CBL & Associates Properties Reports Outstanding Third Quarter 2016 Results

CHATTANOOGA, Tenn.--(BUSINESS WIRE)-- CBL & Associates Properties, Inc. (NYSE: CBL) announced results for the third quarter ended September 30, 2016. A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure is located at the end of this news release.

		Three Months EndedSeptember 30,											Nine Months EndedSeptember 30,
		2016				2015				%			2016				2015				%
Net income (loss) attributable to common shareholders per diluted share		$	(0.06	)		$	0.15			(140.0	)%		$	0.41			$	0.54			(24.1	)%
Funds from Operations ("FFO") per diluted share		$	0.56			$	0.56			0.0	%		$	1.97			$	1.70			15.9	%
FFO, as adjusted, per diluted share (1)		$	0.57			$	0.56			1.8	%		$	1.72			$	1.61			6.8	%
(1) FFO, as adjusted, for the three months ended September 30, 2016 excludes $0.7 million of nonrecurring professional fees expense, $0.6 million of litigation expense, $1.1 million of equity in losses from the disposal of unconsolidated affiliates and $1.4 million of non-cash default interest expense. FFO, as adjusted, for the nine months ended September 30, 2016 excludes a $55.6 million increase in equity in earnings, of which $29.2 million related to the foreclosure of the loan secured by Gulf Coast Town Center and $26.4 million related to the sale of our 50% interest in Triangle Town Center; $2.3 million of litigation expense and $1.8 million of nonrecurring professional fees expense. FFO, as adjusted, for the three months ended September 30, 2015 excludes $0.3 million of expense related to a litigation settlement. FFO, as adjusted, for the nine months ended September 30, 2015 excludes a partial litigation settlement, net of related expenses, of $1.3 million, a $16.6 million gain on investment related to the sale of marketable securities and a $0.3 million gain on extinguishment of debt.

HIGHLIGHTS:

• Closed on the sale of two Tier 3 malls and entered into a binding contract for the sale of three additional Tier 3 malls.
• Same-center NOI for the third quarter of 2016 increased 2.6% in the Total Portfolio and 2.3% in the Malls compared with the prior period, primarily driven by top-line revenue growth.
• FFO per diluted share, as adjusted, of $0.57 for the third quarter of 2016, increased 1.8% compared with the prior-year period.
• Same-center mall occupancy increased 90 basis points to 92.7% as of September 30, 2016 compared with 91.8% as of September 30, 2015.
• Stabilized Mall leases were signed at an average increase of 10.2% over the expiring gross rent per square foot.

CBL's President and Chief Executive Officer Stephen Lebovitz commented, "Our strong third quarter results and outstanding operating performance year-to-date is further evidence that our portfolio transformation strategy is working. Same-center NOI growth at the high-end of our guidance range was driven by top-line revenue growth as same-center mall occupancy increased 90 basis points and lease spreads improved to average 10.2%.

"We have made tremendous progress on our disposition program this year with 17 mall transactions completed or in process. These include the two Tier 3 malls sold during the quarter as well as a portfolio of three Tier 3 malls under binding contract. Our portfolio and our company are stronger today than they have ever been. We are utilizing our free cash flow and disposition proceeds to reinvest in accretive redevelopments and high-growth developments, while at the same time we are reducing debt. With $460 million lower total debt compared with the prior-year period and healthy coverage ratios, our balance sheet is only getting better. As we close out 2016 and begin to look to 2017, we are focused on building on these portfolio and balance sheet enhancements and positioning CBL for even greater success in the future."

Net loss attributable to common shareholders for the third quarter of 2016 was $10.2 million, or $(0.06) per diluted share, compared with net income of $26.3 million, or $0.15 per diluted share, for the third quarter of 2015. Net loss in the quarter included the $53.6 million impairment of properties classified as held-for-sale or properties that the Company intends to dispose of before the end of their useful lives.

FFO allocable to common shareholders, as adjusted, for the third quarter of 2016 was $98.1 million, or $0.57 per diluted share, compared with $95.0 million, or $0.56 per diluted share, for the third quarter of 2015. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the third quarter of 2016 was $114.9 million compared with $111.3 million for the third quarter of 2015.

Percentage change in same-center Net Operating Income ("NOI")(1):
			Three MonthsEnded September 30, 2016
	Portfolio same-center NOI		2.6%
	Mall same-center NOI		2.3%
(1)	CBL's definition of same-center NOI excludes the impact of lease termination fees and certain non-cash items of straight line rents, write-offs of landlord inducements and net amortization of acquired above and below market leases. NOI is for real estate properties and excludes the Company's subsidiary that provides maintenance, janitorial and security services.

Major variances impacting same-center NOI for the quarter ended September 30, 2016 include:

• NOI increased $4.4 million, generated from a $3.4 million increase in revenue and a $1.0 million decline in operating expense.
• Minimum rents increased $4.0 million during the quarter as a result of rent growth and occupancy increases over the prior year.
• Percentage rents declined $0.2 million as sales softened in the third quarter.
• Tenant reimbursement and other revenues declined $0.4 million.
• Property operating expense declined $0.7 million, maintenance and repair expense declined $0.2 million, and real estate tax expense declined $0.1 million.

PORTFOLIO OPERATIONAL RESULTS

Occupancy:
			As of June 30,		As of September 30,
			2016		2016		2015
	Portfolio occupancy		92.6%		93.5%		92.4%
	Mall portfolio		91.6%		92.6%		91.7%
	Same-center malls		91.6%		92.7%		91.8%
	Stabilized malls		91.6%		92.5%		91.6%
	Non-stabilized malls (1)		92.3%		93.6%		95.0%
	Associated centers		95.6%		96.1%		93.8%
	Community centers		96.8%		97.5%		96.6%
(1)	Represents occupancy for The Outlet Shoppes at Atlanta and The Outlet Shoppes of the Bluegrass as of June 30, 2016 and September 30, 2016 and Fremaux Town Center, The Outlet Shoppes at Atlanta and The Outlet Shoppes of the Bluegrass as of September 30, 2015.

New and Renewal Leasing Activity of Same Small Shop Space Less Than 10,000 Square Feet:
% Change in Average Gross Rent Per Square Foot
		Three Months Ended September 30, 2016
Stabilized Malls		10.2%
New leases		19.7%
Renewal leases		7.3%

Same-Center Sales Per Square Foot for Mall Tenants 10,000 Square Feet or Less:
				Twelve Months Ended September 30,
				2016					2015						% Change
Stabilized mall same-center sales per square foot				$	377				$	379					(0.5)%

DISPOSITIONS

During the quarter, CBL entered into a contract for a portfolio of three Tier 3 enclosed malls for an aggregate sales price of $32.25 million. The buyer, Hull Property Group, has completed due diligence and posted a significant non-refundable deposit. The portfolio includes Randolph Mall in Asheboro, NC; Regency Mall in Racine, WI; and Walnut Square in Dalton, GA. The transaction is expected to close prior to year-end 2016. CBL recorded an impairment charge of $43.3 million to write down the depreciated book value of the malls to their net sales price.

Year-to-Date Disposition Activity:
Status/Timing		Property		Location		CBL's Ownership		CBL's Share of Consideration		CBL's Share of Debt		CBL's Share of Equity
Pending/Est. Q4		Randolph Mall; Regency Mall; Walnut Square		Asheboro, NC; Racine, WI; Dalton, GA		100%		$32.3		$0.0		$32.3
Closed/July		Fashion Square/The Lakes Mall		Saginaw, MI/Muskegon, MI		100%		66.5		38.2		28.3
Closed/May		Bonita Lakes Mall & Crossing		Meridian, MI		100%		27.9		—		27.9
Closed/March		River Ridge Mall (1)		Lynchburg, VA		100% → 25%		33.5		—		33.5
Closed/February		Triangle Town Center, Place and Commons (1)		Raleigh, NC		50% → 10%		69.6		68.4		1.2
Total Malls:								229.8		106.6		123.2
Closed/September		High Pointe Commons		Harrisburg, PA		50%		16.9		8.7		8.2
Closed/September		Oak Branch Business Center		Greensboro, NC		100%		2.4		—		2.4
Closed/April		Renaissance Center		Durham, NC		50%		64.6		23.8		40.8
Closed/April		The Crossings at Marshall's Creek		Middle Smithfield, PA		100%		22.3		—		22.3
Total Community Center and Office:								106.2		32.5		73.7
Total Disposition Activity:								$336.0		$139.1		$196.9
(1) Joint Venture amounts are reflected net of retained interest.

In September, CBL and its joint venture partner closed on the assignment of 100% of the partnership interests in High Pointe Commons in Harrisburg, PA for a total consideration of $33.8 million. Proceeds from the transaction were used to retire existing secured loans aggregating to $17.4 million with CBL’s share of net proceeds used to reduce outstanding balances on the Company’s lines of credit.

In September, CBL completed the sale of a wholly owned office building in Greensboro, NC for a total sales price of $2.4 million.

In July, CBL completed the sale of Fashion Square in Saginaw, MI and The Lakes Mall in Muskegon, MI for an aggregate sales price of $66.5 million, including the assumption of a $38.2 million loan secured by Fashion Square. CBL recorded an impairment charge of $32.1 million in the second quarter related to the sale.

In May, CBL closed on the sale of Bonita Lakes Mall and Bonita Lakes Crossing in Meridian, MS for $27.9 million.

In April, CBL and its 50/50 joint venture partner closed on the sale of 100% of Renaissance Center, the 363,000-square-foot community shopping center located in Durham, NC. Renaissance Center was sold for a sales price of $129.2 million, including the assumption of a $16.0 million loan by the buyer and a $31.6 million loan that was retired at closing. The transaction generated net equity to CBL of $40.8 million.

In April, CBL completed the sale of The Crossings at Marshalls Creek, the 86,000-square-foot community center located in Middle Smithfield, PA, for a sales price of $22.3 million, in cash.

In March, CBL closed on the sale of a 75% interest in River Ridge in Lynchburg, VA, to Liberty University and received net cash proceeds of $33.5 million. CBL retains a 25% ownership position in the asset and is responsible for leasing and management, earning customary fees.

In February, CBL formed a new 10/90 joint venture for Triangle Town Center, Place and Commons in Raleigh, NC, with DRA Advisors LLC (DRA). The new joint venture acquired the property from the existing 50/50 joint venture between CBL and The Richard E. Jacobs Group for a total consideration of $174.0 million, including assumption of a $171.1 million loan secured by the property. CBL holds a 10% ownership position in the asset and is responsible for leasing and managing, earning customary fees.

FINANCING ACTIVITY

During the quarter, CBL retired three loans totaling $71.9 million (at CBL's share) and added the properties to its unencumbered pool of assets. The loans were secured by Dakota Square Mall in Minot, ND and two unconsolidated joint venture properties, Kentucky Oaks in Paducah, KY and Governor's Square in Clarksville, TN. Subsequent to the quarter-end, CBL retired the $38.3 million loan secured by Southaven Town Center in Southaven, MS.

OUTLOOK AND GUIDANCE

Based on results year-to-date and its current outlook, the Company anticipates achieving 2016 FFO, as adjusted, near the high-end of its guidance range of $2.36 - $2.40 per diluted share. CBL also anticipates achieving same-center NOI growth near the high-end of its guidance range of 1.5% - 2.5% in 2016.

The guidance also assumes the following:

• $8.0 million to $10.0 million in gains on outparcel sales;
• 75-125 basis point increase in total portfolio occupancy as well as stabilized mall occupancy;
• G&A, net of litigation expense and non-recurring professional fees, of $58 million to $60 million; and
• No unannounced capital markets activity.

		Low				High
Expected diluted earnings per common share		$	0.69			$	0.73
Adjust to fully converted shares from common shares		(0.10		)		(0.11		)
Expected earnings per diluted, fully converted common share		0.59				0.62
Add: depreciation and amortization		1.57				1.57
Add: Loss on impairment		0.58				0.58
Add: noncontrolling interest in earnings of Operating Partnership		0.10				0.11
Less: Gain on depreciable property		(0.22		)		(0.22		)
Expected FFO per diluted, fully converted common share		2.62				2.66
Adjustment for dispositions of unconsolidated affiliates		(0.28		)		(0.28		)
Adjustment for litigation settlement and nonrecurring professional fees expense		0.02				0.02
Expected adjusted FFO per diluted, fully converted common share		$	2.36			$	2.40

INVESTOR CONFERENCE CALL AND WEBCAST

CBL & Associates Properties, Inc. will conduct a conference call on Friday, October 28, 2016, at 11:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 9239777. A replay of the conference call will be available through November 4, 2016, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10091791. A transcript of the Company's prepared remarks will be furnished on a Form 8-K following the conference call.

To receive the CBL & Associates Properties, Inc. third quarter earnings release and supplemental information, please visit the Investing section of our website at cblproperties.com or contact Investor Relations at (423) 490-8312.

The Company will also provide an online webcast and rebroadcast of its 2016 third quarter earnings release conference call. The live broadcast of the quarterly conference call will be available online at cblproperties.com on Friday, October 28, 2016 beginning at 11:00 a.m. ET. The online replay will follow shortly after the call.

ABOUT CBL & ASSOCIATES PROPERTIES, INC.

Headquartered in Chattanooga, TN, CBL is one of the largest and most active owners and developers of malls and shopping centers in the United States. CBL owns, holds interests in or manages 139 properties, including 87 regional malls/open-air centers. The properties are located in 31 states and total 81.1 million square feet including 7.1 million square feet of non-owned shopping centers managed for third parties. Additional information can be found at cblproperties.com.

NON-GAAP FINANCIAL MEASURES

Funds From Operations

FFO is a widely used measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. The Company’s method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

The Company believes that FFO provides an additional indicator of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of well-maintained real estate assets have historically risen with market conditions, the Company believes that FFO enhances investors’ understanding of its operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of the Company’s properties and interest rates, but also by its capital structure. The Company presents both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as it believes that both are useful performance measures. The Company believes FFO allocable to Operating Partnership common unitholders is a useful performance measure since it conducts substantially all of its business through its Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company’s common shareholders and the noncontrolling interest in the Operating Partnership. The Company believes FFO allocable to its common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to its common shareholders.

In the reconciliation of net income (loss) attributable to the Company's common shareholders to FFO allocable to Operating Partnership common unitholders, located in this earnings release, the Company makes an adjustment to add back noncontrolling interest in income (loss) of its Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders. The Company then applies a percentage to FFO of the Operating Partnership common unitholders to arrive at FFO allocable to its common shareholders. The percentage is computed by taking the weighted average number of common shares outstanding for the period and dividing it by the sum of the weighted average number of common shares and the weighted average number of Operating Partnership units outstanding during the period.

FFO does not represent cash flows from operations as defined by accounting principles generally accepted in the United States, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating the Company’s operating performance or to cash flow as a measure of liquidity.

As described above, during the third quarter of 2016, the Company recognized $0.7 million of nonrecurring professional expense, $0.6 million of litigation expense, $1.1 million of equity in losses from the disposals of unconsolidated affiliates and $1.4 million of non-cash default interest expense. For the nine months ended September 30, 2016, the Company recognized a $54.5 million increase in equity in earnings, of which $27.9 million related to the foreclosure of the loan secured by Gulf Coast Town Center and $26.4 million related to the sale of our 50% interest in Triangle Town Center; $2.3 million of litigation expense and $1.8 million of nonrecurring professional fees expense. During the third quarter of 2015, the Company recognized $0.3 million of expense related to a litigation settlement. Additionally, during the nine months ended September 30, 2015, the Company recognized a $16.6 million gain on investment related to the sale of marketable securities, a $0.3 million gain on extinguishment of debt and received income of $1.3 million, net of related expense, as a partial settlement of ongoing litigation. Considering the significance and nature of these items, the Company believes it is important to identify their impact on its FFO measures for readers to have a complete understanding of the Company's results of operations. Therefore, the Company has also presented adjusted FFO measures excluding these items from the applicable periods.

Same-center Net Operating Income

NOI is a supplemental measure of the operating performance of the Company's shopping centers and other properties. The Company defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).

The Company computes NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated properties. We believe that presenting NOI and same-center NOI (described below) based on our Operating Partnership’s pro rata share of both consolidated and unconsolidated Properties is useful since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the Properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in the Operating Partnership. The Company's definition of NOI may be different than that used by other companies and, accordingly, the Company's NOI may not be comparable to that of other companies.

Since NOI includes only those revenues and expenses related to the operations of its shopping center and other properties, the Company believes that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates and operating costs and the impact of those trends on the Company's results of operations. The Company’s calculation of same-center NOI also excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-off of landlord inducement assets in order to enhance the comparability of results from one period to another, as these items can be impacted by one-time events that may distort same-center NOI trends and may result in same-center NOI that is not indicative of the ongoing operations of the Company’s shopping center and other properties. A reconciliation of same-center NOI to net income is located at the end of this earnings release.

Pro Rata Share of Debt

The Company presents debt based on its pro rata ownership share (including the Company's pro rata share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties) because it believes this provides investors a clearer understanding of the Company's total debt obligations which affect the Company's liquidity. A reconciliation of the Company's pro rata share of debt to the amount of debt on the Company's consolidated balance sheet is located at the end of this earnings release.

Information included herein contains "forward-looking statements" within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual events, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. The reader is directed to the Company's various filings with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K, and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included therein, for a discussion of such risks and uncertainties.

CBL & Associates Properties, Inc.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
		Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
		2016				2015				2016				2015
REVENUES:
Minimum rents		$	164,444			$	170,422			$	502,289			$	505,931
Percentage rents		3,225				3,869				10,590				10,418
Other rents		3,866				4,156				13,747				13,748
Tenant reimbursements		69,489				72,461				212,951				214,818
Management, development and leasing fees		4,177				2,754				10,825				8,195
Other		6,520				8,974				19,362				24,278
Total revenues		251,721				262,636				769,764				777,388
OPERATING EXPENSES:
Property operating		35,116				35,859				104,804				107,629
Depreciation and amortization		71,794				74,045				220,505				221,550
Real estate taxes		22,492				23,579				68,354				68,913
Maintenance and repairs		13,236				12,480				39,574				39,103
General and administrative		13,222				12,995				46,865				46,440
Loss on impairment		53,558				884				116,736				3,665
Other		5,576				8,787				20,313				21,191
Total operating expenses		214,994				168,629				617,151				508,491
Income from operations		36,727				94,007				152,613				268,897
Interest and other income		451				579				1,062				6,242
Interest expense		(54,292		)		(56,451		)		(162,710		)		(174,362		)
Gain on extinguishment of debt		(6		)		—				—				256
Gain on investment		—				—				—				16,560
Equity in earnings of unconsolidated affiliates		10,478				3,508				107,217				12,212
Income tax benefit (provision)		2,386				(448		)		2,974				(2,004		)
Income (loss) from continuing operations before gain on sales of real estate assets		(4,256		)		41,195				101,156				127,801
Gain on sales of real estate assets		4,926				3,237				14,503				18,167
Net income		670				44,432				115,659				145,968
Net (income) loss attributable to noncontrolling interests in:
Operating Partnership		1,372				(4,665		)		(12,056		)		(15,783		)
Other consolidated subsidiaries		(983		)		(2,198		)		449				(4,557		)
Net income attributable to the Company		1,059				37,569				104,052				125,628
Preferred dividends		(11,223		)		(11,223		)		(33,669		)		(33,669		)
Net income (loss) attributable to common shareholders		$	(10,164	)		$	26,346			$	70,383			$	91,959
Basic per share data attributable to common shareholders:
Net income (loss) attributable to common shareholders		$	(0.06	)		$	0.15			$	0.41			$	0.54
Weighted-average common shares outstanding		170,792				170,494				170,751				170,470
Diluted per share data attributable to common shareholders:
Net income (loss) attributable to common shareholders		$	(0.06	)		$	0.15			$	0.41			$	0.54
Weighted-average common and potential dilutive common shares outstanding		170,792				170,494				170,751				170,500
Dividends declared per common share		$	0.265			$	0.265			$	0.795			$	0.795

	The Company's reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows:
	(in thousands, except per share data)
			Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
			2016				2015				2016				2015
	Net income (loss) attributable to common shareholders		$	(10,164	)		$	26,346			$	70,383			$	91,959
	Noncontrolling interest in income (loss) of Operating Partnership		(1,372		)		4,665				12,056				15,783
	Depreciation and amortization expense of:
	Consolidated properties		71,794				74,045				220,505				221,550
	Unconsolidated affiliates		10,756				10,734				29,090				31,354
	Non-real estate assets		(838		)		(711		)		(2,397		)		(2,284		)
	Noncontrolling interests' share of depreciation and amortization		(2,237		)		(2,154		)		(6,685		)		(6,936		)
	Loss on impairment, net of tax		51,812				884				114,990				3,665
	Gain on depreciable property, net of tax		(8,685		)		(2,849		)		(44,206		)		(15,045		)
	FFO allocable to Operating Partnership common unitholders		111,066				110,960				393,736				340,046
	Litigation settlements, net of related expenses (1)		601				325				2,308				(1,329		)
	Nonrecurring professional fees expense (1)		662				—				1,781				—
	Gain on investment		—				—				—				(16,560		)
	Equity in (earnings) losses from disposals of unconsolidated affiliates		1,145				—				(54,485		)		—
	Non-cash default interest expense		1,374				—				1,374				—
	Gain on extinguishment of debt		6				—				—				(256		)
	FFO allocable to Operating Partnership common unitholders, as adjusted		$	114,854			$	111,285			$	344,714			$	321,901
	FFO per diluted share		$	0.56			$	0.56			$	1.97			$	1.70
	FFO, as adjusted, per diluted share		$	0.57			$	0.56			$	1.72			$	1.61
	Weighted average common and potential dilutive common shares outstanding with Operating Partnership units fully converted		200,004				199,751				199,992				199,758
(1)	Litigation settlement is included in Interest and Other Income in the Consolidated Statements of Operations. Litigation expense, including settlements paid, is included in General and Administrative expense in the Consolidated Statements of Operations. Nonrecurring professional fees expense is included in General and Administrative expense in the Consolidated Statements of Operations.

The reconciliation of diluted EPS to FFO per diluted share is as follows:
		Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
		2016				2015				2016				2015
Diluted EPS attributable to common shareholders		$	(0.06	)		$	0.15			$	0.41			$	0.54
Eliminate amounts per share excluded from FFO:
Depreciation and amortization expense, including amounts from consolidated properties, unconsolidated affiliates, non-real estate assets and excluding amounts allocated to noncontrolling interests		0.40				0.42				1.21				1.22
Loss on impairment		0.26				—				0.57				0.01
Gain on depreciable property, net of tax		(0.04		)		(0.01		)		(0.22		)		(0.07		)
FFO per diluted share		$	0.56			$	0.56			$	1.97			$	1.70

	The reconciliations of FFO allocable to Operating Partnership common unitholders to FFO allocable to common shareholders, including and excluding the adjustments noted above, are as follows:
			Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
			2016				2015				2016				2015
	FFO allocable to Operating Partnership common unitholders		$	111,066			$	110,960			$	393,736			$	340,046
	Percentage allocable to common shareholders (1)		85.39		%		85.35		%		85.38		%		85.35		%
	FFO allocable to common shareholders		$	94,839			$	94,704			$	336,172			$	290,229
	FFO allocable to Operating Partnership common unitholders, as adjusted		$	114,854			$	111,285			$	344,714			$	321,901
	Percentage allocable to common shareholders (1)		85.39		%		85.35		%		85.38		%		85.35		%
	FFO allocable to common shareholders, as adjusted		$	98,074			$	94,982			$	294,317			$	274,743
(1)	Represents the weighted average number of common shares outstanding for the period divided by the sum of the weighted average number of common shares and the weighted average number of Operating Partnership units outstanding during the period. See the reconciliation of shares and Operating Partnership units outstanding on page 14.

SUPPLEMENTAL FFO INFORMATION:
		Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
		2016				2015				2016				2015
Lease termination fees		$	857			$	1,346			$	2,202			$	4,383
Lease termination fees per share		$	—			$	0.01			$	0.01			$	0.02
Straight-line rental income (including write-offs)		$	(319	)		$	1,412			$	1,241			$	2,975
Straight-line rental income (including write-offs) per share		$	—			$	0.01			$	0.01			$	0.01
Gains on outparcel sales		$	4,387			$	627			$	8,170			$	3,150
Gains on outparcel sales per share		$	0.02			$	—			$	0.04			$	0.02
Net amortization of acquired above- and below-market leases		$	783			$	1,043			$	2,765			$	1,881
Net amortization of acquired above- and below-market leases per share		$	—			$	0.01			$	0.01			$	0.01
Net amortization of debt premiums and discounts		$	1,162			$	404			$	2,000			$	1,437
Net amortization of debt premiums and discounts per share		$	0.01			$	—			$	0.01			$	0.01
Income tax benefit (provision)		$	2,386			$	(448	)		$	2,974			$	(2,004	)
Income tax benefit (provision) per share		$	0.01			$	—			$	0.01			$	(0.01	)
Gain on extinguishment of debt		$	(6	)		$	—			$	—			$	256
Gain on extinguishment of debt per share		$	—			$	—			$	—			$	—
Gain on investment		$	—			$	—			$	—			$	16,560
Gain on investment per share		$	—			$	—			$	—			$	0.08
Equity in earnings (losses) from disposals of unconsolidated affiliates		$	(1,145	)		$	—			$	54,485			$	—
Equity in earnings (losses) from disposals of unconsolidated affiliates per share		$	(0.01	)		$	—			$	0.27			$	—

SUPPLEMENTAL FFO INFORMATION:
		Three Months EndedSeptember 30,											Nine Months EndedSeptember 30,
		2016				2015							2016						2015
Non-cash default interest expense		$	(1,374	)		$	—						$	(1,374			)		$	—
Non-cash default interest expense per share		$	(0.01	)		$	—						$	(0.01			)		$	—
Abandoned projects expense		$	(11	)		$	(2,058				)		$	(44			)		$	(2,183	)
Abandoned projects expense per share		$	—			$	(0.01				)		$	—					$	(0.01	)
Interest capitalized		$	616			$	909						$	1,612					$	3,141
Interest capitalized per share		$	—			$	—						$	0.01					$	0.02
Litigation settlements, net of related expenses		$	(601	)		$	(325				)		$	(2,308			)		$	1,329
Litigation settlements, net of related expenses per share		$	—			$	—						$	(0.01			)		$	—
Nonrecurring professional fees expense		$	(662	)		$	—						$	(1,781			)		$	—
Nonrecurring professional fees expense per share		$	—			$	—						$	(0.01			)		$	—
									As of September 30,
									2016								2015
Straight-line rent receivable									$	67,861							$	66,334

	Same-center Net Operating Income
	(Dollars in thousands)
			Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
			2016				2015				2016				2015
	Net income		$	670			$	44,432			$	115,659			$	145,968
	Adjustments:
	Depreciation and amortization		71,794				74,045				220,505				221,550
	Depreciation and amortization from unconsolidated affiliates		10,756				10,734				29,090				31,354
	Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries		(2,237		)		(2,154		)		(6,685		)		(6,936		)
	Interest expense		54,292				56,451				162,710				174,362
	Interest expense from unconsolidated affiliates		6,109				9,601				19,787				28,873
	Noncontrolling interests' share of interest expense in other consolidated subsidiaries		(1,769		)		(1,693		)		(5,126		)		(5,090		)
	Abandoned projects expense		11				2,058				44				2,183
	Gain on sales of real estate assets		(4,926		)		(3,237		)		(14,503		)		(18,167		)
	Gain on sales of real estate assets of unconsolidated affiliates		(8,018		)		(566		)		(93,340		)		(1,730		)
	Gain on investment		—				—				—				(16,560		)
	Gain on extinguishment of debt		6				—				—				(256		)
	Loss on impairment		53,558				884				116,736				3,665
	Income tax (benefit) provision		(2,386		)		448				(2,974		)		2,004
	Lease termination fees		(857		)		(1,346		)		(2,202		)		(4,383		)
	Straight-line rent and above- and below-market lease amortization		(464		)		(2,455		)		(4,006		)		(4,856		)
	Net (income) loss attributable to noncontrolling interests in other consolidated subsidiaries		(983		)		(2,198		)		449				(4,557		)
	General and administrative expenses		13,222				12,995				46,865				46,440
	Management fees and non-property level revenues		(1,379		)		(5,876		)		(12,429		)		(22,914		)
	Operating Partnership's share of property NOI		187,399				192,123				570,580				570,950
	Non-comparable NOI		(10,816		)		(19,975		)		(39,526		)		(55,557		)
	Total same-center NOI (1)		$	176,583			$	172,148			$	531,054			$	515,393
	Total same-center NOI percentage change		2.6		%						3.0		%
	Malls		$	161,066			$	157,372			$	485,111			$	471,945
	Associated centers		8,245				7,807				24,597				23,357
	Community centers		5,165				4,772				15,133				13,766
	Offices and other		2,107				2,197				6,213				6,325
	Total same-center NOI (1)		$	176,583			$	172,148			$	531,054			$	515,393
	Percentage Change:
	Malls		2.3		%						2.8		%
	Associated centers		5.6		%						5.3		%
	Community centers		8.2		%						9.9		%
	Offices and other		(4.1		)%						(1.8		)%
	Total same-center NOI (1)		2.6		%						3.0		%
(1)	CBL defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income), less property operating expenses (property operating, real estate taxes and maintenance and repairs). Same-center NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-offs of landlord inducement assets. Same-center NOI is for real estate properties and does not include the results of operations of the Company's subsidiary that provides janitorial, security and maintenance services. We include a property in our same-center pool when we own all or a portion of the property as of September 30, 2016, and we owned it and it was in operation for both the entire preceding calendar year and the current year-to-date reporting period ending September 30, 2016. New properties are excluded from same-center NOI, until they meet this criteria. The only properties excluded from the same-center pool that would otherwise meet this criteria are properties which are either under major redevelopment, being considered for repositioning, minority interest properties in which we own an interest of 25% or less, or where we intend to renegotiate the terms of the debt secured by the related property.

Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
		As of September 30, 2016
		Fixed Rate				VariableRate				Total per Debt Schedule				Unamortized Deferred Financing Costs				Total
Consolidated debt		$	3,251,443			$	1,294,531			$	4,545,974			$	(14,705	)		$	4,531,269
Noncontrolling interests' share of consolidated debt		(109,701		)		(7,537		)		(117,238		)		1,015				(116,223		)
Company's share of unconsolidated affiliates' debt		523,833				73,562				597,395				(2,286		)		595,109
Company's share of consolidated and unconsolidated debt		$	3,665,575			$	1,360,556			$	5,026,131			$	(15,976	)		$	5,010,155
Weighted average interest rate		5.30		%		1.96		%		4.39		%
		As of September 30, 2015
		Fixed Rate				VariableRate				Total per Debt Schedule				Unamortized Deferred Financing Costs				Total
Consolidated debt		$	3,502,337			$	1,319,138			$	4,821,475			$	(14,768	)		$	4,806,707
Noncontrolling interests' share of consolidated debt		(112,554		)		(7,007		)		(119,561		)		787				(118,774		)
Company's share of unconsolidated affiliates' debt		665,912				118,033				783,945				(1,442		)		782,503
Company's share of consolidated and unconsolidated debt		$	4,055,695			$	1,430,164			$	5,485,859			$	(15,423	)		$	5,470,436
Weighted average interest rate		5.48		%		1.70		%		4.49		%

	Debt-To-Total-Market Capitalization Ratio as of September 30, 2016
	(In thousands, except stock price)
			SharesOutstanding			Stock Price (1)				Value
	Common stock and Operating Partnership units		199,083			$	12.14			$	2,416,868
	7.375% Series D Cumulative Redeemable Preferred Stock		1,815			250.00				453,750
	6.625% Series E Cumulative Redeemable Preferred Stock		690			250.00				172,500
	Total market equity									3,043,118
	Company's share of total debt, excluding unamortized deferred financing costs									5,026,131
	Total market capitalization									$	8,069,249
	Debt-to-total-market capitalization ratio									62.3		%
(1)	Stock price for common stock and Operating Partnership units equals the closing price of the common stock on September 30, 2016. The stock prices for the preferred stocks represent the liquidation preference of each respective series.

Reconciliation of Shares and Operating Partnership Units Outstanding
(In thousands)
				Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
2016:				Basic			Diluted			Basic			Diluted
Weighted average shares - EPS				170,792			170,792			170,751			170,751
Weighted average Operating Partnership units				29,212			29,212			29,241			29,241
Weighted average shares- FFO				200,004			200,004			199,992			199,992
2015:
Weighted average shares - EPS				170,494			170,494			170,470			170,500
Weighted average Operating Partnership units				29,257			29,257			29,258			29,258
Weighted average shares- FFO				199,751			199,751			199,728			199,758

Dividend Payout Ratio
		Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
		2016				2015				2016				2015
Weighted average cash dividend per share		$	0.27282			$	0.27279			$	0.81838			$	0.81837
FFO, as adjusted, per diluted fully converted share		$	0.57			$	0.56			$	1.72			$	1.61
Dividend payout ratio		47.9		%		48.7		%		47.6		%		50.8		%

Consolidated Balance Sheets
(Unaudited; in thousands, except share data)
		As of
ASSETS		September 30, 2016				December 31, 2015
Real estate assets:
Land		$	839,114			$	876,668
Buildings and improvements		6,906,736				7,287,862
		7,745,850				8,164,530
Accumulated depreciation		(2,370,768		)		(2,382,568		)
		5,375,082				5,781,962
Held for sale		32,250				—
Developments in progress		141,099				75,991
Net investment in real estate assets		5,548,431				5,857,953
Cash and cash equivalents		24,468				36,892
Receivables:
Tenant, net of allowance for doubtful accounts of $1,993 and $1,923 in 2016 and 2015, respectively		95,518				87,286
Other, net of allowance for doubtful accounts of $1,332 and $1,276 in 2016 and 2015, respectively		14,109				17,958
Mortgage and other notes receivable		13,581				18,238
Investments in unconsolidated affiliates		287,791				276,383
Intangible lease assets and other assets		190,423				185,281
		$	6,174,321			$	6,479,991
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness		$	4,531,269			$	4,710,628
Accounts payable and accrued liabilities		303,642				344,434
Total liabilities		4,834,911				5,055,062
Commitments and contingencies
Redeemable noncontrolling partnership interests		22,742				25,330
Shareholders' equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding		18				18
6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding		7				7
Common stock, $.01 par value, 350,000,000 shares authorized, 170,790,979 and 170,490,948 issued and outstanding in 2016 and 2015, respectively		1,708				1,705
Additional paid-in capital		1,959,007				1,970,333
Accumulated other comprehensive income		—				1,935
Dividends in excess of cumulative earnings		(754,425		)		(689,028		)
Total shareholders' equity		1,206,315				1,284,970
Noncontrolling interests		110,353				114,629
Total equity		1,316,668				1,399,599
		$	6,174,321			$	6,479,991

View source version on businesswire.com: http://www.businesswire.com/news/home/20161027006840/en/

CBL & Associates Properties, Inc.
Katie Reinsmidt, 423-490-8301
Senior Vice President - Investor Relations/Corporate Investments
[email protected]

Source: CBL & Associates Properties, Inc.

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