CORRECTINGand REPLACINGCBL Properties Reports Results for Second Quarter 2020 | Financial Buzz

CORRECTINGand REPLACINGCBL 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