CBL & Associates Properties Reports Second Quarter 2013 Results

CBL & Associates Properties, Inc. (NYSE:CBL):
  • FFO per diluted share, as adjusted, increased 3.8% to $0.55 for the second quarter of 2013, compared with $0.53 for the prior-year period.
  • Same-center NOI increased 1.8% in the second quarter 2013 over the prior-year period, excluding lease termination fees and a one-time bankruptcy settlement included in the prior-year period.
  • Portfolio occupancy at June 30, 2013, increased 70 basis points to 93.0% from 92.3% for the prior-year period.
  • Average gross rent per square foot for stabilized mall leases signed in the second quarter of 2013 increased 12.1% over the prior gross rent per square foot.
  • Same-store sales increased 3.2% to $356 per square foot for mall tenants 10,000 square feet or less for stabilized malls for the rolling twelve months ended June 30, 2013, compared with the prior-year period.

CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the second quarter ended June 30, 2013. 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.
       

Three Months Ended

June 30,
Six Months Ended

June 30,
2013   2012 2013   2012
Funds from Operations (“FFO”) per diluted share $0.51   $0.53

$1.04
  $1.02
FFO, as adjusted, per diluted share $0.55 $0.53 $1.08 $1.02
 

“Favorable operating trends within our portfolio continued this quarter and have our Company well positioned for a strong second half of the year,” commented Stephen Lebovitz, CBL’s president and chief executive officer. “Occupancy, leasing and FFO performance were healthy, with positive NOI growth in-line with our guidance. At 97% leased and committed, the recent grand opening of The Outlet Shoppes at Atlanta was a huge success, attracting overflowing crowds. This quarter's announcement of the acquisition of the Sears stores for redevelopment at two of our most productive malls and the commencement of construction of The Outlet Shoppes at Louisville are exciting growth opportunities as we look ahead to next year.

“Our hard work to improve the balance sheet has already resulted in the achievement of a second investment grade rating from Fitch (BBB- with stable outlook) in addition to the previously announced rating from Moody’s (Baa3). The Westfield Preferred is on track for redemption by the end of September, funded in part by over $240 million in equity generated from our ATM program and asset sales earlier this year. In addition, the closing of a new $400 million unsecured term loan this month provides additional capital to increase availability on our unsecured lines to fund new growth opportunities and retire secured loans as they mature.”

FFO, as adjusted, excludes nonrecurring items, impacting second quarter 2013 results. Nonrecurring items include a loss on extinguishment of debt of $9.1 million, primarily related to the prepayment of a loan secured by Mid Rivers Mall in St. Charles, MO, and a gain on investment of $2.4 million resulting from payment of a note receivable related to CBL’s investment in China that was previously written-down.

FFO allocable to common shareholders, as adjusted, for the second quarter of 2013 was $90,801,000, or $0.55 per diluted share, compared with $79,950,000, or $0.53 per diluted share, for the second quarter of 2012. FFO of the operating partnership, as adjusted, for the second quarter of 2013 was $106,900,000, compared with $100,782,000, for the second quarter of 2012.

Net income attributable to common shareholders for the second quarter of 2013 was $501,000, or $0.00 per diluted share, compared with net income of $18,797,000, or $0.12 per diluted share for the second quarter of 2012. In addition to the nonrecurring items impacting FFO, net income in the second quarter of 2013 was impacted by a loss on impairment of real estate of $21.0 million primarily related to the write-down of the book value of Citadel Mall in Charleston, SC, to current fair value.

HIGHLIGHTS

  • Portfolio same-center net operating income (“NOI”), in the prior-year periods included a $1.5 million bankruptcy settlement. Excluding this one-time item and lease termination fees, same-center NOI increased 1.8% for the three months and 1.4% for the six months ended June 30, 2013, over the prior-year periods. Portfolio same-center NOI, excluding lease termination fees, for the quarter ended June 30, 2013, increased 1.0% compared with an increase of 2.7% for the prior-year period. Same-center NOI, excluding lease terminations fees, for the six months ended June 30, 2013, increased 1.0% compared with an increase of 1.7% for the prior-year period.
  • Average gross rent per square foot on stabilized mall leases signed during the second quarter of 2013 for tenants 10,000 square feet or less increased 12.1% 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 rolling twelve months ended June 30, 2013, increased 3.2% to $356 per square foot compared with $345 per square foot in the prior-year period.
  • The Company’s share of consolidated and unconsolidated variable rate debt of $1,214,826,000, as of June 30, 2013, represented 11.9% of the total market capitalization for the Company, compared with 9.6% as of June 30, 2012, and 22.8% of the Company's share of total consolidated and unconsolidated debt, compared with 17.2% as of June 30, 2012.
  • Debt-to-total market capitalization was 52.1% as of June 30, 2013, compared with 55.9% as of June 30, 2012.
  • The ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to interest expense was 2.82 times for the second quarter of 2013, compared with 2.58 times for the second quarter of 2012.

PORTFOLIO OCCUPANCY
        June 30,
2013   2012
Portfolio occupancy 93.0% 92.3%
Mall portfolio 92.7% 92.4%
Stabilized malls 92.6% 92.3%
Non-stabilized malls(1) 100.0% 100.0%
Associated centers 93.6% 93.4%
Community centers 96.4% 91.1%

(1)

The Outlet Shoppes at Oklahoma City is the only property included in the non-stabilized mall category.
 

ACQUISITION ACTIVITY

In April, CBL completed the acquisition of the remaining 51% interest in Kirkwood Mall in Bismarck, ND. CBL had previously acquired a 49% non-controlling interest in Kirkwood Mall in December 2012. In conjunction with the acquisition of the remaining interest, CBL assumed the $40.4 million non-recourse loan secured by the property, which bears a fixed interest rate of 5.75% and matures in April 2018.

During the second quarter, CBL acquired two Sears locations at Fayette Mall in Lexington, KY, and CoolSprings Galleria in Nashville, TN. CBL plans to redevelop both buildings into additional stores and restaurants. Sears will continue to operate in both locations until closing dates have been finalized.

FINANCING ACTIVITY

During the second quarter 2013, CBL retired the $71.7 million loan secured by South County Center in St. Louis, MO, with an interest rate of 4.96% and a scheduled maturity date of October 2013, as well as the $88.4 million loan secured by Mid Rivers Mall in St. Charles, MO, with an interest rate of 5.88% and a scheduled maturity date in May 2021. CBL recorded a $9.1 million loss on extinguishment of debt, primarily related to a prepayment fee on the Mid Rivers Mall loan, which was included in second quarter income from continuing operations and FFO. Subsequent to the second quarter, CBL retired a $16.0 million construction loan secured by Alamance Crossing West.

In July, CBL closed on a $400 million unsecured term loan with a term of five years. Based on the Company’s current credit rating, the loan has a floating interest rate of 150 basis points over LIBOR.

CREDIT RATING

In May, CBL announced that the Company was assigned a Baa3 issuer rating from Moody’s Investors Service.

In July, CBL announced that the Company was assigned a BBB- Issuer Default Rating with a stable outlook and a BBB- Senior Unsecured Note rating from Fitch Ratings.

CAPITAL MARKETS ACTIVITY

During the second quarter of 2013, CBL sold 5.75 million common shares, at a weighted average price of $25.83 per share, under its At-The-Market (“ATM”) equity offering program, generating net proceeds of $147.4 million. Year-to-date, CBL has sold 8.4 million shares generating net proceeds of $209.6 million through the ATM program. The net proceeds generated from the ATM program were used to reduce outstanding balances under the Company’s unsecured credit facilities.

OUTLOOK AND GUIDANCE

Based on second quarter results, including the effect of new shares issued under the ATM program, and CBL’s current outlook, the Company is affirming 2013 FFO guidance in the range of $2.18 - $2.26 per share, after adjusting for the net impact of one-time items included in the second quarter 2013 results. 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 also assumes the pay-off of the Westfield Preferred Units in September using the Company’s unsecured lines of credit and cash on hand. The guidance excludes the impact of any future unannounced transactions. The Company expects to update its annual guidance after each quarter's results.
             
Low High
Expected diluted earnings per common share $0.63 $0.71
Adjust to fully converted shares from common shares (0.10 ) (0.11 )
Expected earnings per diluted, fully converted common share 0.53 0.60
Add: depreciation and amortization 1.55 1.55
Add: noncontrolling interest in earnings of Operating Partnership 0.10   0.11  
Expected FFO per diluted, fully converted common share $2.18   $2.26  
 

INVESTOR CONFERENCE CALL AND SIMULCAST

CBL & Associates Properties, Inc. will conduct a conference call at 11:00 a.m. ET on Thursday, August 1, 2013, to discuss its second quarter results. The number to call for this interactive teleconference is (800) 736-4594 or (212) 231-2901. A replay of the conference call will be available through August 8, 2013, by dialing (800) 633-8284 or (402) 977-9140 and entering the confirmation number, 21646864. 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., second 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 2013 second quarter earnings release conference call. The live broadcast of the quarterly conference call will be available online at cblproperties.com on Thursday, August 1, 2013, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue through August 8, 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 interests in or manages 159 properties, including 96 regional malls/open-air centers. The properties are located in 31 states and total 92.0 million square feet including 9.3 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 depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO allocable to common 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.

As described above, during the second quarter 2013, the Company recorded a loss on extinguishment of debt of $9.1 million and gain on investment of $2.4 million. 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 adjusted 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.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
 
 
Three Months Ended

June 30,
Six Months Ended

June 30,
2013 2012 2013 2012
REVENUES:
Minimum rents $ 170,185 $ 164,613 $ 340,663 $ 322,123
Percentage rents 2,376 1,756 7,291 5,208
Other rents 4,698 4,664 9,995 9,950
Tenant reimbursements 72,576 70,994 146,935 140,686
Management, development and leasing fees 2,849 1,967 5,924 4,436
Other   9,753     7,850     17,606     15,910  
Total revenues   262,437     251,844     528,414     498,313  
 
OPERATING EXPENSES:
Property operating 35,098 35,491 76,176 72,356
Depreciation and amortization 70,515 67,156 142,070 129,414
Real estate taxes 22,013 23,211 45,055 45,540
Maintenance and repairs 13,772 13,034 28,463 25,791
General and administrative 12,875 11,993 26,299 25,793
Loss on impairment 21,038 - 21,038 -
Other   8,190     6,559     14,846     13,317  
Total operating expenses   183,501     157,444     353,947     312,211  
Income from operations 78,936 94,400 174,467 186,102
Interest and other income 661 1,295 1,388 2,370
Interest expense (57,205 ) (61,400 ) (117,033 ) (121,231 )
Loss on extinguishment of debt (9,108 ) - (9,108 ) -
Gain on sales of real estate assets 457 - 1,000 94
Gain on investments 2,400 - 2,400 -
Equity in earnings of unconsolidated affiliates 2,729 2,073 5,348 3,339
Income tax provision   (757 )   (267 )   (583 )   (39 )
Income from continuing operations 18,113 36,101 57,879 70,635
Operating income (loss) of discontinued operations 35 3,308 (627 ) 4,414
Gain (loss) on discontinued operations   91     (16 )   872     895  
Net income 18,239 39,393 58,124 75,944
Net income attributable to noncontrolling interests in:
Operating partnership (36 ) (5,197 ) (3,527 ) (9,559 )
Other consolidated subsidiaries   (6,479 )   (4,805 )   (12,560 )   (10,945 )
Net income attributable to the Company 11,724 29,391 42,037 55,440
Preferred dividends   (11,223 )   (10,594 )   (22,446 )   (21,188 )
Net income attributable to common shareholders $ 501   $ 18,797   $ 19,591   $ 34,252  
 
 
Basic per share data attributable to common shareholders:
Income from continuing operations, net of preferred dividends $ - $ 0.11 $ 0.12 $ 0.20
Discontinued operations   -     0.01     -     0.03  
Net income attributable to common shareholders $ -   $ 0.12   $ 0.12   $ 0.23  
Weighted average common shares outstanding 166,607 150,913 164,088 149,704
 
Diluted earnings per share data attributable to common shareholders:
Income from continuing operations, net of preferred dividends $ - $ 0.11 $ 0.12 $ 0.20
Discontinued operations   -     0.01     -     0.03  
Net income attributable to common shareholders $ -   $ 0.12   $ 0.12   $ 0.23  

Weighted average common and potential dilutive common shares outstanding
166,607 150,954 164,088 149,746
 
Amounts attributable to common shareholders:
Income from continuing operations, net of preferred dividends $ 394 $ 16,184 $ 19,383 $ 30,071
Discontinued operations   107     2,613     208     4,181  
Net income attributable to common shareholders $ 501   $ 18,797   $ 19,591   $ 34,252  
 
 
The Company's calculation of FFO allocable to its shareholders is as follows:
(in thousands, except per share data)
  Three Months Ended

June 30,
  Six Months Ended

June 30,
2013   2012 2013   2012
 
Net income attributable to common shareholders $ 501 $ 18,797 $ 19,591 $ 34,252
Noncontrolling interest in income of operating partnership 36 5,197 3,527 9,559
Depreciation and amortization expense of:
Consolidated properties 70,515 67,156 142,070 129,414
Unconsolidated affiliates 9,923 11,008 19,871 22,119
Discontinued operations - 970 107 1,985
Non-real estate assets (484 ) (471 ) (958 ) (888 )
Noncontrolling interests' share of depreciation and amortization (1,282 ) (1,883 ) (2,889 ) (2,329 )
Loss on impairment, net of tax benefit 21,038 - 21,038 196
Gain on depreciable property - - (2 ) (493 )
(Gain) loss on discontinued operations, net of taxes   (55 )   8     (540 )   (557 )
Funds from operations of the operating partnership 100,192 100,782 201,815 193,258
Gain on investments (2,400 ) - (2,400 ) -
Loss on extinguishment of debt   9,108     -     9,108     -  
Funds from operations of the operating partnership, as adjusted $ 106,900   $ 100,782   $ 208,523   $ 193,258  
 
Funds from operations per diluted share $ 0.51 $ 0.53 $ 1.04 $ 1.02
Gain on investments (0.01 ) - (0.01 ) -
Loss on extinguishment of debt   0.05     -     0.05     -  
Funds from operations, as adjusted, per diluted share $ 0.55   $ 0.53   $ 1.08   $ 1.02  
 

Weighted average common and potential dilutive common shares outstanding with operating partnership units fully converted
196,153 190,277 193,633 190,218
 
 

Reconciliation of FFO of the operating partnership to FFO allocable to common shareholders:
Funds from operations of the operating partnership $ 100,192 $ 100,782 $ 201,815 $ 193,258
Percentage allocable to common shareholders (1)   84.94 %   79.33 %   84.74 %   78.72 %
Funds from operations allocable to common shareholders $ 85,103   $ 79,950   $ 171,018   $ 152,133  
 
Funds from operations of the operating partnership, as adjusted $ 106,900 $ 100,782 $ 208,523 $ 193,258
Percentage allocable to common shareholders (1)   84.94 %   79.33 %   84.74 %   78.72 %
Funds from operations allocable to common shareholders, as adjusted $ 90,801   $ 79,950   $ 176,702   $ 152,133  
 
 

(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 10.
 
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees $ 1,725 $ 1,408 $ 2,538 $ 2,158
Lease termination fees per share $ 0.01 $ 0.01 $ 0.01 $ 0.01
 
Straight-line rental income $ 1,746 $ 1,812 $ 2,836 $ 2,222
Straight-line rental income per share $ 0.01 $ 0.01 $ 0.01 $ 0.01
 
Gains on outparcel sales $ 457 $ 2,754 $ 1,000 $ 2,853
Gains on outparcel sales per share $ - $ 0.01 $ 0.01 $ 0.01
 
Net amortization of acquired above- and below-market leases $ 43 $ 638 $ 629 $ 780
Net amortization of acquired above- and below-market leases per share $ - $ - $ - $ -
 
Net amortization of debt premiums (discounts) $ 700 $ 603 $ 1,076 $ 1,055
Net amortization of debt premiums (discounts) per share $ - $ - $ 0.01 $ 0.01
 
Income tax provision $ (757 ) $ (267 ) $ (583 ) $ (39 )
Income tax provision per share $ - $ - $ - $ -
 
Loss on impairment from continuing operations $ (21,038 ) $ - $ (21,038 ) $ -
Loss on impairment from continuing operations per share $ (0.11 ) $ - $ (0.11 ) $ -
 
Loss on impairment from discontinued operations $ - $ - $ - $ (293 )
Loss on impairment from discontinued operations per share $ - $ - $ - $ -
 
Loss on extinguishment of debt from continuing operations $ (9,108 ) $ - $ (9,108 ) $ -
Gain on extinguishment of debt from continuing operations per share $ (0.05 ) $ - $ (0.05 ) $ -
 
Gain on investments $ 2,400 $ - $ 2,400 $ -
Gain on investments per share $ 0.01 $ - $ 0.01 $ -
 
       
Same-Center Net Operating Income
(Dollars in thousands)
 
Three Months Ended

June 30,
Six Months Ended

June 30,
2013 2012 2013 2012
 
Net income attributable to the Company $ 11,724 $ 29,391 $ 42,037 $ 55,440
 
Adjustments:
Depreciation and amortization 70,515 67,156 142,070 129,414
Depreciation and amortization from unconsolidated affiliates 9,923 11,008 19,871 22,119
Depreciation and amortization from discontinued operations - 970 107 1,985

Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries
(1,282 ) (1,883 ) (2,889 ) (2,329 )
Interest expense 57,205 61,400 117,033 121,231
Interest expense from unconsolidated affiliates 9,764 11,093 19,836 22,296
Interest expense from discontinued operations - 1 - 231

Noncontrolling interests' share of interest expense in other consolidated subsidiaries
(977 ) (1,002 ) (1,953 ) (1,462 )
Abandoned projects expense (1 ) 1 1 (123 )
Gain on sales of real estate assets (457 ) - (1,000 ) (94 )
Gain on sales of real estate assets from discontinued operations - (2,543 ) - (3,036 )
Gain on sales of real estate assets of unconsolidated affiliates - (220 ) - (215 )
Gain on investments (2,400 ) - (2,400 ) -
Loss on extinguishment of debt 9,108 - 9,108 -
Loss on impairment 21,038 - 21,038 -
Loss on impairment from discontinued operations - - - 293
Income tax provision 757 267 583 39

Net income attributable to noncontrolling interest in earnings of operating partnership
36 5,197 3,527 9,559
(Gain) loss on discontinued operations   (91 )   16     (872 )   (895 )
Operating partnership's share of total NOI 184,862 180,852 366,097 354,453
General and administrative expenses 12,875 11,993 26,299 25,793
Management fees and non-property level revenues   (6,057 )   (5,787 )   (14,373 )   (11,482 )
Operating partnership's share of property NOI 191,680 187,058 378,023 368,764
Non-comparable NOI   (10,077 )   (7,782 )   (18,017 )   (12,845 )
Total same-center NOI $ 181,603   $ 179,276   $ 360,006   $ 355,919  
Total same-center NOI percentage change   1.3 %   1.1 %
 
Total same-center NOI $ 181,603 $ 179,276

 
$ 360,006 $ 355,919
Less lease termination fees   (1,775 )   (1,189 )   (2,581 )   (1,937 )
Total same-center NOI, excluding lease termination fees $ 179,828   $ 178,087   $ 357,425   $ 353,982  
 
Malls $ 162,404 $ 162,057 $ 322,324 $ 321,050
Associated centers 8,153 8,187 16,483 16,251
Community centers 4,564 4,317 9,259 8,641
Offices and other   4,707     3,526     9,359     8,040  
Total same-center NOI, excluding lease termination fees $ 179,828   $ 178,087   $ 357,425   $ 353,982  
 
Percentage Change:
Malls * 0.2 % 0.4 %
Associated centers -0.4 % 1.4 %
Community centers 5.7 % 7.2 %
Offices and other   33.5 %   16.4 %
Total same-center NOI, excluding lease termination fees *   1.0 %   1.0 %
 
* Same-Center NOI for the three months and six months ended June 30, 2012, included a one-time bankruptcy settlement of $1.5 million. Excluding the settlement, the increase in same-center mall NOI for the three months and six months ended June 30, 2013 was 1.2% and 0.9%, respectively. Excluding the settlement, the change in total same-center NOI for the three months and six months ended June 30, 2013 was 1.8% and 1.4%, respectively.
 
 
Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
    As of June 30, 2013
Fixed Rate   Variable Rate   Total
Consolidated debt $ 3,534,693 $ 1,087,702 $ 4,622,395
Noncontrolling interests' share of consolidated debt (68,211 ) (5,700 ) (73,911 )
Company's share of unconsolidated affiliates' debt   657,160     132,824     789,984  
Company's share of consolidated and unconsolidated debt $ 4,123,642   $ 1,214,826   $ 5,338,468  
Weighted average interest rate   5.51 %   2.11 %   4.74 %
 
As of June 30, 2012
Fixed Rate Variable Rate Total
Consolidated debt $ 3,886,105 $ 807,103 $ 4,693,208
Noncontrolling interests' share of consolidated debt (69,684 ) - (69,684 )
Company's share of unconsolidated affiliates' debt   673,154     126,890     800,044  
Company's share of consolidated and unconsolidated debt $ 4,489,575   $ 933,993   $ 5,423,568  
Weighted average interest rate   5.47 %   2.53 %   4.96 %
 
 
Debt-To-Total-Market Capitalization Ratio as of June 30, 2013
(In thousands, except stock price) Shares
Outstanding Stock Price (1) Value
Common stock and operating partnership units 199,452 $ 21.42 $ 4,272,262
7.375% Series D Cumulative Redeemable Preferred Stock 1,815 250.00 453,750
6.625% Series E Cumulative Redeemable Preferred Stock 690 250.00   172,500  
Total market equity 4,898,512
Company's share of total debt   5,338,468  
Total market capitalization $ 10,236,980  
Debt-to-total-market capitalization ratio   52.1 %
 
(1) Stock price for common stock and operating partnership units equals the closing price of the common stock on June 28, 2013. 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 Six Months Ended
June 30, June 30,
2013: Basic Diluted Basic Diluted
Weighted average shares - EPS 166,607 166,607 164,088 164,088
Weighted average operating partnership units   29,546     29,546     29,545     29,545  
Weighted average shares- FFO   196,153     196,153     193,633     193,633  
 
2012:
Weighted average shares - EPS 150,913 150,954 149,704 149,746
Weighted average operating partnership units   39,323     39,323     40,472     40,472  
Weighted average shares- FFO   190,236     190,277     190,176     190,218  
 
 
Dividend Payout Ratio Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Weighted average cash dividend per share $ 0.23838 $ 0.22896 $ 0.47702 $ 0.45792
FFO as adjusted, per diluted fully converted share $ 0.55   $ 0.53   $ 1.08   $ 1.02  
Dividend payout ratio   43.3 %   43.2 %   44.2 %   44.9 %
 
   
Consolidated Balance Sheets
(Unaudited; in thousands, except share data)
 
 
As of
June 30,

2013
December 31,

2012
ASSETS
Real estate assets:
Land $ 909,585 $ 905,339
Buildings and improvements   7,237,585     7,228,293  
8,147,170 8,133,632
Accumulated depreciation   (2,061,148 )   (1,972,031 )
6,086,022 6,161,601
Held for sale - 29,425
Developments in progress   210,086     137,956  
Net investment in real estate assets 6,296,108 6,328,982
Cash and cash equivalents 64,430 78,248
Receivables:

Tenant, net of allowance for doubtful accounts of $2,154 and $1,977 in 2013 and 2012, respectively
78,803 78,963

Other, net of allowance for doubtful accounts of $1,283 and $1,270 in 2013 and 2012, respectively
29,985 8,467
Mortgage and other notes receivable 25,020 25,967
Investments in unconsolidated affiliates 282,389 259,810
Intangible lease assets and other assets   257,908     309,299  
$ 7,034,643   $ 7,089,736  
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness $ 4,622,395 $ 4,745,683
Accounts payable and accrued liabilities   327,399     358,874  
Total liabilities   4,949,794     5,104,557  
Commitments and contingencies
Redeemable noncontrolling interests:
Redeemable noncontrolling partnership interests 40,471 40,248
Redeemable noncontrolling preferred joint venture interest   423,777     423,834  
Total redeemable noncontrolling interests   464,248     464,082  
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, 169,906,529 and 161,309,652 issued and outstanding in 2013 and 2012, respectively
1,699 1,613
Additional paid-in capital 1,955,990 1,773,630
Accumulated other comprehensive income 7,855 6,986
Dividends in excess of cumulative earnings   (510,761 )   (453,561 )
Total shareholders' equity 1,454,808 1,328,693
Noncontrolling interests   165,793     192,404  
Total equity   1,620,601     1,521,097  
$ 7,034,643   $ 7,089,736  

Copyright Business Wire 2010

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