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CORRECTING and REPLACING CBL Properties Reports Results for Second Quarter 2020

Please replace the release with the revised version to correct certain Q2 2020 financial information issued on August 6, 2020, at 4:15 p.m. ET. Please refer to Form 8-K/A furnished on August 18, 2020, for additional information.

The corrected release reads:

CBL PROPERTIES REPORTS RESULTS FOR SECOND QUARTER 2020

CBL Properties (NYSE:CBL) announced results for the second quarter ended June 30, 2020. 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
June 30,

Six Months Ended
June 30,

2020

2019

%

2020

2019

%

Net loss attributable to common shareholders per diluted share

$

(0.42

)

$

(0.20

)

(110.0

)%

$

(1.16

)

$

(0.49

)

(136.7

)%

Funds from Operations ("FFO") per diluted share

$

(0.03

)

$

0.34

(108.8

)%

$

0.23

$

0.56

(58.9

)%

FFO, as adjusted, per diluted share (1)

$

0.02

$

0.34

(94.1

)%

$

0.28

$

0.64

(56.3

)%

(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 loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders on page 9 of this news release.

KEY TAKEAWAYS:

  • FFO per diluted share, as adjusted, was $0.02 for the second quarter 2020, compared with $0.34 per share for the second quarter 2019. FFO per diluted share, as adjusted, was $0.28 for the six months ended June 30, 2020, compared with $0.64 per share for the prior year period.
  • Major variances in second quarter 2020 FFO per share compared with the prior year period included $0.24 per share of lower property NOI, which includes an estimate for uncollectable revenues and rent abatements; $0.02 per share higher net G&A expense primarily related to $7.9 million ($0.04 per share) of debt restructuring expense, partially offset by Company furloughs, reductions in force and company-wide temporary salary reductions. FFO per share for the second quarter included $2.5 million ($0.01 per share) related to rent abatements on past due rents and $41.5 million ($0.21 per share) in the estimate for uncollectable revenues for past due rents related to tenants that are in bankruptcy or struggling financially, primarily as a result of mandated property closures. FFO was also impacted by a $0.08 full valuation allowance established on the deferred tax asset during the quarter.
  • Total Portfolio same-center NOI declined 32.0% for the three months ended June 30, 2020, and 20.4% for the six months ended June 30, 2020, as compared with the prior-year periods.
  • Portfolio occupancy as of June 30, 2020, was 88.1%, representing a 210-basis point decline compared with 90.2% as of June 30, 2019. Same-center mall occupancy was 86.6% as of June 30, 2020, a 170-basis point decline compared with 88.3% as of June 30, 2019. An estimated 370-basis points of the decline in total mall portfolio occupancy was due to store closures related to tenants in bankruptcy.
  • CBL’s portfolio is now fully operational with all properties, except one, open for business. CBL continues to prioritize the safety of its employees, retailers and shoppers by maintaining strict safety protocols across its portfolio. Protocols are updated as new guidance is issued by the CDC and local or state sources.

“With all but one of our properties and the vast majority of retailers now open, we are seeing improved traffic levels,” said Stephen Lebovitz, Chief Executive Officer. “While our properties and our tenants have extensive safety protocols in place, shoppers appear to be more deliberate in their visits, resulting in lower traffic numbers compared to last year. However, retailers are reporting higher conversion rates with many equaling or exceeding pre-pandemic levels. In addition to traditional in-store shopping, retailers have innovated by adding curbside pick-up, order-online and pick-up in-store and other programs designed to ease the shopping experience. These conveniences are an increasingly important part of successful retailing.

“Our financial and operating results for the second quarter reflect the temporary closure of the CBL portfolio for a significant period due to government mandates. Revenues for the quarter were impacted by a major increase in the estimate for uncollectible revenues related to rents due from tenants that recently filed for bankruptcy or are struggling financially, as well as amounts that were abated as part of negotiations. Store closures and rent loss from prior tenant bankruptcies and lower percentage rent related to lower retail sales also impacted revenues. We offset a portion of this decline through aggressive actions to reduce costs both at the property and corporate levels, including company-wide salary reductions, furloughs, reductions-in-force and other expense reduction initiatives. However, the pandemic has accelerated a number of tenant bankruptcies, resulting in an expectation of additional store closures and lost rent through the remainder of the year. As a result of the difficulty in accurately predicting the impact to our business, we expect our visibility over the next few quarters to remain limited. Accordingly, we are continuing the suspension of full-year guidance until there are signs of more stability in our operating environment.

“Leasing activity for the quarter was muted as we shifted our focus to negotiating with existing tenants. To date, we have completed or are finalizing negotiations with retailers representing the majority of second quarter rent. These agreements generally include flexible terms on second quarter rent to certain retailers that require assistance, such as rent deferrals, while at the same time preserving current and future income to CBL. As we complete these negotiations, rent collections have improved with retailers paying all or a portion of past-due amounts as well as paying current rents.

“While the events to date in 2020 have dramatically impacted our business in the near-term, these events also underscore the importance of our portfolio transformation and tenant diversification strategy as well as the prudent actions we’ve taken to preserve and strengthen our cash position. Most traditional retailers have paused on new store plans until they can stabilize their existing store base and have better clarity on the outlook. However, a number of local and other users, primarily non-apparel, are viewing this as an opportunity to identify attractive new growth opportunities. Our leasing team is more creative than ever in pursuing these leads to continue the all-important diversification to our tenants and properties, and we are confident that, over time, our revenues will stabilize due to these efforts.

“Finally, while our corporate policy is to not comment on the unfortunate rumors and speculation reported by the media, we want to confirm that over the past few months we have been holding constructive discussions with our lenders. In June, we deliberately elected to withhold the interest payments on two issuances of senior unsecured notes that were due as part of our discussions with certain holders of our bonds as well as the lenders under our credit facility. We first entered the 30-day grace periods provided for in the indenture and subsequently entered into forbearance agreements with certain holders of our notes and lenders under our credit facility. On August 5th, we elected to make these payments, which total $30.4 million and accordingly are current on all unsecured debt service. Discussions are ongoing, and we are hopeful that a positive and mutually beneficial outcome will be reached.”

FINANCIAL RESULTS

Net loss attributable to common shareholders for the second quarter 2020 was $81.5 million, or $0.42 per diluted share, compared with a net loss of $35.4 million, or a loss of $0.20 per diluted share, for the second quarter 2019. Net loss for the second quarter 2020 was impacted by a $13.3 million loss on impairment of real estate to write down the carrying value of Asheville Mall in Asheville, NC, to the property’s estimated fair value. Net loss for the second quarter 2020 also included establishing a full valuation allowance of $15.8 million on the deferred tax asset.

Net loss attributable to common shareholders for the six months ended June 30, 2020, was $215.3 million, or $1.16 per diluted share, compared with a net loss of $85.6 million, or a loss of $0.49 per diluted share, for the six months ended 2019.

FFO allocable to common shareholders, as adjusted, for the second quarter 2020 was $4.7 million, or $0.02 per diluted share, compared with $59.4 million, or $0.34 per diluted share, for the second quarter 2019. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the second quarter 2020 was $4.9 million compared with $68.5 million for the second quarter 2019.

FFO allocable to common shareholders, as adjusted, for the six months ended June 30, 2020 was $52.0 million or $0.28 per diluted share, compared with $111.8 million or $0.64 per diluted share, for the six months ended June 30, 2019. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the six months ended June 30, 2020, was $56.5 million compared with $129.1 million for the six months ended June 30, 2019.

Percentage change in same-center Net Operating Income (“NOI”) (1):

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

Portfolio same-center NOI

(32.0

)%

(20.4

)%

Mall same-center NOI

(33.7

)%

(21.6

)%

 (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 three months ended June 30, 2020, include:

  • Same-center NOI declined $42.7 million, due to a $53.4 million decrease in revenues offset by a $10.7 million decline in operating expenses.
  • Rental revenues declined $50.5 million, including a $46.9 million decline in minimum and other rents. The decline in minimum and other rents was substantially related to $37.8 million in estimated uncollectible revenues related to tenants in bankruptcy or struggling financially, and $2.4 million related to rent abatements. Rental revenues also include a $1.2 million decline in tenant reimbursements and a $2.2 million decline in percentage rents.
  • Property operating expenses declined $6.5 million compared with the prior year. Maintenance and repair expenses improved $4.5 million. Real estate tax expenses increased $0.1 million.

COVID-19 UPDATE/RENT COLLECTION UPDATE

The COVID-19 pandemic resulted in closure of the majority of CBL’s owned and managed portfolio in response to government mandates beginning in March. To date, all but one of CBL’s owned and managed mall properties have re-opened and CBL has implemented strict procedures and guidelines for our employees, tenants and property visitors based on CDC and other health agency recommendations. Our properties continue to update these policies and procedures, following any new mandates and regulations, as required.

The mandated closures resulted in nearly all our tenants closing for a period of time and/or shortening operating hours. As a result, the Company has experienced an increased level of requests for rent deferrals and abatements as well as defaults on rent obligations. While, in general, CBL believes that tenants have a clear contractual obligation to pay rent, CBL has been working with its tenants to address rent deferral requests. Based on executed or in process agreements with our top 20 tenants as a percentage of total revenues, excluding tenants in bankruptcy, CBL anticipates collecting over 61% of related rent for the second quarter, with the remainder expected to be deferred or abated. CBL remains in negotiations with tenants and is unable to predict the outcome of those discussions.

As the Company finalizes negotiations, rent collections as a percentage of billed cash-based rents have increased with certain past-due amounts being paid, resulting in an overall collection rate for April through July of over 54%. July rent collections are currently estimated at 49% of billed rents; however, the Company anticipates an improvement in the collection rate as it finalizes negotiations with retailers and additional past-due amounts are paid.

EXPENSE REDUCTION AND LIQUIDITY

As previously announced, CBL has implemented comprehensive programs to halt all non-essential expenditures, reduce operating and overhead expenses and to reduce, defer or suspend capital expenditures, including redevelopment investments. In March, CBL completed a $280 million aggregate draw on its line of credit, which represented substantially all of the remaining available balance. As of June 30, 2020, the company had $275.8 million available in cash and marketable securities.

PORTFOLIO OPERATIONAL RESULTS

Occupancy(1):

As of June 30,

2020

2019

Total portfolio

88.1

%

90.2

%

Malls:

Total Mall portfolio

86.6

%

88.1

%

Same-center Malls

86.6

%

88.3

%

Stabilized Malls

86.8

%

88.3

%

Non-stabilized Malls (2)

79.2

%

78.0

%

Associated centers

90.5

%

96.3

%

Community centers

95.2

%

97.6

%

(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
June 30,

Six Months Ended
June 30,

2020

2019

Stabilized Malls

0.8

%

(6.4

)%

New leases

20.9

%

30.5

%

Renewal leases

(0.7

)%

(10.0

)%

Same-Center Sales Per Square Foot for Mall Tenants 10,000 Square Feet or Less:

Due to the temporary mall and store closures that occurred during the second quarter 2020, the majority of CBL’s tenants did not report sales for the full reporting period. As a result, CBL is not able to provide a complete measure of sales per square foot for the second quarter 2020 or trailing twelve-month period.

FINANCING ACTIVITY AND LENDER DISCUSSIONS

After discussions with each respective lender for the loans separately secured by Park Plaza in Little Rock, AR ($77.6 million), Hickory Point in Forsyth, IL ($27.4 million), EastGate Mall in Cincinnati, OH ($31.9 million) and Burnsville Center in Minneapolis, MN ($64.5 million), the Company anticipates cooperating with foreclosure or conveyance proceedings.

The Company remains in discussions with the lender for a potential modification and extension of the loan secured by Greenbrier Mall in Chesapeake, VA ($64.5 million) and recently entered into discussions with the lenders for the loans secured by Asheville Mall in Ashville, NC ($63.0 million) and Oak Park Mall in Overland Park, KS ($131.5 million at CBL’s share). These discussions are ongoing and CBL is not able to predict the outcome at this time.

As previously announced, CBL elected to not pay the interest payments due on June 1, 2020 and June 15, 2020, for the 5.25% senior unsecured notes due 2023 and the 5.95% senior unsecured notes due 2026, respectively (together, “the Notes”). CBL entered into forbearance agreements with certain beneficial holders in excess of 50% of the aggregate principal amount of the Notes as well as a forbearance agreement with lenders under the Company’s credit facility in order to continue discussions with both parties. On August 5, 2020, CBL elected to make the $30.4 million in interest payments and is now current on all unsecured debt service.

DISPOSITIONS

CBL did not complete any major dispositions during the quarter.

ANCHOR REPLACEMENT PROGRESS AND REDEVELOPMENT

As part of overall cost reduction and cash preservation actions, CBL has suspended or delayed certain redevelopment projects, where possible. Detailed project information is available in CBL’s Financial Supplement for Q2 2020, which can be found in the Invest – Financial Reports section of CBL’s 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.

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
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

REVENUES:

Rental revenues

$

120,222

$

185,393

$

281,395

$

376,373

Management, development and leasing fees

1,055

2,586

3,147

5,109

Other

2,934

5,398

7,243

9,925

Total revenues

124,211

193,377

291,785

391,407

OPERATING EXPENSES:

Property operating

(16,906

)

(26,532

)

(42,615

)

(55,512

)

Depreciation and amortization

(52,663

)

(64,478

)

(108,565

)

(134,270

)

Real estate taxes

(17,837

)

(19,148

)

(36,285

)

(39,067

)

Maintenance and repairs

(6,042

)

(11,298

)

(17,250

)

(24,074

)

General and administrative

(18,727

)

(14,427

)

(36,563

)

(36,434

)

Loss on impairment

(13,274

)

(41,608

)

(146,918

)

(66,433

)

Litigation settlement

(88,150

)

Other

(242

)

(34

)

(400

)

(34

)

Total operating expenses

(125,691

)

(177,525

)

(388,596

)

(443,974

)

OTHER INCOME (EXPENSES):

Interest and other income

891

356

3,288

845

Interest expense

(52,631

)

(52,482

)

(99,623

)

(106,480

)

Gain on extinguishment of debt

71,722

Gain on sales of real estate assets

2,623

5,527

2,763

5,755

Income tax provision

(16,117

)

(813

)

(16,643

)

(952

)

Equity in earnings (losses) of unconsolidated affiliates

(6,079

)

1,872

(5,061

)

5,180

Total other expenses

(71,313

)

(45,540

)

(115,276

)

(23,930

)

Net loss

(72,793

)

(29,688

)

(212,087

)

(76,497

)

Net loss attributable to noncontrolling interests in:

Operating Partnership

2,077

5,454

18,491

13,212

Other consolidated subsidiaries

487

57

694

132

Net loss attributable to the Company

(70,229

)

(24,177

)

(192,902

)

(63,153

)

Preferred dividends declared

(11,223

)

(22,446

)

Preferred dividends undeclared

(11,223

)

(22,446

)

Net loss attributable to common shareholders

$

(81,452

)

$

(35,400

)

$

(215,348

)

$

(85,599

)

Basic and diluted per share data attributable to common

shareholders:

Net loss attributable to common shareholders

$

(0.42

)

$

(0.20

)

$

(1.16

)

$

(0.49

)

Weighted-average common and potential dilutive common shares

outstanding

191,962

173,473

185,547

173,363

The Company's reconciliation of net 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
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Net loss attributable to common shareholders

$

(81,452

)

$

(35,400

)

$

(215,348

)

$

(85,599

)

Noncontrolling interest in loss of Operating Partnership

(2,077

)

(5,454

)

(18,491

)

(13,212

)

Depreciation and amortization expense of:

Consolidated properties

52,663

64,478

108,565

134,270

Unconsolidated affiliates

14,020

11,462

27,530

22,128

Non-real estate assets

(812

)

(902

)

(1,729

)

(1,799

)

Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries

(788

)

(2,648

)

(1,711

)

(4,805

)

Loss on impairment

13,274

41,608

146,918

66,433

(Gain) Loss on depreciable property

(4,599

)

25

(4,841

)

FFO allocable to Operating Partnership common unitholders

(5,172

)

68,545

45,759

112,575

Debt restructuring expenses (1)

7,857

7,857

Litigation settlement, net of taxes (2)

87,667

Non-cash default interest expense (3)

2,203

2,893

542

Gain on extinguishment of debt (4)

(71,722

)

FFO allocable to Operating Partnership common unitholders,

as adjusted

$

4,888

$

68,545

$

56,509

$

129,062

FFO per diluted share

$

(0.03

)

$

0.34

$

0.23

$

0.56

FFO, as adjusted, per diluted share

$

0.02

$

0.34

$

0.28

$

0.64

Weighted-average common and potential dilutive common shares

outstanding with Operating Partnership units fully converted

201,702

200,231

201,480

200,122

(1) 

 

Represents professional fees related to the Company's negotiations with the administrative agent and lenders under the secured credit facility and certain holders of the Company's senior unsecured notes regarding a restructure of such indebtedness.

(2)

 

The six months ended June 30, 2019 is comprised of the accrued maximum expense related to the proposed settlement of a class action lawsuit.

(3) 

 

The six months ended June 30, 2020 includes default interest expense related to Greenbrier Mall, Hickory Point Mall, Eastgate Mall, Asheville Mall, Burnsville Center and Park Plaza Mall. The six months ended June 30, 2019 includes default interest expense related to Acadiana Mall and Cary Towne Center.

(4) 

 

The six months ended June 30, 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
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Diluted EPS attributable to common shareholders

$

(0.42

)

$

(0.20

)

$

(1.16

)

$

(0.49

)

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

0.32

0.36

0.66

0.75

Loss on impairment

0.07

0.20

0.73

0.32

Gain on depreciable property

(0.02

)

(0.02

)

FFO per diluted share

$

(0.03

)

$

0.34

$

0.23

$

0.56

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
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

FFO allocable to Operating Partnership common unitholders

$

(5,172

)

$

68,545

$

45,759

$

112,575

Percentage allocable to common shareholders (1)

95.17

%

86.64

%

92.09

%

86.63

%

FFO allocable to common shareholders

$

(4,922

)

$

59,387

$

42,139

$

97,524

FFO allocable to Operating Partnership common unitholders, as

adjusted

$

4,888

$

68,545

$

56,509

$

129,062

Percentage allocable to common shareholders (1)

95.17

%

86.64

%

92.09

%

86.63

%

FFO allocable to common shareholders, as adjusted

$

4,652

$

59,387

$

52,039

$

111,806

(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
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

SUPPLEMENTAL FFO INFORMATION:

Lease termination fees

$

1,433

$

1,073

$

1,653

$

2,090

Lease termination fees per share

$

0.01

$

0.01

$

0.01

$

0.01

Straight-line rental income

$

27

$

717

$

919

$

954

Straight-line rental income per share

$

$

$

$

Gains on outparcel sales

$

2,623

$

315

$

2,788

$

933

Gains on outparcel sales per share

$

0.01

$

$

0.01

$

Net amortization of acquired above- and below-market leases

$

209

$

691

$

1,112

$

1,499

Net amortization of acquired above- and below-market leases per share

$

$

$

0.01

$

0.01

Net amortization of debt premiums and discounts

$

344

$

325

$

687

$

649

Net amortization of debt premiums and discounts per share

$

$

$

$

Income tax provision

$

(16,117

)

$

(813

)

$

(16,643

)

$

(952

)

Income tax provision per share

$

(0.08

)

$

$

(0.08

)

$

Gain on extinguishment of debt

$

$

$

$

71,722

Gain on extinguishment of debt per share

$

$

$

$

0.36

Non-cash default interest expense

$

(2,203

)

$

$

(2,893

)

$

(542

)

Non-cash default interest expense per share

$

(0.01

)

$

$

(0.01

)

$

Abandoned projects expense

$

(242

)

$

(34

)

$

(400

)

$

(34

)

Abandoned projects expense per share

$

$

$

$

Interest capitalized

$

366

$

619

$

1,092

$

1,182

Interest capitalized per share

$

$

$

0.01

$

0.01

Litigation settlement, net of taxes

$

$

$

$

(87,667

)

Litigation settlement, net of taxes per share

$

$

$

$

(0.44

)

Estimate of uncollectible revenues

$

(41,484

)

$

(103

)

$

(44,623

)

$

(1,783

)

Estimate of uncollectible revenues, per share

$

(0.21

)

$

$

(0.22

)

$

(0.01

)

As of June 30,

2020

2019

Straight-line rent receivable

$

55,930

$

54,494

Same-center Net Operating Income

(Dollars in thousands)

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Net loss

$

(72,793

)

$

(29,688

)

$

(212,087

)

$

(76,497

)

Adjustments:

Depreciation and amortization

52,663

64,478

108,565

134,270

Depreciation and amortization from unconsolidated affiliates

14,020

11,462

27,530

22,128

Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries

(788

)

(2,648

)

(1,711

)

(4,805

)

Interest expense

52,631

52,482

99,623

106,480

Interest expense from unconsolidated affiliates

7,679

6,586

15,355

13,156

Noncontrolling interests' share of interest expense in other consolidated subsidiaries

(574

)

(1,717

)

(1,156

)

(3,483

)

Abandoned projects expense

242

34

400

34

Gain on sales of real estate assets

(2,623

)

(5,527

)

(2,763

)

(5,755

)

Gain on sales of real estate assets of unconsolidated affiliates

3

(627

)

Gain on extinguishment of debt

(71,722

)

Loss on impairment

13,274

41,608

146,918

66,433

Litigation settlement

88,150

Income tax provision

16,117

813

16,643

952

Lease termination fees

(1,433

)

(1,073

)

(1,653

)

(2,090

)

Straight-line rent and above- and below-market lease amortization

(236

)

(1,408

)

(2,031

)

(2,453

)

Net loss attributable to noncontrolling interests in other consolidated subsidiaries

487

57

694

132

General and administrative expenses

18,727

14,427

36,563

36,434

Management fees and non-property level revenues

(1,142

)

(4,118

)

(5,320

)

(6,784

)

Operating Partnership's share of property NOI

96,251

145,771

225,570

293,953

Non-comparable NOI

(5,523

)

(12,336

)

(13,222

)

(27,338

)

Total same-center NOI (1)

$

90,728

$

133,435

$

212,348

$

266,615

Total same-center NOI percentage change

(32.0

)%

(20.4

)%

Same-center Net Operating Income

(Continued)

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Malls

$

78,660

$

118,657

$

186,013

$

237,342

Associated centers

6,316

8,166

13,776

16,293

Community centers

4,508

5,595

10,105

10,762

Offices and other

1,244

1,017

2,454

2,218

Total same-center NOI (1)

$

90,728

$

133,435

$

212,348

$

266,615

Percentage Change:

Malls

(33.7

)%

(21.6

)%

Associated centers

(22.7

)%

(15.4

)%

Community centers

(19.4

)%

(6.1

)%

Offices and other

22.3

%

10.6

%

Total same-center NOI (1)

(32.0

)%

(20.4

)%

(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 June 30, 2020, 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, 2020. 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 June 30, 2020

Fixed Rate

Variable
Rate

Total per
Debt
Schedule

Unamortized
Deferred
Financing
Costs

Total

Consolidated debt

$

2,596,241

$

1,192,140

$

3,788,381

$

(14,347

)

$

3,774,034

Noncontrolling interests' share of consolidated debt

(30,377

)

(30,377

)

291

(30,086

)

Company's share of unconsolidated affiliates' debt

628,262

117,715

745,977

(2,769

)

743,208

Company's share of consolidated and unconsolidated debt

$

3,194,126

$

1,309,855

$

4,503,981

$

(16,825

)

$

4,487,156

Weighted-average interest rate

5.07

%

2.49

%

4.32

%

As of June 30, 2019

Fixed Rate

Variable
Rate

Total per
Debt
Schedule

Unamortized
Deferred
Financing
Costs

Total

Consolidated debt

$

2,946,440

$

938,989

$

3,885,429

$

(19,490

)

$

3,865,939

Noncontrolling interests' share of consolidated debt

(93,451

)

(93,451

)

747

(92,704

)

Company's share of unconsolidated affiliates' debt

544,829

79,251

624,080

(2,360

)

621,720

Company's share of consolidated and unconsolidated debt

$

3,397,818

$

1,018,240

$

4,416,058

$

(21,103

)

$

4,394,955

Weighted-average interest rate

5.10

%

4.73

%

5.01

%

Total Market Capitalization as of June 30, 2020

(In thousands, except stock price)

Shares
Outstanding

Stock
Price (1)

Common stock and operating partnership units

201,691

$

0.27

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 June 30, 2020. 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
June 30,

Six Months Ended
June 30,

Basic

Diluted

Basic

Diluted

2020:

Weighted-average shares - EPS

191,962

191,962

185,547

185,547

Weighted-average Operating Partnership units

9,740

9,740

15,933

15,933

Weighted-average shares - FFO

201,702

201,702

201,480

201,480

2019:

Weighted-average shares - EPS

173,473

173,473

173,363

173,363

Weighted-average Operating Partnership units

26,758

26,758

26,759

26,759

Weighted-average shares - FFO

200,231

200,231

200,122

200,122

Consolidated Balance Sheets

(Unaudited; in thousands, except share data)

As of

June 30,
2020

December 31,
2019

ASSETS

Real estate assets:

Land

$

719,497

$

730,218

Buildings and improvements

5,285,259

5,631,831

6,004,756

6,362,049

Accumulated depreciation

(2,199,622

)

(2,349,404

)

3,805,134

4,012,645

Developments in progress

30,600

49,351

Net investment in real estate assets

3,835,734

4,061,996

Cash and cash equivalents

123,388

32,816

Available-for-sale securities - at fair value (amortized cost of $152,460 in 2020)

152,418

Receivables:

Tenant

125,930

75,252

Other

5,457

10,792

Mortgage and other notes receivable

2,729

4,662

Investments in unconsolidated affiliates

301,148

307,354

Intangible lease assets and other assets

108,355

129,474

$

4,655,159

$

4,622,346

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Mortgage and other indebtedness, net

$

3,774,034

$

3,527,015

Accounts payable and accrued liabilities

227,147

231,306

Total liabilities

4,001,181

3,758,321

Commitments and contingencies

Redeemable noncontrolling interests

525

2,160

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, 191,951,454 and

174,115,111 issued and outstanding in 2020 and 2019, respectively

1,920

1,741

Additional paid-in capital

1,982,454

1,965,897

Accumulated other comprehensive loss

(42

)

Dividends in excess of cumulative earnings

(1,354,253

)

(1,161,351

)

Total shareholders' equity

630,104

806,312

Noncontrolling interests

23,349

55,553

Total equity

653,453

861,865

$

4,655,159

$

4,622,346

Contacts:

 Katie Reinsmidt, Executive Vice President - Chief Investment Officer, 423.490.8301, katie.reinsmidt@cblproperties.com

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