Securities Exchange Act of 1934 -- Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended to
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Commission File Number 1-12494
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CBL & Associates Properties, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 62-1545718
------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Park Place, 6148 Lee Highway, Chattanooga, TN 37421
------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (423) 855-0001
--------------
-------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares outstanding of each of the registrants classes of common
stock, as of November 2, 2000 : Common Stock, par value $.01 per share,
25,032,752 shares.
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<PAGE>
CBL & Associates Properties, Inc.
INDEX
PART I FINANCIAL INFORMATION PAGE NUMBER
ITEM 1: FINANCIAL INFORMATION 3
CONSOLIDATED BALANCE SHEETS - AS OF 4
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
CONSOLIDATED STATEMENTS OF OPERATIONS - 5
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2000 AND 1999 AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999
CONSOLIDATED STATEMENTS OF CASH FLOWS 6
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2000 AND 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2: MANAGEMENT'S DISCUSSION AND 10
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PART II OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS 23
ITEM 2: CHANGES IN SECURITIES 23
ITEM 3: DEFAULTS UPON SENIOR SECURITIES 23
ITEM 4: SUBMISSION OF MATTERS TO HAVE A 23
VOTE OF SECURITY HOLDERS
ITEM 5: OTHER INFORMATION 23
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 23
SIGNATURE 25
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<PAGE>
CBL & Associates Properties, Inc.
ITEM 1 - FINANCIAL INFORMATION
The accompanying financial statements are unaudited; however, they have
been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and in conjunction with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
they do not include all of the disclosures required by accounting principles
generally accepted in the United States for complete financial statements. In
the opinion of management, all adjustments (consisting solely of normal
recurring matters) necessary for a fair presentation of the financial statements
for these interim periods have been included. The results for the interim period
ended September 30, 2000 are not necessarily indicative of the results to be
obtained for the full fiscal year.
These financial statements should be read in conjunction with the CBL &
Associates Properties, Inc. (the "Company") December 31, 1999 audited financial
statements and notes thereto included in the CBL & Associates Properties, Inc.
Form 10-K for the year ended December 31, 1999.
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<PAGE>
<TABLE>
CBL & Associates Properties, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
(UNAUDITED)
<CAPTION>
September 30, December 31,
2000 1999
---------------- ---------------
<S> <C> <C>
ASSETS
Real estate assets:
Land $284,764 $284,881
Buildings and improvements 1,857,567 1,834,020
---------------- ---------------
2,142,331 2,118,901
Less: Accumulated depreciation (259,467) (223,548)
---------------- ---------------
1,882,864 1,895,353
Developments in progress 129,982 65,201
---------------- ---------------
Net investment in real estate assets 2,012,846 1,960,554
Cash and cash equivalents 5,544 7,074
Cash in escrow 9,751 -
Receivables:
Tenant 27,904 21,557
Other 3,296 1,536
Mortgage notes receivable 8,694 9,385
Other assets 18,537 18,732
---------------- ---------------
$2,086,572 $2,018,838
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable $1,399,326 $1,360,753
Accounts payable and accrued liabilities 59,245 64,236
---------------- ---------------
Total liabilities 1,458,571 1,424,989
---------------- ---------------
Distributions and losses in excess of investment
in unconsolidated affiliates 3,586 3,212
---------------- ---------------
Minority interest 180,326 170,750
---------------- ---------------
Commitments and contingencies (Note 2)
Shareholders' Equity:
Preferred stock, $.01 par value, 5,000,000
shares authorized, 2,875,000 outstanding
in 2000 and 1999 29 29
Common stock, $.01 par value, 95,000,000
shares authorized, 25,012,707 and 24,590,936
shares issued and outstanding in 2000
and 1999, respectively 250 248
Additional paid - in capital 461,205 455,875
Accumulated earnings (deficit) (17,395) (36,265)
---------------- ---------------
Total shareholders' equity 444,089 419,887
---------------- ---------------
$2,086,572 $2,018,838
================ ===============
<FN>
The accompanying notes are an integral part of these balance sheets.
</FN>
</TABLE>
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<PAGE>
<TABLE>
CBL & Associates Properties, Inc.
Consolidated Statements Of Operations
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rentals:
Minimum $ 56,130 $ 50,688 $ 167,806 $ 147,240
Percentage 1,527 1,595 7,458 6,497
Other 739 590 2,668 1,998
Tenant reimbursements 27,999 23,436 78,757 65,091
Management, development and leasing fees 1,107 4,493 3,135 6,502
Interest and other 1,119 920 3,663 3,133
----------- ----------- ---------- -----------
Total revenues 88,621 81,722 263,487 230,461
----------- ----------- ---------- -----------
EXPENSES:
Property operating 14,769 13,110 41,698 36,275
Depreciation and amortization 15,238 13,309 45,002 38,875
Real estate taxes 7,628 6,981 22,501 20,268
Maintenance and repairs 4,795 4,648 14,703 12,918
General and administrative 4,031 3,958 13,120 11,315
Interest 23,472 20,705 70,562 60,141
Other 31 82 62 970
----------- ----------- ---------- -----------
Total expenses 69,964 62,793 207,648 180,762
----------- ----------- ---------- -----------
Income from operations 18,657 18,929 55,839 49,699
Gain on sales of real estate assets 3,945 937 13,275 9,505
Equity in earnings of unconsolidated affiliates 934 678 2,585 2,419
Minority interest in earnings:
Operating partnership (6,988) (6,068) (21,346) (18,183)
Shopping center properties (296) (279) (1,022) (941)
----------- ----------- ---------- -----------
Income before extraordinary item 16,252 14,197 49,331 42,499
Extraordinary loss on extinguishment of debt (84) -- (221) --
----------- ----------- ---------- -----------
Net income 16,168 14,197 49,110 42,499
Preferred dividends (1,617) (1,617) (4,851) (4,851)
----------- ----------- ---------- -----------
Net income available to common shareholders $ 14,551 $ 12,580 $ 44,259 $ 37,648
=========== =========== ========== ===========
Basic per share data:
Income before extraordinary item $ 0.59 $ 0.51 $ 1.79 $ 1.53
=========== =========== ========== ===========
Net income $ 0.58 $ 0.51 $ 1.78 $ 1.53
=========== =========== ========== ===========
Weighted average common shares outstanding 24,954 24,677 24,845 24,628
=========== =========== ========== ===========
Diluted per share data:
Income before extraordinary item $ 0.58 $ 0.50 $ 1.78 $ 1.51
=========== =========== ========== ===========
Net income $ 0.58 $ 0.50 $ 1.77 $ 1.51
=========== =========== ========== ===========
Weighted average common shares and potential
dilutive common shares outstanding 25,183 24,935 24,983 24,869
=========== =========== ========== ===========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
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<PAGE>
<TABLE>
CBL & Associates Properties, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
<CAPTION>
Nine Months
Ended September 30,
------------------------
2000 1999
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 49,110 $ 42,499
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest in earnings 22,368 19,124
Depreciation 35,196 32,071
Amortization 10,751 7,697
Gain on sales of real estate assets (13,275) (9,505)
Equity in earnings of unconsolidated affiliates (2,585) (2,419)
Issuance of stock under incentive plan 826 80
Amortization of deferred compensation -- 360
Write-off of development projects 62 970
Distributions from unconsolidated affiliates 9,200 9,621
Distributions to minority investors (18,782) (17,563)
Changes in assets and liabilities -
Tenant and other receivables (8,107) (3,470)
Other assets (1,756) (5,394)
Accounts payable and accrued liabilities 4,255 3,998
--------- --------
Net cash provided by operating activities 87,263 78,069
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction of real estate assets and land acquisition (97,297) (110,292)
Acquisition of real estate assets (11,100) (68,545)
Capitalized interest (4,575) (4,879)
Other capital expenditures (19,198) (25,023)
Deposits in escrow (9,751) --
Proceeds from sales of real estate assets 59,618 36,412
Additions to mortgage notes receivable (1,497) (1,425)
Payments received on mortgage notes receivable 2,189 1,039
Advances and investments in unconsolidated affiliates (6,277) (3,237)
--------- --------
Net cash used in investing activities (87,888) (175,950)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other notes payable 137,539 219,656
Principal payments on mortgage and other notes payable (98,965) (82,300)
Additions to deferred financing costs (1,676) (779)
Proceeds from issuance of common stock 1,250 878
Proceeds from exercise of stock options 3,256 1,469
Dividends paid (42,309) (40,328)
--------- --------
Net cash used in or provided by financing activities (905) 98,596
--------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,530) 715
CASH AND CASH EQUIVALENTS, beginning of period 7,074 5,827
--------- --------
CASH AND CASH EQUIVALENTS, end of period $ 5,544 $ 6,542
========= ========
Cash paid for interest, net of amounts capitalized $ 70,831 $ 60,351
========= ========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
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<PAGE>
CBL & Associates Properties, Inc.
Notes to Consolidated Financial Statements
Note 1 - Unconsolidated Affiliates
At September 30, 2000, the Company had investments in five partnerships all
of which are reflected using the equity method of accounting. Condensed combined
results of operations for the unconsolidated affiliates are presented as follows
(in thousands):
<TABLE>
<CAPTION>
Company's Share
Total For The For The
Nine Months Ended Nine Months Ended
September 30, September 30,
------------------------- --------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 20,162 $ 19,885 $ 9,926 $ 9,812
-------- -------- -------- --------
Depreciation and amortization 2,496 2,548 1,223 1,251
Interest expense 6,141 6,271 3,027 3,087
Other operating expenses 5,926 6,168 3,091 3,055
-------- -------- -------- --------
Net income $ 5,599 $ 4,898 $ 2,585 $ 2,419
======== ======== ======== ========
</TABLE>
Note 2 - Contingencies
The Company is currently involved in certain litigation arising in the
ordinary course of business. In the opinion of management, the pending
litigation will not materially affect the financial statements of the Company.
Additionally, based on environmental studies completed to date on the real
estate properties, management believes any exposure related to environmental
cleanup will not be significant to the financial position and results of
operations of the Company.
Note 3 - Credit Agreements
The Company has credit facilities of $240 million of which $89.7 million is
available at September 30, 2000. Outstanding amounts under the credit facilities
bear interest at a weighted average interest rate of 7.38% at September 30,
2000. The Company's variable rate debt as of September 30, 2000 was $578.7
million with a weighted average interest rate of 7.30% as compared to 6.56% as
of September 30, 1999. Through the execution of interest rate swap agreements,
the Company has fixed the interest rates on $443 million of variable rate debt
on operating properties at a weighted average interest rate of 7.17%. There were
no fees charged to the Company related to these swap agreements. In addition,
the Company has interest rate caps in place on $50 million of variable rate debt
leaving $85.7 million of debt subject to variable rates. The Company's remaining
variable rate debt of $85.7 million is limited to construction properties
leaving no debt subject to variable rates on operating properties. The Company's
swap agreements in place at September 30, 2000 are as follows:
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<PAGE>
<TABLE>
<CAPTION>
Swap Amount Fixed LIBOR
(in millions) Component Effective Date Expiration Date
------------- ----------- -------------- ---------------
<S> <C> <C> <C>
$50 5.975% 11/04/1999 11/04/2000
50 5.980% 11/04/1999 11/06/2000
100 6.405% 01/27/2000 01/27/2001
75 6.610% 02/24/2000 02/24/2001
50 5.700% 06/15/1998 06/15/2001
38 5.730% 06/26/1998 06/30/2001
80 5.490% 09/01/1998 09/01/2001
</TABLE>
At September 30, 2000, the Company had an interest rate cap of $50 million
at 7.5% on LIBOR-based variable rate debt.
Note 4 - Segment Information
Management of the Company measures performance and allocates resources
according to property type, which are determined based on differences such as
nature of tenants, capital requirements, economic risks and leasing terms.
Rental income and tenant reimbursements from tenant leases provide the majority
of revenues from all segments. Information on management's reportable segments
is presented as follows (in thousands):
<TABLE>
<CAPTION>
Associated Community
Three Months Ended September 30, 2000 Malls Centers Centers All Other Total
-------------------------------------- ----------- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 66,725 $ 3,730 $ 15,905 $ 2,261 $ 88,621
Property operating expenses (1) (23,144) (627) (3,694) 273 (27,192)
Interest expense (18,762) (1,042) (3,178) (490) (23,472)
Gain on sales of real estate assets (115) - 3,109 951 3,945
----------- ------------ ----------- ------------- -----------
Segment profit and loss $ 24,704 $ 2,061 $ 12,142 $ 2,995 41,902
=========== ============ =========== =============
Depreciation and amortization (15,238)
General and administrative and other (4,062)
Equity in earnings and minority
interest adjustment (6,350)
-----------
Income before extraordinary item $16,252
===========
Capital expenditures (2) $29,925 $1,623 $1,869 $15,253 $48,670
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Associated Community
Three Months Ended September 30, 1999 Malls Centers Centers All Other Total
-------------------------------------- ----------- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $58,290 $3,007 $15,224 $5,201 $81,722
Property operating expenses (1) (21,769) (507) (2,681) 218 (24,739)
Interest expense (15,768) (663) (3,032) (1,242) (20,705)
Gain on sales of real estate assets (426) - 797 566 937
----------- ------------ ----------- ------------- -----------
Segment profit and loss $20,327 $1,837 $10,308 $4,743 37,215
=========== ============ =========== =============
Depreciation and amortization (13,309)
General and administrative and other (4,040)
Equity in earnings and minority
interest adjustment (5,669)
-----------
Income before extraordinary item $14,197
===========
Capital expenditures (2) $70,178 $2,118 $5,238 $16,762 $94,296
</TABLE>
<TABLE>
<CAPTION>
Associated Community
Nine Months Ended September 30, 2000 Malls Centers Centers All Other Total
-------------------------------------- ----------- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $197,298 $10,862 $49,193 $6,134 $263,487
Property operating expenses (1) (67,204) (1,854) (10,754) 910 (78,902)
Interest expense (55,171) (2,683) (9,786) (2,922) (70,562)
Gain on sales of real estate assets (399) - 9,801 3,873 13,275
----------- ------------ ----------- ------------- -----------
Segment profit and loss $74,524 $6,325 $38,454 $7,995 127,298
=========== ============ =========== =============
Depreciation and amortization (45,002)
General and administrative and other (13,182)
Equity in earnings and minority
interest adjustment (19,783)
-----------
Income before extraordinary item $49,331
===========
Total assets (2) $1,435,819 $105,338 $432,942 $112,473 $2,086,572
Capital expenditures (2) $62,091 $4,067 $23,420 $42,175 $131,753
</TABLE>
<TABLE>
<CAPTION>
Associated Community
Nine Months Ended September 30, 1999 Malls Centers Centers All Other Total
-------------------------------------- ----------- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $168,306 $8,948 $43,982 $9,225 $230,461
Property operating expenses (1) (60,355) (1,468) (8,283) 645 (69,461)
Interest expense (45,316) (1,937) (9,168) (3,720) (60,141)
Gain on sales of real estate assets (426) - 797 9,134 9,505
----------- ------------ ----------- ------------- -----------
Segment profit and loss $62,209 $5,543 $27,328 $15,284 110,364
=========== ============ =========== =============
Depreciation and amortization (38,875)
General and administrative and other (12,285)
Equity in earnings and minority
interest adjustment (16,705)
-----------
Income before extraordinary item $42,499
===========
Total assets (2) $1,307,844 $100,585 $450,987 $147,184 $2,006,600
Capital expenditures (2) $81,642 $4,289 $21,654 $68,981 $176,566
<FN>
(1) Property operating expenses include property operating expenses, real
estate taxes, and maintenance and repairs.
(2) Developments in progress are included in the "All Other" category.
</FN>
</TABLE>
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<PAGE>
CBL & Associates Properties, Inc.
Item 2: Management's Discussion And Analysis Of
Financial Condition And Results Of Operations
The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with CBL & Associates
Properties, Inc. Consolidated Financial Statements and Notes thereto.
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 results, financial and otherwise, may differ materially from the events
and results discussed in the forward-looking statements. We direct you to the
Company's other 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" incorporated by reference therein, for a discussion of such risks
and uncertainties.
GENERAL BACKGROUND
CBL & Associates Properties, Inc. (the "Company") Consolidated Financial
Statements and Notes thereto reflect the consolidated financial results of CBL &
Associates Limited Partnership (the "Operating Partnership") which includes at
September 30, 2000 the operations of a portfolio of properties consisting of
twenty-six regional malls, fourteen associated centers, seventy-two community
centers, an office building, joint venture investments in four regional malls
and one associated center, and income from seven mortgages (the "Properties").
The Operating Partnership also has two malls, two community centers and two mall
expansions currently under construction and options to acquire certain shopping
center development sites. The consolidated financial statements also include the
accounts of CBL & Associates Management, Inc. (the "Management Company").
The Company classifies its regional malls into two categories - malls which
have completed their initial lease-up ("Stabilized Malls") and malls which are
in their initial lease-up phase ("New Malls"). The New Mall category is
presently comprised of a redevelopment project, Springdale Mall in Mobile,
Alabama, Arbor Place Mall in Atlanta (Douglasville), Georgia which opened in
October 1999, Bonita Lakes Mall in Meridian, Mississippi which opened in October
1997, and Parkway Place Mall in Huntsville, Alabama which was acquired in
December 1998 and which is being redeveloped in a joint venture with a third
party.
The Company has entered into a definitive Master Contribution Agreement
with affiliates of The Richard E. Jacobs Group, Inc. pursuant to which the
Company will acquire interests in a portfolio of 21 regional malls and two
associated centers. The Company has filed a preliminary proxy statement in
anticipation of a vote by the Company's shareholders on the acquisition.
RESULTS OF OPERATIONS
During the quarter, the Company sold five community centers. Proceeds from
the sales of $11.0 million were used to pay down the Company's credit lines,
$1.2 million were used to pay permenant loans and $3.3 million of sales proceeds
were placed in escrow in anticipation of a like-kind exchange of properties
under section 1031 of the Internal Revenue Code of 1986 as amended.
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<PAGE>
Operational highlights for the three months and nine months ended September
30, 2000 as compared to September 30, 1999 are as follows:
SALES
Mall shop sales, for those tenants who have reported, in the twenty-six
Stabilized Malls in the Company's portfolio increased by 1.2% on a comparable
per square foot basis.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------
2000 1999
------------ -----------
<S> <C> <C>
Sales per square foot $185.44 $183.26
</TABLE>
Total sales volume in the mall portfolio, including New Malls, increased
4.0% to $1.096 billion for the nine months ended September 30, 2000 from $1.054
billion for the nine months ended September 30, 1999.
Occupancy costs as a percentage of sales for the nine months ended
September 30, 2000 and 1999 for the Stabilized Malls were 13.8% and 13.1%,
respectively. Occupancy costs were 11.5%, 11.1% and 11.2% for the years ended
December 31, 1999, 1998, and 1997, respectively. Occupancy costs as a percentage
of sales are generally higher in the first three quarters of the year as
compared to the fourth quarter due to the seasonality of retail sales.
OCCUPANCY
Occupancy for the Company's overall portfolio was as follows:
<TABLE>
<CAPTION>
At September 30,
--------------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Stabilized malls 92.7% 92.7%
New malls 89.7 93.7
Associated centers 91.4 91.1
Community centers 97.8 96.5
------------ ------------
Total Portfolio 94.5% 94.2%
============ ============
</TABLE>
Parkway Place Mall in Huntsville, Alabama is not included in either period,
due to the imminent demolition of the existing mall for re-development.
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<PAGE>
AVERAGE BASE RENT
Average base rents for the Company's three portfolio categories were as
follows:
<TABLE>
<CAPTION>
At September 30,
------------------------
2000 1999
------ ------
<S> <C> <C>
Malls $20.97 $19.96
Associated centers 9.67 9.39
Community centers 8.76 8.31
</TABLE>
LEASE ROLLOVERS
On spaces previously occupied, the Company achieved the following results
from rollover leasing for the nine months ended September 30, 2000 compared to
the base and percentage rent previously paid:
<TABLE>
<CAPTION>
Per Square Per Square
Foot Rent Foot Rent Percentage
Prior Lease (1) New Lease (2) Increase
--------------- ------------- ----------
<S> <C> <C> <C>
Malls $23.53 $25.32 7.6%
Associated centers 9.99 11.45 14.6%
Community centers 10.03 11.31 12.7%
<FN>
(1) - Rental achieved for spaces previously occupied at the end of the lease
including percentage rent.
(2) - Average base rent over the term of the lease.
</FN>
</TABLE>
For the nine months ended September 30, 2000, malls represented 76.8% of
total revenues from all properties; revenues from associated centers represented
4.0%; revenues from community centers represented 17.6%; and revenues from
mortgages, development fees and the office building represented 1.6%.
Accordingly, revenues and results of operations are disproportionately impacted
by the malls' performance.
The shopping center business is somewhat seasonal in nature with tenant
sales achieving the highest levels during the fourth quarter because of the
holiday season. The malls earn most of their "temporary" rents (rents from
short-term tenants) during the holiday period. Thus, occupancy levels and
revenue production are generally the highest in the fourth quarter of each year.
Results of operations realized in any one quarter may not be indicative of the
results likely to be experienced over the course of the fiscal year.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2000 TO THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
Total revenues for the three months ended September 30, 2000 increased by
$6.9 million, or 8.4%, to $88.6 million as compared to $81.7 million in 1999.
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<PAGE>
Minimum rents increased by $5.4 million, or 10.7%, to $56.1 million as compared
to $50.7 million in 1999, and tenant reimbursements increased by $4.6 million,
or 19.5%, to $28.0 million in 2000 as compared to $23.4 million in 1999.
Percentage rents decreased by $0.1 million, or 4.2%, to $1.5 million as
compared to $1.6 million in 1999.
Management, leasing and development fees decreased by $3.4 million, to $1.1
million as compared to $4.5 million in 1999. This decrease was primarily due to
a one-time fee of $3.1 million from a co-development property received in 1999.
Approximately $4.5 million of the increase in revenues resulted from
operations at the six new centers opened or acquired during the past fifteen
months. These centers consist of:
<TABLE>
<CAPTION>
Opening/
Project Name Location Total GLA Type of Addition Acquisition Date
---------------------- ------------------------- ---------- ---------------- -----------------
<S> <C> <C>
Arbor Place Mall Atlanta (Douglasville), 1,035,000 New Development October 1999
Georgia
York Galleria York, Pennsylvania 767,000 Acquisition July 1999
The Landing @ Arbor Place Atlanta (Douglasville), 163,000 New Development August 1999
Georgia
Sand Lake Corners Orlando, Florida 559,000 New Development July 1999
Marketplace at Flower Mound Dallas (Flower Mound), 119,000 Acquisition March 2000
Texas
Coastal Way Spring Hill, Florida 233,000 New Development August 2000
</TABLE>
Approximately $5.5 million of the increase in revenues resulted from
improved operations, increases in occupancies and increases in recoveries, in
the existing centers offset by a one-time fee of $3.1 million earned from the
Company's co-development program in 1999.
Property operating expenses, including real estate taxes and maintenance
and repairs, increased in the third quarter of 2000 by $2.5 million or 9.9% to
$27.2 million as compared to $24.7 million in the third quarter of 1999. This
increase was primarily the result of the addition of the six new centers
referred to above.
Depreciation and amortization increased in the third quarter of 2000 by
$1.9 million or 14.5% to $15.2 million as compared to $13.3 million in the
second quarter of 1999. This increase is primarily due to the addition of the
six new centers referred to above.
Interest expense increased in the third quarter of 2000 by $2.8 million, or
13.4% to $23.5 million as compared to $20.7 million in 1999. This increase was
primarily due to the additional interest on the six centers added during the
last fifteen months referred to above and increases in interest rates in 2000 as
compared to the interest rates in effect during the third quarter of 1999.
The gain on sales of real estate assets increased in the third quarter of
2000 by $3.0 million, to $3.9 million as compared to $0.9 million in 1999. The
majority of gain on sales in the third quarter of 2000 was from outparcel sales
at Coastal Way in Spring Hill, Florida and outparcel land at a previously sold
center in Jacksonville, Florida and the sales of five completed centers.
-13-
<PAGE>
Equity in earnings of unconsolidated affiliates increased in the third
quarter of 2000 by $0.2 million to $0.9 million from $0.7 million in the third
quarter of 1999 primarily due to improved operations at equity centers.
COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
TO THE RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
Total revenues for the nine months ended September 30, 2000 increased by
$33.0 million, or 14.3%, to $263.5 million as compared to $230.5 million in
1999. Of this increase, minimum rents increased by $20.6 million, or 14.0%, to
$167.8 million as compared to $147.2 million in 1999, and tenant reimbursements
increased by $13.7 million, or 21.0%, to $78.8 million in 2000 as compared to
$65.1 million in 1999. Percentage rents increased by $1.0 million, or 14.8% to
$7.5 million as compared to $6.5 million in 1999.
Approximately $19.1 million of the increase in revenues resulted from
operations at the six new centers opened or acquired during the past fifteen
months. These centers consist of:
<TABLE>
<CAPTION>
Opening/
Project Name Location Total GLA Type of Addition Acquisition Date
----------------------- ------------------------- --------- ---------------- -----------------
<S> <C> <C>
Arbor Place Mall Atlanta (Douglasville), 1,035,000 New Development October 1999
Georgia
York Galleria York, Pennsylvania 767,000 Acquisition July 1999
The Landing @ Arbor Place Atlanta (Douglasville), 163,000 New Development August 1999
Georgia
Sand Lake Corners Orlando, Florida 559,000 New Development July 1999
Marketplace at Flower Mound Dallas (Flower Mound), 119,000 Acquisition March 2000
Texas
Coastal Way Spring Hill, Florida 233,000 New Development August 2000
</TABLE>
Improved occupancies and operations , increased recoveries and increased
rents in the Company's operating portfolio generated $17.0 million of increased
revenues offset by the one-time fee of $3.1 million earned from the Company's
co-development program in September 1999.
Management, leasing and development fees decreased by $3.4 million to $3.1
million in the first nine months of 2000 as compared to $6.5 million in 1999.
This decrease was primarily due to a fee of $3.1 million from a co-development
property received in 1999 and decreases in fees from other co-development
properties offset by increases in fees from an equity property under
development.
Property operating expenses, including real estate taxes and maintenance
and repairs, increased in the first nine months of 2000 by $9.4 million, or
13.6%, to $78.9 million as compared to $69.5 million in 1999. This increase was
primarily the result of the addition of the six new centers referred to above.
-14-
<PAGE>
Depreciation and amortization increased in the first nine months of 2000 by
$6.1 million, or 15.8%, to $45.0 million as compared to $38.9 million in 1999.
This increase was primarily the result of the addition of the six new centers
referred to above.
Interest expense increased in the first nine months of 2000 by $10.4
million, or 17.3%, to $70.6 million as compared to $60.1 million in 1999. This
increase was primarily the result of interest on debt related to the addition of
the six new centers referred to above and increases in interest rates in the
first nine months of 2000 as compared to the interest rates in effect for
the same period in 1999.
The gain on sales of real estate assets increased for the nine months ended
September 30, 2000 by $3.8 million to $13.3 million as compared to $9.5 million
in 1999. The majority of gain on sales of $9.2 million in the first nine months
of 2000 resulted from the sales of eleven completed centers. The balance of the
gains on sales were from outparcel sales the majority of which occurred at Sand
Lake Corners in Orlando, Florida, Coastal Way in Spring Hill, Florida and
Gunbarrel Pointe in Chattanooga, Tennessee. Gain on sales in the first nine
months of 1999 was in connection with outparcel sales at the Company's Sand Lake
Corners in Orlando, Florida and The Landing at Arbor Place in Douglasville,
Georgia and anchor pad sales at Chesterfield Crossing in Richmond, Virginia.
Equity in earnings of unconsolidated affiliates increased in the first nine
months of 2000 by $0.2 million to $2.6 million from $2.4 million in the first
nine months of 1999 primarily due to improved operations at existing equity
centers.
LIQUIDITY AND CAPITAL RESOURCES
The principal uses of the Company's liquidity and capital resources have
historically been for property development, expansion and renovation programs,
acquisitions and debt repayment. To maintain its qualification as a real estate
investment trust under the Internal Revenue Code, the Company is required to
distribute to its shareholders at least 95% of its "Real Estate Investment Trust
Taxable Income" as defined in the Internal Revenue Code of 1986, as amended (the
"Code").
As of November 1, 2000, the Company had $119.4 million available in
unfunded construction and redevelopment loans to be used for completion of the
construction and redevelopment projects and replenishment of working capital
previously used for construction. Additionally, as of November 1, 2000, the
Company had obtained revolving credit lines totaling $240.0 million of which
$70.7 million was available. As a publicly traded company, the Company has
access to capital through both the public equity and debt markets. The Company
has filed a Shelf Registration authorizing shares of the Company's preferred
stock and common stock and warrants to purchase shares of the Company's common
stock with an aggregate public offering price of up to $350 million with $278
million remaining after the Company's preferred stock offering on June 30, 1998.
The Company anticipates that the combination of these sources will, for the
foreseeable future, provide adequate liquidity to continue its capital programs
substantially as in the past and make distributions to its shareholders in
accordance with the Code's requirements applicable to real estate investment
trusts.
Management expects to refinance the majority of the mortgage notes payable
maturing over the next five years with replacement loans.
-15-
<PAGE>
The Company's policy is to maintain a conservative debt to total market
capitalization ratio in order to enhance its access to the broadest range of
capital markets, both public and private. The Company's current capital
structure includes property specific mortgages, which are generally
non-recourse, revolving lines of credit, common stock, preferred stock and a
minority interest in the Operating Partnership. The minority interest in the
Operating Partnership represents the 25.5% ownership interest in the Operating
Partnership held by the Company's current and former executive and senior
officers which may be exchanged for approximately 9.4 million shares of common
stock. Additionally, Company executive officers and directors own approximately
1.9 million shares of the outstanding common stock of the Company, for a
combined total interest in the Operating Partnership of approximately 30.6%.
Ownership interests issued to fund acquisitions may be exchanged for
approximately 2.4 million shares of common stock which represents a 6.6%
interest in the Operating Partnership. Assuming the exchange of all limited
partnership interests in the Operating Partnership for common stock, there would
be outstanding approximately 37.0 million shares of common stock with a market
value of approximately $927.1 million at September 30, 2000 (based on the
closing price of $25.06 per share on September 30, 2000). The Company's total
market equity is $991.8 million which includes 2.9 million shares of preferred
stock at the closing price of $22.50 per share on September 30, 2000. Company
executive and senior officers' ownership interests had a market value of
approximately $283.5 million at September 30, 2000.
Mortgage debt consists of debt on certain consolidated properties as well
as on four properties in which the Company owns a non-controlling interest and
is accounted for under the equity method of accounting. At September 30, 2000,
the Company's share of funded mortgage debt on its consolidated properties
adjusted for minority investors' interests in nine properties was $1.378 billion
and its pro rata share of mortgage debt on unconsolidated properties (accounted
for under the equity method of accounting) was $47.9 million for total debt
obligations of $1.426 billion with a weighted average interest rate of 7.39%.
The Company's total conventional fixed rate debt as of September 30, 2000
was $847.2 million with a weighted average interest rate of 7.46% as compared to
7.41% as of September 30, 1999.
The Company's variable rate debt as of September 30, 2000 was $578.7
million with a weighted average interest rate of 7.30% as compared to 6.56% as
of September 30, 1999. Through the execution of swap agreements, the Company has
fixed the interest rates on $443 million of debt on operating properties at a
weighted average interest rate of 7.17%. In addition, the Company had an
interest rate cap in place on $50.0 million of variable rate debt leaving $85.7
million of debt subject to variable rates. Interest expense associated with the
Company's remaining variable rate debt of $85.7 million is capitalized to
projects currently under construction leaving no variable rate debt exposure on
operating properties as of September 30, 2000. There were no fees charged to the
Company related to its swap agreements. The Company's swap and cap agreements in
place at September 30, 2000 are as follows:
-16-
<PAGE>
<TABLE>
<CAPTION>
Swap Amount Fixed LIBOR
(in millions) Component Effective Date Expiration Date
------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
$50 5.975% 11/04/1999 11/04/2000
50 5.980% 11/04/1999 11/06/2000
100 6.405% 01/27/2000 01/27/2001
75 6.610% 02/24/2000 02/24/2001
50 5.700% 06/15/1998 06/15/2001
38 5.730% 06/26/1998 06/30/2001
80 5.490% 09/01/1998 09/01/2001
50 7.500% 09/29/2000 09/29/2001
</TABLE>
Based on the debt (including construction projects) and the market value of
equity described above, the Company's debt to total market capitalization (debt
plus market value equity) ratio was 59.0% at September 30, 2000.
During the quarter the Company closed a $74.5 million permanent loan on
Burnsville Center in Minneapolis (Burnsville), Minnesota. The net proceeds were
used to pay down $60.8 million in variable rate debt and $12.8 million on the
Company's credit lines. The Company also closed a $5.2 million permanent loan on
Plaza del Sol Mall in Del Rio, Texas, a property accounted for under the equity
method of accounting. The Company's share of the proceeds of $4.5 million were
used to pay down the Company's credit lines. During the quarter the Company
extended its credit line with Wells Fargo Bank to September 2002 and increased
the credit facility by $10 million to #130 million.
DEVELOPMENT, EXPANSIONS, ACQUISITIONS AND DISPOSITIONS
In August 2000, the Company opened a 171,000-square-foot phase I of Coastal
Way Shopping Center in Spring Hill, Florida a 233,000-square-foot community
center anchored by Sears and Belk. Subsequent to the end of the quarter the
Company opened Gunbarrel Pointe in Chattanooga, Tennessee, a 282,000-square-foot
associated center anchored by Target (which is non-Company owned), Goody's and
Kohl's and the balance of Chesterfield Crossing in Richmond, Virginia, a
434,000-square-foot power center. Home Depot and Wal*Mart (both of which are
non-Company owned) had previously opened.
Development projects under construction and scheduled to open during 2000
are: an expansion to Asheville Mall in Asheville, North Carolina of
160,000-square feet of which 85,000-square-feet are Company owned retail shops
and a food court which are is scheduled to open November 2000 and an expansion
to Meridian Mall in Lansing, Michigan of 178,000-square-feet opening in phases
in the Fall of 2000 and 2001. The Company also has under construction for a 2001
opening: The Lakes Mall in Muskegon, Michigan a 610,000-square foot mall
anchored by Sears, Yonkers and JCPenney which is scheduled to open in August
2001 and Creekwood Crossing in Bradenton, Florida a 404,000-square-foot
community center anchored by Lowe's, Bealls and K-Mart and scheduled to open in
April 2001. In June 2000 construction began on the joint venture redevelopment
of Parkway Place in Huntsville, Alabama containing 639,000-square feet. The
anchors are Dillard's and Parisian with the full redevelopment scheduled to
reopen in the fall of 2002. The Company also has under development The Mall of
South Carolina in Myrtle Beach, South Carolina, a 1,095,000-square-foot regional
mall.
-17-
<PAGE>
In September 2000, the Company sold the following five community centers:
Centerview Plaza in China Grove, North Carolina, Dorchester Crossing in
Charleston, South Carolina, Hollins Plantation Plaza in Roanoke, Virginia,
Sterling Creek Commons in Portsmouth, Virginia and Wildwood Plaza in Salem,
Virginia. Proceeds of $11.0 million were used to pay down the Company's credit
lines and $3.3 million of sales proceeds, proceeds of $1.2 million were used to
payoff loan were placed in escrow in anticipation of a like-kind exchange of
properties under section 1031 of the Code.
The Company has entered into a standby purchase agreement with a
third-party developer (the "Developer") for the construction, development and
potential ownership of one community center in Texas (the "Co-Development
Project"). The Developer has utilized this standby purchase agreement to assist
in obtaining financing to fund the construction of the Co-Development Project.
The standby purchase agreement, which expires in 2000, provides for certain
requirements or contingencies to occur before the Company becomes obligated to
fund its equity contribution or purchase the Co-Development Project. These
requirements or contingencies include certain completion requirements, rental
levels, the inability of the Developer to obtain adequate permanent financing
and the inability to sell the Co-Development Project. In return for its
commitment to purchase the Co-Development Project pursuant to a standby purchase
agreement, the Company receives a fee as well as a participation interest in
either the cash flow or gains from sale on each Co-Development Project. The
outstanding amount on the standby purchase agreement is $48.1 million at
September 30, 2000. In March 2000, the Company acquired The Marketplace at
Flower Mound in Dallas (Flower Mound), Texas which had been under a
co-development agreement. The $11.1 million purchase was funded from the net
sales proceeds of Fiddler's Run in Morganton, North Carolina and the Company's
credit line.
The Company has entered into a number of option agreements for the
development of future regional malls and community centers. Except for these
projects and as further described below, the Company currently has no other
material capital commitments.
It is management's expectation that the Company will continue to have
access to the capital resources necessary to expand and develop its business.
Future development and acquisition activities will be undertaken by the Company
as suitable opportunities arise. Such activities are not expected to be
undertaken unless adequate sources of financing are available and a satisfactory
budget with targeted returns on investment has been internally approved.
The Company will fund its major development, expansion and acquisition
activities with its traditional sources of construction and permanent debt
financing as well as from other debt and equity financings, including public
financings, and its credit facilities in a manner consistent with its intention
to operate with a conservative debt to total market capitalization ratio.
OTHER CAPITAL EXPENDITURES
Management prepares an annual capital expenditure budget for each property
which is intended to provide for all necessary recurring and non-recurring
capital improvements. Management believes that its annual operating reserve for
maintenance and recurring capital improvements and reimbursements from tenants
will provide the necessary funding for such requirements. The Company intends to
distribute approximately 55% - 90% of its funds from operations with the
remaining 10% - 45% to be held as a reserve for
-18-
<PAGE>
capital expenditures and continued growth opportunities. The Company believes
that this reserve will be sufficient to cover (I) tenant finish costs associated
with the renewal or replacement of current tenant leases as their leases expire
and (II) capital expenditures which will not be reimbursed by tenants.
Major tenant finish costs for currently vacant space are expected to be
funded with working capital, operating reserves, or the revolving lines of
credit, and a return on the funds so invested is expected to be earned.
For the first nine months of 2000, revenue generating capital expenditures
or tenant allowances for improvements were $7.5 million. These capital
expenditures will generate increased rents from these tenants over the term of
their leases. Revenue neutral capital expenditures, which are recovered from the
tenants, were $6.2 million for the first nine months of 2000. Revenue enhancing
capital expenditures, or remodeling and renovation costs, were $5.4 million for
the nine months ended September 30, 2000.
The Company believes that the Properties are in compliance in all material
respects with all federal, state and local ordinances and regulations regarding
the handling, discharge and emission of hazardous or toxic substances. At
Parkway Place (which was acquired in December 1998) approximately 350 square
feet of ground in the vicinity of a former auto service center had been
identified as being contaminated with total petroleum hydrocarbons which has
been remediated during the demolition process. The Company has not been notified
by any governmental authority, and is not otherwise aware, of any material
noncompliance, liability or claim relating to hazardous or toxic substances in
connection with any of its present or former properties. The Company has not
recorded in its financial statements any material liability in connection with
environmental matters.
CASH FLOWS
Cash flows provided by operating activities for the first nine months of
2000, increased by $9.2 million, or 11.8%, to $87.3 million from $78.1 million
in 1999. This increase was primarily due to the six centers opened or acquired
over the last fifteen months and improved operations in the existing centers.
Cash flows used in investing activities for the first nine months of 2000
decreased by $88.1 million, to $87.9 million compared to $176.0 million in 1999.
This decrease was due primarily to a decrease in acquisitions of $57.4 million
to $11.1 million as compared to the $68.5 million of acquisitions in 1999. Cash
flows used in or provided by financing activities for the first nine months of
2000 decreased by $99.5 million, to ($0.9) million compared to $98.6 million in
1999 primarily due to decreased borrowings related to the development and
acquisition program.
IMPACT OF INFLATION
In the last three years, inflation has not had a significant impact on the
Company because of the relatively low inflation rate. Substantially all tenant
leases do, however, contain provisions designed to protect the Company from the
impact of inflation. Such provisions include clauses enabling the Company to
receive percentage rentals based on tenant's gross sales, which generally
increase as prices rise, and/or escalation clauses, which generally
-19-
<PAGE>
increase rental rates during the terms of the leases. In addition, many of the
leases are for terms of less than ten years which may enable the Company to
replace existing leases with new leases at higher base and/or percentage rentals
if rents of the existing leases are below the then-existing market rate. Most of
the leases require the tenants to pay their share of operating expenses,
including common area maintenance, real estate taxes and insurance, thereby
reducing the Company's exposure to increases in costs and operating expenses
resulting from inflation.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133 as amended by SFAS No 137 and
138, "Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000.
SFAS No. 133 must be applied to (a) derivative instruments and (b) certain
derivative instruments embedded in hybrid contracts that were issued, acquired,
or substantively modified after January 1, 1999.
The Company has determined that all of its derivative instruments (swaps
and a cap) in place are ineffective as defined by SFAS No. 133. The terms of the
derivative instruments expire in 2001, thus while the Company may experience
some volatility in earnings in interim periods, there will be no effect to the
Company's financial statements for the year ended December 31, 2001. If the
Company had implemented SFAS No. 133 as of September 30, 2000, total assets
would have increased by and interest expense would have decreased by $1.5
million.
FUNDS FROM OPERATIONS
Management believes that Funds from Operations ("FFO") provides an
additional indicator of the financial performance of the Properties. FFO is
defined by the Company as net income (loss) before depreciation of real estate
assets, other non-cash items, gains or losses on sales of real estate and gains
or losses on investments in marketable securities. FFO also includes the
Company's share of FFO in unconsolidated properties and excludes minority
interests' share of FFO in consolidated properties other than the Operating
Partnership. The Company computes FFO in accordance with the National
Association of Real Estate Investment Trusts ("NAREIT") recommendation
concerning finance costs and non-real estate depreciation. The Company excludes
gains or losses on outparcel sales, even though NAREIT permits their inclusion
when calculating FFO. Gains or losses on outparcel sales would have added to FFO
$1.3 million in the third quarter of 2000 as compared to $0.8 million in 1999
and in the nine months ended September 30, 2000 would have added to FFO $4.1
million compared to $9.3 million in 1999. -20-
<PAGE>
Effective January 1, 2000, NAREIT has clarified FFO to include all
operating results - recurring and non-recurring - except those results defined
as "extraordinary items" as defined by accounting principles generally accepted
in the United States. The Company implemented this clarification in the first
quarter of 2000 and will no longer add back to FFO the write-off of development
costs charged to net income. This amount was $31,000 and $62,000 for the three
and nine months ended September 20, 2000, respectively. Results for the quarter
and nine months ended September 30, 1999 were restated to reflect a reduction in
FFO of $82,000 and $970,000, respectively.
The use of FFO as an indicator of financial performance is influenced not
only by the operations of the Properties, but also by the capital structure of
the Operating Partnership and the Company. Accordingly, management expects that
FFO will be one of the significant factors considered by the Board of Directors
in determining the amount of cash distributions the Operating Partnership will
make to its partners (including the REIT). FFO does not represent cash flow from
operations as defined by accounting principles generally accepted in the United
States and 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.
For the three months ended September 30, 2000, FFO increased by $4.8
million, or 17.1%, to $32.6 million as compared to $27.8 million, excluding the
$3.1 million fee earned in the co-development program in September 1999, for the
same period in 1999. For the nine months ended September 30, 2000, FFO increased
by $15.2 million, or 18.5%, to $97.1 million as compared to $81.9 million, again
excluding the $3.1 million fee earned in the co-development program in September
1999, for the same period in 1999. The increases in FFO for both periods was
primarily attributable to the new developments opened during 1999 and in the
first nine months of 2000, the acquisitions during 1999 and 2000 and improved
operations in the existing portfolio.
-21-
<PAGE>
The Company's calculation of FFO is as follows: (in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
2000 1999 2000 1999
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income from operations $18,657 $18,929 $55,839 $49,699
ADD:
Depreciation & amortization from
consolidated properties 15,238 13,309 45,002 38,875
Income from operations of
unconsolidated affiliates 934 678 2,585 2,419
Depreciation & amortization from
unconsolidated affiliates 318 431 1,223 1,251
SUBTRACT:
Preferred dividend (1,617) (1,617) (4,851) (4,851)
Minority investors' share of
income from operations in
nine properties (296) (279) (1,022) (941)
Minority investors share of
depreciation and amortization
in nine properties (246) (250) (736) (708)
Depreciation and amortization of
non-real estate assets and finance costs (344) (218) (980) (735)
---------- --------- --------- ---------
TOTAL FUNDS FROM OPERATIONS $32,644 $30,983 $97,060 $85,009
========== ========= ========= =========
</TABLE>
-22-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None
ITEM 2: Changes in Securities
None
ITEM 3: Defaults Upon Senior Securities
None
ITEM 4: Submission of Matter to a Vote of Security Holders
None
ITEM 5: Other Information
None
ITEM 6: Exhibits and Reports on Form 8-K
A. Exhibits
27 Financial Data Schedule
B. Reports on Form 8-K
The following items were reported:
The outline from the Company's September 25, 2000 conference
call with analysts and investors regarding the announcement
that it had entered into a definitive Master Contribution
Agreement with an affiliate of The Richard E. Jacobs Group,
Inc. pursuant to which the Company will acquire a portfolio of
21 regional malls and two associated centers (Item 5) was
filed on September 25, 2000.
A preliminary proxy statement regarding the acquisition of a
portfolio of 21 regional malls and two associated centers from
an affiliate of The Richard E. Jacobs Group, Inc. was filed on
October 20, 2000.
The outline from the Company's October 26, 2000 conference
call with analysts and investors regarding earnings (Item 5)
was filed on October 26, 2000.
-23-
<PAGE>
An amended current report on Form 8-K/A (exhibits that were
unavailable were added) from the outline of the Company's
September 25, 2000 conference call with analysts and investors
regarding the announcement that it had entered into a
definitive Master Contribution Agreement with an affiliate of
The Richard E. Jacobs Group, Inc. pursuant to which the
Company will acquire a portfolio of 21 regional malls and two
associated centers (Item 5) was filed on October 27, 2000
-24-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CBL & ASSOCIATES PROPERTIES, INC.
/s/ John N. Foy
--------------------------------------------
John N. Foy
Vice Chairman of the Board, Chief Financial
Officer and Treasurer
(Authorized Officer of the Registrant,
Principal Financial Officer and
Principal Accounting Officer)
Date: November 13, 2000
-25-
<PAGE>
EXHIBIT INDEX
Exhibit
No.
-------
27 Financial Data Schedule
-26-
