UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 1, 2005
CBL & ASSOCIATES PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-12494 62-154718
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Incorporation) Number) Identification No.)
Suite 500, 2030 Hamilton Place Blvd, Chattanooga, TN 37421
(Address of principal executive office, including zip code)
(423) 855-0001
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
1
ITEM 9.01 Financial Statements and Exhibits
CBL & Associates Properties, Inc. (the "Company') acquired seven malls, one
associated center and one lifestyle center during the year ended December 31,
2005. Although none of the properties acquired are individually significant
according to the provisions of Rule 3-14 of Regulation S-X of the Securities and
Exchange Commission, they are significant in the aggregate. This Current Report
on Form 8-K is being filed to provide certain historical and pro forma financial
information related to these acquisitions, which are described below. In this
Current Report on Form 8-K, dollars are in thousands, except for per share
amounts.
Effective June 1, 2005, the Company acquired a 70% joint venture interest
in Laurel Park Place, a regional mall in Livonia, MI, for a purchase price of
$80,363. The purchase price consisted of $2,828 in cash, the assumption of
$50,654 of non-recourse debt that bears interest at a stated rate of 8.50% and
matures in December 2012 and the issuance of 571,700 Series L Special Common
Units ("L-SCUs") in the Operating Partnership with a fair value of $26,881
($47.02 per special common unit). The Company recorded a debt premium of
$10,552, computed using an estimated market interest rate of 5.00%, since the
debt assumed was at an above-market interest rate compared to similar debt
instruments at the date of acquisition.
The L-SCUs receive a minimum distribution of $0.7575 per unit per quarter
($3.03 per unit per year). Upon the earlier to occur of June 1, 2020, or when
the distribution on the common units exceeds $0.7575 per unit for four
consecutive calendar quarters, the L-SCUs will thereafter receive a distribution
equal to the amount paid on the common units.
The Company may elect to acquire the remaining 30% ownership interest in
the joint venture, or a portion thereof, at anytime following the acquisition
date for a purchase price of $14,000, which will be paid either through the
issuance of common units of limited partner interest in the Operating
Partnership or with cash, at the Company's election. If the Company exercises
its right to acquire the remaining 30% joint venture interest, or a portion
thereof, prior to December 2012 through the issuance of common units, the common
units issued will not be entitled to receive distributions until after December
2012. If the Company does not exercise its right to acquire the remaining 30%
joint venture interest, then the joint venture partner owning that interest will
receive a preferred return equal to the greater of 12% or the 10-year treasury
rate plus 800 basis points on the portion of its joint venture interest that has
not yet been acquired by the Company. The Company receives all of the profits
and losses of this joint venture and is responsible for all of its debt. The
$14,000 value of the minority partner's interest has been recorded in Accounts
Payable and Accrued Liabilities.
On July 14, 2005, the Company acquired The Mall of Acadiana, a
super-regional mall in Lafayette, LA, for a cash purchase price, including
transaction costs, of $175,204. The Company also entered into 10-year lease
agreements for 13.4 acres of land adjacent to The Mall of Acadiana, which
provide the Company the right to purchase the land for a cash purchase price of
$3,327 during the first year of the lease term, $3,510 during the second year
and amounts increasing by 10% per year for each year of the lease term
thereafter. After the first year, the seller may put the land to the Company for
a price equal to the amounts set forth in the previous sentence. The Company
also obtained a ten-year option to acquire another adjacent 14.9 acre tract of
land for a cash purchase price of $3,245 during the first six months of the
option, which increases to $3,407 during the second six months of the option and
to $3,570 during the remaining nine years of the option.
2
On November 7, 2005, the Company acquired Layton Hills Mall in Salt Lake
City, UT for a cash purchase price, including transaction costs, of $120,926.
The Company funded a portion of the purchase price with a new, short-term loan
of $102,850 that bears interest at the London Interbank Offered Rate plus 95
basis points and has a maturity of March 2006 plus two 30-day extension options.
On November 16, 2005, the Company acquired Oak Park Mall in Overland, KS,
Hickory Point Mall in Forsyth, IL, and Eastland Mall in Bloomington, IL for a
purchase price, including transaction costs, of $508,180, which consisted of
$127,112 in cash, the assumption of $335,100 of interest only, non-recourse
loans that bear interest at a stated rate of 5.85% and mature in November 2015
and the issuance of 1,144,924 Series K special common units (the "K-SCUs") of
limited partner interest in CBL & Associates Limited Partnership (the "Operating
Partnership") with a fair value of $45,969. The Company funded part of the cash
portion of the purchase price with a new, non-recourse loan of $33,150 that
bears interest at 5.85% and matures in November 2015.
The K-SCUs receive a dividend at a rate of 6.0%, or $2.85 per K-SCU, for
the first year following the close of the transaction and 6.25%, or $2.96875 per
K-SCU, thereafter. When the quarterly distribution on the Operating
Partnership's common units exceeds the quarterly K-SCU distribution for four
consecutive quarters, the K-SCUs will receive distributions at the rate equal to
that paid on the Operating Partnership's common units. At any time following the
first anniversary of the closing date, the holders of the K-SCUs may exchange
them, on a one-for-one basis, for shares of the Company's common stock or, at
the Company's election, their cash equivalent.
On November 16, 2005, the Company formed a 50/50 joint venture with The
Richard E. Jacobs Group to own Triangle Town Center and its associated and
lifestyle centers, Triangle Town Place and Triangle Town Commons, in Raleigh,
NC. The joint venture property was valued at $283,500. Concurrent with its
formation, the joint venture entered into a new ten-year, fixed rate
non-recourse loan of $200,000 that bears interest at 5.737% and matures in
December 2015, which is secured by the collective centers. The proceeds from the
loan were used to retire an existing construction loan totaling approximately
$121,830 with the balance paid to Jacobs as a partial return of Jacobs' equity.
The Company's initial capital contribution to the joint venture was $1,452. The
joint venture equity will be equalized between Jacobs and the Company through
future contributions by the Company and through property cash flow
distributions. The Company will account for its investment in the joint venture
using the equity method of accounting.
Listed below are the financial statements, pro forma financial information
and exhibits filed as part of this report:
(a) Financial Statements of Businesses Acquired
The statement of certain revenues and certain operating expenses of
Lafayette Associates, L.L.C. (d/b/a The Mall of Acadiana) (described under
Item 9.01) as listed in the accompanying Index to Financial Statements and
Pro Forma Financial Information is filed as part of this Current Report on
Form 8-K.
The statement of certain revenues and certain operating expenses of Oak
Park Investments, L.P. (described under Item 9.01) as listed in the
accompanying Index to Financial Statements and Pro Forma Financial
Information is filed as part of this Current Report on Form 8-K.
(b) Pro Forma Financial Information
The pro forma financial information of CBL & Associates Properties, Inc.
listed in the accompanying Index to Financial Statements and Pro Forma
Financial Information is filed as part of this Current Report on Form 8-K.
3
(c) Exhibits
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Deloitte & Touche LLP
4
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,
Chief Financial Officer and Treasurer
Date: January 17, 2006
5
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
The following historical financial statements and pro forma financial
information are presented in accordance with Rule 3-14 and Article 11,
respectively, of Regulation S-X of the Securities and Exchange Commission. The
historical financial statements have been audited only for certain properties
acquired. With respect to Lafayette Associates, L.L.C. (d/b/a The Mall of
Acadiana) and Oak Park Investments, L.P., the historical financial statements
have been audited only for the most recent fiscal year preceding the respective
acquisition date as these transactions did not involve a related party and the
registrant, after reasonable inquiry, is not aware of any material factors
related to the acquired properties not otherwise disclosed that would cause the
reported financial information to not be necessarily indicative of future
operating results. In addition, as the properties will be directly or indirectly
owned by entities that will elect or have elected to be treated as real estate
investment trusts (as specified under sections 856-860 of the Internal Revenue
Code of 1986) for Federal income tax purposes, a presentation of estimated
taxable operating results is not applicable.
Page
Number
LAFAYETTE ASSOCIATES, L.L.C. (D/B/A THE MALL OF ACADIANA)
Independent Auditors' Report 7
Statement of Certain Revenues and Certain Operating Expenses
for the Six-Month Period Ended June 30, 2005 (Unaudited)
and for the Year Ended December 31, 2004 8
Notes to the Statement of Certain Revenues and Certain Operating
Expenses for the Six-Month Period Ended June 30, 2005
(Unaudited) and for the Year Ended December 31, 2004 9
OAK PARK INVESTMENTS, L.P.
Independent Auditors' Report 11
Statement of Certain Revenues and Certain Operating Expenses
for the Nine-Month Period Ended September 30, 2005
(Unaudited) and for the Year Ended December 31, 2004 12
Notes to the Statement of Certain Revenues and Certain
Operating Expenses for the Nine-Month Period Ended
September 30, 2005 (Unaudited) and for the Year Ended
December 31, 2004 13
CBL & ASSOCIATES PROPERTIES, INC.
Pro Forma Consolidated Statement of Operations for the
Year Ended December 31, 2004 (Unaudited) 16
Pro Forma Consolidated Statement of Operations for the
Nine Months Ended September 30, 2005 (Unaudited) 17
Pro Forma Consolidated Balance Sheet as of September 30,
2005 (Unaudited) 18
6
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
CBL & Associates Properties, Inc.:
We have audited the accompanying statement of certain revenues and certain
operating expenses of Lafayette Associates, L.L.C. (d/b/a the Mall of Acadiana)
(the "Property) for the year ended December 31, 2004. This financial statement
is the responsibility of the Property's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Property's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statement of certain revenues and certain operating expenses
was prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission (for inclusion in the filing of a Form 8-K by
CBL & Associates Properties, Inc. as a result of the acquisition of the
Property). Material amounts, described in Note 1 to the statement of certain
revenues and certain operating expenses, that would not be directly attributable
to those resulting from future operations of the Property are excluded, and the
financial statement is not intended to be a complete presentation of the
Property's revenues and expenses.
In our opinion, such financial statement presents fairly, in all material
respects, certain revenues and certain operating expenses of the Property for
the year ended December 31, 2004 in conformity with accounting principles
generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
December 11, 2005
Detroit, Michigan
7
LAFAYETTE ASSOCIATES, L.L.C.
(d/b/a THE MALL OF ACADIANA)
STATEMENTS OF CERTAIN REVENUES AND CERTAIN OPERATING EXPENSES
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2005 (UNAUDITED) AND FOR THE YEAR ENDED
DECEMBER 31, 2004
(DOLLARS IN THOUSANDS)
-------------------------------------------------------------------------------
Six Months Ended
June 30, 2005 Year Ended
(unaudited) December 31, 2004
CERTAIN REVENUES:
Rentals:
Minimum $ 4,746 $ 9,567
Percentage 6 310
Tenant reimbursements 2,442 4,880
Other income 112 106
-----------------------------------------------------------
Total revenues 7,306 14,863
-----------------------------------------------------------
CERTAIN OPERATING EXPENSES:
Property operating 836 1,694
Real estate taxes 107 207
Maintenance and repairs 1,373 2,703
-----------------------------------------------------------
Total expenses 2,316 4,604
-----------------------------------------------------------
Excess of certain revenues over
certain operating expenses $4,990 $10,259
===========================================================
See accompanying notes to financial statements.
8
LAFAYETTE ASSOCIATES, L.L.C. (d/b/a THE MALL OF ACADIANA)
NOTES TO STATEMENTS OF CERTAIN REVENUES AND CERTAIN OPERATING EXPENSES FOR THE
SIX-MONTH PERIOD ENDED JUNE 30, 2005 (UNAUDITED) AND FOR THE YEAR ENDED
DECEMBER 31, 2004
NOTE 1. ORGANIZATION AND BASIS FOR PRESENTATION
The accompanying statements of certain revenues and certain operating expenses
(the "Statements") relate to Lafayette Associates, L.L.C. (d/b/a The Mall of
Acadiana) (the "Property"), a super-regional enclosed shopping mall in
Lafayette, LA.
The Statements are prepared for the purpose of complying with Rule 3-14 of
Regulation S-X promulgated under the Securities Act of 1933, as amended, as a
result of the acquisition of the Property by CBL & Associates Properties, Inc.
Accordingly, the Statements are not representative of the actual operations of
the Property for the periods presented as certain revenues and certain operating
expenses have been excluded. Such items include depreciation, amortization,
interest expense, management fees, leasing commissions and interest income.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Rental income comprises minimum rents, expense
reimbursements and percentage rent payments. Minimum rents with fixed increases
are recognized on a straight-line basis over the initial terms of the related
leases. Tenant reimbursements are recognized in the period that the related
costs are incurred. The Property accounts for these leases as operating leases
as it has retained substantially all risks and benefits of property ownership.
Percentage rent is recognized when the tenant's reported sales have reached
certain levels specified in the respective lease.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The accompanying financial statement for the six-month period ended June 30,
2005 is unaudited; however, it has been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and in conjunction with the rules and regulations of the
U.S. Securities and Exchange Commission. Accordingly, it does not include all of
the disclosures required by accounting principles generally accepted in the
United States of America for complete financial statements. In the opinion of
management of the Property, all adjustments (consisting solely of normal
recurring matters) necessary for a fair presentation for the interim period have
been included. The results for the interim period ended June 30, 2005, are not
necessarily indicative of the results that may be expected for the full year.
9
NOTE 3. LEASING ACTIVITIES
The Property has non-cancelable operating leases with tenants requiring monthly
payments of specified minimum rent. The leases generally provide for minimum
rentals, plus percentage rentals based upon the retail stores' sales volume. A
majority of the leases require reimbursement by the tenant of their
proportionate share of real estate taxes and common area expenses. Future
minimum rental commitments under the non-cancelable operating leases at December
31, 2004 are as follows (in thousands):
Year Ending December 31:
2005 $ 8,126
2006 7,753
2007 7,043
2008 6,128
2009 5,363
Thereafter 12,581
---------------------------
Total $ 46,994
===========================
NOTE 4. SUBSEQUENT EVENT
On July 14, 2005, the Property was sold to affiliates of CBL & Associates
Properties, Inc. for $175,000,000.
10
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
CBL & Associates Properties, Inc.:
We have audited the accompanying statement of certain revenues and certain
operating expenses of Oak Park Investments, L.P. (the "Property) for the year
ended December 31, 2004. This financial statement is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Property's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statement of certain revenues and certain operating expenses
was prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission (for inclusion in the filing of a Form 8-K by
CBL & Associates Properties, Inc. as a result of the acquisition of the
Property). Material amounts, described in Note 1 to the statement of certain
revenues and certain operating expenses, that would not be directly attributable
to those resulting from future operations of the Property are excluded, and the
financial statement is not intended to be a complete presentation of the
Property's revenues and expenses.
In our opinion, such financial statement presents fairly, in all material
respects, certain revenues and certain operating expenses of the Property for
the year ended December 31, 2004 in conformity with accounting principles
generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
December 21, 2005
Atlanta, Georgia
11
OAK PARK INVESTMENTS, L.P.
STATEMENTS OF CERTAIN REVENUES AND CERTAIN OPERATING EXPENSES FOR THE
NINE-MONTH PERIOD ENDED SEPTEMBER 30,2005 (UNAUDITED) AND FOR THE YEAR ENDED
DECEMBER 31, 2004
(DOLLARS IN THOUSANDS)
-------------------------------------------------------------------------------
Nine Months Ended
September 30, 2005 Year Ended
(unaudited) December 31, 2004
CERTAIN REVENUES:
Rentals:
Minimum $ 13,175 $ 18,081
Percentage 623 1,225
Other rents 579 766
Tenant reimbursements 6,716 8,348
Other income 45 55
------------------------------------------------------------
Total revenues 21,138 28,475
------------------------------------------------------------
CERTAIN OPERATING EXPENSES:
Property operating 2,114 2,926
Real estate taxes 2,190 2,728
Maintenance and repairs 1,558 1,662
------------------------------------------------------------
Total expenses 5,862 7,316
------------------------------------------------------------
Excess of certain revenues over
certain operating expenses $15,276 $21,159
============================================================
See accompanying notes to financial statements.
12
OAK PARK INVESTMENTS, L.P.
NOTES TO STATEMENTS OF CERTAIN REVENUES AND CERTAIN OPERATING EXPENSES FOR THE
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2005 (UNAUDITED) AND FOR THE YEAR ENDED
DECEMBER 31, 2004
NOTE 1. ORGANIZATION AND BASIS FOR PRESENTATION
The accompanying statements of certain revenues and certain operating expenses
(the "Statements") relate to Oak Park Investments, L.P. (the "Property"), an
enclosed shopping mall in Kansas City, MO.
The Statements are prepared for the purpose of complying with Rule 3-14 of
Regulation S-X promulgated under the Securities Act of 1933, as amended, as a
result of the acquisition of the Property by CBL & Associates Properties, Inc.
Accordingly, the Statements are not representative of the actual operations of
the Property for the periods presented as certain revenues and certain operating
expenses have been excluded. Such items excluded are depreciation, amortization,
interest expense, management fees, leasing commissions and interest income.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Rental income comprises minimum rents, expense
reimbursements and percentage rent payments. Minimum rents with fixed increases
are recognized on a straight-line basis over the initial terms of the related
leases. Tenant reimbursements are recognized in the period that the related
costs are incurred. The Property accounts for these leases as operating leases
as it has retained substantially all risks and benefits of property ownership.
Percentage rent is recognized when the tenant's reported sales have reached
certain levels specified in the respective lease.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The accompanying financial statement for the nine-month period ended September
30, 2005 is unaudited; however, it has been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and in conjunction with the rules and regulations
of the U.S. Securities and Exchange Commission. Accordingly, it does not include
all of the disclosures required by accounting principles generally accepted in
the United States of America for complete financial statements. In the opinion
of management of the Property, all adjustments (consisting solely of normal
recurring matters) necessary for a fair presentation for the interim period have
been included. The results for the interim period ended September 30, 2005, are
not necessarily indicative of the results that may be expected for the full
year.
13
NOTE 3. LEASING ACTIVITIES
The Property has non-cancelable operating leases with tenants requiring monthly
payments of specified minimum rent. The leases generally provide for minimum
rentals, plus percentage rentals based upon the retail stores' sales volume. A
majority of the leases require reimbursement by the tenant of their
proportionate share of real estate taxes and common area expenses. The minimum
future rentals below do not include amounts which may be received under tenants'
leases from percentage rents, which are based on tenant sales, or other charges
to cover certain operating costs. Future minimum rental commitments under the
non-cancelable operating leases at December 31, 2004 are as follows (in
thousands):
Year Ending December 31:
2005 $17,231
2006 16,425
2007 15,155
2008 13,121
2009 10,067
Thereafter 30,016
---------------------------
Total $ 102,015
===========================
NOTE 4. SUBSEQUENT EVENT
On November 16, 2005, the Property was sold to affiliates of CBL & Associates
Properties, Inc. for $392,000,000.
14
Pro Forma Financial Information
The following unaudited pro forma consolidated financial statements are
based on the historical consolidated financial statements of CBL & Associates
Properties, Inc. (the "Company"), Lafayette Associates, L.L.C. (d/b/a The Mall
of Acadiana) and Oak Park Investments, L.P., and certain other properties that
were acquired during the year ended December 31, 2005, consolidated and adjusted
to give effect to the acquisitions as described in Item 9.01 of this Current
Report on Form 8-K. These statements should be read in conjunction with the
audited historical financial statements and notes thereto of the Company for the
year ended December 31, 2004, which are included in the Company's Annual Report
on Form 10-K, as amended, for the year ended December 31, 2004. These statements
should also be read in conjunction with the Company's Current Report on Form 8-K
dated January 10, 2006, which was filed to update certain items in the Company's
Annual Report on Form 10-K, as amended, for the year ended December 31, 2004 to
reflect the application of the requirements of Statement of Financial Accounting
Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" and the effects of the Company's stock split that occurred in
June 2005. These statements should also be read in conjuction with the
historical financial statements of Lafayette Associates, L.L.C. (d/b/a The Mall
of Acadiana)and Oak Park Investments, L.P.included elsewhere in this Form 8-K.
The unaudited pro forma consolidated statements of operations for the year
ended December 31, 2004 and the nine months ended September 30, 2005, present
the results for the Company and the acquired properties as if the acquisitions
had occurred on January 1, 2004. The accompanying unaudited pro forma
consolidated balance sheet as of September 30, 2005, gives effect to the
acquisitions that occurred subsequent to that date as if they had occurred on
September 30, 2005.
The Company's actual consolidated financial statements will reflect the
effects of the acquisitions on and after the applicable closing dates rather
than the dates indicated above. The unaudited pro forma consolidated financial
statements neither purport to represent what the consolidated results of
operations or financial condition actually would have been had the acquisitions
in fact occurred on the assumed date, nor do they purport to project the
consolidated results of operations and financial position for any future period.
The acquisitions, with the exception of the Triangle joint venture, will be
accounted for by the purchase method and, therefore, assets and liabilities of
the properties will be recorded based on their estimated fair values. The
Triangle joint venture will be accounted for using the equity method of
accounting.
15
CBL & Associates Properties, Inc.
Pro Forma Consolidated Statements of Operations
For The Year Ended December 31, 2004
(Unaudited and in thousands, except per share amounts)
Mall of
Acadiana
CBL and Oak Other Pro Forma CBL
Historical Park Mall Acquisitions(a) Adjustments Pro Forma
----------- ---------- --------------- ------------ ------------
REVENUES:
Minimum rents $ 476,578 $ 27,648 $ 23,774 $ 3,612(b) $ 531,612
Percentage rents 15,948 1,535 1,092 - 18,575
Other rents 16,102 766 2,005 - 18,873
Tenant reimbursements 218,736 13,228 10,765 - 242,729
Management, development and leasing fees 9,791 - - - 9,791
Other 20,098 161 141 - 20,400
----------- ---------- --------------- ------------ ------------
Total revenues 757,253 43,338 37,777 3,612 841,980
----------- ---------- --------------- ------------ ------------
EXPENSES:
Property operating 115,173 4,620 7,202 - 126,995
Depreciation and amortization 142,043 - - 36,788(c) 178,831
Real estate taxes 58,081 2,935 2,682 - 63,698
Maintenance and repairs 43,531 4,365 2,899 - 50,795
General and administrative 35,338 - - - 35,338
Loss on impairment of real estate assets 3,080 - - - 3,080
Other 16,373 - - - 16,373
----------- ---------- --------------- ------------ ------------
Total expenses 413,619 11,920 12,783 36,788 475,110
----------- ---------- --------------- ------------ ------------
Income from operations 343,634 31,418 24,994 (33,176) 366,870
Interest income 3,355 - - - 3,355
Interest expense (177,219) - - (34,775)(d) (211,994)
Gain on sales of real estate assets 29,272 - - - 29,272
Equity in earnings of unconsolidated
affiliates 10,308 - 5,498 (11,068)(e) 4,738
Minority interest in earnings:
Operating partnership (85,186) - - 6,647(f) (78,539)
Shopping center properties (5,365) - - - (5,365)
----------- ---------- --------------- ------------ ------------
Income from continuing operations 118,799 31,418 30,492 (72,372) 108,337
Preferred dividends (18,309) - - - (18,309)
----------- ---------- --------------- ------------ ------------
Income from continuing operations available
to common shareholders $ 100,490 $ 31,418 $ 30,492 $(72,372) $ 90,028
=========== ========== =============== ============ ============
Basic per share data:
Income from continuing operations
available to common shareholders $ 1.63 $ 1.46
=========== ============
Weighted average common shares
outstanding 61,602 61,602
Diluted per share data:
Income from continuing operations
available to common shareholders $ 1.57 $ 1.41
=========== ============
Weighted average common and potential
dilutive common shares outstanding 64,004 64,004
(a) Other Acquisitions includes Laurel Park Place, Layton Hills Mall, Eastland
Mall, Hickory Point Mall and the Company's equity investment in Triangle
Town Center, Triangle Town Commons and Triangle Town Place.
(b) Reflects the amortization of acquired above- and below-market leases.
(c) Represents depreciation and amortization expense related to buildings and
improvements, tenant improvements, in-place leases and tenant relationship
of the acquired properties.
(d) Reflects interest expense on the $823,928 of debt assumed or borrowed
(including debt premiums resulting from purchase accounting adjustments) in
connection with the properties acquired during 2005, which had a weighted
average interest rate of 5.32%. This amount includes the cash portion of
the purchase price of each property acquired totaling $291,622, which is
assumed to have been borrowed at the Company's borrowing rate under its
lines of credit.
(e) Reflects the Company's share of the depreciation and amortization expense
related to buildings and improvements and the interest expense related to
the Company's 50/50 joint venture that owns Triangle Town Center, Triangle
Town Commons and Triangle Town Place, which is accounted for using the
equity method of accounting.
(f) Reflects the allocation of earnings to the minority interest in the
Operating Partnership as a result of the acquired properties.
16
CBL & Associates Properties, Inc.
Pro Forma Consolidated Statements of Operations
For The Nine Months Ended September 30,
2005 (Unaudited and in thousands, except per share amounts)
Mall of
Acadiana
CBL and Oak Other Pro Forma CBL
Historical Park Mall Acquisitions(a) Adjustments Pro Forma
----------- ---------- --------------- ------------ ------------
REVENUES:
Minimum rents $ 394,485 $ 18,331 $ 15,746 $ 2,381(b) $ 430,943
Percentage rents 12,972 630 841 - 14,443
Other rents 8,320 579 963 - 9,862
Tenant reimbursements 184,598 9,329 6,636 - 200,563
Management, development and leasing fees 17,927 - - - 17,927
Other 15,768 223 76 - 16,067
----------- ---------- --------------- ------------ ------------
Total revenues 634,070 29,092 24,262 2,381 689,805
----------- ---------- --------------- ------------ ------------
EXPENSES:
Property operating 95,539 3,119 4,118 - 102,776
Depreciation and amortization 130,663 - - 23,712(c) 154,375
Real estate taxes 47,626 2,297 2,171 - 52,094
Maintenance and repairs 36,673 3,076 1,812 - 41,561
General and administrative 28,641 - - - 28,641
Loss on impairment of real estate assets 262 - - - 262
Other 10,256 - - - 10,256
----------- ---------- --------------- ------------ ------------
Total expenses 349,660 8,492 8,101 23,712 389,965
----------- ---------- --------------- ------------ ------------
Income from operations 284,410 20,600 16,161 (21,331) 299,840
Interest income 6,214 - - - 6,214
Interest expense (151,822) - - (28,268)(d) (180,090)
Loss on extinguishment of debt (928) - - - (928)
Gain on sales of real estate assets 53,581 - - - 53,581
Gain on sales of real estate assets 21,619 - - - 21,619
Equity in earnings of unconsolidated
affiliates 6,769 - 5,197 (8,321)(e) 3,645
Minority interest in earnings:
Operating partnership (87,176) - - 5,919(f) (81,257)
Shopping center properties (3,661) - - - (3,661)
----------- ---------- --------------- ------------ ------------
Income from continuing operations 129,006 20,600 21,358 (52,001) 118,963
Preferred dividends (22,926) - - - (22,926)
----------- ---------- --------------- ------------ ------------
Income from continuing operations available
to common shareholders $ 106,080 $ 20,600 $ 21,358 $(52,001) $ 96,037
=========== ========== =============== ============ ============
Basic per share data:
Income from continuing operations
available to common shareholders $ 1.69 $ 1.53
=========== ============
Weighted average common shares
outstanding 62,693 62,693
Diluted per share data:
Income from continuing operations
available to common shareholders $ 1.63 $ 1.48
=========== ============
Weighted average common and potential
dilutive common shares outstanding 64,973 64,973
(a) Other Acquisitions includes Laurel Park Place, Layton Hills Mall, Eastland
Mall, Hickory Point Mall and the Company's equity investment in Triangle
Town Center, Triangle Town Commons and Triangle Town Place.
(b) Reflects the amortization of acquired above- and below-market leases.
(c) Represents depreciation and amortization expense related to buildings and
improvements, tenant improvements and in-place leases of the acquired
properties.
(d) Reflects interest expense on the $823,928 of debt assumed or borrowed
(including debt premiums resulting from purchase accounting adjustments) in
connection with the properties acquired during 2005, which had a weighted
average interest rate of 5.32%. This amount includes the cash portion of
the purchase price of each property acquired totaling $291,622, which is
assumed to have been borrowed at the Company's borrowing rate under its
lines of credit.
(e) Reflects the Company's share of the depreciation and amortization expense
related to buildings and improvements and the interest expense related to
the Company's 50/50 joint venture that owns Triangle Town Center, Triangle
Town Commons and Triangle Town Place, which is accounted for using the
equity method of accounting.
(f) Reflects the allocation of earnings to the minority interest in the
Operating Partnership as a result of the issuance of limited partner
interests as part of the purchase price consideration.
17
CBL & Associates Properties, Inc.
Pro Forma Consolidated Balance Sheet
September 30, 2005
(in thousands, except share amounts)
CBL Pro-forma CBL
Historical Adjustments Pro Forma
--------------- ---------------- ---------------
ASSETS
Real estate assets:
Land $ 702,250 $ 62,820(a) $ 765,070
Buildings and improvements 5,066,292 513,984(a) 5,580,276
--------------- ---------------- ---------------
5,768,542 576,804 6,345,346
Less: accumulated depreciation (683,390) - (683,390)
--------------- ---------------- ---------------
5,085,152 576,804 5,661,956
Developments in progress 216,318 - 216,318
--------------- ---------------- ---------------
Net investment in real estate 5,301,470 576,804 5,878,274
Cash, restricted cash and cash equivalents 36,802 - 36,802
Receivables:
Tenant, net of allowance 41,232 - 41,232
Other 3,915 - 3,915
Mortgage notes receivable 18,104 - 18,104
Investment in unconsolidated affiliates 80,059 1,560(b) 81,619
Other assets 140,507 90,322(a) 230,829
--------------- ---------------- ---------------
$ 5,622,089 $ 668,686 $ 6,290,775
=============== ================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable $ 3,664,086 $ 584,698(c) $ 4,248,784
Accounts payable and accrued liabilities 247,273 38,019(a) 285,292
--------------- ---------------- ---------------
Total liabilities 3,911,359 622,717 4,534,076
--------------- ---------------- ---------------
Commitments and contingencies
Minority interests 606,179 27,818(d) 633,997
--------------- ---------------- ---------------
Shareholders' equity:
Preferred Stock, $.01 par value, 15,000,000 shares authorized:
8.75% Series B cumulative redeemable preferred stock,
2,000,000 shares outstanding 20 - 20
7.75% Series C cumulative redeemable preferred stock,
460,000 shares outstanding 5 - 5
7.375% Series D cumulative redeemable preferred stock,
700,000 shares outstanding 7 - 7
Common Stock, $.01 par value, 95,000,000 shares authorized,
63,557,518 issued and outstanding 636 - 636
Additional paid-in capital 1,052,988 18,151(d) 1,071,139
Deferred compensation (9,691) - (9,691)
Other comprehensive income 310 - 310
Retained earnings 60,276 - 60,276
--------------- ---------------- ---------------
Total shareholders' equity 1,104,551 18,151 1,122,702
--------------- ---------------- ---------------
$ 5,622,089 $ 668,686 $ 6,290,775
=============== ================ ===============
(a) Represents the allocation of the purchase price of Layton Hills Mall, Oak
Park Mall, Eastland Mall and Hickory Point Mall to the assets acquired and
liabilities assumed. Tangible and intangible assets/liabilities (and the
related weighted average depreciable life) include land, buildings (40
years), site improvements (10 years), tenant improvements (10 years), above
and below market leases (15 years), in-place leases (10 years) and tenant
relationship (40 years). The purchase price allocations for Laurel Park
Place and The Mall of Acadiana are not included in the pro forma
adjustments as these properties were acquired prior to September 30, 2005,
and are included in the CBL Historical amounts.
(b) Represents the Company's investment in Triangle Town Center, Triangle Town
Commons and Triangle Town Place, which are owned in a joint venture
accounted for using the equity method.
(c) Represents debt of $471,100 assumed or incurred in connection with the
acquisitions of Layton Hills Mall, Oak Park Mall, Eastland Mall and Hickory
Point Mall plus the aggregate cash of $113,589 paid in connection with
these acquisitions and the investment in the Triangle properties, which is
assumed to have been borrowed under the Company's lines of credit.
(d) Represents the value of $45,969 attributable to the 1,144,924 K-SCUs issued
as part of the consideration to acquire Oak Park Mall and Eastland Mall.
This amount is offset by a reclassification of $18,151 to additional
paid-in capital resulting from an allocation made between shareholders'
equity and minority interest in the operating partnership to reflect the
change in ownership of the operating partnership's underlying equity as a
result of the change in the number of operating partnership units
outstanding.