair

44

values are, thus, primarily reported in other comprehensive income (loss) and are reclassified into earnings in the same period or periods during which the hedged item affects earnings. The fair values of the Operating Partnership’s interest rate hedges, classified under Level 2,  are determined using a proprietary model which is based on prevailing market data for contracts with matching durations, current and anticipated LIBOR or other interest basis information, consideration of the Operating Partnership’s credit standing, credit risk of the counterparties and reasonable estimates about relevant future market conditions. See Notes 2 and 6 for additional information regarding the Operating Partnership’s interest rate hedging instruments.

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short-term nature of these financial instruments. Based on the interest rates for similar financial instruments, the carrying value of mortgage and other notes receivable is a reasonable estimate of fair value. The fair value of mortgage and other indebtedness was $5,058,411 and $4,836,028 at December 31, 2012 and 2011, respectively. The fair value was calculated by discounting future cash flows for the notes payable using estimated market rates at which similar loans would be made currently.

The Operating Partnership holds TIF bonds, which mature in 2028, received in a private placement as consideration for infrastructure improvements made by the Operating Partnership related to the development of a community center. The Operating Partnership had the intent and ability to hold the TIF bonds through the recovery period. The bonds were redeemed in January 2013 and the Operating Partnership adjusted the value of the bonds to their net realizable value as of December 31, 2012. See Note 19 for additional information. Due to the significant unobservable estimates and assumptions used in the valuation of the TIF bonds, the Operating Partnership has classified the TIF bonds under Level 3 in the fair value hierarchy. The following table provides a reconciliation of changes between the beginning and ending balances of items measured at fair value on a recurring basis in the tables above that used significant unobservable inputs (Level 3):

	Available For Sale Securities - Government and Government Sponsored Entities
Balance, January 1, 2011	$	11,829
Change in unrealized loss included in other comprehensive income	1,542
Transfer out of Level 3 (1)	(2,248		)
Balance, December 31, 2012	$	11,123

(1) The TIF bonds were adjusted to their net realizable value as of December 31, 2012 with the difference in estimate recorded as a transfer to long-lived assets. See for additional information related to the redemption of the bonds in January 2013.

In February 2007, the Operating Partnership received a secured convertible promissory note from, and a warrant to acquire shares of, Jinsheng, in which the Operating Partnership also holds a cost- method investment. See Note 5 for additional information. The secured convertible note is non-interest bearing and is secured by shares of Jinsheng. Since the secured convertible note is non-interest bearing and there is no active market for Jinsheng’s debt, the Operating Partnership performed an analysis on the note considering credit risk and discounting factors to determine the fair value. The warrant was initially valued using estimated share price and volatility variables in a Black Scholes model. Due to the significant estimates and assumptions used in the valuation of the note and warrant, the Operating Partnership has classified these under Level 3. As part of its investment review as of March 31, 2009, the Operating Partnership determined that its investment in Jinsheng was impaired on an other-than-temporary basis due to a decline in expected future cash flows as a result of declining occupancy and sales related to the then downturn of the real estate market in China. An impairment charge of $2,400 is recorded in the Operating Partnership’s consolidated statement of operations for the year ended December 31, 2009 to reduce the carrying values of the secured convertible note and warrant to their estimated fair values. The warrant expired in January 2010 and had no value. Since the secured convertible note is non-interest bearing and there is no active market for Jinsheng’s debt, the Operating Partnership performed a probability-weighted discounted cash flow analysis using various sale, redemption and IPO exit strategies. The fair value analysis as of December 31, 2012 forecasts a 0% to 10% reduction in estimated cash flows. Sale and IPO scenarios employ capitalization rates ranging from10% to 12% which are discounted 20% for lack of marketability. Due to the significant unobservable estimates and assumptions used in the valuation of the note, the Operating Partnership has classified it under Level 3 in the fair value hierarchy.  Based on the valuation as of December 31, 2012, the Operating Partnership determined that the current balance of the secured convertible note of $2,475 is not impaired. There were no changes in the $2,475 classified as privately held debt and equity securities (Level 3) for the period for the period from January 1, 2011 through December 31, 2012.

The significant unobservable inputs used in the fair value measurement of the Jinsheng note include revenue estimates and marketability discount. Significant increases (decreases) in revenues could result in a significantly higher (lower) fair value

45

measurement whereas significant increases (decreases) in the marketability discount could result in a significantly lower (higher) fair value measurement.

Fair Value Measurements on a Nonrecurring Basis

The Operating Partnership measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Operating Partnership considers both quantitative and qualitative factors in its impairment analysis of long-lived assets. Significant quantitative factors include historical and forecasted information for each property such as net operating income, occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition or the property and tenant mix. Due to the significant unobservable estimates and assumptions used in the valuation of long-lived assets that experienced impairment, the Operating Partnership has classified them under Level 3 in the fair value hierarchy. The fair value analysis for long-lived assets as of December 31, 2012 used various probability-weighted scenarios comparing the property's net book value to the sum of its estimated fair value. Assumptions included up to a 10-year holding period with a sale at the end of the holding period, capitalization rates ranging from 10% to 12% and an estimated sales cost of 1%.

The following tables set forth information regarding the Operating Partnership’s assets that are measured at fair value on a nonrecurring basis, restated for discontinued operations for all periods presented:

			Fair Value Measurements at Reporting Date Using
	Fair Value at December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses
Assets:
Long-lived assets	$	8,604	$	—	$	—	$	8,604	$	23,315

In December 2012, the Operating Partnership acquired the remaining 40.0% interest in Imperial Valley Commons L.P., a joint venture in which the Operating Partnership held a 60.0% ownership interest. In accordance with the Operating Partnership's impairment review process described in Note 2, the Operating Partnership recorded a non-cash impairment of real estate of $20,315 in the fourth quarter of 2012, related to vacant land available for the future expansion of Imperial Valley Commons located in El Centro, CA, to write down the book value as of December 31, 2012 from $25,645 to $5,330. Development of this asset has been negatively impacted by recent economic conditions and other competition in the market area that have affected pre-development leasing activity.

In accordance with the Operating Partnership's impairment review process described in Note 2, the Operating Partnership recorded a non-cash impairment of real estate of $3,000 in the third quarter of 2012 related to The Courtyard at Hickory Hollow, an associated center located in Antioch, TN, to write down the depreciated book value as of September 30, 2012 from $5,843 to an estimated fair value of $2,843 as of the same date. The revenues of The Courtyard at Hickory Hollow accounted for approximately 0.03% of total consolidated revenues for the year ended December 31, 2012. A reconciliation of the property's carrying values for the year ended December 31, 2012 is as follows:

	The Courtyard at Hickory Hollow
Beginning carrying value, January 1, 2012	$	5,754
Capital expenditures	644
Depreciation expense	(124		)
Loss on impairment of real estate	(3,000		)
Ending carrying value, December 31, 2012	$	3,274

During the year ended December 31, 2012, the Operating Partnership recorded an impairment of real estate of $1,064 related to the sale of three outparcels for total net proceeds after selling costs of $1,186, which were less than their total carrying amounts of $2,250.

46

			Fair Value Measurements at Reporting Date Using
	Fair Value at December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses
Asset:
Long-lived asset	$	6,141	$	—	$	—	$	6,141	$	50,683

In accordance with the Operating Partnership's impairment review process described in Note 2, the Operating Partnership recorded a non-cash impairment of real estate of $50,683 in the third quarter of 2011 related to Columbia Place, a mall located in Columbia, SC, to write down the depreciated book value as of September 30, 2011 from $56,746 to an estimated fair value of $6,063 as of the same date. Columbia Place experienced declining cash flows as a result of changes in property-specific market conditions, which were further exacerbated by economic conditions that negatively impacted leasing activity and occupancy. The fair value reflected in the table above reflects the estimated fair value of Columbia Place as of September 30, 2011, adjusted for capital expenditures and depreciation expense during the fourth quarter of 2011.

The revenues of Columbia Place accounted for less than 1.0% of total consolidated revenues for the year ended December 31, 2011. A reconciliation of the property's carrying values for the year ended December 31, 2011 is as follows:

	Columbia Place
Beginning carrying value, January 1, 2011	$	58,207
Capital expenditures	142
Depreciation expense	(1,525		)
Loss on impairment of real estate	(50,683		)
Ending carrying value, December 31, 2011	$	6,141

In September 2011, the Operating Partnership recorded an impairment of real estate of $621 related to an outparcel that was sold for net proceeds after selling costs of $1,477, which was less than its carrying amount of $2,098.

In December 2010, the Operating Partnership recorded an impairment of real estate of $1,156 related to the sale of a parcel of land.

See Note 19 for impairment subsequent to December 31, 2012.

NOTE 16. SHARE-BASED COMPENSATION

As of December 31, 2012, there were two share-based compensation plans under which CBL has outstanding awards. The CBL & Associates Properties, Inc. 2012 Stock Incentive Plan ("the 2012 Plan") was approved by CBL's shareholders in May 2012. The 2012 Plan permits CBL to issue stock options and common stock to selected officers, employees and non-employee directors of CBL and its subsidiaries and affiliates, as defined, including the Operating Partnership, up to a total of 10,400,000 shares. The CBL & Associates Properties, Inc. Second Amended and Restated Stock Incentive Plan ("the 1993 Plan"), which was approved by CBL's shareholders in May 2003, will expire in May 2013 and no new grants will be issued. As the primary operating subsidiary of CBL, the Operating Partnership participates in and bears the compensation expense associated with CBL's share-based compensation plans. The Compensation Committee of the Board of Directors of CBL (the “Committee”) administers the plans.

The share-based compensation cost that was charged against income for the plan was $3,704, $1,687 and $2,201 for 2012, 2011 and 2010, respectively. Share-based compensation cost resulting from share-based awards is recorded at the Management Company, which is a taxable entity. The income tax effect resulting from share-based compensation of $1,815 in 2010 has been reflected as a financing cash flow in the consolidated statements of cash flows. There was no income tax benefit in 2011.   Share-based compensation cost capitalized as part of real estate assets was $128, $166 and $169 in 2012, 2011 and 2010, respectively.

47

Stock Options

Stock options issued under the plans allow for the purchase of common stock at the fair market value of the stock on the date of grant. Stock options granted to officers and employees vest and become exercisable in equal installments on each of the first five anniversaries of the date of grant and expire 10 years after the date of grant. Stock options granted to independent directors are fully vested upon grant; however, the independent directors may not sell, pledge or otherwise transfer their stock options during their board term or for one year thereafter. No stock options have been granted since 2002.

CBL's stock option activity for the year ended December 31, 2012 is summarized as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2012	281,725		$	18.27
Cancelled	(15,375	)	$	18.27
Exercised	(266,350	)	$	18.27
Outstanding at December 31, 2012	—		$	—	0	$	—
Vested and exercisable at December 31, 2012	—		$	—	0	$	—

The total intrinsic value of options exercised during 2012, 2011 and 2010 was $177, $509 and $346, respectively.  

Stock Awards

Under the plans, common stock may be awarded either alone, in addition to, or in tandem with other stock awards granted under the plans. The Committee has the authority to determine eligible persons to whom common stock will be awarded, the number of shares to be awarded and the duration of the vesting period, as defined. Generally, an award of common stock vests either immediately at grant, in equal installments over a period of five years or in one installment at the end of periods up to five years. Stock awarded to independent directors is fully vested upon grant; however, the independent directors may not transfer such shares during their board term.  The Committee may also provide for the issuance of common stock under the plans on a deferred basis pursuant to deferred compensation arrangements. The fair value of common stock awarded under the plans is determined based on the market price of CBL’s common stock on the grant date and the related compensation expense is recognized over the vesting period on a straight-line basis.

A summary of the status of CBL’s stock awards as of December 31, 2012, and changes during the year ended December 31, 2012, is presented below:

	Shares		Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2012	289,290		$	16.09
Granted	295,465		$	19.09
Vested	(228,415	)	$	18.48
Forfeited	(9,480	)	$	16.64
Nonvested at December 31, 2012	346,860		$	17.06

The weighted average grant-date fair value of shares granted during 2012, 2011 and 2010 was $19.09, $17.48 and $10.34, respectively. The total fair value of shares vested during 2012, 2011 and 2010 was $4,573, $1,276 and $914, respectively.

As of December 31, 2012, there was $3,325 of total unrecognized compensation cost related to nonvested stock awards granted under the plans, which is expected to be recognized over a weighted average period of 3.5 years.  In February 2013, CBL granted 155,400 shares of restricted stock to its employees that will vest over the next five years.

48

NOTE 17. EMPLOYEE BENEFIT PLANS

401(k) Plan

The Management Company maintains a 401(k) profit sharing plan, which is qualified under Section 401(a) and Section 401(k) of the Code to cover employees of the Management Company. All employees who have attained the age of 21 and have completed at least 90 days of service are eligible to participate in the plan. The plan provides for employer matching contributions on behalf of each participant equal to 50% of the portion of such participant’s contribution that does not exceed 2.5% of such participant’s compensation for the plan year. Additionally, the Management Company has the discretion to make additional profit-sharing-type contributions not related to participant elective contributions. Total contributions by the Management Company were $929, $820 and $957 in 2012, 2011 and 2010, respectively.

Employee Stock Purchase Plan

CBL maintains an employee stock purchase plan that allows eligible employees to acquire shares of CBL’s common stock in the open market without incurring brokerage or transaction fees. Under the plan, eligible employees make payroll deductions that are used to purchase shares of CBL’s common stock. The shares are purchased at the prevailing market price of the stock at the time of purchase.

Deferred Compensation Arrangements

The Operating Partnership has entered into agreements with certain of its officers that allow the officers to defer receipt of selected salary increases and/or bonus compensation for periods ranging from 5 to 10 years. For certain officers, the deferred compensation arrangements provide that when the salary increase or bonus compensation is earned and deferred, shares of CBL’s common stock issuable under the Amended and Restated Stock Incentive Plan are deemed set aside for the amount deferred. The number of shares deemed set aside is determined by dividing the amount of compensation deferred by the fair value of CBL’s common stock on the deferral date, as defined in the arrangements. The shares set aside are deemed to receive dividends equivalent to those paid on CBL’s common stock, which are then deemed to be reinvested in CBL’s common stock in accordance with CBL’s dividend reinvestment plan. When an arrangement terminates, CBL will issue shares of its common stock to the officer equivalent to the number of shares deemed to have accumulated under the officer’s arrangement. The Operating Partnership will issue common units to CBL equivalent to the number of shares of common stock issued to the officer. The Operating Partnership accrues compensation expense related to these agreements as the compensation is earned during the term of the agreement.

At December 31, 2012 and 2011, there were 0 and 68,906 shares, respectively, that were deemed set aside in accordance with these arrangements.

For other officers, the deferred compensation arrangements provide that their bonus compensation is deferred in the form of a note payable to the officer. Interest accumulates on these notes at 5.0%. When an arrangement terminates, the note payable plus accrued interest is paid to the officer in cash. At December 31, 2012 and 2011, the Operating Partnership had notes payable, including accrued interest, of $124 and $81, respectively, related to these arrangements.

49

NOTE 18. QUARTERLY INFORMATION (UNAUDITED)

Year Ended December 31, 2012	First Quarter		Second Quarter		Third Quarter			Fourth Quarter		Total (1)
Total revenues	$	246,469	$	251,844	$	256,359		$	278,005	$	1,032,677
Income from operations	91,702		94,400		96,331			95,999		378,432
Income from continuing operations (2)	34,533		36,100		37,425			84,429		192,487
Discontinued operations	2,018		3,293		(24,933		)	1,654		(17,968		)
Net income	36,551		39,393		12,492			86,083		174,519
Net income attributable to the Operating Partnership	30,411		34,588		6,298			79,570		150,867
Net income (loss) attributable to common unitholders	19,817		23,994		(4,296		)	63,841		103,356
Basic per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	0.09	$	0.12	$	0.09		$	0.33	$	0.63
Net income (loss) attributable to common unitholders	$	0.10	$	0.13	$	(0.02	)	$	0.34	$	0.55
Diluted per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	0.09	$	0.12	$	0.09		$	0.33	$	0.63
Net income (loss) attributable to common unitholders	$	0.10	$	0.13	$	(0.02	)	$	0.34	$	0.55

Year Ended December 31, 2011	First Quarter		Second Quarter			Third Quarter			Fourth Quarter			Total (1)
Total revenues	$	262,678	$	258,039		$	264,699		$	264,545		$	1,049,961
Income from operations (3)	97,933		96,041			51,257			113,348			358,579
Income (loss) from continuing operations (4)	36,283		32,813			(18,498		)	110,324			160,922
Discontinued operations	27,624		(3,281		)	179			(450		)	24,072
Net income (loss)	63,907		29,532			(18,319		)	109,874			184,994
Net income (loss) attributable to the Operating Partnership	57,770		23,127			(24,485		)	103,365			159,777
Net income (loss) attributable to common unitholders	47,176		12,533			(35,079		)	92,771			117,401
Basic per unit data attributable to common unitholders:
Income (loss) from continuing operations, net of preferred distributions	$	0.11	$	0.08		$	(0.18	)	$	0.49		$	0.50
Net income (loss) attributable to common unitholders	$	0.22	$	0.07		$	(0.18	)	$	0.49		$	0.60
Diluted per unit data attributable to common unitholders:
Income (loss) from continuing operations, net of preferred distributions	$	0.11	$	0.08		$	(0.18	)	$	0.49		$	0.50
Net income (loss) attributable to common unitholders	$	0.22	$	0.07		$	(0.18	)	$	0.49		$	0.60

(1) The sum of quarterly earnings per unit may differ from annual earnings per unit due to rounding.

(2) Income from continuing operations for the quarter ended December 31, 2012 includes a $45,072 gain on investment related to the Operating Partnership's acquisition of a joint venture partner's interest in one property (see Note 3).

(3) Income from operations for the quarter ended September 30, 2011 includes a $50,683 loss on impairment of real estate related to one mall (see Note 15).

(4) Income from continuing operations for the quarter ended December 31, 2011 includes a $54,327 gain on sale of real estate for the sale of a partial interest in several properties as part of the CBL/T-C joint venture (see Note 5).

NOTE 19. SUBSEQUENT EVENTS

Credit Facilities

In the first quarter of 2013, the Operating Partnership closed on an amended and restated agreement of its $105,000 secured credit facility with First Tennessee Bank, NA. The facility was converted from secured to unsecured with a capacity of $100,000 and a maturity date of February 2016. Amounts outstanding bear interest at an annual rate equal to one-month LIBOR plus a spread of 155 to 210 basis points, depending on the Operating Partnership's leverage ratio. Under the terms of the agreement, the Operating Partnership also obtained a $50,000 unsecured term loan that bears interest at LIBOR plus 190 basis points and matures in February 2018. The $100,000 facility also provided that in the event the Operating Partnership obtained an investment grade rating, the Operating Partnership could make a one-time irrevocable election to use its credit rating to determine the interest rate on the facility. If the Operating Partnership were to make such an election, the facility would bear interest at an annual rate equal to LIBOR plus a spread of 100 to 175 basis points.

50

CBL received an investment grade rating in May 2013 of Baa3 with a stable outlook from Moody's Investors Service. This was followed by an Issuer Default Rating of BBB- with a stable outlook and a senior unsecured notes rating of BBB- from Fitch Ratings in July 2013. In May 2013, the Operating Partnership made a one-time irrevocable election to use its credit rating to determine the interest rate on each of its three unsecured credit facilities. Under the credit rating election, each facility bears interest at LIBOR plus a spread of 100 to 175 basis points. As of the date of this filing, each facility bears interest at LIBOR plus 140 basis points based on current investment grade ratings. Additionally, the Operating Partnership will pay an annual facility fee that ranges from 0.15% to 0.35% of the total capacity of each facility rather than unused commitment fees. In accordance with the agreements to the credit facilities, once CBL obtained an investment grade rating, guarantees by material subsidiaries of the Operating Partnership were no longer required.

At-the-Market Equity Offering Program

On March 1, 2013, CBL and the Operating Partnership entered into separate controlled equity offering sales agreements (collectively, the "Sales Agreements") with a number of sales agents to sell shares of CBL's common stock, having an aggregate offering price of up to $300,000, from time to time in "at-the-market" equity offerings (as defined in Rule 415 of the Securities Act of 1933, as amended) or in negotiated transactions (the "ATM program"). In accordance with the Sales Agreements, CBL will set the parameters for the sales of shares, including the number of shares to be issued, the time period during which sales are to be made and any minimum price below which sales may not be made. The Sales Agreements provide that the sales agents will be entitled to compensation for their services at a mutually agreed commission rate not to exceed 2.0% of the gross proceeds from the sales of shares sold through the ATM program. For each share of common stock issued by CBL, the Operating Partnership issues a corresponding number of common units of limited partnership interest to CBL in exchange for the contribution of the proceeds from the stock issuance. The Operating Partnership includes only CBL share issuances that have settled in the calculation of units outstanding at the end of each period.

Under the $300,000 ATM program, CBL sold approximately 8,400,000 shares of common stock for net proceeds of $210,000 after payment of approximately $1,500 of sales agents' commissions. As a result, the Operating Partnership issued an equivalent number of common units to CBL in exchange for the contribution of the proceeds to the Operating Partnership. As of the date of this filing, approximately $88,500 remains available to be sold under this program, although CBL has no obligation to sell the remaining shares.

Unsecured Term Loans

In the second quarter of 2013, the Operating Partnership retired a $228,000 unsecured term loan at its maturity date with borrowings from the Company's credit facilities.

In the third quarter of 2013, the Operating Partnership closed on a five-year $400,000 unsecured term loan. Net proceeds from the term loan were used to reduce outstanding balances on the Operating Partnership's credit facilities. The loan bears interest at a variable rate of LIBOR plus 150 basis points based on CBL's current credit rating and has a maturity date of July 2018.

Operating Property Mortgages

In the first quarter of 2013, the Operating Partnership retired two loans with an aggregate balance of $77,099, including a $13,460 loan secured by Statesboro Crossing in Statesboro, GA and a $63,639 loan secured by Westmoreland Mall in Greensburg, PA, with borrowings from the Operating Partnership's credit facilities. Both loans were scheduled to mature in the first quarter of 2013.

In the first quarter of 2013, Renaissance Phase II CMBS, LLC closed on a $16,000 10-year, non-recourse CMBS loan, secured by Renaissance Center Phase II in Durham, NC. The loan bears interest at a fixed rate of 3.4895% and matures in April 2023. Proceeds from the loan were used to retire the existing $15,700 loan that was scheduled to mature in April 2013.

Also during the first quarter of 2013, CBL-Friendly Center CMBS, LLC, an unconsolidated affiliate accounted for using the equity method, closed on a $100,000 10-year, non-recourse CMBS loan, secured by Friendly Center, located in Greensboro, NC. The loan bears interest at a fixed rate of 3.4795% and matures in April 2023. Proceeds from the new loan were used to retire four existing loans aggregating $100,00 that were secured by Friendly Center, Friendly Center Office Building, First National Bank Building, Green Valley Office Building, First Citizens Bank Building, Wachovia Office Building and Bank of America Building, all located in Greensboro, NC and scheduled to mature in April 2013.

In the second quarter of 2013, the Operating Partnership retired a $71,740 loan, secured by South County Center in St. Louis, MO, with borrowings from its credit facilities. The loan was scheduled to mature in October 2013. In connection with this

51

prepayment, the Operating Partnership recorded a loss on extinguishment of debt of $172 from the write-off of an unamortized discount. The Operating Partnership also retired an $88,410 loan in the second quarter of 2013, which was secured by Mid Rivers Mall in St. Peters, MO, with borrowings from its credit facilities. The loan was scheduled to mature in May 2021 and bore interest at a fixed rate of 5.88%. The Operating Partnership recorded an $8,936 loss on extinguishment of debt, which consisted of an $8,708 prepayment fee and $228 of unamortized debt issuance costs.

Also during the second quarter of 2013, the Operating Partnership closed on a three-year $11,400 non-recourse loan secured by Statesboro Crossing in Statesboro, GA. The loan bears interest at LIBOR plus 180 basis points. The loan matures in June 2016 and has two one-year extension options, which are at the Operating Partnership's election, for an outside maturity date of June 2018. Proceeds from the loan were used to pay down the Operating Partnership's credit facilities.

In the third quarter of 2013, the Operating Partnership retired a $16,000 loan, which was secured by Alamance Crossing West in Burlington, NC with borrowings from its credit facilities. The loan was scheduled to mature in December 2013.

Acquisition

In the second quarter of 2013, the Operating Partnership acquired the remaining 51% noncontrolling interest in Kirkwood Mall in accordance with the agreement executed in December 2012 that is described in Note 3.

Dispositions

In the third quarter of 2013, the Operating Partnership sold three malls and three associated centers in a portfolio transaction for a gross sale price of $176,000. The properties included in the portfolio were Georgia Square Mall and Georgia Square Plaza in Athens, GA; Panama City Mall and The Shoppes at Panama City in Panama City, FL; and RiverGate Mall and Village at RiverGate in Nashville, TN. Net proceeds from the sale were used to reduce the outstanding balances on the Operating Partnership's credit facilities.

Redemption of TIF Bonds

In the first quarter of 2013, TIF bonds, received in a private placement as consideration for infrastructure improvements made by the Operating Partnership related to the development of a community center, were redeemed for $12,000. The Operating Partnership adjusted the value of the bonds to their net realizable value as of December 31, 2012.

Citadel Mall

In accordance with the Operating Partnership's quarterly impairment review process, the Operating Partnership recorded a non-cash impairment of real estate of $20,453 in the second quarter of 2013 related to Citadel Mall, located in Charleston, SC to write-down the depreciated book value to its estimated fair value as of the same date. The mall has experienced declining cash flows which are insufficient to cover the debt service on the mortgage secured by the property. In August 2013, the lender of the non-recourse mortgage loan secured by Citadel Mall in Charleston, SC sent a formal notice of default and initiated foreclosure proceedings.

Other

In the first quarter of 2013, Woodstock GA Investments, LLC, a joint venture in which the Operating Partnership owns a 75.0% interest, received $3,525 of the balance on its $6,581 note receivable.

In the first quarter of 2013, the Operating Partnership guaranteed 100% of a construction loan for Fremaux, an unconsolidated affiliate in which the Operating Partnership owns a 65% interest, of which the maximum guaranteed amount is $46,000. The loan is for the development of Fremaux Town Center, a community center located in Slidell, LA. The guaranty will expire upon repayment of the debt. The loan matures in March 2016 and has two one-year extension options for an outside maturity date of March 2018. The Operating Partnership received a 1% fee for this guaranty when the loan was issued in March 2013.

In the second quarter of 2013, the third party that developed and operates a shopping center on the land parcel located in Lee's Summit, MO which the Operating Partnership owns, extended the maturity date on its construction loan to July 2013. The third party developer is working with the lender to further extend the maturity date of the loan. The Operating Partnership has guaranteed 27% of the loan.

52

In the second quarter of 2013, the Operating Partnership issued a redemption notice to Westfield to redeem all of the PJV units. Under the terms agreed to by the Operating Partnership and Westfield, the annual preferred distribution rate will remain at 5.0% until the earlier of the closing or rejection by Westfield of the redemption offer or September 30, 2013.

In the second quarter of 2013, the Operating Partnership entered into a joint venture, Louisville Outlet Shoppes, LLC ("Louisville Outlet"), with a third party to develop, own and operate The Outlet Shoppes at Louisville located in Simpsonville, KY. Construction began in June 2013 with completion expected in summer 2014. The Operating Partnership holds a 65% ownership interest in the joint venture. The Operating Partnership determined that its investment in this joint venture represents an interest in a VIE and that the Operating Partnership is the primary beneficiary because of its power to direct activities of the joint venture that most significantly impact the joint venture's economic performance as well as the obligation to absorb losses or right to receive benefits from the VIE that could be significant. As a result, the joint venture is accounted for on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest. In the third quarter of 2013, Louisville Outlet obtained a construction loan on the property that allows for borrowings up to $60,200 and bears interest at LIBOR plus 2.00%. The construction loan matures in August 2016 and has two one-year extension options, which are at the joint venture's election, for an outside maturity date of August 2018. The Operating Partnership has guaranteed 100% of the loan. No monies will be drawn on the loan until equity requirements are met.

In May 2013, Jinsheng paid the outstanding balance of $4,875 on the promissory note held by the Operating Partnership. The Operating Partnership recognized a realized gain of $2,400 in the second quarter of 2013. The Operating Partnership had previously recorded a $2,400 other-than-temporary impairment related to the Jinsheng note in 2009.

In August 2013, TPD received a partial settlement of $8,240 from certain of the defendants in the matter described in Note 14. Litigation continues with other defendants in the matter.

53

Schedule II

CBL & Associates Limited Partnership

Valuation and Qualifying Accounts

(In thousands)

	Year Ended December 31,
	2012			2011			2010
Tenant receivables - allowance for doubtful accounts:
Balance, beginning of year	$	1,760		$	3,167		$	3,101
Additions in allowance charged to expense	1,532			1,676			2,722
Transfer to other receivables - allowance	—			(1,400		)	—
Bad debts charged against allowance	(1,315		)	(1,683		)	(2,656		)
Balance, end of year	$	1,977		$	1,760		$	3,167
	Year Ended December 31,
	2012			2011			2010
Other receivables - allowance for doubtful accounts:
Balance, beginning of year	$	1,400		$	—		$	—
Transfer from tenant receivables - allowance	—			1,400			—
Bad debts charged against allowance	(130		)	—			—
Balance, end of year	$	1,270		$	1,400		$	—

54

SCHEDULE III

CBL & ASSOCIATES LIMITED PARTNERSHIP

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

At December 31, 2012

(In thousands)

			Initial Cost(A)										Gross Amounts at Which Carried at Close of Period
Description /Location	Encumbrances  (B)		Land		Buildings and Improvements		Costs  Capitalized Subsequent to Acquisition			Sales of Outparcel   Land			Land		Buildings and Improvements		Total (C)		Accumulated Depreciation (D)			Date of Construction  / Acquisition
MALLS:
Acadiana Mall, Lafayette, LA	$	137,640	$	22,511	$	145,769	$	7,405		$	—		$	22,511	$	153,174	$	175,685	$	(51,476	)	2005
Alamance Crossing, Burlington, NC	66,001		20,853		62,799		39,269			(2,112		)	18,741		102,068		120,809		(16,494		)	2007
Arbor Place, Douglasville, GA	121,050		7,862		95,330		23,109			—			7,862		118,439		126,301		(44,988		)	1998-1999
Asheville Mall, Asheville, NC	76,289		7,139		58,747		48,330			(805		)	6,334		107,077		113,411		(38,244		)	1998
Bonita Lakes Mall, Meridian, MS	—		4,924		31,933		6,664			(985		)	4,924		37,612		42,536		(15,423		)	1997
Brookfield Square, Brookfield, WI	92,305		8,996		84,250		43,545			(18		)	9,170		127,603		136,773		(40,394		)	2001
Burnsville Center, Burnsville, MN	79,272		12,804		71,355		51,092			(1,157		)	16,102		117,992		134,094		(41,016		)	1998
Cary Towne Center, Cary, NC	55,910		23,688		74,432		23,708			—			23,701		98,127		121,828		(30,788		)	2001
Chapel Hill Mall, Akron, OH	70,045		6,578		68,043		13,651			—			6,578		81,694		88,272		(19,784		)	2004
CherryVale Mall, Rockford, IL	82,347		11,892		63,973		50,569			(1,667		)	11,608		113,159		124,767		(32,331		)	2001
Chesterfield Mall, Chesterfield, MO	139,022		11,083		282,140		1,915			—			11,083		284,055		295,138		(49,464		)	2007
Citadel Mall, Charleston, SC	68,835		10,990		44,008		7,247			(1,289		)	10,154		50,802		60,956		(16,629		)	2001
College Square, Morristown, TN (E)	—		2,954		17,787		22,836			(88		)	2,866		40,623		43,489		(17,775		)	1987-1988
Columbia Place, Columbia, SC	27,265		1,526		52,348		(47,222		)	(423		)	1,103		5,126		6,229		(261		)	2002
Cross Creek Mall, Fayetteville, NC	137,179		19,155		104,353		14,656			—			19,155		119,009		138,164		(27,877		)	2003
Dakota Square Mall, Minot, ND	61,193		4,552		87,625		178			—			4,552		87,803		92,355		(1,650		)	2012
Eastland Mall, Bloomington, IL	59,400		5,746		75,893		6,582			(753		)	5,304		82,163		87,467		(21,671		)	2005
East Towne Mall, Madison, WI	70,220		4,496		63,867		41,145			(366		)	4,130		105,012		109,142		(32,039		)	2002
EastGate Mall , Cincinnati, OH	42,281		13,046		44,949		26,233			(879		)	12,167		71,182		83,349		(22,049		)	2001
Fashion Square, Saginaw, MI	41,569		15,218		64,970		10,102			—			15,218		75,072		90,290		(23,967		)	2001
Fayette Mall, Lexington, KY	179,227		20,707		84,267		46,326			11			20,718		130,593		151,311		(37,644		)	2001
Frontier Mall , Cheyenne, WY	—		2,681		15,858		18,217			—			2,681		34,075		36,756		(17,508		)	1984-1985
Foothills Mall, Maryville, TN (E)	—		5,558		22,594		11,284			—			5,558		33,878		39,436		(18,589		)	1996
Georgia Square, Athens, GA	—		2,982		31,071		30,879			(31		)	2,951		61,950		64,901		(38,819		)	1982
Greenbrier Mall, Chesapeake, VA	77,085		3,181		107,355		8,300			(626		)	2,555		115,655		118,210		(26,643		)	2004
Hamilton Place, Chattanooga, TN	106,024		2,422		40,757		39,214			(441		)	1,981		79,971		81,952		(37,889		)	1986-1987
Hanes Mall, Winston-Salem, NC	156,208		17,176		133,376		44,343			(948		)	16,808		177,139		193,947		(52,168		)	2001
Harford Mall , Bel Air, MD	—		8,699		45,704		21,140			—			8,699		66,844		75,543		(16,776		)	2003
Hickory Point, (Forsyth) Decatur, IL	29,635		10,732		31,728		11,283			(293		)	10,440		43,010		53,450		(12,780		)	2005
Honey Creek Mall, Terre Haute, IN	30,921		3,108		83,358		9,229			—			3,108		92,587		95,695		(21,935		)	2004
Imperial Valley Mall, El Centro, CA	54,169		35,378		70,549					—			35,378		70,549		105,927		—			2012
JC Penney Store, Maryville, TN (E)	—		—		2,650		—			—			—		2,650		2,650		(1,877		)	1983
Janesville Mall, Janesville, WI	5,269		8,074		26,009		7,991			—			8,074		34,000		42,074		(12,430		)	1998
Jefferson Mall, Louisville, KY	70,676		13,125		40,234		21,657			(521		)	12,604		61,891		74,495		(19,169		)	2001

55

SCHEDULE III

CBL & ASSOCIATES LIMITED PARTNERSHIP

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

At December 31, 2012

(In thousands)

		Initial Cost(A)						Gross Amounts at Which Carried at Close of Period
Description /Location	Encumbrances  (B)	Land	Buildings and Improvements	Costs  Capitalized Subsequent to Acquisition		Sales of Outparcel   Land		Land	Buildings and Improvements	Total (C)	Accumulated Depreciation (D)		Date of Construction  / Acquisition
Kirkwood Mall , Bismarck ND	43,338	3,368	118,945	83		—		3,368	119,028	122,396	—		2012
The Lakes Mall, Muskegon, MI (E)	—	3,328	42,366	10,031		—		3,328	52,397	55,725	(20,188	)	2000-2001
Lakeshore Mall, Sebring, FL	—	1,443	28,819	6,409		(169	)	1,274	35,228	36,502	(17,164	)	1991-1992
Laurel Park, Livonia, MI	—	13,289	92,579	9,366		—		13,289	101,945	115,234	(28,811	)	2005
Layton Hills Mall, Layton, UT	98,369	20,464	99,836	12,790		(275	)	20,189	112,626	132,815	(28,625	)	2005
Summit Fair Land, Lee's Summit, MO	—	10,992		315		—		10,992	315	11,307	—		2010
Madison Square, Huntsville, AL	—	17,596	39,186	19,059		—		17,596	58,245	75,841	(18,820	)	1984
Mall del Norte, Laredo, TX (F)	113,400	21,734	142,049	49,115		—		21,734	191,164	212,898	(52,079	)	2004
Meridian Mall , Lansing, MI	—	529	103,678	64,044		—		2,232	166,019	168,251	(60,818	)	1998
Midland Mall, Midland, MI	34,568	10,321	29,429	8,499		—		10,321	37,928	48,249	(13,406	)	2001
Mid Rivers Mall, St. Peters, MO	89,312	16,384	170,582	7,453		—		16,384	178,035	194,419	(32,320	)	2007
Monroeville Mall, Pittsburgh, PA	—	22,195	177,214	43,169		—		24,716	217,862	242,578	(49,668	)	2004
Northgate Mall, Chattanooga, TN	—	2,330	8,960	(1,031	)	—		2,330	7,929	10,259	(745	)	2011
Northpark Mall, Joplin, MO	33,897	9,977	65,481	32,818		—		10,962	97,314	108,276	(26,390	)	2004
Northwoods Mall, Charleston, SC	72,339	14,867	49,647	16,990		(2,339	)	12,528	66,637	79,165	(20,917	)	2001
Oak Hollow Mall Barnes & Noble, High Point, NC	—	893	1,870	—		—		893	1,870	2,763	(1,582	)	1994-1995
Old Hickory Mall, Jackson, TN	—	15,527	29,413	5,788		—		15,527	35,201	50,728	(11,731	)	2001
The Outlet Shoppes at El Paso, El Paso, TX	73,118	9,165	96,640	379		—		9,165	97,019	106,184	(3,320	)	2012
The Outlet Shoppes at Gettysburg, Gettysburg, PA	40,170	20,940	22,180	480		—		20,940	22,660	43,600	(1,185	)	2012
The Outlet Shoppes at Oklahoma City, Oklahoma City, OK	58,888	8,365	50,268	9,077		—		8,369	59,341	67,710	(5,338	)	2011
Panama City Mall, Panama City, FL	—	9,017	37,454	20,055		—		12,168	54,358	66,526	(14,977	)	2002
Parkdale Mall, Beaumont, TX	91,906	23,850	47,390	46,305		(307	)	23,543	93,695	117,238	(26,671	)	2001
Park Plaza Mall, Little Rock, AR	96,059	6,297	81,638	34,658		—		6,304	116,289	122,593	(34,478	)	2004
Parkway Place Mall, Huntsville, AL	40,244	6,364	67,067	912		—		6,364	67,979	74,343	(6,352	)	2010
Pearland Town Center, Pearland, TX	18,264	16,300	108,615	10,657		(366	)	15,443	119,763	135,206	(21,425	)	2008
Post Oak Mall, College Station, TX	—	3,936	48,948	10,563		(327	)	3,608	59,512	63,120	(24,316	)	1984-1985
Randolph Mall, Asheboro, NC	—	4,547	13,927	8,015		—		4,547	21,942	26,489	(7,188	)	2001
Regency Mall, Racine, WI	—	3,384	36,839	14,979		—		4,244	50,958	55,202	(16,694	)	2001
Richland Mall, Waco, TX	—	9,874	34,793	8,981		—		9,887	43,760	53,647	(13,063	)	2002
RiverGate Mall, Nashville, TN	—	17,896	86,767	25,328		—		17,896	112,095	129,991	(41,150	)	1998
River Ridge Mall, Lynchburg, VA	—	4,824	59,052	9,830		(94	)	4,731	68,881	73,612	(13,219	)	2003
South County Center, Mehlville, MO	71,928	15,754	159,249	3,387		—		15,754	162,636	178,390	(29,044	)	2007
Southaven Towne Ctr, Southaven, MS	41,786	8,255	29,380	9,258		—		8,159	38,734	46,893	(10,967	)	2005
Southpark Mall, Colonial Heights, VA	66,525	9,501	73,262	24,577		—		9,503	97,837	107,340	(24,701	)	2003
Stroud Mall, Stroudsburg, PA	34,469	14,711	23,936	20,320		—		14,711	44,256	58,967	(13,345	)	1998

56

SCHEDULE III

CBL & ASSOCIATES LIMITED PARTNERSHIP

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

At December 31, 2012

(In thousands)

		Initial Cost(A)						Gross Amounts at Which Carried at Close of Period
Description /Location	Encumbrances  (B)	Land	Buildings and Improvements	Costs  Capitalized Subsequent to Acquisition		Sales of Outparcel   Land		Land	Buildings and Improvements	Total (C)	Accumulated Depreciation (D)		Date of Construction  / Acquisition
St. Clair Square, Fairview Heights, IL	123,875	11,027	75,620	32,001		—		11,027	107,621	118,648	(40,050	)	1996
Sunrise Mall, Brownsville, TX	—	11,156	59,047	5,915		—		11,156	64,962	76,118	(23,065	)	2003
Turtle Creek Mall , Hattiesburg, MS	—	2,345	26,418	18,281		—		3,535	43,509	47,044	(18,221	)	1993-1995
Valley View, Roanoke, VA	62,282	15,985	77,771	17,715		—		15,999	95,472	111,471	(22,555	)	2003
Volusia Mall, Daytona, FL	53,191	2,526	120,242	10,601		—		2,526	130,843	133,369	(29,086	)	2004
Walnut Square, Dalton, GA (E)	—	50	15,138	16,746		—		50	31,884	31,934	(16,181	)	1984-1985
Wausau Center, Wausau, WI	19,187	5,231	24,705	16,775		(5,231	)	—	41,480	41,480	(14,766	)	2001
West Towne Mall, Madison, WI	99,185	9,545	83,084	39,418		—		9,545	122,502	132,047	(37,093	)	2002
Westgate Mall, Spartanburg, SC	39,661	2,149	23,257	44,543		(432	)	1,746	67,774	69,520	(31,069	)	1995
Westmoreland Mall, Greensburg, PA	63,639	4,621	84,215	14,454		—		4,621	98,669	103,290	(29,023	)	2002
York Galleria, York, PA	55,057	5,757	63,316	9,521		—		5,757	72,837	78,594	(25,591	)	1995
ASSOCIATED CENTERS:
Annex at Monroeville, Monroeville, PA	—	716	29,496	(945	)	—		716	28,551	29,267	(6,102	)	2004
Bonita Crossing, Meridian, MS	—	794	4,786	8,746		—		794	13,532	14,326	(4,960	)	1997
Chapel Hill Surban, Akron, OH	—	925	2,520	935		—		925	3,455	4,380	(774	)	2004
CoolSprings Crossing, Nashville, TN	12,887	2,803	14,985	4,525		—		3,554	18,759	22,313	(10,037	)	1991-1993
Courtyard at Hickory Hollow, Nashville, TN	—	3,314	2,771	(3,022	)	(231	)	1,500	1,332	2,832	(22	)	1998
Eastgate Crossing, Cincinnati, OH	15,324	707	2,424	7,442		(11	)	696	9,866	10,562	(2,479	)	2001
Foothills Plaza , Maryville, TN	—	132	2,132	626		—		148	2,742	2,890	(1,920	)	1984-1988
Foothills Plaza Expansion, Maryville, TN	—	137	1,960	947		—		141	2,903	3,044	(1,440	)	1984-1988
Frontier Square, Cheyenne, WY	—	346	684	374		(86	)	260	1,058	1,318	(555	)	1985
General Cinema, Athens, GA	—	100	1,082	173		—		100	1,255	1,355	(1,020	)	1984
Gunbarrel Pointe, Chattanooga, TN	11,472	4,170	10,874	3,314		—		4,170	14,188	18,358	(3,991	)	2000
Hamilton Corner, Chattanooga, TN	15,595	630	5,532	6,346		—		734	11,774	12,508	(5,380	)	1986-1987
Hamilton Crossing, Chattanooga, TN	10,283	4,014	5,906	7,028		(1,370	)	2,644	12,934	15,578	(5,253	)	1987
Hamilton Place Outparcel, Chattanooga, TN	—	1,110	1,866	(4	)	—		1,110	1,862	2,972	(770	)	2007
Harford Annex , Bel Air, MD	—	2,854	9,718	750		—		2,854	10,468	13,322	(2,311	)	2003
The Landing at Arbor Place, Douglasville, GA	—	4,993	14,330	1,487		(748	)	4,245	15,817	20,062	(6,661	)	1998-1999
Layton Convenience Center, Layton Hills, UT	—	—	8	942		—		—	950	950	(203	)	2005
Layton Hills Plaza, Layton Hills, UT	—	—	2	240		—		—	242	242	(111	)	2005
Madison Plaza , Huntsville, AL	—	473	2,888	3,678		—		473	6,566	7,039	(3,709	)	1984
The Plaza at Fayette Mall, Lexington, KY	40,634	9,531	27,646	4,102		—		9,531	31,748	41,279	(7,286	)	2006
Parkdale Crossing, Beaumont, TX	—	2,994	7,408	2,088		(355	)	2,639	9,496	12,135	(2,465	)	2002
The Shoppes At Hamilton Place, Chattanooga, TN (E)	—	4,894	11,700	1,493		—		4,894	13,193	18,087	(3,042	)	2003

57

SCHEDULE III

CBL & ASSOCIATES LIMITED PARTNERSHIP

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

At December 31, 2012

(In thousands)

		Initial Cost(A)						Gross Amounts at Which Carried at Close of Period
Description /Location	Encumbrances  (B)	Land	Buildings and Improvements	Costs  Capitalized Subsequent to Acquisition		Sales of Outparcel   Land		Land	Buildings and Improvements	Total (C)	Accumulated Depreciation (D)		Date of Construction  / Acquisition
Sunrise Commons, Brownsville, TX	—	1,013	7,525	1,108		—		1,013	8,633	9,646	(1,985	)	2003
The Shoppes at Panama City, Panama City, FL	—	1,010	8,294	781		(318	)	896	8,871	9,767	(1,861	)	2004
The Shoppes at St. Clair, St. Louis, MO	20,594	8,250	23,623	536		(5,044	)	3,206	24,159	27,365	(5,949	)	2007
The Terrace, Chattanooga, TN	14,224	4,166	9,929	7,544		—		6,536	15,103	21,639	(3,781	)	1997
Village at RiverGate, Nashville, TN	—	2,641	2,808	1,075		—		2,641	3,883	6,524	(1,329	)	1998
West Towne Crossing, Madison, WI	—	1,151	2,955	312		—		1,151	3,267	4,418	(924	)	1998
Westgate Crossing, Spartanburg, SC	—	1,082	3,422	6,113		—		1,082	9,535	10,617	(3,240	)	1997
Westmoreland South, Greensburg, PA	—	2,898	21,167	8,981		—		2,898	30,148	33,046	(7,415	)	2002
COMMUNITY CENTERS:
Cobblestone Village, Palm Coast, FL	—	6,082	12,070	(310	)	(220	)	4,296	13,326	17,622	(1,760	)	2007
The Promenade at D'lberville, D'lberville, MS	58,000	16,278	48,806	9,124		(706	)	15,879	57,623	73,502	(6,185	)	2009
The Forum at Grand View, Madison , MS	10,200	9,234	17,285	14,956		(288	)	9,048	32,139	41,187	(1,133	)	2010
Statesboro Crossing, Statesboro, GA	13,482	2,855	17,805	362		(235	)	2,840	17,947	20,787	(2,460	)	2008
Waynesville Commons, Waynesville, NC	—	3,511	6,141	—		—		3,511	6,141	9,652	(43	)	2012
Pemberton Plaza, Vicksburg, MS	—	1,284	1,379	288		—		1,284	1,667	2,951	(503	)	2004
OFFICE BUILDINGS:
CBL Center, Chattanooga, TN	21,675	140	24,675	(45	)	—		140	24,630	24,770	(11,672	)	2001
CBL Center II, Chattanooga, TN	—	—	13,648	984		—		—	14,632	14,632	(2,647	)	2008
Oak Branch Business Center, Greensboro, NC	—	535	2,192	(151	)	—		535	2,041	2,576	(365	)	2007
One Oyster Point, Newport News, VA	—	1,822	3,623	235		—		1,822	3,858	5,680	(781	)	2007
Pearland Office, Pearland, TX	—	—	7,849	1,443		—		—	9,292	9,292	(1,102	)	2009
Two Oyster Point, Newport News, VA	—	1,543	3,974	341		—		1,543	4,315	5,858	(1,017	)	2007
840 Greenbrier Circle, Chesapeake, VA	—	2,096	3,091	(168	)	—		2,096	2,923	5,019	(621	)	2007
850 Greenbrier Circle, Chesapeake, VA	—	3,154	6,881	(360	)	—		3,154	6,521	9,675	(1,025	)	2007
Pearland Hotel, Pearland, TX	—	—	16,149	289		—		—	16,438	16,438	(2,488	)	2008
Pearland Residential, Pearland, TX	—	—	9,666	9		—		—	9,675	9,675	(1,185	)	2008
DISPOSITIONS:
Lake Point Office Building Greensboro, NC (H)	—	1,435	14,261	746		—			16,442	16,442	—		2007
Peninsula Business Center I, Newport News (H)	—	887	1,440	429		—		887	1,869	2,756	(464	)	2007
Peninsula Business Center II, Newport News (H)	—	1,654	873	170		—		1,654	1,043	2,697	(540	)	2007
1500 Sunday Drive, Raleigh, NC (H)	—	812	8,872	657		—		812	9,528	10,340	(2,198	)	2007
Sun Trust Bank Building, Greensboro, NC (H)	—	941	18,417	(6,374	)	—			12,984	12,984	—		2007

58

SCHEDULE III

CBL & ASSOCIATES LIMITED PARTNERSHIP

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

At December 31, 2012

(In thousands)

			Initial Cost(A)										Gross Amounts at Which Carried at Close of Period
Description /Location	Encumbrances  (B)		Land		Buildings and Improvements		Costs  Capitalized Subsequent to Acquisition			Sales of Outparcel   Land			Land		Buildings and Improvements		Total (C)		Accumulated Depreciation (D)			Date of Construction  / Acquisition
Hickory Hollow Mall, Nashville, TN	—		13,813		111,431		(125,244		)	—					—		—		—			1998
Massard Crossing, Ft Smith, AR	—		2,879		5,176		(8,055		)	—			—		—		—		—			2004
Oak Hollow Square, High Point, NC	—		8,609		9,097		(17,706		)	—			—		—		—		—			2007
Settler's Ridge-Phase II, Robinson Township, PA	—		1,011		14,922		(15,933		)	—			—		—		—		—			2011
Towne Mall, Franklin, OH	—		3,101		17,033		(20,134		)	—			—		—		—		—			2001
Willowbrook Land, Houston, TX	—						—			—			—		—		—		—			2007
Willowbrook Plaza, Houston, TX	—		15,079		27,376		(42,455		)	—			—		—		—		—			2004
Other - Land	729,614		1,386		4,486		314			(879		)	508		4,799		5,307		(923		)
Developments in progress consisting of construction and Development Properties (G)	436,887		—		—		—			—			—		137,956		137,956		—
TOTALS	$	5,182,565	$	966,434	$	5,929,412	$	1,300,633		$	(33,422	)	$	905,339	$	7,395,674	$	8,301,013	$	(1,972,031	)

(A) Initial cost represents the total cost capitalized including carrying cost at the end of the first fiscal year in which the property opened or was acquired.

(B) Encumbrances represent the mortgage notes payable balance at December 31, 2012.

(C) The aggregate cost of land and buildings and improvements for federal income tax purposes is approximately $7.667 billion.

(D) Depreciation for all properties is computed over the useful life which is generally 40 years for buildings, 10-20 years for certain improvements and 7-10 years for equipment and fixtures.

(E) Property is pledged as collateral on a secured line of credit.

(F) Only certain parcels at these Properties have been pledged as collateral on a secured line of credit.

(G) Includes non-property mortgages and credit line mortgages. 

(H) Sold in the first quarter of 2013.

59

SCHEDULE III

CBL & ASSOCIATES LIMITED PARTNERSHIP

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

At December 31, 2012

(In thousands)

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

The changes in real estate assets and accumulated depreciation for the years ending December 31, 2012, 2011, and 2010 are set forth below (in thousands):

	Year Ended December 31,
	2012			2011			2010
REAL ESTATE ASSETS:
Balance at beginning of period	$	7,767,819		$	8,611,331		$	8,600,875
Additions during the period:
Additions and improvements	217,161			201,359			170,696
Acquisitions of real estate assets	474,623			11,197			72,907
Deductions during the period:
Disposals, deconsolidations and accumulated depreciation on impairments	(108,554		)	(999,685		)	(183,762		)
Transfers from real estate assets	808			(476		)	(23,950		)
Impairment of real estate assets	(50,844		)	(55,907		)	(25,435		)
Balance at end of period	$	8,301,013		$	7,767,819		$	8,611,331
ACCUMULATED DEPRECIATION:
Balance at beginning of period	$	1,762,149		$	1,721,194		$	1,505,840
Depreciation expense	247,702			260,847			268,386
Accumulated depreciation on real estate assets sold, retired or deconsolidated and on impairments	(37,820		)	(219,892		)	(53,032		)
Balance at end of period	$	1,972,031		$	1,762,149		$	1,721,194

60

Schedule IV

CBL & ASSOCIATES LIMITED PARTNERSHIP

MORTGAGE NOTES RECEIVABLE ON REAL ESTATE

AT DECEMBER 31, 2012

(In thousands)

Name Of Center/Location	Interest Rate			Final Maturity Date	Monthly Payment Amount (1)						Balloon Payment At Maturity		Prior Liens	Face Amount Of Mortgage		Carrying Amount Of Mortgage (2)		Principal Amount Of Mortgage Subject To Delinquent Principal Or Interest
FIRST MORTGAGES:
Coastal Grand-MyrtleBeach - Myrtle Beach, SC	7.75	%		Oct-2014	$	58	(3	)			$	9,000	None	$	9,000	$	9,000	$	—
One Park Place - Chattanooga, TN	5.00	%		May-2022	21		(4	)			2,007		None	3,200		1,902		—
Village Square - Houghton Lake, MI and Village at Wexford - Cadillac, MI	4.25	%	(5)	Mar-2015	10		(3	)	(4	)	2,600		None	2,627		2,600		—
OTHER	2.71% -  12.00%		(7)	Jul-2011/  Jan-2047	17						3,418			6,460		5,881		78
					$	106					$	17,025		$	21,287	$	19,383	$	78

(1)  Equal monthly installments comprised of principal and interest, unless otherwise noted.

(2)  The aggregate carrying value for federal income tax purposes was $19,383 at December 31, 2012.

(3)  Payment represents interest only.

(4)  Loans included in the schedule above which were extended or renewed during the year ended December 31, 2012 aggregated approximately $4,607.

(5)  Interest rate increases annually to 4.50% on April 1, 2013 and 4.75% on April 1, 2014.

(6) Unpaid principal and interest are due upon maturity. Subsequent to December 31, 2012, $3,525 was paid to reduce the balance of the note receivable.

(7)  Mortgage and other notes receivable aggregated in Other included a variable-rate note that bears interest at prime plus 2.0%, currently at 5.25%, and a variable-rate note that bears interest at LIBOR plus 2.50%.

The changes in mortgage notes receivable were as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Beginning balance	$	34,239		$	30,519		$	38,208
Additions	—			15,334			1,001
Receipt of land in lieu of payment	—			(2,235		)	—
Non-cash transfer	(12,741		)	—			(7,081		)
Write-off of uncollectible amounts	—			(1,900		)	—
Payments	(2,115		)	(7,479		)	(1,609		)
Ending balance	$	19,383		$	34,239		$	30,519

61

EX-99.2

EXHIBIT 99.2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

of CBL & Associates Limited Partnership

December 31, 2012

Cautionary Statement Regarding Forward-Looking Statements

Certain statements included in this section or elsewhere in this report may be deemed “forward looking statements” within the meaning of the federal securities laws.  All statements other than statements of historical fact should be considered to be forward-looking statements. In many cases, these forward looking statements may be identified by the use of words such as “will,” “may,” “should,” “could,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “projects,” “goals,” “objectives,” “targets,” “predicts,” “plans,” “seeks,” or similar expressions.  Any forward-looking statement speaks only as of the date on which it is made and is qualified in its entirety by reference to the factors discussed throughout this report. In this discussion, the terms “we,” “us,” “our” and the “Operating Partnership” refer to CBL & Associates Limited Partnership and its subsidiaries.

Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance or results and we can give no assurance that these expectations will be attained.  It is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of known and unknown risks and uncertainties. Such known risks and uncertainties include, without limitation:

• general industry, economic and business conditions;

• interest rate fluctuations;

• costs and availability of capital and capital requirements;

• costs and availability of real estate;

• inability to consummate acquisition opportunities and other risks associated with acquisitions;

• competition from other companies and retail formats;

• changes in retail rental rates in our markets;

• shifts in customer demands;

• tenant bankruptcies or store closings;

• changes in vacancy rates at our properties;

• changes in operating expenses;

• changes in applicable laws, rules and regulations;

• sales of real property; and

• the ability to obtain suitable equity and/or debt financing and the continued availability of financing in the amounts and on the terms necessary to support our future refinancing requirements and business.

This list of risks and uncertainties is only a summary and is not intended to be exhaustive.  We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes included in Exhibit 99.1 of this Form 8-K. Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the consolidated financial statements.

Executive Overview

We are a Delaware limited partnership that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air centers, associated centers, community centers and office properties. Our shopping centers are located in 27 states, but are primarily in the southeastern and midwestern United States.  CBL & Associates Properties, Inc. ("CBL"), a Delaware corporation, is a self-managed, self-administered, fully integrated real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. CBL is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At December 31, 2012, CBL Holdings I, Inc., our sole general partner, owned a 1.0% general partner interest and CBL Holdings II, Inc. owned a 83.5% limited partner interest for a combined interest held by CBL of 84.5%.

1

As of December 31, 2012, we owned controlling interests in 77 regional malls/open-air and outlet centers (including one mixed-use center), 28 associated centers (each located adjacent to a regional shopping mall), six community centers and 13 office buildings, including our corporate office building. We consolidate the financial statements of all entities in which we have a controlling financial interest or where we are the primary beneficiary of a variable interest entity ("VIE"). As of December 31, 2012, we owned noncontrolling interests in nine regional malls, four associated centers, four community centers and seven office buildings. Because one or more of the other partners have substantive participating rights, we do not control these partnerships and joint ventures and, accordingly, account for these investments using the equity method.  We had controlling interests in the development of one outlet center, owned in a 75%/25% joint venture at December 31, 2012, one community center development, one mall expansion and two mall redevelopments under construction at December 31, 2012. We also hold options to acquire certain development properties owned by third parties.

Operationally, we continue to pursue strategic acquisitions, prune non-core and mature assets, and invest in our properties through development and expansion initiatives. Occupancy increased 100 basis points in 2012 to 94.6% across our total portfolio as compared to the prior year and we signed more than 6.1 million square feet of leases. Same-store sales per square foot excluding license agreements, for stabilized mall tenants 10,000 square feet or less for 2012 increased 3.2% over the prior year to $353 per square foot. See "Mall Store Sales" section included herein for further information about our same-store sales metrics. Occupancy gains, sales increases and positive leasing spreads contributed to positive growth in our same-center net operating income ("NOI").

Our financing strategy centers on positioning our balance sheet to achieve an investment grade rating, which should provide us with increased flexibility and access to favorable financing options in the public debt markets. As part of this process, we extended and modified our two largest credit facilities to convert them from secured to unsecured and increase their aggregate capacity to $1.2 billion. Additionally, we are retiring property-specific loans as they mature to increase the size of our unencumbered NOI and gross asset value. We believe the process to achieve an investment grade rating could take up to two years.

Funds from operations ("FFO") of our Operating Partnership, as adjusted, increased 5.8% to $412.8 million for the year ending December 31, 2012 as compared to $390.2 million in the prior year. FFO was positively impacted by growth in same-center NOI and decreases in interest rate expense due to lower rates on our lines of credit and favorable refinancings. FFO is a key performance measure for real estate companies.  Please see the more detailed discussion of this measure on page 27.

Results of Operations

Comparison of the Year Ended December 31, 2012 to the Year Ended December 31, 2011

Properties that were in operation for the entire year during both 2012 and 2011 are referred to as the “2012 Comparable Properties.”Since January 1, 2011, we have acquired or opened three outlet centers, three malls and one community center as follows:  

Property	Location	Date Opened /Acquired
New Developments:
The Outlet Shoppes at Oklahoma City (1)	Oklahoma City, OK	August 2011
Waynesville Commons	Waynesville, NC	October 2012
Acquisitions:
Northgate Mall	Chattanooga, TN	September 2011
The Outlet Shoppes at El Paso (1)	El Paso, TX	April 2012
The Outlet Shoppes at Gettysburg (2)	Gettysburg, PA	April 2012
Dakota Square Mall	Minot, ND	May 2012
Kirkwood Mall (3)	Bismarck, ND	December 2012

(1) The Outlet Shoppes at Oklahoma City and The Outlet Shoppes at El Paso are 75/25 joint ventures, which are included in the accompanying consolidated statements of operations on a consolidated basis.

(2) The Outlet Shoppes at Gettysburg is a 50/50 joint venture and is included in the accompanying consolidated statements of operations on a consolidated basis.

(3) The Operating Partnership acquired a 49.0% interest in Kirkwood Mall in December 2012 and executed an agreement to acquire the remaining 51.0% interest within 90 days, subject to lender approval. This property is included in the accompanying consolidated statements of operations on a consolidated basis.

The properties listed above are included in our operations on a consolidated basis and are collectively referred to as the "2012 New Properties." In addition to the above properties, in December 2012, we purchased the remaining 40.0% noncontrolling interest in Imperial Valley Mall in El Centro, CA from our joint venture partner. The results of operations of this property, previously

2

accounted for using the equity method of accounting, are included in our operations on a consolidated basis beginning December 27, 2012. The transactions related to the 2012 New Properties impact the comparison of the results of operations for the year ended December 31, 2012 to the results of operations for the year ended December 31, 2011.

In October 2011, we formed a joint venture, CBL/T-C, with TIAA-CREF. As described in Note 5 to the consolidated financial statements, that are included in Exhibit 99.1 of this Form 8-K, we began accounting for our remaining interest in three of our malls, CoolSprings Galleria, Oak Park Mall and West County Center, which were previously accounted for on a consolidated basis, using the equity method of accounting upon formation of the joint venture. These properties are collectively referred to as the "CBL/T-C Properties". This transaction impacts the comparison of the results of operations for the year ended December 31, 2012 to the results of operations for the year ended December 31, 2011.

In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the consolidated financial statements included in Exhibit 99.1 of this Form 8-K have been revised to reflect the operations of three office buildings, that were sold in the first quarter of 2013 as discontinued operations because the interim condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K reflect these properties as discontinued operations.

Revenues

Total revenues decreased by $17.3 million for 2012 compared to the prior year. Rental revenues and tenant reimbursements decreased $17.6 million due to a decrease of $70.4 million related to the CBL/T-C Properties partially offset by an increase of $39.8 million from the 2012 New Properties and an increase of $13.0 million from the 2012 Comparable Properties. The increase in rental revenues and tenant reimbursements of the 2012 Comparable Properties was driven by increases of $14.0 million in minimum rents and $1.1 million in sponsorship income partially offset by a decrease of $2.6 million in tenant reimbursements. High occupancy levels and continued improvement in leasing spreads led to the increase in minimum rents.

Our cost recovery ratio decreased to 99.8% for 2012 compared to 102.0% for 2011.

The increase in management, development and leasing fees of $3.8 million was mainly attributable to a new contract to provide property management services to a portfolio of six third party malls in 2012 as well as income from the CBL/T-C joint venture.

    Other revenues decreased $3.5 million primarily due to a decrease of $2.4 million in revenues of our subsidiary that provides security and maintenance services to third parties.

Operating Expenses

Total operating expenses decreased $37.1 million for 2012 compared to the prior year due to a $26.9 million decrease in loss on impairment of real estate. Property operating expenses, including real estate taxes and maintenance and repairs, decreased $7.3 million due to a decrease of $21.6 million related to the CBL/T-C Properties partially offset by increases of $13.3 million related to the 2012 New Properties and $1.0 million attributable to the 2012 Comparable Properties. The $1.0 million increase in property operating expenses of the 2012 Comparable Properties is primarily attributable to increases of $2.4 million in real estate taxes and $2.4 million in payroll costs, which were partially offset by decreases of $2.8 million in utilities and snow removal costs, $0.4 million in land rent expense, $0.4 million in promotion-related costs and $0.3 million in insurance expense.

The decrease in depreciation and amortization expense of $5.6 million resulted from a decrease of $23.8 million related to the CBL/T-C Properties and $1.3 million from the 2012 Comparable Properties, partially offset by an increase of $19.5 million from the 2012 New Properties. The decrease attributable to the 2012 Comparable Properties is primarily attributable to lower amortization of tenant allowances due to write-offs of unamortized tenant allowances in the prior year period related to certain store closings partially offset by ongoing capital expenditures for renovations, expansions and deferred maintenance.

General and administrative expenses increased $6.5 million primarily as a result of an increase of $3.9 million in payroll and related expenses, a decrease of $0.8 for capitalized overhead related to development projects, an increase of $0.7 million in legal and other professional services and an increase of $0.7 million related to accelerating the vesting of certain restricted stock awards. The balance of the increase was attributable to increased costs in acquisition costs and several other general and administrative accounts. As a percentage of revenues, general and administrative expenses were 5.0% in 2012 compared to 4.3% in 2011. General and administrative expenses as a percentage of revenues were slightly higher in 2012 due to lower revenues as a result of the deconsolidation of the CBL/T-C Properties.

During 2012, we recorded a non-cash impairment of real estate of $24.4 million. The $24.4 million impairment is attributable to a $20.3 million loss recorded to reduce the fair value of land available for the future expansion of an associated center, a $3.0 million loss to write down the book value of an associated center and a $1.1 million loss from the sale of three outparcels. During 2011, we recorded a non-cash impairment of real estate of $51.3 million, which consisted of $50.7 million related to Columbia Place in Columbia, SC and $0.6 million related to a loss on the sale of a land parcel. Columbia Place experienced declining cash flows as a result of changes in property-specific market conditions, which were further exacerbated by economic

3

conditions that negatively impacted leasing activity and occupancy. See Note 15 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for further discussion of impairment charges.

Other expenses decreased $3.8 million primarily due to lower expenses of $2.2 million related to our subsidiary that provides security and maintenance services to third parties, a write-down of $1.5 million recorded in 2011 to reduce the carrying value of a mortgage note receivable to equal its estimated realizable value, for which we foreclosed on the land that served as collateral on the loan, and a decrease of $0.1 million in abandoned projects expense.

Other Income and Expenses

Interest and other income increased $1.4 million in 2012 compared to the prior year period, primarily as a result of two mezzanine loans for two outlet centers. We earned $0.4 million in interest income on these loans and subsequently recognized $0.6 million of unamortized discounts on these loans when they terminated in connection with the acquisition of member interests in both outlet centers in 2012. We also earned $0.4 million of interest income on a note receivable related to the development of The Outlet Shoppes at Atlanta, located in Woodstock, GA.

Interest expense decreased $22.6 million in 2012 compared to the prior year period. Interest expense related to the CBL/T-C Properties decreased $25.2 million partially offset by an increase of $10.3 million related to the 2012 New Properties. The remaining decrease was primarily related to our continued efforts to deleverage our balance sheet as we used our credit facilities to retire higher rate mortgages loans and refinanced other properties at favorable fixed rates. Our weighted average interest rate was 4.86% as of December 31, 2012 compared to 5.04% as of December 31, 2011. Additionally, we modified and extended our two largest credit facilities in the fourth quarter of 2012 reducing average spreads by 60 basis points.

During 2012, we recorded a gain on extinguishment of debt of $0.3 million in connection with the early retirement of a mortgage loan. During 2011, we recorded a gain on extinguishment of debt of $1.0 million as a result of the early retirement of debt on two malls.

We recorded a gain on investment of $45.1 million during 2012 related to the acquisition of a controlling interest in Imperial Valley Mall, located in El Centro, CA, when we acquired our joint venture partner's 40% interest.

We recognized a gain on sale of real estate assets of $2.3 million in 2012 related to the sale of a vacant anchor space at one of our malls and the sale of eight parcels of land. During 2011, we recognized a gain on sales of real estate assets of $59.4 million. Of this amount, $54.3 million was related to the sale of a portion of our interests in the CBL/T-C Properties and $5.1 million was related to the sale of a vacant anchor space at one of our malls and five parcels of land.

Equity in earnings of unconsolidated affiliates increased by $2.2 million during 2012. Gains related to the sales of three outparcels comprised $1.4 million of the increase. Increases in revenues from several new tenants and favorable rent increases for existing tenants at several unconsolidated properties also contributed to this increase, reflecting improved occupancy and rental rates consistent with the 2012 Comparable Properties.

The income tax provision of $1.4 million in 2012 primarily relates to our Management Company, which is a taxable REIT subsidiary, and consists of a current tax benefit of $1.7 million and a deferred income tax provision of $3.1 million. During 2011, we recorded an income tax benefit of $0.3 million, consisting of a current tax provision of $5.4 million, partially offset by a deferred income tax benefit of $5.7 million. Our taxable REIT subsidiary had higher income in 2012 compared to 2011 primarily as a result of an increase in the management fee income from our own portfolio of properties. Because this fee income is from our consolidated properties, the fee income is eliminated in our consolidated financial statements; however, there is still a tax effect to the taxable REIT subsidiary.

Loss from discontinued operations for 2012 of $18.9 million includes an aggregate loss of $26.5 million on impairment of real estate which was partially offset by the operating results of five office buildings that were sold in the first quarter of 2013, of which two of these office buildings were classified as held for sale as of December 31, 2012; the operating results of two malls and four community centers that were sold during 2012 and a $0.1 million gain on sale of real estate related to one community center that was sold in 2012.

Operating income from discontinued operations for 2011 of $24.1 million includes a gain on extinguishment of debt of $31.4 million for one mall sold in 2011, the operating results of one mall and one community center that were sold in 2011, the operating results of two malls and four community centers that were sold in 2012 and the operating results of five office buildings that were sold in the first quarter of 2013, which were partially offset by an aggregate loss on impairment of real estate of $7.4 million.

We also recorded a gain on discontinued operations of $0.9 million in 2012 related to the sale of a community center.

4

Comparison of the Year Ended December 31, 2011 to the Year Ended December 31, 2010

Properties that were in operation for the entire year during both 2011 and 2010 are referred to as the “2011 Comparable Properties.” From January 1, 2010 to December 31, 2011, we acquired or opened one mall, one outlet center and two community centers as follows:

Property	Location	Date Opened/Acquired
New Developments:
The Pavilion at Port Orange (1)	Port Orange, FL	March 2010
The Forum at Grandview - Phase I	Madison, MS	November 2010
The Outlet Shoppes at Oklahoma City (2)	Oklahoma City, OK	August 2011
Acquisition:
Northgate Mall	Chattanooga, TN	September 2011

(1) The Pavilion at Port Orange is a 50/50 joint venture that is accounted for using the equity method of accounting and is included in equity in earnings (losses) of unconsolidated affiliates in the accompanying consolidated statements of operations.

(2) The Outlet Shoppes at Oklahoma City is a 75/25 joint venture, which is included in the accompanying consolidated statements of operations on a consolidated basis.

The Forum at Grandview, The Outlet Shoppes at Oklahoma City and Northgate Mall are included in our operations on a consolidated basis and are collectively referred to as the "2011 New Properties." In addition to the above properties, in October 2010, we purchased the remaining 50% interest in Parkway Place in Huntsville, AL, from our joint venture partner. The results of operations of this property, previously accounted for using the equity method of accounting, are included in our operations on a consolidated basis beginning October 1, 2010.The transactions related to the 2011 New Properties impact the comparison of the results of operations for the year ended December 31, 2011 to the results of operations for the year ended December 31, 2010.

In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the consolidated financial statements included in Exhibit 99.1 of this Form 8-K have been revised to reflect the operations of three office buildings that were sold in the first quarter of 2013 as discontinued operations because the interim condensed consolidated financial statements included in Exhibit 99.3 of this Form 8-K reflect these properties as discontinued operations.

Revenues

Total revenues increased by $6.1 million for 2011 compared to the prior year. Rental revenues and tenant reimbursements decreased by less than $0.1 million due to a decrease of $19.4 million related to the CBL/T-C Properties partially offset by an increase of $11.3 million from the 2011 Comparable Properties and an increase of $8.1 million from the 2011 New Properties. The purchase of the additional interest in Parkway Place in October 2010 comprised $8.6 million of the increase from the 2011 Comparable Properties. The remaining increase in rental revenues and tenant reimbursements of the 2011 Comparable Properties was primarily driven by a $2.3 million increase in minimum rents as a result of overall improvement in leasing spreads and higher occupancy levels.

Our cost recovery ratio decreased to 102.0% for 2011 compared to 104.1% for 2010.

The increase in management, development and leasing fees of $0.5 million was mainly attributable to the management fees from the CBL/T-C Properties after the formation of CBL/T-C.

Other revenues increased $5.6 million primarily due to an increase of $3.9 million in revenues of our subsidiary that provides security and maintenance services to third parties.

Operating Expenses

Total operating expenses increased $48.4 million for 2011 compared to the prior year due to a $50.1 million increase in loss on impairment of real estate. Property operating expenses, including real estate taxes and maintenance and repairs, increased $2.6 million due to higher expenses of $6.1 million related to the 2011 Comparable Properties, of which $2.5 million is attributable to the consolidation of Parkway Place, and $3.0 million related to the 2011 New Properties, which were partially offset by a decrease of $6.4 million related to the CBL/T-C Properties. The increase in property operating expenses of the 2011 Comparable Properties is primarily attributable to increases of $2.9 million in security and maintenance expense, $1.9 million in utilities expense and $1.3 million in promotion-related costs.

The decrease in depreciation and amortization expense of $9.1 million resulted from a decrease of $8.7 million related to the CBL/T-C Properties and $2.4 million from the 2011 Comparable Properties, partially offset by an increase of $2.0 million from the 2011 New Properties. The decrease attributable to the 2011 Comparable Properties is primarily attributable to lower

5

amortization of tenant allowances due to write-offs of unamortized tenant allowances in the prior year period related to certain store closings partially offset by an increase related to the consolidation of Parkway Place.

General and administrative expenses increased $1.4 million primarily as a result of increases of $1.1 million in payroll and related expenses, $0.6 million in legal and consulting expenses and $0.6 million in insurance expense, partially offset by a reduction of $0.6 million in travel costs. As a percentage of revenues, general and administrative expenses were 4.3% in 2011 compared to 4.2% in 2010.

During 2011, we recorded a non-cash impairment of real estate of $51.3 million, which consisted of $50.7 million related to Columbia Place in Columbia, SC and $0.6 million related to a loss on the sale of a land parcel. Columbia Place experienced declining cash flows as a result of changes in property-specific market conditions, which were further exacerbated by the recent economic conditions that negatively impacted leasing activity and occupancy. See Carrying Value of Long-Lived Assets in the Critical Accounting Policies and Estimates section herein for further discussion of impairment charges. During 2010, we incurred a loss on impairment of real estate assets of $1.2 million related to the sale of a parcel of land.

Other expenses increased $3.4 million primarily due to higher expenses of $3.8 million related to our subsidiary that provides security and maintenance services to third parties, partially offset by a decrease of $0.3 million in abandoned projects expense.

Other Income and Expenses

Interest and other income decreased $1.3 million in 2011 compared to the prior year period due to the elimination of interest income on advances to two joint ventures and a mortgage note receivable.  Interest income declined on one joint venture to which we had outstanding advances when it was sold in June 2010 and, in October 2010, we purchased our partner's 50% share of the joint venture that owned Parkway Place to which we previously had outstanding advances.  In addition, interest income is no longer being accrued on a mortgage note receivable for which we foreclosed on the land that served as collateral on the loan.

Interest expense decreased $14.0 million in 2011 compared to the prior year. The CBL/T-C Properties comprised $8.1 million of the decrease, which was partially offset by an increase of $2.0 million related to the 2011 New Properties. The remaining decrease was primarily related to our continued efforts to deleverage our balance sheet as we decreased our consolidated debt by $720.4 million to $4,489.4 million from December 31, 2010 to December 31, 2011. Additionally, during the second and third quarters of 2011, our secured credit facilities were modified to remove a 1.50% floor on LIBOR and to reduce the amount of the spreads above LIBOR based on our leverage.

During 2011, we recorded a gain on extinguishment of debt of $1.0 million as a result of accelerated premium amortization related to the early retirement of debt on two malls.

We recorded a gain on investment of $0.9 million during 2010 related to the acquisition of the remaining 50% interest in Parkway Place in Huntsville, AL from our joint venture partner. There were no transactions of this nature in 2011.

During 2011, we recognized gain on sales of real estate assets of $59.4 million. Of this amount, $54.3 million was related to the sale of a portion of our interests in the CBL/T-C Properties and $5.1 million was related to the sale of a vacant anchor space at one of our malls and five parcels of land. We recognized a gain on sales of real estate assets of $2.9 million during 2010 from the sale of eight parcels of land.

Equity in earnings (losses) of unconsolidated affiliates increased by $6.3 million during 2011. One joint venture property that opened in March 2010 contributed to the increase compared to the prior year.  Increases in revenues and tenant reimbursements were key drivers at several unconsolidated properties, reflecting improved occupancy and rental rates consistent with the 2011 Comparable Properties. Additionally, our share of the earnings of the CBL/T-C Properties accounted for $0.3 million of the increase. In addition, outparcel sales increased approximately $0.3 million compared to the prior year.  These increases were partially offset by a decline in earnings from Parkway Place as a result of the acquisition of the remaining 50% interest from our joint venture partner in October 2010.  Results of Parkway Place are now reported on a consolidated basis.

The income tax benefit of $0.3 million in 2011 primarily relates to our taxable REIT subsidiary and consists of a current tax provision of $5.4 million and a deferred income tax benefit of $5.7 million. During 2010, we recorded an income tax benefit of $6.4 million, consisting of a current tax benefit of $8.4 million, partially offset by a deferred income tax provision of $2.0 million. Our taxable REIT subsidiary had higher income in 2011 compared to 2010 primarily as a result of an increase in the management fee income from our own portfolio of properties. Because this fee income is from our consolidated properties, the fee income is eliminated in our consolidated financial statements; however, there is still a tax effect to the taxable REIT subsidiary.

Operating income from discontinued operations for 2011 of $24.1 million includes a gain on extinguishment of debt of $31.4 million for one mall sold in 2011, the operating results of one mall and one community center that were sold in 2011, the operating results of two malls and four community centers that were sold in 2012 and the operating results of five office buildings that were sold in the first quarter of 2013, which were partially offset by an aggregate loss on impairment of real estate of $7.4

6

million.

Loss on discontinued operations for 2010 of $35.8 million includes an aggregate loss on impairment of real estate assets of $39.1 million primarily from one mall sold in 2011 and one community center was sold in 2010, which were partially offset by operating results of one mall and two community centers that were sold in 2010, operating results of one mall and one community center that were sold in 2011, operating results of two malls and three community centers that were sold in 2012 and operating results of five office buildings that were sold in the first quarter of 2013.

We also recorded a gain on discontinued operations of $0.4 million related to the sale of a mall in 2010.

Same-Center Net Operating Income

We present same-center NOI as a supplemental performance measure of the operating performance of our same-center properties. NOI is defined as operating revenues (rental revenues, tenant reimbursements, and other income) less property operating expenses (property operating, real estate taxes, and maintenance and repairs). We compute NOI based on our pro rata share of both consolidated and unconsolidated properties. Our definition of NOI may be different than that used by other real estate companies, and accordingly, our calculation of NOI may not be comparable to other real estate companies.

Since same-center NOI includes only those revenues and expenses related to the operations of Comparable Properties, we believe same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, and operating costs and the impact of those trends on our results of operations. Additionally, there are instances when tenants terminate their leases prior to the scheduled expiration date and pay us lease termination fees. These one-time lease termination fees may distort same-center NOI and not be indicative of the ongoing operations of our shopping center properties. Therefore, we believe presenting same-center NOI, excluding lease termination fees, is useful to investors.

We included a property in our same-center pool when we owned all or a portion of the property as of December 31, 2012, and we owned it and it was in operation for both the entire preceding calendar year and the current year ending December 31, 2012. The only properties excluded from the same-center pool that would otherwise meet this criteria are non-core properties and properties included in discontinued operations. As of December 31, 2012, Columbia Place is the only property classified as a non-core property. New Properties are excluded from same-center NOI, until they meet this criteria.

7

Due to the exclusions noted above, same-center NOI should only be used as a supplemental measure of our performance and not as an alternative to operating income (loss) or net income (loss) determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). A reconciliation of our same-center NOI to net income attributable to the Operating Partnership for the years ended December 31, 2012 and 2011 is as follows (in thousands):

	Year Ended December 31,
	2012			2011
Net income attributable to the Operating Partnership	$	150,867		$	159,777
Adjustments: (1)
Depreciation and amortization	307,519			307,989
Interest expense	285,769			303,116
Abandoned projects expense	(39		)	94
Gain on sales of real estate assets	(6,496		)	(60,841		)
Gain on extinguishment of debt	(265		)	(32,463		)
Gain on investments	(45,072		)	—
Write-down of mortgage notes receivable	—			1,900
Loss on impairment of real estate	50,840			58,729
Income tax provision (benefit)	1,404			(269		)
Net income attributable to noncontrolling interest    in earnings of Operating Partnership
(Gain) loss on discontinued operations	(938		)	1
Operating Partnership's share of total NOI	743,589			738,033
General and administrative expenses	51,251			44,751
Management fees and non-property level revenues	(27,729		)	(22,827		)
Operating Partnership's share of property NOI	767,111			759,957
Non-comparable NOI	(36,361		)	(43,981		)
Total same-center NOI	730,750			715,976
Less lease termination fees	(3,456		)	(2,945		)
Total same-center NOI, excluding lease termination fees	$	727,294		$	713,031

(1) Adjustments are based on our pro rata ownership share, including our share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties.

Same-center NOI, excluding lease termination fees, increased $14.3 million for the year ended December 31, 2012 compared to 2011. The 2.0% increase for 2012 compared to the prior year was driven by occupancy gains and positive leasing spreads. The majority of the increase in NOI was from our malls segment.

Operational Review

The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during the fourth quarter due to the holiday season, which generally results in higher percentage rents in the fourth quarter. Additionally, the malls earn most of their rents from short-term tenants during the holiday period. Thus, occupancy levels and revenue production are generally the highest in the fourth quarter of each year. Results of operations realized in any one quarter may not be indicative of the results likely to be experienced over the course of the fiscal year.

8

We derive the majority of our revenues from the mall properties. The sources of our revenues by property type were as follows:

	Year Ended December 31,
	2012		2011
Malls	89.8	%	87.8	%
Associated centers	4.1	%	3.9	%
Community centers	1.2	%	1.7	%
Mortgages, office buildings and other	4.9	%	6.6	%

Mall Store Sales

Mall store sales for the year ended December 31, 2012 on a comparable per square foot basis, including license agreements, were $346 per square foot compared with $334 per square foot for 2011, representing an increase of 3.6%. Going forward we will begin reporting comparable mall store sales excluding license agreements, which we believe is more consistent with current industry standards. License agreements are rental contracts that are temporary or short-term in nature generally lasting more than three months but less than twelve months. Mall store sales, excluding license agreements, for the year ended December 31, 2012 on a comparable per square foot basis were $353 per square foot compared with $342 per square foot for 2011 representing an increase of 3.2%. The holiday shopping season was solid and on par with industry expectations. Regionally, we saw strength in sales from our border malls, partially fueled by the favorable exchange rate. The steady economy and improving unemployment rates lead us to project sales growth for 2013 similar to what we experienced in 2012.

Occupancy

Our portfolio occupancy is summarized in the following table:

	As of December 31,
	2012		2011
Total portfolio (1)	94.6	%	93.6	%
Total mall portfolio (1)	94.6	%	94.1	%
Stabilized malls (1)	94.5	%	94.2	%
Non-stabilized malls (2)	100.0	%	92.1	%
Associated centers	94.8	%	93.4	%
Community centers	95.9	%	91.5	%

(1)    Excludes occupancy for Kirkwood Mall, which was acquired in December 2012.

(2) Represents occupancy for The Outlet Shoppes at Oklahoma City as of December 31, 2012 and occupancy for Pearland Town Center and The Outlet Shoppes at Oklahoma City as of December 31, 2011. Pearland Town Center is classified as a stabilized mall in 2012.

Continued demand from new and existing tenants generated year-over-year occupancy increases in every category of our portfolio. Occupancy improved 100 basis points in 2012 to 94.6% across our total portfolio as compared to 2011. Our stabilized mall occupancy also improved 30 basis points to 94.5% as compared to the prior year. For 2013, we are forecasting occupancy improvements of 25 to 50 basis points as compared to 2012 for the total portfolio.

Leasing

During 2012, we signed more than 6.1 million square feet of leases, including 5.8 million square feet of leases in our operating portfolio and 0.3 million square feet of development leases. The leases signed in our operating portfolio included approximately 1.5 million square feet of new leases and approximately 4.2 million square feet of renewals. This compares with a total of approximately 7.1 million square feet of leases signed during 2011, including 6.8 million square feet of leases in our operating portfolio and 0.3 million square feet of development leasing.

9

Average annual base rents per square foot are based on contractual rents in effect as of December 31, 2012 and 2011, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each property type:

	December 31,
	2012		2011
Stabilized malls (1)	$	29.72	$	29.68
Non-stabilized malls (2)	22.81		23.92
Associated centers	11.90		11.65
Community centers	16.02		14.38
Office buildings	18.62		17.68

(1) Excludes average annual base rents for Kirkwood Mall, which was acquired December 2012. Average annual bases rents as of December 31, 2012 were impacted by the addition of two outlet centers acquired in 2012, which have lower average base rents than traditional malls and one mall acquired in 2012 that has lower average base rents than our stabilized mall portfolio.

(2) Represents average annual base rents for The Outlet Shoppes at Oklahoma City as of December 31, 2012 and average annual base rents for Pearland Town Center and The Outlet Shoppes at Oklahoma City as of December 31, 2011. Pearland Town Center is classified as a stabilized mall in 2012.

Results from new and renewal leasing of comparable small shop space of less than 10,000 square feet during the year ended December 31, 2012 for spaces that were previously occupied are as follows:

Property Type	Square Feet	Prior Gross Rent PSF		New Initial Gross Rent PSF		% Change Initial		New Average Gross Rent PSF (2)		% Change Average
All Property Types (1)	2,892,058	$	38.74	$	40.55	4.7	%	$	41.86	8.1	%
Stabilized Malls	2,642,733	40.49		42.50		5.0	%	43.87		8.4	%
New leases	487,734	43.36		50.48		16.4	%	53.49		23.4	%
Renewal leases	2,154,999	39.83		40.69		2.2	%	41.69		4.7	%

(1) Includes stabilized malls, associated centers, community centers and office buildings with the exception of Kirkwood Mall, which was acquired in December 2012.

(2)    Average gross rent does not incorporate allowable future increases for recoverable common area expenses.

For stabilized mall leasing in 2012, on a same space basis, rental rates were signed at an average increase of 8.4% from the prior gross rent per square foot for new and renewal leases. Demand from new and existing tenants created ongoing improvement in our leasing spreads for both new and renewal leases across our portfolio.

Our goal is to continue to convert shorter term leases to longer terms. We also anticipate continued improvements in rental rates during 2013 as retailers seek out space in our market-dominant properties and new supply remains constricted.

Liquidity and Capital Resources

We continue to focus on reducing our debt levels while exploring opportunities to diversify our financing structure. We believe an investment grade rating would provide us with access to a broader range of corporate securities leading to a more diversified and flexible balance sheet with lower overall cost of capital. The process to achieve an investment grade rating is complex and we anticipate could take up to two years to achieve. As an initial step in the rating process, we increased our pool of unencumbered properties through the extension and modification in November 2012 of our two largest credit facilities totaling $1.2 billion. As of December 31, 2012, we had approximately $818.1 million available on all of our credit facilities combined.

As discussed in Note 14 to the accompanying consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, under the terms of the joint venture agreement for CW Joint Venture, LLC (“CWJV”), we have the ability to redeem Westfield Group's ("Westfield") Westfield's preferred units beginning January 31, 2013 and anticipate we will redeem them in the middle of 2013 using a combination of capital sources. As a short-term solution, we will have sufficient capacity on our credit facilities to redeem all of the preferred units. However, we expect a longer-term option will involve a combination of assets sales, excess proceeds from refinancings and other capital sources.  

We derive a majority of our revenues from leases with retail tenants, which have historically been the primary source for funding short-term liquidity and capital needs such as operating expenses, debt service, tenant construction allowances, recurring capital expenditures, dividends and distributions. We believe that the combination of cash flows generated from our operations, combined with our debt and equity sources and the availability under our lines of credit will, for the foreseeable future, provide

10

adequate liquidity to meet our cash needs.  In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, equity offerings, joint venture investments, issuances of noncontrolling interests in our Operating Partnership, and decreasing expenditures related to tenant construction allowances and other capital expenditures.  We also generate revenues from sales of peripheral land at the properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.

Cash Flows From Operations

There was $78.2 million of unrestricted cash and cash equivalents as of December 31, 2012, an increase of $22.2 million from December 31, 2011.  Cash provided by operating activities during 2012, increased $39.7 million to $481.2 million from $441.8 million during 2011.  The increase is primarily due to the operations of the 2012 New Properties, same-center NOI growth of the 2012 Comparable Properties, an increase in fee income and the reduction in interest expense as a result of our ongoing efforts to reduce debt levels.

Debt

The following tables summarize debt based on our pro rata ownership share, including our pro rata share of unconsolidated affiliates and excluding noncontrolling investors’ share of consolidated properties, because we believe this provides investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands):

	Consolidated		Noncontrolling Interests			Unconsolidated Affiliates		Total		Weighted Average Interest Rate (1)
December 31, 2012:
Fixed-rate debt:
Non-recourse loans on operating properties (2)	$	3,776,245	$	(89,530	)	$	660,563	$	4,347,278	5.48	%
Financing method obligation (3)	18,264		—			—		18,264
Total fixed-rate debt	3,794,509		(89,530		)	660,563		4,365,542		5.48	%
Variable-rate debt:
Non-recourse term loans on operating properties	123,875		—			—		123,875		3.36	%
Recourse term loans on operating properties	97,682		—			128,491		226,173		2.16	%
Construction loans	15,366		—			—		15,366		2.96	%
Unsecured lines of credit (4)	475,626		—			—		475,626		2.07	%
Secured lines of credit	10,625		—			—		10,625		2.46	%
Unsecured term loans	228,000		—			—		228,000		1.82	%
Total variable-rate debt	951,174		—			128,491		1,079,665		2.39	%
Total	$	4,745,683	$	(89,530	)	$	789,054	$	5,445,207	4.86	%

	Consolidated		Noncontrolling Interests			Unconsolidated Affiliates		Total		Weighted Average Interest Rate (1)
December 31, 2011:
Fixed-rate debt:
Non-recourse loans on operating properties (2)	$	3,637,979	$	(30,416	)	$	658,470	$	4,266,033	5.58	%
Recourse term loans on operating properties	77,112		—			—		77,112		5.89	%
Financing method obligation (3)	18,264		—			—		18,264
Total fixed-rate debt	3,733,355		(30,416		)	658,470		4,361,409		5.58	%
Variable-rate debt:
Non-recourse term loans on operating properties	168,750		—			19,716		188,466		2.88	%
Recourse term loans on operating properties	124,439		(726		)	130,455		254,168		3.32	%
Construction loans	25,921		—			—		25,921		3.32	%
Secured lines of credit	27,300		—			—		27,300		3.03	%
Unsecured term loans	409,590		—			—		409,590		1.67	%
Total variable-rate debt	756,000		(726		)	150,171		905,445		2.47	%
Total	$	4,489,355	$	(31,142	)	$	808,641	$	5,266,854	5.04	%

11

(1) Weighted average interest rate includes the effect of debt premiums (discounts), but excludes amortization of deferred financing costs.

(2) We had four interest rate swaps on notional amounts outstanding totaling $113.9 million as of December 31, 2012 and $117.7 million as of December 31, 2011 related to four of our variable-rate loans on operating properties to effectively fix the interest rates on these loans.  Therefore, these amounts are reflected in fixed-rate debt at December 31, 2012 and 2011.

(3) This amount represents the noncontrolling partner's equity contribution that is accounted for as a financing due to certain terms of the joint venture agreement related to Pearland Town Center, in which we own an 88.0% interest. See Note 5 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for further information.

(4) We converted two of our credit facilities from secured facilities to unsecured facilities in November 2012.

Of the $547.3 million of our pro rata share of consolidated and unconsolidated debt as of December 31, 2012 that is scheduled to mature during 2013, excluding debt premiums, we have extensions available on $68.6 million of debt at our option that we intend to exercise, leaving $478.7 million of debt maturities in 2013 that must be retired or refinanced, representing 14 operating property loans and one unsecured term loan.   We plan to retire loans secured by wholly-owned properties using our lines of credit. Loans secured by joint venture properties will be refinanced. Subsequent to December 31, 2012, we retired two operating property loans with an outstanding balance of $77.1 million as of December 31, 2012.

The weighted average remaining term of our total share of consolidated and unconsolidated debt was 4.6 years and 4.5 years at December 31, 2012 and 2011, respectively. The weighted average remaining term of our pro rata share of fixed-rate debt was 5.2 years and 5.0 years at December 31, 2012 and 2011, respectively.

As of December 31, 2012 and 2011, our pro rata share of consolidated and unconsolidated variable-rate debt represented 19.8% and 17.2%, respectively, of our total pro rata share of debt. The increase is primarily due to using our lines of credit to retire higher fixed-rate property-specific mortgages as we continue to grow our unencumbered asset pool to facilitate our strategy to achieve an investment grade rating as well as to support our lines of credit. As of December 31, 2012, our share of consolidated and unconsolidated variable-rate debt represented 10.7% of our total market capitalization (see Equity below) as compared to 10.3% as of December 31, 2011.

See Note 3 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for a description of debt assumed in connection with acquisitions completed during the year ended December 31, 2012.

Unsecured Lines of Credit

In November 2012, we closed on the modification and extension of our $525.0 million and $520.0 million secured credit facilities. Under the terms of the agreements, of which Wells Fargo Bank, NA serves as the administrative agent for the lender groups, the two secured credit facilities were converted to two unsecured credit facilities ("Facility A" and "Facility B") with an increase in capacity on each to $600.0 million for a total capacity of $1.2 billion. We paid aggregate fees of approximately $4.3 million in connection with the extension and modification of the facilities. Facility A matures in November 2015 and has a one-year extension option for an outside maturity date of November 2016. Facility B matures in November 2016 and has a one-year extension option for an outside maturity date of November 2017. The extension options on both facilities are at our election, subject to continued compliance with the terms of the facilities, and have a one-time extension fee of 0.20% of the commitment amount of each credit facility. Both unsecured facilities bear interest at an annual rate equal to one-month, three-month, or six-month LIBOR plus a range of 155 to 210 basis points based on our leverage ratio. We also pay annual unused facility fees, on a quarterly basis, at rates of either 0.25% or 0.35% based on any unused commitment of each facility. In the event we obtain an investment grade rating by either Standard & Poor's or Moody's, we may make a one-time irrevocable election to use our credit rating to determine the interest rate on each facility. If we were to make such an election, the interest rate on each facility would bear interest at an annual rate equal to one-month, three-month, or six-month LIBOR plus a spread of 100 to 175 basis points. Once we elect to use our credit rating to determine the interest rate on each facility, we will begin to pay an annual facility fee that ranges from 0.15% to 0.35% of the total capacity of each facility rather than the annual unused commitment fees described above. We use our lines of credit for mortgage retirement, working capital, construction and acquisition purposes, as well as issuances of letters of credit. The two unsecured lines of credit had a weighted average interest rate of 2.07% at December 31, 2012.

12

The following summarizes certain information about the unsecured lines of credit as of December 31, 2012: 

	Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date
Facility A	600,000		300,297		(1)	November 2015	November 2016
Facility B	600,000		175,329			November 2016	November 2017
	$	1,200,000	$	475,626

(1) There was an additional $601 outstanding on this facility as of December 31, 2012 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit.

See Note 19 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent event related to the unsecured lines of credit.

Secured Line of Credit

In June 2012, we closed on the extension and modification of our $105.0 million secured credit facility. The facility's maturity date was extended to June 2015 and has a one-year extension option, which is at our election and subject to continued compliance with the terms of the facility, for an outside maturity date of June 2016. The facility bears interest at an annual rate equal to one-month LIBOR plus a margin of 175 to 275 basis points based on our leverage ratio. The line is secured by mortgages on certain of our operating properties and is used for mortgage retirement, working capital, construction and acquisition purposes. The secured line of credit had a weighted average interest rate of 2.46% at December 31, 2012. We also pay a non-usage fee based on the amount of unused availability under our secured line of credit at 0.15% of unused availability. The $105.0 million secured credit facility had $10.6 million outstanding at December 31, 2012.

The secured line of credit is collateralized by six of the Operating Partnership’s properties, or certain parcels thereof, which had an aggregate net carrying value of $130.8 million at December 31, 2012.

See Note 19 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for subsequent event related to the secured credit facility.

Unsecured Term Loans

We have an unsecured term loan of $228.0 million that bears interest at LIBOR plus a margin of 1.50% to 1.80% based on our leverage ratio, as defined in the loan agreement. At December 31, 2012, the outstanding borrowings of $228.0 million under the unsecured term loan had a weighted average interest rate of 1.82%.  In 2012, we exercised our one-year extension option to extend the maturity date from April 2012 to April 2013. We intend to retire this loan at the maturity date.

We had an unsecured term loan that bore interest at LIBOR plus a margin ranging from 0.95% to 1.40%, based on our leverage ratio. The loan was obtained in February 2008 for the exclusive purpose of acquiring certain properties from the Starmount Company or its affiliates. We retired the $127.2 million unsecured term loan at its maturity in November 2012 with borrowings from our credit facilities.

See Note 19 to the consolidated financial statements, included in Exhibit 99.1 of the Form 8-K that this Management's Discussion and Analysis is included in, for subsequent events related to unsecured term loans.

Letters of Credit

At December 31, 2012, we had additional secured and unsecured lines of credit with a total commitment of $14.0 million that can only be used for issuing letters of credit. The letters of credit outstanding under these lines of credit totaled $1.5 million at December 31, 2012.

Covenants and Restrictions

The agreements to the unsecured and secured lines of credit contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum net worth requirements, minimum unencumbered asset and interest ratios, maximum secured indebtedness ratios and limitations on cash flow distributions.  We believe we were in compliance with all covenants and restrictions at December 31, 2012.

13

The following presents our compliance with key unsecured debt covenant compliance ratios as of December 31, 2012:

Ratio	Required	Actual
Debt to total asset value	< 60%	52.6%
Ratio of unencumbered asset value to unsecured indebtedness	> 1.60x	3.13x
Ratio of unencumbered NOI to unsecured interest expense	> 1.75x	11.41x
Ratio of EBITDA to fixed charges (debt service)	>1.50x	2.00x

The agreements to the two $600,000 unsecured credit facilities described above, each with the same lead lender, contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000 or any non-recourse indebtedness greater than $150,000 (for the Operating Partnership's ownership share) of the Operating Partnership, the Operating Partnership or any Subsidiary, as defined, will constitute an event of default under the agreements to the credit facilities. The credit facilities also restrict the Operating Partnership's ability to enter into any transaction that could result in certain changes in its, or CBL's, ownership or structure as described under the heading “Change of Control/Change in Management” in the agreements to the credit facilities. The Operating Partnership's obligations under the agreement also will be unconditionally guaranteed, jointly and severally, by any of its subsidiaries to the extent such subsidiary becomes a material subsidiary and is not otherwise an excluded subsidiary, as defined in the agreement. See Note 19 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for event related to debt covenants subsequent to December 31 2012.

The agreement to the $228,000 unsecured term loan described above, with the same lead lender as the unsecured credit facilities, contains default and cross-default provisions customary for transactions of this nature (with applicable customary grace periods) in the event (i) there is a default in the payment of any indebtedness owed by the Operating Partnership to any institution which is a part of the lender group for the unsecured term loan, or (ii) there is any other type of default with respect to any indebtedness owed by the Operating Partnership to any institution which is a part of the lender group for the unsecured term loan and such lender accelerates the payment of the indebtedness owed to it as a result of such default.  The unsecured term loan agreement provides that, upon the occurrence and continuation of an event of default, payment of all amounts outstanding under the unsecured term loan and those facilities with which these agreements reference cross-default provisions may be accelerated and the lenders' commitments may be terminated.  Additionally, any default in the payment of any recourse indebtedness greater than 1% of gross asset value or default in the payment of any non-recourse indebtedness greater than 3% of gross asset value of the Operating Partnership, the Operating Partnership and Significant Subsidiaries, as defined, regardless of whether the lending institution is a part of the lender groups for the unsecured term loan, will constitute an event of default under the agreements to the unsecured term loan.

Mortgages on Operating Properties

In the fourth quarter of 2012, a subsidiary of CBL/T-C, a joint venture in which we own a 50% interest, obtained a 10-year $190.0 million non-recourse loan, secured by West County Center in Des Peres, MO, that bears a fixed interest rate of 3.4% and matures in December 2022. Net proceeds of $189.7 million were used to retire the outstanding borrowings of $142.2 million under the previous loan and the excess proceeds were distributed 50/50 to us and our partner. Additionally, we retired a non-recourse loan with a principal balance of $106.9 million, secured by Monroeville Mall in Monroeville, PA, with borrowings from our credit facilities. The loan was scheduled to mature in January 2013.

In the fourth quarter of 2012, we retired a non-recourse loan with a principal balance of $106.9 million, secured by Monroeville Mall in Monroeville, PA, with borrowings from our credit facilities. The loan was scheduled to mature in January 2013.

During the third quarter of 2012, we retired two loans totaling $122.0 million, each of which was secured by a regional mall, with borrowings from our credit facilities. The loans were scheduled to mature in 2012. We recorded a gain on extinguishment of debt of $0.2 million related to the early retirement of this debt. Additionally, we retired a $2.0 million land loan, secured by The Forum at Grandview in Madison, MS, with borrowings from our credit facilities. The loan was scheduled to mature in September 2012.

Also in the third quarter of 2012, Gulf Coast, a joint venture in which we own a 50% interest, closed on a three-year $7.0 million loan with a bank, 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%. We have guaranteed 100% of this loan. Proceeds from the loan were distributed to us in accordance with the terms of the joint venture agreement and we used these funds to reduce the balance on our credit facilities.

14

During the second quarter of 2012, we closed on five ten-year non-recourse CMBS loans totaling $342.2 million. The loans bear interest at fixed rates ranging from 4.750% to 5.099% with a total weighted average interest rate of 4.946%. These loans are secured by WestGate Mall in Spartanburg, SC; Southpark Mall in Colonial Heights, VA; Jefferson Mall in Louisville, KY; Fashion Square Mall in Saginaw, MI and Arbor Place in Douglasville, GA. Proceeds were used to pay down our credit facilities and to retire an existing loan with a balance of $30.8 million secured by Southpark Mall.

Additionally, during the second quarter of 2012, we closed on a $22.0 millionten-year non-recourse loan with an insurance company at a fixed interest rate of 5.00% secured by CBL Centers I and II in Chattanooga, TN. The new loan was used to pay down our credit facilities, which had been used in April 2012 and February 2012 to retire the balances on the maturing loans on CBL Centers II and I which had principal outstanding balances of $9.1 million and $12.8 million, respectively.

In the second quarter of 2012, we entered into a 75%/25% joint venture, Atlanta Outlet Shoppes, LLC, with a third party to develop, own and operate The Outlet Shoppes at Atlanta, an outlet center development located in Woodstock, GA, In August 2012, the joint venture closed on a construction loan with a maximum capacity of $69.8 million that bears interest at LIBOR plus a margin of 275 basis points. The loan matures in August 2015 and has two one-year extensions available, which are at our option. We have guaranteed 100% of this loan.

Also during the second quarter of 2012, we closed on the extension and modification of a recourse loan secured by Statesboro Crossing in Statesboro, GA to extend the maturity date to February 2013 and reduce the amount available under the loan from $20.9 million to equal the outstanding balance of $13.6 million. The interest rate remained at one-month LIBOR plus a spread of 1.00%. The loan was retired at maturity with borrowings from our credit facilities.

During the first quarter of 2012, we closed on a $73.0 millionten-year non-recourse CMBS loan secured by Northwoods Mall in Charleston, SC, which bears a fixed interest rate of 5.075%. Proceeds were used to reduce outstanding balances on our credit facilities.

During the first quarter of 2012, YTC, a joint venture in which we own a 50% interest, closed on a $38.0 million10-year non-recourse loan, secured by York Town Center in York, PA, which bears interest at a fixed rate of 4.9% and matures in February 2022. Proceeds from the new loan, plus cash on hand, were used to retire an existing loan of $39.4 million that was scheduled to mature in March 2012.

Also during the first quarter of 2012, Port Orange, a joint venture in which we own a 50% interest, 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 $98.9 million to $65.0 million. Port Orange paid $3.3 million 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%. We have guaranteed 100% of the construction loan.

Also during the first quarter of 2012, we retired 14 operating property loans with an aggregate principal balance of $381.6 million that were secured by Arbor Place, The Landing at Arbor Place, Fashion Square, Hickory Hollow, The Courtyard at Hickory Hollow Mall, Jefferson Mall, Massard Crossing, Northwoods Mall, Old Hickory Mall, Pemberton Plaza, Randolph Mall, Regency Mall, WestGate Mall and Willowbrook Plaza with borrowings from our credit facilities. See Note 4 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, related to the sale of Massard Crossing, Hickory Hollow Mall and Willowbrook Plaza in 2012.

In the first quarter of 2012, the lender of the non-recourse mortgage loan secured by Columbia Place in Columbia, SC notified us that the loan had been placed in default. Columbia Place generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $27.3 million at December 31, 2012, and a contractual maturity date of September 2013. The lender on the loan receives the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments.

See Note 19 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for events related to operating property loans subsequent to December 31, 2012.

15

Interest Rate Hedging Instruments

During the first quarter of 2012, we entered into an interest rate cap agreement with an initial notional amount of $125.0 million, amortizing to $122.4 million, to hedge the risk of changes in cash flows on the borrowings of one of our properties equal to the cap notional. The interest rate cap protects us from increases in the hedged cash flows attributable to overall changes in 3-month LIBOR above the strike rate of the cap on the debt. The strike rate associated with the interest rate cap is 5.0%. The cap matures in January 2014.

The following table provides further information related to each of our interest rate derivatives that were designated as cash flow hedges of interest rate risk as of December 31, 2012 and 2011 (dollars in thousands):

Instrument Type	Location in Consolidated Balance Sheet	Outstanding Notional Amount	Designated Benchmark Interest Rate	Strike Rate		Fair Value at 12/31/12			Fair Value at 12/31/11			Maturity Date
Cap	Intangible lease assets   and other assets	$ 123,875 (amortizing to $122,375)	3-month LIBOR	5.000	%	$	—		$	—		January 2014
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$ 55,057 (amortizing to $48,337)	1-month LIBOR	2.149	%	$	(2,775	)	$	(2,674	)	April 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$ 34,469 (amortizing to $30,276)	1-month LIBOR	2.187	%	(1,776		)	(1,725		)	April 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$ 12,887 (amortizing to $11,313)	1-month LIBOR	2.142	%	(647		)	(622		)	April 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$ 11,472 (amortizing to $10,083)	1-month LIBOR	2.236	%	(607		)	(596		)	April 2016
						$	(5,805	)	$	(5,617	)

Equity

In October 2012, CBL completed an underwritten public offering of 6,900,000 depositary shares, each representing 1/10th of a share of its Series E Preferred Stock at $25.00 per depositary share. CBL contributed the net proceeds from the offering of $166.6 million to us in exchange for 690,000 of our Series E Preferred Units. We used a portion of the net proceeds to redeem all of our outstanding Series C Preferred Units, which were held by CBL, for a liquidation preference of $115.0 million plus $0.9 million related to accrued and unpaid dividends for an aggregate redemption amount of $115.9 million. we used the remaining net proceeds of $50.7 million to reduce outstanding balances on our secured credit facilities. We will pay cumulative distributions on the Series E Preferred Units from the date of original issuance in the amount of $16.5625 per preferred unit each year, which is equivalent to 6.625% of the $250.00 liquidation preference per preferred unit. We may not redeem the Series E Preferred Units before October 12, 2017, except in limited circumstances to preserve CBL's REIT status or in connection with a change of control. On or after October 12, 2017, we may, at our option, redeem the Series E Preferred Units in whole at any time or in part from time to time by paying $250.00 per preferred unit, plus any accrued and unpaid distributions up to, but not including, the date of redemption. The Series E Preferred Units generally have no stated maturity and will not be subject to any sinking fund or mandatory redemption. The Series E Preferred Units are not convertible into any of CBL's securities, except under certain circumstances in connection with a change of control. Owners of the Series E Preferred Units generally have no voting rights except under dividend default.

On November 5, 2012, we redeemed all 460,000 Series C Preferred Units for $115.9 million. We recorded a charge to distributions to preferred unitholders of $3.8 million in the fourth quarter of 2012 to write off direct issuance costs related to the Series C Preferred Units.

During the year ended December 31, 2012, we paid distributions of $216.2 million to holders of our common and preferred units, as well as $26.9 million in distributions to noncontrolling interest investors.

We paid first, second and third quarter 2012 cash distributions on our common units of $0.22 per unit and $0.7322 to $0.7572 per unit for certain special common units on April 17^th, July 17^th and October 16^th2012, respectively.  On November 28, 2012, we announced a fourth quarter cash distribution of $0.22 per common unit and $0.7322 to $0.7572 per unit for certain special common units that was paid on January 16, 2013.  Future distributions will be determined by our general partner based upon circumstances at the time of declaration.

16

As a public company and, as a subsidiary of a publicly traded company, we have access to capital through both the public equity and debt markets. We and CBL currently have a shelf registration statement on file with the Securities and Exchange Commission authorizing CBL to publicly issue senior and/or subordinated debt securities, shares of preferred stock (or depositary shares representing fractional interests therein), shares of common stock, warrants or rights to purchase any of the foregoing securities, and units consisting of two or more of these classes or series of securities.  We are also authorized to publicly issue senior and/or subordinated debt securities. There is no limit to the offering price or number of securities that we may issue under this shelf registration statement. Generally, if CBL publicly issues any equity or debt securities, CBL will contribute the net proceeds to us in exchange for equity or debt securities, as the case may be, that have corresponding economic terms as the securities issued by CBL.

Our strategy is to maintain a conservative debt-to-total-market capitalization ratio in order to enhance our access to the broadest range of capital markets, both public and private. Based on our share of total consolidated and unconsolidated debt and the market value of equity (based on the market price of CBL's stock), our debt-to-total-market capitalization (debt plus market value of CBL's equity) ratio was 53.8% at December 31, 2012, compared to 59.7% at December 31, 2011. Our debt-to-market capitalization ratio at December 31, 2012 was computed as follows (in thousands, except stock prices):

	Units Outstanding	Stock Price (1)		Value
Operating partnership units	190,855	$	21.21	$	4,048,035
7.375% Series D Cumulative Redeemable Preferred Units	1,815	250.00		453,750
6.625% Series E Cumulative Redeemable Preferred Units	690	250.00		172,500
Total market equity				4,674,285
Operating Partnership’s share of total debt				5,445,207
Total market capitalization				$	10,119,492
Debt-to-total-market capitalization ratio				53.8		%

(1) Stock price for Operating Partnership units equals the closing price of CBL's common stock on December 31, 2012. The stock prices for the preferred units represent the liquidation preference of each respective series of preferred units.

Contractual Obligations

The following table summarizes our significant contractual obligations as of December 31, 2012 (dollars in thousands):

	Payments Due By Period
	Total			Less Than 1 Year			1-3 Years			3-5 Years			More Than 5 Years
Long-term debt:
Total consolidated debt service (1)	$	5,942,128		$	733,648		$	1,671,749		$	1,589,818		$	1,946,913
Noncontrolling interests' share in other consolidated subsidiaries	(108,317		)	(5,614		)	(11,279		)	(52,627		)	(38,797		)
Our share of unconsolidated affiliates debt service (2)	928,851			162,101			404,046			189,061			173,643
Our share of total debt service obligations	6,762,662			890,135			2,064,516			1,726,252			2,081,759
Operating leases: (3)
Ground leases on consolidated properties	32,372			775			1,573			1,613			28,411
Purchase obligations:(4)
Construction contracts on consolidated properties	6,491			6,491			—			—			—
Total contractual obligations	$	6,801,525		$	897,401		$	2,066,089		$	1,727,865		$	2,110,170

(1) Represents principal and interest payments due under the terms of mortgage and other indebtedness and includes $1,218,183 of variable-rate debt service on ten operating properties, one construction loan, one secured credit facility and two unsecured credit facilities. The construction loan and credit facilities do not require scheduled principal payments. The future interest payments are projected based on the interest rates that were in effect at December 31, 2012. See to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for additional information regarding the terms of long-term debt.

(2) Includes $137,914 of variable-rate debt service. Future contractual obligations have been projected using the same assumptions as used in (1) above.

17

(3) Obligations where we own the buildings and improvements, but lease the underlying land under long-term ground leases. The maturities of these leases range from 2014 to 2089 and generally provide for renewal options.

(4) Represents the remaining balance to be incurred under construction contracts that had been entered into as of December 31, 2012, but were not complete. The contracts are primarily for development of properties.

Capital Expenditures

Deferred maintenance expenditures are generally billed to tenants as common area maintenance expense, and most are recovered over a 5 to 15-year period. Renovation expenditures are primarily for remodeling and upgrades of malls, of which a portion is recovered from tenants over a 5 to 15-year period.  We recover these costs through fixed amounts with annual increases or pro rata cost reimbursements based on the tenant’s occupied space. The following table summarizes these capital expenditures, including our share of unconsolidated affiliates' capital expenditures for the year ended December 31, 2012 compared to 2011 (dollars in thousands):

	Year Ended December 31,
	2012		2011
Tenant allowances (1)	$	56,657	$	46,403
Renovations	28,106		23,300
Deferred maintenance:
Parking lot and parking lot lighting	18,163		8,793
Roof repairs and replacements	8,427		3,312
Other capital expenditures	11,567		8,707
Total deferred maintenance	38,157		20,812
Total capital expenditures	$	122,920	$	90,515

(1) Tenant allowances primarily relate to new leases. Tenant allowances related to renewal leases were not material for the periods presented.

We capitalized overhead of $3.2 million and $4.0 million during 2012 and 2011, respectively. We capitalized $2.7 million and $5.0 million of interest during 2012 and 2011, respectively.

We continue to make it a priority to reinvest in our properties in order to enhance their dominant position in the market. In 2012, we completed upgrades at Cross Creek Mall in Fayetteville, NC; Post Oak Mall in College Station, TX; Turtle Creek Mall in Hattiesburg, MS and Mall del Norte in Laredo, TX. Our 2013 renovation program includes upgrades at four of our properties. Renovations are scheduled to be completed in 2013 at Friendly Center in Greensboro, NC; Greenbrier Mall in Chesapeake, VA; Acadiana Mall in Lafayette, LA and Northgate Mall in Chattanooga, TN. Friendly Center's renovation will include updated walkway canopies and landscaping. Greenbrier Mall will receive a newly designed food court with new tables and chairs in addition to landscape improvements and other upgrades. The upgrades at Acadiana Mall will include updated entrances, a remodeled food court, new landscaping and other enhancements. The renovation at Northgate Mall will include exterior enhancements, new flooring and soft seating areas as well as ceiling and lighting upgrades. Our total anticipated net investment in these renovations is approximately $24.7 million.

The terms of the joint venture that we formed with TIAA-CREF require us to fund certain capital expenditures related to parking decks at West County Center of approximately $26.4 million. As of December 31, 2012, we had funded $7.3 million of this amount leaving approximately $19.1 million to be funded.

Annual capital expenditures budgets are prepared for each of our properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, will provide the necessary funding for these expenditures.

18

Developments and Expansions

The following tables summarize our development projects as of December 31, 2012:

Properties Opened During the Year Ended December 31, 2012
(Dollars in thousands)
		Total Project Square Feet
Property	Location		Total Cost (1)		Cost to  Date (2)		Date Opened	Initial Unleveraged Yield
Community Center:
Waynesville Commons	Waynesville, NC	127,585	$	9,987	$	9,505	October-12	10.6%
Community Center Expansion:
The Forum at Grandview - Phase II (3)	Madison, MS	83,060	$	16,826	$	13,119	April-12	7.6%
Mall /Open-Air Center Expansion:
The Shoppes at Southaven Towne Center - Phase I	Southaven, MS	15,557	$	1,828	$	1,614	November-12	16.4%
Mall Redevelopment:
Foothills Mall/Plaza - Carmike Cinemas	Maryville, TN	45,276	$	8,337	$	8,718	March-12	7.3%
Outlet Center Expansion:
The Outlet Shoppes at Oklahoma City - Phase II (3)	Oklahoma City, OK	27,850	$	6,668	$	5,055	November-12	11.4%
Total Properties Opened		299,328	$	43,646	$	38,011

(1) Total cost is presented net of reimbursements to be received. 

(2) Cost to date does not reflect reimbursements until they are received. 

(3) These properties are 75/25 joint ventures. Total cost and cost to date are reflected at 100%.

In the fourth quarter of 2012, we opened Waynesville Commons, our newest community center development in Waynesville, NC. The 100% leased center is anchored by Belk, PetSmart and Michaels. In the second quarter of 2012, we also celebrated the opening of the second phase of The Forum at Grandview, our 75/25 joint venture community center development in Madison, MS, which is anchored by Michaels, ULTA, HomeGoods and Petco.

In the fourth quarter of 2012, we completed the first phase of an expansion at Southaven Town Center, an open-air center located in Southaven, MS. The project is fully leased to Men's Wearhouse, College Station and Rue 21.

In the first quarter of 2012, Carmike Cinemas opened a state-of-the art 12-screen movie theater complex at Foothills Mall in Maryville, TN.

We also opened the second phase of The Outlet Shoppes at Oklahoma City in the last quarter of 2012. The outlet center is 100% leased and second phase expansion includes stores such as Ann Taylor, LOFT, Waterford, Lucky Jeans and Coach Men.

19

Properties Under Development at December 31, 2012
(Dollars in thousands)
		Total Project Square Feet
Property	Location		Total Cost (1)		Cost to Date (2)		Expected Opening Date	Initial Unleveraged Yield
Community Center:
The Crossings at Marshalls Creek	Middle Smithfield, PA	104,525	$	18,983	$	11,312	Summer-13	9.8%
Mall Expansion:
Volusia Mall - Restaurant District	Daytona Beach, FL	28,000	$	8,951	$	4,107	Fall-13	11.0%
Mall Redevelopments:
Monroeville Mall - JC Penney/Cinemark	Pittsburgh, PA	464,792	$	26,178	$	8,784	October-12/Winter-13	7.6%
Southpark Mall - Dick's Sporting Goods	Colonial Heights, VA	91,770	9,891		860		Fall-13	6.6%
		556,562	$	36,069	$	9,644
Outlet Center:
The Outlet Shoppes at Atlanta (3)	Woodstock, GA	370,456	$	80,490	$	31,468	July-13	10.0%
Total Under Development		1,059,543	$	144,493	$	56,531

(1) Total cost is presented net of reimbursements to be received. 

(2) Cost to date does not reflect reimbursements until they are received. 

(3) This property is a 75/25 joint venture. Total cost and cost to date are reflected at 100%.

Construction continues at The Crossings at Marshalls Creek, a community center development, which will be anchored by Price Chopper super market, Rite Aid, STS Tire and Auto Centers, and Family Dollar. The project is approximately 85% leased or committed with a grand opening scheduled for summer 2013.

We continue to invest in our mall properties through several expansion and redevelopment projects slated for completion in 2013. A 28,000-square-foot expansion to add a restaurant district at Volusia Mall in Daytona Beach commenced construction in late 2012. At Monroeville Mall, JC Penney opened their new 110,000-square-foot prototype store in October 2012, relocating from their existing store in the mall. Their former building is being redeveloped into a new 12-screen Cinemark Theatre, anticipated to open in fall 2013. We also began construction in the fourth quarter of 2012 on the redevelopment of a recently vacated Dillard's location at Southpark Mall in Colonial Heights, VA. The store will be redeveloped for a 56,000-square-foot Dick's Sporting Goods. The project may also feature a selection of specialty stores and restaurants with a grand opening planned in summer 2013.

Construction is in progress on The Outlet Shoppes at Atlanta. The 370,500-square-foot project is approximately 92% leased or committed with retailers including Saks Fifth Avenue OFF 5^TH, Nike, Brooks Brothers, Under Armour, J.Crew and Fossil. This project is a 75/25 joint venture scheduled to open in July 2013.

We hold options to acquire certain development properties owned by third parties.  Except for the projects presented above, we do not have any other material capital commitments as of December 31, 2012.

Acquisitions

In December 2012, we acquired the remaining 40.0% interests in Imperial Valley Mall, L.P., Imperial Valley Peripheral, L.P. and Imperial Valley Commons, L.P. in El Centro, CA from our joint venture partner. The interests were acquired for total consideration of $36.5 million which consists of $15.5 million in cash and $21.0 million related to our assumption of the joint venture partner's share of the loan secured by Imperial Valley Mall.

In December 2012, we acquired a 49.0% joint venture interest in Kirkwood Mall in Bismarck, ND. We paid cash of $39.8 million for our 49.0% share, which was based on a total value of $121.5 million including a $40.4 million non-recourse loan. We executed an agreement to acquire the remaining 51.0% interest within 90 days subject to the lender's approval to assume the loan, which bears interest of 5.75% and matures in April 2018.

20

In May 2012, weacquired Dakota Square Mall in Minot, ND. The purchase price of $91.5 million consisted of $32.5 million in cash and the assumption of a $59.0 million non-recourse loan that bears interest at a fixed rate of 6.23% and matures in November 2016.

In April 2012, we exercised our rights with our noncontrolling interest partner under the terms of a mezzanine loan agreement with the borrower, which owned The Outlet Shoppes at Gettysburg in Gettysburg, PA, to convert the mezzanine loan into a member interest in the outlet shopping center. After conversion, we own a 50.0% interest in the outlet center. The investment of $24.8 million consisted of a $4.5 million converted mezzanine loan and the assumption of $20.3 million of debt. The $40.6 million of debt, of which our share is 50.0%, bears interest at a fixed rate of 5.87% and matures in February 2016.

In April 2012, we acquired a 75.0% joint venture interest in The Outlet Shoppes at El Paso, an outlet shopping center located in El Paso, TX for $31.6 million and a 50.0% joint venture interest in outparcel land adjacent to The Outlet Shoppes at El Paso for $3.9 million for a total of $35.5 million. The amount paid for our 75.0% and 50.0% interests was based on a total value of $116.8 million including a non-recourse mortgage loan of $66.9 million, which bears interest at a fixed rate of 7.06% and matures in December 2017. The entity that owned The Outlet Shoppes at El Paso used a portion of the cash proceeds to repay a $9.2 million mezzanine loan provided by us. After considering the repayment of the mezzanine loan to us, the net consideration paid by us in connection with this transaction was $28.6 million.

Dispositions

During 2012, we completed the sale of two malls, four community centers and eight parcels of land for aggregate net proceeds of $77.0 million, which were used to reduce the outstanding borrowings on our credit facilities. See Note 4 and Note 19 in Exhibit 99.1 of this Form 8-K for information on properties sold subsequent to December 31, 2012.

Off-Balance Sheet Arrangements

Unconsolidated Affiliates

We have ownership interests in 16 unconsolidated affiliates as of December 31, 2012, that are described in Note 5 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the consolidated balance sheets as “Investments in Unconsolidated Affiliates.” The following are circumstances when we may consider entering into a joint venture with a third party:

▪ Third parties may approach us with opportunities in which they have obtained land and performed some pre-development activities, but they may not have sufficient access to the capital resources or the development and leasing expertise to bring the project to fruition. We enter into such arrangements when we determine such a project is viable and we can achieve a satisfactory return on our investment. We typically earn development fees from the joint venture and provide management and leasing services to the property for a fee once the property is placed in operation.

▪ We determine that we may have the opportunity to capitalize on the value we have created in a property by selling an interest in the property to a third party. This provides us with an additional source of capital that can be used to develop or acquire additional real estate assets that we believe will provide greater potential for growth. When we retain an interest in an asset rather than selling a 100% interest, it is typically because this allows us to continue to manage the property, which provides us the ability to earn fees for management, leasing, development and financing services provided to the joint venture.

Preferred Joint Venture Units

We consolidate our investment in a joint venture, CWJV, with Westfield.  The terms of the joint venture agreement require that CWJV pay an annual preferred distribution at a rate of 5.0%, which increases to 6.0% on July 1, 2013, on the preferred liquidation value of the perpetual preferred joint venture units (“PJV units”) of CWJV that are held by Westfield.  Westfield has the right to have all or a portion of the PJV units redeemed by CWJV with either cash or property owned by CWJV, in each case for a net equity amount equal to the preferred liquidation value of the PJV units. At any time after January 1, 2013, Westfield may propose that CWJV acquire certain qualifying property that would be used to redeem the PJV units at their preferred liquidation value. If CWJV does not redeem the PJV units with such qualifying property (a “Preventing Event”), then the annual preferred distribution rate on the PJV units increases to 9.0% beginning July 1, 2013.  We will have the right, but not the obligation, to offer to redeem the PJV units from January 31, 2013 through January 31, 2015 at their preferred liquidation value, plus accrued and unpaid distributions. We amended the joint venture agreement with Westfield in September 2012 to provide that, if we exercise

21

our right to offer to redeem the PJV units on or before August 1, 2013, then the preferred liquidation value will be reduced by $10.0 million so long as Westfield does not reject the offer and the redemption closes on or before September 30, 2013. If we fail to make such an offer, the annual preferred distribution rate on the PJV units increases to 9.0% for the period from July 1, 2013 through June 30, 2016, at which time it decreases to 6.0% if a Preventing Event has not occurred.  If, upon redemption of the PJV units, the fair value of our common stock is greater than $32.00 per share, then such excess (but in no case greater than $26.0 million in the aggregate) shall be added to the aggregate preferred liquidation value payable on account of the PJV units.  We account for this contingency using the method prescribed for earnings or other performance measure contingencies.  As such, should this contingency result in additional consideration to Westfield, we will record the current fair value of the consideration issued as a purchase price adjustment at the time the consideration is paid or payable.

See Note 19 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for events related to CWJV and Westfield subsequent to December 31, 2012.

Guarantees

We may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on our investment in the joint venture. We may receive a fee from the joint venture for providing the guaranty. Additionally, when we issue a guaranty, the terms of the joint venture agreement typically provide that we may receive indemnification from the joint venture partner or have the ability to increase our ownership interest.

We own a parcel of land in Lee's Summit, MO that we are ground leasing to a third party development company.  The third party developed and operates a shopping center on the land parcel. We have guaranteed 27% of the third party’s construction loan and bond line of credit (the “loans”) of which the maximum guaranteed amount, representing 27% of capacity, is approximately $15.2 million. In the third quarter of 2012, the loans were modified and extended to December 2012. In August 2012, proceeds from a bond issuance were applied to reduce $10.4 million of the outstanding balance on the bond line of credit. Additionally, $1.0 million of the construction loan was repaid. The total amount outstanding at December 31, 2012 on the loans was $49.3 million of which we have guaranteed $13.3 million.  We included an obligation of $0.2 million as of December 31, 2012 and 2011 in the consolidated balance sheets, included in Exhibit 99.1 of this Form 8-K, to reflect the estimated fair value of the guaranty. The loan was in default at December 31, 2012 because it was not refinanced at the scheduled maturity date in December 2012. The third party developer is working with the lender to extend the maturity date of the loan. We have not increased our accrual for the contingent obligation as we do not believe that this contingent obligation is probable.

We have guaranteed 100% of the construction and land loans of West Melbourne I, LLC (“West Melbourne”), an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $45.4 million.  West Melbourne developed and operates Hammock Landing, a community center in West Melbourne, FL. The total amount outstanding on the loans at December 31, 2012 was $45.4 million.  The guaranty will expire upon repayment of the debt. The land loan, and the construction loan, each representing $2.9 million and $42.4 million, respectively, of the amount outstanding at December 31, 2012, mature in November 2013. The construction loan has a one-year extension option available. We included an obligation of $0.5 million in the consolidated balance sheets as of December 31, 2012 and 2011 to reflect the estimated fair value of this guaranty.

We have guaranteed 100% of the construction loan of Port Orange, an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $63.0 million. Port Orange developed and operates The Pavilion at Port Orange, a community center in Port Orange, FL. The total amount outstanding at December 31, 2012 on the loan was $63.0 million. The guaranty will expire upon repayment of debt.  The loan matures in March 2014 and has a one-year extension option available.  We included an obligation of $1.0 million in the consolidated balance sheets as of December 31, 2012 and 2011, included in Exhibit 99.1 of this Form 8-K, to reflect the estimated fair value of this guaranty.

We have guaranteed the lease performance of YTC, an unconsolidated affiliate in which we own a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving

22

reductions in rent. We have guaranteed YTC’s performance under this agreement up to a maximum of $22.0 million, which decreases by $0.8 million annually until the guaranteed amount is reduced to 10.0 million. The guaranty expires on December 31, 2020.  The maximum guaranteed obligation was $17.2 million as of December 31, 2012.  We entered into an agreement with our joint venture partner under which the joint venture partner has agreed to reimburse us 50% of any amounts we are obligated to fund under the guaranty.  We did not include an obligation for this guaranty because we determined that the fair value of the guaranty was not material as of December 31, 2012 and 2011.

In July 2012, we guaranteed 100% of a term loan for Gulf Coast, an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $6.8 million.  The loan is for the third phase expansion of Gulf Coast Town Center, a shopping center located in Ft. Myers, FL. The total amount outstanding as of December 31, 2012 on the loan was $6.8 million. The guaranty will expire upon repayment of the debt. The loan matures in July 2015. We did not record an obligation for this guaranty because we determined that the fair value of the guaranty was not material as of December 31, 2012.

Our guarantees and the related accounting are more fully described in Note 14 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K.

See Note 19 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for guarantee subsequent to December 31, 2012.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP.  In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures.  We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared.  On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP.  However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that are reasonably likely to occur could materially impact the financial statements.  Management believes that the following critical accounting policies discussed in this section reflect its more significant estimates and assumptions used in preparation of the consolidated financial statements.  We have reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.   For a discussion of our significant accounting policies, see Note 2 of the Notes to Consolidated Financial Statements, included in Exhibit 99.1 of this Form 8-K.

Revenue Recognition

Minimum rental revenue from operating leases is recognized on a straight-line basis over the initial terms of the related leases. Certain tenants are required to pay percentage rent if their sales volumes exceed thresholds specified in their lease agreements. Percentage rent is recognized as revenue when the thresholds are achieved and the amounts become determinable.

We receive reimbursements from tenants for real estate taxes, insurance, common area maintenance, and other recoverable operating expenses as provided in the lease agreements. Tenant reimbursements are recognized as revenue in the period the related operating expenses are incurred. Tenant reimbursements related to certain capital expenditures are billed to tenants over periods of 5 to 15 years and are recognized as revenue in accordance with underlying lease terms.

We receive management, leasing and development fees from third parties and unconsolidated affiliates. Management fees are charged as a percentage of revenues (as defined in the management agreement) and are recognized as revenue when earned. Development fees are recognized as revenue on a pro rata basis over the development period. Leasing fees are charged for newly executed leases and lease renewals and are recognized as revenue when earned. Development and leasing fees received from unconsolidated affiliates during the development period are recognized as revenue to the extent of the third-party partners’ ownership interest. Fees to the extent of our ownership interest are recorded as a reduction to our investment in the unconsolidated affiliate.

Gains on sales of real estate assets are recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, our receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. When we have an ownership interest in the buyer, gain is recognized to the extent of the third party partner’s ownership interest and the portion of the gain attributable to our ownership interest is deferred.

23

Real Estate Assets

We capitalize predevelopment project costs paid to third parties. All previously capitalized predevelopment costs are expensed when it is no longer probable that the project will be completed. Once development of a project commences, all direct costs incurred to construct the project, including interest and real estate taxes, are capitalized. Additionally, certain general and administrative expenses are allocated to the projects and capitalized based on the amount of time applicable personnel work on the development project. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements are capitalized and depreciated over their estimated useful lives.

All acquired real estate assets are accounted for using the acquisition method of accounting and accordingly, the results of operations are included in the consolidated statements of operations from the respective dates of acquisition. The purchase price is allocated to (i) tangible assets, consisting of land, buildings and improvements, as if vacant, and tenant improvements and (ii) identifiable intangible assets and liabilities generally consisting of above- and below-market leases and in-place leases. We use estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation methods to allocate the purchase price to the acquired tangible and intangible assets. Liabilities assumed generally consist of mortgage debt on the real estate assets acquired. Assumed debt with a stated interest rate that is significantly different from market interest rates is recorded at its fair value based on estimated market interest rates at the date of acquisition.

Depreciation is computed on a straight-line basis over estimated lives of 40 years for buildings, 10 to 20 years for certain improvements and 7 to 10 years for equipment and fixtures. Tenant improvements are capitalized and depreciated on a straight-line basis over the term of the related lease. Lease-related intangibles from acquisitions of real estate assets are amortized over the remaining terms of the related leases. The amortization of above- and below-market leases is recorded as an adjustment to minimum rental revenue, while the amortization of all other lease-related intangibles is recorded as amortization expense. Any difference between the face value of the debt assumed and its fair value is amortized to interest expense over the remaining term of the debt using the effective interest method.

Carrying Value of Long-Lived Assets

We periodically evaluate long-lived assets to determine if there has been any impairment in their carrying values and record impairment losses if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts or if there are other indicators of impairment. If it is determined that impairment has occurred, the amount of the impairment charge is equal to the excess of the asset’s carrying value over its estimated fair value.  We estimate fair value using the undiscounted cash flows expected to be generated by each property, which are based on a number of assumptions such as leasing expectations, operating budgets, estimated useful lives, future maintenance expenditures, intent to hold for use and capitalization rates, among others.  These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the future cash flows estimated in our impairment analyses may not be achieved. During the year ended December 31, 2012, we recorded a loss on impairment of real estate totaling $50.9 million. Of this total, $26.5 million is attributable to four properties which were sold in 2012 and included in discontinued operations, $23.3 million is attributable to two existing properties and $1.1 million relates to the sale of three outparcels. During the year ended December 31, 2011, we recorded impairment charges of $58.7 million. Of this total, $50.7 million is due to the impairment of one mall and $0.6 million is from the sale of one outparcel. The balance of $7.4 million relates to properties that are included in discontinued operations. During the year ended December 31, 2010 , we recorded a $40.3 million loss on impairment, of which $39.1 million relates to three properties which are included in discontinued operations and $1.2 attributable to the sale of an outparcel. See Notes 4 and 15 to the consolidated financial statements, included in Exhibit 99.1 of this Form 8-K, for additional information about these impairment losses.

Allowance for Doubtful Accounts

We periodically perform a detailed review of amounts due from tenants and others to determine if accounts receivable balances are impaired based on factors affecting the collectibility of those balances.  Our estimate of the allowance for doubtful accounts requires significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.  We recorded a provision for doubtful accounts of $1.5 million, $1.7 million and $2.7 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Investments in Unconsolidated Affiliates

We evaluate our joint venture arrangements to determine whether they should be recorded on a consolidated basis.  The percentage of ownership interest in the joint venture, an evaluation of control and whether a VIE exists are all considered in the consolidation assessment.

24

Initial investments in joint ventures that are in economic substance a capital contribution to the joint venture are recorded in an amount equal to our historical carryover basis in the real estate contributed. Initial investments in joint ventures that are in economic substance the sale of a portion of our interest in the real estate are accounted for as a contribution of real estate recorded in an amount equal to our historical carryover basis in the ownership percentage retained and as a sale of real estate with profit recognized to the extent of the other joint venturers’ interests in the joint venture. Profit recognition assumes that we have no commitment to reinvest with respect to the percentage of the real estate sold and the accounting requirements of the full accrual method are met.

We account for our investment in joint ventures where we own a noncontrolling interest or where we are not the primary beneficiary of a VIE using the equity method of accounting. Under the equity method, our cost of investment is adjusted for our share of equity in the earnings of the unconsolidated affiliate and reduced by distributions received. Generally, distributions of cash flows from operations and capital events are first made to partners to pay cumulative unpaid preferences on unreturned capital balances and then to the partners in accordance with the terms of the joint venture agreements.

Any differences between the cost of our investment in an unconsolidated affiliate and our underlying equity as reflected in the unconsolidated affiliate’s financial statements generally result from costs of our investment that are not reflected on the unconsolidated affiliate’s financial statements, capitalized interest on our investment and our share of development and leasing fees that are paid by the unconsolidated affiliate to us for development and leasing services provided to the unconsolidated affiliate during any development periods. The net difference between our investment in unconsolidated affiliates and the underlying equity of unconsolidated affiliates is generally amortized over a period of 40 years.

On a periodic basis, we assess whether there are any indicators that the fair value of our investments in unconsolidated affiliates may be impaired. An investment is impaired only if our estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment. Our estimates of fair value for each investment are based on a number of assumptions such as future leasing expectations, operating forecasts, discount rates and capitalization rates, among others.  These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the fair values estimated in the impairment analyses may not be realized.

No impairments of investments in unconsolidated affiliates were incurred during 2012, 2011 and 2010.

Recent Accounting Pronouncements

Accounting Guidance Adopted

In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). The objective of ASU 2011-04 is to align fair value measurements and related disclosure requirements under GAAP and International Financial Reporting Standards (“IFRSs”), thus improving the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. For public entities, this guidance was effective for interim and annual periods beginning after December 15, 2011 and should be applied prospectively. The adoption of ASU 2011-04 did not have a material impact on our consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). The objective of this accounting update is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in capital. ASU 2011-05 requires that all non-owner changes in capital be presented either in a single continuous statement of comprehensive income or in two separate but continuous statements of net income and other comprehensive income. For public entities, this guidance was effective for interim and annual periods beginning after December 15, 2011 and should be applied retrospectively. In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (“ASU 2011-12”). This guidance defers the changes in ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. Other requirements of ASU 2011-05 are not affected by ASU 2011-12. The guidance in ASU 2011-12 was effective at the same time as ASU 2011-05 so that entities would not be required to comply with the presentation requirements in ASU 2011-05 that ASU 2011-12 deferred. The adoption of this guidance changed the presentation format of our consolidated financial statements but did not have an impact on the amounts reported in those statements.

25

In December 2011, the FASB issued ASU No. 2011-10, Derecognition of in Substance Real Estate - a Scope Clarification (“ASU 2011-10”). This guidance applies to the derecognition of in substance real estate when the parent ceases to have a controlling financial interest in a subsidiary that is in substance real estate because of a default by the subsidiary on its nonrecourse debt. Under ASU 2011-10, the reporting entity should apply the guidance in Accounting Standards Codification ("ASC") 360-20, Property, Plant and Equipment - Real Estate Sales, to determine whether it should derecognize the in substance real estate. Generally, the requirements to derecognize in substance real estate would not be met before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. Thus, even if the reporting entity ceases to have a controlling financial interest under ASC 810-10, Consolidation - Overall, it would continue to include the real estate, debt, and the results of the subsidiary's operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. ASU 2011-10 should be applied on a prospective basis to deconsolidation events occurring after the effective date. For public companies, this guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. Early adoption is permitted. We elected to adopt ASU 2011-10 effective January 1, 2012. The adoption of this guidance did not have an impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Effective

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02"). The objective of ASU 2013-02 is to improve reporting of reclassifications out of accumulated other comprehensive income ("AOCI") by presenting information about such reclassifications and their corresponding effect on net income primarily in one place either on the face of the financial statements or in the notes. ASU 2013-02 requires an entity to disclose information by component for significant amounts reclassified out of AOCI if the amounts reclassified are required to be reclassified under GAAP to net income in their entirety in the same reporting period. For amounts not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. ASU 2013-02 established the effective date and guidance for the presentation of reclassification adjustments which ASU 2011-12 deferred. For public companies, this guidance is effective on a prospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2012. ASU 2013-02 does not change the calculation of net income or comprehensive income and will not have an impact on the amounts reported in the Operating Partnership's consolidated financial statements.

Impact of Inflation and Deflation

Deflation can result in a decline in general price levels, often caused by a decrease in the supply of money or credit.  The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand.  Restricted lending practices could impact our ability to obtain financings or refinancings for our properties and our tenants’ ability to obtain credit.  Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.

During inflationary periods, substantially all of our tenant leases contain provisions designed to mitigate the impact of inflation.  These provisions include clauses enabling us to receive percentage rent based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases.  In addition, many of the leases are for terms of less than ten years, which may provide us the opportunity to replace existing leases with new leases at higher base and/or percentage rent if rents of the existing leases are below the then existing market rate.  Most of the leases require the tenants to pay a fixed amount subject to annual increases for their share of operating expenses, including common area maintenance, real estate taxes, insurance and certain capital expenditures, which reduces our exposure to increases in costs and operating expenses resulting from inflation.

Funds From Operations

FFO is a widely used measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO allocable to common unitholders as defined above by NAREIT less distributions on preferred units. Our method of calculating FFO allocable to common unitholders may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

We believe that FFO provides an additional indicator of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of well-maintained real estate assets have historically risen with market conditions, we believe that FFO enhances investors’ understanding of our operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of our properties and interest rates, but also by our capital structure.

26

FFO does not represent cash flows from operations as defined by GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating our operating performance or to cash flow as a measure of liquidity.

We recorded a gain on investment of $45.1 million related to the acquisition of the remaining 40% noncontrolling interest in Imperial Valley Mall in December 2012. During 2012 and 2011, we recorded gains on extinguishment of debt from both continuing and discontinued operations. Considering the significance and nature of these items, we believe that it is important to identify the impact of these changes on our FFO measures for a reader to have a complete understanding of our results of operations. Therefore, we have also presented FFO excluding these items.

FFO increased 8.4% to $458.2 million for the year ended December 31, 2012 compared to $422.7 million for the prior year.  Excluding the gain on investment and gains on extinguishment of debt, FFO increased 5.8% for the years ending December 31, 2012 and 2011 to $412.8 million and $390.2 million, respectively.

The reconciliation of FFO to net income attributable to common unitholders is as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Net income attributable to common unitholders	$	103,356		$	117,401		$	40,592
Depreciation and amortization expense of:
Consolidated properties	265,192			270,828			279,936
Unconsolidated affiliates	43,956			32,538			27,445
Discontinued operations	3,442			5,542			11,836
Non-real estate assets	(1,841		)	(2,488		)	(4,182		)
Noncontrolling interests' share of depreciation and amortization	(5,071		)	(919		)	(605		)
Loss on impairment of real estate, net of tax benefit	50,343			56,557			40,240
Gain on depreciable property	(652		)	(56,763		)	—
(Gain) loss on discontinued operations, net of tax	(566		)	1			(379		)
Funds from operations of the operating partnership	458,159			422,697			394,883
Gain on extinguishment of debt	(265		)	(32,463		)	—
Gain on investments	(45,072		)	—			$	888
Funds from operations of the operating partnership, as adjusted	$	412,822		$	390,234		$	395,771

27

EX-99.3

EXHIBIT 99.3

CBL & Associates Limited Partnership

Table of Contents

	Page Number
Condensed Consolidated Financial Statements (Unaudited)	2
Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	2
Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2013 and 2012	3
Condensed Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2013 and 2012	4
Condensed Consolidated Statements of Changes in Capital for the Six Months Ended June 30, 2013 and 2012	5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012	7
Notes to Unaudited Condensed Consolidated Financial Statements	9

1

Financial Statements

CBL & Associates Limited Partnership

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

ASSETS	June 30, 2013			December 31, 2012
Real estate assets:
Land	$	909,585		$	905,339
Buildings and improvements	7,237,585			7,228,293
	8,147,170			8,133,632
Accumulated depreciation	(2,061,148		)	(1,972,031		)
	6,086,022			6,161,601
Held for sale	—			29,425
Developments in progress	210,086			137,956
Net investment in real estate assets	6,296,108			6,328,982
Cash and cash equivalents	64,391			78,244
Receivables:
Tenant, net of allowance for doubtful accounts of $2,154      and $1,977 in 2013 and 2012, respectively	78,803			78,963
Other, net of allowance for doubtful accounts of $1,283       and $1,270 in 2013 and 2012, respectively	29,985			8,467
Mortgage and other notes receivable	25,020			25,967
Investments in unconsolidated affiliates	282,389			260,363
Intangible lease assets and other assets	257,908			309,239
	$	7,034,604		$	7,090,225
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness	$	4,622,395		$	4,745,683
Accounts payable and accrued liabilities	327,254			358,800
Total liabilities	4,949,649			5,104,483
Commitments and contingencies (Notes 5 and 12)
Redeemable interests:
Redeemable noncontrolling interests	6,262			6,413
Redeemable common units	34,209			33,835
Redeemable noncontrolling preferred joint venture interest	423,777			423,834
Total redeemable interests	464,248			464,082
Partners' capital:
Preferred units	565,212			565,212
Common units:
General partner	10,916			9,904
Limited partners	1,016,124			877,363
Accumulated other comprehensive income	6,705			5,685
Total partners' capital	1,598,957			1,458,164
Noncontrolling interests	21,750			63,496
Total capital	1,620,707			1,521,660
	$	7,034,604		$	7,090,225

The accompanying notes are an integral part of these condensed consolidated statements.

2

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Six Months Ended June 30,
	2013			2012
REVENUES:
Minimum rents	$	340,663		$	322,123
Percentage rents	7,291			5,208
Other rents	9,995			9,950
Tenant reimbursements	146,935			140,686
Management, development and leasing fees	5,924			4,436
Other	17,606			15,910
Total revenues	528,414			498,313
OPERATING EXPENSES:
Property operating	76,176			72,356
Depreciation and amortization	142,070			129,414
Real estate taxes	45,055			45,540
Maintenance and repairs	28,463			25,791
General and administrative	26,299			25,793
Loss on impairment	21,038			—
Other	14,846			13,317
Total operating expenses	353,947			312,211
Income from operations	174,467			186,102
Interest and other income	1,388			2,370
Interest expense	(117,033		)	(121,231		)
Loss on extinguishment of debt	(9,108		)	—
Gain on sale of real estate assets	1,000			94
Gain on investments	2,400			—
Equity in earnings of unconsolidated affiliates	5,348			3,339
Income tax provision	(583		)	(39		)
Income from continuing operations	57,879			70,635
Operating income (loss) from discontinued operations	(627		)	4,414
Gain (loss) on discontinued operations	872			895
Net income	58,124			75,944
Net income attributable to noncontrolling interests	(12,560		)	(10,945		)
Net income attributable to the Operating Partnership	45,564			64,999
Distributions to preferred unitholders	(22,446		)	(21,188		)
Net income attributable to common unitholders	23,118			43,811
Basic per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	0.12			0.21
Discontinued operations	—			0.02
Net income attributable to common unitholders	0.12			0.23
Weighted average common units outstanding	193,633			190,176
Diluted per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	0.12			0.21
Discontinued operations	—			0.02
Net income attributable to common unitholders	0.12			0.23
Weighted average common and potential dilutive common units outstanding	193,633			190,218
Amounts attributable to common unitholders:
Income from continuing operations, net of preferred distributions	22,910			39,630
Discontinued operations	208			4,181
Net income attributable to common unitholders	23,118			43,811
Distributions declared per common unit	0.46			0.44

3

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2013			2012
Net income	$	58,124		$	75,944
Other comprehensive income:
Unrealized holding gain (loss) on available-for-sale securities	(252		)	1,579
Reclassification to net income of realized gain on available-for-sale securities	—			(160		)
Unrealized gain (loss) on hedging instruments	163			(1,610		)
Reclassification to net income of hedging loss included in net income	1,119			1,129
Total other comprehensive income	1,030			938
Comprehensive income	59,154			76,882
Comprehensive income attributable to noncontrolling interests	(12,560		)	(10,945		)
Comprehensive income attributable to partners	$	46,594		$	65,937

The accompanying notes are an integral part of these condensed consolidated statements.

4

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Partner's Capital and Noncontrolling Interests

(in thousands, except share data)

 (Unaudited)

	Redeemable Interests										Common Units
	Redeemable Partnership Interests		Redeemable Common Units		Total Redeemable Partnership Interests		Preferred Units	Common Units	Preferred Units		General Partner		Limited Partners		Accumulated Other Comprehensive Income (Loss)	Total Partner's Capital		Noncontrolling Interests		Total Partner's Capital and Noncontrolling Interests
Balance, January 1, 2012	6,235		26,036		32,271		22,750	190,380	509,719		10,178		944,633		1,711	1,466,241		4,280		1,470,521
Net income	1,251		369		1,620		-	-	21,188		468		42,974		-	64,630		(595	)	64,035
Other comprehensive income (loss)	-		8		8		-	-	-		-		-		930	930		-		930
Redemption of common units	-		-		—		-	-	-		-		(9,836	)	-	(9,836	)	-		(9,836	)
Distributions declared - common units	-		(2,286	)	(2,286	)	-	-	-		(914	)	(84,259	)	-	(85,173	)	-		(85,173	)
Distributions declared - preferred units	-		-		—		-	-	(21,188	)	-		-		-	(21,188	)	-		(21,188	)
Issuance of common units	-		-		—		-	213,238	-		-		329		-	329		-		329
Cancellation of common units	-		-		—		-	(20,369)	-		-		(255	)	-	(255	)	-		(255	)
Contributions from CBL related to exercises of stock options	-		-		—		-	243,350	-		-		4,434		-	4,434		-		4,434
Accrual under deferred compensation      arrangements	-		-		—		-	-	-		-		29		-	29		-		29
Amortization of deferred compensation	-		12		12		-	-	-		16		1,468		-	1,484		-		1,484
Contributions from noncontrolling interests	-		-		—		-	-	-		-		-		-	—		4,042		4,042
Distributions to noncontrolling interests	(2,250	)	-		(2,250	)	-	-	-		-		-		-	—		(306	)	(306	)
Allocation of partner's capital	-		1,473		1,473		-	-	-		(68	)	(1,406	)	-	(1,474	)	-		(1,474	)
Adjustment to record redeemable      interests at redemption value	919		6,451		7,370		-	-	-		(79	)	(7,291	)	-	(7,370	)	-		(7,370	)
Acquire controlling interest in shopping center properties	-		-		—		-	-	-		-		-		-	—		14,505		14,505
Balance, June 30, 2012	6,155		32,063		38,218		22,750	626,599	509,719		9,601		890,820		2,641	1,412,781		21,926		1,434,707

The accompanying notes are an integral part of these condensed consolidated statements.

5

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Partner's Capital and Noncontrolling Interests

(in thousands, except share data)

(Unaudited)

(Continued)

	Redeemable Interests															Common Units
	Redeemable Partnership Interests			Redeemable Common Units			Total Redeemable Partnership Interests			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Income (Loss)		Total Partner's Capital			Noncontrolling Interests			Total Partner's Capital and Noncontrolling Interests
Balance, January 1, 2013	$	6,413		$	33,835		$	40,248		25,050	190,855		$	565,212		$	9,904		$	877,363		$	5,685	$	1,458,164		$	63,496		$	1,521,660
Net income	1,809			187			1,996			-	-		22,446			240			22,481			-		45,167			733			45,900
Other comprehensive income	-			10			10			-	-		-			-			-			1,020		1,020			-			1,020
Issuance of common units	-			-			—			-	8,633		-			-			209,506			-		209,506			-			209,506
Distributions declared - common units	-			(2,288		)	(2,288		)	-	-		-			(966		)	(90,615		)	-		(91,581		)	-			(91,581		)
Distributions declared - preferred units	-			-			—			-	-		(22,446		)	-			-			-		(22,446		)	-			(22,446		)
Cancellation of common units	-			-			—			-	(36	)	-			-			(705		)	-		(705		)	-			(705		)
Amortization of deferred compensation	-			15			15			-	-		-			20			1,852			-		1,872			-			1,872
Distributions to noncontrolling interests	(1,550		)	-			(1,550		)	-	-		-			-			-			-		—			(1,035		)	(1,035		)
Allocation of partner's capital	-			2,894			2,894			-	-		-			1,709			(4,603		)	-		(2,894		)	-			(2,894		)
Adjustment to record redeemable      interests at redemption value	(410		)	(444		)	(854		)	-	-		-			9			845			-		854			-			854
Acquire controlling interests in shopping center properties	-			-			—			-	-		-			-			-			-		—			(41,444		)	(41,444		)
Balance, June 30, 2013	$	6,262		$	34,209		$	40,471		25,050	199,452		$	565,212		$	10,916		$	1,016,124		$	6,705	$	1,598,957		$	21,750		$	1,620,707

The accompanying notes are an integral part of these condensed consolidated statements.

6

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	58,124		$	75,944
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	142,177			131,399
Net amortization of deferred finance costs and debt premiums	2,503			3,787
Net amortization of intangible lease assets and liabilities	(180		)	(147		)
Gain on sale of real estate assets	(1,000		)	(3,130		)
Gain on investment	(2,400		)	—
Gain on sale of discontinued operations	(872		)	(895		)
Write-off of development projects	1			(123		)
Share-based compensation expense	1,887			1,739
Net realized gain on sale of available-for-sale securities	—			(160		)
Loss on impairment	21,038			—
Loss on impairment from discontinued operations	—			293
Loss on extinguishment of debt	9,108			—
Equity in earnings of unconsolidated affiliates	(5,348		)	(3,339		)
Distributions of earnings from unconsolidated affiliates	7,911			7,314
Provision for doubtful accounts	927			1,331
Change in deferred tax accounts	1,824			2,316
Changes in:
Tenant and other receivables	(5,796		)	5,745
Other assets	5,210			2,923
Accounts payable and accrued liabilities	(45,480		)	(5,231		)
Net cash provided by operating activities	189,634			219,766
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets	(147,327		)	(88,890		)
Acquisition of real estate assets	(26,444		)	(61,419		)
Additions to restricted cash	(528		)	(1,270		)
Proceeds from sales of real estate assets	45,039			38,161
Additions to mortgage and other notes receivable	(2,700		)	(2,965		)
Payments received on mortgage and other notes receivable	3,699			2,160
Proceeds from sales of investments and available-for-sale securities	15,877			—
Additional investments in and advances to unconsolidated affiliates	(29,079		)	(3,969		)
Distributions in excess of equity in earnings of unconsolidated affiliates	4,239			7,316
Changes in other assets	(11,677		)	2,066
Net cash used in investing activities	(148,901		)	(108,810		)

7

CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued)
	Six Months Ended June 30,
	2013			2012
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	752,835		$	1,136,081
Principal payments on mortgage and other indebtedness	(882,239		)	(1,108,292		)
Additions to deferred financing costs	(900		)	(2,688		)
Prepayment fees on extinguishment of debt	(8,708		)	—
Proceeds from issuances of common units	209,506			87
Redemption of common units	—			(9,836		)
Contributions from CBL related to exercises of stock options	—			4,434
Contributions from noncontrolling interests	—			4,042
Distributions to noncontrolling interests	(12,871		)	(12,905		)
Distributions to preferred unitholders	(22,446		)	(21,188		)
Distributions to common unitholders	(89,763		)	(85,270		)
Net cash used in financing activities	(54,586		)	(95,535		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(13,853		)	15,421
CASH AND CASH EQUIVALENTS, beginning of period	78,244			56,077
CASH AND CASH EQUIVALENTS, end of period	$	64,391		$	71,498
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	114,360		$	115,507

The accompanying notes are an integral part of these condensed consolidated statements.

8

CBL & Associates Limited Partnership

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except unit data)

Note 1 – Organization and Basis of Presentation

CBL & Associates Limited Partnership (the "Operating Partnership") is a Delaware limited partnership that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air centers, associated centers, community centers and office properties. Its properties are located in 27 states, but are primarily in the southeastern and midwestern United States. CBL & Associates Properties, Inc. (“CBL”), a Delaware corporation, is a self-managed, self-administered, fully-integrated real estate investment trust (“REIT”) whose stock is traded on the New York Stock Exchange. CBL is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At June 30, 2013, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 84.2% limited partner interest for a combined interest held by CBL of 85.2%.

As of June 30, 2013, the Operating Partnership owned controlling interests in 77 regional malls/open-air and outlet centers (including one mixed-use center), 28 associated centers (each located adjacent to a regional mall), seven community centers and eight office buildings, including the Operating Partnership’s corporate office building. The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a variable interest entity ("VIE").  At June 30, 2013, the Operating Partnership owned noncontrolling interests in nine regional malls/open-air centers, four associated centers, four community centers and seven office buildings. Because one or more of the other partners have substantive participating rights, the Operating Partnership does not control these partnerships and joint ventures and, accordingly, accounts for these investments using the equity method. The Operating Partnership had controlling interests in two outlet center developments, four mall expansions, three mall redevelopments and one associated center redevelopment at June 30, 2013.  The Operating Partnership had a noncontrolling interest in one community center development at June 30, 2013. The Operating Partnership also holds options to acquire certain development properties owned by third parties.

The remaining interest in the Operating Partnership is held by CBL & Associates, Inc., its shareholders and affiliates and certain senior officers of CBL (collectively "CBL's Predecessor"), all of which contributed their interests in certain real estate properties and joint ventures to the Operating Partnership in exchange for a limited partner interest when the Operating Partnership was formed in November 1993, and by various third parties. At June 30, 2013, CBL’s Predecessor owned a 9.1% limited partner interest and the third parties owned a 5.7% limited partner interest in the Operating Partnership.  CBL’s Predecessor also owned 3.2 million shares of CBL’s common stock at June 30, 2013, for a total combined effective interest of 10.7% in the Operating Partnership.

The Operating Partnership conducts CBL’s property management and development activities through its wholly-owned subsidiary, CBL & Associates Management, Inc. (the “Management Company”), to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

The Operating Partnership, the Management Company and the Operating Partnership's other subsidiaries are collectively referred to herein as "the Operating Partnership."

The accompanying condensed consolidated financial statements are unaudited; however, they have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. All intercompany transactions have been eliminated. The results for the interim period ended June 30, 2013 are not necessarily indicative of the results to be obtained for the full fiscal year.

Certain historical amounts have been reclassified to conform to the current year's presentation. The financial results of certain properties that had been classified in continuing operations have been reclassified to discontinued operations in the condensed consolidated financial statements for all periods presented herein. Except where noted, the information presented in the Notes to Unaudited Condensed Consolidated Financial Statements excludes discontinued operations.

These condensed consolidated financial statements should be read in conjunction with the Operating Partnership’s audited consolidated financial statements and notes thereto included in Exhibit 99.1 of the Form 8-K that these condensed consolidated financial statements are included in.

9

Note 2 – Recent Accounting Pronouncements

Accounting Guidance Adopted

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02"). The objective of ASU 2013-02 is to improve reporting of reclassifications out of accumulated other comprehensive income ("AOCI") by presenting information about such reclassifications and their corresponding effect on net income primarily in one place, either on the face of the financial statements or in the notes. ASU 2013-02 requires an entity to disclose information by component for significant amounts reclassified out of AOCI if the amounts reclassified are required to be reclassified under GAAP to net income in their entirety in the same reporting period. For amounts not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. For public companies, this guidance was effective on a prospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2012. ASU 2013-02 did not change the calculation of or amounts reported as net income and comprehensive income but did change the presentation of the components of AOCI reported in the Operating Partnership's condensed consolidated financial statements.

In July 2013, the FASB issued ASU 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes ("ASU 2013-10"). ASU 2013-10 permits the Overnight Index Swap ("OIS") Rate, also referred to as the Fed Funds Effective Swap Rate, to be used as a U.S. benchmark for hedge accounting purposes, in addition to London Interbank Offered Rate ("LIBOR") and interest rates on direct U.S. Treasury obligations. The guidance also removes the restriction on using different benchmarks for similar hedges. ASU 2013-10 is effective prospectively for qualifying new or redesignated hedges entered into on or after July 17, 2013. The Operating Partnership does not expect the adoption of this guidance to have a material effect on its condensed consolidated financial statements.

Accounting Pronouncements Not Yet Effective

In February 2013, the FASB issued ASU 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date ("ASU 2013-04"). ASU 2013-04 addresses the diversity in practice related to the recognition, measurement and disclosure of certain obligations which are not addressed within existing GAAP guidance. Such obligations under the scope of ASU 2013-04 include debt arrangements, other contractual obligations, settled litigation and judicial rulings. The guidance requires an entity to measure these joint and several obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors as well as any additional amount the reporting entity expects to pay on behalf of its co-obligors. ASU 2013-04 also requires an entity to disclose information about the nature and amount of these obligations. For public companies, ASU 2013-04 is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Operating Partnership may elect to use hindsight for the comparative periods (if the Operating Partnership changes its accounting as a result of the adoption of this guidance). Early adoption is permitted. The Operating Partnership is evaluating the impact that this update may have on its consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"). The objective of this update is to reduce the diversity in practice related to the presentation of certain unrecognized tax benefits. ASU 2013-11 provides that unrecognized tax benefits are to be presented as a reduction of a deferred tax asset for a net operating loss ("NOL") carryforward, a similar tax loss or a tax credit carryforward when settlement in this manner is available under the governing tax law. To the extent such an NOL carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date under the governing tax law to settle taxes that would result from the disallowance of the tax position or the entity does not intend to use the deferred tax asset for this purpose, the unrecognized tax benefit is to be recorded as a liability in the financial statements and should not be netted with a deferred tax asset. ASU 2013-11 is effective for public companies for fiscal years beginning after December 15, 2013 and interim periods within those years. The guidance should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Early adoption and retrospective application are permitted. The Operating Partnership is evaluating the impact that this update may have on its consolidated financial statements.

10

Note 3 – Fair Value Measurements

The Operating Partnership has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosure, ("ASC 820") based on whether the inputs to valuation techniques are observable or unobservable.  The fair value hierarchy contains three levels of inputs that may be used to measure fair value as follows:

Level 1 – Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.

Level 2 – Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.

Level 3 – Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability.  Market valuations must often be determined using discounted cash flow methodologies, pricing models or similar techniques based on the Operating Partnership’s assumptions and best judgment.

The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions, and risk of nonperformance.

Fair Value Measurements on a Recurring Basis

The following tables set forth information regarding the Operating Partnership’s financial instruments that are measured at fair value on a recurring basis in the accompanying condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012:

			Fair Value Measurements at Reporting Date Using
	Fair Value at June 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	$	16,304	$	16,304	$	—	$	—
Interest rate cap	—		—		—		—
Liabilities:
Interest rate swaps	$	4,528	$	—	$	4,528	$	—

			Fair Value Measurements at Reporting Date Using
	Fair Value at December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	$	27,679	$	16,556	$	—	$	11,123
Privately-held debt and equity securities	2,475		—		—		2,475
Interest rate cap	—		—		—		—
Liabilities:
Interest rate swaps	$	5,805	$	—	$	5,805	$	—

11

The Operating Partnership recognizes transfers in and out of every level at the end of each reporting period. There were no transfers between Levels 1, 2, or 3 for any periods presented.

Intangible lease assets and other assets in the condensed consolidated balance sheets include marketable securities consisting of corporate equity securities and bonds that are classified as available-for-sale.  Net unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of AOCI in redeemable common units and partners’ capital.  If a decline in the value of an investment is deemed to be other than temporary, the investment is written down to fair value and an impairment loss is recognized in the current period to the extent of the decline in value. During the six month periods ended June 30, 2013 and 2012, the Operating Partnership did not record any write-downs related to other-than-temporary impairments.  During the six month period ended June 30, 2013, the Operating Partnership did not recognize any realized gains or losses related to sales of marketable securities. During the six month period ended June 30, 2012, the Operating Partnership recognized realized gains of $160 related to sales of marketable securities. The fair values of the Operating Partnership’s available-for-sale securities are based on quoted market prices and are classified under Level 1.  Tax increment financing bonds ("TIF bonds"), which were classified as Level 3 as of December 31, 2012, were redeemed in January 2013.

The following is a summary of the available-for-sale securities held by the Operating Partnership as of June 30, 2013 and December 31, 2012:

			Gross Unrealized
	Adjusted Cost		Gains		Losses			Fair Value
June 30, 2013:
Common stocks	$	4,195	$	13,124	$	(1,015	)	$	16,304

			Gross Unrealized
	Adjusted Cost		Gains		Losses		Fair Value
December 31, 2012:
Common stocks	$	4,195	$	12,361	$	—	$	16,556
Government and government-sponsored entities	11,123		—		—		11,123
	$	15,318	$	12,361	$	—	$	27,679

The Operating Partnership uses interest rate swaps and caps to mitigate the effect of interest rate movements on its variable-rate debt.  The Operating Partnership had four interest rate swaps and one interest rate cap as of June 30, 2013 and December 31, 2012, that qualify as hedging instruments and are designated as cash flow hedges.  The interest rate cap is included in intangible lease assets and other assets and the interest rate swaps are reflected in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets.  The swaps and cap have predominantly met the effectiveness test criteria since inception and changes in their fair values are, thus, primarily reported in other comprehensive income (loss) ("OCI/L") and are reclassified into earnings in the same period or periods during which the hedged items affect earnings.  The fair values of the Operating Partnership’s interest rate hedges, classified under Level 2, are determined based on prevailing market data for contracts with matching durations, current and anticipated LIBOR information, consideration of the Operating Partnership’s credit standing, credit risk of the counterparties and reasonable estimates about relevant future market conditions.  See Note 6 for further information regarding the Operating Partnership’s interest rate hedging instruments.

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short-term nature of these financial instruments.  Based on the interest rates for similar financial instruments, the carrying value of mortgage and other notes receivable is a reasonable estimate of fair value.  The estimated fair value of mortgage and other indebtedness was $4,817,491 and $5,058,411 at June 30, 2013 and December 31, 2012, respectively.  The fair value was calculated using Level 2 inputs by discounting future cash flows for mortgage and other indebtedness using estimated market rates at which similar loans would be made currently. The carrying amount of mortgage and other indebtedness was $4,622,395 and $4,745,683 at June 30, 2013 and December 31, 2012, respectively.

12

Prior to February 2013, the Operating Partnership held TIF bonds, which had a 2028 maturity date and were received in a private placement as consideration for infrastructure improvements made by the Operating Partnership related to the development of a community center. The Operating Partnership had the intent and ability to hold the TIF bonds through the recovery period. The Operating Partnership adjusted the bonds to their net realizable value as of December 31, 2012 and they were redeemed in January 2013. Due to the significant unobservable estimates and assumptions used in the valuation of the TIF bonds, such as the forecasted growth in sales and lack of marketability discount, the Operating Partnership had classified the TIF bonds under Level 3 in the fair value hierarchy. The following table provides a reconciliation of changes between the beginning and ending balances of the TIF bonds (Level 3):

	Six Months Ended June 30, 2013			Year Ended  December 31, 2012
Available-for-sale securities (Level 3):
Balance, beginning of period	$	11,123		$	11,829
Redemption of TIF bonds	(11,002		)	—
Reclassification adjustment AOCI	—			1,542
Transfer out of Level 3 (1)	(121		)	(2,248		)
Balance, end of period	$	—		$	11,123

(1) The TIF bonds were adjusted to their net realizable value as of December 31, 2012 and were redeemed in January 2013. The difference in estimate was recorded as a transfer to real estate assets.

Prior to May 2013, the Operating Partnership held a secured convertible promissory note from Jinsheng Group (“Jinsheng”), in which the Operating Partnership also holds a cost-method investment.  The secured convertible note was non-interest bearing and secured by shares of Jinsheng.  Since the secured convertible note was non-interest bearing and there was no active market for Jinsheng’s debt, the Operating Partnership performed a probability-weighted discounted cash flow analysis for its valuation as of December 31, 2012 using various sale, redemption and initial public offering ("IPO") exit strategies. The fair value analysis as of December 31, 2012 forecasted a 0% to 10% reduction in estimated cash flows. Sale and IPO scenarios employed capitalization rates ranging from 10% to 12% which were discounted 20% for lack of marketability. Due to the significant unobservable estimates and assumptions used in the valuation of the note, the Operating Partnership had classified it under Level 3 in the fair value hierarchy.  The Operating Partnership exercised its right to demand payment of the note and received $4,875 from Jinsheng in May 2013, recognizing a realized gain of $2,400 in the second quarter of 2013. The Operating Partnership had previously recorded a $2,400 other-than-temporary impairment related to the Jinsheng note in 2009 due to China's declining real estate market. See Note 5 for further discussion. The following table provides a reconciliation of changes between the beginning and ending balances of the Jinsheng note (Level 3):

	Six Months Ended June 30, 2013			Year Ended  December 31, 2012
Privately-held debt and equity securities (Level 3):
Balance, beginning of period	$	2,475		$	2,475
Net settlement	(4,875		)	—
Realized gain recorded in earnings	2,400			—
Balance, end of period	$	—		$	2,475

Fair Value Measurements on a Nonrecurring Basis

The Operating Partnership measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Operating Partnership considers both quantitative and qualitative factors in its impairment analysis of long-lived assets. Significant quantitative factors include historical and forecasted information for each property such as net operating income ("NOI"), occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition of the property and tenant mix. Due to the significant unobservable estimates and assumptions used in the valuation of long-lived assets that experience impairment, the Operating Partnership classifies such long-lived assets under Level 3 in the fair value hierarchy. The fair value analysis as of June 30, 2013 used various probability-weighted scenarios comparing the property's

13

net book value to the sum of its estimated fair value. Assumptions included up to a 10-year holding period with a sale at the end of the holding period, capitalization rates ranging from 10% to 12% and an estimated sales cost of 1%.

The following table sets forth information regarding the Operating Partnership's assets that are measured at fair value on a nonrecurring basis:

			Fair Value Measurements at Reporting Date Using
	Fair Value at June 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Loss
Assets:
Long-lived assets	$	23,900	$	—	$	—	$	23,900	$	20,453

In accordance with the Operating Partnership's quarterly impairment review process, the Operating Partnership recorded a non-cash impairment of real estate of $20,453 in the second quarter of 2013 related to Citadel Mall, located in Charleston, SC to write-down the depreciated book value to its estimated fair value as of the same date. The mall has experienced declining cash flows which are insufficient to cover the debt service on the mortgage secured by the property. The loan is currently in default and the Operating Partnership has classified Citadel Mall as a non-core property as of June 30, 2013.

The revenue of Citadel Mall accounted for approximately 0.7% of total consolidated revenue for the trailing twelve months ended June 30, 2013. A reconciliation of Citadel Mall's carrying value for the six months ended June 30, 2013 is as follows:

	Citadel Mall
Beginning carrying value, January 1, 2013	$	45,178
Capital expenditures	69
Depreciation expense	(894		)
Loss on impairment of real estate	(20,453		)
Ending carrying value, June 30, 2013	$	23,900

Additionally, during the second quarter of 2013, the Operating Partnership recorded a non-cash impairment of $585 to write-down the depreciated book value of the Operating Partnership's corporate airplane to its fair value at its trade-in date.

14

Note 4 – Acquisitions and Discontinued Operations

Acquisitions

The pro forma effect of the acquisitions described below was not material.

In April 2013, the Operating Partnership acquired the remaining 51% noncontrolling interest in Kirkwood Mall in Bismarck, ND. See Note 5 for additional information.

The following table summarizes the final allocation of the estimated fair values of the assets acquired and liabilities assumed as of the respective acquisition dates for the Operating Partnership's 2012 acquisitions, consisting of a 75% interest in The Outlet Shoppes at El Paso, a 50% interest in The Outlet Shoppes at Gettysburg, Dakota Square Mall, a 49% interest in Kirkwood Mall, and the remaining 40% interests in Imperial Valley:

	Preliminary Purchase Price Allocation			Adjustments (1)			Final Purchase Price Allocation
Land	$	88,066		$	(197	)	$	87,869
Buildings and improvements	378,550			1,213			379,763
Investments in unconsolidated affiliates	3,864			—			3,864
Tenant improvements	15,429			(101		)	15,328
Above-market leases	15,451			(92		)	15,359
In-place leases	67,112			(1,298		)	65,814
Total assets	568,472			(475		)	567,997
Mortgage note payables assumed	(259,470		)	—			(259,470		)
Debt premium	(15,334		)	—			(15,334		)
Below-market leases	(40,173		)	475			(39,698		)
Noncontrolling interest	(60,295		)	—			(60,295		)
Value of Operating Partnership's interest in joint ventures	(65,494		)	—			(65,494		)
Net assets acquired	$	127,706		$	—		$	127,706
(1) Represents adjustments to Dakota Square based on final valuation report.

15

Discontinued Operations

The results of operations of the properties described below, as well as any gains or impairment losses related to those properties, are included in discontinued operations for all periods presented, as applicable. Net proceeds from these sales were used to reduce the outstanding balances on the Operating Partnership's credit facilities.

The following is a summary of the Operating Partnership's dispositions since January 1, 2012:

				Sales Price				Gain (Loss)
Sales Date	Property	Property Type	Location	Gross		Net
March 2013	1500 Sunday Drive	Office Building	Raleigh, NC	$	8,300	$	7,862	$	(549	)
March 2013	Peninsula I & II	Office Building	Newport News, VA	5,250		5,121		598
January 2013	Lake Point & SunTrust (1)	Office Building	Greensboro, NC	30,875		30,490		823
			2013 Activity	$	44,425	$	43,473	$	872
December 2012	Willowbrook Plaza (2)	Community Center	Houston, TX	$	24,450	$	24,171	$	—
October 2012	Towne Mall (3)	Mall	Franklin, OH	950		892		—
October 2012	Hickory Hollow Mall (4)	Mall	Antioch, TN	1,000		966		—
July 2012	Massard Crossing	Community Center	Fort Smith, AR	7,803		7,432		—
March 2012	Settlers Ridge - Phase II	Community Center	Robinson Township, PA	19,144		18,951		867
January 2012	Oak Hollow Square (5)	Community Center	High Point, NC	14,247		13,796		(1		)
November 2011	Westridge Square (6)	Community Center	Greensboro, NC					29
			2012 Activity	$	67,594	$	66,208	$	895

(1) Classified as held for sale as of December 31, 2012.

(2) Loss on impairment of $17,743 recorded in the third quarter of 2012 to write down the book value of this property to its then estimated fair value.

(3) Loss on impairment of $419 recorded in the third quarter of 2012 to write down the book value of this property to expected sales price.

(4) Loss on impairment of $8,047 recorded in the third quarter of 2012 to write down the book value of this property to expected sales price.

(5) Loss on impairment of $255 recorded in the first quarter of 2012 related to the true-up of certain estimated amounts to actual amounts.

(6) Reflects subsequent true-up for settlement of estimated expenses based on actual amounts.

Total revenues of the properties described above that are included in discontinued operations were $450 and $8,367 for the six months ended June 30, 2013 and 2012, respectively. The total net investment in real estate assets at the time of sale for the office buildings sold during the six months ended June 30, 2013 was $42,693. There were no outstanding mortgage loans for any of the office buildings that were sold during the six months ended June 30, 2013. Discontinued operations for the six month periods ended June 30, 2013 and 2012 also include settlements of estimated expenses based on actual amounts for properties sold during previous periods.

See Note 16 for information on properties sold subsequent to June 30, 2013.

16

Note 5 – Unconsolidated Affiliates, Noncontrolling Interests and Cost Method Investments

Unconsolidated Affiliates

At June 30, 2013, the Operating Partnership had investments in the following 17 entities, which are accounted for using the equity method of accounting:

Joint Venture	Property Name	Operating Partnership'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%
Fremaux Town Center JV, LLC	Fremaux Town Center	65.0%
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%
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 Operating Partnership had majority ownership of certain joint ventures during 2013 and 2012, it evaluated the investments and concluded that the other partners or owners in these joint ventures had 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 Operating Partnership accounts for these investments using the equity method of accounting.

17

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

	As of
ASSETS	June 30, 2013			December 31, 2012
Investment in real estate assets	$	2,147,166		$	2,143,187
Accumulated depreciation	(522,680		)	(492,864		)
	1,624,486			1,650,323
Developments in progress	74,038			21,809
Net investment in real estate assets	1,698,524			1,672,132
Other assets	170,975			175,540
Total assets	$	1,869,499		$	1,847,672
LIABILITIES
Mortgage and other indebtedness	$	1,454,758		$	1,456,622
Other liabilities	41,279			48,538
Total liabilities	1,496,037			1,505,160
OWNERS' EQUITY
The Operating Partnership	218,639			196,694
Other investors	154,823			145,818
Total owners' equity	373,462			342,512
Total liabilities and owners' equity	$	1,869,499		$	1,847,672

	Total for the Six Months Ended June 30,						Operating Partnership's Share for the Six Months Ended June 30,
	2013			2012			2013			2012
Revenues	$	120,743		$	124,499		$	62,446		$	66,387
Depreciation and amortization	(38,270		)	(41,484		)	(19,871		)	(22,119		)
Interest expense	(38,711		)	(42,197		)	(19,836		)	(22,296		)
Other operating expenses	(35,518		)	(37,023		)	(17,391		)	(18,853		)
Gain on sale of real estate assets	—			430			—			220
Net income	$	8,244		$	4,225		$	5,348		$	3,339

Fremaux Town Center JV, LLC

In January 2013, the Operating Partnership formed a 65/35 joint venture, Fremaux Town Center JV, LLC ("Fremaux"), to develop, own and operate Fremaux Town Center, a community center development located in Slidell, LA. Construction began in March 2013 with completion expected in July 2014. The partners contributed aggregate initial equity of $20,500, of which the Operating Partnership's contribution was $18,450. Following the initial formation of Fremaux, all required future contributions will be funded on a 65/35 pro rata basis. In March 2013, Fremaux obtained a construction loan on the property that allows for borrowings up to $46,000 and bears interest at LIBOR plus 2.125%. The loan matures in March 2016 and has two one-year extension options, which are at the joint venture's election, for an outside maturity date of March 2018. The Operating Partnership has guaranteed 100% of the construction loan. As of June 30, 2013, $5,531 was outstanding under the loan. The Operating Partnership holds the majority ownership interest in Fremaux but the noncontrolling interest partner holds substantive participating rights. As a result, the Operating Partnership accounted for its investment in Fremaux using the equity method of accounting as of June 30, 2013.

2013 Financings

In the first quarter of 2013, Renaissance Phase II CMBS, LLC closed on a $16,00010-year, non-recourse commercial mortgage-backed securities ("CMBS") loan, secured by Renaissance Center Phase II in Durham, NC. The loan bears interest at

18

a fixed rate of 3.4895% and matures in April 2023. Proceeds from the loan were used to retire the existing $15,700 loan that was scheduled to mature in April 2013.

Also during the first quarter of 2013, CBL-Friendly Center CMBS, LLC closed on a $100,00010-year, non-recourse CMBS loan, secured by Friendly Center, located in Greensboro, NC. The loan bears interest at a fixed rate of 3.4795% and matures in April 2023. Proceeds from the new loan were used to retire four existing loans aggregating $100,000 that were secured by Friendly Center, Friendly Center Office Building, First National Bank Building, Green Valley Office Building, First Citizens Bank Building, Wachovia Office Building and Bank of America Building, all located in Greensboro, NC and scheduled to mature in April 2013.

All of the debt on the properties owned by the unconsolidated affiliates is non-recourse, except for Fremaux, West Melbourne, Port Orange, High Pointe Commons, and Gulf Coast Phase III. See Note 12 for a description of guarantees the Operating Partnership has issued related to certain unconsolidated affiliates.

Redeemable Interests

Redeemable common units of $34,209 and $33,835 at June 30, 2013 and December 31, 2012, respectively, includes a partnership interest in the Operating Partnership for which the partnership agreement includes redemption provisions that may require the Operating Partnership to redeem the partnership interest for real property.  

Redeemable noncontrolling interests of $6,262 and $6,413 at June 30, 2013 and December 31, 2012, respectively, includes the aggregate noncontrolling ownership interest in 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 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 12 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:

	Six Months Ended June 30,
	2013			2012
Beginning Balance	$	423,834		$	423,834
Net income attributable to redeemable noncontrolling preferred joint venture interest	10,228			10,286
Distributions to redeemable noncontrolling preferred joint venture interest	(10,285		)	(10,343		)
Ending Balance	$	423,777		$	423,777

Noncontrolling Interests

Noncontrolling interests include the aggregate noncontrolling ownership interest in the Operating Partnership’s 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. Total noncontrolling interests was $21,750 and $63,496, as of June 30, 2013 and December 31, 2012, respectively.

Cost Method Investments

The Operating Partnership 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 June 30, 2013, Jinsheng owned controlling interests in eight home furnishing shopping malls.

Prior to May 2013, the Operating Partnership also held a secured convertible promissory note secured by 16,565,534 Series 2 Ordinary Shares of Jinsheng (which equated to a 2.275% ownership interest). The secured note was non-interest bearing and was amended by the Operating Partnership and Jinsheng to extend to May 30, 2013 the Operating Partnership'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 provided that if Jinsheng should complete an IPO, the secured note would be converted into common shares of Jinsheng immediately prior to the IPO. Furthermore, the secured note would bear interest of 8.0% until the extended maturity date and, if not paid prior to or on the maturity date, would thereafter bear interest at 30.0%. The Operating Partnership exercised its right to demand payment of the note and received payment from Jinsheng in May 2013. See Note 3 for additional information.

The Operating Partnership accounts for its noncontrolling interest in Jinsheng using the cost method because the Operating Partnership 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. The noncontrolling

19

interest and the secured note are reflected as investment in unconsolidated affiliates in the accompanying condensed consolidated balance sheets. 

Variable Interest Entities

Louisville Outlet Shoppes, LLC

In May 2013, the Operating Partnership entered into a joint venture, Louisville Outlet Shoppes, LLC ("Louisville Outlet"), with a third party to develop, own and operate The Outlet Shoppes at Louisville located in Simpsonville, KY. Construction began in June 2013 with completion expected in summer 2014. The Operating Partnership holds a 65% ownership interest in the joint venture. The Operating Partnership determined that its investment in this joint venture represents an interest in a VIE and that the Operating Partnership is the primary beneficiary because of its power to direct activities of the joint venture that most significantly impact the joint venture's economic performance as well as the obligation to absorb losses or right to receive benefits from the VIE that could be significant. As a result, the joint venture is presented in the accompanying condensed consolidated financial statements as of June 30, 2013 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest.

Kirkwood Mall Mezz, LLC

In the fourth quarter of 2012, the Operating Partnership acquired a 49% ownership interest in Kirkwood Mall Mezz, LLC, which owns Kirkwood Mall located in Bismarck, ND. The Operating Partnership determined that its investment in this joint venture represented an interest in a VIE and that the Operating Partnership was the primary beneficiary, since under the terms of the agreement the Operating Partnership's equity investment was at risk while the third party had a fixed price for which it would sell its remaining 51% equity interest to the Operating Partnership. As a result, the joint venture was presented in the consolidated financial statements as of December 31, 2012 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest. In accordance with its executed agreement, the Operating Partnership acquired the remaining 51% interest in April 2013 and assumed $40,368 of non-recourse debt. Following the Operating Partnership's acquisition of the noncontrolling interest in April 2013, this joint venture is now wholly-owned, and is no longer a VIE.

Gettysburg Outlet Center Holding LLC

In the second quarter of 2012, the Operating Partnership 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 Operating Partnership holds a 50% ownership interest in this joint venture. The Operating Partnership determined that its investment in this joint venture represents an interest in a VIE and that the Operating Partnership is the primary beneficiary since it has the power to direct activities of the joint venture that most significantly impact the joint venture's economic performance as well as the obligation to absorb losses or right to receive benefits from the VIE that could be significant. As a result, the joint venture is presented in the accompanying condensed consolidated financial statements as of June 30, 2013 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest.

El Paso Outlet Center Holding, LLC

In the second quarter of 2012, the Operating Partnership 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 Operating Partnership holds a 75% ownership interest in the joint venture. The Operating Partnership determined that its investment in this joint venture represents an interest in a VIE and that the Operating Partnership is the primary beneficiary since it has the power to direct the activities of the joint venture that most significantly impact the joint venture's economic performance as well as the obligation to absorb losses or right to receive benefits from the VIE that could be significant. As a result, the joint venture is presented in the accompanying condensed consolidated financial statements as of June 30, 2013 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest.

See Note 16 for subsequent event related to Louisville Outlet.

20

Note 6 – Mortgage and Other Indebtedness

Mortgage and other indebtedness consisted of the following:

	June 30, 2013			December 31, 2012
	Amount		Weighted- Average Interest Rate (1)	Amount		Weighted- Average Interest Rate (1)
Fixed-rate debt:
Non-recourse loans on operating properties (2)	$	3,516,429	5.56%	$	3,776,245	5.42%
Financing method obligation (3)	18,264		8.00%	18,264		8.00%
Total fixed-rate debt	3,534,693		5.57%	3,794,509		5.43%
Variable-rate debt:
Non-recourse term loans on operating properties	134,525		3.00%	123,875		3.36%
Recourse term loans on operating properties	78,820		2.33%	97,682		1.78%
Construction loans	40,963		2.94%	15,366		2.96%
Unsecured lines of credit	783,394		1.60%	475,626		2.07%
Secured line of credit (4)	—		—%	10,625		2.46%
Unsecured term loans	50,000		2.09%	228,000		1.82%
Total variable-rate debt	1,087,702		1.90%	951,174		2.20%
Total	$	4,622,395	4.71%	$	4,745,683	4.79%

(1) Weighted-average interest rate includes the effect of debt premiums (discounts), but excludes amortization of deferred financing costs.

(2) The Operating Partnership has four interest rate swaps on notional amounts totaling $111,881 as of June 30, 2013 and $113,885 as of December 31, 2012 related to four variable-rate loans on operating properties to effectively fix the interest rate on the respective loans.  Therefore, these amounts are reflected in fixed-rate debt at June 30, 2013 and December 31, 2012.

(3) This amount represents the noncontrolling partner's equity contributions related to Pearland Town Center that is accounted for as a financing due to certain terms of the CBL/T-C, LLC joint venture agreement.

(4) The Operating Partnership converted its secured line of credit to unsecured in February 2013.

Unsecured Lines of Credit

The Operating Partnership has three unsecured credit facilities that are used for retirement of secured loans, repayment of term loans, working capital, construction and acquisition purposes, as well as issuances of letters of credit.

Wells Fargo Bank, NA serves as the administrative agent for a syndicate of financial institutions for the Operating Partnership's two unsecured $600,000 credit facilities ("Facility A" and "Facility B"). Facility A matures in November 2015 and has a one-year extension option for an outside maturity date of November 2016. Facility B matures in November 2016 and has a one-year extension option for an outside maturity date of November 2017. The extension options on both facilities are at the Operating Partnership's election, subject to continued compliance with the terms of the facilities, and have a one-time extension fee of 0.20% of the commitment amount of each credit facility.

In the first quarter of 2013, the Operating Partnership amended and restated its $105,000 secured credit facility with First Tennessee Bank, NA. The facility was converted from secured to unsecured with a capacity of $100,000 and a maturity date of February 2016.

Prior to May 14, 2013, borrowings under the three unsecured lines of credit bore interest at LIBOR plus a spread ranging from 155 to 210 basis points based on the Operating Partnership’s leverage ratio. The Operating Partnership also paid annual unused facility fees, on a quarterly basis, at rates of either 0.25% or 0.30% based on any unused commitment of each facility. In May 2013, CBL obtained an investment grade rating from Moody's Investors Service ("Moody's") and, effective May 14, 2013, made a one-time irrevocable election to use its credit rating to determine the interest rate on each facility. Under the credit rating election, each facility now bears interest at LIBOR plus a spread of 100 to 175 basis points. As of June 30, 2013, the Operating Partnership's interest rate based on CBL's credit rating from Moody's is LIBOR plus140 basis points. Additionally, the Operating Partnership will pay an annual facility fee that ranges from 0.15% to 0.35% of the total capacity of each facility rather than the unused commitment fees as described above. As of June 30, 2013, the annual facility fee is 0.30%. The three unsecured lines of credit had a weighted-average interest rate of 1.60% at June 30, 2013.

21

The following summarizes certain information about the Operating Partnership's unsecured lines of credit as of June 30, 2013:     

	Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date
Facility A	$	600,000	$	300,297	(1)	November 2015	November 2016
First Tennessee	100,000		52,679			February 2016	N/A
Facility B	600,000		430,418		(2)	November 2016	November 2017
	$	1,300,000	$	783,394

(1) There was an additional $475 outstanding on this facility as of June 30, 2013 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit.

(2) There was an additional $617 outstanding on this facility as of June 30, 2013 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit.

Unsecured Term Loans

In April 2013, the Operating Partnership retired a $228,000 unsecured term loan at its maturity date with borrowings from the Operating Partnership's credit facilities.

In the first quarter of 2013, under the terms of the Operating Partnership's amended and restated agreement with First Tennessee Bank, NA described above, the Operating Partnership obtained a $50,000 unsecured term loan that bears interest at LIBOR plus 1.90% and matures in February 2018. At June 30, 2013, the outstanding borrowings of $50,000 had a weighted-average interest rate of 2.09%.

See Note 16 for information related to a new unsecured term loan the Operating Partnership obtained subsequent to June 30, 2013.

Covenants and Restrictions

The agreements to the unsecured lines of credit contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum net worth requirements, minimum unencumbered asset and interest ratios, maximum secured indebtedness and limitations on cash flow distributions.  The Operating Partnership believes that it was in compliance with all covenants and restrictions at June 30, 2013.

The following presents the Operating Partnership's compliance with key unsecured debt covenant compliance ratios as of June 30, 2013:

Ratio	Required	Actual
Debt to total asset value	< 60%	50.3%
Ratio of unencumbered asset value to unsecured indebtedness	> 1.60x	3.65x
Ratio of unencumbered NOI to unsecured interest expense	> 1.75x	8.80x
Ratio of EBITDA to fixed charges (debt service)	> 1.50x	2.09x

The agreements for the unsecured credit facilities described above contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000 or any non-recourse indebtedness greater than $150,000 (for the Operating Partnership's ownership share) of CBL, the Operating Partnership or any Subsidiary, as defined, will constitute an event of default under the agreements to the credit facilities. The credit facilities also restrict the Operating Partnership's ability to enter into any transaction that could result in certain changes in its ownership or structure as described under the heading “Change of Control/Change in Management” in the agreements to the credit facilities. Prior to CBL obtaining an investment grade rating in May 2013, the obligations of the Operating Partnership under the agreements were unconditionally guaranteed, jointly and severally, by any subsidiary of the Operating Partnership to the extent such subsidiary was a material subsidiary and was not otherwise an excluded subsidiary, as defined in the agreements. In accordance with the agreements, once CBL obtained an investment grade rating, guarantees by material subsidiaries of the Operating Partnership were no longer required.

Several of the Operating Partnership’s malls/open-air centers, associated centers and community centers, in addition to the corporate office building, are owned by special purpose entities that are included in the Operating Partnership’s condensed consolidated financial statements. The sole business purpose of the special purpose entities is to own and operate these properties.

22

The real estate and other assets owned by these special purpose entities are restricted under the loan agreements in that they are not available to settle other debts of the Operating Partnership. However, so long as the loans are not under an event of default, as defined in the loan agreements, the cash flows from these properties, after payments of debt service, operating expenses and reserves, are available for distribution to the Operating Partnership.

Mortgages on Operating Properties

In June 2013, the Operating Partnership closed on a three-year $11,400 non-recourse loan secured by Statesboro Crossing in Statesboro, GA. The loan bears interest at LIBOR plus180 basis points. The loan matures in June 2016 and has two one-year extension options, which are at the Operating Partnership's election, for an outside maturity date of June 2018. Proceeds from the loan were used to pay down the Operating Partnership's credit facilities. The Operating Partnership also retired an $88,410 loan in June 2013, which was secured by Mid Rivers Mall in St. Peters, MO, with borrowings from its credit facilities. The loan was scheduled to mature in May 2021 and bore interest at a fixed rate of 5.88%. The Operating Partnership recorded an $8,936 loss on extinguishment of debt, which consisted of an $8,708 prepayment fee and $228 of unamortized debt issuance costs.

In April 2013, the Operating Partnership retired a $71,740 loan, secured by South County Center in St. Louis, MO, with borrowings from its credit facilities. The loan was scheduled to mature in October 2013. In connection with this prepayment, the Operating Partnership recorded a loss on extinguishment of debt of $172 from the write-off of an unamortized discount.

In the first quarter of 2013, the Operating Partnership retired two loans with an aggregate balance of $77,099, including a $13,460 loan secured by Statesboro Crossing in Statesboro, GA and a $63,639 loan secured by Westmoreland Mall in Greensburg, PA, with borrowings from the Operating Partnership's credit facilities. Both loans were scheduled to mature in the first quarter of 2013.

The lender of the non-recourse mortgage loan secured by Columbia Place in Columbia, SC notified the Operating Partnership in the first quarter of 2012 that the loan had been placed in default. Columbia Place generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $27,265 at June 30, 2013, and a contractual maturity date of September 2013. The lender on the loan receives the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments.

The lender of the non-recourse mortgage loan secured by Citadel Mall in Charleston, SC notified the Operating Partnership in July 2013 that the loan had been placed in default. Citadel Mall generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $68,282 at June 30, 2013, and a contractual maturity date of April 2017. In June 2013, the lender on the loan began receiving the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments.

See Note 16 for information concerning mortgages on operating properties subsequent to June 30, 2013.

Scheduled Principal Payments

As of June 30, 2013, the scheduled principal amortization and balloon payments of the Operating Partnership’s consolidated debt, excluding extensions available at the Operating Partnership’s option, on all mortgage and other indebtedness, including construction loans and lines of credit, are as follows: 

2013	$	89,731
2014	219,168
2015	890,611
2016	1,271,515
2017	550,368
Thereafter	1,589,235
	4,610,628
Net unamortized premiums	11,767
	$	4,622,395

Of the $89,731 of scheduled principal payments in 2013, $53,466 relates to the maturing principal balances of three operating property loans and $36,265 represents scheduled principal amortization. Two maturing operating property loans with principal balances totaling $26,200 as of June 30, 2013 have extensions available at the Operating Partnership's option, leaving approximately $27,266 of loan maturities in 2013 that the Operating Partnership intends to retire or refinance. Subsequent to June 30, 2013, the Operating Partnership retired one operating property loan with an outstanding balance of $16,000 as of June 30,

23

2013. The Operating Partnership may use its three unsecured credit facilities to retire loans maturing in 2013 as well as to provide flexibility for liquidity purposes.

The Operating Partnership’s mortgage and other indebtedness had a weighted-average maturity of 4.6 years as of June 30, 2013 and 4.9 years as of December 31, 2012.

Interest Rate Hedge Instruments

The Operating Partnership records its derivative instruments in its condensed consolidated balance sheets at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the derivative has been designated as a hedge and, if so, whether the hedge has met the criteria necessary to apply hedge accounting.

The Operating Partnership’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.  To accomplish these objectives, the Operating Partnership primarily uses interest rate swaps and caps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Operating Partnership making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in AOCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.  Such derivatives are used to hedge the variable cash flows associated with variable-rate debt.

As of June 30, 2013, the Operating Partnership had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative	Number of Instruments	Notional Amount Outstanding
Interest Rate Cap	1	$	123,125
Interest Rate Swaps	4	$	111,881

Instrument Type	Location in Condensed Consolidated Balance Sheet	Notional Amount Outstanding	Designated Benchmark Interest Rate	Strike Rate	Fair Value at 6/30/2013			Fair Value at 12/31/12			Maturity Date
Cap	Intangible lease assets and other assets	$123,125 (amortizing to $122,375)	3-month LIBOR	5.000%	$	—		$	—		Jan 2014
Pay fixed/ Receive  variable Swap	Accounts payable and accrued liabilities	$54,086 (amortizing to $48,337)	1-month LIBOR	2.149%	$	(2,162	)	$	(2,775	)	Apr 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$33,863 (amortizing to $30,276)	1-month LIBOR	2.187%	(1,386		)	(1,776		)	Apr 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$12,660 (amortizing to $11,313)	1-month LIBOR	2.142%	(504		)	(647		)	Apr 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$11,272 (amortizing to $10,083)	1-month LIBOR	2.236%	(476		)	(607		)	Apr 2016
					$	(4,528	)	$	(5,805	)

24

	Gain (Loss) Recognized in OCI/L (Effective Portion)					Location of Losses Reclassified from AOCI into Earnings(Effective  Portion)	Loss Recognized in Earnings (Effective Portion)						Location of Gain Recognized in Earnings (Ineffective  Portion)	Gain Recognized in Earnings (Ineffective Portion)
Hedging Instrument	Six Months Ended June 30,						Six Months Ended June 30,							Six Months Ended June 30,
	2013		2012				2013			2012				2013		2012
Interest rate contracts	$	1,282	$	(481	)	Interest Expense	$	(1,119	)	$	(1,129	)	Interest Expense	$	—	$	—

As of June 30, 2013, the Operating Partnership expects to reclassify approximately $2,141 of losses currently reported in AOCI to interest expense within the next twelve months due to amortization of its outstanding interest rate contracts.  Fluctuations in fair values of these derivatives between June 30, 2013 and the respective dates of termination will vary the projected reclassification amount.

Note 7 – Comprehensive Income

Comprehensive income includes all changes in redeemable common units and partners' capital during the period, except those resulting from investments by unitholders, distributions to unitholders and redemption valuation adjustments. OCI/L includes changes in unrealized gains (losses) on available-for-sale securities and interest rate hedge agreements. 

The changes in the components of AOCI for the six months ended June 30, 2013 are as follows: 

	Redeemable Common Units					Partners' Capital
	Unrealized Gains (Losses)
	Hedging Agreements			Available-for-Sale Securities		Hedging Agreements			Available-for-Sale Securities		Total
Beginning balance, January 1, 2013	$	373		$	353	$	(6,319	)	$	12,005	$	6,412
OCI before reclassifications	(1		)	11		868			1,271		2,149
Amounts reclassified from AOCI	—			—		(1,119		)	—		(1,119		)
Net year-to-date period OCI	(1		)	11		(251		)	1,271		1,030
Ending balance, June 30, 2013	$	372		$	364	$	(6,570	)	$	13,276	$	7,442

Reclassifications out of AOCI for the six months ended June 30, 2013 are as follows:

	Amount Reclassified from AOCI		Location in Condensed Consolidated   Statement of Operations
Reclassification on cash flow hedges - interest rate contracts	$	1,119	Interest Expense

25

Note 8 – Mortgage and Other Notes Receivable

Each of the Operating Partnership’s mortgage notes receivable is collateralized by either a first mortgage, or a second mortgage, or by an assignment of 100% of the partnership interests that own the real estate assets.  Other notes receivable include amounts due from tenants or government-sponsored districts and unsecured notes received from third parties as whole or partial consideration for property or investments.  Interest rates on mortgage and other notes receivable ranged from 2.7% to 10.0%, with a weighted-average interest rate of 6.94% and 7.33% at June 30, 2013 and December 31, 2012, respectively. Maturities of these notes receivable range from May 2014 to January 2047.

In May 2013, Mortgage Holdings, LLC, a subsidiary of the Operating Partnership, entered into a $2,700 loan agreement with an affiliate of Horizon Group Properties, Inc. ("Horizon"), the Operating Partnership's noncontrolling interest partner in The Outlet Shoppes at Atlanta. The note receivable bears interest of 7.0% through its maturity date in May 2015 and is secured by Horizon's interest in The Outlet Shoppes at Atlanta.

In the first quarter of 2013, Woodstock GA Investments, LLC, a joint venture in which the Operating Partnership owns a 75.0%interest, received $3,525 of the balance on its $6,581 note receivable with an entity that owns an interest in land in Woodstock, GA, adjacent to the site of The Outlet Shoppes at Atlanta.

The Operating Partnership believes that its mortgage and other notes receivable balance of $25,020 was fully collectible as of June 30, 2013.

Note 9 – Segment Information

The Operating Partnership measures performance and allocates resources according to property type, which is determined based on certain criteria such as type of tenants, capital requirements, economic risks, leasing terms, and short and long-term returns on capital. Rental income and tenant reimbursements from tenant leases provide the majority of revenues from all segments. Information on the Operating Partnership’s reportable segments is presented as follows, restated for discontinued operations in all periods presented:

Six Months Ended June 30, 2013	Malls			Associated Centers			Community Centers			All Other (1)			Total
Revenues	$	464,352		$	22,431		$	7,885		$	33,746		$	528,414
Property operating expenses (2)	(152,004		)	(5,431		)	(1,417		)	9,158			(149,694		)
Interest expense	(104,396		)	(4,093		)	(1,121		)	(7,423		)	(117,033		)
Other expense	—			—			—			(14,846		)	(14,846		)
Gain on sale of real estate assets	295			—			—			705			1,000
Segment profit	$	208,247		$	12,907		$	5,347		$	21,340		247,841
Depreciation and amortization expense													(142,070		)
General and administrative expense													(26,299		)
Interest and other income													1,388
Loss on extinguishment of debt													(9,108		)
Equity in earnings of unconsolidated affiliates													5,348
Loss on impairment													(21,038		)
Gain on investment													2,400
Income tax provision													(583		)
Income from continuing operations													$	57,879
Total assets	$	6,021,614		$	290,856		$	243,642		$	478,492		$	7,034,604
Capital expenditures (3)	$	102,167		$	7,466		$	2,598		$	84,376		$	196,607

26

Six Months Ended June 30, 2012	Malls			Associated Centers			Community Centers			All Other (1)			Total
Revenues	$	448,892		$	20,841		$	5,543		$	23,037		$	498,313
Property operating expenses (2)	(145,934		)	(5,126		)	(2,502		)	9,875			(143,687		)
Interest expense	(107,358		)	(4,310		)	(1,298		)	(8,265		)	(121,231		)
Other expense	—			—			—			(13,317		)	(13,317		)
Gain (loss) on sale of real estate assets	—			—			97			(3		)	94
Segment profit	$	195,600		$	11,405		$	1,840		$	11,327		220,172
Depreciation and amortization expense													(129,414		)
General and administrative expense													(25,793		)
Interest and other income													2,370
Equity in earnings of unconsolidated affiliates													3,339
Income tax provision													(39		)
Income from continuing operations													$	70,635
Total assets	$	6,228,312		$	303,899		$	240,850		$	140,550		$	6,913,611
Capital expenditures (3)	$	121,272		$	3,480		$	10,706		$	18,586		$	154,044

(1) The All Other category includes mortgage and other notes receivable, office buildings, the Management Company and the Operating Partnership’s subsidiary that provides security and maintenance services. 

(2) Property operating expenses include property operating, real estate taxes and maintenance and repairs. 

(3) Amounts include acquisitions of real estate assets and investments in unconsolidated affiliates. Developments in progress are included in the All Other category.

27

Note 10 – ATM Program

At-The-Market Equity Program

On March 1, 2013, CBL and collectively, the Operating Partnership, entered into separate controlled equity offering sales agreements (collectively, the "Sales Agreements") with a number of sales agents to sell shares of CBL's common stock, having an aggregate offering price of up to $300,000, from time to time in "at-the-market" equity offerings (as defined in Rule 415 of the Securities Act of 1933, as amended) or in negotiated transactions (the "ATM program"). In accordance with the Sales Agreements, CBL will set the parameters for the sales of shares, including the number of shares to be issued, the time period during which sales are to be made and any minimum price below which sales may not be made. The Sales Agreements provide that the sales agents will be entitled to compensation for their services at a mutually agreed commission rate not to exceed 2.0% of the gross proceeds from the sales of shares sold through the ATM program. For each share of common stock issued by CBL, the Operating Partnership issues a corresponding number of common units of limited partnership interest to CBL in exchange for the contribution of the proceeds from the stock issuance. The Operating Partnership includes only CBL share issuances that have settled in the calculation of units outstanding at the end of each period. The following table summarizes issuances of CBL's common stock sold through the ATM program since inception through June 30, 2013:

	Number of Shares Settled	Gross Proceeds		Net Proceeds		Weighted-average Sales Price
2013:
First quarter	1,889,105	$	44,459	$	43,904	$	23.53
Second quarter	6,530,193	167,034		165,692		25.58
Total	8,419,298	$	211,493	$	209,596	$	25.12

The proceeds from these sales were used to reduce the balances on our unsecured lines of credit. Since the commencement of the ATM program, the Operating Partnership has issued 8,419,298 common units to CBL and approximately $88,507 remains available to be sold under this program. Actual future sales will depend on a variety of factors including but not limited to market conditions, the trading price of CBL's common stock and the Operating Partnership's capital needs. CBL has no obligation to sell the remaining shares available under the ATM program.

Note 11 – Earnings Per Unit

Basic earnings per unit (“EPU”) is computed by dividing net income attributable to common unitholders by the weighted-average number of common units outstanding for the period. Diluted EPU assumes the issuance of common units for all potential dilutive common units outstanding.

The following summarizes the impact of potential dilutive common units on the denominator used to compute EPU:

	Six Months Ended June 30,
	2013	2012
Denominator – basic	193,633	190,176
Deemed units related to deferred compensation arrangements	—	42
Denominator – diluted	193,633	190,218

The dilutive effect of stock options of 2,000 shares for the six months ended June 30, 2012 was excluded from the computation of diluted EPU because the effect of including the stock options would have been anti-dilutive. There were no outstanding stock options in 2013.

Note 12 – Contingencies

Litigation

The Operating Partnership is currently involved in certain litigation that arises in the ordinary course of business, most of which is expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Operating Partnership records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated.

28

If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Operating Partnership accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Operating Partnership accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Operating Partnership discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Operating Partnership discloses the nature and estimate of the possible loss of the litigation. The Operating Partnership does not disclose information with respect to litigation where an unfavorable outcome is considered to be remote or where the estimated loss would not be material. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Operating Partnership.

On March 11, 2010, The Promenade D'Iberville, LLC (“TPD”), a subsidiary of the Operating Partnership, filed a lawsuit in the Circuit Court of Harrison County, Mississippi, against M. Hanna Construction Co., Inc. (“M Hanna”), Gallet & Associates, Inc., LA Ash, Inc., EMJ Corporation (“EMJ”) and JEA (f/k/a Jacksonville Electric Authority), seeking damages for alleged property damage and related damages occurring at a shopping center development in D'Iberville, Mississippi. EMJ filed an answer and counterclaim denying liability and seeking to recover from TPD the retainage of approximately $327 allegedly owed under the construction contract. Kohl's Department Stores, Inc. (“Kohl's”) was granted permission to intervene in the lawsuit and, on April 13, 2011, filed a cross-claim against TPD alleging that TPD is liable to Kohl's for unspecified damages resulting from the actions of the defendants and for the failure to perform the obligations of TPD under a Site Development Agreement with Kohl's. Kohl's also made a claim against the Operating Partnership which guaranteed the performance of TPD under the Site Development Agreement. The case is at the discovery stage. Although, based on information currently available, the Operating Partnership believes the likelihood of an unfavorable outcome related to the claims made by EMJ and Kohl's against the Operating Partnership in connection with the TPD case is remote, the Operating Partnership is providing disclosure of this litigation due to the related party relationship between the Operating Partnership and EMJ described below.

TPD also has filed claims under several insurance policies in connection with this matter, and there are three pending lawsuits relating to insurance coverage. On October 8, 2010, First Mercury Insurance Company (“First Mercury”) filed an action in the United States District Court for the Eastern District of Texas against M Hanna and TPD seeking a declaratory judgment concerning coverage under a liability insurance policy issued by First Mercury to M Hanna. That case was dismissed for lack of federal jurisdiction and refiled in Texas state court. On June 13, 2011, TPD filed an action in the Chancery Court of Hamilton County, Tennessee against National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) and EMJ seeking a declaratory judgment regarding coverage under a liability insurance policy issued by National Union to EMJ and recovery of damages arising out of National Union's breach of its obligations. In March 2012, Zurich American and Zurich American of Illinois, which also have issued liability insurance policies to EMJ, intervened in that case and the case is set for trial on October 29, 2013. On February 14, 2012, TPD filed claims in the United States District Court for the Southern District of Mississippi against Factory Mutual Insurance Company and Federal Insurance Company seeking a declaratory judgment concerning coverage under certain builders risk and property insurance policies issued by those respective insurers to the Operating Partnership.

Certain executive officers of CBL and members of the immediate family of Charles B. Lebovitz, Chairman of the Board of CBL, collectively have a significant non-controlling interest in EMJ, a major national construction company that the Operating Partnership engaged to build a substantial number of the Operating Partnership's properties. EMJ is one of the defendants in the Harrison County, MS and Hamilton County, TN cases described above.

See Note 16 for subsequent event related to TPD.

Environmental Contingencies

The Operating Partnership evaluates potential loss contingencies related to environmental matters using the same criteria described above related to litigation matters. Based on current information, an unfavorable outcome concerning such environmental matters, both individually and in the aggregate, is considered to be reasonably possible. However, the Operating Partnership believes its maximum potential exposure to loss would not be material to its results of operations or financial condition. The Operating Partnership has a master insurance policy that provides coverage through 2022 for certain environmental claims up to $10,000 per occurrence and up to$50,000 in the aggregate, subject to deductibles and certain exclusions.

Other Contingencies

The Operating Partnership consolidates its investment in a joint venture, CW Joint Venture, LLC (“CWJV”), with Westfield.  The terms of the joint venture agreement require that CWJV pay an annual preferred distribution at a rate of 5.0%, which increases to 6.0% on July 1, 2013, on the preferred liquidation value of the PJV units of CWJV that are held by Westfield.  Westfield has the right to have all or a portion of the PJV units redeemed by CWJV with either cash or property owned by CWJV, in each case for a net equity amount equal to the preferred liquidation value of the PJV units. At any time after January 1, 2013, Westfield may propose that CWJV acquire certain qualifying property that would be used to redeem the PJV units at their preferred liquidation value. If CWJV does not redeem the PJV units with such qualifying property (a “Preventing Event”), then the annual preferred distribution rate on the PJV units increases to 9.0% beginning July 1, 2013.  The Operating Partnership will

29

have the right, but not the obligation, to offer to redeem the PJV units from January 31, 2013 through January 31, 2015 at their preferred liquidation value, plus accrued and unpaid distributions. The Operating Partnership amended the joint venture agreement with Westfield in September 2012 to provide that, if the Operating Partnership exercises its right to offer to redeem the PJV units on or before August 1, 2013, then the preferred liquidation value will be reduced by $10,000 so long as Westfield does not reject the offer and if the redemption closes on or before September 30, 2013. If the Operating Partnership fails to make such an offer, the annual preferred distribution rate on the PJV units increases to 9.0% for the period from July 1, 2013 through June 30, 2016, at which time it decreases to 6.0% if a Preventing Event has not occurred.  If, upon redemption of the PJV units, the fair value of CBL’s common stock is greater than $32.00 per share, then such excess (but in no case greater than $26,000 in the aggregate) shall be added to the aggregate preferred liquidation value payable on account of the PJV units.  The Operating Partnership accounts for this contingency using the method prescribed for earnings or other performance measure contingencies.  As such, should this contingency result in additional consideration to Westfield, the Operating Partnership will record the current fair value of the consideration issued as a purchase price adjustment at the time the consideration is paid or payable.

In June 2013, the Operating Partnership issued a redemption notice to Westfield to redeem all of the PJV units. Under the terms agreed to by the Operating Partnership and Westfield, the annual preferred distribution rate will remain at 5.0% until the earlier of the closing or rejection by Westfield of the redemption offer or September 30, 2013.

Guarantees

 The Operating Partnership may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on the Operating Partnership’s investment in the joint venture. The Operating Partnership may receive a fee from the joint venture for providing the guaranty. Additionally, when the Operating Partnership issues a guaranty, the terms of the joint venture agreement typically provide that the Operating Partnership may receive indemnification from the joint venture partner or have the ability to increase its ownership interest.

 The Operating Partnership owns a parcel of land in Lee’s Summit, MO that it is ground leasing to a third party development company.  The third party developed and operates a shopping center on the land parcel.  The Operating Partnership has guaranteed 27% of the third party’s construction loan and bond line of credit (the “loans”) of which the maximum guaranteed amount, representing 27% of capacity, is approximately $14,931. The total amount outstanding at June 30, 2013 on the loans was $49,699 of which the Operating Partnership has guaranteed $13,419. The Operating Partnership included an obligation of $192 as of June 30, 2013 and December 31, 2012 in the accompanying condensed consolidated balance sheets to reflect the estimated fair value of the guaranty. In the second quarter of 2013, the loan was extended to July 2013. The third party developer is working with the lender to further extend the maturity date of the loan. The Operating Partnership has not increased its accrual for the contingent obligation as the Operating Partnership does not believe that this contingent obligation is probable.

The Operating Partnership has guaranteed 100% of the construction and land loans of West Melbourne I, LLC (“West Melbourne”), an unconsolidated affiliate in which the Operating Partnership owns a 50% interest, of which the maximum guaranteed amount is $43,825.  West Melbourne developed and operates Hammock Landing, a community center in West Melbourne, FL. The total amount outstanding on the loans at June 30, 2013 was $43,825. The guaranty will expire upon repayment of the debt.  The land loan, and the construction loan, each representing $2,757 and $41,068, respectively, of the amount outstanding at June 30, 2013, mature in November 2013.  The construction loan has a one-year extension option available. The Operating Partnership included an obligation of $478 in the accompanying condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012 to reflect the estimated fair value of this guaranty.

 The Operating Partnership has guaranteed 100% of the construction loan of Port Orange I, LLC ("Port Orange"), an unconsolidated affiliate in which the Operating Partnership owns a 50% interest, of which the maximum guaranteed amount is $62,772.  Port Orange developed and operates The Pavilion at Port Orange, a community center in Port Orange, FL.  The total amount outstanding at June 30, 2013 on the loan was $62,772. The guaranty will expire upon repayment of the debt.  The loan matures in March 2014 and has a one-year extension option available. The Operating Partnership included an obligation of $961 in the accompanying condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012 to reflect the estimated fair value of this guaranty.

 The Operating Partnership has guaranteed the lease performance of York Town Center, LP ("YTC"), an unconsolidated affiliate in which the Operating Partnership owns a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. The Operating Partnership has guaranteed YTC’s performance under this agreement up to a maximum of $22,000, which decreases by $800 annually until the guaranteed amount is reduced to $10,000. The guaranty expires on December 31, 2020.  The maximum guaranteed obligation was $17,200 as of June 30, 2013.  The Operating Partnership entered into an agreement with its joint venture partner under which the joint venture partner has agreed to reimburse the Operating Partnership 50% of any amounts it is obligated to fund under the guaranty.  The

30

Operating Partnership did not include an obligation for this guaranty because it determined that the fair value of the guaranty was not material as of June 30, 2013 and December 31, 2012.

The Operating Partnership has guaranteed 100% of a term loan for JG Gulf Coast Town Center LLC ("Gulf Coast"), an unconsolidated affiliate in which the Operating Partnership owns a 50% interest, of which the maximum guaranteed amount is $6,529. The loan is for the third phase expansion of Gulf Coast Town Center, a shopping center located in Ft. Myers, FL. The total amount outstanding at June 30, 2013 on the loan was $6,529. The guaranty will expire upon repayment of the debt. The loan matures in July 2015. The Operating Partnership did not include an obligation for this guaranty because it determined that the fair value of the guaranty was not material as of June 30, 2013 and December 31, 2012.

In March 2013, the Operating Partnership guaranteed 100% of a construction loan for Fremaux, an unconsolidated affiliate in which the Operating Partnership owns a 65% interest, of which the maximum guaranteed amount is $46,000. The loan is for the development of Fremaux Town Center, a community center located in Slidell, LA. The total amount outstanding at June 30, 2013 on the loan was $5,531. The guaranty will expire upon repayment of the debt. The loan matures in March 2016 and has two one-year extension options for an outside maturity date of March 2018. The Operating Partnership received a 1% fee for this guaranty when the loan was issued in March 2013 and has included an obligation of $460 in the accompanying condensed consolidated balance sheet as of June 30, 2013 to reflect the estimated fair value of this guaranty.

See Note 16 for subsequent event related to guarantees.

Performance Bonds

 The Operating Partnership has issued various bonds that it would have to satisfy in the event of non-performance. The total amount outstanding on these bonds was $27,067 and $29,211 at June 30, 2013 and December 31, 2012, respectively. 

Note 13 – Share-Based Compensation

As of June 30, 2013, there were two share-based compensation plans under which CBL has outstanding awards. CBL can elect to make new awards under one of these plans, the CBL & Associates Properties, Inc. 2012 Stock Incentive Plan ("the 2012 Plan"), which was approved by CBL's shareholders in May 2012. The 2012 Plan permits CBL to issue stock options and common stock to selected officers, employees and non-employee directors of CBL and its subsidiaries and affiliates, as defined, including the Operating Partnership, up to a total of 10,400,000 shares. CBL did not issue any new awards under the CBL & Associates Properties, Inc. Second Amended and Restated Stock Incentive Plan ("the 1993 Plan"), which was approved by CBL's shareholders in May 2003, between the adoption of the 2012 Plan to replace the 1993 Plan in May 2012 and the termination of the 1993 Plan (as to new awards) on May 5, 2013. As the primary operating subsidiary of CBL, the Operating Partnership participates in and bears the compensation expense associated with CBL's share-based compensation plans.

Share-based compensation expense was $1,757 and $1,756 for the six months ended June 30, 2013 and 2012, respectively. Share-based compensation cost capitalized as part of real estate assets was $105 and $51 for the six months ended June 30, 2013 and 2012, respectively.

A summary of the status of stock awards as of June 30, 2013, and changes during the six months ended June 30, 2013, is presented below: 

	Shares		Weighted  Average Grant-Date Fair Value
Nonvested at January 1, 2013	346,860		$	17.06
Granted	209,650		$	21.92
Vested	(208,030	)	$	18.40
Forfeited	(8,590	)	$	18.20
Nonvested at June 30, 2013	339,890		$	19.20

As of June 30, 2013, there was $5,905 of total unrecognized compensation cost related to nonvested stock awards granted under the plans, which is expected to be recognized over a weighted-average period of 3.9 years.

31

Note 14 – Noncash Investing and Financing Activities

The Operating Partnership’s noncash investing and financing activities were as follows for the six months ended June 30, 2013 and 2012:

	Six Months Ended June 30,
	2013		2012
Additions to real estate assets from conversion of notes receivable	$	—	$	4,522
Accrued dividends and distributions payable	47,546		43,547
Additions to real estate assets accrued but not yet paid	36,755		23,107
Debt assumed to acquire real estate assets, including premiums	40,368		177,296
Trade-in allowance - aircraft	2,800		—

Note 15 – Income Taxes

 The Operating Partnership is generally not liable for federal corporate income taxes as income or loss is reported in the tax returns of its partners. The Operating Partnership has also elected taxable REIT subsidiary status for some of its subsidiaries.  For these entities, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if the Operating Partnership believes all or some portion of the deferred tax asset may not be realized. An increase or decrease in the valuation allowance resulting from changes in circumstances that may affect the realizability of the related deferred tax asset is included in income or expense, as applicable. State tax expense was $2,137 and $1,556 during the six months ended June 30, 2013 and 2012, respectively.

The Operating Partnership recorded an income tax provision of $583 and $39 for the six months ended June 30, 2013 and 2012, respectively. The income tax provision in 2013 consisted of a current tax benefit of $1,241 and deferred tax provision of $1,824. The income tax provision in 2012 consisted of a current tax benefit of $2,277 and deferred tax provision of $2,316.

The Operating Partnership had a net deferred tax asset of $6,024 and $6,607 at June 30, 2013 and December 31, 2012, respectively. The net deferred tax asset at June 30, 2013 and December 31, 2012 is included in intangible lease assets and other assets and primarily consisted of operating expense accruals and differences between book and tax depreciation.  

 The Operating Partnership reports any income tax penalties attributable to its properties as property operating expenses and any corporate-related income tax penalties as general and administrative expenses in its condensed consolidated statements of operations.  In addition, any interest incurred on tax assessments is reported as interest expense.  The Operating Partnership reported nominal interest and penalty amounts for the six month periods ended June 30, 2013 and 2012, respectively. 

Note 16 – Subsequent Events

In July 2013, the Operating Partnership retired a $16,000 loan, which was secured by Alamance Crossing West in Burlington, NC with borrowings from its credit facilities. The loan was scheduled to mature in December 2013.

Also during July 2013, the Operating Partnership closed on a five-year $400,000 unsecured term loan. Net proceeds from the term loan were used to reduce outstanding balances on the Operating Partnership's lines of credit. The loan bears interest at a variable rate of LIBOR plus 150 basis points based on the Operating Partnership's current credit rating and has a maturity date of July 2018.

In August 2013, the lender of of the non-recourse mortgage loan secured by Citadel Mall in Charleston, SC sent a formal notice of default and filed for foreclosure.

In August 2013, Louisville Outlet obtained a construction loan that allows for borrowings up to $60,200 and bears interest at LIBOR plus 2.00%. The construction loan matures in August 2016 and has two one-year extension options, which are at the joint venture's election, for an outside maturity date of August 2018. The Operating Partnership has guaranteed 100% of the loan. No monies will be drawn on the loan until equity requirements are met.

In August 2013, TPD received a partial settlement of $8,240 from certain of the defendants in the matter described in Note 12. Litigation continues with other defendants in the matter.

In the third quarter of 2013, the Operating Partnership sold three malls and three associated centers in a portfolio transaction for a gross sale price of $176,000. The properties included in the portfolio were Georgia Square Mall and Georgia Square Plaza

32

in Athens, GA; Panama City Mall and The Shoppes at Panama City in Panama City, FL; and RiverGate Mall and Village at RiverGate in Nashville, TN. Net proceeds from the sale were used to reduce the outstanding balances on the Operating Partnership's credit facilities.

The Operating Partnership has evaluated subsequent events through the date of issuance of these financial statements.  

33

EX-99.4

EXHIBIT 99.4

Management’s Discussion and Analysis of Financial Condition and Results of Operations

of CBL & Associates Limited Partnership

June 30, 2013

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and accompanying notes that are included in Exhibit 99.3 of this Form 8-K.  Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the condensed consolidated financial statements. In this discussion, the terms “we,” “us,” “our” and the “Operating Partnership” refer to CBL & Associates Limited Partnership and its subsidiaries.

Certain statements made in this section or elsewhere in this report may be deemed “forward-looking statements” within the meaning of the federal securities laws. All statements other than statements of historical fact should be considered to be forward-looking statements. In many cases, these forward-looking statements may be identified by the use of words such as “will,” “may,” “should,” “could,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “projects,” “goals,” “objectives,” “targets,” “predicts,” “plans,” “seeks,” or similar expressions.  Any forward-looking statement speaks only as of the date on which it is made and is qualified in its entirety by reference to the factors discussed throughout this report.

Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance or results and we can give no assurance that these expectations will be attained.  It is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of known and unknown risks and uncertainties.  Such known risks and uncertainties include, without limitation:

• general industry, economic and business conditions;

• interest rate fluctuations;

• costs and availability of capital and capital requirements;

• costs and availability of real estate;

• inability to consummate acquisition opportunities and other risks associated with acquisitions;

• competition from other companies and retail formats;

• changes in retail rental rates in our markets;

• shifts in customer demands;

• tenant bankruptcies or store closings;

• changes in vacancy rates at our properties;

• changes in operating expenses;

• changes in applicable laws, rules and regulations;

• sales of real property;

• changes in our credit rating; and

• the ability to obtain suitable equity and/or debt financing and the continued availability of financing in the amounts and on the terms necessary to support our future refinancing requirements and business.

This list of risks and uncertainties is only a summary and is not intended to be exhaustive.  We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information. 

1

EXECUTIVE OVERVIEW

CBL & Associates Limited Partnership (the "Operating Partnership") is a Delaware limited partnership that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air centers, outlet centers, associated centers, community centers and office properties. Our properties are located in 27 states, but are primarily in the southeastern and midwestern United States.   CBL & Associates Properties, Inc. ("CBL"), a Delaware Corporation, is a self-managed, self-administered, fully integrated real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Operating Partnership conducts CBL's property management and development activities through its wholly-owned subsidiary, CBL & Associates Management, Inc. (the “Management Company”), to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Operating Partnership, the Management Company and the Operating Partnership's other subsidiaries are collectively referred to herein as "the Operating Partnership."

As of June 30, 2013, we owned controlling interests in 77 regional malls/open-air and outlet centers (including one mixed-use center), 28 associated centers (each located adjacent to a regional mall), seven community centers and eight office buildings, including our corporate office building. We consolidate the financial statements of all entities in which we have a controlling financial interest or where we are the primary beneficiary of a variable interest entity ("VIE"). As of June 30, 2013, we owned noncontrolling interests in nine regional malls/open-air centers, four associated centers, four community centers and seven office buildings. Because one or more of the other partners have substantive participating rights, we do not control these partnerships and joint ventures and, accordingly, account for these investments using the equity method.  We had controlling interests in two outlet center developments, four mall expansions, three mall redevelopments and one associated center redevelopment at June 30, 2013. We also had a noncontrolling interest in one community center development at June 30, 2013. We also hold options to acquire certain development properties owned by third parties.

Second quarter 2013 marked the culmination of a significant step in our financing strategy as we received an investment grade rating in May 2013 of Baa3 with a stable outlook from Moody's Investors Service ("Moody's"). This was followed by an Issuer Default Rating ("IDR") of BBB- with a stable outlook and a senior unsecured notes rating of BBB- from Fitch Ratings ("Fitch") in July 2013. These investment grade ratings allow us to access the public debt markets and provide more financing flexibility. We were also able to lower the interest rates on our credit facilities as a result of our investment grade rating. Additionally, our ATM program has generated more than $209 million in net proceeds since its inception in the first quarter of 2013, providing additional liquidity.

The achievement of our financing objectives enables us to continue to selectively pursue acquisition, redevelopment and development opportunities, which contribute to growing and enhancing our portfolio.

We continue to achieve positive results in leasing and occupancy. For the second quarter of 2013, leasing spreads were positive for our stabilized malls with a 12.1% increase over the prior gross rent per square foot. Portfolio occupancy also increased 70 basis points to 93.0% from 92.3% as compared to the prior-year period. We continue to move forward with our retailer upgrade strategy that began last quarter as we invest in existing properties as well as new development.

2

RESULTS OF OPERATIONS

Properties that were in operation for the entire year during 2012 and the six months ended June 30, 2013 are referred to as the “Comparable Properties.”  Since January 1, 2012, we have opened two community center developments and acquired two outlet centers and two malls as follows: 

Property	Location	Date Opened/Acquired
New Developments:
Waynesville Commons	Waynesville, NC	October 2012
The Crossings at Marshalls Creek	Middle Smithfield, PA	June 2013
Acquisitions:
The Outlet Shoppes at El Paso (1)	El Paso, TX	April 2012
The Outlet Shoppes at Gettysburg (2)	Gettysburg, PA	April 2012
Dakota Square Mall	Minot, ND	May 2012
Kirkwood Mall (3)	Bismarck, ND	December 2012

(1)	The Outlet Shoppes at El Paso is a 75/25 joint venture and is included in the condensed consolidated statements of operations on a consolidated basis in Exhibit 99.3 to the Form 8-K that this Management's Discussion and Analysis is included in.
(2)	The Outlet Shoppes at Gettysburg is a 50/50 joint venture and is included in the condensed consolidated statements of operations on a consolidated basis in Exhibit 99.3 to the Form 8-K that this Management's Discussion and Analysis is included in.
(3)	We acquired a 49.0% interest in Kirkwood Mall in December 2012 and acquired the remaining 51.0% interest in April 2013. This property has been included on a consolidated basis since December 2012 in the condensed consolidated statements of operations in Exhibit 99.3 to the Form 8-K that this Management's Discussion and Analysis is included in.

The properties listed above are included in our operations on a consolidated basis and are collectively referred to as the “New Properties.” In addition to the above properties, in December 2012, we purchased the remaining 40.0% noncontrolling interests in Imperial Valley Mall L.P. and Imperial Valley Peripheral L.P., collectively referred to as the "IV Property," from our joint venture partner. The results of operations of the IV Property, previously accounted for using the equity method of accounting, are included in our operations on a consolidated basis beginning December 2012. The transactions related to the New Properties and the IV Property impact the comparison of the results of operations for the six months ended June 30, 2013 to the results of operations for the six months ended June 30, 2012. 

Comparison of the Six Months Ended June 30, 2013 to the Six Months Ended June 30, 2012

Revenues

Total revenues increased $30.1 million for the six months ended June 30, 2013 compared to the prior-year period.  Rental revenues and tenant reimbursements increased by $26.9 million due to increases of $16.8 million related to the New Properties, $6.9 million attributable to the IV Property and $3.2 million related to the Comparable Properties. The increase in revenues of the Comparable Properties is primarily attributable to increases in base and percentage rents.

Our cost recovery ratio for the six months ended June 30, 2013 was 98.2% compared with 97.9% for the prior-year period.

The increase in management, development and leasing fees of $1.5 million was mainly attributable to a contract that began in June 2012 to provide management services to a portfolio of six malls owned by a third party.

Other revenues increased $1.7 million primarily due to an increase of $1.2 million in revenue related to our subsidiary that provides security and maintenance services to third parties and a $0.6 million increase in miscellaneous income in the second quarter of 2013.

Operating Expenses

Total operating expenses increased $41.7 million for the six months ended June 30, 2013 compared to the prior-year period.  Property operating expenses, including real estate taxes and maintenance and repairs, increased $6.0 million due to increases of $4.7 million attributable to the New Properties and $2.1 million related to the IV Property partially offset by a decrease of $0.8 million related to the Comparable Properties. The decrease in property operating expenses of the Comparable Properties is primarily attributable to decreases of $1.9 million in real estate taxes, $0.5 million in utilities expense, and $0.4 million in bad debt expense, which were partially offset by increases of $1.0 million in snow removal costs, $0.6 million in insurance expense and $0.3 million in payroll and related costs.

3

The increase in depreciation and amortization expense of $12.7 million resulted from increases of $7.3 million related to the New Properties, $3.6 million attributable to the IV Property and $1.8 million related to the Comparable Properties. The increase attributable to the Comparable Properties is primarily due to an increase of $3.1 million in depreciation expense related to capital expenditures for renovations and redevelopments.

General and administrative expenses increased $0.5 million primarily as a result of increases in payroll and related costs, state tax expense, fees related to obtaining investment grade ratings and legal and consulting expenses, partially offset by decreases in acquisition-related costs recorded in 2012. As a percentage of revenues, general and administrative expenses were 5.0% and 5.2% for the six months ended June 30, 2013 and 2012, respectively.

During the six months ended June 30, 2013, we recorded non-cash impairment charges of $21.0 million, which consisted of $20.4 million related to Citadel Mall in Charleston, SC and $0.6 million attributable to the trade-in of the Operating Partnership's aircraft at a price below its cost basis. See Note 3 to the condensed consolidated financial statements, included in Exhibit 99.3 of this Form 8-K, for further discussion of impairment charges.

Other expenses increased $1.5 million primarily due to higher expenses of $1.4 million related to our subsidiary that provides security and maintenance services to third parties.

Other Income and Expenses

Interest and other income decreased $1.0 million compared to the prior-year period. The decrease relates to $1.2 million attributable to two mezzanine loans for two outlet centers. In 2012, we earned $0.6 million in interest income on these loans and subsequently recognized $0.6 million of unamortized discounts on these loans when they terminated in connection with the acquisitions of member interests in both outlet centers in 2012. This decrease was partially offset by an increase of $0.2 million from a note receivable from a third party related to the development of The Outlet Shoppes at Atlanta, located in Woodstock, GA.

Interest expense decreased $4.2 million for the six months ended June 30, 2013 compared to the prior-year period.  A decrease of $8.9 million for the Comparable Properties was partially offset by increases of $3.7 million related to the New Properties and $1.0 million attributable to the IV Property. The decrease attributable to the Comparable Properties resulted from using our credit facilities to retire higher-rate mortgage loans and refinancing other properties at lower fixed rates.

During the six months ended June 30, 2013, we recorded a loss on extinguishment of debt of $9.1 million in connection with the early retirement of two mortgage loans. The loss was attributable to a prepayment fee of $8.7 million for the loan payoff of Mid Rivers Mall and $0.4 million to write-off unamortized financing costs for Mid Rivers Mall and South County Center.

During the six months ended June 30, 2013, we recognized a gain on sale of real estate assets of $1.0 million from the sale of six parcels of land.  We recognized a gain on sales of real estate assets of $0.1 million during the six months ended June 30, 2012 related to the sale of one parcel of land.

We recorded a gain on investment of $2.4 million in the six months ended June 30, 2013 attributable to the payment of a note receivable related to our investment in China that was written down in 2009.

Equity in earnings of unconsolidated affiliates increased by $2.0 million during the six months ended June 30, 2013 compared to the prior-year period. The $2.0 million increase is primarily attributable to lower interest expense from the refinancing of West County Center in December 2012 and increases in base rents and tenant reimbursements due to occupancy improvements.

The income tax provision of $0.6 million for the six months ended June 30, 2013 relates to the Management Company, which is a taxable REIT subsidiary, and consists of a current tax benefit of $1.2 million and a deferred income tax provision of $1.8 million.  During the six months ended June 30, 2012, we recorded an income tax provision of less than $0.1 million, consisting of a current tax benefit of $2.3 million and a deferred tax provision of $2.3 million.

The operating loss of discontinued operations for the six months ended June 30, 2013 of $0.6 million includes the settlement of estimated expenses for properties sold in previous periods partially offset by the operating results of five office buildings that were sold in the first quarter of 2013. Operating income from discontinued operations for the six months ended June 30, 2012 of $4.4 million represents the operating results of two malls and four community centers that were sold in 2012 and the operating results of five office buildings that were sold in 2013. The gain on discontinued operations of $0.9 million for the six months ended June 30, 2013 represents the gain from the sale of five office buildings sold during the period. The gain on discontinued operations of $0.9 million for the same period in 2012 represents the gain from a community center that was sold in the first quarter of 2012.

Same-Center Net Operating Income

We present same-center net operating income ("NOI") as a supplemental performance measure of the operating performance of our same-center properties. NOI is defined as operating revenues (rental revenues, tenant reimbursements, and other income) less property operating expenses (property operating, real estate taxes, and maintenance and repairs). We compute

4

NOI based on our pro rata share of both consolidated and unconsolidated properties. Our definition of NOI may be different than that used by other real estate companies, and accordingly, our calculation of NOI may not be comparable to other real estate companies.

We included a property in our same-center pool when we owned all or a portion of the property as of June 30, 2013 and we owned it and it was in operation for both the entire preceding calendar year and the current year-to-date reporting period ending June 30, 2013. New Properties are excluded from same-center NOI, until they meet this criteria. The only properties excluded from the same-center pool that would otherwise meet this criteria are non-core properties and properties included in discontinued operations. As of June 30, 2013, Columbia Place and Citadel Mall are classified as non-core properties. As of June 30, 2012, Columbia Place was classified as a non-core property.

We believe same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, and operating costs and the impact of those trends on our results of operations. Additionally, there are instances when tenants terminate their leases prior to the scheduled expiration date and pay us lease termination fees. These one-time lease termination fees may distort same-center NOI and may not be indicative of the ongoing operations of our shopping center properties. Therefore, we believe also presenting same-center NOI, excluding lease termination fees, is useful to investors.

Due to the exclusions noted above, same-center NOI should only be used as a supplemental measure of our performance and not as an alternative to GAAP operating income (loss) or net income (loss). A reconciliation of our same-center NOI to net income attributable to the Operating Partnership for the six months ended June 30, 2013 and 2012 is as follows (in thousands):

	Six Months Ended June 30,
	2013			2012
Net income attributable to the Operating Partnership	45,564			64,999
Adjustments: (1)
Depreciation and amortization	159,159			151,189
Interest expense	134,916			142,296
Abandoned projects expense	1			(123		)
Gain on sales of real estate assets	(1,000		)	(3,345		)
Gain on investments	(2,400		)	—
Loss on extinguishment of debt	9,108			—
Loss on impairment	21,038			293
Income tax provision	583			39
Gain on discontinued operations	(872		)	(895		)
Operating Partnership's share of total NOI	366,097			354,453
General and administrative expenses	26,299			25,793
Management fees and non-property level revenues	(14,373		)	(11,482		)
Operating Partnership's share of property NOI	378,023			368,764
Non-comparable NOI	(18,017		)	(12,845		)
Total same-center NOI	360,006			355,919
Less lease termination fees	(2,581		)	(1,937		)
Total same-center NOI, excluding lease termination fees	$	357,425		$	353,982

(1) Adjustments are based on our pro rata ownership share, including our share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties.

Same-center NOI, excluding lease termination fees, increased $3.4 million for the six month periods ending June 30, 2013 and 2012, respectively. Same-center NOI for the six month period ending June 30, 2012 included a $1.5 million bankruptcy settlement. Excluding lease termination fees and the 2012 bankruptcy settlement, same-center NOI increased 1.4% for the six months ended June 30, 2013. The increase is primarily attributable to improved occupancy and higher rental rates.

Operational Review

The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during the fourth quarter due to the holiday season, which generally results in higher percentage rents in the fourth quarter. Additionally, the malls earn most of their rents from short-term tenants during the holiday period. Thus, occupancy levels and

5

revenue production are generally the highest in the fourth quarter of each year. Results of operations realized in any one quarter may not be indicative of the results likely to be experienced over the course of the fiscal year.

We classify our regional malls into three categories:

(1) Stabilized malls – Malls that have completed their initial lease-up and have been open for more than three complete calendar years.

(2) Non-stabilized malls - Malls that are in their initial lease-up phase. After three complete calendar years of operation, they are reclassified on January 1 of the fourth calendar year to the stabilized mall category. The Outlet Shoppes at Oklahoma City, which opened in August 2011, was our only non-stabilized mall as of June 30, 2013 and 2012.

(3) Non-core malls - Malls where we have determined that the current format of the property no longer represents the best use of the property and we are in the process of evaluating alternative strategies for the property, which may include major redevelopment or an alternative retail or non-retail format, or after evaluating alternative strategies for the property, we have determined that the property no longer meets our criteria for long-term investment. Columbia Place and Citadel Mall were classified as non-core malls as of June 30, 2013. Columbia Place was our only non-core mall as of June 30, 2012. The steps taken to reposition non-core malls, such as signing tenants to short-term leases, which are not included in occupancy percentages, or leasing to regional or local tenants, which typically do not report sales, may lead to metrics which do not provide relevant information related to the condition of the non-core properties. Therefore, traditional performance measures, such as occupancy percentages and leasing metrics, exclude non-core malls.

We derive the majority of our revenues from the mall properties. The sources of our revenues by property type were as follows: 

	Six Months Ended June 30,
	2013		2012
Malls	87.9	%	89.1	%
Associated centers	4.2	%	4.1	%
Community centers	1.5	%	1.7	%
Mortgages, office buildings and other	6.4	%	5.1	%

Mall Store Sales

Mall store sales exclude license agreements, which we believe is consistent with industry standards. License agreements are rental contracts that are temporary or short-term in nature, generally lasting more than three months but less than twelve months. Mall store sales for our portfolio increased 0.6% for the six months ended June 30, 2013 as compared to the same period in 2012.  Mall store sales for the trailing twelve months ended June 30, 2013 on a comparable per square foot basis were $356 per square foot compared with $345 per square foot in the prior-year period, an increase of 3.2%. We anticipate sales will continue to improve for the remainder of 2013.

Occupancy

Our portfolio occupancy is summarized in the following table:  

	As of June 30,
	2013		2012
Total portfolio	93.0	%	92.3	%
Total mall portfolio	92.7	%	92.4	%
Stabilized malls	92.6	%	92.3	%
Non-stabilized malls	100.0	%	100.0	%
Associated centers	93.6	%	93.4	%
Community centers	96.4	%	91.1	%

Total portfolio occupancy increased 70 basis points for the second quarter of 2013 to 93.0% as compared to the prior-year period. Stabilized malls occupancy increased 30 basis points in the second quarter of 2013 compared to the prior-year period as we progress in our strategy to enhance our properties through improvements in our retail offerings to customers. In the first quarter of 2013, we intentionally allowed a number of store vacancies to occur as an opportunity to upgrade our tenant mix with higher performing retailers. For 2013, we continue to forecast occupancy improvements of 25 to 50 basis points for the total

6

portfolio from the prior year to approximately 95%.

Leasing

During the second quarter of 2013, we signed approximately 1.5 million square feet of leases, including 1.1 million square feet of leases in our operating portfolio and 0.4 million square feet of development leases. The leases signed in our operating portfolio included approximately 0.4 million square feet of new leases and approximately 0.7 million square feet of renewals.

Average annual base rents per square foot are based on contractual rents in effect as of June 30, 2013 and 2012, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each property type: 

	As of June 30,
	2013		2012
Stabilized malls	$	29.66	$	29.31
Non-stabilized malls	23.04		22.64
Associated centers	11.82		11.85
Community centers	15.74		15.48
Office buildings	19.16		18.23

Results from new and renewal leasing of comparable small shop space of less than 10,000 square feet during the three and six month periods ended June 30, 2013 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows: 

Property Type	Square Feet	Prior Gross Rent PSF		New Initial Gross Rent PSF		% Change Initial		New Average Gross Rent PSF (1)		% Change Average
Quarter:
All Property Types (2)	523,773	$	38.79	$	41.84	7.9	%	$	43.47	12.1	%
Stabilized malls	465,616	40.92		44.15		7.9	%	45.88		12.1	%
New leases	168,720	41.47		49.34		19.0	%	52.41		26.4	%
Renewal leases (3)	296,896	40.61		41.21		1.5	%	42.18		3.9	%
Year to Date:
All Property Types (2)	1,097,712	$	38.59	$	41.34	7.1	%	$	42.97	11.4	%
Stabilized malls	1,004,021	40.20		43.09		7.2	%	44.78		11.4	%
New leases	287,169	42.81		52.14		21.8	%	55.30		29.2	%
Renewal leases (3)	716,852	39.15		39.46		0.8	%	40.57		3.6	%

(1) Average gross rent does not incorporate allowable future increases for recoverable common area expenses.

(2) Includes stabilized malls, associated centers, community centers and office buildings.

(3) Excluding nine leases signed with Wet Seal for terms of two years or less, during the second quarter of 2013, the change in rents received on renewal leases for the quarter ending June 30, 2013 was 5.6% on an initial basis and 8.2% on an average basis. Year-to-date, excluding the nine Wet Seal leases, the change in rents received on renewal leases for the six months ended June 30, 2013 was 2.4% on an initial basis and 5.4% on an average basis.

Overall, leases in the second quarter of 2013 were signed at a 12.1% increase over the prior gross rent per square foot.  Leases for stabilized malls signed during the quarter were signed at a 12.1% increase over the prior gross rent per square foot. New leases were up 26.4% compared to prior rents and renewal leasing spreads were also positive, increasing 3.9% over prior rents. Our leasing momentum continues with double-digit leasing spreads as both established and new retailers value space in our properties.

LIQUIDITY AND CAPITAL RESOURCES    

CBL obtained an investment grade rating of Baa3 with a stable outlook from Moody's in May 2013. Subsequent to June 30, 2013, CBL and the Operating Partnership also received an issuer default credit rating of BBB- with a stable outlook and a senior unsecured notes rating of BBB-from Fitch. We believe these investment grade ratings provide us with access to a broader

7

range of corporate debt securities, leading to a more diversified and flexible balance sheet with a lower overall cost of capital. As of June 30, 2013, we had approximately $783.4 million outstanding on our combined credit facilities. Through our ATM equity offering program, we have raised approximately $209 million in net proceeds, which were used to reduce the balances on our credit facilities. Subsequent to June 30, 2013, we closed on a new $400.0 million unsecured term loan. Net proceeds from the term loan were used to reduce outstanding balances on our lines of credit, providing us with additional financing flexibility.

As discussed in Note 12 to the condensed consolidated financial statements, included in Exhibit 99.3 to this Form 8-K, under the terms of the joint venture agreement for CWJV, we have the ability to redeem Westfield's preferred units beginning January 31, 2013. As such, we issued a redemption notice in the second quarter of 2013 to redeem all of the PJV units using funding from our lines of credit.

We derive a majority of our revenues from leases with retail tenants, which historically have been the primary source for funding short-term liquidity and capital needs such as operating expenses; debt service; tenant construction allowances; recurring capital expenditures; equity for expansions, redevelopments and acquisitions; dividends; and distributions. We believe that the combination of cash flows generated from our operations, combined with our debt and equity sources and the availability under our lines of credit will, for the foreseeable future, provide adequate liquidity to meet our cash needs.  In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, equity offerings, joint venture investments, issuances of noncontrolling interests in our Operating Partnership, decreasing expenditures related to tenant construction allowances and other capital expenditures, and paying dividends equal to the minimum amount required to maintain our REIT status.  We also generate revenues from sales of peripheral land at our properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.

Cash Flows From Operations

We had $64.4 million of unrestricted cash and cash equivalents as of June 30, 2013, a decrease of $13.9 million from December 31, 2012.  Cash provided by operating activities during the six months ended June 30, 2013, decreased $30.1 million to $189.6 million from $219.8 million during the six months ended June 30, 2012. The decrease is primarily a result of the timing of the receipt of rent payments. We received a larger amount of January 2013 rent payments prior to December 31, 2012 than we did for the corresponding prior-year period. As a result, these January 2013 rent payments were reflected in cash flows from operating activities in the fourth quarter of 2012.

Debt

The following tables summarize debt based on our pro rata ownership share, including our pro rata share of unconsolidated affiliates and excluding noncontrolling investors’ share of consolidated properties, because we believe this provides investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands): 

	Consolidated		Noncontrolling Interests			Unconsolidated Affiliates		Total		Weighted- Average Interest Rate (1)
June 30, 2013
Fixed-rate debt:
Non-recourse loans on operating properties (2)	$	3,516,429	$	(68,211	)	$	657,160	$	4,105,378	5.50%
Financing method obligation (3)	18,264		—			—		18,264		8.00%
Total fixed-rate debt	3,534,693		(68,211		)	657,160		4,123,642		5.51%
Variable-rate debt:
Non-recourse term loans on operating properties	134,525		(5,700		)	—		128,825		3.13%
Recourse term loans on operating properties	78,820		—			127,293		206,113		3.22%
Construction loans	40,963		—			5,531		46,494		2.87%
Unsecured lines of credit	783,394		—			—		783,394		1.60%
Unsecured term loan	50,000		—			—		50,000		2.09%
Total variable-rate debt	1,087,702		(5,700		)	132,824		1,214,826		2.11%
Total	$	4,622,395	$	(73,911	)	$	789,984	$	5,338,468	4.74%

8

	Consolidated		Noncontrolling Interests			Unconsolidated Affiliates		Total		Weighted- Average Interest Rate (1)
December 31, 2012
Fixed-rate debt:
Non-recourse loans on operating properties (2)	$	3,776,245	$	(89,530	)	$	660,563	$	4,347,278	5.47%
Financing method obligation (3)	18,264		—			—		18,264		8.00%
Total fixed-rate debt	3,794,509		(89,530		)	660,563		4,365,542		5.48%
Variable-rate debt:
Non-recourse term loans on operating properties	123,875		—			—		123,875		3.36%
Recourse term loans on operating properties	97,682		—			128,491		226,173		2.16%
Construction loans	15,366		—			—		15,366		2.96%
Unsecured lines of credit	475,626		—			—		475,626		2.07%
Secured line of credit (4)	10,625		—			—		10,625		2.46%
Unsecured term loan	228,000		—			—		228,000		1.82%
Total variable-rate debt	951,174		—			128,491		1,079,665		2.39%
Total	$	4,745,683	$	(89,530	)	$	789,054	$	5,445,207	4.86%

(1) Weighted-average interest rate includes the effect of debt premiums (discounts), but excludes amortization of deferred financing costs.

(2) We have four interest rate swaps with notional amounts outstanding totaling $111,881 as of June 30, 2013 and $113,885 as of December 31, 2012 related to four of our variable-rate loans on operating properties to effectively fix the interest rates on these loans.  Therefore, these amounts are reflected in fixed-rate debt at June 30, 2013 and December 31, 2012.

(3) This amount represents the noncontrolling partner's equity contributions related to Pearland Town Center that is accounted for as a financing due to certain terms of the CBL/T-C, LLC joint venture agreement.

(4) We converted our secured line of credit to unsecured in February 2013.

As of June 30, 2013, $110.7 million of our pro rata share of consolidated and unconsolidated debt, excluding debt premiums, is scheduled to mature during the remainder of 2013. We have extensions available on $51.3 million of debt at our option that we intend to exercise and, subsequent to June 30, 2013, we retired an operating property loan with a principal balance of $16.0 million as of June 30, 2013, leaving $43.4 million of debt maturities in 2013 that must be retired or refinanced, representing two operating property loans and one land loan.

The weighted-average remaining term of our total share of consolidated and unconsolidated debt was 4.5 years at June 30, 2013 and 4.6 years at December 31, 2012. The weighted-average remaining term of our pro rata share of fixed-rate debt was 5.0 years and 5.2 years at June 30, 2013 and December 31, 2012, respectively.

As of June 30, 2013 and December 31, 2012, our pro rata share of consolidated and unconsolidated variable-rate debt represented 22.8% and 19.8%, respectively, of our total pro rata share of debt. The increase is due to replacing higher fixed-rate debt with variable-rate debt as we grow our unencumbered asset pool. As of June 30, 2013, our share of consolidated and unconsolidated variable-rate debt represented 11.9% of our total market capitalization (see Equity below) as compared to 10.7% as of December 31, 2012.

Unsecured Lines of Credit

We have three unsecured credit facilities that are used for retirement of secured loans, repayment of term loans, working capital, construction and acquisition purposes, as well as issuances of letters of credit.

Wells Fargo Bank, NA serves as the administrative agent for a syndicate of financial institutions for our two unsecured $600.0 million credit facilities ("Facility A" and "Facility B"). Facility A matures in November 2015 and has a one-year extension option for an outside maturity date of November 2016. Facility B matures in November 2016 and has a one-year extension option for an outside maturity date of November 2017. The extension options on both facilities are at our election, subject to continued compliance with the terms of the facilities, and have a one-time extension fee of 0.20% of the commitment amount of each credit facility.

In the first quarter of 2013, we amended and restated our $105.0 million secured credit facility with First Tennessee Bank, NA. The facility was converted from secured to unsecured with a capacity of $100.0 million and a maturity date of February 2016.

9

Prior to May 14, 2013, borrowings under our three unsecured lines of credit bore interest at London Interbank Offered Rate ("LIBOR") plus a spread ranging from 155 to 210 basis points based on our leverage ratio. We also paid annual unused facility fees, on a quarterly basis, at rates of either 0.25% or 0.30% based on any unused commitment of each facility. In May 2013, CBL obtained an investment grade rating from Moody's and, effective May 14, 2013, we made a one-time irrevocable election to use CBL's credit rating to determine the interest rate on each facility. Under the credit rating election, each facility now bears interest at LIBOR plus a spread of 100 to 175 basis points. As of June 30, 2013, the interest rate based on the credit rating from Moody's is LIBOR plus 140 basis points. Additionally, we will pay an annual facility fee that ranges from 0.15% to 0.35% of the total capacity of each facility rather than the unused commitment fees as described above. As of June 30, 2013, the annual facility fee is 0.30%. The three unsecured lines of credit had a weighted-average interest rate of 1.60% at June 30, 2013.

The following summarizes certain information about our unsecured lines of credit as of June 30, 2013 (in thousands):     

	Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date
Facility A	$	600,000	$	300,297	(1)	November 2015	November 2016
First Tennessee	100,000		52,679			February 2016	N/A
Facility B	600,000		430,418		(2)	November 2016	November 2017
	$	1,300,000	$	783,394

(1) There was an additional $475 outstanding on this facility as of June 30, 2013 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit.

(2) There was an additional $617 outstanding on this facility as of June 30, 2013 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit.

Unsecured Term Loans

In April 2013, we retired a $228.0 million unsecured term loan at its maturity date with borrowings from our credit facilities.

In the first quarter of 2013, under the terms of our amended and restated agreement with First Tennessee Bank, NA described above, we obtained a $50.0 million unsecured term loan that bears interest at LIBOR plus 1.90% and matures in February 2018. At June 30, 2013, the outstanding borrowings of $50.0 million had a weighted-average interest rate of 2.09%.

Subsequent to June 30, 2013, we closed on a five-year $400.0 million unsecured term loan. The loan bears interest at a variable rate of LIBOR plus 150 basis points based on our current credit rating.

Covenants and Restrictions

The agreements for our unsecured lines of credit contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum net worth requirements, minimum unencumbered asset and interest ratios, maximum secured indebtedness and limitations on cash flow distributions.  We believe we were in compliance with all covenants and restrictions at June 30, 2013.

The following presents our compliance with key unsecured debt covenant compliance ratios as of June 30, 2013:

Ratio	Required	Actual
Debt to total asset value	< 60%	50.3%
Ratio of unencumbered asset value to unsecured indebtedness	> 1.60x	3.65x
Ratio of unencumbered NOI to unsecured interest expense	> 1.75x	8.80x
Ratio of EBITDA to fixed charges (debt service)	> 1.50x	2.09x

The agreements for the unsecured credit facilities described above contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50.0 million or any non-recourse indebtedness greater than $150.0 million (for the Operating Partnership's ownership share) of CBL, the Operating Partnership or any Subsidiary, as defined, will constitute an event of default under the agreements to the credit facilities. The credit facilities also restrict our ability to enter into any transaction that could result in certain changes in our ownership or structure as described under the heading “Change of Control/Change in Management” in the agreements to the credit facilities. Prior to CBL obtaining an investment grade rating in May 2013, our obligations under the agreements were unconditionally guaranteed, jointly and severally, by any subsidiary of the Operating Partnership to the extent such subsidiary was a material subsidiary and was not otherwise an excluded subsidiary, as defined in the agreements. In accordance

10

with the agreements, once CBL obtained an investment grade rating, guarantees by material subsidiaries of the Operating Partnership were no longer required.

Several of our malls/open-air centers, associated centers and community centers, in addition to our corporate office building, are owned by special purpose entities that are included in the our condensed consolidated financial statements. The sole business purpose of the special purpose entities is to own and operate these properties. The real estate and other assets owned by these special purpose entities are restricted under the loan agreements in that they are not available to settle our other debts. However, so long as the loans are not under an event of default, as defined in the loan agreements, the cash flows from these properties, after payments of debt service, operating expenses and reserves, are available for distribution to us.

Mortgages on Operating Properties

In June 2013, we closed on a three-year $11.4 million non-recourse loan secured by Statesboro Crossing in Statesboro, GA. The loan bears interest at LIBOR plus 180 basis points. The loan matures in June 2016 and has two one-year extension options, which are at our election, for an outside maturity date of June 2018. Proceeds from the loan were used to pay down our credit facilities. We also retired an $88.4 million loan in June 2013, which was secured by Mid Rivers Mall in St. Peters, MO, with borrowings from our credit facilities. The loan was scheduled to mature in May 2021 and bore interest at a fixed rate of 5.88%. We recorded an $8.9 million loss on extinguishment of debt, which consisted of an $8.7 million prepayment fee and $0.2 million of unamortized debt issuance costs.

In April 2013, we retired a $71.7 million loan, secured by South County Center in St. Louis, MO, with borrowings from our credit facilities. The loan was scheduled to mature in October 2013. In connection with this prepayment, we recorded a loss on extinguishment of debt of $0.2 million from the write-off of an unamortized discount.

In the first quarter of 2013, Renaissance Phase II CMBS, LLC closed on a $16.0 million10-year non-recourse CMBS loan secured by Renaissance Center Phase II in Durham, NC. The loan bears interest at a fixed rate of 3.4895% and matures in April 2023. Proceeds from the loan were used to retire a $15.7 million loan that was scheduled to mature in April 2013.

Also during the first quarter of 2013, CBL-Friendly Center CMBS, LLC closed on a $100.0 million10-year non-recourse CMBS loan, secured by Friendly Center, located in Greensboro, NC. The loan bears interest at a fixed rate of 3.4795% and matures in April 2023. Proceeds from the new loan were used to retire four existing loans aggregating $100.0 million that were secured by Friendly Center, Friendly Center Office Building, First National Bank Building, Green Valley Office Building, First Citizens Bank Building, Wachovia Office Building and Bank of America Building, all located in Greensboro, NC and scheduled to mature in April 2013.

In the first quarter of 2013, we retired two loans with an aggregate balance of $77.1 million, including a $13.5 million loan secured by Statesboro Crossing in Statesboro, GA and a $63.6 million loan secured by Westmoreland Mall in Greensburg, PA, with borrowings from our credit facilities. Both loans were scheduled to mature in the first quarter of 2013.

In the first quarter of 2012, the lender of the non-recourse mortgage loan secured by Columbia Place in Columbia, SC notified us that the loan had been placed in default. Columbia Place generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $27.3 million at June 30, 2013, and a contractual maturity date of September 2013. The lender on the loan receives the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments.

The lender of the non-recourse mortgage loan secured by Citadel Mall in Charleston, SC notified us in July 2013 that the loan had been placed in default. Citadel Mall generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $68.3 million at June 30, 2013, and a contractual maturity date of April 2017. In June 2013, the lender on the loan began receiving the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments. Subsequent to June 30, 2013, the lender sent a formal notice of default and filed for foreclosure.

Subsequent to June 30, 2013, we retired a $16.0 million loan, which was secured by Alamance Crossing West in Burlington, NC with borrowings from our credit facilities. The loan was scheduled to mature in December 2013.

11

Interest Rate Hedging Instruments

As of June 30, 2013, we had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Instrument Type	Location in Condensed Consolidated Balance Sheet	Outstanding Notional Amount	Designated Benchmark Interest Rate	Strike Rate		Fair Value at 6/30/2013			Fair Value at 12/31/12			Maturity Date
Cap	Intangible lease assets and other assets	$123,125 (amortizing to $122,375)	3-month LIBOR	5.000	%	$	—		$	—		January 2014
Pay fixed/ Receive  variable Swap	Accounts payable and accrued liabilities	$54,086 (amortizing to $48,337)	1-month LIBOR	2.149	%	$	(2,162	)	$	(2,775	)	April 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$33,863 (amortizing to $30,276)	1-month LIBOR	2.187	%	(1,386		)	(1,776		)	April 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$12,660 (amortizing to $11,313)	1-month LIBOR	2.142	%	(504		)	(647		)	April 2016
Pay fixed/ Receive    variable Swap	Accounts payable and accrued liabilities	$11,272 (amortizing to $10,083)	1-month LIBOR	2.236	%	(476		)	(607		)	April 2016
						$	(4,528	)	$	(5,805	)

Equity

During the six months ended June 30, 2013, we paid distributions of $112.2 million to holders of our common and preferred units, as well as $12.9 million in distributions to noncontrolling interest investors.

On May 31, 2013, we declared a second quarter 2013 cash distribution on our common units of $0.23 per unit and $0.7322 to $0.7572 per unit for certain special common units that were paid on July 16, 2013. On February 26, 2013, we declared a first quarter 2013 cash distribution on our common units of $0.23 per unit and $0.7322 to $0.7572 per unit for certain special common units that were paid on April 16, 2013. Future distributions payable will be determined by our general partner based upon circumstances at the time of declaration.

As a public company and, as a subsidiary of a publicly traded company, we have access to capital through both the public equity and debt markets. We and CBL currently have a shelf registration statement on file with the Securities and Exchange Commission authorizing CBL to publicly issue senior and/or subordinated debt securities, shares of preferred stock (or depositary shares representing fractional interests therein), shares of common stock, warrants or rights to purchase any of the foregoing securities, and units consisting of two or more of these classes or series of securities.  We are also authorized to publicly issue senior and/or subordinated debt securities. There is no limit to the offering price or number of securities that we may issue under this shelf registration statement. Generally, if CBL publicly issues any equity or debt securities, CBL will contribute the net proceeds to us in exchange for equity or debt securities, as the case may be, that have corresponding economic terms as the securities issued by CBL.

12

At-The-Market Equity Program

On March 1, 2013, CBL and collectively, us, entered into Sales Agreements with a number of sales agents to sell shares of CBL's common stock, having an aggregate offering price of up to $300.0 million, from time to time through an ATM program. In accordance with the Sales Agreements, CBL will set the parameters for the sales of shares, including the number of shares to be issued, the time period during which sales are to be made and any minimum price below which sales may not be made. The Sales Agreements provide that the sales agents will be entitled to compensation for their services at a mutually agreed commission rate not to exceed 2.0% of the gross proceeds from the sales of shares sold through the ATM program. For each share of common stock issued by CBL, we issue a corresponding number of common units of limited partnership interest to CBL in exchange for the contribution of the proceeds from the stock issuance. We include only CBL share issuances that have settled in the calculation of units outstanding at the end of each period. The following table summarizes CBL's issuances of common stock sold through the ATM program since inception through June 30, 2013 (dollars in thousands, except stock prices):

	Number of Shares Settled	Gross Proceeds		Net Proceeds		Weighted-average Sales Price
2013:
First quarter	1,889,105	$	44,459	$	43,904	$	23.53
Second quarter	6,530,193	167,034		165,692		25.58
Total	8,419,298	$	211,493	$	209,596	$	25.12

The proceeds from these sales were used to reduce the balances on our unsecured lines of credit. Since the commencement of the ATM program, the Operating Partnership has issued 8,419,298 common units to CBL and approximately $88.5 million remains available to be sold under this program. Actual future sales will depend on a variety of factors including but not limited to market conditions, the trading price of CBL's common stock and our capital needs. CBL has no obligation to sell the remaining shares available under the ATM program.

Debt-To-Total Market Capitalization

Our strategy is to maintain a conservative debt-to-total-market capitalization ratio in order to enhance our access to the broadest range of capital markets, both public and private. Based on our share of total consolidated and unconsolidated debt and the market value of equity (based on the market price of CBL's stock), CBL's debt-to-total-market capitalization (debt plus market value of equity) ratio was 52.1% at June 30, 2013, compared to 55.9% at June 30, 2012. Our debt-to-market capitalization ratio at June 30, 2013 was computed as follows (in thousands, except stock prices): 

	Units Outstanding	Stock Price (1)		Value
Operating partnership units	199,452	$	21.42	$	4,272,262
7.375% Series D Cumulative Redeemable Preferred Units	1,815	250.00		453,750
6.625% Series E Cumulative Redeemable Preferred Units	690	250.00		172,500
Total market equity				4,898,512
Operating Partnership’s share of total debt				5,338,468
Total market capitalization				$	10,236,980
Debt-to-total-market capitalization ratio				52.1		%

(1) Stock price for Operating Partnership units equals the closing price of CBL's common stock on June 28, 2013. The stock prices for the preferred units represent the liquidation preference of each respective series of preferred units

13

Capital Expenditures

Deferred maintenance expenditures are generally billed to tenants as common area maintenance expense, and most are recovered over a 5 to 15-year period. Renovation expenditures are primarily for remodeling and upgrades of malls, of which a portion is recovered from tenants over a 5 to 15-year period.  We recover these costs through fixed amounts with annual increases or pro rata cost reimbursements based on the tenant’s occupied space. The following table summarizes these capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the six month period ended June 30, 2013 compared to the same period in 2012 (in thousands):

	Six Months Ended June 30,
	2013		2012
Tenant allowances (1)	$	21,614	$	24,338
Renovations	11,932		5,661
Deferred maintenance:
Parking lot and parking lot lighting	1,054		7,041
Roof repairs and replacements	2,767		3,823
Other capital expenditures	2,914		9,114
	6,735		19,978
	$	40,281	$	49,977
(1) Tenant allowances related to renewal leases were not material for the periods presented.

We capitalized overhead of $2.3 million and $1.9 million during the six months ended June 30, 2013 and 2012, respectively. We capitalized $1.9 million and $1.3 million during the six months ended June 30, 2013 and 2012, respectively.

Our 2013 renovation program includes upgrades at four of our malls. Renovations are scheduled to be completed in 2013 at Friendly Center in Greensboro, NC; Greenbrier Mall in Chesapeake, VA; Acadiana Mall in Lafayette, LA and Northgate Mall in Chattanooga, TN. Friendly Center's renovation will include updated walkway canopies and landscaping. Greenbrier Mall will receive a newly designed food court with new tables and chairs in addition to landscape improvements and other upgrades. The upgrades at Acadiana Mall will include updated entrances, a remodeled food court, new landscaping and other enhancements. The renovation at Northgate Mall will include exterior enhancements, new flooring and soft seating areas as well as ceiling and lighting upgrades. Our share of total anticipated net investment in these renovations as well as other less extensive renovations is approximately $29.9 million.

The terms of the joint venture that we formed with TIAA-CREF require us to fund certain capital expenditures related to parking decks at West County Center of approximately $26.4 million. As of June 30, 2013, we had funded $13.2 million of this amount leaving approximately $13.2 million to be funded.

Annual capital expenditures budgets are prepared for each of our properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, will provide the necessary funding for these expenditures.

Developments and Expansions

The following tables summarize our development projects as of June 30, 2013:

14

Property Opened During the Six Months Ended June 30, 2013

(Dollars in thousands)

		Total Project Square Feet
			Total Cost (1)		Cost to Date (2)		Opening Date	Initial Unleveraged Yield
Property	Location
Community Center:
The Crossings at Marshalls Creek	Middle Smithfield, PA	104,525	$	18,983	$	19,318	June-13	9.8%

In the second quarter of 2013, we opened The Crossings at Marshalls Creek, a community center development. Anchors include Price Chopper super market, Rite Aid, STS Tire and Auto Centers and Family Dollar.

15

Properties Under Development at June 30, 2013

(Dollars in thousands)

		Total Project Square Feet
			Total Cost (1)		Cost to Date (2)		Expected Opening Date	Initial Unleveraged Yield
Property	Location
Outlet Centers:
The Outlet Shoppes at Atlanta (3)	Woodstock, GA	370,456	$	80,490	$	56,999	July-13	11.7%
The Outlet Shoppes at Louisville (4)	Simpsonville, KY	373,944	80,472		9,056		August-14	10.2%
		744,400	$	160,962	$	66,055
Community Center:
Fremaux Town Center (4) - Phase I	Slidell, LA	295,000	$	52,396	$	26,045	Summer-14	8.5%
Mall Expansions:
Cross Creek Mall - Shops	Fayetteville, NC	45,620	$	15,831	$	6,259	November-13	9.8%
Volusia Mall - Restaurant District	Daytona Beach, FL	27,500	7,114		5,309		Fall-13	10.4%
The Shoppes at Southaven Towne Center - Phase II	Southaven, MS	22,925	3,968		1,661		November-13	12.2%
West Towne Mall - Phase I	Madison, WI	22,500	5,454		2,054		October-13	11.8%
		118,545	$	32,367	$	15,283
Mall Redevelopments:
Monroeville Mall - JC Penney/Cinemark	Pittsburgh, PA	78,223	$	26,178	$	16,706	October-12/ Winter-13	7.6%
South County - Dick's Sporting Goods	St. Louis, MO	50,000	8,051		626		November-13	9.5%
Southpark Mall - Dick's Sporting Goods	Colonial Heights, VA	85,322	9,379		4,090		July-13	6.5%
		213,545	$	43,608	$	21,422
Associated Center Redevelopment:
The Shops at Northgate	Chattanooga, TN	75,018	$	6,105	$	5,124	October-13	9.2%
Total Properties Under Development		1,446,508	$	295,438	$	133,929

(1) Total cost is presented net of reimbursements to be received.

(2) Cost to date does not reflect reimbursements until they are received.

(3) This property is a 75/25 joint venture. Total and cost to date are reflected at 100%.

(4) These properties are 65/35 joint ventures. Total cost and cost to date are reflected at 100%.

We have construction loans in place for the development of Fremaux Town Center and The Outlet Shoppes at Atlanta. Construction continues on the first phase of Fremaux Town Center, a 295,000-square-foot community center development. Dick's Sporting Goods, Michaels, PetSmart, T.J. Maxx and Kohl's will anchor the first phase of this project which is scheduled to open in summer 2014 and is approximately 90% leased or committed. Plans for the second phase of the development include 300,000-square-feet of additional retail space targeted towards fashion and entertainment. Dillard's will open a 126,000-square-foot store in Phase II of the Fremaux Town Center development. Equity for these developments has been funded with operating cash inflows and our credit facilities.

The Outlet Shoppes at Atlanta opened July 2013. At the opening, the 370,500-square-foot project was approximately 97% leased or committed with 99 retailers including Saks Fifth Avenue OFF 5TH, Nike, Asics, Coach, Columbia Sportswear and Juicy Couture. In June 2013, we began construction on The Outlet Shoppes at Louisville. Scheduled to open in summer 2014, the 370,000-square-foot project is approximately 83% leased or committed and includes retailers such as Coach, Banana Republic, Brooks Brothers, Chico's, Nike, Saks Fifth Avenue OFF 5TH among others.

16

We have four mall expansions and four redevelopment projects under construction as of June 30, 2013. A 46,000-square-foot expansion of Cross Creek Mall is approximately 91% leased or committed and will provide additional space for new retailers including Chico's, LOFT, Men's Wearhouse and Reed's Jewelers. A 28,000-square-foot restaurant district featuring Bahama Breeze, Olive Garden and iHOP, is under construction at Volusia Mall near the Daytona Speedway. Construction continues on expansions of Southaven Towne Center and West Towne Mall to accommodate new tenants. At Monroeville Mall, JC Penney opened their new 110,000-square-foot prototype store in October 2012, relocating from their existing store in the mall. Their former building is being redeveloped into a new 12-screen Cinemark Theatre, anticipated to open in fall 2013. We also began construction in late 2012 on the redevelopment of a recently vacated Dillard's location at Southpark Mall in Colonial Heights, VA. The store will be redeveloped into a 56,000-square-foot Dick's Sporting Goods, with a grand opening planned in July 2013. We began construction on a 50,000-square-foot Dick's Sporting Goods store at South County Center in the second quarter of 2013 with an anticipated opening date in November 2013. The Shops at Northgate is an associated center redevelopment near Northgate Mall, which we acquired in late 2011. Michaels and Ross stores will join the existing T.J. Maxx as anchors of this project with completion expected in October 2013.

In June 2013, we acquired two Sears locations at Fayette Mall in Lexington, KY and CoolSprings Galleria in Nashville, TN. We plan to redevelop both buildings into new specialty stores and restaurants. Sears will continue to operate in both locations in the interim.

We hold options to acquire certain development properties owned by third parties.  Except for the projects presented above, we do not have any other material capital commitments as of June 30, 2013.

Acquisition

In April 2013, we acquired the remaining 51.0% noncontrolling interest in Kirkwood Mall in Bismarck, ND in accordance with the agreement executed in December 2012 that is described in Note 5 to the condensed consolidated financial statements, included in Exhibit 99.3 of this Form 8-K.

Dispositions

See Note 16 in Exhibit 99.3 of this Form 8-K for information on properties sold subsequent to June 30, 2013.

Joint Ventures

Louisville Outlet Shoppes, LLC

In May 2013, we entered into a joint venture with a third party to develop, own and operate The Outlet Shoppes at Louisville located in Simpsonville, KY. Construction began in June 2013 with completion expected in summer 2014. We hold a 65% ownership interest in the joint venture.

Fremaux Town Center JV, LLC

In January 2013, we formed a 65/35 joint venture, Fremaux Town Center JV, LLC ("Fremaux"), to develop, own and operate Fremaux Town Center, a community center development located in Slidell, LA. Construction began in March 2013 with completion expected in July 2014. The partners contributed aggregate initial equity of $20.5 million on formation of Fremaux, of which our contribution was $18.5 million. Future required contributions will be funded on a 65/35 pro rata basis. In March 2013, Fremaux obtained a construction loan on the property that allows for borrowings up to $46.0 million and bears interest at LIBOR plus 2.125%. The loan matures in March 2016 and has two one-year extension options, which are at the joint venture's election, for an outside maturity date of March 2018. We guaranteed 100% of the construction loan. As of June 30, 2013, $5.5 million was outstanding under the loan. We account for our investment in Fremaux using the equity method of accounting as of June 30, 2013.

Dispositions

We sold five office buildings, as described in Note 4 to the condensed consolidated financial statements, included in Exhibit 99.3 of this Form 8-K, during the first quarter of 2013 for aggregate net proceeds of $43.5 million, which were used to reduce the outstanding borrowings on our credit facilities.

Off-Balance Sheet Arrangements

Unconsolidated Affiliates

We have ownership interests in 17 unconsolidated affiliates as of June 30, 2013 that are described in Note 5 to the condensed consolidated financial statements, included in Exhibit 99.3 of this Form 8-K . The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the condensed consolidated balance sheets as “Investments in Unconsolidated Affiliates.”  The following are circumstances when we may consider entering into a joint venture with a third party:

17

• Third parties may approach us with opportunities in which they have obtained land and performed some pre-development activities, but they may not have sufficient access to the capital resources or the development and leasing expertise to bring the project to fruition. We enter into such arrangements when we determine such a project is viable and we can achieve a satisfactory return on our investment. We typically earn development fees from the joint venture and provide management and leasing services to the property for a fee once the property is placed in operation.

• We determine that we may have the opportunity to capitalize on the value we have created in a property by selling an interest in the property to a third party. This provides us with an additional source of capital that can be used to develop or acquire additional real estate assets that we believe will provide greater potential for growth. When we retain an interest in an asset rather than selling a 100% interest, it is typically because this allows us to continue to manage the property, which provides us the ability to earn fees for management, leasing, development and financing services provided to the joint venture.

Preferred Joint Venture Units

We consolidate our investment in the CW Joint Venture, LLC ("CWJV") with Westfield Group ("Westfield").  The terms of the joint venture agreement require that CWJV pay an annual preferred distribution at a rate of 5.0%, which increases to 6.0% on July 1, 2013, on the preferred liquidation value of the preferred joint venture units ("PJV units") of CWJV that are held by Westfield.  Westfield has the right to have all or a portion of the PJV units redeemed by CWJV with either cash or property owned by CWJV, in each case for a net equity amount equal to the preferred liquidation value of the PJV units. At any time after January 1, 2013, Westfield may propose that CWJV acquire certain qualifying property that would be used to redeem the PJV units at their preferred liquidation value. If CWJV does not redeem the PJV units with such qualifying property (a “Preventing Event”), then the annual preferred distribution rate on the PJV units increases to 9.0% beginning July 1, 2013.  We will have the right, but not the obligation, to offer to redeem the PJV units from January 31, 2013 through January 31, 2015 at their preferred liquidation value, plus accrued and unpaid distributions. We amended the joint venture agreement with Westfield in September 2012 to provide that, if we exercise our right to offer to redeem the PJV units on or before August 1, 2013, then the preferred liquidation value will be reduced by $10.0 million so long as Westfield does not reject the offer and if the redemption closes on or before September 30, 2013. If we fail to make such an offer, the annual preferred distribution rate on the PJV units increases to 9.0% for the period from July 1, 2013 through June 30, 2016, at which time it decreases to 6.0% if a Preventing Event has not occurred.  If, upon redemption of the PJV units, the fair value of our common stock is greater than $32.00 per share, then such excess (but in no case greater than $26.0 million in the aggregate) shall be added to the aggregate preferred liquidation value payable on account of the PJV units.  We account for this contingency using the method prescribed for earnings or other performance measure contingencies.  As such, should this contingency result in additional consideration to Westfield, we will record the current fair value of the consideration issued as a purchase price adjustment at the time the consideration is paid or payable.

In June 2013, we issued a redemption notice to Westfield to redeem all of the PJV units. Under the terms agreed to by us and Westfield, the annual preferred distribution rate will remain at 5.0% until the earlier of the closing or rejection by Westfield of the redemption offer or September 30, 2013. We plan to use our lines of credit to fund the redemption.

Guarantees

We may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on our investment in the joint venture. We may receive a fee from the joint venture for providing the guaranty. Additionally, when we issue a guaranty, the terms of the joint venture agreement typically provide that we may receive indemnification from the joint venture or have the ability to increase our ownership interest.

We own a parcel of land in Lee’s Summit, MO that we are ground leasing to a third party development company.  The third party developed and operates a shopping center on the land parcel.  We have guaranteed 27% of the loans of which the maximum guaranteed amount, representing 27% of capacity, is approximately $14.9 million. The total amount outstanding at June 30, 2013 on the loans was $49.7 million of which we have guaranteed $13.4 million. We included an obligation of $0.2 million as of June 30, 2013 and December 31, 2012 in the condensed consolidated balance sheets, included in Exhibit 99.3 of this Form 8-K, to reflect the estimated fair value of the guaranty. In the second quarter of 2013, the loan was extended to July. The third party developer is working with the lender to further extend the maturity date of the loan. We have not increased our accrual for the contingent obligation as we do not believe that this contingent obligation is probable.

We have guaranteed 100% of the construction and land loans of West Melbourne I, LLC ("West Melbourne"), an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $43.8 million.  West Melbourne developed and operates Hammock Landing, a community center in West Melbourne, FL. The total amount outstanding on the loans at June 30, 2013 was $43.8 million. The guaranty will expire upon repayment of the debt.  The land loan, and the construction loan, each representing $2.8 million and $41.1 million, respectively, of the amount outstanding at June 30, 2013, mature in November 2013. The construction loan has a one-year extension option available. We included an obligation of $0.5

18

million in the condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012, included in Exhibit 99.3 of this Form 8-K, to reflect the estimated fair value of this guaranty.

We have guaranteed 100% of the construction loan of Port Orange I, LLC ("Port Orange"), an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $62.8 million.  Port Orange developed and operates The Pavilion at Port Orange, a community center in Port Orange, FL.  The total amount outstanding at June 30, 2013 on the loan was $62.8 million. The guaranty will expire upon repayment of the debt.  The loan matures in March 2014 and has a one-year extension option available. We included an obligation of $1.0 million in the condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012, included in Exhibit 99.3 of this Form 8-K, to reflect the estimated fair value of this guaranty.

We have guaranteed the lease performance of York Town Center, LP ("YTC"), an unconsolidated affiliate in which we own a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. We have guaranteed YTC’s performance under this agreement up to a maximum of $22.0 million, which decreases by $0.8 million annually until the guaranteed amount is reduced to $10.0 million. The guaranty expires on December 31, 2020.  The maximum guaranteed obligation was $17.2 million as of June 30, 2013.  We entered into an agreement with our joint venture partner under which the joint venture partner has agreed to reimburse us 50% of any amounts we are obligated to fund under the guaranty.  We did not include an obligation for this guaranty because we determined that the fair value of the guaranty was not material as of June 30, 2013 and December 31, 2012.

We have guaranteed 100% of a term loan for JG Gulf Coast Town Center LLC ("Gulf Coast"), an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $6.5 million. The loan is for the third phase expansion of Gulf Coast Town Center, a shopping center located in Ft. Myers, FL. The total amount outstanding at June 30, 2013 on the loan was $6.5 million. The guaranty will expire upon repayment of the debt. The loan matures in July 2015. We did not include an obligation for this guaranty because we determined that the fair value of the guaranty was not material as of June 30, 2013 and December 31, 2012.

In March 2013, we guaranteed 100% of a construction loan for Fremaux, an unconsolidated affiliate in which we own a 65% interest, of which the maximum guaranteed amount is $46.0 million. The loan is for the development of Fremaux Town Center, a community center located in Slidell, LA. The total amount outstanding at June 30, 2013 on the loan was $5.5 million. The guaranty will expire upon repayment of the debt. The loan matures in March 2016 and has two one-year extension options for an outside maturity date of March 2018. We received a 1% fee for this guaranty when the loan was issued in March 2013 and have included an obligation of $0.5 million in the condensed consolidated balance sheet as of June 30, 2013, included in Exhibit 99.3 of this Form 8-K, to reflect the estimated fair value of this guaranty.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are disclosed in Note 2 to the consolidated financial statements included in Exhibit 99.1 of this Form 8-K. The following discussion describes our most critical accounting policies, which are those that are both important to the presentation of our financial condition and results of operations and that require significant judgment or use of complex estimates.

Revenue Recognition

Minimum rental revenue from operating leases is recognized on a straight-line basis over the initial terms of the related leases. Certain tenants are required to pay percentage rent if their sales volumes exceed thresholds specified in their lease agreements. Percentage rent is recognized as revenue when the thresholds are achieved and the amounts become determinable.

We receive reimbursements from tenants for real estate taxes, insurance, common area maintenance, and other recoverable operating expenses as provided in the lease agreements. Tenant reimbursements are recognized as revenue in the period the related operating expenses are incurred. Tenant reimbursements related to certain capital expenditures are billed to tenants over periods of 5 to 15 years and are recognized as revenue in accordance with underlying lease terms.

We receive management, leasing and development fees from third parties and unconsolidated affiliates. Management fees are charged as a percentage of revenues (as defined in the management agreement) and are recognized as revenue when earned. Development fees are recognized as revenue on a pro rata basis over the development period. Leasing fees are charged for newly executed leases and lease renewals and are recognized as revenue when earned. Development and leasing fees received from unconsolidated affiliates during the development period are recognized as revenue to the extent of the third-party partners’ ownership interest. Fees to the extent of our ownership interest are recorded as a reduction to our investment in the unconsolidated affiliate.

19

 Gains on sales of real estate assets are recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, our receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. When we have an ownership interest in the buyer, gain is recognized to the extent of the third party partner’s ownership interest and the portion of the gain attributable to our ownership interest is deferred.

Real Estate Assets

We capitalize predevelopment project costs paid to third parties. All previously capitalized predevelopment costs are expensed when it is no longer probable that the project will be completed. Once development of a project commences, all direct costs incurred to construct the project, including interest and real estate taxes, are capitalized. Additionally, certain general and administrative expenses are allocated to the projects and capitalized based on the amount of time applicable personnel work on the development project. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements are capitalized and depreciated over their estimated useful lives.

All acquired real estate assets are accounted for using the acquisition method of accounting and accordingly, the results of operations are included in the condensed consolidated statements of operations from the respective dates of acquisition.  The purchase price is allocated to (i) tangible assets, consisting of land, buildings and improvements, as if vacant, and tenant improvements and (ii) identifiable intangible assets and liabilities generally consisting of above- and below-market leases and in-place leases.  We use estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation methods to allocate the purchase price to the acquired tangible and intangible assets.  Liabilities assumed generally consist of mortgage debt on the real estate assets acquired.  Assumed debt with a stated interest rate that is significantly different from market interest rates is recorded at its fair value based on estimated market interest rates at the date of acquisition.

Depreciation is computed on a straight-line basis over estimated lives of 40 years for buildings, 10 to 20 years for certain improvements and 7 to 10 years for equipment and fixtures. Tenant improvements are capitalized and depreciated on a straight-line basis over the term of the related lease.  Lease-related intangibles from acquisitions of real estate assets are amortized over the remaining terms of the related leases.  The amortization of above- and below-market leases is recorded as an adjustment to minimum rental revenue, while the amortization of all other lease-related intangibles is recorded as amortization expense.  Any difference between the face value of the debt assumed and its fair value is amortized to interest expense over the remaining term of the debt using the effective interest method.

Carrying Value of Long-Lived Assets

We periodically evaluate long-lived assets to determine if there has been any impairment in their carrying values and record impairment losses if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts or if there are other indicators of impairment. If it is determined that impairment has occurred, the amount of the impairment charge is equal to the excess of the asset’s carrying value over its estimated fair value.  We estimate fair value using the undiscounted cash flows expected to be generated by each property, which are based on a number of assumptions such as leasing expectations, operating budgets, estimated useful lives, future maintenance expenditures, intent to hold for use and capitalization rates, among others.  These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the future cash flows estimated in our impairment analyses may not be achieved. See Note 3 to the condensed consolidated financial statements, included in Exhibit 99.3 of this Form 8-K, for impairment of long-lived assets for the six month period ended June 30, 2013.

Allowance for Doubtful Accounts

We periodically perform a detailed review of amounts due from tenants and others to determine if accounts receivable balances are impaired based on factors affecting the collectibility of those balances.  Our estimate of the allowance for doubtful accounts requires significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.  We recorded a provision for doubtful accounts of $0.9 million and $1.2 million for the six months ended June 30, 2013 and 2012, respectively.

Investments in Unconsolidated Affiliates

We evaluate our joint venture arrangements to determine whether they should be recorded on a consolidated basis.  The percentage of ownership interest in the joint venture, an evaluation of control and whether a VIE exists are all considered in the consolidation assessment.

Initial investments in joint ventures that are in economic substance a capital contribution to the joint venture are recorded in an amount equal to our historical carryover basis in the real estate contributed. Initial investments in joint ventures that are in economic substance the sale of a portion of our interest in the real estate are accounted for as a contribution of real estate recorded in an amount equal to our historical carryover basis in the ownership percentage retained and as a sale of real estate with profit

20

recognized to the extent of the other joint venturers’ interests in the joint venture. Profit recognition assumes that we have no commitment to reinvest with respect to the percentage of the real estate sold and the accounting requirements of the full accrual method are met.

We account for our investment in joint ventures where we own a noncontrolling interest or where we are not the primary beneficiary of a VIE using the equity method of accounting. Under the equity method, our cost of investment is adjusted for our share of equity in the earnings of the unconsolidated affiliate and reduced by distributions received. Generally, distributions of cash flows from operations and capital events are first made to partners to pay cumulative unpaid preferences on unreturned capital balances and then to the partners in accordance with the terms of the joint venture agreements.

Any differences between the cost of our investment in an unconsolidated affiliate and our underlying equity as reflected in the unconsolidated affiliate’s financial statements generally result from costs of our investment that are not reflected on the unconsolidated affiliate’s financial statements, capitalized interest on our investment and our share of development and leasing fees that are paid by the unconsolidated affiliate to us for development and leasing services provided to the unconsolidated affiliate during any development periods. The net difference between our investment in unconsolidated affiliates and the underlying equity of unconsolidated affiliates is generally amortized over a period of 40 years.

On a periodic basis, we assess whether there are any indicators that the fair value of our investments in unconsolidated affiliates may be impaired. An investment is impaired only if our estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment. Our estimates of fair value for each investment are based on a number of assumptions such as future leasing expectations, operating forecasts, discount rates and capitalization rates, among others.  These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the fair values estimated in the impairment analyses may not be realized.

No impairments of investments in unconsolidated affiliates were incurred during the six month period ended June 30, 2013.

Recent Accounting Pronouncements

Accounting Guidance Adopted

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02"). The objective of ASU 2013-02 is to improve reporting of reclassifications out of accumulated other comprehensive income ("AOCI") by presenting information about such reclassifications and their corresponding effect on net income primarily in one place, either on the face of the financial statements or in the notes. ASU 2013-02 requires an entity to disclose information by component for significant amounts reclassified out of AOCI if the amounts reclassified are required to be reclassified under accounting principles generally accepted in the United States of America ("GAAP") to net income in their entirety in the same reporting period. For amounts not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. For public companies, this guidance was effective on a prospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2012. ASU 2013-02 did not change the calculation of or amounts reported as net income and comprehensive income but did change the presentation of the components of AOCI reported in our condensed consolidated financial statements.

In July 2013, the FASB issued Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes ("ASU 2013-10"). ASU 2013-10 permits the Overnight Index Swap ("OIS") Rate, also referred to as the Fed Funds Effective Swap Rate, to be used as a U.S. benchmark for hedge accounting purposes, in addition to LIBOR and interest rates on direct U.S. Treasury obligations. The guidance also removes the restriction on using different benchmarks for similar hedges. ASU 2013-10 is effective prospectively for qualifying new or redesignated hedges entered into on or after July 17,2013. We do not expect the adoption of this guidance to have a material effect on our condensed consolidated financial statements.

Accounting Pronouncements Not Yet Effective

In February 2013, the FASB issued Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date ("ASU 2013-04"). ASU 2013-04 addresses the diversity in practice related to the recognition, measurement and disclosure of certain obligations which are not addressed within existing GAAP guidance. Such obligations under the scope of ASU 2013-04 include debt arrangements, other contractual obligations, settled litigation and judicial rulings. The guidance requires an entity to measure these joint and several obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors as well as any additional amount the reporting entity expects to pay on behalf of its co-obligors. ASU 2013-04 also requires an entity to disclose information about

21

the nature and amount of these obligations. For public companies, ASU 2013-04 is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2013. We may elect to use hindsight for the comparative periods (if we change our accounting as a result of the adoption of this guidance). Early adoption is permitted. We are evaluating the impact that this update may have on our consolidated financial statements.

In July 2013, the FASB issued Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"). The objective of this update is to reduce the diversity in practice related to the presentation of certain unrecognized tax benefits. ASU 2013-11 provides that unrecognized tax benefits are to be presented as a reduction of a deferred tax asset for a net operating loss ("NOL") carryforward, a similar tax loss or a tax credit carryforward when settlement in this manner is available under the governing tax law. To the extent such an NOL carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date under the governing tax law to settle taxes that would result from the disallowance of the tax position or the entity does not intend to use the deferred tax asset for this purpose, the unrecognized tax benefit is to be recorded as a liability in the financial statements and should not be netted with a deferred tax asset. ASU 2013-11 is effective for public companies for fiscal years beginning after December 15, 2013 and interim periods within those years. The guidance should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Early adoption and retrospective application are permitted. We are evaluating the impact that this update may have on our consolidated financial statements.

Impact of Inflation/Deflation

Deflation can result in a decline in general price levels, often caused by a decrease in the supply of money or credit.  The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand.  Restricted lending practices could impact our ability to obtain financings or refinancings for our properties and our tenants’ ability to obtain credit.  Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.

During inflationary periods, substantially all of our tenant leases contain provisions designed to mitigate the impact of inflation.  These provisions include clauses enabling us to receive percentage rent based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases.  In addition, many of the leases are for terms of less than 10 years, which may provide us the opportunity to replace existing leases with new leases at higher base and/or percentage rent if rents of the existing leases are below the then existing market rate.  Most of the leases require the tenants to pay a fixed amount, subject to annual increases, for their share of operating expenses, including common area maintenance, real estate taxes, insurance and certain capital expenditures, which reduces our exposure to increases in costs and operating expenses resulting from inflation.

Funds From Operations

Funds from Operations ("FFO") is a widely used measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO allocable to common unitholders as defined above by NAREIT less distributions on preferred units. Our method of calculating FFO allocable to common unitholders may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

We believe that FFO provides an additional indicator of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of well-maintained real estate assets have historically risen with market conditions, we believe that FFO enhances investors’ understanding of our operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of our properties and interest rates, but also by our capital structure.

We present both FFO of our Operating Partnership and FFO allocable to common unitholders, as we believe that both are useful performance measures.  We believe FFO of our Operating Partnership is a useful performance measure since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of our common unitholders and the noncontrolling interest in our Operating Partnership.  We believe FFO allocable to common unitholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to common unitholders.

In our reconciliation of net income (loss) attributable to common unitholders to FFO allocable to common unitholders that is presented below, we make an adjustment to add back noncontrolling interest in income (loss) of our Operating Partnership in order to arrive at FFO of our Operating Partnership.  We then apply a percentage to FFO of our Operating Partnership to arrive at FFO allocable to common unitholders. The percentage is computed by taking the weighted-average number of common units outstanding for the period and dividing it by the sum of the weighted-average number of common units and the weighted-average

22

number of Operating Partnership units held by noncontrolling interests during the period.     

FFO does not represent cash flows from operations as defined by GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating our operating performance or to cash flow as a measure of liquidity.

We recorded a $2.4 million gain on investment in the second quarter of 2013 when a note related to our China investment, of which a portion was written down to its estimated fair value in 2009, was repaid in May 2013. We also recorded a $9.1 million loss on extinguishment of debt in the second quarter of 2013 due to the early retirement of debt on loans secured by two malls. Considering the significance and nature of these items, we believe it is important to identify the impact of these changes on our FFO measures for a reader to have a complete understanding of our results of operations. Therefore, we have also presented FFO, as adjusted, excluding these items.

FFO of the Operating Partnership increased to $205.3 million during the six months ended June 30, 2013 compared to $202.8 million in the prior-year period. Excluding the gain on investment and loss on extinguishment of debt, FFO of the Operating Partnership, as adjusted, for the six month periods ended June 30, 2013 and 2012 was $212.1 million as compared to $202.8 million, respectively. FFO was positively impacted by continued improvements in occupancy, new development and recent acquisitions.

The reconciliation of FFO to net income attributable to common unitholders is as follows (in thousands):

	Six Months Ended June 30,
	2013			2012
Net income attributable to common unitholders	$	23,118		$	43,811
Noncontrolling interest in income of operating partnership	3,527			9,559
Depreciation and amortization expense of:
Consolidated properties	142,070			129,414
Unconsolidated affiliates	19,871			22,119
Discontinued operations	107			1,985
Non-real estate assets	(958		)	(888		)
Noncontrolling interests' share of depreciation and amortization	(2,889		)	(2,329		)
Loss on impairment of real estate, net of tax	21,038			196
Gain on depreciable property	(2		)	(493		)
Gain on discontinued operations, net of tax	(540		)	(557		)
Funds from operations of the Operating Partnership	$	205,342		$	202,817
Gain on investment	(2,400		)	—
Loss on extinguishment of debt	9,108			—
Funds from operations of the Operating Partnership, as adjusted	$	212,050		$	202,817

23