Press Release

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

• FFO per diluted share, as adjusted, increased 5.9% to $2.17 for 2012, compared with $2.05 for the prior-year period.
• Same-center NOI, excluding lease termination fees, increased 2.2% in the fourth quarter 2012 and 2.0% for 2012 over the comparable prior-year periods.
• Portfolio occupancy at December 31, 2012, increased 100 basis points to 94.6% from 93.6% for the prior-year period.
• Average gross rent per square foot for stabilized mall leases signed in 2012 increased 8.4% over the prior gross rent per square foot.
• Same-store sales increased 3.6% to $346 per square foot for mall tenants 10,000 square feet or less for stabilized malls for the year ended December 31, 2012.

CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the fourth quarter and year ended December 31, 2012. 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.

“We continue to enjoy the benefits of our market-dominant mall portfolio, an expanding pipeline of new growth opportunities and an enhanced capital structure,” said Stephen Lebovitz, CBL’s president and chief executive officer. “With NOI at the top end of our guidance, FFO growth well above our expectations and occupancy up across the board, we are executing well in all areas of the company. The acquisitions of Kirkwood Mall (Bismarck, ND) and the remaining joint venture interest in Imperial Valley Mall (El Centro, CA) in December demonstrate our ability to source attractive off-market opportunities. The recent announcements to expand Cross Creek Mall (Fayetteville, NC) and develop Fremaux Town Center (Slidell, LA) should further accelerate the growth we anticipate in 2013 and beyond.

“We are progressing with our plan to achieve an investment grade rating by 2014, using our new unsecured lines of credit completed in the quarter to increase our pool of unencumbered assets. This will allow us to reduce our overall cost of capital over time. The sale of non-core office buildings in Greensboro, NC, in January and the $190 million refinancing on West County Center (St. Louis, MO), at a ten-year fixed-rate of 3.4%, combined with over $818 million of availability on our credit lines position us to improve our credit profile and provide sources for our continued growth.”

FFO allocable to common shareholders, as adjusted, for the fourth quarter of 2012 was $99,683,000, or $0.62 per diluted share, compared with $88,686,000, or $0.60 per diluted share, for the fourth quarter of 2011. FFO of the operating partnership, as adjusted, for the fourth quarter of 2012 was $117,968,000, compared with $113,802,000, for the fourth quarter 2011.

FFO allocable to common shareholders, as adjusted, for 2012 was $335,871,000, or $2.17 per diluted share, compared with $304,031,000 or $2.05 per diluted share for 2011. FFO of the operating partnership, as adjusted, for 2012 was $412,821,000, compared with $390,234,000, for 2011.

Net income attributable to common shareholders for the fourth quarter of 2012 was $52,356,000, or $0.33 per diluted share, compared with net income of $72,373,000, or $0.49 per diluted share for the fourth quarter of 2011.

Net income attributable to common shareholders for 2012 was $84,088,000, or $0.54 per diluted share, compared with net income of $91,560,000, or $0.62 per diluted share for 2011.

HIGHLIGHTS

• Portfolio same-center net operating income (“NOI”), excluding lease termination fees, for the quarter ended December 31, 2012, increased 2.2% compared with an increase of 0.6% for the prior-year period. Same-center NOI, excluding lease terminations fees, for the year ended December 31, 2012, increased 2.0% compared with an increase of 1.4% for the prior-year period.
• Average gross rent per square foot on stabilized mall leases signed during the fourth quarter of 2012 for tenants 10,000 square feet or less increased 6.8% over the prior gross rent per square foot. Average gross rent per square foot on stabilized mall leases signed during 2012 for tenants 10,000 square feet or less increased 8.4% 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 year ended December 31, 2012, increased 3.6% to $346 per square foot compared with $334 per square foot in the prior-year period.
• Consolidated and unconsolidated variable rate debt of $1,079,665,000, as of December 31, 2012, represented 10.9% of the total market capitalization for the Company, compared with 10.3% in the prior-year period, and 19.8% of the Company's share of total consolidated and unconsolidated debt, compared with 17.2% in the prior-year period.
• Debt-to-total market capitalization was 54.7% as of December 31, 2012, compared with 59.7% as of December 31, 2011.

PORTFOLIO OCCUPANCY ⁽¹⁾

ACQUISITIONS

In December 2012, CBL invested a total of $96.1 million, including the assumption of debt, to acquire interests in two enclosed regional malls, Kirkwood Mall and Imperial Valley Mall, in two separate transactions. CBL completed the acquisition of a 49% interest in Kirkwood Mall in Bismarck, ND and executed an agreement to acquire the remaining 51% interest. CBL anticipates closing on the remaining 51% interest within 90 days (subject to lender approval), including the assumption of a $40.4 million (at 100%) non-recourse loan secured by the property. The loan bears a fixed interest rate of 5.75% and matures in April 2018.

In addition, CBL acquired the remaining 40% interest in its Imperial Valley Mall and Imperial Valley Commons in El Centro, CA from its joint venture partner. Following the transaction, CBL owns 100% of Imperial Valley Mall and Imperial Valley Commons. As a result of the acquisition of the remaining interest in Imperial Valley Mall, CBL recorded a gain on investment of $45.1 million in the fourth quarter 2012. Additionally, CBL recorded a loss on impairment of real estate of $20.3 million related to land that is available for the future expansion of Imperial Valley Commons.

DISPOSITION ACTIVITY

During the fourth quarter CBL completed the sale of Hickory Hollow Mall in Nashville (Antioch), TN; Towne Mall in Franklin, OH; and Willowbrook Plaza, a community center located in Houston, TX, in three separate transactions, for an aggregate sales price of $25.5 million. In 2012, CBL generated aggregate gross proceeds from dispositions of $70.3 million.

Subsequent to the quarter-end, CBL completed the sale of two office buildings located in Greensboro, NC for an aggregate sales price of $30.0 million, which were classified as held for sale as of December 31, 2012.

FINANCING ACTIVITY

In November, CBL closed on the modification and extension of its two major credit facilities, increasing the aggregate capacity by $155.0 million to $1.2 billion. Both facilities were converted from secured to unsecured and the capacity of each facility was increased to $600 million. The maturities were extended to 2016 and 2017, including extension options, and the average borrowing rate reduced by 60 basis points. The outstanding balances on the two facilities bear interest at an annual rate equal to LIBOR plus a range of 155 to 210 basis points, depending on the Company’s leverage ratio.

In December, CBL closed on a 10-year, non-recourse loan secured by West County Center in St. Louis, MO. The new 10-year, non-recourse $190 million loan bears a fixed interest rate of 3.4%, representing the lowest fixed interest rate CBL has ever achieved on a secured mortgage. CBL’s share of the excess proceeds generated after payoff of the existing loan was approximately $23 million, which was used to reduce outstanding balances on the Company’s lines of credit. During 2012, CBL completed more than $558 million of property-specific loan refinancings.

CAPITAL MARKETS ACTIVITY

On October 5, 2012, CBL closed on an underwritten public offering of 6,900,000 depositary shares, each representing 1/10th of a share of its newly designated 6.625% Series E Cumulative Redeemable Preferred Stock (“Series E Shares”) with a liquidation preference of $25.00 per depositary share, including 900,000 depositary shares sold pursuant to the underwriters’ exercise of their option to purchase additional depositary shares. The offering generated net proceeds to the Company of approximately $166.6 million, after deducting the underwriting discount and estimated offering expenses.

On November 5, 2012, CBL completed the redemption of 460,000 outstanding shares of 7.75% Series C Cumulative Redeemable Preferred Stock (“Series C Shares”), and all outstanding depositary shares (“Depositary Shares”), each representing 1/10th of a Series C Share (NYSE: CBLPrC - CUSIP No.: 124830-50-6). The aggregate amount paid to effect the redemption of the Series C Shares (including the Depositary Shares) was approximately $115.9 million, which was funded with a portion of the net proceeds from the issuance of Series E Shares.

OUTLOOK AND GUIDANCE

Based on today's outlook, the Company is providing 2013 FFO guidance in the range of $2.18 - $2.26 per share. Full-year guidance assumes same-center NOI growth in a range of 1.0% - 3.0%, $2.0 million to $4.0 million of outparcel sales and a 25-50 basis point increase in year-end occupancy. 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, February 6, 2013, to discuss its fourth quarter results. The numbers to call for this interactive teleconference are (800) 734-8592 or (212) 231-2900. A seven-day replay of the conference call will be available by dialing (402) 977-9140 and entering the passcode 21544170. 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., fourth 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 2012 fourth quarter earnings release conference call. The live broadcast of the quarterly conference call will be available online at cblproperties.com on Wednesday, February 6, 2013, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue through February 13, 2013.

CBL is one of the largest and most active owners and developers of malls and shopping centers in the United States. CBL owns, holds interest in or manages 163 properties, including 94 regional malls/open-air centers. The properties are located in 27 states and total 91.7 million square feet including 9.4 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. In October 2011, NAREIT clarified that FFO should exclude the impact of losses on impairment of depreciable properties. The Company has calculated FFO for all periods presented in accordance with this clarification. 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 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 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 2012, the Company recorded a gain on investment of $45.1 million related to the acquisition of the remaining interest in Imperial Valley Mall. During 2012 and 2011, the Company recorded gains on extinguishment of debt from both continuing and discontinued operations. Considering the significance and nature of these items, the Company believes that it is important to identify their impact 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.
Katie Reinsmidt, 423-490-8301
Senior Vice President - Investor Relations/Corporate Investments
katie_reinsmidt@cblproperties.com

Source: CBL & Associates Properties, Inc.