CBL Properties (NYSE:CBL) announced results for the fourth
quarter and year ended December 31, 2019. A description of each
supplemental non-GAAP financial measure and the related
reconciliation to the comparable GAAP financial measure is located
at the end of this news release.
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
%
2019
2018
%
Net income (loss) attributable to common
shareholders per diluted share
$
0.27
$
(0.38
)
170.6
%
$
(0.74
)
$
(0.72
)
(4.1
)%
Funds from Operations (“FFO”) per diluted
share
$
0.39
$
0.44
(12.4
)%
$
1.40
$
1.70
(17.7
)%
FFO, as adjusted, per diluted share
(1)
$
0.37
$
0.45
(17.1
)%
$
1.36
$
1.73
(21.6
)%
(1) For a reconciliation of FFO to FFO, as
adjusted, for the periods presented, please refer to the footnotes
to the Company’s reconciliation of net income (loss) attributable
to common shareholders to FFO allocable to Operating Partnership
common unitholders on page 9 of this news release.
KEY TAKEAWAYS:
- Same-center sales per square foot for the stabilized mall
portfolio for the fourth quarter 2019 improved 3%. For the
twelve-months ended December 31, 2019, same-center sales increased
2% to $386 per square foot compared with the prior-year
period.
- During 2019, CBL made significant progress on its anchor
redevelopment program, completing a dozen redevelopment projects.
CBL currently has 27 former anchor spaces committed, under
construction or with replacements already open featuring dining,
entertainment, fitness and other mixed-use components.
- FFO per diluted share, as adjusted, was $0.37 for the fourth
quarter 2019, compared with $0.45 per share for the fourth quarter
2018. Fourth quarter 2019 FFO per share was impacted by $0.02 per
share of dilution from asset sales completed since the prior-year
period and $0.06 per share of lower property NOI.
- FFO per diluted share, as adjusted, was $1.36 for 2019,
compared with $1.73 for 2018. 2019 FFO per share was impacted by
$0.06 per share of dilution from asset sales completed since the
prior-year period, $0.04 lower gains on the sale of outparcels and
$0.20 per share of lower property NOI.
- Total Portfolio Same-center NOI declined 6.5% for 2019, as
compared with 2018.
- Portfolio occupancy as of December 31, 2019, was 91.2%,
representing a 70-basis point improvement sequentially and a
190-basis point decline compared with 93.1% as of December 31,
2018. Same-center mall occupancy was 89.8% as of December 31, 2019,
a 110-basis point improvement sequentially and a 210-basis point
decline compared with 91.9% as of December 31, 2018.
- During 2019, CBL completed gross asset sales totaling $185.7
million (details herein).
“As our results indicate, our properties are facing ongoing
challenges as retailers struggle to adapt to today’s consumer
preferences. For the year 2019, our financial results were at the
high end of our guidance range with same-center NOI of (6.5%) and
adjusted FFO of $1.36 per share,” said Stephen D. Lebovitz, Chief
Executive Officer. “2019 results, as well as 2020 guidance, reflect
the significant impact of retailer bankruptcies and store closings
on revenues and occupancy. Our guidance range for 2020 incorporates
the carryover from 2019 plus anticipated challenges by retailers in
2020 and a reserve for unbudgeted impacts.
“At the same time, we are working to diversify and stabilize
revenues. In recent months, we have opened 15 new tenants in former
anchor locations, adding more productive, higher traffic-driving
uses. And, we have another dozen committed replacements either
under construction or with planning underway. We are proactively
reducing our exposure to apparel retailers with more than 76% of
2019 mall leasing completed with non-apparel tenants. As we
approach our redevelopments, we are evaluating our capital
investments closely and successfully stretching our dollars through
ground leases, joint ventures and other creative structures. The
steps we took in December 2019 to suspend our common and preferred
dividends in 2020 are key elements of our strategy to preserve our
significant level of internally generated cash flow, providing us
with the capital to execute on our redevelopment and leasing
strategies that will lead to stabilized future revenues and
growth.”
Net income attributable to common shareholders for the fourth
quarter 2019 was $46.5 million, or $0.27 per diluted share,
compared with a net loss of $65.5 million, or a loss of $0.38 per
diluted share, for the fourth quarter of 2018. Net income for the
fourth quarter 2019 was impacted by a $37.4 million loss on
impairment of real estate to write down the carrying value of Park
Plaza to the property’s estimated fair value.
Net loss attributable to common shareholders for 2019 was $129.2
million, or a loss of $0.74 per diluted share, compared with a net
loss of $123.5 million, or a loss of $0.72 per diluted share, for
2018. Net loss for the full-year 2019 included a $26.4 million
reduction to the class-action litigation expense recorded in the
first quarter 2019. The majority of the reduction relates to past
tenants that did not submit a claim pursuant to the terms of the
settlement agreement with the remainder relating to tenants that
opted out of the lawsuit.
FFO allocable to common shareholders, as adjusted, for the
fourth quarter 2019 was $64.7 million, or $0.37 per diluted share,
compared with $77.0 million, or $0.45 per diluted share, for the
fourth quarter 2018. FFO allocable to the Operating Partnership
common unitholders, as adjusted, for the fourth quarter 2019 was
$74.6 million compared with $89.0 million for the fourth quarter
2018.
FFO allocable to common shareholders, as adjusted, for 2019 was
$235.2 million, or $1.36 per diluted share, compared with $298.2
million, or $1.73 per diluted share, for 2018. FFO allocable to the
Operating Partnership common unitholders, as adjusted, for 2019 was
$271.5 million compared with $345.1 million for 2018.
Percentage change in same-center Net Operating Income (“NOI”)
(1):
Three Months Ended
December 31,
Year Ended
December 31,
2019
2019
Portfolio same-center NOI
(9.1
)%
(6.5
)%
Mall same-center NOI
(9.8
)%
(7.3
)%
(1) CBL’s definition of same-center NOI
excludes the impact of lease termination fees and certain non-cash
items such as straight-line rents and reimbursements, write-offs of
landlord inducements and net amortization of acquired above and
below market leases.
Major variances impacting same-center NOI for the year ended
December 31, 2019, include:
- Same-center NOI declined $38.9 million, due to a $48.8 million
decrease in revenues offset by a $9.9 million decline in operating
expenses.
- Rental revenues declined $57.9 million, including a $26.5
million decline in tenant reimbursements and a $32.8 million
decline in minimum and other rents. Percentage rents improved $1.4
million.
- Property operating expenses declined $5.8 million compared with
the prior year. Maintenance and repair expenses were flat. Real
estate tax expenses declined $4.1 million.
PORTFOLIO OPERATIONAL RESULTS
Occupancy(1):
As of December 31,
2019
2018
Total portfolio
91.2
%
93.1
%
Malls:
Total Mall portfolio
89.8
%
91.8
%
Same-center Malls
89.8
%
91.9
%
Stabilized Malls
90.0
%
92.1
%
Non-stabilized Malls (2)
83.8
%
76.7
%
Associated centers
95.6
%
97.4
%
Community centers
96.0
%
97.2
%
(1) Occupancy for malls represents
percentage of mall store gross leasable area under 20,000 square
feet occupied. Occupancy for associated and community centers
represents percentage of gross leasable area occupied.
(2) Represents occupancy for The Outlet
Shoppes at Laredo.
New and Renewal Leasing Activity of Same Small Shop Space
Less Than 10,000 Square Feet:
% Change in Average Gross Rent Per
Square Foot:
Three Months Ended
December 31,
Year Ended
December 31,
2019
2019
Stabilized Malls
(12.1
)%
(8.6
)%
New leases
8.8
%
9.1
%
Renewal leases
(15.7
)%
(11.5
)%
Same-Center Sales Per Square Foot for Mall Tenants 10,000
Square Feet or Less:
Year Ended December
31,
2019
2018
% Change
Stabilized mall same-center sales per
square foot
$
386
$
379
2
%
Stabilized mall sales per square foot
$
386
$
377
2
%
DISPOSITIONS Year-to-date, CBL has closed on $185.7
million in asset sales, as detailed below.
In December, CBL closed on the sale of a 15% interest in The
Outlet Shoppes at Atlanta to its existing joint venture partner,
Horizon Group Properties (“Horizon”), for $20.8 million, including
cash of $9.4 million and the assumption of 15% interest in the
existing loan (representing $11.4 million at closing). Following
the completion of the sale, CBL and Horizon each own a 50%
interest, with Horizon continuing to lease and manage the
asset.
Property
Location
Date Closed
Gross Sales Price (M)
Cary Towne Center(1)
Cary, NC
January
$
31.5
Honey Creek Mall (1)
Terre Haute, IN
April
14.6
The Shoppes at Hickory Point
Forsyth, IL
April
2.5
Courtyard by Marriott at Pearland Town
Center
Pearland, TX
June
15.1
The Forum at Grandview
Madison, MS
July
31.8
850 Greenbrier Circle
Chesapeake, VA
July
10.5
Various parcels
Various
Various
31.1
25% interest in The Outlet Shoppes at El
Paso (2)
El Paso, TX
August
27.8
15% interest in The Outlet Shoppes at
Atlanta (3)
Woodstock, GA
December
20.8
Total
$
185.7
(1) 100% of sale proceeds utilized to
retire existing secured loans.
(2) Gross amount shown above is comprised
of $9.3 million in equity and 25% interest in loan balance at
closing of $18.5 million.
(3) Gross amount shown above is comprised
of $9.4 million in equity and 15% interest in loan balance at
closing of $11.4 million.
ANCHOR REPLACEMENT PROGRESS AND REDEVELOPMENT During
2019, CBL completed a dozen redevelopment projects and had five
additional projects under construction at year-end. Anchor
replacements recently opened or pending include (complete list and
additional information can be found in the financial
supplement):
Property
Prior Tenant
New Tenant(s)
Construction/Opening
Status
Eastland Mall
JCPenney
H&M, Planet Fitness
Open
Jefferson Mall
Macy’s
Round1
Open
Northwoods Mall
Sears
Burlington
Open
Kentucky Oaks Mall
Sears
Burlington, Ross Dress for Less
Open
West Towne
Sears
Dave & Busters, Total Wine
Open
Hanes Mall
Shops
Dave & Busters
Open
Parkdale Mall
Macy’s
Dick’s, Five Below, HomeGoods
Open
Brookfield Square
Sears
Marcus Theatres, Whirlyball
Open
Laurel Park Place
Carson’s
Dunham’s Sports
Open
Meridian Mall
Younkers
High Caliber Karts
Open
Stroud Mall
Boston
Shoprite
Open
Kentucky Oaks Mall
Elder Beerman
HomeGoods and Five Below
Open
Frontier Mall
Sears
Jax Outdoor Gear
Open
Stroud Mall
Sears
EFO Furniture Outlet
Open
Dakota Square
Herberger’s
Ross Dress for Less
Open
Hamilton Place
Sears
Dick’s Sporting Goods, Dave & Busters,
Aloft Hotel, Malones
Under construction - Spring 2020/
2021 (Aloft)
CherryVale Mall
Sears
Tilt
Under construction - Q1/Q2
‘20
Richland Mall
Sears
Dillard’s
Under construction - 2020
Post Oak Mall
Sears
Conn’s HomePlus
Under construction - 2020
Kirkwood Mall
BonTon
Restaurants
2020
Imperial Valley
Sears
Hobby Lobby
2020
Westmoreland Mall
BonTon
Stadium Live! Casino
2020
York Galleria
Sears
Hollywood Casino
2020
Cross Creek Mall
Sears
Dave & Busters
Construction start in 2020
South County Center
Sears
Round1
Opening TBD
Hanes Mall
Sears
Novant Health
Opening TBD
West Towne Mall
Sears
Von Maur
2021
DIVIDENDS In December 2019, CBL announced that it is
suspending all future dividends on its common stock, 7.375% Series
D Cumulative Redeemable Preferred Stock and 6.625% Series E
Cumulative Redeemable Preferred Stock. The dividend suspension will
be reviewed quarterly by the Board of Directors, but is expected to
remain in place until year-end 2020. The Company made this
determination following a review of taxable income projections for
2019 and 2020. The Company will review taxable income on a regular
basis and take measures, if necessary, to ensure that it meets the
minimum distribution requirements to maintain its status as a Real
Estate Investment Trust (REIT).
OUTLOOK AND GUIDANCE CBL is providing 2020 FFO, as
adjusted, guidance in the range of $1.03 - $1.13 per diluted share.
Guidance incorporates a reserve in the range of $8.0 - $18.0
million (the “Reserve”) for potential future unbudgeted loss in
rent from tenant bankruptcies, store closures or lease
modifications that may occur in 2020.
Key assumptions underlying guidance are as follows:
Low
High
2020 FFO, as adjusted, per share (includes
the Reserve)
$
1.03
$
1.13
2020 Change in Same-Center NOI (“SC NOI”)
(includes the Reserve)
(9.5
)%
(8.0
)%
Reserve for unbudgeted lost rents included
in SC NOI and FFO
$18.0 million
$8.0 million
Updated expectation for gains on outparcel
sales
$2.0 million
$5.0 million
Assumptions underlying the change in 2020 SC NOI are as
follows:
Estimated Impact to 2020 SC
NOI
Explanation
New Leasing/Contractual Rent Increases
2.30
%
Specialty Retail/Branding
(0.50
)%
2019 actual and 2020 budgeted closures
Store Closures/Non-renewals
(4.00
)%
2019 actual and 2020 budgeted store
closures at natural lease maturity as well as mid-term store
closures primarily due to tenants in bankruptcy
Lease Renewals
(1.50
)%
Impact of new renewals completed in 2019
and budgeted for 2020, including certain tenants in bankruptcy
reorganization
Lease Modifications/Co-tenancy
(2.10
)%
Mid-term lease modifications and
co-tenancy rents triggered in 2019 or budgeted in 2020
Expenses
(0.65
)%
Increases in operating expenses
Reserve for lost rents
(2.30
)%
Mid-point of reserve for unbudgeted lost
rents
Total 2020 SC NOI Change at
Midpoint
(8.75
)%
Reconciliation of GAAP net income (loss) to 2020 FFO, as
adjusted, per share guidance:
Low
High
Expected diluted earnings per common
share
$
(0.26
)
$
(0.16
)
Adjust to fully converted shares from
common shares
0.02
0.02
Expected earnings per diluted, fully
converted common share
(0.24
)
(0.14
)
Add: depreciation and amortization
1.28
1.28
Add: noncontrolling interest in loss of
Operating Partnership
(0.01
)
(0.01
)
Expected FFO, as adjusted, per diluted,
fully converted common share
$
1.03
$
1.13
INVESTOR CONFERENCE CALL AND WEBCAST CBL Properties will
host a conference call on Friday, February 7, 2020, at 11:00 a.m.
ET. To access this interactive teleconference, dial (888) 317-6003
or (412) 317-6061 and enter the confirmation number, 1982728. A
replay of the conference call will be available through February
14, 2020, by dialing (877) 344-7529 or (412) 317-0088 and entering
the confirmation number, 10136909.
The Company will also provide an online webcast and rebroadcast
of its fourth quarter 2019 earnings release conference call. The
live broadcast of the quarterly conference call will be available
online at cblproperties.com on Friday, February 7, 2020, beginning
at 11:00 a.m. ET. The online replay will follow shortly after the
call.
To receive the CBL Properties fourth quarter earnings release
and supplemental information, please visit the Invest section of
our website at cblproperties.com.
ABOUT CBL PROPERTIES Headquartered in Chattanooga, TN,
CBL Properties owns and manages a national portfolio of
market-dominant properties located in dynamic and growing
communities. CBL’s portfolio is comprised of 108 properties
totaling 68.2 million square feet across 26 states, including 68
high-quality enclosed, outlet and open-air retail centers and 9
properties managed for third parties. CBL seeks to continuously
strengthen its company and portfolio through active management,
aggressive leasing and profitable reinvestment in its properties.
For more information visit cblproperties.com.
ADOPTION OF NEW LEASE ACCOUNTING STANDARD The Company
adopted Accounting Standards Codification (“ASC”) 842, Leases,
effective January 1, 2019, which resulted in the Company revising
the presentation of rental revenues in its consolidated statements
of operations. In the past, certain components of rental revenues
were shown separately in the consolidated statements of operations.
Upon the adoption of ASC 842, these amounts have been combined into
a single line item. Please see the Company’s Supplemental Financial
and Operating Information located in the Invest section of the
Company’s website for more information regarding the components of
rental revenues.
NON-GAAP FINANCIAL MEASURES Funds From Operations FFO is
a widely used non-GAAP 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 as
defined above by NAREIT less dividends on preferred stock of the
Company or distributions on preferred units of the Operating
Partnership, as applicable. The Company’s method of calculating FFO
may be different from methods used by other REITs and, accordingly,
may not be comparable to such other REITs.
The Company believes that FFO provides an additional indicator
of the operating performance of its 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, the Company believes
that FFO enhances investors’ understanding of its operating
performance. The use of FFO as an indicator of financial
performance is influenced not only by the operations of the
Company’s properties and interest rates, but also by its capital
structure.
The Company presents both FFO allocable to Operating Partnership
common unitholders and FFO allocable to common shareholders, as it
believes that both are useful performance measures. The Company
believes FFO allocable to Operating Partnership common unitholders
is a useful performance measure since it conducts substantially all
of its business through its Operating Partnership and, therefore,
it reflects the performance of the properties in absolute terms
regardless of the ratio of ownership interests of the Company’s
common shareholders and the noncontrolling interest in the
Operating Partnership. The Company believes FFO allocable to its
common shareholders is a useful performance measure because it is
the performance measure that is most directly comparable to net
income (loss) attributable to its common shareholders.
In the reconciliation of net income (loss) attributable to the
Company’s common shareholders to FFO allocable to Operating
Partnership common unitholders, located in this earnings release,
the Company makes an adjustment to add back noncontrolling interest
in income (loss) of its Operating Partnership in order to arrive at
FFO of the Operating Partnership common unitholders. The Company
then applies a percentage to FFO of the Operating Partnership
common unitholders to arrive at FFO allocable to its common
shareholders. The percentage is computed by taking the
weighted-average number of common shares outstanding for the period
and dividing it by the sum of the weighted-average number of common
shares and the weighted-average 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 the Company’s
operating performance or to cash flow as a measure of
liquidity.
The Company believes that it is important to identify the impact
of certain significant items on its FFO measures for a reader to
have a complete understanding of the Company’s results of
operations. Therefore, the Company has also presented adjusted FFO
measures excluding these items from the applicable periods. Please
refer to the reconciliation of net income (loss) attributable to
common shareholders to FFO allocable to Operating Partnership
common unitholders on page 9 of this news release for a description
of these adjustments.
Same-center Net Operating Income NOI is a supplemental
non-GAAP measure of the operating performance of the Company’s
shopping centers and other properties. The Company defines NOI as
property operating revenues (rental revenues, tenant reimbursements
and other income) less property operating expenses (property
operating, real estate taxes and maintenance and repairs).
The Company computes NOI based on the Operating Partnership’s
pro rata share of both consolidated and unconsolidated properties.
The Company believes that presenting NOI and same-center NOI
(described below) based on its Operating Partnership’s pro rata
share of both consolidated and unconsolidated properties is useful
since the Company conducts substantially all of its business
through its Operating Partnership and, therefore, it reflects the
performance of the properties in absolute terms regardless of the
ratio of ownership interests of the Company’s common shareholders
and the noncontrolling interest in the Operating Partnership. The
Company’s definition of NOI may be different than that used by
other companies and, accordingly, the Company’s calculation of NOI
may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to
the operations of the Company’s shopping center properties, the
Company believes that same-center NOI provides a measure that
reflects trends in occupancy rates, rental rates, sales at the
malls and operating costs and the impact of those trends on the
Company’s results of operations. The Company’s calculation of
same-center NOI excludes lease termination income, straight-line
rent adjustments, amortization of above and below market lease
intangibles and write-off of landlord inducement assets in order to
enhance the comparability of results from one period to another. A
reconciliation of same-center NOI to net income is located at the
end of this earnings release.
Pro Rata Share of Debt The Company presents debt based on
its pro rata ownership share (including the Company’s pro rata
share of unconsolidated affiliates and excluding noncontrolling
interests’ share of consolidated properties) because it believes
this provides investors a clearer understanding of the Company’s
total debt obligations which affect the Company’s liquidity. A
reconciliation of the Company’s pro rata share of debt to the
amount of debt on the Company’s condensed consolidated balance
sheet is located at the end of this earnings release.
Information included herein contains “forward-looking
statements” within the meaning of the federal securities laws. Such
statements are inherently subject to risks and uncertainties, many
of which cannot be predicted with accuracy and some of which might
not even be anticipated. Future events and actual events, financial
and otherwise, may differ materially from the events and results
discussed in the forward-looking statements. The reader is directed
to the Company’s various filings with the Securities and Exchange
Commission, including without limitation the Company’s Annual
Report on Form 10-K, and the “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” included therein,
for a discussion of such risks and uncertainties.
Consolidated Statements of Operations (Unaudited; in
thousands, except per share amounts)
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
REVENUES (1):
Rental revenues
$
180,464
$
201,907
$
737,453
$
829,113
Management, development and leasing
fees
2,025
2,520
9,350
10,542
Other
7,016
12,454
21,360
18,902
Total revenues
189,505
216,881
768,163
858,557
OPERATING EXPENSES:
Property operating
(26,049
)
(29,660
)
(108,905
)
(122,017
)
Depreciation and amortization
(59,308
)
(68,140
)
(257,746
)
(285,401
)
Real estate taxes
(17,699
)
(20,554
)
(75,465
)
(82,291
)
Maintenance and repairs
(11,955
)
(11,591
)
(46,282
)
(48,304
)
General and administrative
(15,280
)
(13,661
)
(64,181
)
(61,506
)
Loss on impairment
(37,400
)
(89,885
)
(239,521
)
(174,529
)
Litigation settlement
3,708
—
(61,754
)
—
Other
(50
)
(410
)
(91
)
(787
)
Total operating expenses
(164,033
)
(233,901
)
(853,945
)
(774,835
)
OTHER INCOME (EXPENSES):
Interest and other income
552
1,144
2,764
1,858
Interest expense
(49,266
)
(56,874
)
(206,261
)
(220,038
)
Gain on extinguishment of debt
—
—
71,722
—
Gain on investments/deconsolidation
84,356
—
95,530
—
Gain on sales of real estate assets
2,463
2,616
16,274
19,001
Income tax benefit (provision)
(32
)
(295
)
(2,654
)
1,551
Equity in earnings of unconsolidated
affiliates
1,519
4,808
4,940
14,677
Total other income (expenses)
39,592
(48,601
)
(17,685
)
(182,951
)
Net income (loss)
65,064
(65,621
)
(103,467
)
(99,229
)
Net (income) loss attributable to
noncontrolling interests in:
Operating Partnership
(7,210
)
10,710
19,906
19,688
Other consolidated subsidiaries
(108
)
604
(739
)
973
Net income (loss) attributable to the
Company
57,746
(54,307
)
(84,300
)
(78,568
)
Preferred dividends declared
—
(11,223
)
(33,669
)
(44,892
)
Preferred dividends undeclared
(11,223
)
—
(11,223
)
—
Net income (loss) attributable to
common shareholders
$
46,523
$
(65,530
)
$
(129,192
)
$
(123,460
)
Basic and diluted per share data
attributable to common shareholders:
Net income (loss) attributable to common
shareholders
$
0.27
$
(0.38
)
$
(0.74
)
$
(0.72
)
Weighted-average common and potential
dilutive common shares outstanding
173,578
172,665
173,445
172,486
(1) See "Adoption of Lease Accounting
Standard" on page 5 for further information on the presentation of
rental revenues in accordance with the new standard adopted
effective January 1, 2019.
The Company's reconciliation of net income (loss)
attributable to common shareholders to FFO allocable to Operating
Partnership common unitholders is as follows: (in thousands,
except per share data)
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
Net income (loss) attributable to common
shareholders
$
46,523
$
(65,530
)
$
(129,192
)
$
(123,460
)
Noncontrolling interest in income (loss)
of Operating Partnership
7,210
(10,710
)
(19,906
)
(19,688
)
Depreciation and amortization expense
of:
Consolidated properties
59,308
68,140
257,746
285,401
Unconsolidated affiliates
12,835
10,681
49,434
41,858
Non-real estate assets
(931
)
(913
)
(3,650
)
(3,661
)
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(1,355
)
(2,177
)
(8,191
)
(8,601
)
Loss on impairment, net of taxes
37,400
89,773
239,521
174,416
Loss on impairment of unconsolidated
affiliates
—
—
—
1,022
Gain on depreciable property, net of
taxes
(83,783
)
(1,941
)
(105,538
)
(7,484
)
FFO allocable to Operating Partnership
common unitholders
77,207
87,323
280,224
339,803
Litigation settlement, net of taxes
(1)
(3,708
)
—
61,271
—
Non-cash default interest expense (2)
1,146
1,669
1,688
5,285
Gain on extinguishment of debt (3)
—
—
(71,722
)
—
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
74,645
$
88,992
$
271,461
$
345,088
FFO per diluted share
$
0.39
$
0.44
$
1.40
$
1.70
FFO, as adjusted, per diluted
share
$
0.37
$
0.45
$
1.36
$
1.73
Weighted-average common and potential
dilutive common shares outstanding with Operating Partnership units
fully converted
200,201
199,430
200,169
199,580
(1) The three months ended December 31,
2019 represents a reduction of $3,708 to the accrued expense
related to the settlement of a class action lawsuit that was
recorded in the three months ended March 31, 2019. The year ended
December 31, 2019 is comprised of the accrued maximum expense of
$88,150 recorded in the three months ended March 31, 2019 less
total subsequent reductions of $26,396 pursuant to the terms of the
settlement agreement related to past tenants that did not submit a
claim pursuant to the terms of the settlement agreement, tenants
that opted out of the lawsuit and other permissible reductions.
(2) The three months ended December 31,
2019 includes default interest expense related to Greenbrier Mall
and Hickory Point Mall. The year ended December 31, 2019 includes
default interest expense related to Acadiana Mall, Cary Towne
Center, Greenbrier Mall and Hickory Point Mall. The three months
and year ended December 31, 2018 include default interest expense
related to Acadiana Mall, Cary Towne Center and Triangle Town
Center.
(3) The year ended December 31, 2019
includes a gain on extinguishment of debt related to the
non-recourse loan secured by Acadiana Mall, which was conveyed to
the lender in the first quarter of 2019, and a gain on
extinguishment of debt related to the non-recourse loan secured by
Cary Towne Center, which was sold in the first quarter of 2019.
The reconciliation of diluted EPS to FFO per diluted share is as
follows:
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
Diluted EPS attributable to common
shareholders
$
0.27
$
(0.38
)
$
(0.74
)
$
(0.72
)
Eliminate amounts per share excluded from
FFO:
Depreciation and amortization expense,
including amounts from consolidated properties, unconsolidated
affiliates, non-real estate assets and excluding amounts allocated
to noncontrolling interests
0.35
0.38
1.48
1.58
Loss on impairment, net of taxes
0.19
0.45
1.19
0.88
Gain on depreciable property, net of
taxes
(0.42
)
(0.01
)
(0.53
)
(0.04
)
FFO per diluted share
$
0.39
$
0.44
$
1.40
$
1.70
The reconciliations of FFO allocable to Operating Partnership
common unitholders to FFO allocable to common shareholders,
including and excluding the adjustments noted above, are as
follows:
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
FFO allocable to Operating Partnership
common unitholders
$
77,207
$
87,323
$
280,224
$
339,803
Percentage allocable to common
shareholders (1)
86.70
%
86.58
%
86.65
%
86.42
%
FFO allocable to common
shareholders
$
66,938
$
75,604
$
242,814
$
293,658
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
74,645
$
88,992
$
271,461
$
345,088
Percentage allocable to common
shareholders (1)
86.70
%
86.58
%
86.65
%
86.42
%
FFO allocable to common shareholders,
as adjusted
$
64,717
$
77,049
$
235,221
$
298,225
(1) Represents the weighted-average number
of common shares outstanding for the period divided by the sum of
the weighted-average number of common shares and the
weighted-average number of Operating Partnership units outstanding
during the period. See the reconciliation of shares and Operating
Partnership units outstanding on page 13.
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees
$
856
$
317
$
3,794
$
10,105
Lease termination fees per share
$
—
$
—
$
0.02
$
0.05
Straight-line rental income
$
984
$
(1,108
)
$
3,286
$
(5,031
)
Straight-line rental income per share
$
—
$
(0.01
)
$
0.02
$
(0.03
)
Gains on outparcel sales, net of taxes
$
3,021
$
1,679
$
5,915
$
13,138
Gains on outparcel sales, net of taxes per
share
$
0.02
$
0.01
$
0.03
$
0.07
Net amortization of acquired above- and
below-market leases
$
930
$
662
$
2,962
$
1,644
Net amortization of acquired above- and
below-market leases per share
$
—
$
—
$
0.01
$
0.01
Net amortization of debt premiums and
discounts
$
334
$
316
$
1,316
$
1,043
Net amortization of debt premiums and
discounts per share
$
—
$
—
$
0.01
$
0.01
Income tax benefit (provision)
$
(32
)
$
(295
)
$
(2,654
)
$
1,551
Income tax benefit (provision) per
share
$
—
$
—
$
(0.01
)
$
0.01
Gain on extinguishment of debt
$
—
$
—
$
71,722
$
—
Gain on extinguishment of debt per
share
$
—
$
—
$
0.36
$
—
Non-cash default interest expense
$
(1,146
)
$
(1,669
)
$
(1,688
)
$
(5,285
)
Non-cash default interest expense per
share
$
(0.01
)
$
(0.01
)
$
(0.01
)
$
(0.03
)
Abandoned projects expense
$
(50
)
$
(410
)
$
(91
)
$
(787
)
Abandoned projects expense per share
$
—
$
—
$
—
$
—
Interest capitalized
$
692
$
919
$
2,661
$
3,655
Interest capitalized per share
$
—
$
—
$
0.01
$
0.02
Litigation settlement, net of taxes
$
3,708
$
—
$
(61,271
)
$
—
Litigation settlement, net of taxes per
share
$
0.02
$
—
$
(0.31
)
$
—
As of December 31,
2019
2018
Straight-line rent receivable
$
46,973
$
55,902
Same-center Net Operating Income (Dollars in
thousands)
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
Net income (loss)
$
65,064
$
(65,621
)
$
(103,467
)
$
(99,229
)
Adjustments:
Depreciation and amortization
59,308
68,140
257,746
285,401
Depreciation and amortization from
unconsolidated affiliates
12,835
10,681
49,434
41,858
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(1,355
)
(2,177
)
(8,191
)
(8,601
)
Interest expense
49,266
56,874
206,261
220,038
Interest expense from unconsolidated
affiliates
7,204
6,754
27,046
25,603
Noncontrolling interests' share of
interest expense in other consolidated subsidiaries
(1,112
)
(1,837
)
(6,156
)
(7,749
)
Abandoned projects expense
50
410
91
787
Gain on sales of real estate assets
(2,463
)
(2,616
)
(16,274
)
(19,001
)
Gain on sales of real estate assets of
unconsolidated affiliates
—
(1,043
)
(627
)
(1,607
)
Gain on investments/deconsolidation
(84,356
)
—
(95,530
)
—
Gain on extinguishment of debt
—
—
(71,722
)
—
Loss on impairment
37,400
89,885
239,521
174,529
Litigation settlement
(3,708
)
—
61,754
—
Income tax (benefit) provision
32
295
2,654
(1,551
)
Lease termination fees
(856
)
(317
)
(3,794
)
(10,105
)
Straight-line rent and above- and
below-market lease amortization
(1,914
)
446
(6,248
)
3,387
Net (income) loss attributable to
noncontrolling interests in other consolidated subsidiaries
(108
)
604
(739
)
973
General and administrative expenses
15,280
13,661
64,181
61,506
Management fees and non-property level
revenues
(3,171
)
(4,501
)
(12,202
)
(14,143
)
Operating Partnership's share of
property NOI
147,396
169,638
583,738
652,096
Non-comparable NOI
(3,786
)
(11,681
)
(21,648
)
(51,131
)
Total same-center NOI (1)
$
143,610
$
157,957
$
562,090
$
600,965
Total same-center NOI percentage
change
(9.1
)%
(6.5
)%
Same-center Net Operating Income (Continued)
Three Months Ended
December 31,
Year Ended
December 31,
2019
2018
2019
2018
Malls
$
129,386
$
143,502
$
504,789
$
544,829
Associated centers
8,110
8,286
32,720
32,380
Community centers
5,057
5,013
20,273
19,624
Offices and other
1,057
1,156
4,308
4,132
Total same-center NOI (1)
$
143,610
$
157,957
$
562,090
$
600,965
Percentage Change:
Malls
(9.8
)%
(7.3
)%
Associated centers
(2.1
)%
1.1
%
Community centers
0.9
%
3.3
%
Offices and other
(8.6
)%
4.3
%
Total same-center NOI (1)
(9.1
)%
(6.5
)%
(1) CBL defines NOI as property operating
revenues (rental revenues, tenant reimbursements and other income),
less property operating expenses (property operating, real estate
taxes and maintenance and repairs). Same-center NOI excludes lease
termination income, straight-line rent adjustments, amortization of
above and below market lease intangibles and write-offs of landlord
inducement assets. We include a property in our same-center pool
when we own all or a portion of the property as of December 31,
2019, 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 December 31, 2019. New properties are excluded from
same-center NOI, until they meet these criteria. Properties
excluded from the same-center pool that would otherwise meet these
criteria are properties which are under major redevelopment or
being considered for repositioning, where we intend to renegotiate
the terms of the debt secured by the related property or return the
property to the lender.
Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
As of December 31,
2019
Fixed Rate
Variable
Rate
Total per
Debt
Schedule
Unamortized
Deferred
Financing
Costs
Total
Consolidated debt
$
2,695,888
$
847,275
$
3,543,163
$
(16,148
)
$
3,527,015
Noncontrolling interests' share of
consolidated debt
(30,658
)
—
(30,658
)
318
(30,340
)
Company's share of unconsolidated
affiliates' debt
633,243
104,408
737,651
(2,851
)
734,800
Company's share of consolidated and
unconsolidated debt
$
3,298,473
$
951,683
$
4,250,156
$
(18,681
)
$
4,231,475
Weighted-average interest rate
5.10
%
4.00
%
4.85
%
As of December 31,
2018
Fixed Rate
Variable
Rate
Total per
Debt
Schedule
Unamortized
Deferred
Financing
Costs
Total
Consolidated debt
$
3,147,108
$
955,751
$
4,102,859
(1
)
$
(15,963
)
$
4,086,896
Noncontrolling interests' share of
consolidated debt
(94,361
)
—
(94,361
)
804
(93,557
)
Company's share of unconsolidated
affiliates' debt
550,673
99,904
650,577
(2,687
)
647,890
Company's share of consolidated and
unconsolidated debt
$
3,603,420
$
1,055,655
$
4,659,075
$
(17,846
)
$
4,641,229
Weighted-average interest rate
5.16
%
4.28
%
4.96
%
(1) Includes $43,716 of debt related to
Cary Town Center that is classified in liabilities related to
assets held for sale in the consolidated balance sheet as of
December 31, 2018. The mall was sold in January 2019.
Total Market Capitalization as of December 31,
2019 (In thousands, except stock price)
Shares
Outstanding
Stock
Price (1)
Common stock and operating partnership
units
200,189
$
1.05
7.375% Series D Cumulative Redeemable
Preferred Stock
1,815
250.00
6.625% Series E Cumulative Redeemable
Preferred Stock
690
250.00
(1) Stock price for common stock and
Operating Partnership units equals the closing price of the common
stock on December 31, 2019. The stock prices for the preferred
stocks represent the liquidation preference of each respective
series.
Reconciliation of Shares and Operating Partnership Units
Outstanding (In thousands)
Three Months Ended
December 31,
Year Ended
December 31,
Basic
Diluted
Basic
Diluted
2019:
Weighted-average shares - EPS
173,578
173,578
173,445
173,445
Weighted-average Operating Partnership
units
26,623
26,623
26,724
26,724
Weighted-average shares - FFO
200,201
200,201
200,169
200,169
2018:
Weighted-average shares - EPS
172,665
172,665
172,486
172,486
Weighted-average Operating Partnership
units
26,765
26,765
27,094
27,094
Weighted-average shares – FFO
199,430
199,430
199,580
199,580
Consolidated Balance Sheets (Unaudited; in thousands,
except share data)
As of December 31,
2019
2018
ASSETS
Real estate assets:
Land
$
730,218
$
793,944
Buildings and improvements
5,630,795
6,414,886
6,361,013
7,208,830
Accumulated depreciation
(2,349,404
)
(2,493,082
)
4,011,609
4,715,748
Held for sale
—
30,971
Developments in progress
49,207
38,807
Net investment in real estate assets
4,060,816
4,785,526
Cash and cash equivalents
32,816
25,138
Receivables:
Tenant, net of allowance for doubtful
accounts of $2,337 in 2018
74,718
77,788
Other, net of allowance for doubtful
accounts of $838 in 2018
10,793
7,511
Mortgage and other notes receivable
4,662
7,672
Investments in unconsolidated
affiliates
326,526
283,553
Intangible lease assets and other
assets
129,973
153,665
$
4,640,304
$
5,340,853
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND EQUITY
Mortgage and other indebtedness, net
$
3,527,015
$
4,043,180
Accounts payable and accrued
liabilities
221,010
218,217
Liabilities related to assets held for
sale
—
43,716
Total liabilities
3,748,025
4,305,113
Commitments and contingencies
Redeemable noncontrolling interests
2,381
3,575
Shareholders' equity:
Preferred stock, $.01 par value,
15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable
Preferred Stock, 1,815,000 shares outstanding
18
18
6.625% Series E Cumulative Redeemable
Preferred Stock, 690,000 shares outstanding
7
7
Common stock, $.01 par value, 350,000,000
shares authorized, 174,115,111 and 172,656,458 issued and
outstanding in 2019 and 2018, respectively
1,741
1,727
Additional paid-in capital
1,965,897
1,968,280
Dividends in excess of cumulative
earnings
(1,136,874
)
(1,005,895
)
Total shareholders' equity
830,789
964,137
Noncontrolling interests
59,109
68,028
Total equity
889,898
1,032,165
$
4,640,304
$
5,340,853
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200206005952/en/
Katie Reinsmidt, Executive Vice President - Chief Investment
Officer, 423.490.8301, katie.reinsmidt@cblproperties.com
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