Press Release

CHATTANOOGA, Tenn.--(BUSINESS WIRE)-- CBL & Associates Properties, Inc. (NYSE:CBL):

• FFO per diluted share, as adjusted, increased 2.1% to $0.48 for the third quarter 2011.
• Same-center net operating income improved 4.2% for the mall portfolio for the third quarter 2011 over the prior-year period, excluding lease termination fees.
• Same-store sales per square foot increased 3.5% for mall tenants 10,000 square feet or less for stabilized malls for the nine months ended September 30, 2011.
• Portfolio occupancy at September 30, 2011, increased 30 basis points from the prior-year period.
• Positive leasing spread of 8.2% during the third quarter 2011 over prior gross rents.
• FFO and same-center NOI guidance raised.

CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the third quarter ended September 30, 2011. A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure is located at the end of this news release.

CBL’s President and Chief Executive Officer Stephen Lebovitz commented, “The improved same-center NOI growth and strong FFO performance validates the stability and long-term viability of our portfolio of market-dominant malls as well as the commitment to successful execution throughout the company. While we have concerns regarding the broader macroeconomic trends, the sustained improvement in leasing spreads and occupancy confirms our positive outlook and provides the confidence for our raising guidance for the year.

“We continued to put our stronger capital structure to work with attractive new investment opportunities such as the Waynesville Commons (Waynesville, NC) construction start, the second phase expansion of the Forum at Grandview (Madison, MS) and the acquisition and future redevelopment of Northgate Mall (Chattanooga, TN). Closing the $1.1 billion joint venture with TIAA-CREF earlier this month further enhanced our liquidity, and we look forward to pursuing additional opportunities through this new partnership.”

FFO, as adjusted, excludes the impact of non-cash impairment charges and gains on debt extinguishment. In the third quarter 2011, the Company recorded a non-cash impairment charge of $0.27 per diluted share related to Columbia Place in Columbia, SC. In the first quarter 2011, the Company recorded a gain on extinguishment of debt of $0.17 per diluted share and a non-cash impairment charge of $0.01 per diluted share related to the sale of Oak Hollow Mall in High Point, NC. In the second quarter 2011, the Company recorded a non-cash impairment charge, net of taxes, of $0.02 per diluted share related to the second phase of Settlers Ridge in Pittsburgh, PA. In the second quarter 2010, the Company recorded a non-cash impairment charge of $0.14 per diluted share primarily related to Oak Hollow Mall.

After reflecting the impact of the non-cash impairment of real estate in the third quarter 2011, the net loss attributable to common shareholders for the third quarter 2011 was $27,320,000, or $0.18 per diluted share, compared with net income of $9,580,000, or $0.07 per diluted share for the third quarter 2010. After reflecting the impact of the non-cash impairment of real estate in both periods and the gain on extinguishment of debt in 2011, net income attributable to common shareholders for the nine months ended September 30, 2011, was $19,187,000, or $0.13 per diluted share, compared with $13,266,000, or $0.10 per diluted share, for the nine months ended September 30, 2010.

HIGHLIGHTS

• Portfolio same-center net operating income (“NOI”), excluding lease termination fees, for the quarter ended September 30, 2011, increased 2.3% compared with 0.6% for the prior-year period. Same-center NOI, excluding lease termination fees, in the mall portfolio increased 4.2% compared with the prior-year period. Same-center NOI, excluding lease terminations fees, for the nine months ended September 30, 2011, increased 1.6% compared with a decline of 1.5% for the prior-year period.
• Average gross rent on leases signed for tenants 10,000 square feet or less increased 8.2% over the prior gross rent per square foot.
• Same-store sales per square foot for mall tenants 10,000 square feet or less for stabilized malls for the nine months ended September 30, 2011, increased 3.5%. Same-store sales per square foot for mall tenants 10,000 square feet or less for stabilized malls for the rolling twelve months ended September 30, 2011, increased 3.2% to $329 per square foot.
• Consolidated and unconsolidated variable rate debt of $1,257,092,000 represented 14.8% of the total market capitalization for the Company and 21.8% of the Company's share of total consolidated and unconsolidated debt as of September 30, 2011. This compares favorably to variable rate debt in the prior-year period of 20.1% of total market capitalization and 30.0% of the Company’s share of total consolidated and unconsolidated debt as of September 30, 2010.

PORTFOLIO OCCUPANCY

JOINT VENTURE ACTIVITY

In October, CBL and TIAA-CREF closed their $1.09 billion real estate joint venture to invest in market dominant shopping malls. TIAA-CREF received a 50% pari passu interest in three enclosed malls, including Oak Park Mall in Kansas City, KS; West County Center in St. Louis, MO; and CoolSprings Galleria in Nashville, TN, and a 12% interest in Pearland Town Center in Houston, TX. In total, CBL reduced outstanding debt balances by approximately $486 million through TIAA-CREF’s assumption of approximately $267 million of property-specific debt and cash proceeds of approximately $219 million. CBL continues to manage and lease the properties.

ACQUISITIONS

On September 30, 2011, CBL closed on the acquisition of Northgate Mall in CBL’s hometown of Chattanooga, TN, for $11.5 million in cash. The mall was listed for sale through an online auction.

OUTLOOK AND GUIDANCE

Based on third quarter results and today’s outlook, the Company is raising 2011 FFO guidance to $2.12 - $2.15 per share, which excludes the impact of non-cash impairment charges, net of taxes, and includes the gain on extinguishment of debt. The full-year guidance also assumes $3.0 million to $4.0 million of outparcel sales and same-center NOI growth in the range of 0.0% to 1.5%, excluding the impact of lease termination fees from both applicable periods. The guidance excludes the impact of any future unannounced acquisitions or dispositions. The Company expects to update its annual guidance after each quarter's results.

INVESTOR CONFERENCE CALL AND SIMULCAST

CBL & Associates Properties, Inc. will conduct a conference call at 11:00 a.m. ET on Wednesday, November 2, 2011, to discuss its third quarter results. The number to call for this interactive teleconference is (212) 231-2900. A seven-day replay of the conference call will be available by dialing (402) 977-9140 and entering the passcode 21515945. A transcript of the Company's prepared remarks will be furnished on a Form 8-K following the conference call.

To receive the CBL & Associates Properties, Inc., third quarter earnings release and supplemental information please visit our website at cblproperties.com or contact Investor Relations at 423-490-8312.

The Company will also provide an online web simulcast and rebroadcast of its 2011 third quarter earnings release conference call. The live broadcast of the quarterly conference call will be available online at cblproperties.com on Wednesday, November 2, 2011, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue through November 9, 2011.

CBL is one of the largest and most active owners and developers of malls and shopping centers in the United States. CBL owns, holds interests in or manages 160 properties, including 86 regional malls/open-air centers. The properties are located in 27 states and total 86.5 million square feet including 3.6 million square feet of non-owned shopping centers managed for third parties. Headquartered in Chattanooga, TN, CBL has regional offices in Boston (Waltham), MA, Dallas (Irving), TX, and St. Louis, MO. Additional information can be found at cblproperties.com.

NON-GAAP FINANCIAL MEASURES

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 operating 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. The Company defines FFO allocable to its common shareholders as defined above by NAREIT less dividends on preferred stock. The Company’s method of calculating FFO allocable to its common shareholders 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 of its operating partnership and FFO allocable to its common shareholders, as it believes that both are useful performance measures. The Company believes FFO of its operating partnership 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 attributable to the Company's common shareholders to FFO allocable to its common shareholders, located at the end of 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 its operating partnership. The Company then applies a percentage to FFO of its operating partnership 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 outstanding during the period.

FFO does not represent cash flows from operations as defined by accounting principles generally accepted in the United States, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating the Company’s operating performance or to cash flow as a measure of liquidity.

During the first three quarters of 2011 and the second quarter of 2010, the Company recorded losses on impairment of certain of its real estate assets and gain on extinguishment of debt from discontinued operations. Considering the significance and nature of these items, the Company believes that it is important to identify the impact of the change 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 its FFO measures excluding these items.

Same-Center Net Operating Income

NOI is a supplemental measure of the operating performance of the Company's shopping centers. The Company defines NOI as operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).

Similar to FFO, the Company computes NOI based on its pro rata share of both consolidated and unconsolidated properties. The Company's definition of NOI may be different than that used by other companies and, accordingly, the Company's NOI may not be comparable to that of other companies. A reconciliation of same-center NOI to net income is located at the end of this earnings release.

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

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 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.

CBL & Associates Properties, Inc.
Investor Contact:
Katie Reinsmidt, 423-490-8301
Vice President - Corporate Communications and Investor Relations
katie_reinsmidt@cblproperties.com

Source: CBL & Associates Properties, Inc.