10-K 1 cbl-12312017x10k.htm 10-K Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017
 
Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO _______________
 
COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)
COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)
______________
 
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
Delaware (CBL & Associates Properties, Inc.)
Delaware (CBL & Associates Limited Partnership)
(State or Other Jurisdiction of Incorporation or Organization)
 
62-1545718
62-1542285
(I.R.S. Employer Identification No.)
2030 Hamilton Place Blvd., Suite 500
Chattanooga, TN
(Address of Principal Executive Offices)
 
37421
(Zip Code)
Registrant’s telephone number, including area code:  423.855.0001
Securities registered pursuant to Section 12(b) of the Act:
CBL & Associates Properties, Inc.:
Title of each Class
 
Name of each exchange on
which registered
Common Stock, $0.01 par value 
 
New York Stock Exchange
7.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value 
 
New York Stock Exchange
6.625% Series E Cumulative Redeemable Preferred Stock, $0.01 par value 
 
New York Stock Exchange

CBL & Associates Limited Partnership: None

Securities registered pursuant to Section 12(g) of the Act:
CBL & Associates Properties, Inc.: None
CBL & Associates Limited Partnership: None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 Yes x   
No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
CBL & Associates Properties, Inc.
 
 Yes o  
No x
CBL & Associates Limited Partnership
 
 Yes o  
No x



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.
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 Yes x   
No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 Yes x   
No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
CBL & Associates Properties, Inc.
 Large accelerated filer x
 
 
Accelerated filer o
 Non-accelerated filer  o (do not check if a smaller reporting company)
Smaller Reporting Company o
 Emerging growth company  o
 
 
 
 
 
 
 
CBL & Associates Limited Partnership
 Large accelerated filer o
 
 
Accelerated filer o
 Non-accelerated filer  x (do not check if a smaller reporting company)
Smaller Reporting Company o
 Emerging growth company  o
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
                                                                                                               
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
CBL & Associates Properties, Inc.
 
 Yes o  
No x
CBL & Associates Limited Partnership
 
 Yes o  
No x
                                        
The aggregate market value of the 167,265,551 shares of CBL & Associates Properties, Inc.'s common stock held by non-affiliates of the registrant as of June 30, 2017 was $1,410,048,595, based on the closing price of $8.43 per share on the New York Stock Exchange on June 30, 2017. (For this computation, the registrant has excluded the market value of all shares of its common stock reported as beneficially owned by executive officers and directors of the registrant; such exclusion shall not be deemed to constitute an admission that any such person is an “affiliate” of the registrant.)
 
As of February 22, 2018, 172,643,728 shares of common stock were outstanding.


DOCUMENTS INCORPORATED BY REFERENCE

Portions of CBL & Associates Properties, Inc.’s Proxy Statement for the 2018 Annual Meeting of Stockholders are incorporated by reference in Part III.


EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 2017 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we," "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.
The Company is a real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At December 31, 2017, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 84.8% limited partner interest for a combined interest held by the Company of 85.8%.
As the sole general partner of the Operating Partnership, the Company's subsidiary, CBL Holdings I, Inc., has exclusive control of the Operating Partnership's activities. Management operates the Company and the Operating Partnership as one business. The management of the Company consists of the same individuals that manage the Operating Partnership. The Company's only material asset is its indirect ownership of partnership interests of the Operating Partnership. As a result, the Company conducts substantially all its business through the Operating Partnership as described in the preceding paragraph. The Company also issues public equity from time to time and guarantees certain debt of the Operating Partnership. The Operating Partnership holds all of the assets and indebtedness of the Company and, through affiliates, retains the ownership interests in the Company's joint ventures. Except for the net proceeds of offerings of equity by the Company, which are contributed to the Operating Partnership in exchange for partnership units on a one-for-one basis, the Operating Partnership generates all remaining capital required by the Company's business through its operations and its incurrence of indebtedness.
We believe that combining the two annual reports on Form 10-K for the Company and the Operating Partnership provides the following benefits:
•
enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;
•
eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
•
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
To help investors understand the differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership. Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to consolidated financial statements is presented that includes separate discussions for the Company and the Operating Partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.
In order to highlight the differences between the Company and the Operating Partnership, this report includes the following sections that provide separate financial and other information for the Company and the Operating Partnership:
•
consolidated financial statements;
•
certain accompanying notes to consolidated financial statements, including Note 2- Summary of Significant Accounting Policies, Note 6 - Mortgage and Other Indebtedness, Net, Note 7 - Shareholders' Equity and Partners' Capital and Note 8 - Redeemable Interests and Noncontrolling Interests;
•
information concerning unregistered sales of equity securities and use of proceeds in Item 5 of Part II of this report;
•
selected financial data in Item 6 of Part II of this report;
•
controls and procedures in Item 9A of Part II of this report; and
•
certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4.


TABLE OF CONTENTS

 
 
Page Number
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Cautionary Statement Regarding Forward-Looking Statements 
Certain statements included or incorporated by reference in this Annual Report on Form 10-K may be deemed “forward looking statements” within the meaning of the federal securities laws.  All statements other than statements of historical fact should be considered to be forward-looking statements. In many cases, these forward looking statements may be identified by the use of words such as “will,” “may,” “should,” “could,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “projects,” “goals,” “objectives,” “targets,” “predicts,” “plans,” “seeks,” and variations of these words and similar expressions.  Any forward-looking statement speaks only as of the date on which it is made and is qualified in its entirety by reference to the factors discussed throughout this report. 
Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance or results and we can give no assurance that these expectations will be attained.  It is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of known and unknown risks and uncertainties. In addition to the risk factors discussed in Part I, Item 1A of this report, such known risks and uncertainties include, without limitation:
•
general industry, economic and business conditions;
•
interest rate fluctuations;
•
costs and availability of capital and capital requirements;
•
costs and availability of real estate;
•
inability to consummate acquisition opportunities and other risks associated with acquisitions;
•
competition from other companies and retail formats;
•
changes in retail demand and rental rates in our markets;
•
shifts in customer demands including the impact of online shopping;
•
tenant bankruptcies or store closings;
•
changes in vacancy rates at our Properties;
•
changes in operating expenses;
•
changes in applicable laws, rules and regulations;
•
sales of real property;
•
cyber-attacks or acts of cyber-terrorism;
•
changes in the credit ratings of the Operating Partnership's senior unsecured long-term indebtedness;
•
the ability to obtain suitable equity and/or debt financing and the continued availability of financing, in the amounts and on the terms necessary to support our future refinancing requirements and business; and
•
other risks referenced from time to time in filings with the Securities and Exchange Commission (“SEC”) and those factors listed or incorporated by reference into this report.
This list of risks and uncertainties is only a summary and is not intended to be exhaustive.  We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.
PART I
ITEM 1. BUSINESS 
Background
CBL & Associates Properties, Inc. (“CBL”) was organized on July 13, 1993, as a Delaware corporation, to acquire substantially all of the real estate properties owned by CBL & Associates, Inc., which was formed by Charles B. Lebovitz in 1978, and by certain of its related parties.  On November 3, 1993, CBL completed an initial public offering (the “Offering”). Simultaneously with the completion of the Offering, CBL & Associates, Inc., its shareholders and affiliates

1


and certain senior officers of the Company (collectively, “CBL’s Predecessor”) transferred substantially all of their interests in its real estate properties to CBL & Associates Limited Partnership (the “Operating Partnership”) in exchange for common units of limited partner interest in the Operating Partnership. The interests in the Operating Partnership contain certain conversion rights that are more fully described in Note 7 to the consolidated financial statements. The terms “we,” “us” and “our” refer to the Company or the Company and the Operating Partnership collectively, as the context requires. 
The Company’s Business
We are a self-managed, self-administered, fully integrated REIT. We own, develop, acquire, lease, manage, and operate regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers and office properties. Our Properties are located in 26 states, but are primarily in the southeastern and midwestern United States. We have elected to be taxed as a REIT for federal income tax purposes.
We conduct substantially all of our business through CBL & Associates Limited Partnership (the "Operating Partnership"), which is a variable interest entity ("VIE"). We are the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. CBL Holdings I, Inc. is the sole general partner of the Operating Partnership. At December 31, 2017, CBL Holdings I, Inc. owned a 1.0% general partner interest and CBL Holdings II, Inc. owned an 84.8% limited partner interest in the Operating Partnership, for a combined interest held by us of 85.8%.
As of December 31, 2017, we owned interests in the following Properties:
 
 
 
 
Other Properties
 
 
 
 
Malls (1)
 
Associated
Centers
 
Community
Centers
 
Office
Buildings
 
Total
Consolidated Properties
 
60
 
20
 
5
 
5
(2) 
90
Unconsolidated Properties (3)
 
8
 
3
 
4
 
—
 
15
Total
 
68
 
23
 
9
 
5
 
105
(1)
Category consists of regional malls, open-air centers and outlet centers (including one mixed-use center) (the "Malls").
(2)
Includes our two corporate office buildings.
(3)
The Operating Partnership accounts for these investments using the equity method because one or more of the other partners have substantive participating rights.
At December 31, 2017, we had interests in the following Properties under development ("Construction Properties"):
 
 
Consolidated
Properties
 
Unconsolidated
Properties
 
 
 
Malls
 
Malls
 
Other Properties
 
Development
 
—
 
—
 
1
(1) 
Expansion
 
1
 
—
 
—
 
Redevelopments
 
3
 
1
 
—
 
(1)
Reflects a community center in development.
As of December 31, 2017, we owned mortgages on seven Properties, each of which is collateralized by either a first mortgage, a second mortgage or by assignment of 100% of the ownership interests in the underlying real estate and related improvements (the “Mortgages”).
The Malls, Other Properties ("Associated Centers, Community Centers and Office Buildings"), Construction Properties and Mortgages are collectively referred to as the “Properties” and individually as a “Property.”
We conduct our property management and development activities through CBL & Associates Management, Inc. (the “Management Company”) to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").  The Operating Partnership owns 100% of the Management Company’s outstanding preferred stock and common stock.

2


The Management Company manages all but ten of the Properties. Governor’s Square and Governor’s Square Plaza in Clarksville, TN, Kentucky Oaks Mall in Paducah, KY, Fremaux Town Center in Slidell, LA and Ambassador Town Center in Lafayette, LA are all owned by unconsolidated joint ventures and are managed by a property manager that is affiliated with the third party partner, which receives a fee for its services. The third party partner of each of these Properties controls the cash flow distributions, although our approval is required for certain major decisions.  The Outlet Shoppes at Gettysburg in Gettysburg, PA, The Outlet Shoppes at El Paso in El Paso, TX, The Outlet Shoppes at Atlanta in Woodstock, GA, The Outlet Shoppes of the Bluegrass in Simpsonville, KY and The Outlet Shoppes at Laredo in Laredo, TX are owned by consolidated joint ventures and managed by a property manager that is affiliated with the third party partner, which receives a fee for its services.
Revenues are primarily derived from leases with retail tenants and generally include fixed minimum rents, percentage rents based on tenants’ sales volumes and reimbursements from tenants for expenditures related to real estate taxes, insurance, common area maintenance ("CAM") and other recoverable operating expenses, as well as certain capital expenditures. We also generate revenues from management, leasing and development fees, sponsorships, sales of peripheral land at the Properties and from sales of operating real estate assets when it is determined that we can realize an appropriate value for the assets. Proceeds from such sales are generally used to retire related indebtedness or reduce outstanding balances on our credit facilities. 
The following terms used in this Annual Report on Form 10-K will have the meanings described below:
▪
GLA – refers to gross leasable area of space in square feet, including Anchors and Mall tenants.
▪
Anchor – refers to a department store, other large retail store, non-retail space or theater greater than or equal to 50,000 square feet.
▪
Junior Anchor - non-traditional department store, retail store, non-retail space or theater comprising more than 20,000 square feet and less than 50,000 square feet.
▪
Freestanding – Property locations that are not attached to the primary complex of buildings that comprise the mall shopping center.
▪
Outparcel – land used for freestanding developments, such as retail stores, banks and restaurants, which are generally on the periphery of the Properties.
▪
2023 Notes - $450 million of senior unsecured notes issued by the Operating Partnership in November 2013 that bear interest at 5.25% and mature on December 1, 2023.
▪
2024 Notes - $300 million of senior unsecured notes issued by the Operating Partnership in October 2014 that bear interest at 4.60% and mature on October 15, 2024.
▪
2026 Notes - $625 million of senior unsecured notes issued by the Operating Partnership in December 2016 and September 2017 that bear interest at 5.95% and mature on December 15, 2026 (and, collectively with the 2023 Notes and 2024 Notes, the "Notes"). See Note 6 to the consolidated financial statements for additional information on the Notes.
Significant Markets and Tenants 
Top Five Markets
Our top five markets, based on percentage of total revenues, were as follows for the year ended December 31, 2017:
Market
 
Percentage of
Total Revenues
St. Louis, MO
 
7.2%
Chattanooga, TN
 
4.6%
Lexington, KY
 
3.7%
Laredo, TX
 
3.6%
Madison, WI
 
3.3%

3


Top 25 Tenants
Our top 25 tenants based on percentage of total revenues were as follows for the year ended December 31, 2017:
 
Tenant
 
Number of
Stores
 
Square
Feet
 
Percentage of
Total
Annualized
Revenues (1)
1
L Brands, Inc. (2)
 
135

 
 
796,459

 
 
4.01
%
 
2
Signet Jewelers Limited (3)
 
187

 
 
272,811

 
 
2.98
%
 
3
Foot Locker, Inc.
 
118

 
 
537,308

 
 
2.59
%
 
4
Ascena Retail Group, Inc. (4)
 
174

 
 
887,895

 
 
2.34
%
 
5
AE Outfitters Retail Company
 
67

 
 
412,629

 
 
1.99
%
 
6
Dick's Sporting Goods, Inc. (5)
 
27

 
 
1,537,861

 
 
1.87
%
 
7
Genesco Inc. (6)
 
170

 
 
277,943

 
 
1.82
%
 
8
The Gap, Inc.
 
57

 
 
667,538

 
 
1.58
%
 
9
Luxottica Group, S.P.A. (7)
 
110

 
 
247,637

 
 
1.34
%
 
10
Express Fashions
 
40

 
 
331,347

 
 
1.26
%
 
11
Finish Line, Inc.
 
48

 
 
248,490

 
 
1.20
%
 
12
Forever 21 Retail, Inc.
 
20

 
 
410,070

 
 
1.19
%
 
13
H&M
 
40

 
 
839,848

 
 
1.19
%
 
14
The Buckle, Inc.
 
46

 
 
237,790

 
 
1.11
%
 
15
Charlotte Russe Holding, Inc.
 
45

 
 
288,343

 
 
1.04
%
 
16
Abercrombie & Fitch, Co.
 
45

 
 
299,937

 
 
1.02
%
 
17
JC Penney Company, Inc. (8)
 
49

 
 
5,881,263

 
 
0.99
%
 
18
Sears, Roebuck and Co. (9)
 
42

 
 
5,949,700

 
 
0.96
%
 
19
Shoe Show, Inc.
 
40

 
 
506,323

 
 
0.84
%
 
20
Barnes & Noble Inc.
 
19

 
 
579,660

 
 
0.83
%
 
21
Best Buy Co., Inc. (10)
 
47

 
 
455,847

 
 
0.80
%
 
22
Cinemark
 
9

 
 
467,230

 
 
0.77
%
 
23
Hot Topic, Inc.
 
90

 
 
199,957

 
 
0.77
%
 
24
Claire's Stores, Inc.
 
87

 
 
110,402

 
 
0.76
%
 
25
The Children's Place Retail Stores, Inc.
 
48

 
 
210,243

 
 
0.72
%
 
 
 
 
1,760

 
 
22,654,531

 
 
35.97
%
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Includes our proportionate share of revenues from unconsolidated affiliates based on our ownership percentage in the respective joint venture and any other applicable terms.
(2)
L Brands, Inc. operates Bath & Body Works, PINK, Victoria's Secret and White Barn Candle.
(3)
Signet Jewelers Limited operates Belden Jewelers, Gordon's Jewelers, Jared Jewelers, JB Robinson, Kay Jewelers, LeRoy's Jewelers, Marks & Morgan, Osterman's Jewelers, Piercing Pagoda, Rogers Jewelers, Shaw's Jewelers, Silver & Gold Connection, Ultra Diamonds and Zales.
(4)
Ascena Retail Group, Inc. operates Ann Taylor, Catherines, Dressbarn, Justice, Lane Bryant, LOFT, Lou & Grey and Maurices.
(5)
Dick's Sporting Goods, Inc. operates Dick's Sporting Goods, Field & Stream and Golf Galaxy.
(6)
Genesco Inc. operates Clubhouse, Hat Shack, Hat Zone, Johnston & Murphy, Journey's, Journey's Kidz, Lids, Lids Locker Room, Shi by Journey's and Underground by Journey's.
(7)
Luxottica Group, S.P.A. operates Lenscrafters, Pearle Vision and Sunglass Hut.
(8)
JC Penney Co., Inc. owns 30 of these stores.
(9)
In January 2017, we acquired five Sears locations and two auto centers, located at our malls, for future redevelopment. Of the 42 stores in our portfolio, Sears owns 23 and Seritage Growth Properties owns 3. One vacant store is included in the above chart as Sears remains obligated for rent under the terms of the lease.
(10)
Best Buy Co., Inc. operates Best Buy and Best Buy Mobile.

4


Growth Strategy
Our objective is to achieve growth in funds from operations ("FFO") (see page 78 for a discussion of funds from operations) and reduce our overall cost of debt and equity by maximizing same-center net operating income ("NOI"), total earnings before income taxes, depreciation and amortization ("EBITDA") and cash flows through a variety of methods as further discussed below.
FFO and same-center NOI are non-GAAP measures. For a description of same-center NOI, a reconciliation from net income to same-center NOI, and an explanation of why we believe this is a useful performance measure, see Non-GAAP Measure - Same-center Net Operating Income in “Results of Operations.” For a description of FFO, a reconciliation from net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders, and an explanation of why we believe this is a useful performance measure, see Non-GAAP Measure - Funds from Operations within the "Liquidity and Capital Resources" section.
Leasing, Management and Marketing 
Our objective is to maximize cash flows from our existing Properties through:
▪
aggressive leasing that seeks to increase occupancy and facilitate an optimal merchandise mix,
▪
originating and renewing leases at higher gross rents per square foot compared to the previous lease,
▪
merchandising, marketing, sponsorship and promotional activities and
▪
actively controlling operating costs.
Redevelopments  
Redevelopments represent situations where we capitalize on opportunities to increase the productivity of previously occupied space through aesthetic upgrades, retenanting and/or changing the use of the space. Many times, redevelopments result from acquiring possession of Anchor space (such as former Sears and JC Penney stores) and subdividing it into multiple spaces.
Renovations
Renovations usually include remodeling and upgrading existing facades, uniform signage, new entrances and floor coverings, updating interior décor, resurfacing parking lots and improving the lighting of interiors and parking lots. Renovations can result in attracting new retailers, increased rental rates, sales and occupancy levels and maintaining the Property's market dominance. In 2017, we invested approximately $13.1 million in renovations, which included exterior and floor renovations, as well as other eco-friendly green renovations. The total investment in the renovations scheduled for 2018 is projected to be $9.6 million, which includes floor renovations at Kirkwood Mall in Bismarck, ND, Asheville Mall in Asheville, NC and Southpark Mall in Colonial Heights, VA, as well as other eco-friendly green renovations.
Development of New Retail Properties and Expansions
In general, we seek development opportunities in middle-market trade areas that we believe are under-served by existing retail operations. These middle-markets must also have strong demographics to provide the opportunity to effectively maintain a competitive position.
We can also generate additional revenues by expanding a Property through the addition of large retail formats including restaurants and entertainment venues. An expansion also protects the Property's competitive position within its market.
Shadow Development Pipeline
We are continually pursuing redevelopment opportunities and have projects in various stages of pre-development. Our shadow pipeline consists of projects for Properties on which we have completed initial project analysis and design but which have not commenced construction as of December 31, 2017.
See "Liquidity and Capital Resources" section for information on the above projects completed during 2017 and under construction at December 31, 2017.


5


Acquisitions
We believe there is some opportunity for growth through acquisitions of retail centers and anchor stores that complement our portfolio. We selectively acquire properties we believe can appreciate in value by increasing NOI through our development, leasing and management expertise. However, our primary acquisition focus at this time is on opportunities to acquire anchors at our Properties for future redevelopment.
Environmental Matters
A discussion of the current effects and potential future impacts on our business and Properties of compliance with federal, state and local environmental regulations is presented in Item 1A of this Annual Report on Form 10-K under the subheading “Risks Related to Real Estate Investments.”
Competition
The Properties compete with various shopping facilities in attracting retailers to lease space. In addition, retailers at our Properties face competition from discount shopping centers, outlet centers, wholesale clubs, direct mail, television shopping networks, the internet and other retail shopping developments. The extent of the retail competition varies from market to market. We work aggressively to attract customers through marketing promotions and campaigns. Many of our retailers have adopted an omni-channel approach which leverages sales through both online and in-store retailing channels.
Seasonality
The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during the fourth quarter due to the holiday season, which generally results in higher percentage rent income in the fourth quarter. Additionally, 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 our fiscal year.
Recent Developments
Asset Acquisitions
Our partner in Gulf Coast Town Center - Phase IIII, assigned its 50% interest in the joint venture to us in December 2017 for no consideration. In the first quarter of 2017, we acquired several Sears and Macy's stores for $79.8 million for future redevelopment at several of our malls. See Note 3 and Note 5 to the consolidated financial statements for more information.
New Developments
The Outlet Shoppes at Laredo opened in April 2017. See "Liquidity and Capital Resources" section for more information on this development.
In 2017, the 50/50 unconsolidated affiliate, Shoppes at Eagle Point, LLC, acquired land and construction began on a community center development, The Shoppes at Eagle Point, located in Cookeville, TN. Construction of the first phase of this development is expected to be complete in October 2018. Additionally, in 2017, the Company entered into a 50/50 joint venture, EastGate Storage, LLC, to develop a self-storage facility adjacent to EastGate Mall. See Note 5 to the consolidated financial statements for additional information on these unconsolidated affiliates.
Dispositions
We sold three malls and two office buildings in 2017 for an aggregate gross sales price of $189.8 million. After loan repayment, commissions and closing costs, the sales generated approximately $112.1 million of net proceeds. We also returned three malls to their respective lenders in satisfaction of the non-recourse debt secured by each Property and recognized a gain on extinguishment of debt of approximately $39.8 million during 2017. See Note 4 and Note 6 to the consolidated financial statements for additional information on these dispositions.
Impairment Losses
In 2017, we recorded a loss on impairment totaling $71.4 million, which primarily consisted of $67.5 million attributable to two malls. See Note 15 to the consolidated financial statements for further details.

6


Loss on Investment
In 2017, we recorded a loss on investment of $6.2 million related to the sale of our 25% interest in an unconsolidated affiliate, River Ridge Mall JV, LLC, to our joint venture partner for $9.0 million. See Note 5 to the consolidated financial statements for additional information.
Financing and Capital Markets Activity    
We made substantial progress during 2017 in our strategy to build a high-quality unencumbered pool of Properties in addition to balancing our leverage structure. Highlights of financing and capital markets activity for the year ended December 31, 2017 include the following:
•
completed an additional $225 million unsecured bond issuance of our 2026 Notes at a fixed-rate of 5.95%, utilizing proceeds to reduce balances on our unsecured lines of credit;
•
retired $352.9 million in mortgage loans, at our share, which added seven Properties to our unencumbered pool, resulting in 59% of our total consolidated NOI being unencumbered at year-end;
•
completed the extension and modification of two unsecured term loans, which included increasing the aggregate balance from $450 to $535 million; and
•
disposed of interests in Properties as noted above, generating aggregate net proceeds of over $112 million, which were primarily used to reduce the balances on our unsecured lines of credit.
Equity
Common Stock and Common Units
Our authorized common stock consists of 350,000,000 shares at $0.01 par value per share. We had 171,088,778 and 170,792,645 shares of common stock issued and outstanding as of December 31, 2017 and 2016, respectively. The Operating Partnership had 199,297,151 and 199,085,032 common units outstanding as of December 31, 2017 and 2016, respectively.
Preferred Stock
Our authorized preferred stock consists of 15,000,000 shares at $0.01 par value per share. See Note 7 to the consolidated financial statements for a description of our outstanding cumulative redeemable preferred stock.
Financial Information about Segments
See Note 11 to the consolidated financial statements for information about our reportable segments.
Employees
CBL does not have any employees other than its statutory officers.  Our Management Company had 560 full-time and 125 part-time employees as of December 31, 2017. None of our employees are represented by a union.
 Corporate Offices
Our principal executive offices are located at CBL Center, 2030 Hamilton Place Boulevard, Suite 500, Chattanooga, Tennessee, 37421 and our telephone number is (423) 855-0001.
 Available Information
There is additional information about us on our web site at cblproperties.com. Electronic copies of our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments to those reports, are available free of charge by visiting the “investor relations” section of our web site. These reports are posted as soon as reasonably practical after they are electronically filed with, or furnished to, the SEC. The information on our web site is not, and should not be considered, a part of this Form 10-K. 

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ITEM 1A. RISK FACTORS 
Set forth below are certain factors that may adversely affect our business, financial condition, results of operations and cash flows.  Any one or more of the following factors may cause our actual results for various financial reporting periods to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. See “Cautionary Statement Regarding Forward-Looking Statements” contained herein on page 1. 
RISKS RELATED TO REAL ESTATE INVESTMENTS
Real property investments are subject to various risks, many of which are beyond our control, which could cause declines in the operating revenues and/or the underlying value of one or more of our Properties.
A number of factors may decrease the income generated by a retail shopping center property, including: 
•
national, regional and local economic climates, which may be negatively impacted by loss of jobs, production slowdowns, adverse weather conditions, natural disasters, acts of violence, war or terrorism, declines in residential real estate activity and other factors which tend to reduce consumer spending on retail goods;
•
adverse changes in levels of consumer spending, consumer confidence and seasonal spending (especially during the holiday season when many retailers generate a disproportionate amount of their annual profits);
•
local real estate conditions, such as an oversupply of, or reduction in demand for, retail space or retail goods, and the availability and creditworthiness of current and prospective tenants;
•
increased operating costs, such as increases in repairs and maintenance, real property taxes, utility rates and insurance premiums;
•
delays or cost increases associated with the opening of new properties or redevelopment and expansion of properties, due to higher than estimated construction costs, cost overruns, delays in receiving zoning, occupancy or other governmental approvals, lack of availability of materials and labor, weather conditions, and similar factors which may be outside our ability to control;
•
perceptions by retailers or shoppers of the safety, convenience and attractiveness of the shopping center; and
•
the convenience and quality of competing retail properties and other retailing options, such as the internet and the adverse impact of online sales.
In addition, other factors may adversely affect the value of our Properties without affecting their current revenues, including:
•
adverse changes in governmental regulations, such as local zoning and land use laws, environmental regulations or local tax structures that could inhibit our ability to proceed with development, expansion or renovation activities that otherwise would be beneficial to our Properties;
•
potential environmental or other legal liabilities that reduce the amount of funds available to us for investment in our Properties;
•
any inability to obtain sufficient financing (including construction financing, permanent debt, unsecured notes issuances, lines of credit and term loans), or the inability to obtain such financing on commercially favorable terms, to fund repayment of maturing loans, new developments, acquisitions, and property redevelopments, expansions and renovations which otherwise would benefit our Properties; and
•
an environment of rising interest rates, which could negatively impact both the value of commercial real estate such as retail shopping centers and the overall retail climate.
Illiquidity of real estate investments could significantly affect our ability to respond to adverse changes in the performance of our Properties and harm our financial condition.
Substantially all of our total consolidated assets consist of investments in real properties. Because real estate investments are relatively illiquid, our ability to quickly sell one or more Properties in our portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand for space, that are beyond our control. We cannot predict whether we will be able to sell any Property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be

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acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a Property. In addition, current economic and capital market conditions might make it more difficult for us to sell Properties or might adversely affect the price we receive for Properties that we do sell, as prospective buyers might experience increased costs of debt financing or other difficulties in obtaining debt financing.
Moreover, there are some limitations under federal income tax laws applicable to REITs that limit our ability to sell assets. In addition, because many of our Properties are mortgaged to secure our debts, we may not be able to obtain a release of a lien on a mortgaged Property without the payment of the associated debt and/or a substantial prepayment penalty, which restricts our ability to dispose of a Property, even though the sale might otherwise be desirable. Furthermore, the number of prospective buyers interested in purchasing shopping centers is limited. Therefore, if we want to sell one or more of our Properties, we may not be able to dispose of it in the desired time period and may receive less consideration than we originally invested in the Property.
Before a Property can be sold, we may be required to make expenditures to correct defects or to make improvements. We cannot assure you that we will have funds available to correct those defects or to make those improvements, and if we cannot do so, we might not be able to sell the Property, or might be required to sell the Property on unfavorable terms. In acquiring a property, we might agree to provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as limitations on the amount of debt that can be placed or repaid on that property. These factors and any others that would impede our ability to respond to adverse changes in the performance of our Properties could adversely affect our financial condition and results of operations.
We may elect not to proceed with certain developments, redevelopments or expansion projects once they have been undertaken, resulting in charges that could have a material adverse effect on our results of operations for the period in which the charge is taken.
We intend to pursue developments, redevelopments and expansion activities as opportunities arise. In connection with any developments, redevelopments or expansion, we will incur various risks, including the risk that developments, redevelopments or expansion opportunities explored by us may be abandoned for various reasons including, but not limited to, credit disruptions that require the Company to conserve its cash until the capital markets stabilize or alternative credit or funding arrangements can be made. Developments, redevelopments or expansions also include the risk that construction costs of a project may exceed original estimates, possibly making the project unprofitable. Other risks include the risk that we may not be able to refinance construction loans which are generally with full recourse to us, the risk that occupancy rates and rents at a completed project will not meet projections and will be insufficient to make the project profitable, and the risk that we will not be able to obtain Anchor, mortgage lender and property partner approvals for certain expansion activities.
When we elect not to proceed with a development opportunity, the development costs ordinarily are charged against income for the then-current period. Any such charge could have a material adverse effect on our results of operations for the period in which the charge is taken.
Certain of our Properties are subject to ownership interests held by third parties, whose interests may conflict with ours and thereby constrain us from taking actions concerning these Properties which otherwise would be in the best interests of the Company and our stockholders.
We own partial interests in 14 malls, 7 associated centers, 7 community centers and 2 office buildings. Governor’s Square and Governor’s Plaza in Clarksville, TN; Kentucky Oaks Mall in Paducah, KY; Fremaux Town Center in Slidell, LA and Ambassador Town Center in Lafayette, LA are all owned by unconsolidated joint ventures and are managed by a property manager that is affiliated with the third party partner, which receives a fee for its services. The third party partner of each of these Properties controls the cash flow distributions, although our approval is required for certain major decisions.  The Outlet Shoppes at Gettysburg in Gettysburg, PA; The Outlet Shoppes at El Paso in El Paso, TX; The Outlet Shoppes at Atlanta in Woodstock, GA; The Outlet Shoppes of the Bluegrass in Simpsonville, KY and The Outlet Shoppes at Laredo in Laredo, TX are owned by consolidated joint ventures and managed by a property manager that is affiliated with the third party partner, which receives a fee for its services.
Where we serve as managing general partner (or equivalent) of the entities that own our Properties, we may have certain fiduciary responsibilities to the other owners of those entities. In certain cases, the approval or consent of the other owners is required before we may sell, finance, expand or make other significant changes in the operations of such Properties. To the extent such approvals or consents are required, we may experience difficulty in, or may be prevented from, implementing our plans with respect to expansion, development, financing or other similar transactions with respect to such Properties.

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With respect to those Properties for which we do not serve as managing general partner (or equivalent), we do not have day-to-day operational control or control over certain major decisions, including leasing and the timing and amount of distributions, which could result in decisions by the managing entity that do not fully reflect our interests. This includes decisions relating to the requirements that we must satisfy in order to maintain our status as a REIT for tax purposes. However, decisions relating to sales, expansion and disposition of all or substantially all of the assets and financings are subject to approval by the Operating Partnership.
Bankruptcy of joint venture partners could impose delays and costs on us with respect to the jointly owned retail Properties.
In addition to the possible effects on our joint ventures of a bankruptcy filing by us, the bankruptcy of one of the other investors in any of our jointly owned shopping centers could materially and adversely affect the relevant Property or Properties. Under the bankruptcy laws, we would be precluded from taking some actions affecting the estate of the other investor without prior approval of the bankruptcy court, which would, in most cases, entail prior notice to other parties and a hearing in the bankruptcy court. At a minimum, the requirement to obtain court approval may delay the actions we would or might want to take. If the relevant joint venture through which we have invested in a Property has incurred recourse obligations, the discharge in bankruptcy of one of the other investors might result in our ultimate liability for a greater portion of those obligations than we would otherwise bear. 
We may incur significant costs related to compliance with environmental laws, which could have a material adverse effect on our results of operations, cash flows and the funds available to us to pay dividends.
Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of petroleum, certain hazardous or toxic substances on, under or in such real estate. Such laws typically impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances. The costs of remediation or removal of such substances may be substantial. The presence of such substances, or the failure to promptly remove or remediate such substances, may adversely affect the owner's or operator's ability to lease or sell such real estate or to borrow using such real estate as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of such substances at the disposal or treatment facility, regardless of whether such facility is owned or operated by such person. Certain laws also impose requirements on conditions and activities that may affect the environment or the impact of the environment on human health. Failure to comply with such requirements could result in the imposition of monetary penalties (in addition to the costs to achieve compliance) and potential liabilities to third parties. Among other things, certain laws require abatement or removal of friable and certain non-friable asbestos-containing materials in the event of demolition or certain renovations or remodeling. Certain laws regarding asbestos-containing materials require building owners and lessees, among other things, to notify and train certain employees working in areas known or presumed to contain asbestos-containing materials. Certain laws also impose liability for release of asbestos-containing materials into the air and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with asbestos-containing materials. In connection with the ownership and operation of properties, we may be potentially liable for all or a portion of such costs or claims.
All of our Properties (but not properties for which we hold an option to purchase but do not yet own) have been subject to Phase I environmental assessments or updates of existing Phase I environmental assessments. Such assessments generally consisted of a visual inspection of the Properties, review of federal and state environmental databases and certain information regarding historic uses of the Property and adjacent areas and the preparation and issuance of written reports. Some of the Properties contain, or contained, underground storage tanks used for storing petroleum products or wastes typically associated with automobile service or other operations conducted at the Properties. Certain Properties contain, or contained, dry-cleaning establishments utilizing solvents. Where believed to be warranted, samplings of building materials or subsurface investigations were undertaken. At certain Properties, where warranted by the conditions, we have developed and implemented an operations and maintenance program that establishes operating procedures with respect to asbestos-containing materials. The cost associated with the development and implementation of such programs was not material. We have also obtained environmental insurance coverage at certain of our Properties.
We believe that our 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. As of December 31, 2017, we have recorded in our consolidated financial statements a liability of $3.1 million related to potential future asbestos abatement activities at our Properties which are not expected to have a material impact on our financial condition or results of operations. We have not been notified by any governmental authority, and are

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not otherwise aware, of any material noncompliance, liability or claim relating to hazardous or toxic substances in connection with any of our present or former Properties. Therefore, we have not recorded any liability related to hazardous or toxic substances. Nevertheless, it is possible that the environmental assessments available to us do not reveal all potential environmental liabilities. It is also possible that subsequent investigations will identify material contamination, that adverse environmental conditions have arisen subsequent to the performance of the environmental assessments, or that there are material environmental liabilities of which management is unaware. Moreover, no assurances can be given that (i) future laws, ordinances or regulations will not impose any material environmental liability or (ii) the current environmental condition of the Properties has not been or will not be affected by tenants and occupants of the Properties, by the condition of properties in the vicinity of the Properties or by third parties unrelated to us, the Operating Partnership or the relevant Property's partnership.
Possible terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.
Future terrorist attacks in the United States, and other acts of violence, including terrorism or war, might result in declining consumer confidence and spending, which could harm the demand for goods and services offered by our tenants and the values of our Properties, and might adversely affect an investment in our securities. A decrease in retail demand could make it difficult for us to renew or re-lease our Properties at lease rates equal to or above historical rates and, to the extent our tenants are affected, could adversely affect their ability to continue to meet obligations under their existing leases. Terrorist activities also could directly affect the value of our Properties through damage, destruction or loss. Furthermore, terrorist acts might result in increased volatility in national and international financial markets, which could limit our access to capital or increase our cost of obtaining capital.
RISKS RELATED TO OUR BUSINESS AND THE MARKET FOR OUR STOCK
The loss of one or more significant tenants, due to bankruptcies or as a result of consolidations in the retail industry, could adversely affect both the operating revenues and value of our Properties.
Regional malls are typically anchored by well-known department stores and other significant tenants who generate shopping traffic at the mall. A decision by an Anchor tenant or other significant tenant to cease operations at one or more Properties could have a material adverse effect on those Properties and, by extension, on our financial condition and results of operations. The closing of an Anchor or other significant tenant may allow other Anchors and/or tenants at an affected Property to terminate their leases, to seek rent relief and/or cease operating their stores or otherwise adversely affect occupancy at the Property. In addition, key tenants at one or more Properties might terminate their leases as a result of mergers, acquisitions, consolidations, dispositions or bankruptcies in the retail industry. The bankruptcy and/or closure of one or more significant tenants, if we are not able to successfully re-tenant the affected space, could have a material adverse effect on both the operating revenues and underlying value of the Properties involved, reducing the likelihood that we would be able to sell the Properties if we decided to do so, or we may be required to incur redevelopment costs in order to successfully obtain new anchors or other significant tenants when such vacancies exist.
The market price of our common stock or other securities may fluctuate significantly.
The market price of our common stock or other securities may fluctuate significantly in response to many factors, including: 
•
actual or anticipated variations in our operating results, FFO, cash flows or liquidity;
•
changes in our earnings estimates or those of analysts;
•
changes in our dividend policy;
•
impairment charges affecting the carrying value of one or more of our Properties or other assets;
•
publication of research reports about us, the retail industry or the real estate industry generally;
•
increases in market interest rates that lead purchasers of our securities to seek higher dividend or interest rate yields;
•
changes in market valuations of similar companies;
•
adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt in the near and medium term and our ability to refinance such debt and the terms thereof or our plans to incur additional debt in the future;

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•
additions or departures of key management personnel;
•
actions by institutional security holders;
•
proposed or adopted regulatory or legislative changes or developments;
•
speculation in the press or investment community;
•
changes in our credit ratings;
•
the occurrence of any of the other risk factors included in, or incorporated by reference in, this report; and
•
general market and economic conditions.
Many of the factors listed above are beyond our control. Those factors may cause the market price of our common stock or other securities to decline significantly, regardless of our financial performance and condition and prospects. It is impossible to provide any assurance that the market price of our common stock or other securities will not fall in the future, and it may be difficult for holders to sell such securities at prices they find attractive, or at all.
Competition could adversely affect the revenues generated by our Properties, resulting in a reduction in funds available for distribution to our stockholders.
There are numerous shopping facilities that compete with our Properties in attracting retailers to lease space. In addition, retailers at our Properties face competition for customers from: 
•
online shopping;
•
discount shopping centers;
•
outlet malls;
•
wholesale clubs;
•
direct mail; and
•
television shopping networks.
Each of these competitive factors could adversely affect the amount of rents and tenant reimbursements that we are able to collect from our tenants, thereby reducing our revenues and the funds available for distribution to our stockholders.
We compete with many commercial developers, real estate companies and major retailers for prime development locations and for tenants. New regional malls or other retail shopping centers with more convenient locations or better rents may attract tenants or cause them to seek more favorable lease terms at, or prior to, renewal.
Increased operating expenses and decreased occupancy rates may not allow us to recover the majority of our CAM and other operating expenses from our tenants, which could adversely affect our financial position, results of operations and funds available for future distributions.
Energy costs, repairs, maintenance and capital improvements to common areas of our Properties, janitorial services, administrative, property and liability insurance costs and security costs are typically allocable to our Properties' tenants. Our lease agreements typically provide that the tenant is liable for a portion of the CAM and other operating expenses. While historically our lease agreements provided for variable CAM provisions, the majority of our current leases require an equal periodic tenant reimbursement amount for our cost recoveries which serves to fix our tenants' CAM contributions to us. In these cases, a tenant will pay a single specified rent amount, or a set expense reimbursement amount, subject to annual increases, regardless of the actual amount of operating expenses. The tenant's payment remains the same regardless of whether operating expenses increase or decrease, causing us to be responsible for any excess amounts or to benefit from any declines. As a result, the CAM and tenant reimbursements that we receive may or may not allow us to recover a substantial portion of these operating costs.
Additionally, in the event that our Properties are not fully occupied, we would be required to pay the portion of any operating, redevelopment or renovation expenses allocable to the vacant space(s) that would otherwise typically be paid by the residing tenant(s). Our cost recovery ratio was 97.7% for 2017.

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Our Properties may be subject to impairment charges which can adversely affect our financial results.
We monitor events or changes in circumstances that could indicate the carrying value of a long-lived asset may not be recoverable.  When indicators of potential impairment are present that suggest that the carrying amounts of a long-lived asset may not be recoverable, we assess the recoverability of the asset by determining whether the asset’s carrying value will be recovered through the estimated undiscounted future cash flows expected from our probability weighted use of the asset and its eventual disposition. In the event that such undiscounted future cash flows do not exceed the carrying value, we adjust the carrying value of the long-lived asset to its estimated fair value and recognize an impairment loss.  The estimated fair value is calculated based on the following information, in order of preference, depending upon availability:  (Level 1) recently quoted market prices, (Level 2) market prices for comparable properties, or (Level 3) the present value of future cash flows, including estimated salvage value. Certain of our long-lived assets may be carried at more than an amount that could be realized in a current disposition transaction.  Projections of expected future operating cash flows require that we estimate future market rental income amounts subsequent to expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the Property, and the number of years the Property is held for investment, among other factors. As these assumptions are subject to economic and market uncertainties, they are difficult to predict and are subject to future events that may alter the assumptions used or management’s estimates of future possible outcomes. Therefore, the future cash flows estimated in our impairment analyses may not be achieved. During 2017, we recorded a loss on impairment of real estate totaling $71.4 million, which primarily related to two malls. See Note 15 to the consolidated financial statements for further details.
Inflation or deflation may adversely affect our financial condition and results of operations.
Increased inflation could have a pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may cause operating expenses to rise and adversely affect tenant leases with stated rent increases, which could be lower than the increase in inflation at any given time. Inflation could also have an adverse effect on consumer spending which could impact our tenants' sales and, in turn, our percentage rents, where applicable.
Deflation can result in a decline in general price levels, often caused by a decrease in the supply of money or credit. The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand. Restricted lending practices could impact our ability to obtain financings or refinancings for our Properties and our tenants' ability to obtain credit. Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.
We have experienced cybersecurity attacks that, to date, have not had a material impact on our financial results, but it is not possible to predict the impact of future incidents that may involve security breaches through cyber-attacks as well as other significant disruptions of our information technology ("IT") networks and related systems, which could harm our business by disrupting our operations and compromising or corrupting confidential information, which could adversely impact our financial condition.
We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breech or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants. Certain of these resources are provided to us and/or maintained on our behalf by third-party service providers pursuant to agreements that specify to varying degrees certain security and service level standards. Although we and our service providers have implemented processes, procedures and controls to help mitigate these risks, there can be no assurance that these measures, as well as our increased awareness of the risk of cyber incidents, will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.

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A security breach or other significant disruption involving our IT networks and related systems could occur due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption or failure or error or poor product or vendor/developer selection (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions (including the failure to follow our security protocols), or lost connectivity to our networked resources. Such occurrences could disrupt the proper functioning of our networks and systems; result in misstated financial reports and/or missed reporting deadlines; result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space; require significant management attention and resources to remedy any damages that result; subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or damage our reputation among our tenants and investors generally.     Moreover, cyber attacks perpetrated against our Anchors and tenants, including unauthorized access to customers’ credit card data and other confidential information, could diminish consumer confidence and consumer spending and negatively impact our business.
Certain agreements with prior owners of Properties that we have acquired may inhibit our ability to enter into future sale or refinancing transactions affecting such Properties, which otherwise would be in the best interests of the Company and our stockholders.
Certain Properties that we originally acquired from third parties had unrealized gain attributable to the difference between the fair market value of such Properties and the third parties' adjusted tax basis in the Properties immediately prior to their contribution of such Properties to the Operating Partnership pursuant to our acquisition. For this reason, a taxable sale by us of any of such Properties, or a significant reduction in the debt encumbering such Properties, could result in adverse tax consequences to the third parties who contributed these Properties in exchange for interests in the Operating Partnership. Under the terms of these transactions, we have generally agreed that we either will not sell or refinance such an acquired Property for a number of years in any transaction that would trigger adverse tax consequences for the parties from whom we acquired such Property, or else we will reimburse such parties for all or a portion of the additional taxes they are required to pay as a result of the transaction. Accordingly, these agreements may cause us not to engage in future sale or refinancing transactions affecting such Properties which otherwise would be in the best interests of the Company and our stockholders, or may increase the costs to us of engaging in such transactions.
Declines in economic conditions, including increased volatility in the capital and credit markets, could adversely affect our business, results of operations and financial condition.
An economic recession can result in extreme volatility and disruption of our capital and credit markets. The resulting economic environment may be affected by dramatic declines in the stock and housing markets, increases in foreclosures, unemployment and costs of living, as well as limited access to credit. This economic situation can, and most often will, impact consumer spending levels, which can result in decreased revenues for our tenants and related decreases in the values of our Properties. A sustained economic downward trend could impact our tenants' ability to meet their lease obligations due to poor operating results, lack of liquidity, bankruptcy or other reasons. Our ability to lease space and negotiate rents at advantageous rates could also be affected in this type of economic environment. Additionally, access to capital and credit markets could be disrupted over an extended period, which may make it difficult to obtain the financing we may need for future growth and/or to meet our debt service obligations as they mature. Any of these events could harm our business, results of operations and financial condition.

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Uninsured losses could adversely affect our financial condition, and in the future our insurance may not include coverage for acts of terrorism.
We carry a comprehensive blanket policy for general liability, property casualty (including fire, earthquake and flood) and rental loss covering all of the Properties, with specifications and insured limits customarily carried for similar properties. However, even insured losses could result in a serious disruption to our business and delay our receipt of revenue. Furthermore, there are some types of losses, including lease and other contract claims, as well as some types of environmental losses, that generally are not insured or are not economically insurable. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenues from the Property. If this happens, we, or the applicable Property's partnership, may still remain obligated under guarantees provided to the lender for any mortgage debt or other financial obligations related to the Property.
The general liability and property casualty insurance policies on our Properties currently include coverage for losses resulting from acts of terrorism, whether foreign or domestic. While we believe that the Properties are adequately insured in accordance with industry standards, the cost of general liability and property casualty insurance policies that include coverage for acts of terrorism has risen significantly subsequent to September 11, 2001. The cost of coverage for acts of terrorism is currently mitigated by the Terrorism Risk Insurance Act (“TRIA”). In January 2015, Congress reinstated TRIA under the Terrorism Risk Insurance Program Reauthorization Act of 2015 ("TRIPRA") and extended the program through December 31, 2020. Under TRIPRA, the amount of terrorism-related insurance losses triggering the federal insurance threshold will be raised gradually from$100 million in 2015 to $200 million in 2020. Additionally, the bill increases insurers' co-payments for losses exceeding their deductibles, in annual steps, from 15% in 2015 to 20% in 2020. Each of these changes may have the effect of increasing the cost to insure against acts of terrorism for property owners, such as the Company, notwithstanding the other provisions of TRIPRA. Further, if TRIPRA is not continued beyond 2020 or is significantly modified, we may incur higher insurance costs and experience greater difficulty in obtaining insurance that covers terrorist-related damages. Our tenants may also have similar difficulties.
RISKS RELATED TO DEBT AND FINANCIAL MARKETS
A deterioration of the capital and credit markets could adversely affect our ability to access funds and the capital needed to refinance debt or obtain new debt.
We are significantly dependent upon external financing to fund the growth of our business and ensure that we meet our debt servicing requirements. Our access to financing depends on the willingness of lending institutions to grant credit to us and conditions in the capital markets in general. An economic recession may cause extreme volatility and disruption in the capital and credit markets. We rely upon our largest credit facilities as sources of funding for numerous transactions. Our access to these funds is dependent upon the ability of each of the participants to the credit facilities to meet their funding commitments. When markets are volatile, access to capital and credit markets could be disrupted over an extended period of time and many financial institutions may not have the available capital to meet their previous commitments. The failure of one or more significant participants to our credit facilities to meet their funding commitments could have an adverse effect on our financial condition and results of operations. This may make it difficult to obtain the financing we may need for future growth and/or to meet our debt service obligations as they mature. Although we have successfully obtained debt for refinancings and retirement of our maturing debt, acquisitions and the construction of new developments in the past, we cannot make any assurances as to whether we will be able to obtain debt in the future, or that the financing options available to us will be on favorable or acceptable terms.
Our indebtedness is substantial and could impair our ability to obtain additional financing.
At December 31, 2017, our total share of consolidated and unconsolidated debt outstanding was approximately $4,743.7 million. Excluding deferred financing costs, our total share of consolidated and unconsolidated debt outstanding represented approximately 73.1% of our total market capitalization at December 31, 2017. Our total share of consolidated and unconsolidated debt maturing in 2018, 2019 and 2020 giving effect to all maturity extensions that are available at our election, was approximately $288.6 million, $509.1 million and $371.3 million, respectively. Additionally, we have $122.4 million of consolidated debt, which matured in 2017, related to a non-recourse loan that is in default and receivership. See Note 6 to the consolidated financial statements for more information. Our leverage could have important consequences. For example, it could:
•
result in the acceleration of a significant amount of debt for non-compliance with the terms of such debt or, if such debt contains cross-default or cross-acceleration provisions, other debt;

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•
result in the loss of assets due to foreclosure or sale on unfavorable terms, which could create taxable income without accompanying cash proceeds, which could hinder the Company's ability to meet the REIT distribution requirements imposed by the Internal Revenue Code;
•
materially impair our ability to borrow unused amounts under existing financing arrangements or to obtain additional financing or refinancing on favorable terms or at all;
•
require us to dedicate a substantial portion of our cash flow to paying principal and interest on our indebtedness, reducing the cash flow available to fund our business, to pay dividends, including those necessary to maintain our REIT qualification, or to use for other purposes;
•
increase our vulnerability to an economic downturn;
•
limit our ability to withstand competitive pressures; or
•
reduce our flexibility to respond to changing business and economic conditions.
If any of the foregoing occurs, our business, financial condition, liquidity, results of operations and prospects could be materially and adversely affected, and the trading price of our common stock or other securities could decline significantly.
Rising interest rates could both increase our borrowing costs, thereby adversely affecting our cash flows and the amounts available for distributions to our stockholders, and decrease our stock price, if investors seek higher yields through other investments.
An environment of rising interest rates could lead holders of our securities to seek higher yields through other investments, which could adversely affect the market price of our stock. One of the factors that may influence the price of our stock in public markets is the annual distribution rate we pay as compared with the yields on alternative investments. Numerous other factors, such as governmental regulatory action and tax laws, could have a significant
impact on the future market price of our stock. In addition, increases in market interest rates could result in increased borrowing costs for us, which may adversely affect our cash flow and the amounts available for distributions to our stockholders.
As of December 31, 2017, our total share of consolidated and unconsolidated variable-rate debt was $1,149.8 million. Increases in interest rates will increase our cash interest payments on the variable-rate debt we have outstanding from time to time. If we do not have sufficient cash flow from operations, we might not be able to make all required payments of principal and interest on our debt, which could result in a default or have a material adverse effect on our financial condition and results of operations, and which might adversely affect our cash flow and our ability to make distributions to shareholders. These significant debt payment obligations might also require us to use a significant portion of our cash flow from operations to make interest and principal payments on our debt rather than for other purposes such as working capital, capital expenditures or distributions on our common equity.
Adverse changes in our credit ratings could negatively affect our borrowing costs and financing ability.
As of December 31, 2017, we had credit ratings of Baa3 from Moody's Investors Service ("Moody’s"), BBB- from Standard & Poor's Rating Services ("S&P") and BB+ from Fitch Ratings ("Fitch"), which are based on credit ratings for the Operating Partnership's unsecured long-term indebtedness. There can be no assurance that we will be able to maintain these ratings. Subsequent to December 31, 2017, Moody's downgraded the rating related to the Operating Partnership's unsecured long-term indebtedness from Baa3 to Ba1. This subsequent downgrade did not change our current interest rates. However, a downgrade by S&P (if Moody's credit rating remained non-investment grade) could increase our interest rates as noted below.
In 2013, we made a one-time irrevocable election to use the credit ratings of the Operating Partnership's senior unsecured long-term indebtedness to determine the interest rate on our three unsecured credit facilities. With this election and so long as we maintain our current credit ratings, borrowings under our three unsecured credit facilities bear interest at LIBOR plus 120 basis points. We also have two unsecured term loans, which were extended and modified in July 2017, that bear interest at LIBOR plus 135 and 150 basis points, respectively, based on the current credit ratings of the Operating Partnership's senior unsecured long-term indebtedness. If our credit rating from S&P is downgraded, our unsecured credit facilities would bear interest at LIBOR plus 155 basis points and the interest rate on our two unsecured term loans would bear interest at LIBOR plus 175 basis points and 200 basis points, respectively, which would increase our borrowing costs. Additionally, a downgrade in our credit ratings may adversely impact our ability to obtain financing and limit our access to capital.

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Our hedging arrangements might not be successful in limiting our risk exposure, and we might be required to incur expenses in connection with these arrangements or their termination that could harm our results of operations or financial condition.
From time to time, we use interest rate hedging arrangements to manage our exposure to interest rate volatility, but these arrangements might expose us to additional risks, such as requiring that we fund our contractual payment obligations under such arrangements in relatively large amounts or on short notice. Developing an effective interest rate risk strategy is complex, and no strategy can completely insulate us from risks associated with interest rate fluctuations. We cannot assure you that our hedging activities will have a positive impact on our results of operations or financial condition. We might be subject to additional costs, such as transaction fees or breakage costs, if we terminate these arrangements. In addition, although our interest rate risk management policy establishes minimum credit ratings for counterparties, this does not eliminate the risk that a counterparty might fail to honor its obligations.
The covenants in our credit facilities and in the Notes might adversely affect us.
Our credit facilities, as well as the terms of the Notes, require us to satisfy certain affirmative and negative covenants and to meet numerous financial tests, and also contain certain default and cross-default provisions as described in more detail in Note 6 to the consolidated financial statements. Our credit facilities also restrict our ability to enter into any transaction that could result in certain changes in our ownership or structure as described under the heading “Change of Control/Change in Management” in the agreements for the credit facilities.
The financial covenants under the unsecured credit facilities require, among other things, that our debt to total asset value ratio, as defined in the agreements to our unsecured credit facilities, be less than 60%, that our ratio of unsecured indebtedness to unencumbered asset value, as defined, be less than 60%, that our ratio of unencumbered NOI to unsecured interest expense, as defined, be greater than 1.75, and that our ratio of earnings before EBITDA to fixed charges (debt service), as defined, be greater than 1.5. The financial covenants under the Notes also require, among other things, that our debt to total assets, as defined in the indenture governing the Notes, be less than 60%, that our ratio of total unencumbered assets to unsecured indebtedness, as defined, be greater than 150%, and that our ratio of consolidated income available for debt service to annual debt service charges, as defined, be greater than 1.5. For the 2023 Notes and the 2024 Notes, the financial covenants require that our ratio of secured debt to total assets, as defined, be less than 45% (40% on and after January 1, 2020). The financial covenants require that our ratio of secured debt to total assets, as defined, be less than 40% for the 2026 Notes. Compliance with each of these ratios is dependent upon our financial performance. The debt to total asset value ratio is based, in part, on applying a capitalization rate to EBITDA as defined in the agreements governing our credit facilities. Based on this calculation method, decreases in EBITDA would result in an increased debt to total asset value ratio, assuming overall debt levels remain constant.
If any future failure to comply with one or more of these covenants resulted in the loss of these credit facilities or a default under the Notes and we were unable to obtain suitable replacement financing, such loss could have a material, adverse impact on our financial position and results of operations.
RISKS RELATED TO THE OPERATING PARTNERSHIP'S NOTES
CBL has no significant operations and no material assets other than its indirect investment in the Operating Partnership; therefore, the limited guarantee of the Notes does not provide material additional credit support.
The limited guarantee provides that the Notes are guaranteed by CBL for any losses suffered by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. However, CBL has no significant operations and no material assets other than its indirect investment in the Operating Partnership. Furthermore, the limited guarantee of the Notes is effectively subordinated to all existing and future liabilities and preferred equity of the Company's subsidiaries (including the Operating Partnership (except as to the Notes) and any entity the Company accounts for under the equity method of accounting) and any of the Company's secured debt, to the extent of the value of the assets securing any such indebtedness. Due to the narrow scope of the limited guarantee, the lack of significant operations or assets at CBL other than its indirect investment in the Operating Partnership and the structural subordination of the limited guarantee to the liabilities and any preferred equity of the Company's subsidiaries, the limited guarantee does not provide material additional credit support.

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Our substantial indebtedness could materially and adversely affect us and the ability of the Operating Partnership to meet its debt service obligations under the Notes.
Our level of indebtedness and the limitations imposed on us by our debt agreements could have significant adverse consequences to holders of the Notes, including the following:
•
our cash flow may be insufficient to meet our debt service obligations with respect to the Notes and our other indebtedness, which would enable the lenders and other debtholders to accelerate the maturity of their indebtedness, or be insufficient to fund other important business uses after meeting such obligations;
•
we may be unable to borrow additional funds as needed or on favorable terms;
•
we may be unable to refinance our indebtedness at maturity or earlier acceleration, if applicable, or the refinancing terms may be less favorable than the terms of our original indebtedness or otherwise be generally unfavorable;
•
because a significant portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense;
•
increases in interest rates could also materially increase our interest expense on future fixed rate debt;
•
we may be forced to dispose of one or more of our Properties, possibly on disadvantageous terms;
•
we may default on our other unsecured indebtedness;
•
we may default on our secured indebtedness and the lenders may foreclose on our Properties or our interests in the entities that own the Properties that secure such indebtedness and receive an assignment of rents and leases; and
•
we may violate restrictive covenants in our debt agreements, which would entitle the lenders and other debtholders to accelerate the maturity of their indebtedness.
If any one of these events were to occur, our business, financial condition, liquidity, results of operations and prospects, as well as the Operating Partnership's ability to satisfy its obligations with respect to the Notes, could be materially and adversely affected. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, a circumstance which could hinder the Company's ability to meet the REIT distribution requirements imposed by the Internal Revenue Code.
The structural subordination of the Notes may limit the Operating Partnership's ability to meet its debt service obligations under the Notes.
The Notes are the Operating Partnership's unsecured and unsubordinated indebtedness and rank equally with the Operating Partnership's existing and future unsecured and unsubordinated indebtedness, and are effectively junior to all liabilities and any preferred equity of the Operating Partnership's subsidiaries and to all of the Operating Partnership's indebtedness that is secured by the Operating Partnership's assets, to the extent of the value of the assets securing such indebtedness. While the indenture governing the Notes limits our ability to incur additional secured indebtedness in the future, it will not prohibit us from incurring such indebtedness if we are in compliance with certain financial ratios and other requirements at the time of its incurrence. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to us, the holders of any secured indebtedness will, subject to the automatic stay under section 362 of the Bankruptcy Code, be entitled to proceed directly against the collateral that secures the secured indebtedness. Therefore, such collateral generally will not be available for satisfaction of any amounts owed under our unsecured indebtedness, including the Notes, until such secured indebtedness is satisfied in full.
The Notes also are effectively subordinated to all liabilities, whether secured or unsecured, and any preferred equity of the subsidiaries of the Operating Partnership. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to any such subsidiary, the Operating Partnership, as an equity owner of such subsidiary, and therefore holders of our debt, including the Notes, will be subject to the prior claims of such subsidiary's creditors, including trade creditors, and preferred equity holders. Furthermore, while the indenture governing the Notes limits the ability of our subsidiaries to incur additional unsecured indebtedness in the future, it does not prohibit our subsidiaries from incurring such indebtedness if such subsidiaries are in compliance with certain financial ratios and other requirements at the time of its incurrence.

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We may not be able to generate sufficient cash flow to meet our debt service obligations.
Our ability to meet our debt service obligations on, and to refinance, our indebtedness, including the Notes, and to fund our operations, working capital, acquisitions, capital expenditures and other important business uses, depends on our ability to generate sufficient cash flow in the future. To a certain extent, our cash flow is subject to general economic, industry, financial, competitive, operating, legislative, regulatory and other factors, many of which are beyond our control.
We cannot be certain that our business will generate sufficient cash flow from operations or that future sources of cash will be available to us in an amount sufficient to enable us to meet our debt service obligations on our indebtedness, including the Notes, or to fund our other important business uses. Additionally, if we incur additional indebtedness in connection with future acquisitions or development projects or for any other purpose, our debt service obligations could increase significantly and our ability to meet those obligations could depend, in large part, on the returns from such acquisitions or projects, as to which no assurance can be given.
We may need to refinance all or a portion of our indebtedness, including the Notes, at or prior to maturity. Our ability to refinance our indebtedness or obtain additional financing will depend on, among other things:
•
our financial condition, liquidity, results of operations and prospects and market conditions at the time; and
•
restrictions in the agreements governing our indebtedness.
As a result, we may not be able to refinance any of our indebtedness, including the Notes, on favorable terms, or at all.
If we do not generate sufficient cash flow from operations, and additional borrowings or refinancings are not available to us, we may be unable to meet all of our debt service obligations, including payments on the Notes. As a result, we would be forced to take other actions to meet those obligations, such as selling Properties, raising equity or delaying capital expenditures, any of which could have a material adverse effect on us. Furthermore, we cannot be certain that we will be able to effect any of these actions on favorable terms, or at all.
Despite our substantial outstanding indebtedness, we may still incur significantly more indebtedness in the future, which would exacerbate any or all of the risks described above.
We may be able to incur substantial additional indebtedness in the future. Although the agreements governing our revolving credit facilities, term loans and certain other indebtedness do, and the indenture governing the Notes does, limit our ability to incur additional indebtedness, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, debt incurred in compliance with these restrictions could be substantial. To the extent that we incur substantial additional indebtedness in the future, the risks associated with our substantial leverage described above, including our inability to meet our debt service obligations, would be exacerbated.
Federal and state statutes allow courts, under specific circumstances, to void guarantees and require holders of indebtedness and lenders to return payments received from guarantors.
Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee, such as the limited guarantee provided by CBL or any future guarantee of the Notes issued by any subsidiary of the Operating Partnership, could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor, if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee (i) received less than reasonably equivalent value or fair consideration for the incurrence of the guarantee and (ii) one of the following was true with respect to the guarantor:
•
the guarantor was insolvent or rendered insolvent by reason of the incurrence of the guarantee;
•
the guarantor was engaged in a business or transaction for which the guarantor's remaining assets constituted unreasonably small capital; or
•
the guarantor intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature.

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In addition, any claims in respect of a guarantee could be subordinated to all other debts of that guarantor under principles of "equitable subordination," which generally require that the claimant must have engaged in some type of inequitable conduct, the misconduct must have resulted in injury to the creditors of the debtor or conferred an unfair advantage on the claimant, and equitable subordination must not be inconsistent with other provisions of the U.S. Bankruptcy Code.
The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:
•
the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;
•
the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they became absolute and mature; or
•
it could not pay its debts as they become due.
The court might also void such guarantee, without regard to the above factors, if it found that a guarantor entered into its guarantee with actual or deemed intent to hinder, delay, or defraud its creditors.
A court would likely find that a guarantor did not receive reasonably equivalent value or fair consideration for its guarantee unless it benefited directly or indirectly from the issuance or incurrence of such indebtedness. This risk may be increased if any subsidiary of the Operating Partnership guarantees the Notes in the future, as no additional consideration would be received at the time such guarantee is issued. If a court voided such guarantee, holders of the indebtedness and lenders would no longer have a claim against such guarantor or the benefit of the assets of such guarantor constituting collateral that purportedly secured such guarantee. In addition, the court might direct holders of the indebtedness and lenders to repay any amounts already received from a guarantor.
The indenture governing the Notes contains restrictive covenants that may restrict our ability to expand or fully pursue certain of our business strategies.
The indenture governing the Notes contains financial and operating covenants that, among other things, restrict our ability to take specific actions, even if we believe them to be in our best interest, including, subject to various exceptions, restrictions on our ability to:
•
consummate a merger, consolidation or sale of all or substantially all of our assets; and
•
incur secured and unsecured indebtedness.
In addition, our revolving credit facilities, term loans and certain other debt agreements require us to meet specified financial ratios and the indenture governing the Notes requires us to maintain at all times a specified ratio of unencumbered assets to unsecured debt. These covenants may restrict our ability to expand or fully pursue our business strategies. Our ability to comply with these and other provisions of the indenture governing the Notes, our revolving credit facility and certain other debt agreements may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events beyond our control.
The breach of any of these covenants could result in a default under our indebtedness, which could result in the acceleration of the maturity of such indebtedness. If any of our indebtedness is accelerated prior to maturity, we may not be able to repay such indebtedness or refinance such indebtedness on favorable terms, or at all.
There is no prior public market for the Notes, so if an active trading market does not develop or is not maintained for the Notes, holders of the Notes may not be able to resell them on favorable terms when desired, or at all.
Prior to the offering of each of the 2023 Notes, the 2024 Notes and the 2026 Notes, there was no public market for such Notes and we cannot be certain that an active trading market will ever develop for the Notes or, if one develops, will be maintained. Furthermore, we do not intend to apply for listing of the Notes on any securities exchange or for the inclusion of the Notes on any automated dealer quotation system. The underwriters informed us that they intend to make a market in the Notes. However, the underwriters may cease their market making at any time without notice to or the consent of existing holders of the Notes. The lack of a trading market could adversely affect a holder's ability to sell the Notes when desired, or at all, and the price at which a holder may be able to sell the Notes. The liquidity of the trading market, if any, and future trading prices of the Notes will depend on many factors, including, among other things, prevailing interest rates, our financial condition, liquidity, results of operations and prospects, the market

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for similar securities and the overall securities market, and may be adversely affected by unfavorable changes in these factors. It is possible that the market for the Notes will be subject to disruptions which may have a negative effect on the holders of the Notes, regardless of our financial condition, liquidity, results of operations or prospects.
RISKS RELATED TO GEOGRAPHIC CONCENTRATIONS
Since our Properties are located principally in the southeastern and midwestern United States, our financial position, results of operations and funds available for distribution to shareholders are subject generally to economic conditions in these regions. 
Our Properties are located principally in the southeastern and midwestern United States. Our Properties located in the southeastern United States accounted for approximately 47.9% of our total revenues from all Properties for the year ended December 31, 2017 and currently include 31 malls, 12 associated centers, 9 community centers and 4 office buildings. Our Properties located in the midwestern United States accounted for approximately 28.5% of our total revenues from all Properties for the year ended December 31, 2017 and currently include 20 malls and 2 associated centers. Our results of operations and funds available for distribution to shareholders therefore will be subject generally to economic conditions in the southeastern and midwestern United States. While we already have Properties located in 7 states across the southwestern, northeastern and western regions, we will continue to look for opportunities to geographically diversify our portfolio in order to minimize dependency on any particular region; however, the expansion of the portfolio through both acquisitions and developments is contingent on many factors including consumer demand, competition and economic conditions.
Our financial position, results of operations and funds available for distribution to shareholders could be adversely affected by any economic downturn affecting the operating results at our Properties in the St. Louis, MO; Chattanooga, TN; Lexington, KY; Laredo, TX; and Madison, WI metropolitan areas, which are our five largest markets.
Our Properties located in the St. Louis, MO; Chattanooga, TN; Lexington, KY; Laredo, TX; and Madison, WI metropolitan areas accounted for approximately 7.2%, 4.6%, 3.7%, 3.6% and 3.3%, respectively, of our total revenues for the year ended December 31, 2017. No other market accounted for more than 2.8% of our total revenues for the year ended December 31, 2017. Our financial position and results of operations will therefore be affected by the results experienced at Properties located in these metropolitan areas.
RISKS RELATED TO DIVIDENDS
We may change the dividend policy for our common stock in the future.
Depending upon our liquidity needs, we reserve the right to pay any or all of a dividend in a combination of cash and shares of common stock, to the extent permitted by any applicable revenue procedures of the Internal Revenue Service ("IRS"). In the event that we pay a portion of our dividends in shares of our common stock pursuant to such procedures, taxable U.S. stockholders would be required to pay tax on the entire amount of the dividend, including the portion paid in shares of common stock, in which case such stockholders may have to use cash from other sources to pay such tax. If a U.S. stockholder sells the common stock it receives as a dividend in order to pay its taxes, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold federal tax with respect to our dividends, including dividends that are paid in common stock. In addition, if a significant number of our stockholders sell shares of our common stock in order to pay taxes owed on dividends, such sales would put downward pressure on the market price of our common stock.
The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Directors and will depend on our earnings, taxable income, FFO, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness and preferred stock, the annual distribution requirements under the REIT provisions of the Internal Revenue Code, Delaware law and such other factors as our Board of Directors deems relevant. Any dividends payable will be determined by our Board of Directors based upon the circumstances at the time of declaration. Any change in our dividend policy could have a material adverse effect on the market price of our common stock.

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Since we conduct substantially all of our operations through our Operating Partnership, our ability to pay dividends on our common and preferred stock depends on the distributions we receive from our Operating Partnership.
Because we conduct substantially all of our operations through our Operating Partnership, our ability to pay dividends on our common and preferred stock will depend almost entirely on payments and distributions we receive on our interests in our Operating Partnership. Additionally, the terms of some of the debt to which our Operating Partnership is a party may limit its ability to make some types of payments and other distributions to us. This in turn may limit our ability to make some types of payments, including payment of dividends to our stockholders, unless we meet certain financial tests. As a result, if our Operating Partnership fails to pay distributions to us, we generally will not be able to pay dividends to our stockholders for one or more dividend periods.
RISKS RELATED TO FEDERAL INCOME TAX LAWS
We conduct a portion of our business through taxable REIT subsidiaries, which are subject to certain tax risks.
We have established several taxable REIT subsidiaries including our Management Company. Despite our qualification as a REIT, our taxable REIT subsidiaries must pay income tax on their taxable income. In addition, we must comply with various tests to continue to qualify as a REIT for federal income tax purposes, and our income from and investments in our taxable REIT subsidiaries generally do not constitute permissible income and investments for these tests. While we will attempt to ensure that our dealings with our taxable REIT subsidiaries will not adversely affect our REIT qualification, we cannot provide assurance that we will successfully achieve that result. Furthermore, we may be subject to a 100% penalty tax, or our taxable REIT subsidiaries may be denied deductions, to the extent our dealings with our taxable REIT subsidiaries are not deemed to be arm's length in nature.
If we fail to qualify as a REIT in any taxable year, our funds available for distribution to stockholders will be reduced.
We intend to continue to operate so as to qualify as a REIT under the Internal Revenue Code. Although we believe that we are organized and operate in such a manner, no assurance can be given that we currently qualify and in the future will continue to qualify as a REIT. Such qualification involves the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial or administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify. In addition, no assurance can be given that legislation, new regulations, administrative interpretations or court decisions will not significantly change the tax laws with respect to qualification or its corresponding federal income tax consequences. Any such change could have a retroactive effect.
If in any taxable year we were to fail to qualify as a REIT, we would not be allowed a deduction for distributions to stockholders in computing our taxable income and we would be subject to federal income tax on our taxable income at regular corporate rates. Unless entitled to relief under certain statutory provisions, we also would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. As a result, the funds available for distribution to our stockholders would be reduced for each of the years involved. This would likely have a significant adverse effect on the value of our securities and our ability to raise additional capital. In addition, we would no longer be required to make distributions to our stockholders. We currently intend to operate in a manner designed to qualify as a REIT. However, it is possible that future economic, market, legal, tax or other considerations may cause our Board of Directors, with the consent of a majority of our stockholders, to revoke the REIT election.
Any issuance or transfer of our capital stock to any person in excess of the applicable limits on ownership necessary to maintain our status as a REIT would be deemed void ab initio, and those shares would automatically be transferred to a non-affiliated charitable trust.
To maintain our status as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of a taxable year. Our certificate of incorporation generally prohibits ownership of more than 6% of the outstanding shares of our capital stock by any single stockholder determined by vote, value or number of shares (other than Charles Lebovitz, Executive Chairman of our Board of Directors and our former Chief Executive Officer, David Jacobs, Richard Jacobs and their affiliates under the Internal Revenue Code's attribution rules). The affirmative vote of 66 2/3% of our outstanding voting stock is required to amend this provision.

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Our Board of Directors may, subject to certain conditions, waive the applicable ownership limit upon receipt of a ruling from the IRS or an opinion of counsel to the effect that such ownership will not jeopardize our status as a REIT. Absent any such waiver, however, any issuance or transfer of our capital stock to any person in excess of the applicable ownership limit or any issuance or transfer of shares of such stock which would cause us to be beneficially owned by fewer than 100 persons, will be null and void and the intended transferee will acquire no rights to the stock. Instead, such issuance or transfer with respect to that number of shares that would be owned by the transferee in excess of the ownership limit provision would be deemed void ab initio and those shares would automatically be transferred to a trust for the exclusive benefit of a charitable beneficiary to be designated by us, with a trustee designated by us, but who would not be affiliated with us or with the prohibited owner. Any acquisition of our capital stock and continued holding or ownership of our capital stock constitutes, under our certificate of incorporation, a continuous representation of compliance with the applicable ownership limit.
In order to maintain our status as a REIT and avoid the imposition of certain additional taxes under the Internal Revenue Code, we must satisfy minimum requirements for distributions to shareholders, which may limit the amount of cash we might otherwise have been able to retain for use in growing our business.
To maintain our status as a REIT under the Internal Revenue Code, we generally will be required each year to distribute to our stockholders at least 90% of our taxable income after certain adjustments. However, to the extent that we do not distribute all of our net capital gains or distribute at least 90% but less than 100% of our REIT taxable income, as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates, as the case may be. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which certain distributions paid by us during each calendar year are less than the sum of 85% of our ordinary income for such calendar year, 95% of our capital gain net income for the calendar year and any amount of such income that was not distributed in prior years. In the case of property acquisitions, including our initial formation, where individual Properties are contributed to our Operating Partnership for Operating Partnership units, we have assumed the tax basis and depreciation schedules of the entities contributing Properties. The relatively low tax basis of such contributed Properties may have the effect of increasing the cash amounts we are required to distribute as dividends, thereby potentially limiting the amount of cash we might otherwise have been able to retain for use in growing our business. This low tax basis may also have the effect of reducing or eliminating the portion of distributions made by us that are treated as a non-taxable return of capital.
Complying with REIT requirements might cause us to forego otherwise attractive opportunities.
In order to qualify as a REIT for U.S. federal income tax purposes, we must satisfy tests concerning, among other things, our sources of income, the nature of our assets, the amounts we distribute to our shareholders and the ownership of our stock. We may also be required to make distributions to our shareholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with REIT requirements may cause us to forego opportunities we would otherwise pursue. In addition, the REIT provisions of the Internal Revenue Code impose a 100% tax on income from “prohibited transactions.” “Prohibited transactions” generally include sales of assets that constitute inventory or other property held for sale in the ordinary course of business, other than foreclosure property. This 100% tax could impact our desire to sell assets and other investments at otherwise opportune times if we believe such sales could be considered “prohibited transactions.”
Our holding company structure makes us dependent on distributions from the Operating Partnership.
Because we conduct our operations through the Operating Partnership, our ability to service our debt obligations and pay dividends to our shareholders is strictly dependent upon the earnings and cash flows of the Operating Partnership and the ability of the Operating Partnership to make distributions to us. Under the Delaware Revised Uniform Limited Partnership Act, the Operating Partnership is prohibited from making any distribution to us to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the Operating Partnership (other than some non-recourse liabilities and some liabilities to the partners) exceed the fair value of the assets of the Operating Partnership. Additionally, the terms of some of the debt to which our Operating Partnership is a party may limit its ability to make some types of payments and other distributions to us. This in turn may limit our ability to make some types of payments, including payment of dividends on our outstanding capital stock, unless we meet certain financial tests or such payments or dividends are required to maintain our qualification as a REIT or to avoid the imposition of any federal income or excise tax on undistributed income. Any inability to make cash distributions from the Operating Partnership could jeopardize our ability to pay dividends on our outstanding shares of capital stock and to maintain qualification as a REIT.

23


Legislative or regulatory action could adversely affect stockholders and our Company
While the changes in the Tax Cuts and Jobs Act generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Internal Revenue Code may have unanticipated effects on us or our shareholders. Moreover, Congressional leaders have recognized that the process of adopting extensive tax legislation in a short amount of time without hearings and substantial time for review is likely to have led to drafting errors, issues needing clarification and unintended consequences that will have to be reviewed in subsequent tax legislation. It is not clear when Congress will address these issues or when the IRS will issue administrative guidance on the changes made in the Tax Cuts and Jobs Act.
As a result of the changes to U.S. federal tax laws implemented by the Tax Cuts and Jobs Act, our taxable income and the amount of distributions to our shareholders required in order to maintain our REIT status, and our relative tax advantage as a REIT, may significantly change. The long-term impact of the Tax Cuts and Jobs Act on the overall economy, government revenues, our tenants, us, and the real estate industry cannot be reliably predicted at this early stage of the new law's implementation. Furthermore, the Tax Cuts and Jobs Act may negatively impact certain of our tenants' operating results, financial condition and future business plans. There can be no assurance that the Tax Cuts and Jobs Act will not negatively impact our operating results, financial condition and future business operations.
Future changes to tax laws may adversely affect us either directly through changes to the taxation of the Company, our subsidiaries or our shareholders or indirectly through changes which adversely affect our tenants. These changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets. Not all states automatically conform to changes in the Internal Revenue Code. Some states use the legislative process to decide whether it is in their best interests to conform or not to various provisions of the Internal Revenue Code. This could increase the complexity of our compliance efforts, increase compliance costs, and may subject us to additional taxes and audit risk.
RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE
The ownership limit described above, as well as certain provisions in our amended and restated certificate of incorporation, amended and restated bylaws, and certain provisions of Delaware law, may hinder any attempt to acquire us.
There are certain provisions of Delaware law, our amended and restated certificate of incorporation, our Third Amended and Restated Bylaws (the "Bylaws"), and other agreements to which we are a party that may have the effect of delaying, deferring or preventing a third party from making an acquisition proposal for us. These provisions may also inhibit a change in control that some, or a majority, of our stockholders might believe to be in their best interest or that could give our stockholders the opportunity to realize a premium over the then-prevailing market prices for their shares. These provisions and agreements are summarized as follows:
•
The Ownership Limit – As described above, to maintain our status as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the last half of a taxable year. Our amended and restated certificate of incorporation generally prohibits ownership of more than 6% of the outstanding shares of our capital stock by any single stockholder determined by value (other than Charles Lebovitz, David Jacobs, Richard Jacobs and their affiliates under the Internal Revenue Code's attribution rules). In addition to preserving our status as a REIT, the ownership limit may have the effect of precluding an acquisition of control of us without the approval of our Board of Directors.
•
Supermajority Vote Required for Removal of Directors - Historically, our governing documents have provided that stockholders can only remove directors for cause and only by a vote of 75% of the outstanding voting stock. In light of a ruling by the Delaware Court of Chancery in a proceeding not involving the Company, our Board of Directors approved an amendment to our Bylaws to delete the “for cause” limitation on removal of the Company’s directors, and, based on our Board of Directors' recommendation, our shareholders approved a similar amendment to our Amended and Restated Certificate of Incorporation at the Company’s 2016 annual meeting. As a result of such actions, shareholders will be able to remove directors with or without cause, but only by a vote of 75% of the outstanding voting stock. This provision makes it more difficult to change the composition of our Board of Directors and may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our Board of Directors rather than pursue non-negotiated takeover attempts.

24


•
Advance Notice Requirements for Stockholder Proposals – Our Bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures generally require advance written notice of any such proposals, containing prescribed information, to be given to our Secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the anniversary date of the prior year’s annual meeting. Alternatively, a stockholder (or group of stockholders) seeking to nominate candidates for election as directors pursuant to the proxy access provisions set forth in Section 2.8 of our Bylaws generally must provide advance written notice to our Secretary, containing information prescribed in the proxy access bylaw, not less than 120 days nor more than 150 days prior to the anniversary date of the prior year’s annual meeting.
•
Vote Required to Amend Bylaws – A vote of 66  2/3% of our outstanding voting stock (in addition to any separate approval that may be required by the holders of any particular class of stock) is necessary for stockholders to amend our Bylaws.
•
Delaware Anti-Takeover Statute – We are a Delaware corporation and are subject to Section 203 of the Delaware General Corporation Law. In general, Section 203 prevents an “interested stockholder” (defined generally as a person owning 15% or more of a company's outstanding voting stock) from engaging in a “business combination” (as defined in Section 203) with us for three years following the date that person becomes an interested stockholder unless:
(a)
before that person became an interested holder, our Board of Directors approved the transaction in which the interested holder became an interested stockholder or approved the business combination;
(b)
upon completion of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owns 85% of our voting stock outstanding at the time the transaction commenced (excluding stock held by directors who are also officers and by employee stock plans that do not provide employees with the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer); or
(c)
following the transaction in which that person became an interested stockholder, the business combination is approved by our Board of Directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least two-thirds of our outstanding voting stock not owned by the interested stockholder. Under Section 203, these restrictions also do not apply to certain business combinations proposed by an interested stockholder following the announcement or notification of certain extraordinary transactions involving us and a person who was not an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of our directors, if that extraordinary transaction is approved or not opposed by a majority of the directors who were directors before any person became an interested stockholder in the previous three years or who were recommended for election or elected to succeed such directors by a majority of directors then in office.
Certain ownership interests held by members of our senior management may tend to create conflicts of interest between such individuals and the interests of the Company and our Operating Partnership. 
•
Tax Consequences of the Sale or Refinancing of Certain Properties – Since certain of our Properties had unrealized gain attributable to the difference between the fair market value and adjusted tax basis in such Properties immediately prior to their contribution to the Operating Partnership, a taxable sale of any such Properties, or a significant reduction in the debt encumbering such Properties, could cause adverse tax consequences to the members of our senior management who owned interests in our predecessor entities. As a result, members of our senior management might not favor a sale of a Property or a significant reduction in debt even though such a sale or reduction could be beneficial to us and the Operating Partnership. Our Bylaws provide that any decision relating to the potential sale of any Property that would result in a disproportionately higher taxable income for members of our senior management than for us and our stockholders, or that would result in a significant reduction in such Property's debt, must be made by a majority of the independent directors of the Board of Directors. The Operating Partnership is required, in the case of such a sale, to distribute to its partners, at a minimum, all of the net cash proceeds from such sale up to an amount reasonably believed necessary to enable members of our senior management to pay any income tax liability arising from such sale.

25


•
Interests in Other Entities; Policies of the Board of Directors – Certain Property tenants are affiliated with members of our senior management. Our Bylaws provide that any contract or transaction between us or the Operating Partnership and one or more of our directors or officers, or between us or the Operating Partnership and any other entity in which one or more of our directors or officers are directors or officers or have a financial interest, must be approved by our disinterested directors or stockholders after the material facts of the relationship or interest of the contract or transaction are disclosed or are known to them. Our code of business conduct and ethics also contains provisions governing the approval of certain transactions involving the Company and employees (or immediate family members of employees, as defined therein) that are not subject to the provision of the Bylaws described above. Such transactions are also subject to the Company's related party transactions policy in the manner and to the extent detailed in the proxy statement filed with the SEC for the Company's 2017 annual meeting. Nevertheless, these affiliations could create conflicts between the interests of these members of senior management and the interests of the Company, our shareholders and the Operating Partnership in relation to any transactions between us and any of these entities.
ITEM 1B. UNRESOLVED STAFF COMMENTS 
None. 
ITEM 2. PROPERTIES
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 for additional information pertaining to the Properties’ performance.
Malls
We owned a controlling interest in 60 Malls and non-controlling interests in 8 Malls as of December 31, 2017.  The Malls are primarily located in middle markets and generally have strong competitive positions because they are the only, or the dominant, regional mall in their respective trade areas. The Malls are generally anchored by two or more department stores and a wide variety of mall stores. Anchor tenants own or lease their stores and non-anchor stores lease their locations. Additional freestanding stores and restaurants that either own or lease their stores are typically located along the perimeter of the Malls' parking areas.
We classify our regional Malls into three categories:
(1)
Stabilized Malls - Malls that have completed their initial lease-up and have been open for more than three complete calendar years.
(2)
Non-stabilized Malls - Malls that are in their initial lease-up phase. After three complete calendar years of operation, they are reclassified on January 1 of the fourth calendar year to the Stabilized Mall category. The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Laredo were classified as Non-stabilized Malls as of December 31, 2017. The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Atlanta were classified as Non-stabilized Malls as of December 31, 2016.
(3)
Excluded Malls - We exclude Malls from our core portfolio if they fall in the following categories, for which operational metrics are excluded:
a.
Lender Malls - Properties for which we are working or intend to work with the lender on a restructure of the terms of the loan secured by the Property or convey the secured Property to the lender. Acadiana Mall was classified as a Lender Mall as of December 31, 2017. Chesterfield Mall, Midland Mall and Wausau Center were classified as Lender Malls as of December 31, 2016. The foreclosure process was completed and these three Lender Malls were conveyed to their respective lenders in 2017. See Note 4 to the consolidated financial statements for more information. Lender Malls are excluded from our same-center pool as decisions made while in discussions with the lender may lead to metrics that do not provide relevant information related to the condition of these Properties or they may be under cash management agreements with the respective servicers.
b.
Repositioning Malls - Malls that are currently being repositioned or where we have determined that the current format of the Property no longer represents the best use of the Property and we are in the process of evaluating alternative strategies for the Property. This may include major redevelopment or an alternative retail or non-retail format, or after evaluating alternative strategies for the Property,

26


we may determine that the Property no longer meets our criteria for long-term investment. The steps taken to reposition these Properties, such as signing tenants to short-term leases, which are not included in occupancy percentages, or leasing to regional or local tenants, which typically do not report sales, may lead to metrics which do not provide relevant information related to the condition of these Properties. Therefore, traditional performance measures, such as occupancy percentages and leasing metrics, exclude Repositioning Malls. As of December 31, 2017 and December 31, 2016, Cary Towne Center and Hickory Point Mall were classified as Repositioning Malls.
c.
Minority Interest Malls - Malls in which we have a 25% or less ownership interest. As of December 31, 2017, we had one Mall classified as a Minority Interest Mall, Triangle Town Center. As of December 31, 2016, River Ridge Mall and Triangle Town Center were classified in the Minority Interest Mall category. We sold our 25% interest in River Ridge Mall to our joint venture partner in the third quarter of 2017. See Note 5 to the consolidated financial statements for more information on this unconsolidated affiliate.
We own the land underlying each Mall in fee simple interest, except for Brookfield Square, Cross Creek Mall, Dakota Square Mall, EastGate Mall, Meridian Mall, St. Clair Square, Stroud Mall and WestGate Mall. We lease all or a portion of the land at each of these Malls subject to long-term ground leases.
The following table sets forth certain information for each of the Malls as of December 31, 2017 (dollars in thousands except for sales per square foot amounts):
Mall / Location
 
Year of
Opening/
Acquisition
 
Year of
Most
Recent
Expansion
 
Our
Ownership
 
Total Center
SF (1)
 
Total
Mall Store
GLA(2)
 
Mall Store
Sales per
Square
Foot (3)
 
Percentage
Mall
Store GLA
Leased (4)
 
Anchors & Junior
Anchors (5)
TIER 1
Sales ≥ $375 or more per square foot
Coastal Grand (6)
   Myrtle Beach, SC
 
2004
 
2007
 
50%
 
1,036,835

 
341,136

 
$
381

 
98%
 
Bed Bath & Beyond, Belk, Cinemark, Dick's Sporting Goods, Dillard's, H&M, JC Penney, Sears
CoolSprings
Galleria (6)
   Nashville, TN
 
1991
 
2015
 
50%
 
1,164,923

 
429,577

 
526

 
95%
 
Belk Men's & Kid's, Belk Women's & Home, Dillard's, H&M, JC Penney, King's Dining & Entertainment, Macy's
Cross Creek Mall
   Fayetteville, NC
 
1975/2003
 
2013
 
100%
 
1,022,590

 
318,455

 
479

 
100%
 
Belk, H&M, JC Penney, Macy's, Sears
Fayette Mall
   Lexington, KY
 
1971/2001
 
2014
 
100%
 
1,158,006

 
459,729

 
542

 
93%
 
Dick's Sporting Goods, Dillard's, H&M, JC Penney, Macy's
Friendly Center and
The Shops at
Friendly (6)
   Greensboro, NC
 
1957/ 2006/ 2007
 
2016
 
50%
 
1,345,194

 
608,101

 
487

 
95%
 
Barnes & Noble, BB&T, Belk, Belk Home Store, The Grande Cinemas, Harris Teeter, Macy's,
O2 Fitness (7), REI, Sears, Whole Foods
Hamilton Place
   Chattanooga, TN
 
1987
 
2016
 
90%
 
1,153,923

 
324,301

 
400

 
99%
 
Barnes & Noble, Belk for Men, Kids & Home, Belk for Women, Dillard's for Men, Kids & Home, Dillard's for Women, Forever 21, H&M, JC Penney, Sears
Jefferson Mall
   Louisville, KY
 
1978/2001
 
1999
 
100%
 
885,782

 
225,078

 
384

 
96%
 
Dillard's, H&M, JC Penney, former Macy's, Ross, Sears

27


Mall / Location
 
Year of
Opening/
Acquisition
 
Year of
Most
Recent
Expansion
 
Our
Ownership
 
Total Center
SF (1)
 
Total
Mall Store
GLA(2)
 
Mall Store
Sales per
Square
Foot (3)
 
Percentage
Mall
Store GLA
Leased (4)
 
Anchors & Junior
Anchors (5)
Mall del Norte
   Laredo, TX
 
1977/2004
 
1993
 
100%
 
1,207,539

 
396,656

 
444

 
94%
 
Beall's, Cinemark, Dillard's, Foot Locker, Forever 21, H&M, JC Penney, Joe Brand, Macy's, Macy's Home Store, Sears
Northwoods Mall
North Charleston, SC
 
1972/2001
 
1995
 
100%
 
778,445

 
255,043

 
381

 
92%
 
Belk,
Books-A-Million, Burlington (8), Dillard's, JC Penney, Planet Fitness
Oak Park Mall (6)
   Overland Park, KS
 
1974/2005
 
1998
 
50%
 
1,599,247

 
437,670

 
447

 
93%
 
Academy Sports & Outdoors, Barnes & Noble, Dillard's for Women, Dillard's for Men, Children & Home, Forever 21, H&M, JC Penney, Macy's, Nordstrom
The Outlet Shoppes at Atlanta
Woodstock, GA
 
2013
 
2015
 
75%
 
404,906

 
380,099

 
425

 
90%
 
Saks Fifth Ave OFF 5TH
The Outlet Shoppes
at El Paso
   El Paso, TX
 
2007/2012
 
2014
 
75%
 
433,046

 
411,007

 
403

 
99%
 
H&M
The Outlet Shoppes of the Bluegrass 
Simpsonville, KY
 
2014
 
2015
 
65%
 
428,072

 
381,372

 
418

*
96%
 
H&M, Saks Fifth Ave OFF 5TH
St. Clair Square (9)
   Fairview Heights, IL
 
1974/1996
 
1993
 
100%
 
1,076,904

 
299,649

 
375

 
95%
 
Dillard's, JC Penney, Macy's, Sears
Sunrise Mall
   Brownsville, TX
 
1979/2003
 
2015
 
100%
 
804,965

 
240,208

 
384

 
97%
 
A'GACI, Beall's, Cinemark, Dick's Sporting Goods, Dillard's, JC Penney, Sears
West County Center (6)
   Des Peres, MO
 
1969/2007
 
2002
 
50%
 
1,196,599

 
414,178

 
502

 
97%
 
Barnes & Noble, Dick's Sporting Goods, Forever 21, JC Penney, Macy's, Nordstrom
West Towne Mall
   Madison, WI
 
1970/2001
 
2013
 
100%
 
855,103

 
310,167

 
451

 
96%
 
Boston Store, Dave & Buster's (10), Dick's Sporting Goods, Forever 21, JC Penney, Sears (10), Total Wine (10)
Total Tier 1 Malls
 
 
 
 
 
 
 
16,552,079

 
6,232,426

 
$
447

 
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TIER 2
Sales ≥ $300 to < $375 per square foot
Arbor Place
Atlanta (Douglasville), GA
 
1999
 
 N/A
 
100%
 
1,161,931

 
307,501

 
$
358

 
98%
 
Bed Bath & Beyond, Belk, Dillard's, Forever 21, H&M, JC Penney, Macy's, Regal Cinemas, Sears
Asheville Mall
   Asheville, NC
 
1972/1998
 
2000
 
100%
 
973,344

 
265,440

 
365

 
93%
 
Barnes & Noble, Belk, Dillard's for Men, Children & Home, Dillard's for Women, H&M, JC Penney, Sears

28


Mall / Location
 
Year of
Opening/
Acquisition
 
Year of
Most
Recent
Expansion
 
Our
Ownership
 
Total Center
SF (1)
 
Total
Mall Store
GLA(2)
 
Mall Store
Sales per
Square
Foot (3)
 
Percentage
Mall
Store GLA
Leased (4)
 
Anchors & Junior
Anchors (5)
Burnsville Center
   Burnsville, MN
 
1977/1998
 
 N/A
 
100%
 
1,045,714

 
389,909

 
320

 
80%
 
Dick's Sporting Goods, Gordmans, H&M, JC Penney, Macy's, former Sears
CherryVale Mall
   Rockford, IL
 
1973/2001
 
2007
 
100%
 
844,383

 
329,798

 
320

 
98%
 
Barnes & Noble, Bergner's, JC Penney, Macy's, Sears
Dakota Square Mall
   Minot, ND
 
1980/2012
 
2016
 
100%
 
804,045

 
174,339

 
315

 
99%
 
AMC Theatres, Barnes & Noble, Herberger's, JC Penney, KJ's Fresh Market, Scheels, former Sears, Sleep Inn & Suites - Splashdown Dakota Super Slides, Target, T.J. Maxx
East Towne Mall
   Madison, WI
 
1971/2001
 
2004
 
100%
 
801,248

 
211,959

 
325

 
93%
 
Barnes & Noble, Boston Store, Dick's Sporting Goods, Gordmans, Flix Brewhouse (11), H&M, JC Penney, Sears
EastGate Mall (12)
   Cincinnati, OH
 
1980/2003
 
1995
 
100%
 
847,550

 
266,947

 
365

 
88%
 
Dillard's, JC Penney, Kohl's, Sears
Frontier Mall
   Cheyenne, WY
 
1981
 
1997
 
100%
 
524,061

 
179,191

 
332

 
91%
 
AMC Theatres, Dillard's for Women, Dillard's for Men, Kids & Home, JC Penney, Planet Fitness (13), Sears
Governor's Square (6)
   Clarksville, TN
 
1986
 
1999
 
47.5%
 
686,868

 
239,986

 
366

 
92%
 
AMC Theatres, Belk, Dick's Sporting Goods, Dillard's, JC Penney, Ross, Sears
Greenbrier Mall
    Chesapeake, VA
 
1981/2004
 
2004
 
100%
 
897,067

 
269,825

 
344

 
92%
 
Dillard's, GameWorks, H&M, JC Penney, Macy's, Sears
Hanes Mall
   Winston-Salem, NC
 
1975/2001
 
1990
 
100%
 
1,499,645

 
498,519

 
370

 
94%
 
Belk, Dick's Sporting Goods, Dillard's, Encore, H&M, JC Penney, Macy's, Sears
Harford Mall
   Bel Air, MD
 
1973/2003
 
2007
 
100%
 
505,487

 
181,311

 
334

 
95%
 
Encore, Macy's, Sears
Honey Creek Mall
   Terre Haute, IN
 
1968/2004
 
1981
 
100%
 
676,327

 
184,812

 
323

 
82%
 
Carson's, Encore, JC Penney, Macy's, Sears
Imperial Valley Mall
   El Centro, CA
 
2005
 
N/A
 
100%
 
826,623

 
213,536

 
342

 
88%
 
Cinemark, Dillard's, JC Penney, Kohl's, Macy's, Sears
Kirkwood Mall
   Bismarck, ND
 
1970/2012
 
2017
 
100%
 
860,914

 
257,050

 
308

 
90%
 
H&M, Herberger's, Keating Furniture, JC Penney, Scheels, Target
Laurel Park Place
   Livonia, MI
 
1989/2005
 
1994
 
100%
 
492,368

 
193,558

 
331

 
94%
 
Carson's, Von Maur
Layton Hills Mall
   Layton, UT
 
1980/2006
 
1998
 
100%
 
482,094

 
212,648

 
361

 
98%
 
Dick's Sporting Goods, Dillard's, JC Penney

29


Mall / Location
 
Year of
Opening/
Acquisition
 
Year of
Most
Recent
Expansion
 
Our
Ownership
 
Total Center
SF (1)
 
Total
Mall Store
GLA(2)
 
Mall Store
Sales per
Square
Foot (3)
 
Percentage
Mall
Store GLA
Leased (4)
 
Anchors & Junior
Anchors (5)
Mayfaire Town Center
   Wilmington, NC
 
2004/2015
 
2017
 
100%
 
635,408

 
318,289

 
361

 
91%
 
Barnes & Noble, Belk, The Fresh Market, former HH Gregg, H&M, Michaels, Regal Cinemas
Meridian Mall (14)
    Lansing, MI
 
1969/1998
 
2001
 
100%
 
943,904

 
290,775

 
308

 
90%
 
Bed Bath & Beyond, Dick's Sporting Goods, H&M, JC Penney, Launch Trampoline Park (15), Macy's, Planet Fitness, Schuler Books & Music, Younkers for Her, Younkers Men, Kids & Home
Northgate Mall
   Chattanooga, TN
 
1972/2011
 
2014
 
100%
 
796,254

 
187,063

 
306

 
90%
 
AMC Theatres, Belk, Burlington, former JC Penney, Michaels, Ross, Sears, T.J. Maxx
Northpark Mall
   Joplin, MO
 
1972/2004
 
1996
 
100%
 
950,860

 
275,136

 
321

 
86%
 
Dunham's Sports, H&M, JC Penney, Jo-Ann Fabrics & Crafts,
Macy's Children's & Home, Macy's Women's & Men's, Regal Cinemas, Sears, Tilt, T.J. Maxx, Vintage Stock
Old Hickory Mall
   Jackson, TN
 
1967/2001
 
1994
 
100%
 
542,004

 
164,909

 
374

 
76%
 
Belk, JC Penney, Macy's, Sears
The Outlet Shoppes at Laredo
   Laredo, TX
 
2017
 
N/A
 
65%
 
358,122

 
315,375

 
N/A

*
79%
 
H&M, Nike Factory Store
Park Plaza
   Little Rock, AR
 
1988/2004
 
N/A
 
100%
 
563,504

 
208,744

 
330

 
91%
 
Dillard's for Men & Children, Dillard's for Women & Home, Forever 21, H&M, U.S. Bank
Parkdale Mall
   Beaumont, TX
 
1972/2001
 
2014
 
100%
 
1,286,266

 
314,426

 
347

 
87%
 
former Ashley HomeStore, Beall's, Dillard's, JC Penney, H&M, Kaplan College, former Macy's (16), Marshall's, Michaels, Regal Cinemas, Sears, 2nd & Charles, Tilt Studio, XXI Forever
Parkway Place
   Huntsville, AL
 
1957/1998
 
2002
 
100%
 
648,271

 
279,093

 
367

 
93%
 
Belk, Dillard's
Pearland Town
Center (17)
    Pearland, TX
 
2008
 
N/A
 
100%
 
686,252

 
328,665

 
336

 
98%
 
Barnes & Noble, Dick's Sporting Goods, Dillard's, Macy's
Post Oak Mall
   College Station, TX
 
1982
 
1985
 
100%
 
788,240

 
300,715

 
356

 
91%
 
Beall's, Dillard's Men & Home, Dillard's Women & Children, Encore, JC Penney, Macy's, Sears
Richland Mall
   Waco, TX
 
1980/2002
 
1996
 
100%
 
693,450

 
191,872

 
365

 
99%
 
Beall's, Dick's Sporting Goods (18), Dillard's for Men, Kids & Home, Dillard's for Women, JC Penney, Sears

30


Mall / Location
 
Year of
Opening/
Acquisition
 
Year of
Most
Recent
Expansion
 
Our
Ownership
 
Total Center
SF (1)
 
Total
Mall Store
GLA(2)
 
Mall Store
Sales per
Square
Foot (3)
 
Percentage
Mall
Store GLA
Leased (4)
 
Anchors & Junior
Anchors (5)
South County Center
   St. Louis, MO
 
1963/2007
 
2001
 
100%
 
1,022,737

 
310,514

 
349

 
88%
 
Dick's Sporting Goods, Dillard's, JC Penney, Macy's, Sears
Southpark Mall
   Colonial Heights, VA
 
1989/2003
 
2007
 
100%
 
672,941

 
229,681

 
365

 
94%
 
Dick's Sporting Goods, JC Penney, Macy's, Regal Cinemas, Sears
Turtle Creek Mall
   Hattiesburg, MS
 
1994
 
1995
 
100%
 
845,571

 
192,184

 
344

 
92%
 
At Home, Belk, Dillard's, JC Penney, Sears, Southwest Theaters, Stein Mart
Valley View Mall
   Roanoke, VA
 
1985/2003
 
2007
 
100%
 
864,373

 
337,613

 
359

 
100%
 
Barnes & Noble, Belk, JC Penney, Macy's, Macy's for Home & Children, Sears
Volusia Mall
   Daytona Beach, FL
 
1974/2004
 
2013
 
100%
 
1,081,061

 
240,228

 
351

 
97%
 
Dillard's for Men & Home, Dillard's for Women, Dillard's for Juniors & Children, H&M, JC Penney, Macy's, Sears
WestGate Mall (19)
   Spartanburg, SC
 
1975/1995
 
1996
 
100%
 
954,774

 
245,015

 
342

 
83%
 
Bed Bath & Beyond, Belk, Dick's Sporting Goods, Dillard's, H&M, JC Penney, Regal Cinemas, Sears
Westmoreland Mall
   Greensburg, PA
 
1977/2002
 
1994
 
100%
 
978,559

 
318,580

 
314

 
92%
 
Bon-Ton, H&M, JC Penney, Macy's, Macy's Home Store, Old Navy, Sears
York Galleria
   York, PA
 
1989/1999
 
N/A
 
100%
 
757,780

 
225,854

 
341

 
84%
 
Bon-Ton, Boscov's, Gold's Gym, 
H&M, Marshalls (20), Sears
Total Tier 2 Malls
 
 
 
 
 
 
 
30,000,000

 
9,651,060

 
$
343

 
91%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TIER 3
Sales < $300 per square foot
Alamance Crossing
   Burlington, NC
 
2007
 
2011
 
100%
 
904,704

 
255,174

 
$
264

 
78%
 
Barnes & Noble, Belk, BJ's Wholesale Club, Carousel Cinemas, Dick's Sporting Goods, Dillard's, Hobby Lobby, JC Penney, Kohl's
Brookfield Square (21)
   Brookfield, WI
 
1967/2001
 
2008
 
100%
 
997,820

 
299,746

 
297

 
94%
 
Barnes & Noble, Boston Store, H&M, JC Penney, Sears
Eastland Mall
   Bloomington, IL
 
1967/2005
 
N/A
 
100%
 
751,420

 
221,397

 
282

 
97%
 
Bergner's, H&M (22), Kohl's, former Macy's, Planet Fitness (22), Sears
Janesville Mall
   Janesville, WI
 
1973/1998
 
1998
 
100%
 
600,137

 
170,619

 
243

 
91%
 
Boston Store, Dick's Sporting Goods, Kohl's, Sears
Kentucky Oaks Mall (6)
   Paducah, KY
 
1982/2001
 
1995
 
50%
 
886,055

 
319,363

 
243

 
84%
 
Best Buy, Dick's Sporting Goods, Dillard's, Dillard's Home Store, Elder-Beerman, JC Penney, former Sears, Vertical Trampoline Park

31


Mall / Location
 
Year of
Opening/
Acquisition
 
Year of
Most
Recent
Expansion
 
Our
Ownership
 
Total Center
SF (1)
 
Total
Mall Store
GLA(2)
 
Mall Store
Sales per
Square
Foot (3)
 
Percentage
Mall
Store GLA
Leased (4)
 
Anchors & Junior
Anchors (5)
Mid Rivers Mall
   St. Peters, MO
 
1987/2007
 
2015
 
100%
 
1,030,471

 
303,174

 
294

 
87%
 
Dick's Sporting Goods, Dillard's, H&M (23), JC Penney, Macy's, Marcus Wehrenberg Theatres, Sears,
V-Stock
Monroeville Mall
   Pittsburgh, PA
 
1969/2004
 
2014
 
100%
 
983,952

 
445,455

 
262

 
87%
 
Barnes & Noble, Cinemark, Dick's Sporting Goods, Forever 21, H&M, JC Penney, Macy's
The Outlet Shoppes at Gettysburg
Gettysburg, PA
 
2000/2012
 
N/A
 
50%
 
249,937

 
249,937

 
266

 
88%
 
None
Southaven Towne Center
   Southaven, MS
 
2005
 
2013
 
100%
 
559,497

 
184,545

 
296

 
83%
 
Bed Bath & Beyond, Dillard's, Gordmans, former HH Gregg, JC Penney
Stroud Mall (24)
   Stroudsburg, PA
 
1977/1998
 
2005
 
100%
 
414,331

 
129,848

 
277

 
90%
 
Bon-Ton, Cinemark, JC Penney, Sears
Total Tier 3 Malls
 
 
 
 
 
 
 
7,378,324

 
2,579,258

 
$
272

 
88%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Mall Portfolio
 
 
 
53,930,403

 
18,462,744

 
$
372

 
92%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Excluded Malls (25)
 
 
 
 
 
 
 
 
 
 
 
 
Lender Mall:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acadiana Mall
   Lafayette, LA
 
1979/2005
 
2004
 
100%
 
991,339

 
299,076

 
N/A
 
N/A
 
Dillard's, JC Penney, Macy's, former Sears
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repositioning Malls:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cary Towne Center
   Cary, NC
 
1979/2001
 
1993
 
100%
 
903,291

 
266,555

 
N/A
 
N/A
 
Belk, former Cary Towne Furniture, Dave & Buster's, Dillard's, JC Penney, IKEA (26)
Hickory Point Mall
   Forsyth, IL
 
1977/2005
 
N/A
 
100%
 
741,648

 
175,333

 
N/A
 
N/A
 
Bergner's, former Cohn Furniture, Encore, Hobby Lobby, Kohl's, Ross, former Sears, T.J. Maxx, Von Maur
Total Repositioning Malls
 
 
 
 
 
1,644,939

 
441,888

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minority Interest Mall
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Triangle Town
Center (6)
   Raleigh, NC
 
2002/2005
 
N/A
 
10%
 
1,255,434

 
429,345

 
N/A
 
N/A
 
Barnes & Noble, Belk, Dillard's, Macy's, Sak's Fifth Avenue, Sears
Total Excluded Malls
 
 
 
 
 
 
 
3,891,712

 
1,170,309

 
 
 
 
 
 
* Non-stabilized Mall - Mall Store Sales per Square Foot metrics are excluded from Mall Store Sales per Square Foot totals by tier and Mall portfolio totals. The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Laredo are non-stabilized malls. The Outlet Shoppes at Laredo opened in April 2017 and is included in Tier 2 based on a projection of 12-month sales.
(1)
Total center square footage includes square footage of shops, owned and leased attached Anchor and Junior Anchors locations and leased freestanding locations immediately adjacent to the center.
(2)
Excludes tenants over 20,000 square feet.
(3)
Totals represent weighted averages.

32


(4)
Includes tenants paying rent as of December 31, 2017.
(5)
Anchors and Junior Anchors listed are attached to the malls or are in freestanding locations adjacent to the malls.
(6)
This Property is owned in an unconsolidated joint venture.
(7)
Friendly Center - O2 Fitness is scheduled to open in 2018.
(8)
Northwoods Mall - Burlington and other shops are scheduled to open in 2018 in the former Sears space.
(9)
St. Clair Square - We are the lessee under a ground lease for 20 acres.  Assuming the exercise of available renewal options, at our election, the ground lease expires January 31, 2073.  The rental amount is $41 per year. In addition to base rent, the landlord receives 0.25% of Dillard's sales in excess of $16,200.
(10)
West Towne Mall - Half of the Sears space is under redevelopment by its third party owner for a Dave & Buster's store and Total Wine store, which are scheduled to open in 2018.
(11)
East Towne Mall - Flix Brewhouse is scheduled to open in 2018 in the former Steinhafels' space.
(12)
EastGate Mall - Ground rent for the Dillard's parcel that extends through January 2022 is $24 per year.
(13)
Frontier Mall - Planet Fitness is scheduled to open in 2018 in the former Sports Authority space.
(14)
Meridian Mall - We are the lessee under several ground leases in effect through March 2067, with extension options.  Fixed rent is $19 per year plus 3% to 4% of all rent.
(15)
Meridian Mall - Launch Trampoline Park is scheduled to open in 2018 in the former Gordmans space.
(16)
Parkdale Mall - A lease to fill the former Macy's space is out for signature. Construction is expected to begin in 2018.
(17)
Pearland Town Center is a mixed-use center which combines retail, hotel, office and residential components.  For segment reporting purposes, the retail portion of the center is classified in Malls and the office portion, hotel and residential portions are classified as All Other.
(18)
Richland Mall - Dick's Sporting Goods is scheduled to open in 2018 in the former Forever 21 space.
(19)
WestGate Mall - We are the lessee under several ground leases for approximately 53% of the underlying land.  Assuming the exercise of renewal options available, at our election, the ground lease expires October 2024.  The rental amount is $130 per year.  In addition to base rent, the landlord receives 20% of the percentage rents collected.  We have a right of first refusal to purchase the fee.
(20)
York Galleria - Marshalls is scheduled to open in 2018 in the upper level of the former JC Penney space.
(21)
Brookfield Square - The annual ground rent for 2017 was $305.
(22)
Eastland Mall - H&M, Planet Fitness and Outback Steakhouse are scheduled to open in 2018 in the former JC Penney space.
(23)
Mid Rivers Mall - H&M is scheduled to open in 2018.
(24)
Stroud Mall - We are the lessee under a ground lease, which extends through July 2089.  The current rental amount is $60 per year, increasing by $10 every ten years through 2059.  An additional $100 is paid every ten years.
(25)
Operational metrics are not reported for Excluded Malls.
(26)
Cary Towne Center - IKEA is scheduled to open in 2020 in the former Sears and Macy's spaces.
Mall Stores 
The Malls have approximately 5,789 Mall stores. National and regional retail chains (excluding local franchises) lease approximately 78.4% of the occupied Mall store GLA. Although Mall stores occupy only 33.0% of the total Mall GLA (the remaining 67.0% is occupied by Anchors and Junior Anchors and a minor percentage is vacant), the Malls received 83.9% of their revenues from Mall stores for the year ended December 31, 2017.
Mall Lease Expirations 
The following table summarizes the scheduled lease expirations for mall stores as of December 31, 2017:
Year Ending
December 31,
 
Number of
Leases
Expiring
 
Annualized
Gross Rent (1)
 
GLA of
Expiring
Leases
 
Average
Annualized
Gross Rent
Per Square
Foot
 
Expiring
Leases as % of
Total
Annualized
Gross Rent (2)
 
Expiring
Leases as a %
of Total Leased
GLA (3)
2018
 
888
 
$
103,148,000

 
2,569,000

 
$
40.15

 
15.7%
 
16.7%
2019
 
722
 
87,008,000

 
2,183,000

 
39.86

 
13.2%
 
14.1%
2020
 
631
 
79,500,000

 
2,012,000

 
39.51

 
12.1%
 
13.0%
2021
 
526
 
69,431,000

 
1,551,000

 
44.77

 
10.5%
 
10.0%
2022
 
472
 
66,706,000

 
1,564,000

 
42.65

 
10.1%
 
10.1%
2023
 
390
 
66,039,000

 
1,390,000

 
47.51

 
10.0%
 
9.0%

33


Year Ending
December 31,
 
Number of
Leases
Expiring
 
Annualized
Gross Rent (1)
 
GLA of
Expiring
Leases
 
Average
Annualized
Gross Rent
Per Square
Foot
 
Expiring
Leases as % of
Total
Annualized
Gross Rent (2)
 
Expiring
Leases as a %
of Total Leased
GLA (3)
2024
 
373
 
55,102,000

 
1,305,000

 
42.22

 
8.4%
 
8.4%
2025
 
289
 
46,962,000

 
974,000

 
48.22

 
7.1%
 
6.3%
2026
 
274
 
45,214,000

 
1,081,000

 
41.83

 
6.9%
 
7.0%
2027
 
221
 
39,256,000

 
842,000

 
46.62

 
6.0%
 
5.4%
(1)
Total annualized gross rent, including recoverable common area expenses and real estate taxes, in effect at December 31, 2017 for expiring leases that were executed as of December 31, 2017.
(2)
Total annualized gross rent, including recoverable CAM expenses and real estate taxes, of expiring leases as a percentage of the total annualized gross rent of all leases that were executed as of December 31, 2017.
(3)
Total GLA of expiring leases as a percentage of the total GLA of all leases that were executed as of December 31, 2017.
See page 59 for a comparison between rents on leases that expired in the current reporting period compared to rents on new and renewal leases executed in 2017. For comparable spaces under 10,000-square-feet, we leased approximately 2.1 million square feet with stabilized mall leasing spreads averaging a decline of 5.4%, including positive spreads on new leases of 9.0% and renewal spreads declining an average of 8.7%. We expect renewal spreads to remain negative for the next several quarters as we work through maturing leases with struggling retailers as well as retailers in bankruptcy where we are negotiating occupancy cost reductions to minimize store closures. Page 59 includes new and renewal leasing activity as of December 31, 2017 with commencement dates in 2017 and 2018.
Mall Tenant Occupancy Costs 
Occupancy cost is a tenant’s total cost of occupying its space, divided by its sales. Mall store sales represent total sales amounts received from reporting tenants with space of less than 10,000 square feet.  The following table summarizes tenant occupancy costs as a percentage of total Mall store sales, excluding license agreements, for each of the past three years:
 
 
Year Ended December 31, (1)
 
 
2017
 
2016
 
2015
Mall store sales (in millions)
 
$
4,713

 
$
5,110

 
$
5,778

Minimum rents
 
8.95
%
 
8.64
%
 
8.46
%
Percentage rents
 
0.45
%
 
0.45
%
 
0.55
%
Tenant reimbursements (2)
 
3.74
%
 
3.66
%
 
3.63
%
Mall tenant occupancy costs
 
13.14
%
 
12.75
%
 
12.64
%
(1)
In certain cases, we own less than a 100% interest in the Malls. The information in this table is based on 100% of the applicable amounts and has not been adjusted for our ownership share.
(2)
Represents reimbursements for real estate taxes, insurance, CAM charges, marketing and certain capital expenditures.
Debt on Malls 
Please see the table entitled “Mortgage Loans Outstanding at December 31, 2017” included herein for information regarding any liens or encumbrances related to our Malls. 
Other Property Types
Other property types include the following three categories:
(1)
Associated Centers - Retail properties that are adjacent to a regional mall complex and include one or more Anchors, or big box retailers, along with smaller tenants. Anchor tenants typically include tenants such as T.J. Maxx, Target, Kohl’s and Bed Bath & Beyond.  Associated Centers are managed by the staff at the Mall since it is adjacent to and usually benefits from the customers drawn to the Mall.

34


(2)
Community Centers - Designed to attract local and regional area customers and are typically anchored by a combination of supermarkets, or value-priced stores that attract shoppers to each center’s small shops. The tenants at our Community Centers typically offer necessities, value-oriented and convenience merchandise.
(3) Office Buildings
See Note 1 to the consolidated financial statements for additional information on the number of consolidated and unconsolidated Properties in each of the above categories category related to our other property types.
The following tables set forth certain information for each of our other property types at December 31, 2017:
Property / Location
 
Property
Type
 
Year of
Opening/ Most
Recent
Expansion
 
Company's
Ownership
 
Total Center
SF (1)
 
Total
Leasable
GLA (2)
 
Percentage
GLA
Occupied (3)
 
Anchors & Junior
Anchors
840 Greenbrier Circle
    Chesapeake, VA
 
Office
 
1983
 
100%
 
50,820

 
50,820

 
82%
 
None
850 Greenbrier Circle
    Chesapeake, VA
 
Office
 
1984
 
100%
 
81,318

 
81,318

 
100%
 
None
Ambassador Town
Center (4)
    Lafayette, LA
 
Community Center
 
2016
 
65%
 
265,323

 
265,323

 
100%
 
Dick's Sporting Goods / Field & Stream, Nordstrom Rack, Marshalls
Annex at Monroeville
Pittsburgh, PA
 
Associated Center
 
1986
 
100%
 
186,367

 
186,367

 
100%
 
Burlington, Steel City Indoor Karting
CBL Center (5)
    Chattanooga, TN
 
Office
 
2001
 
92%
 
130,658

 
130,658

 
100%
 
None
CBL Center II (5)
    Chattanooga, TN
 
Office
 
2008
 
92%
 
73,043

 
73,043

 
100%
 
None
Coastal Grand Crossing (4)
    Myrtle Beach, SC
 
Associated Center
 
2005
 
50%
 
37,234

 
37,234

 
100%
 
PetSmart
CoolSprings Crossing
Nashville, TN
 
Associated Center
 
1992
 
100%
 
304,851

 
78,830

 
99%
 
Former HH Gregg (6), JumpStreet (6), Target (7), Toys R Us (7)
Courtyard at
Hickory Hollow
Nashville, TN
 
Associated Center
 
1979
 
100%
 
68,438

 
68,438

 
100%
 
AMC Theatres
The Forum at Grandview
    Madison, MS
 
Community Center
 
2010/2016
 
75%
 
216,144

 
216,144

 
100%
 
Best Buy, Dick’s Sporting Goods, HomeGoods, Michaels, Stein Mart
Fremaux Town Center (4)
    Slidell, LA
 
Community Center
 
2014/2015
 
65%
 
603,839

 
473,339

 
97%
 
Best Buy, Dick's Sporting Goods, Dillard's, Kohl's, LA Fitness, Michaels, T.J. Maxx
Frontier Square
Cheyenne, WY
 
Associated Center
 
1985
 
100%
 
186,552

 
16,527

 
100%
 
Ross (8), Target (7), T.J. Maxx (8)
Governor's Square
Plaza (4)
     Clarksville, TN
 
Associated Center
 
1985/1988
 
50%
 
214,737

 
71,809

 
100%
 
Bed Bath & Beyond,
Jo-Ann Fabrics & Crafts, Target  (7)
Gulf Coast Town Center
    Ft. Myers, FL
 
Community Center
 
2005/2007
 
100%
 
78,851

 
78,851

 
100%
 
Dick's Sporting Goods
Gunbarrel Pointe
Chattanooga, TN
 
Associated Center
 
2000
 
100%
 
273,913

 
147,913

 
99%
 
Earthfare, Kohl's,
Target (7)
Hamilton Corner
Chattanooga, TN
 
Associated Center
 
1990/2005
 
90%
 
67,301

 
67,301

 
96%
 
None
Hamilton Crossing
Chattanooga, TN
 
Associated Center
 
1987/2005
 
92%
 
191,945

 
98,832

 
100%
 
HomeGoods (9),
Michaels (9),
T.J. Maxx, Toys R Us (7)
Hammock Landing (4)
    West Melbourne, FL
 
Community Center
 
2009/2015
 
50%
 
562,681

 
334,714

 
87%
 
Academy Sports, AMC Theatres, former HH Gregg, Kohl's (4), Marshalls, Michaels, Ross, Target (4)
Harford Annex
Bel Air, MD
 
Associated Center
 
1973/2003
 
100%
 
107,656

 
107,656

 
100%
 
Best Buy, Office Depot, PetSmart

35


Property / Location
 
Property
Type
 
Year of
Opening/ Most
Recent
Expansion
 
Company's
Ownership
 
Total Center
SF (1)
 
Total
Leasable
GLA (2)
 
Percentage
GLA
Occupied (3)
 
Anchors & Junior
Anchors
The Landing at
Arbor Place
Atlanta (Douglasville), GA
 
Associated Center
 
1999
 
100%
 
162,960

 
113,719

 
87%
 
Ben's Furniture and Antiques, Ollie's Bargain Outlet, Toys R Us (7)
Layton Hills
Convenience Center
Layton, UT
 
Associated Center
 
1980
 
100%
 
90,066

 
90,066

 
94%
 
Bed Bath & Beyond
Layton Hills Plaza
Layton, UT
 
Associated Center
 
1989
 
100%
 
18,808

 
18,808

 
100%
 
None
Parkdale Crossing
Beaumont, TX
 
Associated Center
 
2002
 
100%
 
80,064

 
80,064

 
100%
 
Barnes & Noble
Parkway Plaza
    Fort Oglethorpe, GA
 
Community Center
 
2015
 
100%
 
134,047

 
134,047

 
100%
 
Hobby Lobby, Marshalls, Ross
The Pavilion at
Port Orange (4)
    Port Orange, FL
 
Community Center
 
2010
 
50%
 
398,031

 
398,031

 
97%
 
Belk, Regal Cinemas, Marshalls, Michaels
Pearland Office
    Pearland, TX
 
Office
 
2009
 
100%
 
65,843

 
65,843

 
96%
 
None
The Plaza at Fayette
Lexington, KY
 
Associated Center
 
2006
 
100%
 
215,745

 
215,745

 
95%
 
Cinemark, Gordmans
The Promenade
    D'Iberville, MS
 
Community Center
 
2009/2014
 
85%
 
616,014

 
399,054

 
99%
 
Ashley Furniture HomeStore, Bed Bath & Beyond, Best Buy, Dick's Sporting Goods,
Kohl's (7), Marshalls, Michaels, Ross, Target (7)
The Shoppes at
Hamilton Place
Chattanooga, TN
 
Associated Center
 
2003
 
92%
 
131,274

 
131,274

 
89%
 
Bed Bath & Beyond, Marshalls, Ross
The Shoppes at
St. Clair Square
Fairview Heights, IL
 
Associated Center
 
2007
 
100%
 
84,383

 
84,383

 
100%
 
Barnes & Noble
Statesboro Crossing
    Statesboro, GA
 
Community Center
 
2008/2015
 
50%
 
146,981

 
146,981

 
100%
 
Hobby Lobby, T.J. Maxx
Sunrise Commons
Brownsville, TX
 
Associated Center
 
2001
 
100%
 
104,126

 
104,126

 
100%
 
Marshalls, Ross
The Terrace
Chattanooga, TN
 
Associated Center
 
1997
 
92%
 
158,175

 
158,175

 
100%
 
Academy Sports, Party City
West Towne Crossing
Madison, WI
 
Associated Center
 
1980
 
100%
 
411,013

 
146,465

 
100%
 
Barnes & Noble, Best Buy, Kohl's (7), Metcalf's Markets (7), Nordstrom Rack, Office Max (7), Shopko (7)
WestGate Crossing
Spartanburg, SC
 
Associated Center
 
1985/1999
 
100%
 
158,262

 
158,262

 
99%
 
Big Air Trampoline Park, Hamricks, Jo-Ann Fabrics & Crafts
Westmoreland Crossing
Greensburg, PA
 
Associated Center
 
2002
 
100%
 
281,293

 
281,293

 
100%
 
AMC Theatres, Dick's Sporting Goods,
Levin Furniture,
Michaels (10),  
T.J. Maxx (10)
York Town Center (4)
    York, PA
 
Associated Center
 
2007
 
50%
 
282,882

 
232,882

 
99%
 
Bed Bath & Beyond, Best Buy, Christmas Tree Shops, Dick's Sporting Goods, Ross, Staples
Total Other Property Types
 
 
 
7,241,638

 
5,544,335

 
97%
 
 
(1)
Total center square footage includes square footage of shops, owned and leased attached Anchor and Junior Anchor locations and leased freestanding locations immediately adjacent to the center.
(2)
Includes leasable Anchors and Junior Anchors.
(3)
Includes tenants paying rent as of December 31, 2017, including leased Anchors.
(4)
This Property is owned in an unconsolidated joint venture.
(5)
We own a 92% interest in the CBL Center office buildings, with an aggregate square footage of approximately 204,000 square feet, where our corporate headquarters is located. As of December 31, 2017, we occupied 71.4% of the total square footage of the buildings. 

36


(6)
CoolSprings Crossing - Space is owned by Next Realty, LLC. This space is subleased to JumpStreet and the former HH Gregg space is vacant.
(7)
Owned by the tenant.
(8)
Frontier Square - Space is owned by 1639 11th Street Associates and subleased to Ross and T.J. Maxx.
(9)
Hamilton Crossing - Space is owned by Agree Limited Partnership and subleased to HomeGoods and Michaels.
(10)
Westmoreland Crossing - Space is owned by Schottenstein Property Group and subleased to Michaels and T.J. Maxx.
Other Property Types Lease Expirations 
The following table summarizes the scheduled lease expirations for tenants in occupancy at Other Property Types as of December 31, 2017:
Year Ending
 December 31,
 
Number of
Leases
Expiring
 
Annualized
Gross
Rent (1)
 
GLA of
Expiring
Leases
 
Average
Annualized
Gross Rent
Per Square
Foot
 
Expiring Leases
as % of Total
Annualized
Gross
Rent (2)
 
Expiring
Leases as a
% of Total
Leased
GLA (3)
2018
 
39
 
$
4,788,000

 
250,000

 
$
19.15

 
5.8%
 
5.6%
2019
 
66
 
8,234,000

 
442,000

 
18.63

 
9.9%
 
9.9%
2020
 
105
 
14,995,000

 
804,000

 
18.65

 
18.0%
 
18.1%
2021
 
53
 
10,219,000

 
612,000

 
16.70

 
12.3%
 
13.8%
2022
 
50
 
9,860,000

 
591,000

 
16.68

 
11.8%
 
13.3%
2023
 
37
 
6,911,000

 
380,000

 
18.19

 
8.3%
 
8.5%
2024
 
29
 
6,334,000

 
341,000

 
18.57

 
7.6%
 
7.7%
2025
 
37
 
8,519,000

 
461,000

 
18.48

 
10.2%
 
10.4%
2026
 
45
 
7,833,000

 
349,000

 
22.44

 
9.4%
 
7.8%
2027
 
27
 
5,538,000

 
217,000

 
25.52

 
6.7%
 
4.9%
(1)
Total annualized gross rent, including recoverable common area expenses and real estate taxes, in effect at December 31, 2017 for expiring leases that were executed as of December 31, 2017.
(2)
Total annualized gross rent, including recoverable CAM expenses and real estate taxes, of expiring leases as a percentage of the total annualized gross rent of all leases that were executed as of December 31, 2017.
(3)
Total GLA of expiring leases as a percentage of the total GLA of all leases that were executed as of December 31, 2017.
Debt on Other Property Types 
Please see the table entitled “Mortgage Loans Outstanding at December 31, 2017” included herein for information regarding any liens or encumbrances related to our Other Property Types. 
Anchors and Junior Anchors
Anchors and Junior Anchors are an important factor in a Property’s successful performance. However, we believe that the number of traditional department store anchors will decline over time, providing us the opportunity to redevelop these spaces to attract new uses such as restaurants, entertainment, fitness centers and lifestyle retailers that engage consumers and encourage them to spend more time at our Properties. Anchors are generally a department store or, increasingly, other large format retailers, whose merchandise appeals to a broad range of shoppers and plays a significant role in generating customer traffic and creating a desirable location for the Property's tenants.
Anchors and Junior Anchors may own their stores and the land underneath, as well as the adjacent parking areas, or may enter into long-term leases with respect to their stores. Rental rates for Anchor tenants are significantly lower than the rents charged to non-anchor tenants. Total rental revenues from Anchors and Junior Anchors accounted for 14.1% of the total revenues from our Properties in 2017. Each Anchor and Junior Anchor that owns its store has entered into an operating and reciprocal easement agreement with us covering items such as operating covenants, reciprocal easements, property operations, initial construction and future expansion.

37


During 2017, we added the following Anchors and Junior Anchors to our Properties, as listed below:
Name
 
Property
 
Location
Ben's Furniture and Antiques
 
The Landing at Arbor Place
 
Douglasville, GA
Dick's Sporting Goods
 
Pearland Town Center
 
Pearland, TX
Dillard's
 
Layton Hills Mall
 
Layton, UT
Gold's Gym
 
York Galleria
 
York, PA
H&M
 
East Towne Mall
 
Madison, WI
H&M
 
Greenbrier Mall
 
Chesapeake, VA
H&M
 
Hamilton Place
 
Chattanooga, TN
H&M
 
Mayfaire Town Center
 
Wilmington, NC
H&M
 
Northpark Mall
 
Joplin, MO
H&M
 
The Outlet Shoppes at Laredo
 
Laredo, TX
H&M
 
Park Plaza
 
Little Rock, AR
H&M
 
WestGate Mall
 
Spartanburg, SC
Jo-Ann Fabrics & Crafts
 
Governor's Square Plaza
 
Clarksville, TN
Nike Factory Store
 
The Outlet Shoppes at Laredo
 
Laredo, TX
Ollie's Bargain Outlet
 
The Landing at Arbor Place
 
Douglasville, GA
T.J. Maxx
 
Dakota Square Mall
 
Minot, ND
T.J. Maxx
 
Hickory Point Mall
 
Forsyth, IL
Tilt Studio
 
Parkdale Mall
 
Beaumont, TX
As of December 31, 2017, the Properties had a total of 484 Anchors and Junior Anchors, including 11 vacant Anchor and Junior Anchor locations, and excluding Anchors and Junior Anchors at our Excluded Malls. The Anchors and Junior Anchors and the amount of GLA leased or owned by each as of December 31, 2017 is as follows:
 
 
 
Number of Stores
 
Gross Leasable Area
 
 

Leased
 
Anchor
Owned
 
Total
 

Leased
 
Anchor
Owned
 
Total
Anchor/Junior Anchor
 
 
Owned
 
Ground Lease
 
 
 
Owned
 
Ground Lease
 
JC Penney
 
19
 
25
 
4
 
48
 
2,035,058

 
3,163,088

 
586,030

 
5,784,176

Sears (1)
 
15
 
20
 
5
 
40
 
2,181,792

 
2,751,021

 
747,267

 
5,680,080

Dillard's
 
5
 
36
 
3
 
44
 
583,049

 
4,878,936

 
559,612

 
6,021,597

Macy's (2)
 
12
 
18
 
3
 
33
 
1,389,205

 
2,847,163

 
658,378

 
4,894,746

Belk
 
6
 
13
 
3
 
22
 
568,799

 
1,807,861

 
258,105

 
2,634,765

Bon-Ton:
 
 
 
 
 
 
 

 
 

 
 

 
 
 


Bon-Ton
 
1
 
1
 
1
 
3
 
87,024

 
131,915

 
99,800

 
318,739

Bergner's
 
2
 
—
 
—
 
2
 
259,946

 
—

 
—

 
259,946

Boston Store
 
1
 
3
 
—
 
4
 
96,000

 
493,411

 
—

 
589,411

Carson's
 
2
 
—
 
—
 
2
 
219,190

 
—

 
—

 
219,190

Herberger's
 
2
 
—
 
—
 
2
 
144,968

 
—

 
—

 
144,968

Younkers
 
1
 
—
 
1
 
2
 
93,597

 
—

 
74,899

 
168,496

Elder-Beerman
 
1
 
—
 
—
 
1
 
60,092

 
—

 
—

 
60,092

Bon-Ton Subtotal
 
10
 
4
 
2
 
16
 
960,817

 
625,326

 
174,699

 
1,760,842

Academy Sports
 
2
 
—
 
—
 
2
 
136,129

 
—

 
—

 
136,129

A'GACI
 
1
 
—
 
—
 
1
 
28,000

 
—

 
—

 
28,000

AMC Theatres
 
5
 
—
 
1
 
6
 
191,414

 
—

 
56,255

 
247,669

Ashley HomeStore
 
1
 
—
 
—
 
1
 
20,000

 
—

 
—

 
20,000


38


 
 
 
Number of Stores
 
Gross Leasable Area
 
 

Leased
 
Anchor
Owned
 
Total
 

Leased
 
Anchor
Owned
 
Total
Anchor/Junior Anchor
 
 
Owned
 
Ground Lease
 
 
 
Owned
 
Ground Lease
 
At Home
 
—
 
1
 
—
 
1
 
—

 
124,700

 
—

 
124,700

Barnes & Noble
 
16
 
—
 
1
 
17
 
461,278

 
—

 
59,995

 
521,273

BB&T
 
—
 
1
 
—
 
1
 
—

 
60,000

 
—

 
60,000

Beall's
 
5
 
—
 
—
 
5
 
193,209

 
—

 
—

 
193,209

Bed Bath & Beyond
 
10
 
—
 
—
 
10
 
281,868

 
—

 
—

 
281,868

Ben's Furniture and Antiques
 
1
 
—
 
—
 
1
 
35,895

 
—

 
—

 
35,895

Best Buy
 
6
 
—
 
1
 
7
 
215,370

 
—

 
44,239

 
259,609

Big Air Trampoline Park
 
1
 
—
 
—
 
1
 
33,938

 
—

 
—

 
33,938

BJ's Wholesale Club
 
1
 
—
 
—
 
1
 
85,188

 
—

 
—

 
85,188

Books-A-Million
 
1
 
—
 
—
 
1
 
20,642

 
—

 
—

 
20,642

Boscov's
 
—
 
1
 
—
 
1
 
—

 
150,000

 
—

 
150,000

Burlington
 
2
 
—
 
—
 
2
 
140,980

 
—

 
—

 
140,980

Carousel Cinemas
 
1
 
—
 
—
 
1
 
52,000

 
—

 
—

 
52,000

Christmas Tree Shops
 
1
 
—
 
—
 
1
 
33,992

 
—

 
—

 
33,992

Cinemark
 
7
 
—
 
—
 
7
 
382,507

 
—

 
—

 
382,507

Dick's Sporting Goods
 
25
 
1
 
1
 
27
 
1,407,346

 
50,000

 
80,515

 
1,537,861

Dunham's Sports
 
1
 
—
 
—
 
1
 
80,551

 
—

 
—

 
80,551

Earth Fare
 
1
 
—
 
—
 
1
 
26,841

 
—

 
—

 
26,841

Encore
 
4
 
—
 
—
 
4
 
101,488

 
—

 
—

 
101,488

Foot Locker
 
1
 
—
 
—
 
1
 
22,847

 
—

 
—

 
22,847

The Fresh Market
 
1
 
—
 
—
 
1
 
21,442

 
—

 
—

 
21,442

GameWorks
 
1
 
—
 
—
 
1
 
21,295

 
—

 
—

 
21,295

Gold's Gym
 
1
 
—
 
—
 
1
 
30,664

 
—

 
—

 
30,664

Gordmans
 
4
 
—
 
—
 
4
 
216,339

 
—

 
—

 
216,339

The Grande Cinemas
 
—
 
—
 
1
 
1
 
—

 
—

 
60,400

 
60,400

H&M
 
29
 
—
 
—
 
29
 
637,255

 
—

 
—

 
637,255

Hamrick's
 
1
 
—
 
—
 
1
 
40,000

 
—

 
—

 
40,000

Harris Teeter
 
—
 
1
 
—
 
1
 
—

 
72,757

 
—

 
72,757

Hobby Lobby
 
2
 
—
 
1
 
3
 
105,000

 
—

 
52,500

 
157,500

HomeGoods
 
2
 
1
 
—
 
3
 
50,000

 
25,000

 
—

 
75,000

I. Keating Furniture
 
1
 
—
 
—
 
1
 
103,994

 
—

 
—

 
103,994

Jo-Ann Fabrics & Crafts
 
3
 
—
 
—
 
3
 
73,738

 
—

 
—

 
73,738

Joe Brand
 
1
 
—
 
—
 
1
 
29,413

 
—

 
—

 
29,413

JumpStreet
 
—
 
1
 
—
 
1
 
—

 
30,000

 
—

 
30,000

Kaplan College
 
1
 
—
 
—
 
1
 
30,294

 
—

 
—

 
30,294

King's Dining & Entertainment
 
1
 
—
 
—
 
1
 
22,678

 
—

 
—

 
22,678

KJ's Fresh Market
 
1
 
—
 
—
 
1
 
27,801

 
—

 
—

 
27,801

Kohl's
 
5
 
4
 
—
 
9
 
408,796

 
312,731

 
—

 
721,527

LA Fitness
 
1
 
—
 
—
 
1
 
41,000

 
—

 
—

 
41,000

Levin Furniture
 
1
 
—
 
—
 
1
 
55,314

 
—

 
—

 
55,314

Marcus Wehrenberg Theatres
 
1
 
—
 
—
 
1
 
56,000

 
—

 
—

 
56,000


39


 
 
 
Number of Stores
 
Gross Leasable Area
 
 

Leased
 
Anchor
Owned
 
Total
 

Leased
 
Anchor
Owned
 
Total
Anchor/Junior Anchor
 
 
Owned
 
Ground Lease
 
 
 
Owned
 
Ground Lease
 
Marshalls
 
7
 
—
 
—
 
7
 
210,050

 
—

 
—

 
210,050

Metcalf's Market
 
—
 
1
 
—
 
1
 
—

 
67,365

 
—

 
67,365

Michaels
 
6
 
1
 
1
 
8
 
130,501

 
25,000

 
25,000

 
180,501

Nike Factory Store
 
1
 
—
 
—
 
1
 
22,479

 
—

 
—

 
22,479

Nordstrom
 
—
 
—
 
2
 
2
 
—

 
—

 
385,000

 
385,000

Nordstrom Rack
 
1
 
—
 
1
 
2
 
25,303

 
—

 
30,750

 
56,053

Office Depot
 
1
 
—
 
—
 
1
 
23,425

 
—

 
—

 
23,425

OfficeMax
 
—
 
1
 
—
 
1
 
—

 
24,606

 
—

 
24,606

Old Navy
 
1
 
—
 
—
 
1
 
20,257

 
—

 
—

 
20,257

Ollie's Bargain Outlet
 
1
 
—
 
—
 
1
 
28,446

 
—

 
—

 
28,446

Party City
 
1
 
—
 
—
 
1
 
20,841

 
—

 
—

 
20,841

PetSmart
 
2
 
—
 
—
 
2
 
46,248

 
—

 
—

 
46,248

Planet Fitness
 
2
 
—
 
—
 
2
 
43,390

 
—

 
—

 
43,390

Regal Cinemas
 
4
 
1
 
—
 
5
 
211,725

 
57,853

 
—

 
269,578

REI
 
1
 
—
 
—
 
1
 
24,427

 
—

 
—

 
24,427

Ross
 
8
 
1
 
—
 
9
 
218,607

 
30,021

 
—

 
248,628

Saks Fifth Avenue OFF 5TH
 
2
 
—
 
—
 
2
 
49,365

 
—

 
—

 
49,365

Scheel's
 
2
 
—
 
—
 
2
 
200,536

 
—

 
—

 
200,536

2nd & Charles
 
1
 
—
 
—
 
1
 
23,538

 
 
 
—

 
23,538

Schuler Books & Music
 
1
 
—
 
—
 
1
 
24,116

 
—

 
—

 
24,116

Shopko
 
—
 
1
 
—
 
1
 
—

 
97,773

 
—

 
97,773

Sleep Inn & Suites
 
—
 
—
 
1
 
1
 
—

 
—

 
123,506

 
123,506

Southwest Theaters
 
1
 
—
 
—
 
1
 
29,830

 
—

 
—

 
29,830

Staples
 
1
 
—
 
—
 
1
 
20,388

 
—

 
—

 
20,388

Steel City Indoor Karting
 
1
 
—
 
—
 
1
 
64,135

 
—

 
—

 
64,135

Stein Mart
 
2
 
—
 
—
 
2
 
60,463

 
—

 
—

 
60,463

T.J. Maxx
 
4
 
1
 
1
 
6
 
110,558

 
28,081

 
25,000

 
163,639

Target
 
—
 
8
 
—
 
8
 
—

 
948,730

 
—

 
948,730

Tilt
 
2
 
—
 
—
 
2
 
64,658

 
—

 
—

 
64,658

Toys"R"Us
 
—
 
3
 
—
 
3
 
—

 
136,814

 
—

 
136,814

Vertical Trampoline Park
 
1
 
—
 
—
 
1
 
24,972

 
—

 
—

 
24,972

V-Stock / Vintage Stock
 
2
 
—
 
—
 
2
 
69,166

 
—

 
—

 
69,166

Von Maur
 
—
 
1
 
—
 
1
 
—

 
150,000

 
—

 
150,000

Whole Foods
 
—
 
1
 
—
 
1
 
—

 
34,320

 
—

 
34,320

XXI Forever / Forever 21
 
8
 
1
 
—
 
9
 
259,567

 
57,500

 
—

 
317,067

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vacant Anchor/Junior Anchor:
 
 
 
 
 
 
 
 
Vacant - former Ashley HomeStore
 
1
 
—
 
—
 
1
 
26,439

 
—

 
—

 
26,439

Vacant - former HH Gregg
 
3
 
1
 
—
 
4
 
90,911

 
30,000

 
—

 
120,911

Vacant - former JC Penney
 
—
 
1
 
—
 
1
 
—

 
173,124

 
—

 
173,124

Vacant - former Kmart
 
—
 
1
 
—
 
1
 
—

 
101,445

 
—

 
101,445


40


 
 
 
Number of Stores
 
Gross Leasable Area
 
 

Leased
 
Anchor
Owned
 
Total
 

Leased
 
Anchor
Owned
 
Total
Anchor/Junior Anchor
 
 
Owned
 
Ground Lease
 
 
 
Owned
 
Ground Lease
 
Vacant - former Macy's
 
—
 
2
 
—
 
2
 
—

 
273,374

 
—

 
273,374

Vacant - former Sears
 
1
 
2
 
—
 
3
 
81,296

 
279,036

 
—

 
360,332

 
 
 
 
 
 
 
 

 
 
 
 
 
 
 


Current Developments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Burlington (3)
 
—
 
1
 
—
 
1
 
—

 
136,605

 
—

 
136,605

Dave & Buster's (4)
 
—
 
1
 
—
 
1
 
—

 
30,728

 
—

 
30,728

Dick's Sporting Goods (5)
 
1
 
—
 
—
 
1
 
24,647

 
—

 
—

 
24,647

Flix Brewhouse (6)
 
1
 
—
 
—
 
1
 
40,795

 
—

 
—

 
40,795

H&M (7)
 
1
 
—
 
—
 
1
 
37,725

 
—

 
—

 
37,725

Launch Trampoline Park (8)
 
1
 
—
 
—
 
1
 
50,041

 
—

 
—

 
50,041

Marshalls (9)
 
1
 
—
 
—
 
1
 
21,026

 
—

 
—

 
21,026

Planet Fitness (7) (10)
 
2
 
—
 
—
 
2
 
44,869

 
—

 
—

 
44,869

Total Wine (4)
 
—
 
1
 
—
 
1
 
—

 
25,000

 
—

 
25,000

Vacant - former Macy's (11)
 
—
 
1
 
—
 
1
 
—

 
171,267

 
—

 
171,267

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Anchors/Junior Anchors
 
293
 
159
 
32
 
484
 
16,085,966

 
19,777,225

 
3,927,251

 
39,790,442

 
(1)
In 2017, we purchased five of the owned Sears' locations for future redevelopment. These stores were then leased back to Sears.
(2)
In 2017, we purchased four of the owned Macy's locations for future redevelopment.
(3)
Burlington and other shops are scheduled to open in the former Sears space at Northwoods Mall in 2018. The store is owned by Seritage Growth Properties.
(4)
A portion of the Sears store at West Towne Mall is being redeveloped into a Dave & Buster's and Total Wine shops, which are expected to open in 2018. Seritage Growth Properties owns the store and is executing the redevelopment.
(5)
Dick's Sporting Goods is under development and is scheduled to open in the former Forever 21 space at Richland Mall in 2018.
(6)
Flix Brewhouse is under development and is scheduled to open in the former Steinhafel's space at East Towne Mall in 2018.
(7)
A portion of the JC Penney space at Eastland Mall is being redeveloped into an H&M and Planet Fitness, which are expected to open in 2018.
(8)
Launch Trampoline Park is under development to open in the former Gordman's space at Meridian Mall in 2018.
(9)
Marshalls is under development and is scheduled to open in the upper level of the former JC Penney space at York Galleria in 2018.
(10)
Planet Fitness is under development and is scheduled to open in the former Sports Authority space at Frontier Mall in 2018.
(11)
A lease to fill the former Macy's space at Parkdale Mall is out for signature. Construction is expected to begin in 2018.
Mortgages Notes Receivable 
We own seven mortgages, each of which is collateralized by either a first mortgage, a second mortgage or by assignment of 100% of the ownership interests in the underlying real estate and related improvements. The mortgages are more fully described on Schedule IV in Part IV of this report.
Mortgage Loans Outstanding at December 31, 2017 (in thousands):
Property
 
Our
Ownership
Interest
 
Stated
Interest
Rate
 
Principal
Balance as
of
12/31/17 (1)
 
2018 Annual
Debt
Service (2)
 
Maturity
Date
 
Optional
Extended
Maturity
Date
 
Balloon
Payment
Due
on
Maturity
 
Open to
Prepayment
Date (3)
 
Footnote
Consolidated Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Malls:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acadiana Mall
 
100%
 
5.67
%
 
$
122,435

 
$
870

 
Apr-17
 
—
 
$
122,435

 
Open
 
(4)
 

41


Property
 
Our
Ownership
Interest
 
Stated
Interest
Rate
 
Principal
Balance as
of
12/31/17 (1)
 
2018 Annual
Debt
Service (2)
 
Maturity
Date
 
Optional
Extended
Maturity
Date
 
Balloon
Payment
Due
on
Maturity
 
Open to
Prepayment
Date (3)
 
Footnote
Alamance Crossing - East
 
100%
 
5.83
%
 
46,337

 
3,589

 
Jul-21
 
—
 
43,046

 
Open
 
 
 
Arbor Place
 
100%
 
5.10
%
 
111,448

 
7,948

 
May-22
 
—
 
100,861

 
Open
 
 
 
Asheville Mall
 
100%
 
5.80
%
 
68,008

 
5,917

 
Sep-21
 
—
 
60,190

 
Open
 
 
 
Burnsville Center
 
100%
 
6.00
%
 
69,615

 
6,417

 
Jul-20
 
—
 
63,589

 
Open
 
 
 
Cary Towne Center
 
100%
 
4.00
%
 
46,716

 
1,869

 
Mar-19
 
Mar-21
 
46,716

 
Open
 
(5)
 
Cross Creek Mall
 
100%
 
4.54
%
 
119,545

 
9,376

 
Jan-22
 
—
 
102,260

 
Open
 
 
 
EastGate Mall
 
100%
 
5.83
%
 
35,635

 
3,613

 
Apr-21
 
—
 
30,155

 
Open
 
 
 
Fayette Mall
 
100%
 
5.42
%
 
157,387

 
13,527

 
May-21
 
—
 
139,177

 
Open
 
 
 
Greenbrier Mall
 
100%
 
5.00
%
 
70,801

 
6,438

 
Dec-19
 
Dec-20
 
64,801

 
Open
 
(6)
 
Hamilton Place
 
90%
 
4.36
%
 
104,317

 
6,400

 
Jun-26
 
—
 
85,846

 
Open
 
 
 
Hickory Point Mall
 
100%
 
5.85
%
 
27,446

 
1,606

 
Dec-18
 
Dec-19
 
27,446

 
Open
 
(7)
 
Honey Creek Mall
 
100%
 
8.00
%
 
25,417

 
3,373

 
Jul-19
 
—
 
23,290

 
Open
 
(8)
 
Jefferson Mall
 
100%
 
4.75
%
 
64,747

 
4,456

 
Jun-22
 
—
 
58,176

 
Open
 
 
 
Kirkwood Mall
 
100%
 
5.75
%
 
37,295

 
905

 
Apr-18
 
—
 
37,109

 
Open
 
(9)
 
Northwoods Mall
 
100%
 
5.08
%
 
66,544

 
4,743

 
Apr-22
 
—
 
60,292

 
Open
 
 
 
The Outlet Shoppes at Atlanta
 
75%
 
4.90
%
 
74,700

 
5,095

 
Nov-23
 
—
 
65,036

 
Open
 
 
 
The Outlet Shoppes at Atlanta (Phase II)
 
75%
 
3.86
%
 
4,707

 
314

 
Dec-19
 
—
 
4,454

 
Open
 
(10)
(11)
The Outlet Shoppes at El Paso (Phase II)
 
75%
 
4.11
%
 
6,613

 
114

 
Apr-18
 
—
 
6,569

 
Open
 
(10)
(12)
The Outlet Shoppes at Gettysburg
 
50%
 
4.80
%
 
38,354

 
1,963

 
Oct-25
 
—
 
33,172

 
Open
 
 
 
The Outlet Shoppes at Laredo
 
65%
 
4.01
%
 
80,145

 
3,445

 
May-19
 
May-21
 
80,145

 
Open
 
(10)
(13)
The Outlet Shoppes of the Bluegrass
 
65%
 
4.05
%
 
73,268

 
4,464

 
Dec-24
 
—
 
61,316

 
Open
 
 
 
The Outlet Shoppes of the Bluegrass (Phase II)
 
65%
 
3.86
%
 
9,722

 
616

 
Jul-20
 
—
 
9,102

 
Open
 
(10)
(12)
Park Plaza
 
100%
 
5.28
%
 
84,084

 
7,165

 
Apr-21
 
—
 
74,428

 
Open
 
 
 
Parkdale Mall & Crossing
 
100%
 
5.85
%
 
81,108

 
7,241

 
Mar-21
 
—
 
72,447

 
Open
 
 
 
Parkway Place
 
100%
 
6.50
%
 
35,608

 
3,403

 
Jul-20
 
—
 
32,661

 
Open
 
 
 
Southpark Mall
 
100%
 
4.85
%
 
61,036

 
4,240

 
Jun-22
 
—
 
54,924

 
Open
 
 
 
Valley View Mall
 
100%
 
6.50
%
 
55,107

 
5,267

 
Jul-20
 
—
 
50,547

 
Open
 
 
 
Volusia Mall
 
100%
 
8.00
%
 
43,722

 
5,802

 
Jul-19
 
—
 
40,064

 
Open
 
(8)
 
WestGate Mall
 
100%
 
4.99
%
 
34,991

 
2,803

 
Jul-22
 
—
 
29,670

 
Open
 
 
 
 
 
 
 
 

 
1,856,858

 
132,979

 
 
 
 
 
1,679,924

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Properties:
 
 
 
 

 
 

 
 

 
 
 
 
 
 

 
 
 
 
 
CBL Center
 
92%
 
5.00
%
 
18,522

 
1,651

 
Jun-22
 
—
 
14,949

 
Open
 
(14)
 
Hamilton Crossing & Expansion
 
92%
 
5.99
%
 
9,102

 
819

 
Apr-21
 
—
 
8,122

 
Open
 
(15)
 
Statesboro Crossing
 
50%
 
3.37
%
 
10,836

 
247

 
Jun-18
 
—
 
10,774

 
Open
 
(10)
(16)
The Terrace
 
92%
 
7.25
%
 
12,709

 
1,284

 
Jun-20
 
—
 
11,755

 
Open
 
(15)
 
 
 
 
 
 
 
51,169

 
4,001

 
 
 
 
 
45,600

 
 
 
 
 

42


Property
 
Our
Ownership
Interest
 
Stated
Interest
Rate
 
Principal
Balance as
of
12/31/17 (1)
 
2018 Annual
Debt
Service (2)
 
Maturity
Date
 
Optional
Extended
Maturity
Date
 
Balloon
Payment
Due
on
Maturity
 
Open to
Prepayment
Date (3)
 
Footnote
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Partnership Debt:
 
 
 
 
 
 
 
 
 
 
 
Unsecured credit facilities
 
 
 
 
 
 
 
 
 
 
 
 
 
$500,000 capacity
 
100%
 
2.56
%
 
—

 
—

 
Oct-19
 
Oct-20
 
—

 
Open
 
(17)
 
$100,000 capacity
 
100%
 
2.56
%
 
55,899

 
1,431

 
Oct-19
 
Oct-20
 
55,899

 
Open
 
(17)
 
$500,000 capacity
 
100%
 
2.56
%
 
37,888

 
970

 
Oct-20
 
—
 
37,888

 
Open
 
(17)
 
 
 
 
 
 

 
93,787

 
2,401

 
 
 
 
 
93,787

 
 
 
 
 
Unsecured term loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$350,000 term loan
 
100%
 
2.71
%
 
350,000

 
9,485

 
Oct-18
 
Oct-19
 
350,000

 
Open
 
(18)
 
$490,000 term loan
 
100%
 
2.86
%
 
490,000

 
201,750

 
Jul-20
 
Jul-21
 
300,000

 
Open
 
(19)
 
$45,000 term loan
 
100%
 
3.01
%
 
45,000

 
1,355

 
Jun-21
 
Jun-22
 
45,000

 
Open
 
(20)
 
 
 
 
 
 
 
885,000

 
212,590

 
 
 
 
 
695,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior unsecured Notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2023 Notes
 
100%
 
5.25
%
 
450,000

 
23,625

 
Dec-23
 
—
 
450,000

 
Open
 
 
 
2024 Notes
 
100%
 
4.60
%
 
300,000

 
13,800

 
Oct-24
 
—
 
300,000

 
Open
 
 
 
2026 Notes
 
100%
 
5.95
%
 
625,000

 
37,188

 
Dec-26
 
—
 
625,000

 
Open
 
 
 
 
 
 
 
 
 
1,375,000

 
74,613

 
 
 
 
 
1,375,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized Premium and Discounts, net
 
(12,031
)
 
—

 
 
 
 
 
—

 
 
 
(21
)
 
Total Consolidated Debt
 
 

 
$
4,249,783

 
$
426,584

 
 
 
 
 
$
3,889,311

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated Debt
 
 

 
 

 
 

 
 
 
 
 
 

 
 
 
 
 
Operating Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Malls:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coastal Grand
 
50%
 
4.09
%
 
$
112,905

 
$
6,958

 
Aug-24
 
—
 
$
95,230

 
Open
 
 
 
CoolSprings Galleria
 
50%
 
6.98
%
 
98,614

 
4,513

 
Jun-18
 
—
 
97,506

 
Open
 
 
 
Friendly Shopping Center
 
50%
 
3.48
%
 
96,753

 
5,375

 
Apr-23
 
—
 
85,203

 
Open
 
 
 
Oak Park Mall
 
50%
 
3.97
%
 
275,199

 
15,755

 
Oct-25
 
—
 
231,459

 
Oct-18
 
 
 
The Shops at Friendly Center
 
50%
 
3.34
%
 
60,000

 
2,004

 
Apr-23
 
—
 
60,000

 
Feb-19
 
 
 
Triangle Town Center
 
10%
 
4.00
%
 
138,928

 
7,974

 
Dec-18
 
Dec-20
 
138,928

 
Open
 
(22)
 
West County Center
 
50%
 
3.40
%
 
182,655

 
10,111

 
Dec-22
 
—
 
162,270

 
Open
 
 
 
York Town Center
 
50%
 
4.90
%
 
32,814

 
2,657

 
Feb-22
 
—
 
28,293

 
Open
 
 
 
 
 
 
 
 
 
997,868

 
55,347

 
 
 
 
 
898,889

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Properties:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ambassador Town Center
 
65%
 
3.22
%
 
46,054

 
2,861

 
Jun-23
 
—
 
38,866

 
Open
 
(16)
(23)
Ambassador Town Center Infrastructure Improvements
 
65%
 
3.74
%
 
11,035

 
824

 
Aug-20
 
—
 
9,360

 
Open
 
(24)
(25)
Coastal Grand Outparcel
 
50%
 
4.09
%
 
5,448

 
336

 
Aug-24
 
—
 
4,595

 
Open
 
(25)
 

43


Property
 
Our
Ownership
Interest
 
Stated
Interest
Rate
 
Principal
Balance as
of
12/31/17 (1)
 
2018 Annual
Debt
Service (2)
 
Maturity
Date
 
Optional
Extended
Maturity
Date
 
Balloon
Payment
Due
on
Maturity
 
Open to
Prepayment
Date (3)
 
Footnote
Fremaux Town Center (Phase I)
 
65%
 
3.70
%
 
70,321

 
4,427

 
Jun-26
 
—
 
52,130

 
Jun-19
 
(16)
 
Hammock Landing (Phase I)
 
50%
 
3.36
%
 
42,247

 
2,030

 
Feb-18
 
Feb-19
 
42,147

 
Open
 
(10)
(16)
(26)
Hammock Landing (Phase II)
 
50%
 
3.36
%
 
16,317

 
796

 
Feb-18
 
Feb-19
 
16,277

 
Open
 
(10)
(16)
(26)
The Pavilion at Port Orange
 
50%
 
3.36
%
 
57,088

 
2,800

 
Feb-18
 
Feb-19
 
56,948

 
Open
 
(10)
(16)
(26)
York Town Center - Pier 1
 
50%
 
4.13
%
 
1,304

 
102

 
Feb-22
 
—
 
1,089

 
Open
 
(10)
(25)
 
 
 
 
 
 
249,814

 
14,176

 
 
 
 
 
221,412

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction Loans:
 
 
 
 
 
 
 
 
 
 
 
EastGate Mall -
Self-Storage Development
 
50%
 
4.13
%
 
—

 
265

 
Dec-22
 
 
 
6,250

 
Open
 
(10) (12)
(25) (27)
The Shoppes at Eagle Point
 
50%
 
4.28
%
 
5,977

 
265

 
Oct-20
 
Oct-22
 
5,977

 
Open
 
(10) (12)
(16)
 
 
 
 
 
 
5,977

 
530

 
 
 
 
 
12,227

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Unconsolidated Debt
 
 

 
$
1,253,659

 
$
70,053

 
 
 
 
 
$
1,132,528

 
 
 
 
 
Total Consolidated and Unconsolidated Debt
 
$
5,503,442

 
$
496,637

 
 
 
 
 
$
5,021,839

 
 
 
 
 
Company's Pro-Rata Share of Total Debt
 
$
4,764,431

 
$
455,308

 
 
 
 
 
 

 
 
 
(28)
 
(1)
The amount listed includes 100% of the loan amount even though the Operating Partnership may have less than a 100% ownership interest in the Property.
(2)
Assumes extension option will be exercised, if applicable.
(3)
Prepayment premium is based on yield maintenance or defeasance.
(4)
Acadiana Mall - The loan secured by this mall is in default as of December 31, 2017. Subsequent to December 31, 2017, the mall went into receivership and the foreclosure process is expected to be complete in 2018. The default interest rate is an additional 3%. The 2018 annual debt service includes only the January 2018 principal payment, which was made prior to the mall entering receivership.
(5)
Cary Towne Center - Payments are interest-only through the maturity date. The original maturity date is contingent on our redevelopment plans. The loan has one two-year extension option, which is at our election and contingent on having met specified redevelopment criteria.
(6)
Greenbrier Mall - Payments were interest-only through December 2017. The interest rate will increase to 5.41% on January 1, 2018 and thereafter required monthly principal payments are $225 and $300 in 2018 and 2019, respectively, in addition to interest. The loan has a one-year extension option, at our election, which is contingent on the mall meeting specified debt service and operational metrics. If the loan is extended, monthly principal payments of $325 will be required in 2020 in addition to interest.
(7)
Hickory Point Mall - The loan is interest-only through the maturity date.
(8)
The mortgages on Honey Creek Mall and Volusia Mall are cross-collateralized and cross-defaulted.
(9)
Kirkwood Mall - The loan was retired subsequent to December 31, 2017. See Note 19 to the consolidated financial statements for more information.
(10)
The interest rate is variable at various spreads over LIBOR priced at the rates in effect at December 31, 2017.  The debt is prepayable at any time without prepayment penalty.
(11)
The Outlet Shoppes at Atlanta (Phase II) - The interest rate will be reduced to a spread of LIBOR plus 2.35% once certain debt and operational metrics are met. The Operating Partnership owns less than 100% of the Property but guarantees 100% of the debt.
(12)
The Operating Partnership owns less than 100% of the Property but guarantees 100% of the debt.
(13)
The Outlet Shoppes at Laredo - The interest rate will be reduced to LIBOR plus 2.25% once certain debt and operational metrics are met. The loan has one 24-month extension option, which is at the joint venture's election, subject to continued compliance with the terms of the loan agreement. The Operating Partnership owns less than 100% of the Property but guarantees 100% of the debt.
(14)
CBL Center consists of our two corporate office buildings.
(15)
Property type is an associated center.
(16)
Property type is a community center.

44


(17)
Unsecured credit facilities - As of December 31, 2017, the variable interest rate is LIBOR plus 1.20% based on the credit ratings of the Operating Partnership's senior unsecured long-term indebtedness of Baa3 from Moody's, BBB- from S&P and BB+ from Fitch.
(18)
$350,000 term loan - As of December 31, 2017, the variable interest rate is LIBOR plus 1.35% based on the credit ratings of the Operating Partnership's senior unsecured long-term indebtedness of Baa3 from Moody's, BBB- from S&P and BB+ from Fitch.
(19)
$490,000 term loan - In the third quarter of 2017, our $400,000 unsecured term loan was modified and extended to increase the principal balance to $490,000. In July 2018, the principal balance will be reduced to $300,000. The loan will mature in July 2020 and has two one-year extension options, the second of which is at the lenders' discretion, for a July 2022 extended maturity date. As of December 31, 2017, the variable interest rate is LIBOR plus 1.50% based on the credit ratings of the Operating Partnership's senior unsecured long-term indebtedness of Baa3 from Moody's, BBB- from S&P and BB+ from Fitch.
(20)
$45,000 term loan - In the third quarter of 2017, our $50,000 unsecured term loan was modified and extended to reduce the principal balance to $45,000 and change the interest rate to a variable rate of LIBOR plus 1.65%. The maturity date was also extended from February 2018 to June 2021. The loan has a one-year extension option at our election for an outside maturity date of June 2022.
(21)
Represents bond discounts as well as the net premium related to debt assumed to acquire real estate assets, which had a stated interest rate that was above the estimated market rate for similar debt instruments at the acquisition date.
(22)
Triangle Town Center - The loan is interest-only through the initial maturity date. The unconsolidated affiliate and its third party partner have the option to exercise two one-year extension options, subject to continued compliance with the terms of the loan agreement. Under the terms of the loan agreement, the joint venture must pay the lender $5,000 to reduce the principal balance of the loan and an extension fee of 0.5% of the remaining outstanding loan balance if it exercises the first extension. If the joint venture elects to exercise the second extension, it must pay the lender $8,000 to reduce the principal balance of the loan and an extension fee of 0.75% of the remaining outstanding principal balance. Additionally, the interest rate would increase to 5.74% during the extension period.
(23)
Ambassador Town Center - The unconsolidated affiliate has an interest rate swap on a notional amount of $46,054, amortizing to $38,866 over the term of the swap, to effectively fix the interest rate on the variable-rate loan. Therefore, this amount is currently reflected as having a fixed rate. The swap terminates in June 2023.
(24)
Ambassador Town Center Infrastructure Improvements - In 2017, the loan was amended and modified to extend the maturity date. The loan requires annual principal payments of $430, $555 and $690 in 2018, 2019 and 2020, respectively. The joint venture has an interest rate swap on a notional amount of $11,035, amortizing to $9,360 over the term of the swap, to effectively fix the interest rate on the variable rate loan. Therefore, this amount is currently reflected as having a fixed rate. The swap terminates in August 2020. The Operating Partnership owns less than 100% of the Property but guarantees 100% of the debt.
(25)
Property type is Other.
(26)
The loan was extended subsequent to December 31, 2017. See Note 19 to the consolidated financial statements for more information.
(27)
EastGate Mall - Self-Storage Development - The construction loan closed in December 2017 to fund the development of a self-storage facility adjacent to EastGate Mall. As of December 31, 2017, there were no construction draws on the loan. The loan is interest-only through November 2020. Thereafter, monthly payments of $10, in addition to interest, will be due. The interest rate will be reduced to a variable-rate of LIBOR plus 2.35% once construction is complete and certain debt and operational metrics are met.
(28)
Represents our pro rata share of debt, including our share of unconsolidated affiliates' debt and excluding noncontrolling interests' share of consolidated debt on shopping center Properties.
The following is a reconciliation of consolidated debt to our pro rata share of total debt (in thousands):
Total consolidated debt
$
4,249,783

Noncontrolling interests' share of consolidated debt
(82,573
)
Company's share of unconsolidated debt
597,221

Unamortized deferred financing costs
(20,692
)
Company's pro rata share of total debt
$
4,743,739

Other than our property-specific mortgage or construction loans, there are no material liens or encumbrances on our Properties. See Note 5 and Note 6 to the consolidated financial statements for additional information regarding property-specific indebtedness and construction loans.
ITEM 3. LEGAL PROCEEDINGS
We are currently involved in certain litigation that arises in the ordinary course of business, most of which is expected to be covered by liability insurance. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on our liquidity, results of operations, business or financial condition.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

45


PART II 
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 
Common stock of CBL & Associates Properties, Inc. is traded on the New York Stock Exchange.  The stock symbol is “CBL”. Quarterly sale prices and dividends paid per share of common stock are as follows:
 
 
Market Price
 
 
Quarter Ended
 
High
 
Low
 
Dividend
2017
 
 
 
 
 
 
March 31
 
$
11.88

 
$
8.93

 
$
0.265

June 30
 
$
10.03

 
$
7.45

 
$
0.265

September 30
 
$
9.63

 
$
7.95

 
$
0.265

December 31
 
$
8.61

 
$
5.39

 
$
0.200

 
 
 
 
 
 
 
2016
 
 
 
 
 
 
March 31
 
$
12.74

 
$
9.40

 
$
0.265

June 30
 
$
12.28

 
$
9.10

 
$
0.265

September 30
 
$
14.29

 
$
9.73

 
$
0.265

December 31
 
$
12.28

 
$
10.36

 
$
0.265

 
There were approximately 831 shareholders of record for our common stock as of February 22, 2018. 
Future dividend distributions are subject to our actual results of operations, taxable income, economic conditions, issuances of common stock and such other factors as our Board of Directors deems relevant. Our actual results of operations will be affected by a number of factors, including the revenues received from the Properties, our operating expenses, interest expense, unanticipated capital expenditures and the ability of the Anchors and tenants at the Properties to meet their obligations for payment of rents and tenant reimbursements. 
See Part III, Item 12 contained herein for information regarding securities authorized for issuance under equity compensation plans.
The following table presents information with respect to repurchases of common stock made by us during the three months ended December 31, 2017: 
Period
 
Total Number
of Shares
Purchased (1)
 
Average
Price Paid
per Share (2)
 
Total Number of
Shares Purchased as
Part of a Publicly
Announced Plan
 
Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plan
Oct. 1–31, 2017
 
—

 
$
—

 
—

 
$
—

Nov. 1–30, 2017
 
100

 
5.69

 
—

 
—

Dec. 1–31, 2017
 
11,928

 
5.60

 
—

 
—

Total
 
12,028

 
$
5.60

 
—

 
$
—

(1)
Represents shares surrendered to the Company by employees to satisfy federal and state income tax requirements related to the vesting of shares of restricted stock.
(2)
Represents the market value of the common stock on the vesting date for the shares of restricted stock, which was used to determine the number of shares required to be surrendered to satisfy income tax withholding requirements.    

46


Operating Partnership Units
There is no established public trading market for the Operating Partnership’s common units. On February 22, 2018, the Operating Partnership had 27,293,035 common units outstanding (comprised of 3,277,566 special common units and 24,015,469 common units) held by 59 holders of record, excluding the 172,643,728 common units held by the Company.
Quarterly distributions per share on each of the Operating Partnership's classes of equity are as follows:
 
 
 
 
Special Common Units
Quarter Ended
 
Common Units
 
Series K
 
Series L
 
Series S
2017
 
 
 
 
 
 
 
 
March 31
 
$
0.265

 
$
0.742

 
$
0.757

 
$
0.732

June 30
 
$
0.265

 
$
0.742

 
$
0.757

 
$
0.732

September 30
 
$
0.265

 
$
0.742

 
$
0.757

 
$
0.732

December 31
 
$
0.200

 
$
0.742

 
$
0.757

 
$
0.732

 
 
 
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
March 31
 
$
0.265

 
$
0.742

 
$
0.757

 
$
0.732

June 30
 
$
0.265

 
$
0.742

 
$
0.757

 
$
0.732

September 30
 
$
0.265

 
$
0.742

 
$
0.757

 
$
0.732

December 31
 
$
0.265

 
$
0.742

 
$
0.757

 
$
0.732

 
During the three months ended December 31, 2017, the Operating Partnership canceled the 12,028 common units underlying the 12,028 shares of common stock that were surrendered for tax obligations in conjunction with the surrender to the Company of such shares, as described above.
During November 2017, the Operating Partnership elected to pay $0.1 million in cash to a holder of 11,026 common units of limited partnership interest in the Operating Partnership upon the exercise of the holder's conversion rights.

47


ITEM 6. SELECTED FINANCIAL DATA (CBL & Associates Properties, Inc.)
(In thousands, except per share data)
 
Year Ended December 31, (1)
 
2017
 
2016
 
2015
 
2014
 
2013
Total revenues
$
927,252

 
$
1,028,257

 
$
1,055,018

 
$
1,060,739

 
$
1,053,625

Total operating expenses
694,690

 
774,629

 
777,434

 
685,596

 
722,860

Income from operations
232,562

 
253,628

 
277,584

 
375,143

 
330,765

Interest and other income
1,706

 
1,524

 
6,467

 
14,121

 
10,825

Interest expense
(218,680
)
 
(216,318
)
 
(229,343
)
 
(239,824
)
 
(231,856
)
Gain (loss) on extinguishment of debt
30,927

 
—

 
256

 
87,893

 
(9,108
)
Gain (loss) on investments
(6,197
)
 
7,534

 
16,560

 
—

 
2,400

Income tax (provision) benefit
1,933

 
2,063

 
(2,941
)
 
(4,499
)
 
(1,305
)
Equity in earnings of unconsolidated affiliates
22,939

 
117,533

 
18,200

 
14,803

 
11,616

Income from continuing operations before gain on sales of real estate assets
65,190

 
165,964

 
86,783

 
247,637

 
113,337

Gain on sales of real estate assets
93,792

 
29,567

 
32,232

 
5,342

 
1,980

Income from continuing operations
158,982

 
195,531

 
119,015

 
252,979

 
115,317

Discontinued operations
—

 
—

 
—

 
54

 
(4,947
)
Net income
158,982

 
195,531

 
119,015

 
253,033

 
110,370

Net income attributable to noncontrolling interests in:
 

 
 

 
 
 
 

 
 

Operating Partnership
(12,652
)
 
(21,537
)
 
(10,171
)
 
(30,106
)
 
(7,125
)
Other consolidated subsidiaries
(25,390
)
 
(1,112
)
 
(5,473
)
 
(3,777
)
 
(18,041
)
Net income attributable to the Company
120,940

 
172,882

 
103,371

 
219,150

 
85,204

Preferred dividends
(44,892
)
 
(44,892
)
 
(44,892
)
 
(44,892
)
 
(44,892
)
Net income available to common shareholders
$
76,048

 
$
127,990

 
$
58,479

 
$
174,258

 
$
40,312

 
 
 
 
 
 
 
 
 
 
Basic per share data attributable to common shareholders:
 
 

 
 
 
 

Income from continuing operations, net of preferred dividends
$
0.44

 
$
0.75

 
$
0.34

 
$
1.02

 
$
0.27

Net income attributable to common shareholders
$
0.44

 
$
0.75

 
$
0.34

 
$
1.02

 
$
0.24

Weighted-average common shares outstanding
171,070

 
170,762

 
170,476

 
170,247

 
167,027

 
 
 
 
 
 
 
 
 
 
Diluted per share data attributable to common shareholders:
 
 

 
 

 
 

Income from continuing operations, net of preferred dividends
$
0.44

 
$
0.75

 
$
0.34

 
$
1.02

 
$
0.27

Net income attributable to common shareholders
$
0.44

 
$
0.75

 
$
0.34

 
$
1.02

 
$
0.24

Weighted-average common and potential dilutive common shares outstanding
171,070

 
170,836

 
170,499

 
170,247

 
167,027

 
 
 
 
 
 
 
 
 
 
Amounts attributable to common shareholders:
 

 
 

 
 

 
 

 
 

Income from continuing operations, net of preferred dividends
$
76,048

 
$
127,990

 
$
58,479

 
$
174,212

 
$
44,515

Discontinued operations
—

 
—

 
—

 
46

 
(4,203
)
Net income attributable to common shareholders
$
76,048

 
$
127,990

 
$
58,479

 
$
174,258

 
$
40,312

Dividends declared per common share
$
0.995

 
$
1.060

 
$
1.060

 
$
1.000

 
$
0.935

(1)
Please refer to Notes 3, 5 and 15 to the consolidated financial statements for a description of acquisitions, joint venture transactions and impairment charges that have impacted the comparability of the financial information presented.  

48


 
December 31,
 
2017
 
2016
 
2015
 
2014
 
2013
BALANCE SHEET DATA:
 
 
 
 
 
 
 
 
 
Net investment in real estate assets
$
5,156,835

 
$
5,520,539

 
$
5,857,953

 
$
5,947,175

 
$
6,067,157

Total assets
5,704,808

 
6,104,640

 
6,479,991

 
6,599,172

 
6,769,687

Mortgage and other indebtedness, net
4,230,845

 
4,465,294

 
4,710,628

 
4,683,333

 
4,841,239

Redeemable noncontrolling interests
8,835

 
17,996

 
25,330

 
37,559

 
34,639

Total shareholders' equity
1,140,004

 
1,228,714

 
1,284,970

 
1,406,552

 
1,404,913

Noncontrolling interests
96,474

 
112,138

 
114,629

 
143,376

 
155,021

Total equity
1,236,478

 
1,340,852

 
1,399,599

 
1,549,928

 
1,559,934

 
Year Ended December 31,
 
2017
 
2016
 
2015
 
2014
 
2013
OTHER DATA:
 
 
 
 
 
 
 
 
 
Cash flows provided by (used in):
 

 
 

 
 

 
 

 
 

Operating activities
$
430,397

 
$
468,579

 
$
495,015

 
$
468,061

 
$
464,751

Investing activities (1)
(75,812
)
 
9,988

 
(265,306
)
 
(239,735
)
 
(133,101
)
Financing activities
(351,482
)
 
(485,074
)
 
(236,246
)
 
(260,768
)
 
(351,806
)
FFO  allocable to Operating  Partnership common unitholders (2)
434,613

 
538,198

 
481,068

 
545,514

 
437,451

FFO allocable to common shareholders
373,028

 
460,052

 
410,592

 
465,160

 
371,702

(1)
See Note 2 to the consolidated financial statements for information related to the adoption of a new accounting pronouncement in the fourth quarter of 2017 that was retrospectively applied resulting in the reclassification of restricted cash from the Investing activities section to the beginning-of-period and end-of-period total amounts for cash, cash equivalents and restricted cash on the consolidated statements of cash flows.
(2)
Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations for the definition of FFO, which does not represent cash flows from operations as defined by accounting principles generally accepted in the United States of America ("GAAP") and is not necessarily indicative of the cash available to fund all cash requirements.  A reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is presented on page 79.
ITEM 6. SELECTED FINANCIAL DATA (CBL & Associates Limited Partnership)
(In thousands, except per unit data)
 
Year Ended December 31, (1)
 
2017
 
2016
 
2015
 
2014
 
2013
Total revenues
$
927,252

 
$
1,028,257

 
$
1,055,018

 
$
1,060,739

 
$
1,053,625

Total operating expenses
694,690

 
774,629

 
777,434

 
685,596

 
722,860

Income from operations
232,562

 
253,628

 
277,584

 
375,143

 
330,765

Interest and other income
1,706

 
1,524

 
6,467

 
14,121

 
10,825

Interest expense
(218,680
)
 
(216,318
)
 
(229,343
)
 
(239,824
)
 
(231,856
)
Gain (loss) on extinguishment of debt
30,927

 
—

 
256

 
87,893

 
(9,108
)
Gain (loss) on investments
(6,197
)
 
7,534

 
16,560

 
—

 
2,400

Income tax (provision) benefit
1,933

 
2,063

 
(2,941
)
 
(4,499
)
 
(1,305
)
Equity in earnings of unconsolidated affiliates
22,939

 
117,533

 
18,200

 
14,803

 
11,616

Income from continuing operations before gain on sales of real estate assets
65,190

 
165,964

 
86,783

 
247,637

 
113,337

Gain on sales of real estate assets
93,792

 
29,567

 
32,232

 
5,342

 
1,980

Income from continuing operations
158,982

 
195,531

 
119,015

 
252,979

 
115,317

Discontinued operations
—

 
—

 
—

 
54

 
(4,947
)
Net income
158,982

 
195,531

 
119,015

 
253,033

 
110,370


49


 
Year Ended December 31, (1)
 
2017
 
2016
 
2015
 
2014
 
2013
Net income attributable to noncontrolling interests
(25,390
)
 
(1,112
)
 
(5,473
)
 
(3,777
)
 
(18,041
)
Net income attributable to the Operating Partnership
133,592

 
194,419

 
113,542

 
249,256

 
92,329

Distributions to preferred unitholders
(44,892
)
 
(44,892
)
 
(44,892
)
 
(44,892
)
 
(44,892
)
Net income available to common unitholders
$
88,700

 
$
149,527

 
$
68,650

 
$
204,364

 
$
47,437

 
 
 
 
 
 
 
 
 
 
Basic per unit data attributable to common unitholders:
 
 

 
 

 
 
Income from continuing operations, net of preferred distributions
$
0.45

 
$
0.75

 
$
0.34

 
$
1.02

 
$
0.26

Net income attributable to common unitholders
$
0.45

 
$
0.75

 
$
0.34

 
$
1.02

 
$
0.24

Weighted-average common units outstanding
199,322

 
199,764

 
199,734

 
199,660

 
196,572

 
 
 
 
 
 
 
 
 
 
Diluted per unit data attributable to common unitholders:
 
 

 
 

 
 

Income from continuing operations, net of preferred distributions
$
0.45

 
$
0.75

 
$
0.34

 
$
1.02

 
$
0.26

Net income attributable to common unitholders
$
0.45

 
$
0.75

 
$
0.34

 
$
1.02

 
$
0.24

Weighted-average common and potential dilutive common units outstanding
199,322

 
199,838

 
199,757

 
199,660

 
196,572

Amounts attributable to common unitholders:
 

 
 

 
 

 
 

 
 

Income from continuing operations, net of preferred distributions
$
88,700

 
$
149,527

 
$
68,650

 
$
204,318

 
$
51,640

Discontinued operations
—

 
—

 
—

 
46

 
(4,203
)
Net income attributable to common unitholders
$
88,700

 
$
149,527

 
$
68,650

 
$
204,364

 
$
47,437

Distributions per unit
$
1.03

 
$
1.09

 
$
1.09

 
$
1.03

 
$
0.97

(1)
Please refer to Notes 3, 5 and 15 to the consolidated financial statements for a description of acquisitions, joint venture transactions and impairment charges that have impacted the comparability of the financial information presented.  
 
December 31,
 
2017
 
2016
 
2015
 
2014
 
2013
BALANCE SHEET DATA:
 
 
 
 
 
 
 
 
 
Net investment in real estate assets
$
5,156,835

 
$
5,520,539

 
$
5,857,953

 
$
5,947,175

 
$
6,067,157

Total assets
5,705,168

 
6,104,997

 
6,840,430

 
6,599,600

 
6,770,109

Mortgage and other indebtedness, net
4,230,845

 
4,465,294

 
4,710,628

 
4,683,333

 
4,841,239

Redeemable interests
8,835

 
17,996

 
25,330

 
37,559

 
34,639

Total partners' capital
1,227,067

 
1,329,076

 
1,395,162

 
1,541,533

 
1,541,176

Noncontrolling interests
9,701

 
12,103

 
4,876

 
8,908

 
19,179

Total capital
1,236,768

 
1,341,179

 
1,400,038

 
1,550,441

 
1,560,355

 
Year Ended December 31,
 
2017
 
2016
 
2015
 
2014
 
2013
OTHER DATA:
 
 
 
 
 
 
 
 
 
Cash flows provided by (used in):
 

 
 

 
 

 
 

 
 

Operating activities
$
430,405

 
$
468,577

 
$
495,022

 
$
468,063

 
$
464,741

Investing activities (1)
(75,812
)
 
9,988

 
(265,306
)
 
(239,735
)
 
(133,101
)
Financing activities
(351,482
)
 
(485,075
)
 
(236,246
)
 
(260,768
)
 
(351,806
)
(1)
See Note 2 to the consolidated financial statements for information related to the adoption of a new accounting pronouncement in the fourth quarter of 2017 that was retrospectively applied resulting in the reclassification of restricted cash from the Investing activities section to the beginning-of-period and end-of-period total amounts for cash, cash equivalents and restricted cash on the consolidated statements of cash flows.

50


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes that are included in this annual report. Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the consolidated financial statements.
Executive Overview
We are a self-managed, self-administered, fully integrated REIT that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers and office properties. Our shopping centers are located in 26 states, but are primarily in the southeastern and midwestern United States.  We have elected to be taxed as a REIT for federal income tax purposes.
We conduct substantially all of our business through the Operating Partnership. The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a VIE. See Item 1. Business for a description of the number of Properties owned and under development as of December 31, 2017.
Net income for the year ended December 31, 2017 was $159.0 million as compared to $195.5 million in the prior-year period, representing a decrease of 18.7%. Same-center NOI (see below) decreased 2.9% as compared to the prior-year period. Stabilized mall same-center sales per square foot declined to $372 for the current year from $379 for the prior-year period. Diluted earnings per share ("EPS") attributable to common shareholders was $0.44 per diluted share for the year ended December 31, 2017 as compared to $0.75 per diluted share for the prior-year period. FFO, as adjusted, per diluted share (see below) decreased 13.7% for the year ended December 31, 2017 to $2.08 per diluted share as compared to $2.41 per diluted share in the prior-year period.
The year was challenging for many of our retailers and, as a result, our leasing strategies throughout the year were concentrated on mitigating rent loss and maintaining occupancy. The majority of store closures and rent reductions which impacted our portfolio occurred in mid-to-late 2017 and translate into more than $24 million in gross annual rent loss. Backfill leasing of these spaces is expected to come online in late 2018 and 2019 and reflects a diversification of our tenant base towards non-apparel uses as well as the renewal and expansion of other successful retail concepts.
Leasing spreads for comparable space under 10,000 square feet in our stabilized malls were down 5.4% for leases signed in 2017, including an 8.7% decrease in renewal lease rates, which was partially offset by a 9.0% increase for new leases. Average annual base rents for our same-center malls pool were flat at $32.42 as of December 31, 2017 compared to $32.31 for the prior-year period.
We completed a multi-year disposition program in 2017. While this program impacted our metrics through income dilution from the asset sales on a near-term basis, it also contributed to a decrease of over $760 million in our total pro rata share of debt since year-end 2013 (see Liquidity and Capital Resources section) and provided us with an additional capital source to fund our redevelopment pipeline. We also retired over $350 million in secured loans during the year which added seven Properties to our unencumbered assets pool. We began construction on the redevelopment of a former JC Penney's at Eastland Mall and a former JC Penney's at York Galleria, and have plans to start construction in 2018 on the redevelopment of the Sears building at Brookfield Square and the two Sears auto centers we purchased earlier in the year as well as other projects that are currently in planning stages. (See Note 3 to the consolidated financial statements for additional details on these asset acquisitions). As noted above, we are focused on expanding non-retail uses in our portfolio, including new-to-the-market restaurants, entertainment operators, hotels, apartments and, in select locations, self-storage facilities or medical offices. We believe the diversification of our revenue streams will provide future income stability and reflect the evolution of our tenant mix while also targeting current consumer preferences.
Same-center NOI and FFO are non-GAAP measures. For a description of same-center NOI, a reconciliation from net income to same-center NOI, and an explanation of why we believe this is a useful performance measure, see Non-GAAP Measure - Same-center Net Operating Income in “Results of Operations.” For a description of FFO and FFO, as adjusted, a reconciliation from net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders, and an explanation of why we believe this is a useful performance measure, see Non-GAAP Measure - Funds from Operations within the "Liquidity and Capital Resources" section.

51


Results of Operations
Comparison of the Year Ended December 31, 2017 to the Year Ended December 31, 2016
Properties that were in operation for the entire year during both 2017 and 2016 are referred to as the “2017 Comparable Properties.” Since January 1, 2016, we have opened one community center development and one outlet center development as follows:
Property
 
Location
 
Date Opened
Ambassador Town Center (1)
 
Lafayette, LA
 
April 2016
The Outlet Shoppes at Laredo (2)
 
Laredo, TX
 
April 2017
(1)
Ambassador Town Center is a 65/35 joint venture that is accounted for using the equity method of accounting and is included in equity in earnings of unconsolidated affiliates in the accompanying consolidated statements of operations.
(2)
The Outlet Shoppes at Laredo is a 65/35 joint venture.
The Outlet Shoppes at Laredo is included in our operations on a consolidated basis and is referred to as the "2017 New Property."
Revenues
Total revenues decreased by $101.0 million for 2017 compared to the prior year. The $82.3 million decrease in rental revenues and tenant reimbursements was due to decreases of $59.3 million from dispositions and $29.7 million related to the 2017 Comparable Properties, which were partially offset by an increase of $6.7 million attributable to the 2017 New Property. The $29.7 million decrease in revenues of the 2017 Comparable Properties consists of a $26.2 million decrease related to our core Properties and a $3.5 million decrease attributable to non-core Properties. The decline in rental revenues and tenant reimbursements was primarily due to store closures and rental reductions related to tenants that filed bankruptcy as well as a decrease in percentage rents due to a decline in tenant sales.
Our cost recovery ratio was 97.7% for 2017 compared to 99.6% for 2016. The 2017 cost recovery ratio was lower due to a decline in tenant reimbursements.
The decrease in management, development and leasing fees of $2.9 million was due to a $1.8 million decrease in management fees, development fees and leasing commissions as a result of terminated contracts for three malls owned by third parties that were sold to new owners, which we had been managing and two leasing agreements which ended in 2016. Additionally, we received $1.0 million in the prior-year period from financing fees related to loans secured by two malls and two community centers.
In the fourth quarter of 2016 the Company's interest in the subsidiary that provided security and maintenance services to third parties was purchased by its joint venture partner. The Company's exit from this joint venture drove the majority of the decrease in other revenues of $15.7 million. See Note 8 to the consolidated financial statements for more information.
Operating Expenses
Total operating expenses decreased $79.9 million for 2017 compared to the prior year in part due to incurring $45.4 million less in losses on impairment of real estate during 2017 and a net decrease of $15.1 million in other expenses, which consisted of a decrease of $20.2 million related to the 2016 divestiture of our joint venture interest in the consolidated subsidiary that provided security and maintenance services to third parties, partially offset by $5.1 million in abandoned projects expenses. Additionally, property operating expenses, including real estate taxes and maintenance and repairs, decreased $20.9 million primarily due to a decrease of $28.2 million from dispositions, which was partially offset by increases of $3.8 million related to the 2017 New Property and $3.5 million related to the 2017 Comparable Properties. The increase attributable to the 2017 Comparable Properties was primarily due to increases in real estate taxes and bad debt expense, partially offset by a decrease in snow removal costs.
The increase in depreciation and amortization expense of $6.4 million resulted from increases of $23.5 million related to the 2017 Comparable Properties and $3.5 million attributable to the 2017 New Property, which were partially offset by a decrease of $20.6 million related to dispositions. The $23.5 million increase attributable to the 2017 Comparable Properties includes $12.1 million of depreciation and amortization expense related to the Sears and Macy's buildings, which were acquired in the first quarter of 2017, in addition to an increase of $6.1 million in tenant improvement write-offs related to store closures.

52


General and administrative expenses decreased $4.9 million as compared to the prior-year period. General and administrative expenses for 2017 include $0.1 million of expense related to litigation settlements. General and administrative expenses for 2016 include $2.3 million of non-recurring professional fees expense (which represent one-time expenses that are not part of our normal operations) related to the 2016 completed SEC investigation and $2.6 million of expense related to litigation settlements. Excluding the impact of these items, general and administrative expenses decreased approximately $0.1 million as compared to the prior year. The $0.1 million decrease was primarily due to an increase in capitalized overhead related to development projects and a decrease in payroll and related expenses, partially offset by increases in information technology and stock-based compensation.
During 2017, we recognized impairments of real estate of $71.4 million primarily to write down the book value of two malls. During 2016, we recorded impairments of real estate of $116.8 million to write down the book value of nine malls, an associated center, a community center, three office buildings and three outparcels. See Note 15 to the consolidated financial statements for additional information on these impairments.
Other expenses decreased $15.1 million due to a $20.2 million decrease from the divestiture of our interest, in the fourth quarter of 2016, in our subsidiary that provided security and maintenance services to third parties, which was partially offset by a $5.1 million increase in abandoned projects expense.
Other Income and Expenses
Interest and other income increased $0.2 million in 2017 compared to the prior-year period primarily due to $0.9 million received in the current year as an insurance reimbursement for nonrecurring professional fees expense (which represent one-time expenses that are not part of our normal operations) related to the completed SEC investigation that occurred in 2016. This increase was partially offset by a $0.6 million decrease in interest income.
Interest expense increased $2.4 million in 2017 compared to the prior-year period. Our corporate-level interest expense increased by $30.0 million primarily due to the issuance of the 2026 Notes, of which $400.0 million were issued in December 2016 and $225.0 million were issued in September 2017, and the $85.0 million net additional borrowings on our unsecured term loans in July 2017. This increase was mostly offset by a decrease of $26.1 million related to property-level debt that was retired and $1.5 million related to ongoing amortization.
During 2017, we recorded a $30.9 million gain on extinguishment of debt which primarily consisted of a $39.8 million gain related to the conveyance of three malls to the respective lenders in satisfaction of the non-recourse debt secured by the properties. This was partially offset by an $8.9 million loss related to prepayment fees for the early retirement of debt on mortgage loans secured by two malls. See Note 4 and Note 6 to the consolidated financial statements for more information.
During 2017, we recognized a $6.2 million loss on investment related to the disposition of our 25% interest in an unconsolidated joint venture. See Note 5 to the consolidated financial statements for additional information. In 2016, we recognized a gain on investments of $7.5 million which consisted of a $10.1 million gain from the redemption of our remaining investment in a Chinese real estate company, partially offset by a $2.6 million loss attributable to the divestiture of our subsidiary that provided maintenance and security services to third parties.
The income tax benefit of $1.9 million in 2017 relates to the Management Company, which is a taxable REIT subsidiary, and consists of a current tax benefit of $6.4 million and a deferred tax provision of $4.5 million. The income tax provision of $2.1 million in 2016 consists of a current and deferred tax benefit of $1.2 million and $0.9 million, respectively.
Equity in earnings of unconsolidated affiliates decreased by $94.6 million during 2017. The decrease is primarily attributable to gains on sales of real estate assets of $97.4 million, at our share, primarily related to the disposal of interests in two malls, two community centers and four office buildings in the prior-year period.
In 2017, we recognized a $93.8 million gain on sales of real estate assets, primarily related to the sale of an outlet center and 12 outparcels. In 2016, we recognized a $29.6 million gain on sales of real estate assets, which consisted primarily of $27.4 million related to the sale of a community center, an outparcel project at an outlet center and 18 outparcels and $2.2 million attributable to a parking deck project.

53


Comparison of the Year Ended December 31, 2016 to the Year Ended December 31, 2015 
Properties that were in operation for the entire year during both 2016 and 2015 are referred to as the “2016 Comparable Properties.” From January 1, 2015 to December 31, 2016, we opened two community center developments and acquired one mall as follows:
Property
 
Location
 
Date Opened/Acquired
New Developments:
 
 
 
 
Parkway Plaza
 
Fort Oglethorpe, GA
 
March 2015
Ambassador Town Center (1)
 
Lafayette, LA
 
April 2016
 
 
 
 
 
Acquisition:
 
 
 
 
Mayfaire Town Center
 
Wilmington, NC
 
June 2015
(1)
Ambassador Town Center is a 65/35 joint venture that is accounted for using the equity method of accounting and is included in equity in earnings of unconsolidated affiliates in the accompanying consolidated statements of operations.
The Properties listed above, with the exception of Ambassador Town Center, are included in our operations on a consolidated basis and are collectively referred to as the "2016 New Properties." The transactions related to the 2016 New Properties impact the comparison of the results of operations for the year ended December 31, 2016 to the results of operations for the year ended December 31, 2015.
Revenues
Total revenues decreased by $26.8 million for 2016 compared to the prior year. Rental revenues and tenant reimbursements decreased $20.7 million due to a decrease of $31.8 million from dispositions, which was partially offset by increases of $5.6 million related to the 2016 Comparable Properties and $5.5 million attributable to the 2016 New Properties. The $5.6 million increase in revenues of the 2016 Comparable Properties consists of a $9.0 million increase related to our core Properties partially offset by a $3.4 million decrease attributable to non-core Properties. Positive leasing spreads and increases in base rents from occupancy gains led to increases in minimum and percentage rents. Additionally, revenue from specialty leasing drove the growth in other rents. These increases were partially offset by a decline in tenant reimbursements.
Our cost recovery ratio was 99.6% for 2016 compared to 101.7% for 2015. The 2016 cost recovery ratio was lower due to higher seasonal expenses and a decline in tenant reimbursements.
The increase in management, development and leasing fees of $4.0 million was primarily attributable to increases in management fees from new contracts to manage six malls and one community center for third parties, development fees related to the construction of an outlet center and several projects at unconsolidated affiliates and financing fees related to new loans, which closed in June 2016, secured by Ambassador Town Center, Fremaux Town Center and Hamilton Place.
In the fourth quarter of 2016, the Company's interest in the subsidiary that provided security and maintenance services to third parties was purchased by its joint venture partner. The Company's exit from this joint venture drove the majority of the decrease in other revenues of $10.1 million. See Note 8 to the consolidated financial statements for more information.
Operating Expenses
Total operating expenses decreased $2.8 million for 2016 compared to the prior year. Property operating expenses, including real estate taxes and maintenance and repairs, decreased $1.9 million primarily due to a decrease of $7.6 million from dispositions, which was partially offset by increases of $4.3 million related to the 2016 Comparable Properties and $1.4 million related to the 2016 New Properties. The increase attributable to the 2016 Comparable Properties includes increases of $3.2 million related to core Properties and $1.1 million attributable to non-core Properties. The $3.2 million increase at our core Properties was primarily due to increases in bad debt expense, maintenance and repairs expense and snow removal, as well as an increase in real estate taxes from higher tax assessments. These increases were partially offset by decreases in payroll and related costs and utilities expense.
    

54


The decrease in depreciation and amortization expense of $6.4 million resulted from decreases of $7.5 million related to dispositions and $1.8 million related to the 2016 Comparable Properties, which were partially offset by an increase of $2.9 million attributable to the 2016 New Properties. The $1.8 million decrease attributable to the 2016 Comparable Properties includes a decrease of $3.4 million attributable to non-core Properties, partially offset by an increase of $1.6 million related to our core Properties. The $1.6 million increase at our core Properties is a result of an increase of $7.6 million in depreciation expense related to capital expenditures for renovations, redevelopments and deferred maintenance, which was partially offset by a decrease of $6.0 million in amortization of in-place leases and tenant improvements. The decrease related to in-place leases primarily resulted from in-place lease assets of Properties acquired in past years becoming fully amortized.
General and administrative expenses increased $1.2 million as compared to the prior-year period. General and administrative expenses for 2016 include $2.3 million of non-recurring professional fees expense (which represent one-time expenses that are not part of our normal operations) related to the recently completed SEC investigation and $2.6 million of expense related to litigation settlements. Excluding the impact of these items, general and administrative expenses decreased approximately $3.6 million as compared to the prior year. The $3.6 million decrease was primarily due to decreases in consulting and information technology expenses related to process and technology improvements completed in the prior-year period, as well as a decrease in payroll and related expenses attributable to a company-wide bonus paid to employees in 2015 for exceeding NOI budgets in 2014.
During 2016, we recognized impairments of real estate of $116.8 million to write down the book value of nine malls, an associated center, a community center, three office buildings and three outparcels. During 2015, we recorded impairments of real estate of $105.9 million primarily attributable to two malls, an associated center and a community center. See Note 15 to the consolidated financial statements for additional information on these impairments.
Other expenses decreased $6.6 million due to a decrease of $4.3 million related to the divestiture of our interest, in the fourth quarter of 2016, in our subsidiary that provides security and maintenance services to third parties and $2.3 million of abandoned projects that were expensed in the prior-year period.
Other Income and Expenses
Interest and other income decreased $4.9 million in 2016 primarily due to $4.9 million received in the prior year as a partial settlement of a lawsuit.
Interest expense decreased $13.0 million in 2016 compared to the prior-year period. The $13.0 million decrease consists of decreases of $11.8 million attributable to the 2016 Comparable Properties and $1.2 million related to dispositions. The $11.8 million decrease related to the 2016 Comparable Properties primarily consists of a decrease of $14.6 million attributable to our core Properties, partially offset by an increase of $2.8 million in accrued default interest related to three malls that were in foreclosure proceedings. Interest expense related to property-level debt declined $19.1 million from the retirement of secured debt with borrowings from our lines of credit and net proceeds from dispositions. We also recognized a $1.8 million decrease in expense related to our interest rate swaps, which matured in April 2016. These decreases were partially offset by an increase in interest expense related to our corporate-level debt resulting from increased intra-year balances on our lines of credit related to the retirement of secured debt as well as interest expense from the issuance of the 2026 Notes in December 2016.
During 2015, we recorded a gain on extinguishment of debt of $0.3 million due to the early retirement of a mortgage loan.
In 2016, we recognized a gain on investments of $7.5 million which consisted of a $10.1 million gain from the redemption of our remaining investment in a Chinese real estate company, which was partially offset by a $2.6 million loss attributable to the divestiture of our subsidiary that provided maintenance and security services to third parties. We recorded a gain on investment of $16.6 million in 2015 related to the sale of all of our marketable securities.
The income tax benefit of $2.1 million in 2016 relates to the Management Company, which is a taxable REIT subsidiary, and consists of a current and deferred tax benefit of $1.2 million and $0.9 million, respectively. The income tax provision of $2.9 million in 2015 consists of a current tax provision of $3.1 million and a deferred tax benefit of $0.2 million.
Equity in earnings of unconsolidated affiliates increased by $99.3 million during 2016. The increase is primarily attributable to gains on sales of real estate assets of $97.4 million primarily related to the disposal of interests in two malls, two community centers and four office buildings.

55


In 2016, we recognized a $29.6 million gain on sales of real estate assets, which consisted primarily of $27.4 million related to the sale of a community center, an outparcel project at an outlet center and 18 outparcels and $2.2 million attributable to a parking deck project. In 2015, we recognized a $32.2 million gain on sales of real estate assets of $21.3 million from the sale of three Properties in our portfolio and $10.9 million primarily attributable to the sale of interests in two apartment complexes and ten outparcels.
Non-GAAP Measure
Same-center Net Operating Income
NOI is a supplemental non-GAAP measure of the operating performance of our shopping centers and other Properties. We define 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).
We compute 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. Our definition of NOI may be different than that used by other companies, and accordingly, our calculation of NOI may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to the operations of our shopping center Properties, we believe that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on our results of operations. Our calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, and amortization of above and below market lease intangibles in order to enhance the comparability of results from one period to another.
We include a Property in our same-center pool when we have owned all or a portion of the Property since January 1 of the preceding calendar year and it has been in operation for both the entire preceding calendar year ended December 31, 2016 and the current year ended December 31, 2017. New Properties are excluded from same-center NOI, until they meet this criteria. Properties excluded from the same-center pool that would otherwise meet this criteria are Properties which are being repositioned or Properties where we are considering alternatives for repositioning, where we intend to renegotiate the terms of the debt secured by the related Property or return the Property to the lender and those in which we own a noncontrolling interest of 25% or less. Acadiana Mall was classified as a Lender Mall as of December 31, 2017. As of December 31, 2017, Cary Town Center and Hickory Point Mall were classified as Repositioning Malls. Triangle Town Center was classified as a Minority Interest Mall as of December 31, 2017.
Due to the exclusions noted above, same-center NOI should only be used as a supplemental measure of our performance and not as an alternative to GAAP operating income (loss) or net income (loss). A reconciliation of our same-center NOI to net income for the years ended December 31, 2017 and 2016 is as follows (in thousands):
 
Year Ended December 31,
 
2017
 
2016
Net income
$
158,982

 
$
195,531

Adjustments: (1)
 
 
 
Depreciation and amortization
328,237

 
322,539

Interest expense
236,701

 
235,586

Abandoned projects expense
5,180

 
56

Gain on sales of real estate assets, net of noncontrolling interests' share
(67,354
)
 
(126,997
)
(Gain) loss on extinguishment of debt, net of noncontrolling interests' share
(33,902
)
 
197

(Gain) loss on investments
6,197

 
(7,534
)
Loss on impairment
71,401

 
116,822

Income tax benefit
(1,933
)
 
(2,063
)

56


 
Year Ended December 31,
 
2017
 
2016
Lease termination fees
(4,036
)
 
(2,211
)
Straight-line rent and above- and below-market rent
(4,396
)
 
(2,081
)
Net income attributable to noncontrolling interests in other consolidated subsidiaries
(25,390
)
 
(1,112
)
General and administrative expenses
58,466

 
63,332

Management fees and non-property level revenues
(14,115
)
 
(17,026
)
Operating Partnership's share of property NOI
714,038

 
775,039

Non-comparable NOI
(41,834
)
 
(82,703
)
Total same-center NOI 
$
672,204

 
$
692,336

(1)
Adjustments are based on our Operating Partnership's pro rata ownership share, including our share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated Properties.
Same-center NOI decreased $20.1 million for the year ended December 31, 2017 compared to 2016. The NOI decline of 2.9% for 2017 was driven by revenue declines of $20.9 million primarily due to lower occupancy and rent reductions related to tenants in bankruptcy. Negative leasing spreads of 5.4% for our Stabilized Mall portfolio and the decrease in same-center Mall occupancy to 92.2% as of December 31, 2017 compared to 94.0% for 2016 contributed to the decline in rents. Additionally, average annual base rents for our same-center Malls were relatively flat at $32.42 as of December 31, 2017 compared to $32.31 in 2016.
Operational Review
The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during the fourth quarter due to the holiday season, which generally results in higher percentage rents in the fourth quarter. Additionally, the malls earn most of their 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.
We derive the majority of our revenues from the Mall Properties. The sources of our revenues by property type were as follows:
 
Year Ended December 31,
 
2017
 
2016
Malls
91.5%
 
90.3%
Other Properties
8.5%
 
9.7%
     
Mall Store Sales
Mall store sales include reporting mall tenants of 10,000 square feet or less for Stabilized Malls and exclude license agreements, which are retail contracts that are temporary or short-term in nature and generally last more than three months but less than twelve months. The following is a comparison of our same-center sales per square foot for Mall tenants of 10,000 square feet or less:
 
Year Ended December 31,
 
 
 
2017
 
2016
 
% Change
Stabilized mall same-center sales per square foot
$
372

 
$
379

 
(1.8)%
Stabilized mall sales per square foot
$
372

 
$
376

 
(1.1)%

57


Occupancy
Our portfolio occupancy is summarized in the following table (1):
 
As of December 31,
 
2017
 
2016
Total portfolio 
93.2%
 
94.8%
Malls:
 
 
 
Total Mall portfolio
92.0%
 
94.1%
Same-center Malls
92.2%
 
94.0%
Stabilized Malls 
92.1%
 
94.2%
Non-stabilized Malls (2)
88.4%
 
92.8%
Other Properties:
97.4%
 
97.2%
Associated centers
97.9%
 
96.9%
Community centers
96.8%
 
98.2%
(1)
As noted in Item 2. Properties, excluded Properties are not included in occupancy metrics.
(2)
Represents occupancy for The Outlet Shoppes at Laredo and The Outlet Shoppes of the Bluegrass as of December 31, 2017 and occupancy for The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Atlanta as of December 31, 2016.
Leasing
The following is a summary of the total square feet of leases signed in the year ended December 31, 2017 as compared to the prior-year period:
 
Year Ended December 31,
 
2017
 
2016
Operating portfolio:
 
 
 
New leases
1,105,529

 
1,412,130

Renewal leases
2,389,216

 
2,323,516

Development portfolio:
 
 
 
New leases
379,661

 
563,196

Total leased
3,874,406

 
4,298,842

Average annual base rents per square foot are computed based on contractual rents in effect as of December 31, 2017 and 2016, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each Property type (1):
 
December 31,
 
2017
 
2016
Malls:
 
 
 
Same-center Stabilized Malls
$
32.42

 
$
32.31

Stabilized Malls
32.56

 
32.44

Non-stabilized Malls (2)
26.22

 
26.60

Other Properties:
15.09

 
15.06

Associated centers
13.85

 
13.78

Community centers
15.79

 
15.79

Office buildings
19.11

 
18.69

(1)
As noted in Item 2. Properties, excluded Properties are not included in base rent. Average base rents for associated centers, community centers and office buildings include all leased space, regardless of size.
(2)
Represents average annual base rents for The Outlet Shoppes at Laredo and The Outlet Shoppes of the Bluegrass as of December 31, 2017 and average annual base rents for The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Atlanta as of December 31, 2016.

58


Results from new and renewal leasing of comparable small shop space of less than 10,000 square feet during the year ended December 31, 2017 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows:
Property Type
 
Square
Feet
 
Prior Gross
Rent PSF
 
New Initial
Gross Rent
PSF
 
% Change
Initial
 
New Average
Gross Rent
PSF (2)
 
% Change
Average
All Property Types (1)
 
2,091,036

 
$
41.02

 
$
38.06

 
(7.2)%
 
$
38.83

 
(5.3)%
Stabilized Malls
 
1,955,639

 
42.15

 
39.08

 
(7.3)%
 
39.86

 
(5.4)%
New leases
 
351,961

 
43.29

 
45.27

 
4.6%
 
47.20

 
9.0%
Renewal leases
 
1,603,678

 
41.90

 
37.72

 
(10.0)%
 
38.24

 
(8.7)%
(1)
Includes Stabilized Malls, associated centers, community centers and other.
(2)
Average gross rent does not incorporate allowable future increases for recoverable CAM expenses.
New and renewal leasing activity of comparable small shop space of less than 10,000 square feet for the year ended December 31, 2017 based on commencement date is as follows:
 
 
Number
of
Leases
 
Square
Feet
 
Term
(in
years)
 
Initial
Rent
PSF
 
Average
Rent
PSF
 
Expiring
Rent
PSF
 
Initial Rent
Spread
 
 Average Rent
Spread
Commencement 2017:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
 
167
 
443,434

 
7.33
 
$
44.14

 
$
47.04

 
$
40.68

 
$
3.46

 
8.5
 %
 
$
6.36

 
15.6
 %
Renewal
 
494
 
1,321,051

 
3.43
 
39.52

 
40.12

 
41.95

 
(2.43
)
 
(5.8
)%
 
(1.83
)
 
(4.4
)%
Commencement 2017 Total
 
661
 
1,764,485

 
4.52
 
40.68

 
41.86

 
41.63

 
(0.95
)
 
(2.3
)%
 
0.23

 
0.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commencement 2018:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New
 
27
 
69,037

 
7.44
 
49.78

 
51.55

 
44.46

 
5.32

 
12.0
 %
 
$
7.09

 
15.9
 %
Renewal
 
204
 
645,675

 
3.27
 
32.64

 
33.13

 
37.74

 
(5.10
)
 
(13.5
)%
 
(4.61
)
 
(12.2
)%
Commencement 2018 Total
 
231
 
714,712

 
3.75
 
34.30

 
34.94

 
38.39

 
(4.09
)
 
(10.7
)%
 
(3.45
)
 
(9.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2017/2018
 
892
 
2,479,197

 
4.32
 
$
38.84

 
$
39.86

 
$
40.69

 
$
(1.85
)
 
(4.5
)%
 
$
(0.83
)
 
(2.0
)%
    
Liquidity and Capital Resources
In 2017, we completed a multi-year disposition program (announced in 2014) with transactions on 20 malls and other properties through a combination of asset sales, foreclosures and restructurings. These dispositions contributed to a decrease of over $760 million in our total pro rata share of debt since year-end 2013, providing us with increased flexibility on our balance sheet to use free cash flow as the primary funding source for our redevelopment pipeline. While the dilution from these dispositions has a short-term impact on our FFO and other metrics, our liquidity position was strengthened. Additionally, we expect that our long-term plan to reinvent our existing portfolio of Properties through redevelopment of Anchor locations and other initiatives will lead to future growth.
We completed an additional $225 million issuance of the series of 2026 Notes during the year, primarily using the proceeds to reduce amounts outstanding on our unsecured credit facilities. We also extended and modified our unsecured term loans. See Note 6 to the consolidated financial statements for more details. As of December 31, 2017, we had approximately $93.8 million outstanding on our three unsecured credit facilities leaving approximately $576.5 million of availability based on the terms of the credit facilities. We also recognized a $39.8 million gain on extinguishment of debt from three non-recourse loans secured by three malls that were in foreclosure. We were unable to reach an agreement with the special servicer to restructure the non-recourse loan secured by Acadiana Mall. As a result, the mall is in foreclosure proceedings, which are expected to be completed in 2018. During 2017, we retired over $350 million, at our share, of loans on seven operating Properties, adding to our unencumbered asset pool. Our consolidated unencumbered Properties generated approximately 59% of total consolidated NOI as of December 31, 2017. Subsequent to year-end, we retired the $37.3 million loan secured by Kirkwood Mall, which also increased our unencumbered pool. These debt reductions, along with the previously announced reduction in our

59


common stock dividend to an annualized rate of $0.80 per share, provide us with significant liquidity to fund value-added redevelopment activity as we act to diversify our rental income stream and meet evolving consumer preferences.
We derive a majority of our revenues from leases with retail tenants, which have historically been the primary source for funding short-term liquidity and capital needs such as operating expenses, debt service, tenant construction allowances, recurring capital expenditures, dividends and distributions. We believe that the combination of cash flows generated from our operations, combined with our debt and equity sources and the availability under our credit facilities will, for the foreseeable future, provide adequate liquidity to meet our cash needs.  In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, debt and equity offerings, joint venture investments, net proceeds from dispositions, issuances of noncontrolling interests in our Operating Partnership, and decreasing expenditures related to tenant construction allowances and other capital expenditures.  We also generate revenues from sales of peripheral land at our Properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.
Cash Flows - Operating, Investing and Financing Activities
There was $68.2 million of cash, cash equivalents and restricted cash as of December 31, 2017, an increase of $3.1 million from December 31, 2016. Of this amount, $32.6 million was unrestricted cash as of December 31, 2017. Our net cash flows are summarized as follows (in thousands):
 
Year Ended December 31,
 
 
 
Year Ended December 31,
 
 
 
2017
 
2016
 
Change
 
2016
 
2015
 
Change
Net cash provided by operating activities
$
430,397

 
$
468,579

 
$
(38,182
)
 
$
468,579

 
$
495,015

 
$
(26,436
)
Net cash provided by (used in) investing activities (1)
(75,812
)
 
9,988

 
(85,800
)
 
9,988

 
(265,306
)
 
275,294

Net cash used in financing activities
(351,482
)
 
(485,074
)
 
133,592

 
(485,074
)
 
(236,246
)
 
(248,828
)
Net cash flows
$
3,103

 
$
(6,507
)
 
$
9,610

 
$
(6,507
)
 
$
(6,537
)
 
$
30

(1)
See Note 2 to the consolidated financial statements for information related to the adoption of a new accounting pronouncement in the fourth quarter of 2017 that was retrospectively applied resulting in the reclassification of restricted cash from the Investing activities section to the beginning-of-period and end-of-period total amounts for cash, cash equivalents and restricted cash on the consolidated statements of cash flows.
Cash Provided by Operating Activities
•
Cash provided by operating activities during 2017 decreased $38.2 million to $430.4 million from $468.6 million during 2016. The decrease in operating cash flows was primarily due to 2017 and 2016 asset sales, an increase in cash paid for interest related to the Notes, and the impact of lower occupancy and rent reductions on revenues and lower percentage rent due to lower sales.
•
Cash provided by operating activities during 2016 decreased $26.4 million to $468.6 million from $495.0 million during 2015. The decrease in operating cash flows was primarily attributable to operating cash flows related to Properties sold in 2016 partially offset by lower cash paid for interest, as we continued our strategy of retiring higher-rate secured debt with availability on our lower-rate unsecured lines of credit and net proceeds from the 2026 Notes, and increases in operating cash flow as a result of the increase in same-center NOI of 2.3% and the 2016 New Properties.
Cash Provided by (Used in) Investing Activities
•
Cash used in investing activities during 2017 was $75.8 million, representing an $85.8 million difference as compared to cash provided by investing activities of $10.0 million in the prior-year period. The change in 2017 was due to the 2017 acquisition of several Macy's and Sears locations for $79.8 million combined with the effect of a much higher level of net proceeds from sales of consolidated and unconsolidated Properties during 2016.

60


•
Cash provided by investing activities during 2016 was $10.0 million, representing a $275.3 million difference as compared to cash used in investing activities during 2015. Cash provided by investing activities during 2016 resulted from cash used in our development, redevelopment, renovation and expansion programs as well as tenant improvements and ongoing deferred maintenance at our Properties, which was offset by a higher amount of proceeds from the sale of several consolidated Properties and higher distributions from our unconsolidated affiliates related to proceeds from sales of Properties and excess proceeds from the refinancing of certain loans. Additionally, we acquired Mayfaire Town Center for $192.0 million in 2015.
Cash Used in Financing Activities
•
Cash flows used in financing activities during 2017 was $351.5 million as compared to $485.1 million in the prior-year period. In 2016, a greater amount of proceeds from sales of properties were used to reduce the outstanding balances on our lines of credit, resulting in higher cash used for financing activities.
•
Cash flows used in financing activities during 2016 was $485.1 million as compared to $236.2 million in the prior-year period. The $248.8 million increase was driven primarily by the use of net proceeds from the sales of consolidated and unconsolidated Properties that were used to reduce borrowings on our unsecured lines of credit. Additionally, the prior-year period included borrowings of $192.0 million to acquire Mayfaire Town Center.
Debt
Debt of the Company
CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of our debt.
CBL is a limited guarantor of the Notes, as described in Note 6 to the consolidated financial statements, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. We also provide a similar limited guarantee of the Operating Partnership's obligations with respect to our unsecured credit facilities and three unsecured term loans as of December 31, 2017.
Debt of the Operating Partnership
The following tables summarize debt based on our pro rata ownership share, including our pro rata share of unconsolidated affiliates and excluding noncontrolling investors’ share of consolidated Properties, because we believe this provides investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands):
December 31, 2017:
Consolidated
 
Noncontrolling
Interests
 
Unconsolidated
Affiliates
 
Total
 
Weighted-
Average
Interest
Rate (1)
Fixed-rate debt:
 
 
 
 
 
 
 
 
 
  Non-recourse loans on operating Properties
$
1,796,203

 
$
(77,155
)
 
$
521,731

 
$
2,240,779

 
5.06%
Recourse loans on operating Properties
—

 
—

 
11,035

 
11,035

 
3.74%
Senior unsecured notes due 2023 (2)
446,976

 
—

 
—

 
446,976

 
5.25%
Senior unsecured notes due 2024 (3)
299,946

 
—

 
—

 
299,946

 
4.60%
Senior unsecured notes due 2026 (4)
615,848

 
—

 
—

 
615,848

 
5.95%
Total fixed-rate debt
3,158,973

 
(77,155
)
 
532,766

 
3,614,584

 
5.19%
Variable-rate debt:
 

 
 

 
 

 
 

 
 
Non-recourse loans on operating Properties
10,836

 
(5,418
)
 
—

 
5,418

 
3.37%
Recourse loans on operating Properties (5)
101,187

 
—

 
58,478

 
159,665

 
3.77%
Construction loan
—

 
—

 
5,977

 
5,977

 
4.28%
Unsecured lines of credit 
93,787

 
—

 
—

 
93,787

 
2.56%
Unsecured term loans (6)
885,000

 
—

 
—

 
885,000

 
2.81%
Total variable-rate debt
1,090,810

 
(5,418
)
 
64,455

 
1,149,847

 
2.93%
Total fixed-rate and variable-rate debt
4,249,783

 
(82,573
)
 
597,221

 
4,764,431

 
4.65%
Unamortized deferred financing costs 
(18,938
)
 
687

 
(2,441
)
 
(20,692
)
 
 
Total mortgage and other indebtedness, net
$
4,230,845

 
$
(81,886
)
 
$
594,780

 
$
4,743,739

 
 

61


December 31, 2016:
Consolidated
 
Noncontrolling
Interests
 
Unconsolidated
Affiliates
 
Total
 
Weighted-
Average
Interest
Rate (1)
Fixed-rate debt:
 
 
 
 
 
 
 
 
 
  Non-recourse loans on operating Properties
$
2,453,628

 
$
(109,162
)
 
$
530,062

 
$
2,874,528

 
5.29%
Senior unsecured notes due 2023 (2)
446,552

 
—

 
—

 
446,552

 
5.25%
Senior unsecured notes due 2024 (3)
299,939

 
—

 
—

 
299,939

 
4.60%
Senior unsecured notes due 2026 (4)
394,260

 
—

 
—

 
394,260

 
5.95%
Total fixed-rate debt
3,594,379

 
(109,162
)
 
530,062

 
4,015,279

 
5.30%
Variable-rate debt:
 

 
 

 
 

 
 

 
 
Non-recourse loans on operating Properties
19,055

 
(7,504
)
 
2,226

 
13,777

 
3.18%
Recourse loans on operating Properties
24,428

 
—

 
71,037

 
95,465

 
2.80%
Construction loan (5)
39,263

 
—

 
—

 
39,263

 
3.12%
Unsecured lines of credit 
6,024

 
—

 
—

 
6,024

 
1.82%
Unsecured term loans
800,000

 
—

 
—

 
800,000

 
2.04%
Total variable-rate debt
888,770

 
(7,504
)
 
73,263

 
954,529

 
2.18%
Total fixed-rate and variable-rate debt
4,483,149

 
(116,666
)
 
603,325

 
4,969,808

 
4.70%
Unamortized deferred financing costs 
(17,855
)
 
945

 
(2,806
)
 
(19,716
)
 
 
Total mortgage and other indebtedness, net
$
4,465,294

 
$
(115,721
)
 
$
600,519

 
$
4,950,092

 
 
 
(1)
Weighted-average interest rate includes the effect of debt premiums and discounts, but excludes amortization of deferred financing costs.
(2)
The balance is net of an unamortized discount of $3,024 and $3,448, as of December 31, 2017 and 2016, respectively.
(3)
The balance is net of an unamortized discount of $54 and $61, as of December 31, 2017 and 2016, respectively.
(4)
In December 2016, the Operating Partnership issued $400,000 of senior unsecured notes in a public offering. In September 2017, the Operating Partnership issued and sold an additional $225,000 of the series of 2026 notes. The balance is net of an unamortized discount of $9,152 and $5,740 as of December 31, 2017 and 2016, respectively.
(5)
The Outlet Shoppes at Laredo opened in 2017 and the construction loan balance from December 2016 is included in recourse loans on operating Properties as of December 31, 2017.
(6)
We extended and modified our three unsecured term loans in July 2017. See Note 6 to the consolidated financial statements for additional information.
The following table presents our pro rata share of consolidated and unconsolidated debt as of December 31, 2017, excluding debt premiums and discounts, that is scheduled to mature in 2018 as well as one operating Property loan with a 2017 maturity date (in thousands):
 
Balance
Original Maturity Date
 
Extended
Maturity
Date
2017 Maturity:
 
 
 
Consolidated Property:
 
 
 
Acadiana Mall
$
122,435

(1) 
 
Total 2017 Maturity
$
122,435

 
 
 
 
 
 
2018 Maturities:
 
 
 
Consolidated Properties:
 
 
 
Hickory Point Mall
$
27,446

 
December 2019
Kirkwood Mall
37,295

(2) 
 
The Outlet Shoppes at El Paso - Phase II
6,613

(3) 
 
Statesboro Crossing
5,418

(3) 
 
 
76,772

 
 

62


 
Balance
Original Maturity Date
 
Extended
Maturity
Date
Unconsolidated Properties:
 
 
 
CoolSprings Galleria
49,307

(3) 
 
Hammock Landing - Phase I
21,123

(4) 
February 2019
Hammock Landing - Phase II
8,159

(4) 
February 2019
The Pavilion at Port Orange
28,544

(4) 
February 2019
Triangle Town Center
13,893

 
December 2020
 
121,026

 
 
 
 
 
 
$350,000 Unsecured Term Loan
350,000

 
October 2019
$490,000 Unsecured Term Loan
190,000

(5) 
 
 
540,000

 
 
 
 
 
 
Total 2018 Maturities at pro rata share
$
737,798

 
 
(1)
The mall is in foreclosure, which is expected to be complete in 2018.
(2)
Subsequent to December 31, 2017, the loan on this Property was retired. See Note 19 to the consolidated financial statements for more information.
(3)
We expect to refinance the loan secured by this Property.
(4)
Subsequent to December 31, 2017, the loan was extended. See Note 19 to the consolidated financial statements for more information.
(5)
In July 2018, $190,000 of the $490,000 principal balance will be due, reducing the principal balance to $300,000. The loan matures in July 2020 and has two one-year extension options, the second of which is at the lenders' discretion, for a July 2022 extended maturity date.
As of December 31, 2017, $737.8 million of our pro rata share of consolidated and unconsolidated debt, excluding debt premium and discounts, is scheduled to mature during 2018 in addition to $122.4 million related to one operating Property loan, which matured in 2017 and for which the mall securing the loan is in foreclosure. Of the $737.8 million of 2018 maturities, the $350.0 million unsecured term loan and five operating Property loans with an aggregate principal balance of $99.2 million have extension options available leaving a remaining balance of $288.6 million of 2018 maturities that must be either retired or refinanced. Subsequent to December 31, 2017, we retired one operating Property loan with a principal balance of $37.3 million as of December 31, 2017, leaving an aggregate principal balance of $61.3 million of 2018 maturities related to three operating Property loans and the $190.0 million portion of the $490.0 million unsecured term loan that is due in 2018.
The weighted-average remaining term of our total share of consolidated and unconsolidated debt was 4.6 years and 5.4 years at December 31, 2017 and 2016, respectively. The weighted-average remaining term of our pro rata share of fixed-rate debt was 5.4 years and 3.8 years at December 31, 2017 and 2016, respectively. 
As of December 31, 2017 and 2016, our pro rata share of consolidated and unconsolidated variable-rate debt represented 24.2% and 19.3%, respectively, of our total pro rata share of debt. The increase is primarily due to an increase in the construction loan secured by The Outlet Shoppes at Laredo, which opened in April 2017, and increases in our unsecured credit lines and an unsecured term loan, which were used to retire several higher fixed-rate loans during the year as noted below. As of December 31, 2017, our share of consolidated and unconsolidated variable-rate debt represented 17.6% of our total market capitalization (see Equity below) as compared to 12.1% as of December 31, 2016.    
See Note 6 to the consolidated financial statements for additional information concerning the amount and terms of our outstanding indebtedness and compliance with applicable financial covenants and restrictions as of December 31, 2017.

63


Credit Ratings
We had the following credit ratings as of December 31, 2017:
Rating Agency
 
Rating (1)
 
Outlook
 
Investment Grade
Fitch
 
BB+
 
Negative
 
No
Moody's (2)
 
Baa3
 
Negative
 
Yes
S&P
 
BBB-
 
Stable
 
Yes
(1)
Based on the Operating Partnership's unsecured long-term indebtedness.
(2)
Downgraded in February 2018 to Ba1, which is below investment grade. Outlook remains negative.
We made a one-time irrevocable election to use our credit ratings, as defined above, to determine the interest rate on our three unsecured credit facilities and two unsecured term loans. Borrowings under our three unsecured credit facilities bear interest at LIBOR plus 120 basis points and our unsecured term loans bear interest at LIBOR plus 135 and 150 basis points, respectively, based on the credit ratings noted above.
The recent downgrade from Moody’s does not change these interest rates. If our credit rating from S&P were to decline (and Moody’s credit rating remained non-investment grade), our unsecured credit facilities would bear interest at LIBOR plus 155 basis points and the interest rate on our two unsecured term loans would bear interest at LIBOR plus 175 basis points and 200 basis points, respectively, which would increase our borrowing costs. Such a downgrade may also impact terms and conditions of future borrowings in addition to adversely affecting our ability to access the public debt markets.
Mortgages on Operating Properties
2017 Financings
The following table presents loans, secured by the related Properties, that were entered into in 2017 (in thousands):
Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Stated
Interest
Rate
 
Maturity Date
 
Amount
Extended
 
Company's
Pro Rata
Share
March
 
Statesboro Crossing (1)
 
Consolidated
 
LIBOR + 1.8%
 
June 2018
 
$
10,930

 
$
5,465

August
 
Ambassador Town Center - Infrastructure (2)
 
Unconsolidated
 
LIBOR + 2.0%
 
August 2020
 
11,035

 
7,173

(1)
We exercised the extension option under the mortgage loan.
(2)
The loan was amended and modified to extend the maturity date. The Operating Partnership has guaranteed 100% of the loan. See Note 14 to the consolidated financial statements for information on the Operating Partnership's guaranty. The joint venture has an interest rate swap on the notional amount of the loan, amortizing to $9,360 over the term of the swap, to effectively fix the interest rate to 3.74%.
Subsequent to December 31, 2017, several operating Property loans were extended. See Note 19 to the consolidated financial statements for more information.
2016 Financings
The following table presents loans, secured by the related Properties, that were entered into in 2016 (in thousands):
Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Stated
Interest
Rate
 
Maturity
Date (1)
 
Amount
Financed
or Extended
 
Company's
Pro Rata
Share
February
 
The Pavilion at Port Orange (2)
 
Unconsolidated
 
LIBOR + 2.0%
 
February 2018
(3) 
$
58,628

 
$
34,314

February
 
Hammock Landing - Phase I (2)
 
Unconsolidated
 
LIBOR + 2.0%
 
February 2018
(3) 
43,347

(4) 
21,674

February
 
Hammock Landing - Phase II (2)
 
Unconsolidated
 
LIBOR + 2.0%
 
February 2018
(3) 
16,757

 
8,378


64


Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Stated
Interest
Rate
 
Maturity
Date (1)
 
Amount
Financed
or Extended
 
Company's
Pro Rata
Share
February
 
Triangle Town Center, Triangle Town Place, Triangle Town Commons (5)
 
Unconsolidated
 
4.00%
(6) 
December 2018
(7) 
171,092

 
1,711

April
 
Hickory Point Mall (8)
 
Consolidated
 
5.85%
 
December 2018
(9) 
27,446

 
27,446

June
 
Statesboro Crossing (10)
 
Consolidated
 
LIBOR + 1.80%
 
June 2017
 
11,035

 
5,517

June
 
Hamilton Place (11)
 
Consolidated
 
4.36%
 
June 2026
 
107,000

 
96,300

June
 
Ambassador Town Center (12)
 
Unconsolidated
 
3.22%
(13) 
June 2023
 
47,660

 
30,979

June
 
Fremaux Town Center (14)
 
Unconsolidated
 
3.70%
(15) 
June 2026
 
73,000

 
47,450

December
 
The Shops at Friendly Center (16)
 
Unconsolidated
 
3.34%
 
April 2023
 
60,000

 
30,000

December
 
Cary Towne Center (17)
 
Consolidated
 
4.00%
 
March 2019
(18) 
46,716

 
46,716

December
 
Greenbrier Mall (19)
 
Consolidated
 
5.00%
 
December 2019
(20) 
70,801

 
70,801

(1)
Excludes any extension options.
(2)
The guaranty was reduced from 25% to 20% in conjunction with the refinancing. See Note 14 to the consolidated financial statements for more information.
(3)
The loan was modified and extended to February 2018 with a one-year extension option to February 2019.
(4)
The capacity was increased from $39,475 to fund an expansion.
(5)
The loan was amended and modified in conjunction with the sale of the Properties to a newly formed joint venture. See Note 5 to the consolidated financial statements for additional information.
(6)
The interest rate was reduced from 5.74% to 4.00% interest-only payments through the initial maturity date.
(7)
The loan was extended to December 2018 with two one-year extension options to December 2020. Under the terms of the loan agreement, the joint venture must pay the lender $5,000 to reduce the principal balance of the loan and an extension fee of 0.50% of the remaining outstanding loan balance if it exercises the first extension. If the joint venture elects to exercise the second extension, it must pay the lender $8,000 to reduce the principal balance of the loan and an extension fee of 0.75% of the remaining outstanding principal loan balance. Additionally, the interest rate would increase to 5.74% during the extension period.
(8)
The loan was modified to extend the maturity date. The interest rate remains at 5.85% but now the loan is interest-only.
(9)
The loan has a one-year extension option at our election for an outside maturity date of December 2019.
(10)
The loan was modified to extend the maturity date to June 2017 with a one-year extension option to June 2018.
(11)
Proceeds from the non-recourse loan were used to retire an existing $98,181 loan with an interest rate of 5.86% that was scheduled to mature in August 2016. Our share of excess proceeds was used to reduce outstanding balances on our credit facilities.
(12)
The non-recourse loan was used to retire an existing construction loan with a principal balance of $41,885 and excess proceeds were utilized to fund remaining construction costs.
(13)
The joint venture has an interest rate swap on a notional amount of $47,660, amortizing to $38,866 over the term of the swap, related to Ambassador Town Center to effectively fix the interest rate on the variable-rate loan. Therefore, this amount is currently reflected as having a fixed rate.
(14)
Net proceeds from the non-recourse loan were used to retire the existing construction loans, secured by Phase I and Phase II of Fremaux Town Center, with an aggregate balance of $71,125.
(15)
The joint venture had an interest rate swap on a notional amount of $73,000, amortizing to $52,130 over the term of the swap, related to Fremaux Town Center to effectively fix the interest rate on the variable-rate loan. In October 2016, the joint venture made an election under the loan agreement to convert the loan from a variable-rate to a fixed-rate loan which bears interest at 3.70%.
(16)
CBL-TRS Joint Venture, LLC closed on a non-recourse loan, secured by The Shops at Friendly Center in Greensboro, NC. The new loan has a maturity date with a term of six years to coincide with the maturity date of the existing loan secured by Friendly Center. A portion of the net proceeds were used to retire a $37,640 fixed-rate loan that bore interest at 5.90% and was due to mature in January 2017.
(17)
The loan was restructured to extend the maturity date and reduce the interest rate from 8.5% to 4.0% interest-only payments. We plan to utilize excess cash flows from the mall to fund a redevelopment, which includes the sale of land to IKEA. The original maturity date is contingent on our redevelopment plans.
(18)
The loan has one two-year extension option, which is at our option and contingent on our having met specified redevelopment criteria, for an outside maturity date of March 2021.
(19)
The loan was restructured, with an effective date of November 2016, to extend the maturity date and reduce the interest rate from 5.91% to 5.00% interest-only payments through December 2017. The interest rate will increase to 5.4075% on January 1, 2018 and thereafter require monthly principal payments of $225 and $300 in 2018 and 2019, respectively, in addition to interest.
(20)
The loan has a one-year extension option, at our election, which is contingent on the mall meeting specified debt service and operational metrics. If the loan is extended, monthly principal payments of $325 will be required in 2020 in addition to interest.

65


2017 Loan Repayments
We repaid the following loans, secured by the related Properties, in 2017 (in thousands):
Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
  Repaid (1)
January
 
The Plaza at Fayette
 
Consolidated
 
5.67%
 
April 2017
 
$
37,146

January
 
The Shoppes at St. Clair
 
Consolidated
 
5.67%
 
April 2017
 
18,827

February
 
Hamilton Corner
 
Consolidated
 
5.67%
 
April 2017
 
14,227

March
 
Layton Hills Mall
 
Consolidated
 
5.66%
 
April 2017
 
89,526

April
 
The Outlet Shoppes at Oklahoma City (2)
 
Consolidated
 
5.73%
 
January 2022
 
53,386

April
 
The Outlet Shoppes at Oklahoma City - Phase II (2)
 
Consolidated
 
3.53%
 
April 2019
 
5,545

April
 
The Outlet Shoppes at Oklahoma City - Phase III (2)
 
Consolidated
 
3.53%
 
April 2019
 
2,704

July
 
Gulf Coast Town Center - Phase III (3)
 
Unconsolidated
 
3.13%
 
July 2017
 
4,118

September
 
Hanes Mall (4)
 
Consolidated
 
6.99%
 
October 2018
 
144,325

September
 
The Outlet Shoppes at El Paso
 
Consolidated
 
7.06%
 
December 2017
 
61,561

(1)
We retired the loans with borrowings from our credit facilities unless otherwise noted.
(2)
The loan was retired in conjunction with the sale of the Property which secured the loan. See Note 4 for more information. We recorded an $8,500 loss on extinguishment of debt due to a prepayment fee on the early retirement.
(3)
We loaned the unconsolidated affiliate, JG Gulf Coast Town Center, LLC, the amount necessary to retire the loan and received a mortgage note receivable in return. In December 2017, our partner assigned its 50% interest in the Property to us. See Note 3 and Note 5 to the consolidated financial statements for more information. This intercompany loan is eliminated in consolidation as of December 31, 2017 since the Property became wholly-owned by us.
(4)
We recorded a $371 loss on extinguishment of debt due to a prepayment fee on the early retirement.
Subsequent to December 31, 2017, an operating Property loan was retired. See Note 19 to the consolidated financial statements for more information.
2016 Loan Repayments
We repaid the following loans, secured by the related Properties, in 2016 (in thousands):
Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
  Repaid (1)
April
 
CoolSprings Crossing
 
Consolidated
 
4.54%
 
April 2016
 
$
11,313

April
 
Gunbarrel Pointe
 
Consolidated
 
4.64%
 
April 2016
 
10,083

April
 
Stroud Mall
 
Consolidated
 
4.59%
 
April 2016
 
30,276

April
 
York Galleria
 
Consolidated
 
4.55%
 
April 2016
 
48,337

April
 
Renaissance Center - Phase I
 
Unconsolidated
 
5.61%
 
July 2016
 
31,484

June
 
Hamilton Place (2)
 
Consolidated
 
5.86%
 
August 2016
 
98,181

July
 
Kentucky Oaks Mall (3)
 
Unconsolidated
 
5.27%
 
January 2017
 
19,912

August
 
Dakota Square Mall
 
Consolidated
 
6.23%
 
November 2016
 
55,103

September
 
High Pointe Commons - Phase I (4)
 
Unconsolidated
 
5.74%
 
May 2017
 
12,401

September
 
High Pointe Commons - PetCo (4)
 
Unconsolidated
 
3.20%
 
July 2017
 
19

September
 
High Pointe Commons - Phase II (4)
 
Unconsolidated
 
6.10%
 
July 2017
 
4,968

September
 
Governor's Square Mall (5)
 
Unconsolidated
 
8.23%
 
September 2016
 
14,089

October
 
Southaven Towne Center
 
Consolidated
 
5.50%
 
January 2017
 
38,314

December
 
Triangle Town Place (6)
 
Unconsolidated
 
4.00%
 
December 2018
 
29,342

December
 
The Shops at Friendly Center (7)
 
Unconsolidated
 
5.90%
 
January 2017
 
37,640


66


(1)
We retired the loans with borrowings from our credit facilities unless otherwise noted.
(2)
The joint venture retired the loan with proceeds from a $107,000 fixed-rate non-recourse loan. See 2016 Financings above for more information.
(3)
Our share of the loan was $9,956.
(4)
The loan secured by the Property was paid off using proceeds from the sale of the Property in September 2016. See Note 5 to the consolidated financial statements for more information. Our share of the loan was 50%.
(5)
Our share of the loan was $6,692.
(6)
A portion of the net proceeds was used to pay down the balance of a loan for the portion secured by Triangle Town Place upon its sale in December 2016. After the debt reduction associated with the sale of Triangle Town Place, the principal balance of the loan secured by Triangle Town Center and Triangle Town Commons as of December 31, 2016 was $141,126, of which our share was $14,113.
(7)
The loan secured by the Property was retired using a portion of the net proceeds from a $60,000 fixed-rate loan. See 2016 Financings above for more information.
    
Additionally, the $38,150 loan secured by Fashion Square was assumed by the buyer in conjunction with the sale of the mall in July 2016. The fixed-rate loan bore interest at 4.95% and had a maturity date of June 2022.
Construction Loans
2017 Financings
The following table presents the construction loans, secured by the related Properties, that were entered into in 2017 (in thousands):
Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Stated
Interest
Rate
 
Maturity Date (1)
 
Amount
Financed
or Extended
October
 
The Shoppes at Eagle Point (2)
 
Unconsolidated
 
LIBOR + 2.75%
 
October 2020
 
$
36,400

December
 
Self-storage development -
EastGate Mall (3)
 
Unconsolidated
 
LIBOR + 2.75%
 
December 2022
 
6,500

(1)
Excludes any extension options.
(2)
The unconsolidated 50/50 joint venture closed on a construction loan for the development of The Shoppes at Eagle Point, a community center located in Cookeville, TN. The Operating Partnership has guaranteed 100% of the loan. The loan has one two-year extension option available at the unconsolidated affiliate's election, subject to compliance with the terms of the loan. The interest rate will be reduced to a variable-rate of LIBOR plus 2.35% once construction is complete and certain debt and operational metrics are met.
(3)
The unconsolidated 50/50 joint venture closed on a construction loan for the development of a climate controlled self-storage facility adjacent to EastGate Mall in Cincinnati, OH. The loan is interest only through November 2020. Thereafter, monthly principal payments of $10, in addition to interest, will be due. The Operating Partnership has guaranteed 100% of the loan.
2016 Financing
The following table presents the construction loan, secured by the related Property, that was entered into in 2016 (in thousands):
Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Stated
Interest
Rate
 
Maturity Date
 
Amount
Financed
or Extended
May
 
The Outlet Shoppes at Laredo (1)
 
Consolidated
 
LIBOR + 2.5%
(2) 
May 2019
(3) 
$
91,300

(1)
The consolidated 65/35 joint venture closed on a construction loan for the development of The Outlet Shoppes at Laredo, an outlet center located in Laredo, TX. The Operating Partnership has guaranteed 100% of the loan.
(2)
The interest rate will be reduced to LIBOR plus 2.25% once the development is complete and certain debt and operational metrics are met.
(3)
The loan has one 24-month extension option, which is at the joint venture's election, subject to continued compliance with the terms of the loan agreement, for an outside maturity date of May 2021.
2016 Loan Repayments
We repaid the following construction loans, secured by the related Properties, in 2016 (in thousands):
Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
Repaid
June
 
Fremaux Town Center - Phase I (1)
 
Unconsolidated
 
2.44%
 
August 2016
 
$
40,530

June
 
Fremaux Town Center - Phase II (1)
 
Unconsolidated
 
2.44%
 
August 2016
 
30,595


67


Date
 
Property
 
Consolidated/
Unconsolidated
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
Repaid
June
 
Ambassador Town Center (2)
 
Unconsolidated
 
2.24%
 
December 2017
 
41,885

December
 
The Outlet Shoppes at Atlanta -
Parcel Development (3)
 
Consolidated
 
3.02%
 
December 2019
 
2,124

(1)
The construction loan was retired using a portion of the net proceeds from a $73,000 fixed-rate non-recourse mortgage loan. See 2016 Financings above for more information.
(2)
The construction loan was retired using a portion of the net proceeds from a $47,660 fixed-rate non-recourse mortgage loan. Excess proceeds were utilized to fund remaining construction costs. See 2016 Financings above for more information.
(3)
In conjunction with its sale in December 2016, a portion of the net proceeds was used to retire the loan secured by the Property.
Other
The following is a summary of our 2017 dispositions for which the title to the consolidated mall securing the related fixed-rate debt was transferred to the lender in satisfaction of the non-recourse debt (in thousands):
Date
 
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Balance of Non-recourse Debt
 
Gain on Extinguishment of Debt
January
 
Midland Mall
 
6.10%
 
August 2016
 
$
31,953

 
$
3,760

June
 
Chesterfield Mall
 
5.74%
 
September 2016
 
140,000

 
29,187

August
 
Wausau Center
 
5.85%
 
April 2021
 
17,689

 
6,851

 
 
 
 
 
 
 
 
$
189,642

 
$
39,798

In conjunction with the divestiture of our interests in a consolidated joint venture, we were relieved of our funding obligation related to the loan secured by vacant land owned by the joint venture, which had a principal balance of $2.5 million upon the disposition of our interests in 2017. See Note 12 and Note 15 to the consolidated financial statements for more information.    
Unencumbered Consolidated Portfolio Statistics (dollars in thousands, except sales per square foot data)
Unencumbered consolidated Properties:
 
Sales Per Square
Foot for the Year
Ended (1) (2)
 
Occupancy (2)
 
% of
Consolidated
Unencumbered
NOI for
the Year Ended
12/31/17 (3)
 
12/31/17
 
12/31/16
 
12/31/17
 
12/31/16
 
Malls:
 
 
 
 
 
 
 
 
 
 
Tier 1 Malls
 
$
413

 
$
429

 
93.4
%
 
96.3
%
 
23.1
%
Tier 2 Malls
 
339

 
346

 
91.9
%
 
93.1
%
 
50.4
%
Tier 3 Malls
 
279

 
291

 
89.7
%
 
92.7
%
 
15.2
%
Total Malls
 
343

 
354

 
91.7
%
 
93.5
%
 
88.7
%
 
 
 
 
 
 
 
 
 
 
 
 
Other Properties:
 
 
 
 
 
 
 
 
 
 
 
Total Associated Centers
 
N/A

 
N/A

 
97.3
%
 
97.2
%
 
6.8
%
 
 
 
 
 
 
 
 
 
 
 
 
Total Community Centers
 
N/A

 
N/A

 
99.2
%
 
98.8
%
 
3.2
%
 
 
 
 
 
 
 
 
 
 
 
 
Total Office Buildings and Other
 
N/A

 
N/A

 
94.2
%
 
94.0
%
 
1.3
%
 
 
 
 
 
 
 
 
 
 
 
 
Total Unencumbered Consolidated Portfolio
 
$
343

 
$
354

 
92.9
%
 
94.2
%
 
100.0
%
(1)
Represents same-center sales per square foot for mall tenants 10,000 square feet or less for stabilized malls.
(2)
Operating metrics are included for unencumbered operating Properties and do not include sales or occupancy of unencumbered parcels.
(3)
Our consolidated unencumbered Properties generated approximately 59% of total consolidated NOI of $613,489 (which excludes NOI related to dispositions) for the year ended December 31, 2017.

68


Equity
At-The-Market Equity Program
We have not sold any shares under the ATM program since 2013. See Note 7 to the consolidated financial statements for a description of our ATM program.
Preferred Stock / Preferred Units
Our authorized preferred stock consists of 15,000,000 shares at $0.01 par value per share. The Operating Partnership issues an equivalent number of preferred units to CBL in exchange for the contribution of the proceeds from CBL to the Operating Partnership when CBL issues preferred stock. The preferred units generally have the same terms and economic characteristics as the corresponding series of preferred stock. See Note 7 to the consolidated financial statements for a description of our cumulative redeemable preferred stock.
Dividends - CBL 
CBL paid first, second and third quarter 2017 cash dividends on its common stock of $0.265 per share on April 17th, July 17th and October 16, 2017, respectively.  In order to maximize available cash flow for investing in our Properties and debt reduction, CBL's Board of Directors made the decision to reduce our common stock dividend in the fourth quarter of 2017 to an annualized rate of $0.80 per share. On November 2, 2017, CBL's Board of Directors declared a fourth quarter cash dividend of $0.200 per share that was paid on January 16, 2018, to shareholders of record as of December 29, 2017. Future dividends payable will be determined by CBL's Board of Directors based upon circumstances at the time of declaration.
During the year ended December 31, 2017, we paid dividends of $226.2 million to holders of our common stock and our preferred stock, as well as $62.0 million in distributions to the noncontrolling interest investors in our Operating Partnership and other consolidated subsidiaries.
Distributions - The Operating Partnership
The Operating Partnership paid first, second and third quarter 2017 cash distributions on its redeemable common units and common units of $0.7322 and $0.2692 per share, respectively, on April 17th, July 17th and October 16, 2017, respectively.  On November 2, 2017, the Operating Partnership declared a fourth quarter cash distribution on its redeemable common units and common units of $0.7322 and $0.2048 per share, respectively, that was paid on January 16, 2018. The distribution declared in the fourth quarter of 2017, totaling $7.4 million, is included in accounts payable and accrued liabilities at December 31, 2017.  The total dividend included in accounts payable and accrued liabilities at December 31, 2016 was $9.1 million.
As a publicly traded company and, as a subsidiary of a publicly traded company, we have access to capital through both the public equity and debt markets. We currently have a shelf registration statement on file with the SEC authorizing us to publicly issue senior and/or subordinated debt securities, shares of preferred stock (or depositary shares representing fractional interests therein), shares of common stock, warrants or rights to purchase any of the foregoing securities, and units consisting of two or more of these classes or series of securities and limited guarantees of debt securities issued by the Operating Partnership.  Pursuant to the shelf registration statement, the Operating Partnership is also authorized to publicly issue unsubordinated debt securities. There is no limit to the offering price or number of securities that we may issue under this shelf registration statement.
Our strategy is to maintain a conservative debt-to-total-market capitalization ratio in order to enhance our access to the broadest range of capital markets, both public and private. Based on our share of total consolidated and unconsolidated debt and the market value of equity, our debt-to-total-market capitalization (debt plus market value of equity) ratio was 73.1% at December 31, 2017, compared to 63.0% at December 31, 2016. The increase in the ratio was a result of the decline in our stock price to $5.66 at December 29, 2017 from $11.50 at December 30, 2016.

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Our debt-to-market capitalization ratio at December 31, 2017 was computed as follows (in thousands, except stock prices):
 
Shares
Outstanding
 
Stock Price (1)
 
Value
Common stock and operating partnership units
199,297

 
$
5.66

 
$
1,128,021

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
 

 
 

 
1,754,271

Our share of total debt, excluding unamortized deferred financing costs
 

 
 

 
4,764,431

Total market capitalization
 

 
 

 
$
6,518,702

Debt-to-total-market capitalization ratio
 

 
 

 
73.1
%
 
(1)
Stock price for common stock and Operating Partnership units equals the closing price of our common stock on December 29, 2017. The stock prices for the preferred stock represent the liquidation preference of each respective series of preferred stock.
Contractual Obligations 
The following table summarizes our significant contractual obligations as of December 31, 2017 (in thousands):
 
Payments Due By Period
 
Total
 
Less Than 1 Year
 
1-3
Years
 
3-5
Years
 
More Than 5 Years
Long-term debt:
 
 
 
 
 
 
 
 
 
Total consolidated debt service (1)
$
5,235,427

 
$
990,640

 
$
1,240,200

 
$
1,142,308

 
$
1,862,279

Noncontrolling interests' share in other consolidated subsidiaries
(105,466
)
 
(10,505
)
 
(10,861
)
 
(11,432
)
 
(72,668
)
Our share of unconsolidated affiliates debt service (2)
707,542

 
151,499

 
70,959

 
147,459

 
337,625

Our share of total debt service obligations
5,837,503

 
1,131,634

 
1,300,298

 
1,278,335

 
2,127,236

 
 
 
 
 
 
 
 
 
 
Operating leases: (3)
 

 
 

 
 

 
 

 
 

Ground leases on consolidated Properties
15,113

 
622

 
1,264

 
1,106

 
12,121

 
 
 
 
 
 
 
 
 
 
Purchase obligations: (4)
 

 
 

 
 

 
 

 
 

Construction contracts on consolidated Properties
14,497

 
14,497

 
—

 
—

 
—

Our share of construction contracts on unconsolidated Properties
4,166

 
4,166

 
—

 
—

 
—

Our share of total purchase obligations
18,663

 
18,663

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
Other Contractual Obligations: (5)
 
 
 
 
 
 
 
 
 
Master Services Agreements
121,466

 
32,391

 
64,782

 
24,293

 
—

 
 
 
 
 
 
 
 
 
 
Total contractual obligations
$
5,992,745

 
$
1,183,310

 
$
1,366,344

 
$
1,303,734

 
$
2,139,357

 
(1)
Represents principal and interest payments due under the terms of mortgage and other indebtedness, net and includes $1,152,275 of variable-rate debt service on five operating Properties, two unsecured credit facilities and three unsecured term loans. The credit facilities and term loans do not require scheduled principal payments. The future interest payments are projected based on the interest rates that were in effect at December 31, 2017. See Note 6 to the consolidated financial statements for additional information regarding the terms of long-term debt. The total consolidated debt service includes one loan, with a principal balance of $122,435 as of December 31, 2017, secured by Acadiana Mall, which is in receivership. We expect the foreclosure process to be complete in 2018. Subsequent to December 31, 2017, the loan secured by Kirkwood Mall, with a principal balance of $37,295, was retired. The loan was scheduled to mature in April 2018. See Note 6 and Note 19 to the consolidated financial statements for more information.
(2)
Includes $151,592 of variable-rate debt service. Future contractual obligations have been projected using the same assumptions as used in (1) above.
(3)
Obligations where we own the buildings and improvements, but lease the underlying land under long-term ground leases. The maturities of these leases range from 2019 to 2089 and generally provide for renewal options.
(4)
Represents the remaining balance to be incurred under construction contracts that had been entered into as of December 31, 2017, but were not complete. The contracts are primarily for development of Properties.    
(5)
Represents the remainder of a five year agreement for maintenance, security, and janitorial services at our Properties. We have the right to cancel the contract after October 1, 2019.

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Capital Expenditures 
Deferred maintenance expenditures are generally billed to tenants as CAM expense, and most are recovered over a 5 to 15-year period. Renovation expenditures are primarily for remodeling and upgrades of Malls, of which a portion is recovered from tenants over a 5 to 15-year period.  We recover these costs through fixed amounts with annual increases or pro rata cost reimbursements based on the tenant’s occupied space. The following table, which excludes expenditures for developments and expansions, summarizes these capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the year ended December 31, 2017 compared to 2016 (in thousands):
 
Year Ended
December 31,
 
2017
 
2016
Tenant allowances (1)
$
35,673

 
$
55,098

 
 
 
 
Renovations
13,080

 
11,942

 
 
 
 
Deferred maintenance:
 
 
 
Parking lot and parking lot lighting
13,057

 
17,168

Roof repairs and replacements
8,836

 
5,008

Other capital expenditures
22,597

 
16,837

  Total deferred maintenance
44,490

 
39,013

 
 
 
 
Capitalized overhead
6,745

 
5,116

 
 
 
 
Capitalized interest
2,230

 
2,302

 
 
 
 
  Total capital expenditures
$
102,218

 
$
113,471

(1)
Tenant allowances primarily relate to new leases. Tenant allowances related to renewal leases were not material for the periods presented.
We continue to make it a priority to reinvest in our Properties in order to enhance their dominant positions in their markets. Renovations usually include remodeling and upgrading existing facades, uniform signage, new entrances and floor coverings, updating interior décor, resurfacing parking lots and improving the lighting of interiors and parking lots. Renovations can result in attracting new retailers, increased rental rates, sales and occupancy levels and maintaining the Property's market dominance. Our total investment in 2017 renovations was $13.1 million, which included approximately $6.9 million at Asheville Mall in Asheville, NC and $4.1 million at East Towne Mall in Madison, WI as well as other eco-friendly green renovations. The total investment in the renovations that are scheduled for 2018 is projected to be $9.6 million, which includes floor renovations at Kirkwood Mall in Bismarck, ND, Asheville Mall in Asheville, NC and Southpark Mall in Colonial Heights, VA as well as other eco-friendly green renovations.
Annual capital expenditures budgets are prepared for each of our Properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, will provide the necessary funding for these expenditures.

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Developments, Redevelopments and Expansions 
Properties Opened During the Year Ended December 31, 2017
(Dollars in thousands)
 
 
 
 
 
 
 
 
CBL's Share of
 
 
 
 
Property
 
Location
 
CBL
Ownership
Interest
 
Total
Project
Square Feet
 
Total
Cost (1)
 
Cost to
Date (2)
 

Opening Date
 
Initial
Unleveraged
Yield
Outlet Center:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Outlet Shoppes at Laredo
 
Laredo, TX
 
65%
 
357,755

 
$
69,936

 
$
70,662

 
Apr-17
 
9.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mall Expansions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kirkwood Mall - Lucky 13 (Lucky's Pub)
 
Bismarck, ND
 
100%
 
6,500

 
3,200

 
3,205

 
Sep-17
 
7.6%
Mayfaire Town Center - Phase I
 
Wilmington, NC
 
100%
 
67,766

 
19,073

 
12,718

 
Feb-17
 
8.4%
 
 
 
 
 
 
74,266

 
22,273

 
15,923

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Properties Opened
 
 
 
 
 
432,021

 
$
92,209

 
$
86,585

 
 
 
 
(1)
Total Cost is presented net of reimbursements to be received.
(2)
Cost to Date does not reflect reimbursements until they are received.
Redevelopments Completed During the Year Ended December 31, 2017
(Dollars in thousands)
 
 
 
 
 
 
 
 
CBL's Share of
 
 
 
 
Property
 
Location
 
CBL
Ownership
Interest
 
Total Project
Square Feet
 
Total
Cost (1)
 
Cost to
Date (2)
 

Opening Date
 
Initial
Unleveraged
Yield
Mall Redevelopments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
College Square - Partial Belk Redevelopment (Planet Fitness) (3)
 
Morristown, TN
 
100%
 
20,000

 
$
1,549

 
$
1,434

 
Mar-17
 
9.9%
Dakota Square Mall - Partial Miracle Mart Redevelopment (T.J. Maxx)
 
Minot, ND
 
100%
 
20,755

 
1,929

 
1,586

 
May-17
 
12.3%
East Towne Mall - Lulu's 13 Pub
 
Madison, WI
 
100%
 
7,758

 
3,014

 
2,001

 
Oct-17
 
6.5%
Hickory Point Mall Redevelopment
(T.J. Maxx/Shops)
 
Forsyth, IL
 
100%
 
50,030

 
4,070

 
2,689

 
Sep-17
 
8.9%
Pearland Town Center - Sports Authority Redevelopment (Dick's Sporting Goods)
 
Pearland, TX
 
100%
 
48,582

 
7,069

 
6,325

 
Apr-17
 
12.2%
South County Center - DXL
 
St. Louis, MO
 
100%
 
6,792

 
1,266

 
1,137

 
Jun-17
 
21.1%
Stroud Mall - Beauty Academy
 
Stroudsburg, PA
 
100%
 
10,494

 
2,167

 
1,932

 
Jun-17
 
6.6%
Turtle Creek Mall - Ulta Beauty
 
Hattiesburg, MS
 
100%
 
20,782

 
3,050

 
1,763

 
Apr-17
 
6.7%
York Galleria - Partial JC Penney Redevelopment (Gold's Gym/Shops)
 
York, PA
 
100%
 
40,832

 
5,222

 
3,837

 
Jul-17
 
12.8%
York Galleria - Partial JC Penney Redevelopment (H&M/Shops)
 
York, PA
 
100%
 
42,672

 
5,582

 
4,363

 
Apr-17
 
7.8%
Total Redevelopment Completed
 
 
 
 
 
268,697

 
34,918

 
27,067

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Redevelopment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Landing at Arbor Place - Ollie's (4)
 
Atlanta (Douglasville), GA
 
100%
 
28,446

 
1,946

 
1,813

 
Aug-17
 
8.6%
Total Redevelopment Completed
 
 
 
 
 
297,143

 
$
36,864

 
$
28,880

 
 
 
 
(1)
Total Cost is presented net of reimbursements to be received.
(2)
Cost to Date does not reflect reimbursements until they are received.
(3)
This Property was sold in 2017.
(4)
This redevelopment is at an associated center.

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We completed several Anchor redevelopments during 2017, adding in a variety of non-traditional tenants, as we continue to reinvent our Properties into suburban town centers.
Properties under Development at December 31, 2017
(Dollars in thousands)
 
 
 
 
 
 
 
 
CBL's Share of
 
 
 
 
Property
 
Location
 
CBL
Ownership
Interest
 
Total
Project
Square Feet
 
Total
Cost (1)
 
Cost to
Date (2)
 
Expected
Opening Date
 
Initial
Unleveraged
Yield
Other Development:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Shoppes at Eagle Point (3)
 
Cookeville, TN
 
50%
 
233,715

 
$
22,565

 
$
10,167

 
Fall-18
 
8.2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mall Expansion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parkdale Mall - Restaurant Addition
 
Beaumont, TX
 
100%
 
4,700

 
1,315

 
1,143

 
Spring-18
 
10.4%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mall Redevelopments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Eastland Mall - JC Penney Redevelopment (H&M/Outback/Planet Fitness)
 
Bloomington, IL
 
100%
 
64,383

 
14,004

 
492

 
Summer-18
 
6.4%
East Towne Mall - Flix Brewhouse
 
Madison, WI
 
100%
 
40,795

 
9,999

 
5,882

 
Spring-18
 
8.4%
Friendly Center - O2 Fitness
 
Greensboro, NC
 
50%
 
27,048

 
2,285

 
116

 
Spring-18
 
10.3%
York Galleria - Partial JC Penney Redevelopment (Marshalls)
 
York, PA
 
100%
 
21,026

 
2,870

 
477

 
Winter-18
 
11.0%
 
 
 
 
 
 
153,252

 
29,158

 
6,967

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Properties Under Development
 
 
 
 
 
391,667

 
$
53,038

 
$
18,277

 
 
 
 
(1)
Total Cost is presented net of reimbursements to be received.
(2)
Cost to Date does not reflect reimbursements until they are received.
(3)
We will initially fund 100% of the required equity contribution. The remainder of the community center project will be funded through a construction loan with a total borrowing capacity of $36,400. See Note 5 to the consolidated financial statements for more information.
Shadow Development Pipeline at December 31, 2017
(Dollars in thousands)
Property
 
Location
 
CBL
Ownership
Interest
 
Total
Project
Square
Feet
 
CBL's Share of
Estimated Total
Cost  (1)
 
Expected
Opening Date
 
Initial
Unleveraged
Yield
Mall Redevelopments:
 
 
 
 
 
 
 
 
 
 
 
 
Northgate Mall - Sears Auto Center Redevelopment (Aubrey's/Panda Express)
 
Chattanooga, TN
 
100%
 
7,000 - 8,000
 
$1,600 - $2,000
 
Winter-18
 
7.0% - 8.0%
Volusia Mall - Sears Auto Center Redevelopment (Bonefish Grill/Casual Pint/Metro Diner)
 
Daytona Beach, FL
 
100%
 
22,000 - 25,000
 
9,000 - 11,000
 
Winter-18
 
7.0% - 8.0%
Total Shadow Pipeline
 
 
 
 
 
29,000 - 33,000
 
$10,600 - $13,000
 
 
 
 
We are continually pursuing new development opportunities and have projects in various stages of pre-development. Our shadow pipeline consists of projects for Properties on which we have completed initial project analysis and design but which have not commenced construction as of December 31, 2017. Except for the projects presented above, we did not have any other material capital commitments as of December 31, 2017. 

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New Developments
The Outlet Shoppes at Laredo opened in April 2017. See the table above for more information on this development.
In the third quarter of 2017, the 50/50 unconsolidated affiliate, Shoppes at Eagle Point, LLC, acquired land and construction began on a community center development, The Shoppes at Eagle Point, located in Cookeville, TN. Construction is expected to be complete in October 2018. Anchors will include Publix and Academy Sports.
In the fourth quarter of 2017, the Company entered into a 50/50 joint venture, EastGate Storage, LLC, to develop a self-storage facility adjacent to EastGate Mall.
See Note 5 to the consolidated financial statements for additional information on these unconsolidated affiliates.
Dispositions
We completed the disposition of interests in three malls (including one outlet center) and two office buildings in 2017 for an aggregate gross sales price of $189.8 million. After loan repayment, commissions and closing costs, the sales generated approximately $112.1 million of net proceeds which were primarily used to reduce outstanding balances on our lines of credit. We also returned three malls to their respective lenders in satisfaction of the non-recourse debt secured by each Property and recognized a gain on extinguishment of debt of approximately $39.8 million during 2017. See Note 4 and Note 6 to the consolidated financial statements for additional information on these dispositions.
Loss on Investment
In 2017, we recorded a loss on investment of $6.2 million related to the sale of our 25% interest in an unconsolidated affiliate, River Ridge Mall JV, LLC, to our joint venture partner for $9.0 million. See Note 5 to the consolidated financial statements for additional information.
Off-Balance Sheet Arrangements 
Unconsolidated Affiliates
We have ownership interests in 17 unconsolidated affiliates as of December 31, 2017, that are described in Note 5 to the consolidated financial statements. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the accompanying consolidated balance sheets as investments in unconsolidated affiliates.  
The following are circumstances when we may consider entering into a joint venture with a third party:
▪
Third parties may approach us with opportunities in which they have obtained land and performed some pre-development activities, but they may not have sufficient access to the capital resources or the development and leasing expertise to bring the project to fruition. We enter into such arrangements when we determine such a project is viable and we can achieve a satisfactory return on our investment. We typically earn development fees from the joint venture and provide management and leasing services to the property for a fee once the property is placed in operation.
▪
We determine that we may have the opportunity to capitalize on the value we have created in a Property by selling an interest in the Property to a third party. This provides us with an additional source of capital that can be used to develop or acquire additional real estate assets that we believe will provide greater potential for growth. When we retain an interest in an asset rather than selling a 100% interest, it is typically because this allows us to continue to manage the Property, which provides us the ability to earn fees for management, leasing, development and financing services provided to the joint venture.
 Guarantees 
We may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on our investment in the joint venture. We may receive a fee from the joint venture for providing the guaranty. Additionally, when we issue a guaranty, the terms of the joint venture agreement typically provide that we may receive indemnification from the joint venture partner or have the ability to increase our ownership interest.

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The following table represents the Operating Partnership's guarantees of unconsolidated affiliates' debt as reflected in the accompanying consolidated balance sheets as of December 31, 2017 and 2016 (in thousands):
 
 
As of December 31, 2017
 
Obligation recorded
to reflect guaranty
Unconsolidated Affiliate
 
Company's
Ownership
Interest
 
Outstanding
Balance
 
Percentage
Guaranteed
by the
Operating Partnership
 
Maximum
Guaranteed
Amount
 
Debt
Maturity
Date (1)
 
12/31/17
 
12/31/16
West Melbourne I, LLC - Phase I (2)
 
50%
 
$
42,247

 
20%
 
$
8,449

 
Feb-2018
(3) 
$
86

 
$
86

West Melbourne I, LLC - Phase II (2)
 
50%
 
16,317

 
20%
 
3,263

 
Feb-2018
(3) 
33

 
33

Port Orange I, LLC
 
50%
 
57,088

 
20%
 
11,418

 
Feb-2018
(3) 
116

 
116

Ambassador Infrastructure, LLC 
 
65%
 
11,035

 
100%
(4) 
11,035

 
Aug-2020
 
177

 
177

Shoppes at Eagle Point, LLC
 
50%
 
5,977

 
100%
(5) 
36,400

 
Oct-2020
(6) 
364

 
—

EastGate Storage, LLC
 
50%
 
—

 
100%
(7) 
6,500

 
Dec-2022
 
65

 
—

 
 
 
 
 
 
Total guaranty liability
 
$
841

 
$
412

(1)
Excludes any extension options.
(2)
The loan is secured by Hammock Landing - Phase I and Hammock Landing - Phase II, respectively.
(3)
The loan was extended subsequent to December 31, 2017. See Note 19 to the consolidated financial statements for more information.
(4)
In 2017, the loan was amended and modified to extend the maturity date as well as the terms of the guaranty. See Note 5 to the consolidated financial statements for more information.
(5)
We received a 1% fee for this guaranty when the loan was issued in October 2017. The guaranty will be reduced to 35% once construction is complete.
(6)
The loan has one two-year extension option, at the joint venture's election, for an outside maturity date of October 2022.
(7)
Once construction is complete, the guaranty will be reduced to 50%. The guaranty will be further reduced to 25% once certain debt and operational metrics are met.
We have guaranteed the lease performance of York Town Center, LP ("YTC"), an unconsolidated affiliate in which we own a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. We have guaranteed YTC’s performance under this agreement up to a maximum of $22.0 million, which decreases by $0.8 million annually until the guaranteed amount is reduced to $10.0 million. The guaranty expires on December 31, 2020.  The maximum guaranteed obligation was $13.2 million as of December 31, 2017.  We entered into an agreement with our joint venture partner under which the joint venture partner has agreed to reimburse us 50% of any amounts we are obligated to fund under the guaranty.  We did not include an obligation for this guaranty because we determined that the fair value of the guaranty was not material as of December 31, 2017 and 2016.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with GAAP.  In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures.  We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared.  On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP.  However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that are reasonably likely to occur could materially impact the financial statements.  Management believes that the following

75


critical accounting policies discussed in this section reflect its more significant estimates and assumptions used in preparation of the consolidated financial statements.  We have reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.  See Note 2 of the Notes to Consolidated Financial Statements, included in Item 8 of this Annual Report on Form 10-K for a discussion of our significant accounting policies.
Revenue Recognition
Minimum rental revenue from operating leases is recognized on a straight-line basis over the initial terms of the related leases. Certain tenants are required to pay percentage rent if their sales volumes exceed thresholds specified in their lease agreements. Percentage rent is recognized as revenue when the thresholds are achieved and the amounts become determinable.
We receive reimbursements from tenants for real estate taxes, insurance, CAM, and other recoverable operating expenses as provided in the lease agreements. Tenant reimbursements are recognized as revenue in the period the related operating expenses are incurred. Tenant reimbursements related to certain capital expenditures are billed to tenants over periods of 5 to 15 years and are recognized as revenue in accordance with underlying lease terms.
We receive management, leasing and development fees from third parties and unconsolidated affiliates. Management fees are charged as a percentage of revenues (as defined in the management agreement) and are recognized as revenue when earned. Development fees are recognized as revenue on a pro rata basis over the development period. Leasing fees are charged for newly executed leases and lease renewals and are recognized as revenue when earned. Development and leasing fees received from unconsolidated affiliates during the development period are recognized as revenue to the extent of the third-party partners’ ownership interest. Fees to the extent of our ownership interest are recorded as a reduction to our investment in the unconsolidated affiliate.
Gains on sales of real estate assets are recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, our receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. When we have an ownership interest in the buyer, gain is recognized to the extent of the third party partner’s ownership interest and the portion of the gain attributable to our ownership interest is deferred.
Real Estate Assets
We capitalize predevelopment project costs paid to third parties. All previously capitalized predevelopment costs are expensed when it is no longer probable that the project will be completed. Once development of a project commences, all direct costs incurred to construct the project, including interest and real estate taxes, are capitalized. Additionally, certain general and administrative expenses are allocated to the projects and capitalized based on the amount of time applicable personnel work on the development project. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements are capitalized and depreciated over their estimated useful lives.
All acquired real estate assets are accounted for using the acquisition method of accounting and accordingly, the results of operations are included in the consolidated statements of operations from the respective dates of acquisition. The purchase price is allocated to (i) tangible assets, consisting of land, buildings and improvements, as if vacant, and tenant improvements and (ii) identifiable intangible assets and liabilities generally consisting of above- and below-market leases and in-place leases. We use estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation methods to allocate the purchase price to the acquired tangible and intangible assets. Liabilities assumed generally consist of mortgage debt on the real estate assets acquired. Assumed debt with a stated interest rate that is significantly different from market interest rates is recorded at its fair value based on estimated market interest rates at the date of acquisition. Upon our adoption of Accounting Standards Update 2017-01, Clarifying the Definition of a Business, on a prospective basis in January 2017, we expect our future acquisitions will be accounted for as acquisitions of assets in which related transaction costs will be capitalized.
Depreciation is computed on a straight-line basis over estimated lives of 40 years for buildings, 10 to 20 years for certain improvements and 7 to 10 years for equipment and fixtures. Tenant improvements are capitalized and depreciated on a straight-line basis over the term of the related lease. Lease-related intangibles from acquisitions of real estate assets are amortized over the remaining terms of the related leases. The amortization of above- and below-market leases is recorded as an adjustment to minimum rental revenue, while the amortization of all other lease-related intangibles is recorded as amortization expense. Any difference between the face value of the debt assumed and its fair value is amortized to interest expense over the remaining term of the debt using the effective interest method.

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Carrying Value of Long-Lived Assets
We monitor events or changes in circumstances that could indicate the carrying value of a long-lived asset may not be recoverable.  When indicators of potential impairment are present that suggest that the carrying amounts of a long-lived asset may not be recoverable, we assess the recoverability of the asset by determining whether the asset’s carrying value will be recovered through the estimated undiscounted future cash flows expected from our probability weighted use of the asset and its eventual disposition. In the event that such undiscounted future cash flows do not exceed the carrying value, we adjust the carrying value of the long-lived asset to its estimated fair value and recognize an impairment loss.  The estimated fair value is calculated based on the following information, in order of preference, depending upon availability:  (Level 1) recently quoted market prices, (Level 2) market prices for comparable properties, or (Level 3) the present value of future cash flows, including estimated salvage value. Certain of our long-lived assets may be carried at more than an amount that could be realized in a current disposition transaction.  Projections of expected future operating cash flows require that we estimate future market rental income amounts subsequent to expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the Property, and the number of years the Property is held for investment, among other factors. As these assumptions are subject to economic and market uncertainties, they are difficult to predict and are subject to future events that may alter the assumptions used or management’s estimates of future possible outcomes. Therefore, the future cash flows estimated in our impairment analyses may not be achieved.
During the year ended December 31, 2017, we recorded a loss on impairment totaling $71.4 million, which primarily consists of $67.5 million attributable to two malls. During 2016, we recorded a loss on impairment totaling $116.8 million, which primarily consisted of $96.7 million related to 2016 Property dispositions, $15.4 million attributable to two malls that were in foreclosure and $3.8 million related to two office buildings. During 2015, we recorded a loss on impairment totaling $105.9 million. Of this total, $100.0 million related to a Non-Core mall, $2.6 million was attributable to one mall disposition, $1.9 million related to the disposition of an associated center and $1.4 million was from the sale of two outparcels and a building at a formerly owned mall. See Note 4, Note 15 and Note 19 to the consolidated financial statements for additional information about these impairment losses.
Allowance for Doubtful Accounts
We periodically perform a detailed review of amounts due from tenants and others to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances.  Our estimate of the allowance for doubtful accounts requires significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.  We recorded a provision for doubtful accounts of $3.8 million, $4.1 million and $2.3 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Investments in Unconsolidated Affiliates
We evaluate our joint venture arrangements to determine whether they should be recorded on a consolidated basis.  The percentage of ownership interest in the joint venture, an evaluation of control and whether a VIE exists are all considered in the consolidation assessment.
Initial investments in joint ventures that are in economic substance a capital contribution to the joint venture are recorded in an amount equal to our historical carryover basis in the real estate contributed. Initial investments in joint ventures that are in economic substance the sale of a portion of our interest in the real estate are accounted for as a contribution of real estate recorded in an amount equal to our historical carryover basis in the ownership percentage retained and as a sale of real estate with profit recognized to the extent of the other joint venturers’ interests in the joint venture. Profit recognition assumes that we have no commitment to reinvest with respect to the percentage of the real estate sold and the accounting requirements of the full accrual method are met.
We account for our investment in joint ventures where we own a non-controlling interest or where we are not the primary beneficiary of a VIE using the equity method of accounting. Under the equity method, our cost of investment is adjusted for our share of equity in the earnings of the unconsolidated affiliate and reduced by distributions received. Generally, distributions of cash flows from operations and capital events are first made to partners to pay cumulative unpaid preferences on unreturned capital balances and then to the partners in accordance with the terms of the joint venture agreements.
Any differences between the cost of our investment in an unconsolidated affiliate and our underlying equity as reflected in the unconsolidated affiliate’s financial statements generally result from costs of our investment that are not reflected on the unconsolidated affiliate’s financial statements, capitalized interest on our investment and our share of development and leasing fees that are paid by the unconsolidated affiliate to us for development and leasing

77


services provided to the unconsolidated affiliate during any development periods. The components of the net difference between our investment in unconsolidated affiliates and the underlying equity of unconsolidated affiliates is amortized over a period equal to the useful life of the unconsolidated affiliates' asset/liability that is related to the basis difference.
On a periodic basis, we assess whether there are any indicators that the fair value of our investments in unconsolidated affiliates may be impaired. An investment is impaired only if our estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment. Our estimates of fair value for each investment are based on a number of assumptions such as future leasing expectations, operating forecasts, discount rates and capitalization rates, among others.  These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the fair values estimated in the impairment analyses may not be realized.
No impairments of investments in unconsolidated affiliates were incurred during 2017, 2016 and 2015.
Recent Accounting Pronouncements
See Note 2 to the consolidated financial statements for information on recently issued accounting pronouncements.
Impact of Inflation and Deflation
Deflation can result in a decline in general price levels, often caused by a decrease in the supply of money or credit.  The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand.  Restricted lending practices could impact our ability to obtain financings or refinancings for our Properties and our tenants’ ability to obtain credit.  Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.
During inflationary periods, substantially all of our tenant leases contain provisions designed to mitigate the impact of inflation.  These provisions include clauses enabling us to receive percentage rent based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally 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 provide us the opportunity to replace existing leases with new leases at higher base and/or percentage rent if rents of the existing leases are below the then existing market rate.  Most of the leases require the tenants to pay a fixed amount subject to annual increases for their share of operating expenses, including CAM, real estate taxes, insurance and certain capital expenditures, which reduces our exposure to increases in costs and operating expenses resulting from inflation.
Non-GAAP Measure
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. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
We believe that FFO provides an additional indicator of the operating performance of our 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, we believe that FFO enhances investors’ understanding of our operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of our Properties and interest rates, but also by our capital structure.

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We present both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as we believe that both are useful performance measures.  We believe FFO allocable to Operating Partnership common unitholders is a useful performance measure 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 our Operating Partnership.  We believe FFO allocable to common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to common shareholders.
In our reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders that is presented below, we make an adjustment to add back noncontrolling interest in income of our Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders.  We then apply a percentage to FFO of our Operating Partnership common unitholders to arrive at FFO allocable to common shareholders.  The percentage is computed by taking the weighted-average number of common shares outstanding for the period and dividing it by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units held by noncontrolling interests during the period.
FFO does not represent cash flows from operations as defined by GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating our operating performance or to cash flow as a measure of liquidity.
The Company believes that it is important to identify the impact of certain significant items on its FFO measures for a reader to have a complete understanding of the Company’s results of operations. Therefore, the Company has also presented adjusted FFO measures excluding these significant items from the applicable periods. Please refer to the reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders below for a description of these adjustments.
FFO allocable to Operating Partnership common unitholders decreased 19.2% to $434.6 million for the year ended December 31, 2017 compared to $538.2 million for the prior year.  Excluding the adjustments noted below, FFO of the Operating Partnership, as adjusted, decreased 13.9% for the year ending December 31, 2017 to $413.7 million compared to $480.8 million in 2016. FFO was unfavorably impacted primarily by dilution from asset sales, lower gains on outparcel sales and declines in Property NOI.
The reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Net income attributable to common shareholders
$
76,048

 
$
127,990

 
$
58,479

Noncontrolling interest in income of Operating Partnership
12,652

 
21,537

 
10,171

Depreciation and amortization expense of:
 

 
 

 
 

Consolidated Properties
299,090

 
292,693

 
299,069

Unconsolidated affiliates
38,124

 
38,606

 
40,476

Non-real estate assets
(3,526
)
 
(3,154
)
 
(3,083
)
Noncontrolling interests' share of depreciation and amortization
(8,977
)
 
(8,760
)
 
(9,045
)
Loss on impairment, net of taxes
70,185

 
115,027

 
105,945

Gain on depreciable Property, net of taxes and noncontrolling
interests' share
(48,983
)
 
(45,741
)
 
(20,944
)
FFO allocable to Operating Partnership common unitholders
434,613

 
538,198

 
481,068

    Litigation expense (1)
103

 
2,567

 
(1,329
)
    Nonrecurring professional fees expense (reimbursement) (1)
(919
)
 
2,258

 
—

    (Gain) loss on investments, net of taxes (2)
6,197

 
(7,034
)
 
(16,560
)
    Equity in earnings from disposals of unconsolidated affiliates (3)
—

 
(58,243
)
 
—

    Non-cash default interest expense (4)
5,319

 
2,840

 
—

    Impact of new tax law on income tax expense
2,309

 
—

 
—


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Year Ended December 31,
 
2017
 
2016
 
2015
   (Gain) loss on extinguishment of debt, net of noncontrolling interests' share (5)
(33,902
)
 
197

 
(256
)
FFO allocable to Operating Partnership common unitholders, as adjusted
$
413,720

 
$
480,783

 
$
462,923

 
 
 
 
 
 
FFO per diluted share
$
2.18

 
$
2.69

 
$
2.41

 
 
 
 
 
 
FFO, as adjusted, per diluted share
$
2.08

 
$
2.41

 
$
2.32

(1)
Litigation expense and nonrecurring professional fees expense, including settlements paid, are included in general and administrative expense in the consolidated statements of operations. Nonrecurring professional fees reimbursement is included in interest and other income in the consolidated statements of operations.
(2)
The year ended December 31, 2017 includes a loss on investment related to the write down of our 25% interest in River Ridge Mall JV, LLC based on the contract price to sell such interest to our joint venture partner. The sale closed in August 2017. The year ended December 31, 2016, includes a gain of $10,136 related to the redemption of our 2007 investment in a Chinese real estate company, less related taxes of $500, partially offset by a $2,602 loss related to our exit from our consolidated joint venture that provided security and maintenance services to third parties. The year ended December 31, 2015, includes a $16,560 gain related to the sale of marketable securities. These amounts are included in gain on investments in the consolidated statements of operations.
(3)
The year ended December 31, 2016, includes $3,758 related to the sale of four office buildings, $28,146 related to the foreclosure of the loan secured by Gulf Coast Town Center and $26,373 related to the sale of our 50% interest in Triangle Town Center. These amounts are included in equity in earnings of unconsolidated affiliates in the consolidated statements of operations.
(4)
The year ended December 31, 2017 includes default interest expense related to Acadiana Mall, Chesterfield Mall, Midland Mall and Wausau Center. The year ended December 31, 2016 includes default interest expense related to Chesterfield Mall, Midland Mall and Wausau Center.
(5)
The year ended December 31, 2017 includes a gain on extinguishment of debt of $39,798 related to the non-recourse loans secured by Chesterfield Mall, Midland Mall and Wausau Center which were conveyed to their respective lenders in 2017. This gain was partially offset by a loss on extinguishment of debt from prepayment fees on the early retirement of mortgage loans, net of the noncontrolling interests' share.
The reconciliation of diluted EPS attributable to common shareholders to FFO per diluted share is as follows (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Diluted EPS attributable to common shareholders
$
0.44

 
$
0.75

 
$
0.34

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
1.64

 
1.60

 
1.64

  Loss on impairment, net of taxes
0.35

 
0.57

 
0.53

Gain on depreciable Property, net of taxes and noncontrolling interests' share
(0.25
)
 
(0.23
)
 
(0.10
)
FFO per diluted share
$
2.18

 
$
2.69

 
$
2.41


    

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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 (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
FFO of the Operating Partnership
$
434,613

 
$
538,198

 
$
481,068

Percentage allocable to common shareholders (1)
85.83
%
 
85.48
%
 
85.35
%
FFO allocable to common shareholders
$
373,028

 
$
460,052

 
$
410,592

 
 
 
 
 
 
FFO allocable to Operating Partnership common unitholders, as adjusted
$
413,720

 
$
480,783

 
$
462,923

Percentage allocable to common shareholders (1)
85.83
%
 
85.48
%
 
85.35
%
FFO allocable to common shareholders, as adjusted
$
355,096

 
$
410,973

 
$
395,105

 
(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 held by noncontrolling interests during the period.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risk exposures, including interest rate risk. The following discussion regarding our risk management activities includes forward-looking statements that involve risk and uncertainties.  Estimates of future performance and economic conditions are reflected assuming certain changes in interest rates.  Caution should be used in evaluating our overall market risk from the information presented below, as actual results may differ.  We employ various derivative programs to manage certain portions of our market risk associated with interest rates.  See Note 6 of the notes to consolidated financial statements for further discussions of the qualitative aspects of market risk, regarding derivative financial instrument activity.
Interest Rate Risk
Based on our proportionate share of consolidated and unconsolidated variable-rate debt at December 31, 2017, a 0.5% increase or decrease in interest rates on variable rate debt would decrease or increase annual cash flows by approximately $39.5 million and $28.0 million, respectively and increase or decrease annual interest expense, after the effect of capitalized interest, by approximately $5.6 million.
Based on our proportionate share of total consolidated and unconsolidated debt at December 31, 2017, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $68.1 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $83.5 million. 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
Reference is made to the Index to Financial Statements and Schedules contained in Item 15 on page 87. 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
None. 
ITEM 9A. CONTROLS AND PROCEDURES
Controls and Procedures with Respect to the Company
Conclusion Regarding Effectiveness of Disclosure Controls and Procedures
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, these officers concluded that the Company's disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Company in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and is accumulated and communicated to our management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. The Company assessed the effectiveness of its internal control over financial reporting, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and concluded that, as of December 31, 2017, the Company maintained effective internal control over financial reporting, as stated in its report which is included herein.
Report of Management on Internal Control over Financial Reporting
Management of CBL & Associates Properties, Inc. and its consolidated subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Management recognizes that there are inherent limitations in the effectiveness of internal control over financial reporting, including the potential for human error or the circumvention or overriding of internal controls.  Accordingly, even effective internal control over financial reporting cannot provide absolute assurance with respect to financial statement preparation.  Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.  In addition, any projection of the evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the polices or procedures may deteriorate.
Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and concluded that, as of December 31, 2017, the Company maintained effective internal control over financial reporting.
Deloitte & Touche LLP, the Company’s independent registered public accounting firm, has audited the Company's internal control over financial reporting as of December 31, 2017 as stated in their report which is included below.
Changes in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of CBL & Associates Properties, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of CBL & Associates Properties, Inc. and subsidiaries (the “Company”) as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017, of the Company and our report dated March 1, 2018, expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
March 1, 2018


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Controls and Procedures with Respect to the Operating Partnership
Conclusion Regarding Effectiveness of Disclosure Controls and Procedures
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, whose subsidiary CBL Holdings I is the sole general partner of the Operating Partnership, the Operating Partnership has evaluated the effectiveness of its disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, these officers concluded that the Operating Partnership's disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Operating Partnership in the reports that the Operating Partnership files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and is accumulated and communicated to management of the Company, acting on behalf of the Operating Partnership in its capacity as the general partner of the Operating Partnership, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
Management of the Company, acting on behalf of the Operating Partnership in its capacity as the general partner of the Operating Partnership, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. The Operating Partnership assessed the effectiveness of its internal control over financial reporting, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and concluded that, as of December 31, 2016, the Operating Partnership maintained effective internal control over financial reporting, as stated in its report which is included herein.
Report of Management on Internal Control over Financial Reporting
Management of CBL & Associates Limited Partnership and its consolidated subsidiaries (the “Operating Partnership”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Operating Partnership’s internal control over financial reporting is a process designed under the supervision of the Operating Partnership’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Management recognizes that there are inherent limitations in the effectiveness of internal control over financial reporting, including the potential for human error or the circumvention or overriding of internal controls.  Accordingly, even effective internal control over financial reporting cannot provide absolute assurance with respect to financial statement preparation.  Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.  In addition, any projection of the evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the polices or procedures may deteriorate.
The Company's management, whose subsidiary CBL Holdings I is the sole general partner of the Operating Partnership, conducted an assessment of the effectiveness of the Operating Partnership’s internal control over financial reporting based on the framework established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and concluded that, as of December 31, 2017, the Operating Partnership maintained effective internal control over financial reporting.
Deloitte & Touche LLP, the Company’s independent registered public accounting firm, has audited the Operating Partnership's internal control over financial reporting as of December 31, 2017 as stated in their report which is included below.
Changes in Internal Control over Financial Reporting
There were no changes in the Operating Partnership's internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Operating Partnership's internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Unit Holders of CBL & Associates Limited Partnership
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of CBL & Associates Limited Partnership and subsidiaries (the “Partnership”) as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017, of the Partnership and our report dated March 1, 2018, expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A partnership’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A partnership’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the partnership; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the partnership are being made only in accordance with authorizations of management and directors of the partnership; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the partnership’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
March 1, 2018

85


ITEM 9B. OTHER INFORMATION
None.
PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 
Incorporated herein by reference to the sections entitled “ELECTION OF DIRECTORS,” “Board Nominees," "Additional Executive Officers,” “Corporate Governance Matters - Code of Business Conduct and Ethics,” “Board of Directors’ Meetings and Committees – The Audit Committee,” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement filed with the SEC with respect to our Annual Meeting of Stockholders to be held on May 14, 2018. 
Our Board of Directors has determined that each of A. Larry Chapman, an independent director and chairman of the audit committee, and Matthew S. Dominski and Richard J. Lieb, each, an independent director and member of the audit committee, qualifies as an “audit committee financial expert” as such term is defined by the rules of the Commission. 
ITEM 11. EXECUTIVE COMPENSATION 
Incorporated herein by reference to the sections entitled “DIRECTOR COMPENSATION,” “EXECUTIVE COMPENSATION,” “REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS” and “Compensation Committee Interlocks and Insider Participation” in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 14, 2018. 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 
Incorporated herein by reference to the sections entitled “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” and “Equity Compensation Plan Information as of December 31, 2017”, in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 14, 2018. 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 
Incorporated herein by reference to the sections entitled “Corporate Governance Matters – Director Independence” and “CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS”, in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 14, 2018. 
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Incorporated herein by reference to the section entitled “Independent Registered Public Accountants’ Fees and Services” under “RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS” in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 14, 2018.

86


PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(1)
Consolidated Financial Statements
Page Number
CBL & Associates Properties, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CBL & Associates Limited Partnership
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
 
 
 
 
 
(2)
Consolidated Financial Statement Schedules
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial statement schedules not listed herein are either not required or are not present in amounts sufficient to require submission of the schedule or the information required to be included therein is included in our consolidated financial statements in Item 15 or are reported elsewhere.
 
 
 
 
(3)
Exhibits
 
 
The Exhibit Index attached to this report is incorporated by reference into this Item 15(a)(3).
 

87


INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
 
 
Page
Number
CBL & Associates Properties, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CBL & Associates Limited Partnership
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
 
 
 
 
 
 
 
 
 

Financial statement schedules not listed herein are either not required or are not present in amounts sufficient to require submission of the schedule or the information required to be included therein is included in our consolidated financial statements in Item 15 or are reported elsewhere.
ITEM 16. FORM 10-K SUMMARY
None.

88


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of CBL & Associates Properties, Inc.

Opinion on the Financial Statements
 We have audited the accompanying consolidated balance sheets of CBL & Associates Properties, Inc. and subsidiaries (the "Company") as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America. 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2018, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP
Atlanta, Georgia
March 1, 2018

We have served as the Company's auditor since 2002.


89


CBL & Associates Properties, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
 
December 31,
ASSETS (1)
2017
 
2016
Real estate assets:
 
 
 
Land
$
813,390

 
$
820,979

Buildings and improvements
6,723,194

 
6,942,452

 
7,536,584

 
7,763,431

Accumulated depreciation
(2,465,095
)
 
(2,427,108
)
 
5,071,489

 
5,336,323

Held for sale
—

 
5,861

Developments in progress
85,346

 
178,355

Net investment in real estate assets
5,156,835

 
5,520,539

Cash and cash equivalents
32,627

 
18,951

Receivables:
 

 
 

Tenant, net of allowance for doubtful accounts of $2,011
and $1,910 in 2017 and 2016, respectively
83,552

 
94,676

Other, net of allowance for doubtful accounts of $838
in 2017 and 2016
7,570

 
6,227

Mortgage and other notes receivable
8,945

 
16,803

Investments in unconsolidated affiliates
249,192

 
266,872

Intangible lease assets and other assets
166,087

 
180,572

 
$
5,704,808

 
$
6,104,640

 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 

 
 

Mortgage and other indebtedness, net
$
4,230,845

 
$
4,465,294

Accounts payable and accrued liabilities
228,650

 
280,498

Total liabilities (1)
4,459,495

 
4,745,792

Commitments and contingencies (Note 6 and Note 14)


 


Redeemable noncontrolling interests
8,835

 
17,996

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, 171,088,778 and 170,792,645 issued and
outstanding in 2017 and 2016, respectively
1,711

 
1,708

Additional paid-in capital
1,974,537

 
1,969,059

Dividends in excess of cumulative earnings
(836,269
)
 
(742,078
)
Total shareholders' equity
1,140,004

 
1,228,714

Noncontrolling interests
96,474

 
112,138

Total equity
1,236,478

 
1,340,852

 
$
5,704,808

 
$
6,104,640

(1)
As of December 31, 2017, includes $651,272 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $356,442 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 8.

The accompanying notes are an integral part of these consolidated statements.

90


CBL & Associates Properties, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
 
Year Ended December 31,
 
2017
 
2016
 
2015
REVENUES:
 
 
 
 
 
Minimum rents
$
624,161

 
$
670,565

 
$
684,309

Percentage rents
11,874

 
17,803

 
18,063

Other rents
19,008

 
23,110

 
21,934

Tenant reimbursements
254,552

 
280,438

 
288,279

Management, development and leasing fees
11,982

 
14,925

 
10,953

Other
5,675

 
21,416

 
31,480

Total revenues
927,252

 
1,028,257

 
1,055,018

 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 

Property operating
128,030

 
137,760

 
141,030

Depreciation and amortization
299,090

 
292,693

 
299,069

Real estate taxes
83,917

 
90,110

 
90,799

Maintenance and repairs
48,606

 
53,586

 
51,516

General and administrative
58,466

 
63,332

 
62,118

Loss on impairment
71,401

 
116,822

 
105,945

Other
5,180

 
20,326

 
26,957

Total operating expenses
694,690

 
774,629

 
777,434

Income from operations
232,562

 
253,628

 
277,584

Interest and other income
1,706

 
1,524

 
6,467

Interest expense
(218,680
)
 
(216,318
)
 
(229,343
)
Gain on extinguishment of debt
30,927

 
—

 
256

Gain (loss) on investments
(6,197
)
 
7,534

 
16,560

Income tax benefit (provision)
1,933

 
2,063

 
(2,941
)
Equity in earnings of unconsolidated affiliates
22,939

 
117,533

 
18,200

Income from continuing operations before gain on sales of real estate assets
65,190

 
165,964

 
86,783

Gain on sales of real estate assets
93,792

 
29,567

 
32,232

Net income
158,982

 
195,531

 
119,015

Net income attributable to noncontrolling interests in:
 

 
 

 
 

Operating Partnership
(12,652
)
 
(21,537
)
 
(10,171
)
Other consolidated subsidiaries
(25,390
)
 
(1,112
)
 
(5,473
)
Net income attributable to the Company
120,940

 
172,882

 
103,371

Preferred dividends
(44,892
)
 
(44,892
)
 
(44,892
)
Net income attributable to common shareholders
$
76,048

 
$
127,990

 
$
58,479

 
 
 
 
 
 
Basic per share data attributable to common shareholders:
 

 
 

 


Income from continuing operations, net of preferred dividends
$
0.44

 
$
0.75

 
$
0.34

Weighted-average common shares outstanding
171,070

 
170,762

 
170,476

 
 
 
 
 
 
Diluted per share data attributable to common shareholders:
 

 
 

 
 

Income from continuing operations, net of preferred dividends
$
0.44

 
$
0.75

 
$
0.34

Weighted-average common and potential dilutive common shares outstanding
171,070

 
170,836

 
170,499

The accompanying notes are an integral part of these consolidated statements.

91


CBL & Associates Properties, Inc.
 Consolidated Statements of Comprehensive Income
(In thousands)
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
Net income
$
158,982

 
$
195,531

 
$
119,015

 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
   Unrealized holding gain on available-for-sale securities
—

 
—

 
242

Reclassification to net income of realized gain on available-for-sale securities
—

 
—

 
(16,560
)
   Unrealized gain on hedging instruments
—

 
877

 
4,111

   Reclassification of hedging effect on earnings
—

 
(443
)
 
(2,196
)
Total other comprehensive income (loss)
—

 
434

 
(14,403
)
 
 
 
 
 
 
Comprehensive income
158,982

 
195,965

 
104,612

  Comprehensive income attributable to noncontrolling interests in:
 
 
 
 
 
     Operating Partnership
(12,652
)
 
(21,600
)
 
(7,244
)
     Other consolidated subsidiaries
(25,390
)
 
(1,112
)
 
(5,473
)
Comprehensive income attributable to the Company
$
120,940

 
$
173,253

 
$
91,895


The accompanying notes are an integral part of these consolidated statements.


92


CBL & Associates Properties, Inc.
Consolidated Statements of Equity
(in thousands, except share data)


 
 
 
Equity
 
 
 
Shareholders' Equity
 
 
 
 
 
Redeemable Noncontrolling
Interests
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive Income
 
Dividends in Excess of Cumulative Earnings
 
Total Shareholders' Equity
 
Noncontrolling Interests
 
Total Equity
Balance, December 31, 2014
$
37,559

 
$
25

 
$
1,703

 
$
1,958,198

 
$
13,411

 
$
(566,785
)
 
$
1,406,552

 
$
143,376

 
$
1,549,928

Net income
3,902

 
—

 
—

 
—

 
—

 
103,371

 
103,371

 
11,742

 
115,113

Other comprehensive loss
(352
)
 
—

 
—

 
—

 
(11,476
)
 
—

 
(11,476
)
 
(2,575
)
 
(14,051
)
Purchase of noncontrolling interests in Operating Partnership
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(286
)
 
(286
)
Dividends declared - common stock
—

 
—

 
—

 
—

 
—

 
(180,722
)
 
(180,722
)
 
—

 
(180,722
)
Dividends declared - preferred stock
—

 
—

 
—

 
—

 
—

 
(44,892
)
 
(44,892
)
 
—

 
(44,892
)
Issuance of 278,093 shares of common stock and restricted common stock
—

 
—

 
3

 
676

 
—

 
—

 
679

 
—

 
679

Cancellation of 47,418 shares of restricted common stock
—

 
—

 
(1
)
 
(769
)
 
—

 
—

 
(770
)
 
—

 
(770
)
Performance stock units
—

 
—

 
—

 
624

 
—

 
—

 
624

 
—

 
624

Amortization of deferred compensation
—

 
—

 
—

 
4,152

 
—

 
—

 
4,152

 
—

 
4,152

Adjustment for noncontrolling interests
2,981

 
—

 
—

 
(2,773
)
 
—

 
—

 
(2,773
)
 
(207
)
 
(2,980
)
Adjustment to record redeemable noncontrolling interests at redemption value
(11,617
)
 
—

 
—

 
10,225

 
—

 
—

 
10,225

 
1,392

 
11,617

Distributions to noncontrolling interests
(7,143
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(40,534
)
 
(40,534
)
Contributions from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
1,721

 
1,721

Balance, December 31, 2015
$
25,330

 
$
25

 
$
1,705

 
$
1,970,333

 
$
1,935

 
$
(689,028
)
 
$
1,284,970

 
$
114,629

 
$
1,399,599

Net income (loss)
(1,603
)
 
—

 
—

 
—

 
—

 
172,882

 
172,882

 
24,252

 
197,134

Other comprehensive income
3

 
—

 
—

 
—

 
371

 
—

 
371

 
60

 
431

Purchase of noncontrolling interests in Operating Partnership
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(11,754
)
 
(11,754
)
Redemption of redeemable noncontrolling interest
(3,206
)
 
—

 
—

 
9,636

 
—

 
—

 
9,636

 
—

 
9,636

Dividends declared - common stock
—

 
—

 
—

 
—

 
—

 
(181,040
)
 
(181,040
)
 
—

 
(181,040
)
Dividends declared - preferred stock
—

 
—

 
—

 
—

 
—

 
(44,892
)
 
(44,892
)
 
—

 
(44,892
)
Issuance of 335,417 shares of common stock and restricted common stock
—

 
—

 
3

 
478

 
—

 
—

 
481

 
—

 
481

Cancellation of 33,720 shares of restricted common stock
—

 
—

 
—

 
(267
)
 
—

 
—

 
(267
)
 
—

 
(267
)
Performance stock units
—

 
—

 
—

 
1,033

 
—

 
—

 
1,033

 
—

 
1,033

Amortization of deferred compensation
—

 
—

 
—

 
3,680

 
—

 
—

 
3,680

 
—

 
3,680

Adjustment for noncontrolling interests
2,454

 
—

 
—

 
(13,773
)
 
(2,306
)
 
—

 
(16,079
)
 
13,625

 
(2,454
)
Adjustment to record redeemable noncontrolling interests at redemption value
1,937

 
—

 
—

 
(2,061
)
 
—

 
—

 
(2,061
)
 
124

 
(1,937
)
Distributions to noncontrolling interests
(6,919
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(40,039
)
 
(40,039
)
Contributions from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
11,241

 
11,241

Balance, December 31, 2016
$
17,996

 
$
25

 
$
1,708

 
$
1,969,059

 
$
—

 
$
(742,078
)
 
$
1,228,714

 
$
112,138

 
$
1,340,852



93


CBL & Associates Properties, Inc.
Consolidated Statements of Equity
(Continued)
(in thousands, except share data)


 
 
 
Equity
 
 
 
Shareholders' Equity
 
 
 
 
 
Redeemable Noncontrolling
Interests
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Dividends in Excess of Cumulative Earnings
 
Total Shareholders' Equity
 
Noncontrolling Interests
 
Total Equity
Balance, December 31, 2016
$
17,996

 
$
25

 
$
1,708

 
$
1,969,059

 
$
(742,078
)
 
$
1,228,714

 
$
112,138

 
$
1,340,852

Net income
699

 
—

 
—

 
—

 
120,940

 
120,940

 
37,343

 
158,283

Purchase of noncontrolling interests in Operating Partnership
—

 
—

 
—

 
—

 
—

 
—

 
(656
)
 
(656
)
Dividends declared - common stock
—

 
—

 
—

 
—

 
(170,239
)
 
(170,239
)
 
—

 
(170,239
)
Dividends declared - preferred stock
—

 
—

 
—

 
—

 
(44,892
)
 
(44,892
)
 
—

 
(44,892
)
Issuance of 348,809 shares of common stock and restricted common stock
—

 
—

 
3

 
526

 
—

 
529

 
—

 
529

Cancellation of 52,676 shares of restricted common stock
—

 
—

 
—

 
(405
)
 
—

 
(405
)
 
—

 
(405
)
Performance stock units
—

 
—

 
—

 
1,501

 
—

 
1,501

 
—

 
1,501

Amortization of deferred compensation
—

 
—

 
—

 
3,982

 
—

 
3,982

 
—

 
3,982

Adjustment for noncontrolling interests
3,049

 
—

 
—

 
(7,339
)
 
—

 
(7,339
)
 
4,290

 
(3,049
)
Adjustment to record redeemable noncontrolling interests at redemption value
(8,337
)
 
—

 
—

 
7,213

 
—

 
7,213

 
1,124

 
8,337

Deconsolidation of investment
—

 
—

 
—

 
—

 
—

 
—

 
(2,232
)
 
(2,232
)
Distributions to noncontrolling interests
(4,572
)
 
—

 
—

 
—

 
—

 
—

 
(55,796
)
 
(55,796
)
Contributions from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
263

 
263

Balance, December 31, 2017
$
8,835

 
$
25

 
$
1,711

 
$
1,974,537

 
$
(836,269
)
 
$
1,140,004

 
$
96,474

 
$
1,236,478


The accompanying notes are an integral part of these consolidated statements.


94


CBL & Associates Properties, Inc.
Consolidated Statements of Cash Flows
(In thousands)
 
Year Ended December 31,
 
2017

2016

2015
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
Net income
$
158,982

 
$
195,531

 
$
119,015

 
 
 
 
 
 
Adjustments to reconcile net income to net cash provided by
    operating activities:
 
 
 
 
 
Depreciation and amortization
299,090

 
292,693

 
299,069

Net amortization of deferred financing costs, debt premiums and discounts
4,953

 
2,952

 
4,948

Net amortization of intangible lease assets and liabilities
(1,788
)
 
113

 
(1,487
)
Gain on sales of real estate assets
(93,792
)
 
(29,567
)
 
(32,232
)
Write-off of development projects
5,180

 
56

 
2,373

Share-based compensation expense
5,792

 
5,027

 
5,218

(Gain) loss on investments
6,197

 
(7,534
)
 
(16,560
)
Loss on impairment
71,401

 
116,822

 
105,945

Gain on extinguishment of debt
(30,927
)
 
—

 
(256
)
Equity in earnings of unconsolidated affiliates
(22,939
)
 
(117,533
)
 
(18,200
)
Distributions of earnings from unconsolidated affiliates
22,373

 
16,603

 
21,095

Provision for doubtful accounts
3,782

 
4,058

 
2,254

Change in deferred tax accounts
4,526

 
(907
)
 
(153
)
Changes in:
 
 
 
 
 
Tenant and other receivables
(3,941
)
 
(7,979
)
 
(5,455
)
Other assets
(6,660
)
 
(4,386
)
 
1,803

Accounts payable and accrued liabilities
8,168

 
2,630

 
7,638

Net cash provided by operating activities
430,397

 
468,579

 
495,015

 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
Additions to real estate assets
(203,127
)
 
(248,004
)
 
(218,891
)
Acquisitions of real estate assets
(79,799
)
 
—

 
(191,988
)
Proceeds from sales of real estate assets
210,346

 
189,489

 
132,231

Net proceeds from disposal of investments
9,000

 
10,299

 
—

Additions to mortgage and other notes receivable
(4,118
)
 
(3,259
)
 
(3,096
)
Payments received on mortgage and other notes receivable
9,659

 
1,069

 
1,610

Proceeds from sale of available-for-sale securities
—

 
—

 
20,755

Additional investments in and advances to unconsolidated affiliates
(19,347
)
 
(28,510
)
 
(15,200
)
Distributions in excess of equity in earnings of unconsolidated affiliates
18,192

 
95,958

 
20,807

Changes in other assets
(16,618
)
 
(7,054
)
 
(11,534
)
Net cash provided by (used in) investing activities
(75,812
)
 
9,988

 
(265,306
)


95




CBL & Associates Properties, Inc.
Consolidated Statements of Cash Flows
(Continued)
(In thousands)
 
Year Ended December 31,
 
2017
 
2016
 
2015
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
Proceeds from mortgage and other indebtedness
$
1,216,132

 
$
1,174,409

 
$
1,358,296

Principal payments on mortgage and other indebtedness
(1,264,076
)
 
(1,377,739
)
 
(1,315,094
)
Additions to deferred financing costs
(5,905
)
 
(8,345
)
 
(6,796
)
Prepayment fees on extinguishment of debt
(8,871
)
 
—

 
—

Proceeds from issuances of common stock
204

 
179

 
188

Purchases of noncontrolling interests in the Operating Partnership
(656
)
 
(11,754
)
 
(286
)
Contributions from noncontrolling interests
263

 
11,241

 
682

Payment of tax withholdings for restricted stock awards
(390
)
 
—

 
—

Distributions to noncontrolling interests
(62,010
)
 
(47,213
)
 
(47,682
)
Dividends paid to holders of preferred stock
(44,892
)
 
(44,892
)
 
(44,892
)
Dividends paid to common shareholders
(181,281
)
 
(180,960
)
 
(180,662
)
Net cash used in financing activities
(351,482
)
 
(485,074
)
 
(236,246
)
 
 
 
 
 
 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
3,103

 
(6,507
)
 
(6,537
)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
65,069

 
71,576

 
78,113

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
68,172

 
$
65,069

 
$
71,576

 
 
 
 
 
 
Reconciliation from consolidated statements of cash flows to consolidated balance sheets:
Cash and cash equivalents
$
32,627

 
$
18,951

 
$
36,892

Restricted cash (1):
 
 
 
 
 
Restricted cash
920

 
4,123

 
77

Mortgage escrows
34,625

 
41,995

 
34,607

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
68,172

 
$
65,069

 
$
71,576

(1) Included in intangible lease assets and other assets in consolidated balance sheets



The accompanying notes are an integral part of these consolidated statements.

96



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Unit Holders of CBL & Associates Limited Partnership
We have audited the accompanying consolidated balance sheets of CBL & Associates Limited Partnership and subsidiaries (the "Partnership") as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, capital, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America. 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2018, expressed an unqualified opinion on the Partnership's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 /s/ Deloitte & Touche LLP
Atlanta, Georgia
March 1, 2018

We have served as the Partnership's auditor since 2013.


97


CBL & Associates Limited Partnership
Consolidated Balance Sheets
(In thousands)
 
December 31,
ASSETS (1)
2017
 
2016
Real estate assets:
 
 
 
Land
$
813,390

 
$
820,979

Buildings and improvements
6,723,194

 
6,942,452

 
7,536,584

 
7,763,431

Accumulated depreciation
(2,465,095
)
 
(2,427,108
)
 
5,071,489

 
5,336,323

Held for sale
—

 
5,861

Developments in progress
85,346

 
178,355

Net investment in real estate assets
5,156,835

 
5,520,539

Cash and cash equivalents
32,627

 
18,943

Receivables:
 

 
 

Tenant, net of allowance for doubtful accounts of $2,011 
and $1,910 in 2017 and 2016, respectively
83,552

 
94,676

Other, net of allowance for doubtful accounts of $838
     in 2017 and 2016
7,520

 
6,179

Mortgage and other notes receivable
8,945

 
16,803

Investments in unconsolidated affiliates
249,722

 
267,405

Intangible lease assets and other assets
165,967

 
180,452

 
$
5,705,168

 
$
6,104,997

 
 
 
 
 
 
 
 
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
 

 
 

Mortgage and other indebtedness, net
$
4,230,845

 
$
4,465,294

Accounts payable and accrued liabilities
228,720

 
280,528

Total liabilities (1)
4,459,565

 
4,745,822

Commitments and contingencies (Note 6 and Note 14)


 


Redeemable common units  
8,835

 
17,996

Partners' capital:
 

 
 

Preferred units
565,212

 
565,212

Common units:
 
 


 General partner
6,735

 
7,781

 Limited partners
655,120

 
756,083

Total partners' capital
1,227,067

 
1,329,076

Noncontrolling interests
9,701

 
12,103

Total capital
1,236,768

 
1,341,179

 
$
5,705,168

 
$
6,104,997

(1)
As of December 31, 2017, includes $651,272 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $356,442 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Operating Partnership. See Note 8.

The accompanying notes are an integral part of these consolidated statements.

98


CBL & Associates Limited Partnership
Consolidated Statements of Operations
(In thousands, except per unit data)
 
Year Ended December 31,
 
2017
 
2016
 
2015
REVENUES:
 
 
 
 
 
Minimum rents
$
624,161

 
$
670,565

 
$
684,309

Percentage rents
11,874

 
17,803

 
18,063

Other rents
19,008

 
23,110

 
21,934

Tenant reimbursements
254,552

 
280,438

 
288,279

Management, development and leasing fees
11,982

 
14,925

 
10,953

Other
5,675

 
21,416

 
31,480

Total revenues
927,252

 
1,028,257

 
1,055,018

 


 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 

Property operating
128,030

 
137,760

 
141,030

Depreciation and amortization
299,090

 
292,693

 
299,069

Real estate taxes
83,917

 
90,110

 
90,799

Maintenance and repairs
48,606

 
53,586

 
51,516

General and administrative
58,466

 
63,332

 
62,118

Loss on impairment
71,401

 
116,822

 
105,945

Other
5,180

 
20,326

 
26,957

Total operating expenses
694,690

 
774,629

 
777,434

Income from operations
232,562

 
253,628

 
277,584

Interest and other income
1,706

 
1,524

 
6,467

Interest expense
(218,680
)
 
(216,318
)
 
(229,343
)
Gain on extinguishment of debt
30,927

 
—

 
256

Gain (loss) on investments
(6,197
)
 
7,534

 
16,560

Income tax benefit (provision)
1,933

 
2,063

 
(2,941
)
Equity in earnings of unconsolidated affiliates
22,939

 
117,533

 
18,200

Income from continuing operations before gain on sales of real estate assets
65,190

 
165,964

 
86,783

Gain on sales of real estate assets
93,792

 
29,567

 
32,232

Net income
158,982

 
195,531

 
119,015

Net income attributable to noncontrolling interests
(25,390
)
 
(1,112
)
 
(5,473
)
Net income attributable to the Operating Partnership
133,592

 
194,419

 
113,542

Distributions to preferred unitholders
(44,892
)
 
(44,892
)
 
(44,892
)
Net income attributable to common unitholders
$
88,700

 
$
149,527

 
$
68,650

 
 
 
 
 
 
Basic per unit data attributable to common unitholders:
 

 
 

 
 

Income from continuing operations, net of preferred distributions
$
0.45

 
$
0.75

 
$
0.34

Weighted-average common units outstanding
199,322

 
199,764

 
199,734

 
 
 
 
 
 
Diluted per unit data attributable to common unitholders:
 

 
 

 
 

Income from continuing operations, net of preferred distributions
$
0.45

 
$
0.75

 
$
0.34

Weighted-average common and potential dilutive common units outstanding
199,322

 
199,838

 
199,757

The accompanying notes are an integral part of these consolidated statements.

99


CBL & Associates Limited Partnership
 Consolidated Statements of Comprehensive Income
(In thousands)
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
Net income
$
158,982

 
$
195,531

 
$
119,015

 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
Unrealized holding gain on available-for-sale securities
—

 
—

 
242

Reclassification to net income of realized gain on available-for-sale securities
—

 
—

 
(16,560
)
Unrealized gain on hedging instruments
—

 
877

 
4,111

Reclassification of hedging effect on earnings
—

 
(443
)
 
(2,196
)
Total other comprehensive income (loss)
—

 
434

 
(14,403
)
 
 
 
 
 
 
Comprehensive income
158,982

 
195,965

 
104,612

Comprehensive income attributable to noncontrolling interests
(25,390
)
 
(1,112
)
 
(5,473
)
Comprehensive income attributable to the Operating Partnership
$
133,592

 
$
194,853

 
$
99,139


The accompanying notes are an integral part of these consolidated statements.


100


CBL & Associates Limited Partnership
Consolidated Statements of Capital
(in thousands)

 
Redeemable Interests
 
Number of
 
 
 
Common Units
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests
 
Redeemable Common Units
 
Total Redeemable Interests
 
Preferred
Units
 
Common
Units
 
Preferred
Units
 
General
Partner
 
Limited
Partners
 
Accumulated
Other
Comprehensive Income (Loss)
 
Total Partner's Capital
 
Noncontrolling Interests
 
Total Capital
Balance, December 31, 2014
$
6,455

 
$
31,104

 
$
37,559

 
25,050

 
199,532

 
$
565,212

 
$
9,789

 
$
953,349

 
$
13,183

 
$
1,541,533

 
$
8,908

 
$
1,550,441

Net income
3,360

 
542

 
3,902

 
—

 
—

 
44,892

 
699

 
67,409

 
—

 
113,000

 
2,113

 
115,113

Other comprehensive loss
—

 
(352
)
 
(352
)
 
—

 
—

 
—

 
—

 
—

 
(14,051
)
 
(14,051
)
 
—

 
(14,051
)
Redemptions of common units
—

 
—

 
—

 
—

 
(15
)
 
—

 
—

 
(286
)
 
—

 
(286
)
 
—

 
(286
)
Issuances of common units
—

 
—

 
—

 
—

 
278

 
—

 
—

 
679

 
—

 
679

 
—

 
679

Distributions declared - common units
—

 
(4,572
)
 
(4,572
)
 
—

 
—

 
—

 
(2,133
)
 
(211,258
)
 
—

 
(213,391
)
 
—

 
(213,391
)
Distributions declared - preferred units
—

 
—

 
—

 
—

 
—

 
(44,892
)
 
—

 
—

 
—

 
(44,892
)
 
—

 
(44,892
)
Cancellation of restricted common stock
—

 
—

 
—

 
—

 
(47
)
 
—

 
—

 
(770
)
 
—

 
(770
)
 
—

 
(770
)
Performance Stock Units
—

 
—

 
—

 
—

 
—

 
—

 
6

 
618

 
—

 
624

 
—

 
624

Amortization of deferred compensation
—

 
—

 
—

 
—

 
—

 
—

 
43

 
4,109

 
—

 
4,152

 
—

 
4,152

Allocation of partners' capital
—

 
2,981

 
2,981

 
—

 
—

 
—

 
(88
)
 
(2,965
)
 
—

 
(3,053
)
 
—

 
(3,053
)
Adjustment to record redeemable interests at redemption value
(1,658
)
 
(9,959
)
 
(11,617
)
 
—

 
—

 
—

 
119

 
11,498

 
—

 
11,617

 
—

 
11,617

Distributions to noncontrolling interests
(2,571
)
 
—

 
(2,571
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(7,866
)
 
(7,866
)
Contributions from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
1,721

 
1,721

Balance, December 31, 2015
$
5,586

 
$
19,744

 
$
25,330

 
25,050

 
199,748

 
$
565,212

 
$
8,435

 
$
822,383

 
$
(868
)
 
$
1,395,162

 
$
4,876

 
$
1,400,038

Net income (loss)
(2,762
)
 
1,159

 
(1,603
)
 
—

 
—

 
44,892

 
1,523

 
146,845

 
—

 
193,260

 
3,874

 
197,134

Other comprehensive income
—

 
3

 
3

 
—

 
—

 
—

 
—

 
—

 
431

 
431

 
—

 
431

Redemptions of common units
—

 
—

 
—

 
—

 
(965
)
 
—

 
—

 
(11,754
)
 
—

 
(11,754
)
 
—

 
(11,754
)
Issuance of common units
—

 
—

 
—

 
—

 
336

 
—

 
—

 
481

 
—

 
481

 
—

 
481

Distributions declared - common units
—

 
(4,572
)
 
(4,572
)
 
—

 
—

 
—

 
(2,133
)
 
(211,058
)
 
—

 
(213,191
)
 
—

 
(213,191
)
Distributions declared - preferred units
—

 
—

 
—

 
—

 
—

 
(44,892
)
 
—

 
—

 
—

 
(44,892
)
 
—

 
(44,892
)
Cancellation of restricted common stock
—

 
—

 
—

 
—

 
(34
)
 
—

 
—

 
(267
)
 
—

 
(267
)
 
—

 
(267
)
Redemption of redeemable noncontrolling interest
(3,206
)
 
—

 
(3,206
)
 
—

 
—

 
—

 
99

 
9,537

 
—

 
9,636

 
—

 
9,636

Performance stock units
—

 
—

 
—

 
—

 
—

 
—

 
11

 
1,022

 
—

 
1,033

 
—

 
1,033

Amortization of deferred compensation
—

 
—

 
—

 
—

 
—

 
—

 
38

 
3,642

 
—

 
3,680

 
—

 
3,680

Allocation of partners' capital
—

 
2,454

 
2,454

 
—

 
—

 
—

 
(172
)
 
(2,831
)
 
437

 
(2,566
)
 
—

 
(2,566
)
Adjustment to record redeemable interests at redemption value
2,729

 
(792
)
 
1,937

 
—

 
—

 
—

 
(20
)
 
(1,917
)
 
—

 
(1,937
)
 
—

 
(1,937
)
Distributions to noncontrolling interests
(2,347
)
 
—

 
(2,347
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(7,888
)
 
(7,888
)
Contributions from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
11,241

 
11,241

Balance, December 31, 2016
$
—

 
$
17,996

 
$
17,996

 
25,050

 
199,085

 
$
565,212

 
$
7,781

 
$
756,083

 
$
—

 
$
1,329,076

 
$
12,103

 
$
1,341,179



101


CBL & Associates Limited Partnership
Consolidated Statements of Capital
(Continued)
(in thousands)


 
 
 
Number of
 
 
 
Common Units
 
 
 
 
 
 
 
Redeemable Common Units
 
Preferred
Units
 
Common
Units
 
Preferred
Units
 
General
Partner
 
Limited
Partners
 
Total Partner's Capital
 
Noncontrolling Interests
 
Total Capital
Balance, December 31, 2016
$
17,996

 
25,050

 
199,085

 
$
565,212

 
$
7,781

 
$
756,083

 
$
1,329,076

 
$
12,103

 
$
1,341,179

Net income
699

 
—

 
—

 
44,892

 
905

 
87,096

 
132,893

 
25,390

 
158,283

Redemptions of common units
—

 
—

 
(84
)
 
—

 
—

 
(656
)
 
(656
)
 
—

 
(656
)
Issuances of common units
—

 
—

 
349

 
—

 
—

 
529

 
529

 
—

 
529

Distributions declared - common units
(4,572
)
 
—

 
—

 
—

 
(2,002
)
 
(198,209
)
 
(200,211
)
 
—

 
(200,211
)
Distributions declared - preferred units
—

 
—

 
—

 
(44,892
)
 
—

 
—

 
(44,892
)
 
—

 
(44,892
)
Cancellation of restricted common stock
—

 
—

 
(53
)
 
—

 
—

 
(405
)
 
(405
)
 
—

 
(405
)
Performance stock units
—

 
—

 
—

 
—

 
15

 
1,486

 
1,501

 
—

 
1,501

Amortization of deferred compensation
—

 
—

 
—

 
—

 
41

 
3,941

 
3,982

 
—

 
3,982

Allocation of partners' capital
3,049

 
—

 
—

 
—

 
(91
)
 
(2,996
)
 
(3,087
)
 
—

 
(3,087
)
Adjustment to record redeemable interests at redemption value
(8,337
)
 
—

 
—

 
—

 
86

 
8,251

 
8,337

 
—

 
8,337

Deconsolidation of investment
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(2,232
)
 
(2,232
)
Distributions to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(25,823
)
 
(25,823
)
Contributions from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
263

 
263

Balance, December 31, 2017
$
8,835

 
25,050

 
199,297

 
$
565,212

 
$
6,735

 
$
655,120

 
$
1,227,067

 
$
9,701

 
$
1,236,768


The accompanying notes are an integral part of these consolidated statements.


102


CBL & Associates Limited Partnership
Consolidated Statements of Cash Flows
(In thousands)
 
Year Ended December 31,
 
2017
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
Net income
$
158,982

 
$
195,531

 
$
119,015

 
 
 
 
 
 
Adjustments to reconcile net income to net cash provided by
    operating activities:
 
 
 
 
 
Depreciation and amortization
299,090

 
292,693

 
299,069

Amortization of deferred financing costs, debt premiums and discounts
4,953

 
2,952

 
4,948

Net amortization of intangible lease assets and liabilities
(1,788
)
 
113

 
(1,487
)
Gain on sales of real estate assets
(93,792
)
 
(29,567
)
 
(32,232
)
Write-off of development projects
5,180

 
56

 
2,373

Share-based compensation expense
5,792

 
5,027

 
5,218

(Gain) loss on investments
6,197

 
(7,534
)
 
(16,560
)
Loss on impairment
71,401

 
116,822

 
105,945

Gain on extinguishment of debt
(30,927
)
 
—

 
(256
)
Equity in earnings of unconsolidated affiliates
(22,939
)
 
(117,533
)
 
(18,200
)
Distributions of earnings from unconsolidated affiliates
22,376

 
16,633

 
21,092

Provision for doubtful accounts
3,782

 
4,058

 
2,254

Change in deferred tax accounts
4,526

 
(907
)
 
(153
)
Changes in:
 
 
 
 
 
Tenant and other receivables
(3,941
)
 
(7,931
)
 
(5,455
)
Other assets
(6,660
)
 
(4,386
)
 
1,803

Accounts payable and accrued liabilities
8,173

 
2,550

 
7,648

Net cash provided by operating activities
430,405

 
468,577

 
495,022

 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
Additions to real estate assets
(203,127
)
 
(248,004
)
 
(218,891
)
Acquisitions of real estate assets
(79,799
)
 
—

 
(191,988
)
Proceeds from sales of real estate assets
210,346

 
189,489

 
132,231

Net proceeds from disposal of investments
9,000

 
10,299

 
—

Additions to mortgage and other notes receivable
(4,118
)
 
(3,259
)
 
(3,096
)
Payments received on mortgage and other notes receivable
9,659

 
1,069

 
1,610

Proceeds from sale of available-for-sale securities
—

 
—

 
20,755

Additional investments in and advances to unconsolidated affiliates
(19,347
)
 
(28,510
)
 
(15,200
)
Distributions in excess of equity in earnings of unconsolidated affiliates
18,192

 
95,958

 
20,807

Changes in other assets
(16,618
)
 
(7,054
)
 
(11,534
)
Net cash provided by (used in) investing activities
(75,812
)
 
9,988

 
(265,306
)


103




CBL & Associates Limited Partnership
Consolidated Statements of Cash Flows
(Continued)
(In thousands)
 
Year Ended December 31,
 
2017
 
2016
 
2015
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
Proceeds from mortgage and other indebtedness
$
1,216,132

 
$
1,174,409

 
$
1,358,296

Principal payments on mortgage and other indebtedness
(1,264,076
)
 
(1,377,739
)
 
(1,315,094
)
Additions to deferred financing costs
(5,905
)
 
(8,345
)
 
(6,796
)
Prepayment fees on extinguishment of debt
(8,871
)
 
—

 
—

Proceeds from issuances of common units
204

 
179

 
188

Redemption of common units
(656
)
 
(11,754
)
 
(286
)
Contributions from noncontrolling interests
263

 
11,240

 
682

Payment of tax withholdings for restricted stock awards
(390
)
 
—

 
—

Distributions to noncontrolling interests
(32,038
)
 
(14,807
)
 
(17,084
)
Distributions to preferred unitholders
(44,892
)
 
(44,892
)
 
(44,892
)
Distributions to common unitholders
(211,253
)
 
(213,366
)
 
(211,260
)
Net cash used in financing activities
(351,482
)
 
(485,075
)
 
(236,246
)
 
 
 
 
 
 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
3,111

 
(6,510
)
 
(6,530
)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
65,061

 
71,571

 
78,101

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
68,172

 
$
65,061

 
$
71,571

 
 
 
 
 
 
Reconciliation from consolidated statements of cash flows to consolidated balance sheets:
Cash and cash equivalents
$
32,627

 
$
18,943

 
$
36,887

Restricted cash (1):
 
 
 
 
 
Restricted cash
920

 
4,123

 
77

Mortgage escrows
34,625

 
41,995

 
34,607

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
68,172

 
$
65,061

 
$
71,571

(1) Included in intangible lease assets and other assets in consolidated balance sheets



The accompanying notes are an integral part of these consolidated statements.


104


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and unit data)
 
NOTE 1. ORGANIZATION
CBL & Associates Properties, Inc. ("CBL"), a Delaware corporation, is a self-managed, self-administered, fully-integrated real estate investment trust ("REIT") that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers and office properties.  Its Properties are located in 26 states, but are primarily in the southeastern and midwestern United States.
CBL conducts substantially all of its business through CBL & Associates Limited Partnership (the "Operating Partnership"), which is a variable interest entity ("VIE"). In accordance with the guidance in Accounting Standards Codification ("ASC") 810, Consolidations, the Company is exempt from providing further disclosures related to the Operating Partnership's VIE classification. The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a VIE. As of December 31, 2017, the Operating Partnership owned interests in the following Properties:
 
 
 
 
Other Properties
 
 
 
 
Malls (1)
 
Associated
Centers
 
Community
Centers
 
Office
Buildings
 
Total
Consolidated Properties
 
60
 
20
 
5
 
5
(2) 
90
Unconsolidated Properties (3)
 
8
 
3
 
4
 
—
 
15
Total
 
68
 
23
 
9
 
5
 
105
(1)
Category consists of regional malls, open-air centers and outlet centers (including one mixed-use center) (the "Malls").
(2)
Includes CBL's two corporate office buildings.
(3)
The Operating Partnership accounts for these investments using the equity method because one or more of the other partners have substantive participating rights.
At December 31, 2017, the Operating Partnership had interests in the following Properties under development ("Construction Properties"):
 
 
Consolidated
Properties
 
Unconsolidated
Properties
 
 
 
Malls
 
Malls
 
Other Properties
 
Development
 
—
 
—
 
1
(1) 
Expansion
 
1
 
—
 
—
 
Redevelopments
 
3
 
1
 
—
 
(1)
Reflects a community center in development.
The Malls, Other Properties ("Associated Centers, Community Centers and Office Buildings") and Construction Properties are collectively referred to as the “Properties” and individually as a “Property.”
CBL is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At December 31, 2017, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 84.8% limited partner interest for a combined interest held by CBL of 85.8%.
As used herein, the term "Company" includes CBL & Associates Properties, Inc. and its subsidiaries, including CBL & Associates Limited Partnership and its subsidiaries, unless the context indicates otherwise. The term "Operating Partnership" refers to CBL & Associates Limited Partnership and its subsidiaries.
On November 3, 1993, CBL completed an initial public offering (the “Offering”). Simultaneously with the completion of the Offering, CBL & Associates, Inc., its shareholders and affiliates and certain senior officers of the Company (collectively, “CBL’s Predecessor”) transferred substantially all of their interests in certain real estate properties to CBL & Associates Limited Partnership (the “Operating Partnership”) in exchange for common units of limited partner interest in the Operating Partnership. At December 31, 2017, CBL’s Predecessor owned a 9.1% limited

105


partner interest and third parties owned a 5.1% limited partner interest in the Operating Partnership.  CBL’s Predecessor also owned 3.8 million shares of the Company's common stock at December 31, 2017, for a total combined effective interest of 11.0% in the Operating Partnership.
The Operating Partnership conducts the Company's property management and development activities through its wholly-owned subsidiary, CBL & Associates Management, Inc. ("the Management Company"), to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").  
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
 This Form 10-K provides separate consolidated financial statements for the Company and the Operating Partnership. Due to the Company's ability as general partner to control the Operating Partnership, the Company consolidates the Operating Partnership within its consolidated financial statements for financial reporting purposes. The notes to consolidated financial statements apply to both the Company and the Operating Partnership, unless specifically noted otherwise.
The accompanying consolidated financial statements include the consolidated accounts of the Company, the Operating Partnership and their wholly owned subsidiaries, as well as entities in which the Company has a controlling financial interest or entities where the Company is deemed to be the primary beneficiary of a VIE. For entities in which the Company has less than a controlling financial interest or entities where the Company is not deemed to be the primary beneficiary of a VIE, the entities are accounted for using the equity method of accounting. Accordingly, the Company's share of the net earnings or losses of these entities is included in consolidated net income. The accompanying consolidated financial statements have been prepared in accordance with GAAP.  All intercompany transactions have been eliminated.
Reclassifications
Certain reclassifications have been made to amounts in the Company's prior-year financial statements to conform to the current period presentation. The Company reclassified certain amounts related to restricted cash in its consolidated statements of cash flows for the years ended December 31, 2016 and 2015 upon the adoption of the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-18, Restricted Cash ("ASU 2016-18"), which requires the change in restricted cash to be reported with cash and cash equivalents when reconciling beginning and ending amounts on the consolidated statements of cash flows. The guidance was applied retrospectively to all periods presented. See below in Accounting Guidance Adopted for additional information on the adoption of ASU 2016-18.
Accounting Guidance Adopted
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 identifies areas for simplification of accounting for share-based payment transactions. ASU 2016-09 allows an entity to make an accounting policy election to either (1) recognize forfeitures as they occur or (2) continue to estimate the number of awards expected to be forfeited. The Company elected to account for forfeitures of share-based payments as they occur. As the amount of the retrospective adjustment was nominal, the Company elected not to record the change. See Note 16 for further information on the adoption of this guidance. The guidance also requires that when an employer withholds shares upon the vesting of restricted shares for the purpose of meeting tax withholding requirements, that the cash paid for withholding taxes is classified as a financing activity on the statement of cash flows. The Company previously included these amounts within operating activities. ASU 2016-09 is to be applied on a modified retrospective basis as a cumulative-effect adjustment to retained earnings as of the date of adoption. The Company adopted ASU 2016-09 as of January 1, 2017 and it did not have a material impact on its consolidated financial statements and related disclosures.
In October 2016, the FASB issued ASU 2016-17, Interests Held Through Related Parties That Are under Common Control, ("ASU 2016-17") which amended the consolidation guidance in ASU 2015-02, Amendments to the Consolidation Analysis ("ASU 2015-02"), to change how a reporting entity that is a single decision maker of a VIE should consider indirect interests in a VIE held through related parties that are under common control with the entity when determining whether it is the primary beneficiary of the VIE. ASU 2016-17 simplifies the analysis to require consideration of only an entity's proportionate indirect interest in a VIE held through a party under common control. The guidance was applicable on a retrospective basis to all periods in fiscal year 2016, which is the period in which

106


ASU 2015-02 was adopted by the Company. The Company adopted ASU 2016-17 as of January 1, 2017 and it did not have a material impact on its consolidated financial statements and related disclosures.
In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, ("ASU 2017-01"), which provides a more narrow definition of a business to be used in determining the accounting treatment of an acquisition. Under ASC 805, Business Combinations, the Company generally accounted for acquisitions of shopping center properties as acquisitions of a business. Under ASU 2017-01, more acquisitions are expected to be accounted for as acquisitions of assets. Transaction costs for asset acquisitions are capitalized while those related to business acquisitions are expensed. ASU 2017-01 is to be applied prospectively to any transactions occurring within the period of adoption. The Company adopted ASU 2017-01 as of January 1, 2017. The Company expects most of its future acquisitions of shopping center properties will be accounted for as acquisitions of assets in accordance with the guidance in ASU 2017-01.
In January 2017, the FASB issued ASU 2017-03, Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings, ("ASU 2017-03"), which provides guidance related to the disclosure of the potential impact that the adoption of ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"); ASU 2016-02, Leases ("ASU 2016-02") and ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") could have on the Company's consolidated financial statements. ASU 2017-03 was effective upon issuance and the Company has incorporated this guidance within its current disclosures.
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). The objective of ASU 2016-15 is to reduce diversity in practice in the classification of certain items in the statement of cash flows, including the classification of distributions received from equity method investees. The guidance is to be applied on a retrospective basis. The Company adopted ASU 2016-15 in the fourth quarter of 2017 and it did not have a material impact on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18 to address diversity in practice related to the classification and presentation of changes in restricted cash. The update requires a reporting entity to explain the change in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents in reconciling the beginning-of-period and end-of-period total amounts on the statement of cash flows. The Company adopted ASU 2016-18 in the fourth quarter of 2017 and it had no impact on the Company's total consolidated cash flows as the adoption of the guidance only changed the location of where restricted cash is reported within the consolidated statements of cash flows. As a result, restricted cash additions of $11,434 and restricted cash reductions of $5,491 for the years ended December 31, 2016 and 2015, respectively, were reclassified from cash flows from investing activities and are included in the beginning-of-period and end-of-period total amounts on the consolidated statements of cash flows for the respective periods. As prescribed by the guidance, a reconciliation was added to the consolidated Statements of Cash Flows to reconcile ending cash, cash equivalents and restricted cash to the respective line items in the consolidated balance sheets.
Accounting Guidance Not Yet Effective
Revenue Recognition guidance and implementation update
In May 2014, the FASB and the International Accounting Standards Board jointly issued ASU 2014-09. The objective of this converged standard is to enable financial statement users to better understand and analyze revenue by replacing current transaction and industry-specific guidance with a more principles-based approach to revenue recognition. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that the entity expects to be entitled to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other guidance such as lease and insurance contracts.
The Company adopted the guidance as of January 1, 2018 using a modified retrospective approach and it did not have a material impact on its consolidated financial statements as the majority of the Company's revenue is derived from real estate lease contracts. The Company elected to apply the guidance to contracts with open performance obligations as of January 1, 2018. The cumulative effect of adopting ASC 606 includes an opening adjustment of approximately $362 to retained earnings as of January 1, 2018, to record contract assets and contract liabilities. Historical amounts for prior periods will not be adjusted and will continue to be reported using the guidance in Topic 605, Revenue Recognition.

107


The following updates, which were effective as of the same date as ASU 2014-09 as deferred by ASU 2015-14, Deferral of the Effective Date, were issued by the FASB to clarify the implementation of the revenue guidance:
Issuance Date
 
Accounting Standards Update
March 2016
 
ASU 2016-08
Principal versus Agent Considerations (Reporting Revenue Gross versus Net)
April 2016
 
ASU 2016-10
Identifying Performance Obligations and Licensing
May 2016
 
ASU 2016-11
Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting
May 2016
 
ASU 2016-12
Narrow Scope Improvements and Practical Expedients
December 2016
 
ASU 2016-20
Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers
September 2017
 
ASU 2017-13
Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments
November 2017
 
ASU 2017-14
Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release No. 33-10403
The Company's revenues largely consist of income earned from leasing. Other revenue streams which are in the scope of ASC 606 primarily include earnings from property management, leasing and development agreements with unconsolidated affiliates and third parties in addition to marketing and other revenues. As part of the implementation process, the Company completed a review to ascertain which contracts were in the scope of the revenue guidance noted above. For those contracts in scope, these were evaluated using the prescribed five-step method. Based on its evaluation of these contracts, the Company does not expect any material changes in the amount or timing of its revenues upon adoption of the guidance.
The Company's revenue streams for the year ended December 31, 2017, approximate the following:
Revenue stream
 
% of Total Revenues
Leasing revenues
 
97%
Revenues within the scope of ASC 606
 
2%
Other revenues
 
1%
 
 
100%
Leasing guidance and implementation update
In February 2016, the FASB issued ASU 2016-02. The objective of ASU 2016-02 is to increase transparency and comparability by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, lessees will be required to recognize a right-of-use asset and corresponding lease liability on the balance sheet for all leases with terms greater than 12 months. The guidance applied by a lessor under ASU 2016-02 is substantially similar to existing GAAP. For public companies, ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted. Lessees and lessors are required to use a modified retrospective transition method for all leases existing at, or entered into after, the date of initial application. Accordingly, they would apply the new accounting model for the earliest year presented in the financial statements. A number of practical expedients may also be elected. The Company completed a preliminary assessment and continues to evaluate the potential impact the guidance may have on its consolidated financial statements and related disclosures and will adopt ASU 2016-02 as of January 1, 2019.
As a lessor, the Company expects substantially all leases will continue to be classified as operating leases under the new leasing guidance. Additionally, the Company expects to expense certain deferred lease costs due to the narrowed definition of indirect costs that may be capitalized. As a lessee, the Company has 13 ground lease arrangements in which the Company is the lessee for land. As of December 31, 2017, these ground leases have future contractual payments of approximately $15,113 with maturity dates ranging from January 2019 through July 2089.
Other Guidance
In June 2016, the FASB issued ASU 2016-13. The objective of ASU 2016-13 is to provide financial statement users with information about expected credit losses on financial assets and other commitments to extend credit by a reporting entity. The guidance replaces the current incurred loss impairment model, which reflects credit events, with a current expected credit loss model, which recognizes an allowance for credit losses based on an entity's estimate

108


of contractual cash flows not expected to be collected. For public companies that are Securities and Exchange Commission ("SEC") filers, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. Early adoption is permitted. The guidance is to be applied on a modified retrospective basis. The Company plans to adopt ASU 2016-13 as of January 1, 2020 and is evaluating the impact that this update may have on its consolidated financial statements and related disclosures.
In February 2017, the FASB issued ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"), which applies to the partial sale or transfer of nonfinancial assets, including real estate assets, to unconsolidated joint ventures. ASU 2017-05 requires 100% of the gain or loss to be recognized for nonfinancial assets transferred to an unconsolidated joint venture and any noncontrolling interest received in such nonfinancial assets to be measured at fair value. The Company adopted the guidance on January 1, 2018 using a modified retrospective transition method, which required a cumulative effect adjustment as of the date of adoption. This adjustment (1 ) marked investments in unconsolidated joint ventures to fair value as of the date of contribution to the unconsolidated joint ventures, and (2) recognized the remainder of the gain associated with transferring the assets to the unconsolidated joint venture. In its adoption of ASU 2017-15, the Company identified one unconsolidated affiliate, CBL/T-C, LLC, in which the Company recorded a partial sale of real estate assets in 2011, and will record a gain of $57,850 as a cumulative effect adjustment as of January 1, 2018. Additionally, in conjunction with the transfer of land in the formation of a new joint venture in 2017, the Company will record a gain of $902 related to this transaction as a cumulative effect adjustment as of January 1, 2018.
In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting ("ASU 2017-09") which provides guidance on the types of changes to the terms or conditions of a share-based payment award to which an entity would be required to apply modification accounting under ASC 718, Compensation - Stock Compensation. The Company adopted ASU 2017-09 on a prospective basis as of January 1, 2018 and it did not have a material impact on its consolidated financial statements.
Real Estate Assets 
The Company capitalizes predevelopment project costs paid to third parties. All previously capitalized predevelopment costs are expensed when it is no longer probable that the project will be completed. Once development of a project commences, all direct costs incurred to construct the project, including interest and real estate taxes, are capitalized. Additionally, certain general and administrative expenses are allocated to the projects and capitalized based on the amount of time applicable personnel work on the development project. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements are capitalized and depreciated over their estimated useful lives.
All acquired real estate assets have been accounted for using the acquisition method of accounting and accordingly, the results of operations are included in the consolidated statements of operations from the respective dates of acquisition. The Company allocates the purchase price to (i) tangible assets, consisting of land, buildings and improvements, as if vacant, and tenant improvements, and (ii) identifiable intangible assets and liabilities, generally consisting of above-market leases, in-place leases and tenant relationships, which are included in other assets, and below-market leases, which are included in accounts payable and accrued liabilities. The Company uses estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation techniques to allocate the purchase price to the acquired tangible and intangible assets. Liabilities assumed generally consist of mortgage debt on the real estate assets acquired. Assumed debt is recorded at its fair value based on estimated market interest rates at the date of acquisition. Upon the adoption of ASU 2017-01 on a prospective basis in January 2017, as noted above, the Company expects its future acquisitions will be accounted for as acquisitions of assets in which related transaction costs will be capitalized.
Depreciation is computed on a straight-line basis over estimated lives of 40 years for buildings, 10 to 20 years for certain improvements and 7 to 10 years for equipment and fixtures. Tenant improvements are capitalized and depreciated on a straight-line basis over the term of the related lease. Lease-related intangibles from acquisitions of real estate assets are generally amortized over the remaining terms of the related leases. The amortization of above- and below-market leases is recorded as an adjustment to minimum rental revenue, while the amortization of all other lease-related intangibles is recorded as amortization expense. Any difference between the face value of the debt assumed and its fair value is amortized to interest expense over the remaining term of the debt using the effective interest method.

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The Company’s intangibles and their balance sheet classifications as of December 31, 2017 and 2016, are summarized as follows:
 
December 31, 2017
 
December 31, 2016
 
Cost
 
Accumulated
Amortization
 
Cost
 
Accumulated
Amortization
Intangible lease assets and other assets:
 
 
 
 
 
 
 
Above-market leases
$
38,798

 
$
(31,245
)
 
$
49,310

 
$
(38,197
)
In-place leases
103,230

 
(78,854
)
 
110,968

 
(80,256
)
Tenant relationships
44,580

 
(9,719
)
 
29,494

 
(6,610
)
Accounts payable and accrued liabilities:
 

 
 

 
 

 
 

Below-market leases
69,990

 
(49,756
)
 
87,266

 
(60,286
)
These intangibles are related to specific tenant leases.  Should a termination occur earlier than the date indicated in the lease, the related unamortized intangible assets or liabilities, if any, related to the lease are recorded as expense or income, as applicable. The total net amortization expense of the above intangibles was $13,256, $8,687 and $12,939 in 2017, 2016 and 2015, respectively.  The estimated total net amortization expense for the next five succeeding years is $9,093 in 2018, $4,154 in 2019, $1,926 in 2020, $1,712 in 2021 and $1,572 in 2022.
Total interest expense capitalized was $2,314, $2,182 and $3,697 in 2017, 2016 and 2015, respectively.
Carrying Value of Long-Lived Assets 
The Company monitors events or changes in circumstances that could indicate the carrying value of a long-lived asset may not be recoverable.  When indicators of potential impairment are present that suggest that the carrying amounts of a long-lived asset may not be recoverable, the Company assesses the recoverability of the asset by determining whether the asset’s carrying value will be recovered through the estimated undiscounted future cash flows expected from the Company’s probability weighted use of the asset and its eventual disposition. In the event that such undiscounted future cash flows do not exceed the carrying value, the Company adjusts the carrying value of the long-lived asset to its estimated fair value and recognizes an impairment loss.  The estimated fair value is calculated based on the following information, in order of preference, depending upon availability:  (Level 1) recently quoted market prices, (Level 2) market prices for comparable properties, or (Level 3) the present value of future cash flows, including estimated salvage value.  Certain of the Company’s long-lived assets may be carried at more than an amount that could be realized in a current disposition transaction.  Projections of expected future operating cash flows require that the Company estimates future market rental income amounts subsequent to expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the Property, and the number of years the Property is held for investment, among other factors. As these assumptions are subject to economic and market uncertainties, they are difficult to predict and are subject to future events that may alter the assumptions used or management’s estimates of future possible outcomes. Therefore, the future cash flows estimated in the Company’s impairment analyses may not be achieved. See Note 4 and Note 15 for information related to the impairment of long-lived assets for 2017, 2016 and 2015.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less as cash equivalents.
 Restricted Cash
Restricted cash of $35,546 and $46,119 was included in intangible lease assets and other assets at December 31, 2017 and 2016, respectively.  Restricted cash consists primarily of cash held in escrow accounts for debt service, insurance, real estate taxes, capital improvements and deferred maintenance as required by the terms of certain mortgage notes payable. 
Allowance for Doubtful Accounts
The Company periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are realizable based on factors affecting the collectability of those balances. The Company’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the

110


timing, frequency and severity of collection losses, which affects the allowance and net income.  The Company recorded a provision for doubtful accounts of $3,782, $4,058 and $2,254 for 2017, 2016 and 2015, respectively.
Investments in Unconsolidated Affiliates
The Company evaluates its joint venture arrangements to determine whether they should be recorded on a consolidated basis.  The percentage of ownership interest in the joint venture, an evaluation of control and whether a VIE exists are all considered in the Company’s consolidation assessment.
Initial investments in joint ventures that are in economic substance a capital contribution to the joint venture are recorded in an amount equal to the Company’s historical carryover basis in the real estate contributed. Initial investments in joint ventures that are in economic substance the sale of a portion of the Company’s interest in the real estate are accounted for as a contribution of real estate recorded in an amount equal to the Company’s historical carryover basis in the ownership percentage retained and as a sale of real estate with profit recognized to the extent of the other joint venturers’ interests in the joint venture. Profit recognition assumes the Company has no commitment to reinvest with respect to the percentage of the real estate sold and the accounting requirements of the full accrual method are met.
The Company accounts for its investment in joint ventures where it owns a noncontrolling interest or where it is not the primary beneficiary of a VIE using the equity method of accounting. Under the equity method, the Company’s cost of investment is adjusted for additional contributions to and distributions from the unconsolidated affiliate, as well as its share of equity in the earnings of the unconsolidated affiliate. Generally, distributions of cash flows from operations and capital events are first made to partners to pay cumulative unpaid preferences on unreturned capital balances and then to the partners in accordance with the terms of the joint venture agreements.
Any differences between the cost of the Company’s investment in an unconsolidated affiliate and its underlying equity as reflected in the unconsolidated affiliate’s financial statements generally result from costs of the Company’s investment that are not reflected on the unconsolidated affiliate’s financial statements, capitalized interest on its investment and the Company’s share of development and leasing fees that are paid by the unconsolidated affiliate to the Company for development and leasing services provided to the unconsolidated affiliate during any development periods. At December 31, 2017 and 2016, the net difference between the Company’s investment in unconsolidated affiliates and the underlying equity of unconsolidated affiliates, which are amortized over a period equal to the useful life of the unconsolidated affiliates' asset/liability that is related to the basis difference, was $(6,038) and $(6,966), respectively.
On a periodic basis, the Company assesses whether there are any indicators that the fair value of the Company's investments in unconsolidated affiliates may be impaired. An investment is impaired only if the Company’s estimate of the fair value of the investment is less than the carrying value of the investment and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment. The Company's estimates of fair value for each investment are based on a number of assumptions that are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter the Company’s assumptions, the fair values estimated in the impairment analyses may not be realized. No impairments of investments in unconsolidated affiliates were recorded in 2017, 2016 and 2015.  
Deferred Financing Costs
Net deferred financing costs related to the Company's lines of credit of $3,301 and $4,890 were included in intangible lease assets and other assets at December 31, 2017 and 2016, respectively. Net deferred financing costs related to the Company's other indebtedness of $18,938 and $17,855 were included in net mortgage and other indebtedness at December 31, 2017 and 2016, respectively. Deferred financing costs include fees and costs incurred to obtain financing and are amortized on a straight-line basis to interest expense over the terms of the related indebtedness. Amortization expense related to deferred financing costs was $5,918, $5,010 and $7,116 in 2017, 2016 and 2015, respectively. Accumulated amortization of deferred financing costs was $16,269 and $13,370 as of December 31, 2017 and 2016, respectively.

111


Marketable Securities
The Company recognized a realized gain of $16,560, for the difference between the net proceeds of $20,755 less the adjusted cost of $4,195 related to the sale of all its marketable securities in 2015. Unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of accumulated other comprehensive income (loss) ("AOCI/L") in redeemable noncontrolling interests, shareholders’ equity and partners' capital, and noncontrolling interests. Realized gains are recorded in gain on investments. Gains or losses on securities sold were based on the specific identification method.  
There were no other-than-temporary impairments of marketable securities incurred during 2015.
Interest Rate Hedging Instruments
To qualify as a hedging instrument, a derivative must pass prescribed effectiveness tests, performed quarterly using both qualitative and quantitative methods. The Company had entered into derivative agreements, which matured on April 1, 2016, that qualified as hedging instruments and were designated, based upon the exposure being hedged, as cash flow hedges.  To the extent they were effective, changes in the fair values of cash flow hedges were reported in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged item affected earnings. The gain or loss on the termination of an effective cash flow hedge was reported in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged item affected earnings.  The Company also assessed the credit risk that the counterparty would not perform according to the terms of the contract.
See Note 6 for additional information regarding the Company’s former interest rate hedging instruments.
 Revenue Recognition
Minimum rental revenue from operating leases is recognized on a straight-line basis over the initial terms of the related leases. Certain tenants are required to pay percentage rent if their sales volumes exceed thresholds specified in their lease agreements. Percentage rent is recognized as revenue when the thresholds are achieved and the amounts become determinable.
The Company receives reimbursements from tenants for real estate taxes, insurance, common area maintenance ("CAM") and other recoverable operating expenses as provided in the lease agreements.  Tenant reimbursements are recognized when earned in accordance with the tenant lease agreements.  Tenant reimbursements related to certain capital expenditures are billed to tenants over periods of 5 to 15 years and are recognized as revenue in accordance with the underlying lease terms.
The Company receives management, leasing and development fees from third parties and unconsolidated affiliates. Management fees are charged as a percentage of revenues (as defined in the management agreement) and are recognized as revenue when earned. Development fees are recognized as revenue on a pro rata basis over the development period. Leasing fees are charged for newly executed leases and lease renewals and are recognized as revenue when earned. Development and leasing fees received from an unconsolidated affiliate during the development period are recognized as revenue only to the extent of the third-party partner’s ownership interest. Development and leasing fees during the development period, to the extent of the Company’s ownership interest, are recorded as a reduction to the Company’s investment in the unconsolidated affiliate.
Gain on Sales of Real Estate Assets
Gain on sales of real estate assets is recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, the Company’s receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. When the Company has an ownership interest in the buyer, gain is recognized to the extent of the third party partner’s ownership interest.
Income Taxes
The Company is qualified as a REIT under the provisions of the Internal Revenue Code. To maintain qualification as a REIT, the Company is required to distribute at least 90% of its taxable income to shareholders and meet certain other requirements.

112


As a REIT, the Company is generally not liable for federal corporate income taxes. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal and state income taxes on its taxable income at regular corporate tax rates. Even if the Company maintains its qualification as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed income. State tax expense was $3,772, $3,458 and $3,460 during 2017, 2016 and 2015, respectively.
The Company has also elected taxable REIT subsidiary status for some of its subsidiaries. This enables the Company to receive income and provide services that would otherwise be impermissible for REITs. For these entities, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if the Company believes all or some portion of the deferred tax asset may not be realized. An increase or decrease in the valuation allowance that results from the change in circumstances that causes a change in our judgment about the realizability of the related deferred tax asset is included in income or expense, as applicable.
The Company recorded an income tax benefit (provision) as follows for the years ended December 31, 2017, 2016 and 2015:
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Current tax benefit (provision)
 
$
6,459

 
$
1,156

 
$
(3,093
)
Deferred tax benefit (provision)
 
(4,526
)
 
907

 
152

Income tax benefit (provision)
 
$
1,933

 
$
2,063

 
$
(2,941
)
The Company had a net deferred tax asset of $7,120 and $5,841 at December 31, 2017 and December 31, 2016, respectively. The net deferred tax asset at December 31, 2017 and 2016 is included in intangible lease assets and other assets. The Tax Cuts and Jobs Act was enacted on December 22, 2017 and reduces the U.S. federal corporate tax rate, among other provisions. The Company remeasured certain deferred tax assets, based on the rates at which they are expected to reverse in the future, and recorded a reduction of $2,309 in its net deferred tax assets related to the tax law change. These deferred tax balances primarily consisted of net operating loss carryforwards, operating expense accruals and differences between book and tax depreciation.  As of December 31, 2017, tax years that generally remain subject to examination by the Company’s major tax jurisdictions include 2017, 2016, 2015 and 2014.
The Company reports any income tax penalties attributable to its Properties as property operating expenses and any corporate-related income tax penalties as general and administrative expenses in its consolidated statement of operations.  In addition, any interest incurred on tax assessments is reported as interest expense.  The Company incurred nominal interest and penalty amounts in 2017, 2016 and 2015.
 Concentration of Credit Risk
The Company’s tenants include national, regional and local retailers. Financial instruments that subject the Company to concentrations of credit risk consist primarily of tenant receivables. The Company generally does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of tenants. The Company derives a substantial portion of its rental income from various national and regional retail companies; however, no single tenant collectively accounted for more than 4.2% of the Company’s total consolidated revenues in 2017.
Earnings per Share and Earnings per Unit
See Note 7 for information regarding significant CBL equity offerings that affected per share and per unit amounts for each period presented.

113


Earnings per Share of the Company
Basic earnings per share ("EPS") is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS assumes the issuance of common stock for all potential dilutive common shares outstanding. The limited partners’ rights to convert their noncontrolling interests in the Operating Partnership into shares of common stock are not dilutive. There were no potential dilutive common shares and no anti-dilutive shares for the year ended December 31, 2017. There were no anti-dilutive shares for the years ended December 31, 2016 and 2015.
The following summarizes the impact of potential dilutive common shares on the denominator used to compute EPS for the years ended December 31, 2016 and 2015:
 
Year Ended December 31,
 
2016
 
2015
Denominator – basic
170,762

 
170,476

Effect of performance stock units (1)
74

 
23

Denominator – diluted
170,836

 
170,499

(1) Performance stock units are contingently issuable common shares and are included in earnings per share if the effect is dilutive. See Note 16 for a description of the long-term incentive program that these units relate to.    
Earnings per Unit of the Operating Partnership
Basic earnings per unit ("EPU") is computed by dividing net income attributable to common unitholders by the weighted-average number of common units outstanding for the period. Diluted EPU assumes the issuance of common units for all potential dilutive common units outstanding. There were no potential dilutive common units and no anti-dilutive units for the year ended December 31, 2017. There were no anti-dilutive units for the years ended December 31, 2016 and 2015.
The following summarizes the impact of potential dilutive common units on the denominator used to compute EPU for the years ended December 31, 2016 and 2015 :
 
Year Ended December 31,
 
2016
 
2015
Denominator – basic
199,764

 
199,734

Effect of performance stock units (1)
74

 
23

Denominator – diluted
199,838

 
199,757

(1) Performance stock units are contingently issuable common shares and are included in earnings per unit if the effect is dilutive. See Note 16 for a description of the long-term incentive program that these units relate to.
Comprehensive Income
Accumulated Other Comprehensive Income (Loss) of the Company
Comprehensive income (loss) of the Company includes all changes in redeemable noncontrolling interests and total equity during the period, except those resulting from investments by shareholders and partners, distributions to shareholders and partners and redemption valuation adjustments. Other comprehensive income (loss) (“OCI/L”) included changes in unrealized gains (losses) on available-for-sale securities and interest rate hedge agreements. The Company did not have any AOCI for the year ended December 31, 2017.

114


The changes in the components of AOCI for the years ended December 31, 2016 and 2015 are as follows:
 
Redeemable
Noncontrolling
Interests
 
The Company
 
Noncontrolling Interests
 
 
 
Unrealized Gains (Losses)
 
 
 
Hedging
Agreements
 
Available-
for-Sale
Securities
 
Hedging
Agreements
 
Available-
for-Sale
Securities
 
Hedging
Agreements
 
 Available-
for-Sale
Securities
 
Total
Beginning balance, January 1, 2015
$
401

 
$
384

 
$
303

 
$
13,108

 
$
(3,053
)
 
$
2,826

 
$
13,969

  OCI before reclassifications
32

 
10

 
3,828

 
160

 
251

 
72

 
4,353

  Amounts reclassified from AOCI (1)
—

 
(394
)
 
(2,196
)
 
(13,268
)
 
—

 
(2,898
)
 
(18,756
)
Net year-to-date period OCI/L
32

 
(384
)
 
1,632

 
(13,108
)
 
251

 
(2,826
)
 
(14,403
)
Ending balance, December 31, 2015
433

 
—

 
1,935

 
—

 
(2,802
)
 
—

 
(434
)
  OCI before reclassifications
3

 
—

 
814

 
—

 
60

 
—

 
877

  Amounts reclassified from AOCI (1)
(436
)
 
—

 
(2,749
)
 
—

 
2,742

 
—

 
(443
)
Net year-to-date period OCI/L
(433
)
 
—

 
(1,935
)
 
—

 
2,802

 
—

 
434

Ending balance, December 31, 2016
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

(1)
Reclassified $443 and $2,196 of interest on cash flow hedges to interest expense in the consolidated statement of operations for the years ended December 31, 2016 and 2015, respectively. Reclassified $16,560 realized gain on sale of available-for-sale securities to gain on investments in the consolidated statement of operations for the year ended December 31, 2015.
Accumulated Other Comprehensive Income (Loss) of the Operating Partnership
Comprehensive income (loss) of the Operating Partnership includes all changes in redeemable common units and partners' capital during the period, except those resulting from investments by unitholders, distributions to unitholders and redemption valuation adjustments. OCI/L includes changes in unrealized gains (losses) on available-for-sale securities and interest rate hedge agreements. The Operating Partnership did not have any AOCI for the year ended December 31, 2017. The changes in the components of AOCI for the years ended December 31, 2016 and 2015 are as follows:
 
Redeemable
Common
Units
 
Partners'
Capital
 
 
 
Unrealized Gains (Losses)
 
 
 
Hedging
Agreements
 
Available-
for-Sale
Securities
 
Hedging
Agreements
 
 Available-
for-Sale
Securities
 
Total
Beginning balance, January 1, 2015
$
401

 
$
384

 
$
(2,750
)
 
$
15,934

 
$
13,969

  OCI before reclassifications
33

 
10

 
4,078

 
232

 
4,353

  Amounts reclassified from AOCI (1)
—

 
(394
)
 
(2,196
)
 
(16,166
)
 
(18,756
)
Net year-to-date period OCI/L
33

 
(384
)
 
1,882

 
(15,934
)
 
(14,403
)
Ending balance, December 31, 2015
434

 
—

 
(868
)
 
—

 
(434
)
  OCI before reclassifications
3

 
—

 
874

 
—

 
877

  Amounts reclassified from AOCI (1)
(437
)
 
—

 
(6
)
 
—

 
(443
)
Net year-to-date period OCI/L
(434
)
 
—

 
868

 
—

 
434

Ending balance, December 31, 2016
$
—

 
$
—

 
$
—

 
$
—

 
$
—

(1)
Reclassified $443 and $2,196 of interest on cash flow hedges to interest expense in the consolidated statement of operations for the years ended December 31, 2016 and 2015, respectively. Reclassified $16,560 realized gain on sale of available-for-sale securities to gain on investments in the consolidated statement of operations for the year ended December 31, 2015.

115


Use of Estimates
The preparation of financial statements in conformity with GAAP 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 reported period. Actual results could differ from those estimates.
NOTE 3. ACQUISITIONS
Since the adoption of ASU 2017-01 (see Note 2) as of January 1, 2017, the Company's acquisitions of shopping center and other properties have been accounted for as acquisitions of assets. The Company includes the results of operations of real estate assets acquired in the consolidated statements of operations from the date of the related acquisition. The pro forma effect of these acquisitions was not material.
2017 Acquisitions
JG Gulf Coast LLC    
In December 2017, the Company was assigned its partner's 50% interest in Gulf Coast Town Center - Phase III for no consideration. The unconsolidated affiliate was previously accounted for using the equity method of accounting (see Note 5). As of the December 31, 2017 assignment date, the wholly-owned joint venture is accounted for on a consolidated basis in the Company's operations. The Company recorded $2,818 of net assets at their carry-over basis, which included $4,118 related to a mortgage note payable to the Company.
Sears and Macy's stores
In January 2017, the Company acquired several Sears and Macy's stores, which include land, buildings and improvements, for future redevelopment at the related malls.
The Company purchased five Sears department stores and two Sears Auto Centers for $72,765 in cash, which included $265 of capitalized transaction costs. Sears continues to operate the department stores under new ten-year leases for which the Company receives aggregate annual base rent of $5,075. Annual base rent will be reduced by 0.25% for the third through tenth years of the leases. Sears is responsible for paying CAM charges, taxes, insurance and utilities under the terms of the leases. The Company has the right to terminate each Sears lease at any time (except November 15 through January 15, in any given year), with six month's advance notice. With six month's advance notice, Sears has the right to terminate one lease after a four-year period and may terminate the four other leases after a two-year period. The leases on the Sears Auto Centers were subsequently terminated, in accordance with the terms of the Company's agreement with Sears.
The Company also acquired four Macy's stores for $7,034 in cash, which included $34 of capitalized transaction costs. Three of these locations closed in March 2017. The Company entered into a lease with Macy's at the fourth store under which Macy's will continue to operate the store through March 2019 for annual base rent and fixed CAM charges of $19 per year, subject to certain operating covenants. If Macy's ceases to operate at this location, the Company will be reimbursed for the pro rata portion of the amount paid for the operating covenant based on the remaining lease term.     
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the respective acquisition dates:
 
 
Sears Stores
 
Macy's Stores
 
Total
Land
 
$
45,028

 
$
4,635

 
$
49,663

Building and improvements
 
14,814

 
1,965

 
16,779

Tenant improvements
 
4,234

 
377

 
4,611

Above-market leases
 
681

 
—

 
681

In-place leases
 
8,364

 
579

 
8,943

Total assets
 
73,121

 
7,556

 
80,677

Below-market leases
 
(356
)
 
(522
)
 
(878
)
Net assets acquired
 
$
72,765

 
$
7,034

 
$
79,799

    

116


The intangible assets and liabilities acquired with the acquisition of the Sears and Macy's stores have weighted-average amortization periods as of the respective acquisition dates as follows (in years):
 
 
Sears Stores
 
Macy's Stores
Above-market leases
 
2.0
 
N/A
In-place leases
 
2.2
 
2.2
Below-market leases
 
5.4
 
2.2

2016 Acquisitions
The Company did not acquire any consolidated shopping center properties during the year ended December 31, 2016.
2015 Acquisitions
The following is a summary of the Company's acquisitions during 2015:
Purchase Date
 
Property
 
Property
 Type
 
Location
 
Ownership
Percentage
Acquired
 
Cash
 
Purchase
Price
June 2015
 
Mayfaire Town Center and Community Center (1)
 
Mall
 
Wilmington, NC
 
100%
 
$
191,988

 
$
191,988

(1)
The Company acquired Mayfaire Town Center and Community Center on June 18, 2015 for $191,988 utilizing availability on its lines of credit. Since the acquisition date, $8,982 of revenue and $410 in income related to Mayfaire Town Center and Community Center were included in the consolidated financial statements for the year ended December 31, 2015. The Company subsequently sold Mayfaire Community Center in December 2015. See Note 4 for more information.
The following table summarizes the final allocation of the estimated fair values of the assets acquired and liabilities assumed as of the June 2015 acquisition date for Mayfaire Town Center and Community Center:
 
2015
Land
$
39,598

Buildings and improvements
139,818

Tenant improvements
3,331

Above-market leases
393

In-place leases
22,673

  Total assets
205,813

Below-market leases
(13,825
)
  Net assets acquired
$
191,988


117


NOTE 4. DISPOSITIONS
The Company evaluates its disposals utilizing the guidance in ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Based on its analysis, the Company determined that the dispositions described below do not meet the criteria for classification as discontinued operations and are not considered to be significant disposals based on its quantitative and qualitative evaluation. Thus, the results of operations of the shopping center Properties described below, as well as any related gain or impairment loss, are included in net income for all periods presented, as applicable.
2017 Dispositions
Net proceeds realized from the 2017 dispositions were used to reduce the outstanding balances on the Company's credit facilities, unless otherwise noted. The following is a summary of the Company's 2017 dispositions by sale:
 
 
 
 
 
 
 
 
Sales Price
 
Gain
Sales Date
 
Property
 
Property Type
 
Location
 
Gross
 
Net
 
January
 
One Oyster Point & Two Oyster Point (1)
 
All Other
 
Newport News, VA
 
$
6,250

 
$
6,142

 
$
—

April
 
The Outlet Shoppes at Oklahoma City (2)
 
Mall
 
Oklahoma City, OK
 
130,000

 
55,368

 
75,434

May
 
College Square & Foothills Mall (3)
 
Mall
 
Morristown, TN / Maryville, TN
 
53,500

 
50,566

 
546

 
 
 
 
 
 
 
 
$
189,750

 
$
112,076

 
$
75,980

(1)
These Properties were classified as held for sale as of December 31, 2016. See Note 15 for information on the impairment loss related to these Properties which was recognized in 2016.
(2)
In conjunction with the sale of this 75/25 consolidated joint venture, three loans secured by the mall were retired. See Note 6 for more information. The Company's share of the gain from the sale was approximately $48,800. In accordance with the joint venture agreement, the joint venture partner received a priority return of $7,477 from the proceeds of the sale.
(3)
The Company recognized a gain of $1,994 in the second quarter of 2017 upon the sale of the malls. This gain was partially reduced in the third quarter of 2017 due to construction costs of $1,448 not previously considered.
The Company also realized a gain of $17,812 primarily related to the sale of 12 outparcels during the year ended December 31, 2017.
The Company recognized a gain on extinguishment of debt for the Properties listed below, which represented the amount by which the outstanding debt balance exceeded the net book value of the Property as of the transfer date. The respective mortgage lender completed the foreclosure process and received title to the mall listed below in satisfaction of the non-recourse debt secured by the Property. See Note 6 for additional information. See Note 15 for information on previous impairment losses related to these Properties.
The following is a summary of these 2017 dispositions:
Transfer Date
 
Property
 
Property Type
 
Location
January
 
Midland Mall
 
Mall
 
Midland, MI
June
 
Chesterfield Mall
 
Mall
 
Chesterfield, MO
August
 
Wausau Center
 
Mall
 
Wausau, WI

118


2016 Dispositions
Net proceeds realized from the 2016 dispositions were used to reduce the outstanding balances on the Company's credit facilities. The following is a summary of the Company's 2016 dispositions:
 
 
 
 
 
 
 
 
Sales Price
 
Gain
Sales Date
 
Property
 
Property Type
 
Location
 
Gross
 
Net
 
March
 
River Ridge Mall (1)
 
Mall
 
Lynchburg, VA
 
$
33,500

 
$
32,905

 
$
—

April
 
The Crossings at Marshalls Creek
 
All Other
 
Middle Smithfield, PA
 
23,650

 
21,791

 
3,239

May
 
Bonita Lakes Mall & Crossing (2)
 
Mall & All Other
 
Meridian, MS
 
27,910

 
27,614

 
208

July
 
The Lakes Mall / Fashion Square (3)
 
Mall
 
Muskegon, MI
Saginaw, MI
 
66,500

 
65,514

 
273

September
 
Oak Branch Business Center (4)
 
All Other
 
Greensboro, NC
 
2,400

 
2,148

 
—

December
 
Cobblestone Village at Palm Coast (5)
 
All Other
 
Palm Coast, FL
 
8,500

 
8,106

 
—

December
 
Randolph Mall, Regency Mall &
Walnut Square (6)
 
Mall
 
Asheboro, NC
Racine, WI
Dalton, GA
 
32,250

 
31,453

 
—

 
 
 
 
 
 
 
 
$
194,710

 
$
189,531

 
$
3,720

(1)
The Company sold a 75% interest in River Ridge Mall and recorded a loss on impairment of $9,510 to adjust the book value of the mall to its estimated net sales price based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs. An additional loss on impairment of $84 was recognized in December 2016 to reflect actual closing costs. The Company retained a 25% ownership interest in the mall, which was included in investments in unconsolidated affiliates as of December 31, 2016 on the Company's consolidated balance sheet. The Company sold its remaining interest in 2017. See Note 5 for more information.
(2)
The Company recognized a loss on impairment of $5,323 in 2016 when it adjusted the book value of the Properties to their estimated fair value based upon a signed contract with a third party buyer, adjusted to reflect disposition costs.
(3)
The Company recognized a loss on impairment of $32,096 in 2016 when it adjusted the book value of the malls to their estimated fair value based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs. A non-recourse loan secured by Fashion Square with a principal balance of $38,150 was assumed by the buyer in conjunction with the sale. See Note 6.
(4)
The Company recognized a loss on impairment of $122 in the third quarter of 2016 to adjust the book value of the Property to its estimated fair value based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs. The loss on impairment was reduced by $22 in the fourth quarter of 2016 to reflect actual closing costs.
(5)
The Company recorded a loss on impairment of $6,298 to write down the Property to its estimated fair value in the third quarter of 2016 based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs. An additional loss on impairment of $150 was recognized in December 2016 for an adjustment to the sales price when the sale closed in December 2016.
(6)
The Company recorded a loss on impairment in the third quarter of 2016 of $43,294 when it wrote down the book values of the three malls to their estimated fair value based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs. The Company reduced the loss on impairment in the fourth quarter of 2016 by $150 to reflect actual closing costs.
The Company also realized a gain of $21,385 primarily related to the sale of 18 outparcels, $2,184 related to a parking deck project, $1,621 from a parcel project at The Outlet Shoppes at Atlanta and $657 in contingent consideration earned in 2016 related to the sale of EastGate Crossing noted below.
2015 Dispositions
Net proceeds from the 2015 dispositions were used to reduce the outstanding balances on the Company's credit facilities. The following is a summary of the Company's 2015 dispositions:
 
 
 
 
 
 
 
 
Sales Price
 
Gain
Sales Date
 
Property
 
Property Type
 
Location
 
Gross
 
Net
 
April
 
Madison Square (1)
 
Mall
 
Huntsville, AL
 
$
5,000

 
$
4,955

 
$
—

June
 
EastGate Crossing (2)
 
All Other
 
Cincinnati, OH
 
21,060

 
20,688

 
13,491

July
 
Madison Plaza
 
All Other
 
Huntsville, AL
 
5,700

 
5,472

 
2,769

November
 
Waynesville Commons
 
All Other
 
Waynesville, NC
 
14,500

 
14,289

 
5,071

December
 
Mayfaire Community Center (3)
 
All Other (4)
 
Wilmington, NC
 
56,300

 
55,955

 
—

December
 
Chapel Hill Crossing (5)
 
All Other
 
Akron, OH
 
2,300

 
2,178

 
—

 
 
 
 
 
 
 
 
$
104,860

 
$
103,537

 
$
21,331

(1)
The Company recognized a loss on impairment of real estate of $2,620 in 2015 when it adjusted the book value of the mall to its estimated fair value based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs.

119


(2)
In the fourth quarter of 2015, the Company earned $625 of contingent consideration related to the sale of EastGate Crossing and received $574 of net proceeds for the lease of a tenant space. The Company earned additional consideration in 2016 for the lease of one additional specified tenant space as noted above. Additionally, the buyer assumed the mortgage loan on the Property, which had a balance of $14,570 at the time of the sale.
(3)
The Company recognized a loss on impairment of real estate of $397 in 2015 when it adjusted the book value of Mayfaire Community Center to its estimated fair value based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs.
(4)
This Property was combined with Mayfaire Town Center in the Malls category for segment reporting purposes.
(5)
The Company recognized a loss on impairment of real estate of $1,914 in 2015 when it adjusted the book value of Chapel Hill Crossing to its estimated fair value based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs.
See Note 15 for additional information related to the impairment losses described above.
NOTE 5. UNCONSOLIDATED AFFILIATES AND COST METHOD INVESTMENT 
Unconsolidated Affiliates
At December 31, 2017, the Company had investments in the following 17 entities, which are accounted for using the equity method of accounting:
Unconsolidated Affiliates
 
Property Name
 
Company's
Interest
Ambassador Infrastructure, LLC
 
Ambassador Town Center - Infrastructure Improvements
 
65.0%
Ambassador Town Center JV, LLC
 
Ambassador Town Center
 
65.0%
CBL/T-C, LLC
 
CoolSprings Galleria, Oak Park Mall and West County Center
 
50.0%
CBL-TRS Joint Venture, LLC
 
Friendly Center and The Shops at Friendly Center
 
50.0%
EastGate Storage, LLC
 
EastGate Mall self-storage development
 
50.0%
El Paso Outlet Outparcels, LLC
 
The Outlet Shoppes at El Paso (vacant land)
 
50.0%
Fremaux Town Center JV, LLC
 
Fremaux Town Center - Phases I and II
 
65.0%
G&I VIII CBL Triangle LLC
 
Triangle Town Center and Triangle Town Commons
 
10.0%
Governor’s Square IB
 
Governor’s Square Plaza
 
50.0%
Governor’s Square Company
 
Governor’s Square
 
47.5%
Kentucky Oaks Mall Company
 
Kentucky Oaks Mall
 
50.0%
Mall of South Carolina L.P.
 
Coastal Grand
 
50.0%
Mall of South Carolina Outparcel L.P.
 
Coastal Grand Crossing and vacant land
 
50.0%
Port Orange I, LLC
 
The Pavilion at Port Orange - Phase I
 
50.0%
Shoppes at Eagle Point, LLC
 
The Shoppes at Eagle Point
 
50.0%
West Melbourne I, LLC
 
Hammock Landing - Phases I and II
 
50.0%
York Town Center, LP
 
York Town Center
 
50.0%
Although the Company had majority ownership of certain joint ventures during 2017, 2016 and 2015, it evaluated the investments and concluded that the other partners or owners in these joint ventures had substantive participating rights, such as approvals of:
•
the pro forma for the development and construction of the project and any material deviations or modifications thereto;
•
the site plan and any material deviations or modifications thereto;
•
the conceptual design of the project and the initial plans and specifications for the project and any material deviations or modifications thereto;
•
any acquisition/construction loans or any permanent financings/refinancings;
•
the annual operating budgets and any material deviations or modifications thereto;
•
the initial leasing plan and leasing parameters and any material deviations or modifications thereto; and
•
any material acquisitions or dispositions with respect to the project.

120


As a result of the joint control over these joint ventures, the Company accounts for these investments using the equity method of accounting.
2017 Activity - Unconsolidated Affiliates
River Ridge Mall JV, LLC
The Company sold its 25% interest in River Ridge Mall JV, LLC ("River Ridge") to its joint venture partner for $9,000 in cash and the Company recorded a $5,843 loss on investment related to the sale of its interest and recorded an additional $354 loss on investment upon the sale closing in August 2017. The loss on investment is included in gain on investments in the consolidated statements of operations. The Company's property management agreement with River Ridge Mall JV, LLC ended September 30, 2017.
Shoppes at Eagle Point, LLC
The Company formed a 50/50 unconsolidated joint venture, Shoppes at Eagle Point, LLC, to develop, own and operate a community center development located in Cookeville, TN. In the third quarter of 2017, the land was acquired and construction began, with completion of the first phase expected in October 2018. The partners contributed aggregate initial equity of $1,031. See 2017 Financings below for information on a construction loan.
EastGate Storage, LLC
In November 2017, the Company entered into a 50/50 joint venture, EastGate Storage, LLC with an unaffiliated partner to develop a self-storage facility adjacent to EastGate Mall. The Company contributed land with a fair value of $1,134 and the partner is equalizing through cash contributions. In conjunction with the formation of the joint venture, the unconsolidated affiliate closed on a construction loan. See details below in 2017 Financings.
JG Gulf Coast Town Center LLC - Phase III
    In December 2017, the Company entered into an assignment and assumption agreement with the Company's partner in the JG Gulf Coast Town Center LLC 50/50 joint venture. Under the terms of the agreement, the Company was assigned the rights and assumed the obligations of its joint venture partner with respect to its 50% interest in Gulf Coast Town Center - Phase III, a community center located in Ft. Meyers, FL. See Note 3 for more information.
2016 Activity - Unconsolidated Affiliates
CBL-TRS Joint Venture, LLC
In December 2016, CBL-TRS Joint Venture, LLC, sold four office buildings, located in Greensboro, NC, for a gross sales price of $26,000 and net proceeds of approximately $25,406, of which $12,703 represented each partner's share. The unconsolidated affiliate recognized a gain on sale of real estate assets of $51, of which each partner's share was approximately $25. The Company's share of the gain is included in equity in earnings of unconsolidated affiliates in the consolidated statements of operations.
G&I VIII CBL Triangle LLC
In December 2016, G&I VIII CBL Triangle LLC, sold Triangle Town Place, an associated center located in Raleigh, NC, for a gross sales price of $30,250 and net proceeds of approximately $29,802. Net proceeds from the sale were used to retire the outstanding principal balance of the $29,342 loan secured by the Property. See 2016 Loan Repayments below for additional information on this loan. The unconsolidated affiliate recognized a gain on sale of real estate assets of $2,820, of which the Company's share was approximately $282 and the joint venture partner's share was $2,538. The Company's share of the gain is included in equity in earnings of unconsolidated affiliates in the consolidated statements of operations.
G&I VIII CBL Triangle LLC is a 10/90 joint venture, formed in the first quarter of 2016, between the Company and DRA Advisors, which acquired Triangle Town Center, Triangle Town Commons and Triangle Town Place from an existing 50/50 joint venture, Triangle Town Member LLC, between the Company and The R.E. Jacobs Group for $174,000, including the assumption of the $171,092 loan, of which each selling partner's share was $85,546 as of the closing date. Triangle Town Member LLC recognized a gain on sale of real estate assets of $80,979 in connection with the sale of its interests to G&I VIII CBL Triangle LLC. Concurrent with the formation of the new joint venture, the new entity closed on a modification and restructuring of the $171,092 loan, of which the Company's share was $17,109.

121


See information on the new loan under 2016 Financings below. The Company also made an equity contribution of $3,060 to the joint venture at closing. The Company continues to lease and manage the remaining Properties.
High Pointe Commons
In the third quarter of 2016, High Pointe Commons, LP and High Pointe Commons II-HAP, LP, two 50/50 subsidiaries of the Company, and their joint venture partner closed on the sale of High Pointe Commons, a community center located in Harrisburg, PA, for a gross sales price of $33,800 and net proceeds of $14,962, of which $7,481 represented each partner's share. The existing mortgages secured by the property, which had an aggregate balance of $17,388 at the time of closing, were paid off in conjunction with the sale. See 2016 Loan Repayments below for additional information on these loans. The unconsolidated affiliate recognized a gain on sale of real estate assets of $16,649, of which each partner's share was approximately $8,324. Additionally, the unconsolidated affiliates recorded a loss on extinguishment of debt of $393, of which each partner's share was approximately $197. The Company's share of the gain and share of the loss on extinguishment of debt is included in equity in earnings of unconsolidated affiliates in the consolidated statements of operations.
CBL-TRS Joint Venture II, LLC
In the second quarter of 2016, CBL-TRS Joint Venture II, LLC, sold Renaissance Center, a community center located in Durham, NC, for a gross sales price of $129,200 and net proceeds of $80,324, of which $40,162 represented each partner's share. In conjunction with the sale, the buyer assumed the $16,000 loan secured by the Property's second phase. The loan secured by the first phase, which had a principal balance of $31,484 as of closing, was retired. See 2016 Loan Repayments below for additional information on this loan. The unconsolidated affiliate recognized a gain on sale of real estate assets of $59,977, of which each partner's share was approximately $29,989. The Company's share of the gain is included in equity in earnings of unconsolidated affiliates in the consolidated statements of operations.
JG Gulf Coast Town Center LLC - Phases I and II
In the second quarter of 2016, the foreclosure process was completed and the mortgage lender received title to the mall in satisfaction of the non-recourse mortgage loan secured by Phases I and II of Gulf Coast Town Center in Ft. Myers, FL. Gulf Coast Town Center generated insufficient cash flow to cover the debt service on the mortgage, which had a balance of $190,800 (of which the Company's 50% share was $95,400) and a contractual maturity date of July 2017. In the third quarter of 2015, the lender on the loan began receiving the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments. The joint venture recognized a gain on extinguishment of debt of $63,294 upon the disposition of Gulf Coast. The Company recognized a gain on the net investment in Gulf Coast of $29,267 upon the disposition of the Property, which is included in equity in earnings of unconsolidated affiliates in the consolidated statements of operations.
River Ridge Mall JV, LLC
In the first quarter of 2016, the Company entered into a 25/75 joint venture, River Ridge with an unaffiliated partner. The Company contributed River Ridge Mall, located in Lynchburg, VA, to River Ridge and the partner contributed $33,500 of cash and an anchor parcel at River Ridge Mall that it already owned having a value of $7,000. The $33,500 of cash was distributed to the Company and, after closing costs, $32,819 was used to reduce outstanding balances on its lines of credit. Following the initial formation, all required future contributions were funded on a pro rata basis.
The Company had accounted for the formation of River Ridge as the sale of a partial interest and recorded a loss on impairment of $9,594 in 2016, which included a reserve of $2,100 for future capital expenditures. See Note 4 and Note 15 for more information. The Company continued to manage and lease the mall until the sale of its 25% interest in the third quarter of 2017 as described above. The Company had the right to require its 75% partner to purchase its 25% interest in River Ridge if the Company ceased to manage the Property at the partner's election.

122


Condensed Combined Financial Statements - Unconsolidated Affiliates
Condensed combined financial statement information of the unconsolidated affiliates is as follows:
 
December 31,
 
2017
 
2016
ASSETS:
 
 
 
Investment in real estate assets
$
2,089,262

 
$
2,137,666

Accumulated depreciation
(618,922
)
 
(564,612
)
 
1,470,340

 
1,573,054

Developments in progress
36,765

 
9,210

  Net investment in real estate assets
1,507,105

 
1,582,264

Other assets
201,114

 
223,347

    Total assets
$
1,708,219

 
$
1,805,611

LIABILITIES:
 
 
 
Mortgage and other indebtedness, net
$
1,248,817

 
$
1,266,046

Other liabilities
41,291

 
46,160

    Total liabilities
1,290,108

 
1,312,206

OWNERS' EQUITY:
 
 
 
The Company
216,292

 
228,313

Other investors
201,819

 
265,092

  Total owners' equity
418,111

 
493,405

    Total liabilities and owners’ equity
$
1,708,219

 
$
1,805,611


 
Year Ended December 31,
 
2017
 
2016
 
2015
Total revenues
$
236,607

 
$
250,361

 
$
253,399

Depreciation and amortization
(80,102
)
 
(83,640
)
 
(79,870
)
Other operating expenses
(71,293
)
 
(76,328
)
 
(75,875
)
Income from operations
85,212

 
90,393

 
97,654

Interest and other income
1,671

 
1,352

 
1,337

Interest expense
(51,843
)
 
(55,227
)
 
(75,485
)
Gain on extinguishment of debt
—

 
62,901

 
—

Gain on sales of real estate assets
555

 
160,977

 
2,551

Net income (1)
$
35,595

 
$
260,396

 
$
26,057

(1)
The Company's pro rata share of net income is $22,939, $117,533 and $18,200 for the years ended December 31, 2017, 2016 and 2015, respectively, and is included in equity in earnings of unconsolidated affiliates in the consolidated statements of operations.

123


Financings - Unconsolidated Affiliates
See Note 14 for a description of guarantees the Operating Partnership has issued related to the unconsolidated affiliates listed below.
2017 Financings
The Company's unconsolidated affiliates had the following loan activity in 2017:
Date
 
Property
 
Stated
Interest
Rate
 
Maturity
Date (1)
 
Amount
Financed
or Extended
August
 
Ambassador Town Center - Infrastructure Improvements (2)
 
LIBOR + 2.0%
 
August 2020
 
$
11,035

October
 
The Shoppes at Eagle Point (3)
 
LIBOR + 2.75%
 
October 2020
 
36,400

December
 
Self-storage development - EastGate Mall (4)
 
LIBOR + 2.75%
 
December 2022
 
6,500

(1)
Excludes any extension options.
(2)
The loan was amended and modified to extend the maturity date. The Operating Partnership has guaranteed 100% of the loan. The unconsolidated affiliate has an interest rate swap on the notional amount of the loan, amortizing to $9,360 over the term of the swap, to effectively fix the interest rate to 3.74%.
(3)
Shoppes at Eagle Point, LLC closed on a construction loan for the development of The Shoppes at Eagle Point, a community center located in Cookeville, TN. The Operating Partnership has guaranteed 100% of the loan. The loan has one two-year extension option available at the unconsolidated affiliate's election, subject to compliance with the terms of the loan. The interest rate will be reduced to a variable-rate of LIBOR plus 2.35% once construction is complete and certain debt and operational metrics are met.
(4)
EastGate Storage, LLC closed on a construction loan for the development of a climate controlled self-storage facility adjacent to EastGate Mall in Cincinnati, OH. The loan is interest only through November 2020. Thereafter, monthly principal payments of $10, in addition to interest, will be due. The Operating Partnership has guaranteed 100% of the loan.
Subsequent to December 31, 2017, several operating Property loans were extended. See Note 19 for more information.
2016 Financings
The Company's unconsolidated affiliates had the following loan activity in 2016:
Date
 
Property
 
Stated
Interest
Rate
 
Maturity
Date (1)
 
Amount
Financed
or Extended
 
February
 
The Pavilion at Port Orange (2)
 
LIBOR + 2.0%
 
February 2018
(3) 
$
58,628

 
February
 
Hammock Landing - Phase I (2)
 
LIBOR + 2.0%
 
February 2018
(3) 
43,347

(4) 
February
 
Hammock Landing - Phase II (2)
 
LIBOR + 2.0%
 
February 2018
(3) 
16,757

 
February
 
Triangle Town Center, Triangle Town Place, Triangle Town Commons (5)
 
4.00%
(6) 
December 2018
(7) 
171,092

 
June
 
Fremaux Town Center (8)
 
3.70%
(9) 
June 2026
 
73,000

 
June
 
Ambassador Town Center (10)
 
3.22%
(11) 
June 2023
 
47,660

 
December
 
The Shops at Friendly Center (12)
 
3.34%
 
April 2023
 
60,000

 
(1)
Excludes any extension options.
(2)
The guaranty was reduced from 25% to 20% in conjunction with the refinancing.
(3)
The loan was modified and extended to February 2018 with a one-year extension option, at the joint venture's election, to February 2019.
(4)
The capacity was increased from $39,475 to fund an expansion.
(5)
The loan was amended and modified in conjunction with the sale of the Properties to a newly formed joint venture as described above.
(6)
The interest rate was reduced from 5.74% to 4.00% interest-only payments through the initial maturity date.
(7)
The loan was extended to December 2018 with two one-year extension options to December 2020. Under the terms of the loan agreement, the joint venture must pay the lender $5,000 to reduce the principal balance of the loan and an extension fee of 0.50% of the remaining outstanding loan balance if it exercises the first extension. If the joint venture elects to exercise the second extension, it must pay the lender $8,000 to reduce the principal balance of the loan and an extension fee of 0.75% of the remaining outstanding principal loan balance. Additionally, the interest rate would increase to 5.74% during the extension period.

124


(8)
Net proceeds from the non-recourse loan were used to retire the existing construction loans, secured by Phase I and Phase II of Fremaux Town Center, with an aggregate balance of $71,125.
(9)
The joint venture had an interest rate swap on a notional amount of $73,000, amortizing to $52,130 over the term of the swap, related to Fremaux Town Center to effectively fix the interest rate on the variable-rate loan. In October 2016, the joint venture made an election under the loan agreement to convert the loan from a variable-rate to a fixed-rate loan which bears interest at 3.70%.
(10)
The non-recourse loan was used to retire an existing construction loan with a principal balance of $41,885 and excess proceeds were utilized to fund remaining construction costs.
(11)
The joint venture has an interest rate swap on a notional amount of $47,660, amortizing to $38,866 over the term of the swap, related to Ambassador Town Center to effectively fix the interest rate on the variable-rate loan. Therefore, this amount is currently reflected as having a fixed rate.
(12)
CBL-TRS Joint Venture, LLC closed on a non-recourse loan secured by The Shops at Friendly Center in Greensboro, NC. The new loan has a maturity date with a term of six years to coincide with the maturity date of the existing loan secured by Friendly Center. A portion of the net proceeds were used to retire a $37,640 fixed-rate loan that bore interest at 5.90% and was due to mature in January 2017.
2017 Loan Repayment
The loan, secured by the related unconsolidated Property, was retired in 2017:
Date
 
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
Repaid
July
 
Gulf Coast Town Center - Phase III (1)
 
3.13%
 
July 2017
 
$
4,118

(1)
The Company loaned the unconsolidated affiliate, JG Gulf Coast Town Center, LLC, the amount necessary to retire the loan and received a mortgage note receivable in return. In December 2017, the Company's partner assigned its 50% interest in the Property to the Company. See Note 3 and above for more information. This intercompany loan is eliminated in consolidation as of December 31, 2017 since the Property became wholly-owned by the Company.

2016 Loan Repayments
The Company's unconsolidated affiliates retired the following loans, secured by the related unconsolidated Properties, in 2016:
Date
 
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
Repaid
April
 
Renaissance Center - Phase I
 
5.61%
 
July 2016
 
$
31,484

July
 
Kentucky Oaks Mall (1)
 
5.27%
 
January 2017
 
19,912

September
 
Governor's Square Mall (2)
 
8.23%
 
September 2016
 
14,089

September
 
High Pointe Commons - Phase I (3)
 
5.74%
 
May 2017
 
12,401

September
 
High Pointe Commons - PetCo (3)
 
3.20%
 
July 2017
 
19

September
 
High Pointe Commons - Phase II (3)
 
6.10%
 
July 2017
 
4,968

December
 
The Shops at Friendly Center (4)
 
5.90%
 
January 2017
 
37,640

December
 
Triangle Town Place (5)
 
4.00%
 
December 2018
 
29,342

(1)
The Company's share of the loan was $9,956.
(2)
The Company's share of the loan was $6,692.
(3)
The loan secured by the Property was paid off using proceeds from the sale of the Property in September 2016. See above for more information. The Company's share of the loan was 50%.
(4)
The loan secured by the Property was retired using a portion of the net proceeds from a $60,000 fixed-rate loan. See 2016 Financings above for more information.
(5)
A portion of the net proceeds was used to pay down the balance of a loan for the portion secured by Triangle Town Place upon its sale in December 2016. After the debt reduction associated with the sale of Triangle Town Place, the principal balance of the loan secured by Triangle Town Center and Triangle Town Commons as of December 31, 2016 was $141,126, of which the Company's share was $14,113.

    

125


The Company's unconsolidated affiliates retired the following construction loans, secured by the related unconsolidated Properties, in 2016:
Date
 
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
Repaid
June
 
Fremaux Town Center - Phase I (1)
 
2.44%
 
August 2016
 
$
40,530

June
 
Fremaux Town Center - Phase II (1)
 
2.44%
 
August 2016
 
30,595

June
 
Ambassador Town Center (2)
 
2.24%
 
December 2017
 
41,885

(1)
The construction loan was retired using a portion of the net proceeds from a $73,000 fixed-rate non-recourse mortgage loan. See 2016 Financings above for more information.
(2)
The construction loan was retired using a portion of the net proceeds from a $47,660 fixed-rate non-recourse mortgage loan. Excess proceeds were utilized to fund remaining construction costs. See 2016 Financings above for more information.
Cost Method Investment
The Company owned a 6.2% noncontrolling interest in Jinsheng, an established mall operating and real estate development company located in Nanjing, China, which owned controlling interests in home furnishing shopping malls. In the fourth quarter of 2016, the Company received $15,538 from Jinsheng for the redemption of its interest that had a carrying value of $5,325 and recorded a gain on investment of $10,136. The Company had previously recorded an other-than-temporary impairment of $5,306 related to this investment in 2009 upon the decline of China's real estate market. The Company accounted for its noncontrolling interest in Jinsheng using the cost method because the Company did not exercise significant influence over Jinsheng and there was no readily determinable market value of Jinsheng’s shares since they are not publicly traded.
NOTE 6. MORTGAGE AND OTHER INDEBTEDNESS, NET
Debt of the Company
CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of the Company's debt.
CBL is a limited guarantor of the Senior Unsecured Notes, as described below, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. The Company also provides a similar limited guarantee of the Operating Partnership's obligations with respect to its unsecured credit facilities and three unsecured term loans as of December 31, 2017.
Debt of the Operating Partnership
Mortgage and other indebtedness consisted of the following:
 
December 31, 2017
 
December 31, 2016
 
Amount
 
Weighted-Average
Interest
Rate (1)
 
Amount
 
Weighted-Average
Interest
Rate (1)
Fixed-rate debt:
 
 
 
 
 
 
 
   Non-recourse loans on operating Properties
$
1,796,203

 
5.33%
 
$
2,453,628

 
5.55%
Senior unsecured notes due 2023 (2)
446,976

 
5.25%
 
446,552

 
5.25%
Senior unsecured notes due 2024 (3)
299,946

 
4.60%
 
299,939

 
4.60%
Senior unsecured notes due 2026 (4)
615,848

 
5.95%
 
394,260

 
5.95%
Total fixed-rate debt
3,158,973

 
5.37%
 
3,594,379

 
5.48%
Variable-rate debt:
 

 
 
 
 

 
 
Non-recourse loans on operating Properties
10,836

 
3.37%
 
19,055

 
3.13%
Recourse loans on operating Properties (5)
101,187

 
4.00%
 
24,428

 
3.29%
Construction loan (5)
—

 
—%
 
39,263

 
3.12%

126


 
December 31, 2017
 
December 31, 2016
 
Amount
 
Weighted-Average
Interest
Rate (1)
 
Amount
 
Weighted-Average
Interest
Rate (1)
Unsecured lines of credit
93,787

 
2.56%
 
6,024

 
1.82%
Unsecured term loans (6)
885,000

 
2.81%
 
800,000

 
2.04%
Total variable-rate debt
1,090,810

 
2.90%
 
888,770

 
2.15%
Total fixed-rate and variable-rate debt
4,249,783

 
4.74%
 
4,483,149

 
4.82%
Unamortized deferred financing costs
(18,938
)
 
 
 
(17,855
)
 
 
Total mortgage and other indebtedness, net
$
4,230,845

 
 
 
$
4,465,294

 
 
 
(1)
Weighted-average interest rate includes the effect of debt premiums and discounts, but excludes amortization of deferred financing costs.
(2)
The balance is net of an unamortized discount of $3,024 and $3,448, as of December 31, 2017 and 2016, respectively.
(3)
The balance is net of an unamortized discount of $54 and $61, as of December 31, 2017 and 2016, respectively.
(4)
In September 2017, the Operating Partnership issued and sold an additional $225,000 of the series of 2026 Notes. The balance is net of an unamortized discount of $9,152 and $5,740 as of December 31, 2017 and 2016, respectively.
(5)
The Outlet Shoppes at Laredo opened in 2017 and the construction loan balance from December 31, 2016 is included in recourse loans on operating Properties as of December 31, 2017.
(6)
The Company extended and modified its three unsecured term loans in July 2017. See below for additional information.
Non-recourse and recourse term loans include loans that are secured by Properties owned by the Company that have a net carrying value of $2,073,448 at December 31, 2017.
Senior Unsecured Notes
Description
 
Issued (1)
 
Amount
 
Interest Rate (2)
 
Maturity Date (3)
2023 Notes
 
November 2013
 
$
450,000

 
5.25%
 
December 2023
2024 Notes
 
October 2014
 
300,000

 
4.60%
 
October 2024
2026 Notes
 
December 2016 / September 2017 (4)
 
625,000

 
5.95%
 
December 2026
(1)
Issued by the Operating Partnership. CBL is a limited guarantor of the Operating Partnership's obligations under the Notes as described above.
(2)
Interest is payable semiannually in arrears. The interest rate for the 2024 Notes and the 2023 Notes is subject to an increase ranging from 0.25% to 1.00% from time to time if, on or after January 1, 2016 and prior to January 1, 2020, the ratio of secured debt to total assets of the Company, as defined, is greater than 40% but less than 45%. The required ratio of secured debt to total assets for the 2026 Notes is 40% or less. As of December 31, 2017, this ratio was 23% as shown below.
(3)
The Notes are redeemable at the Operating Partnership's election, in whole or in part from time to time, on not less than 30 days and not more than 60 days' notice to the holders of the Notes to be redeemed. The 2026 Notes, the 2024 Notes and the 2023 Notes may be redeemed prior to September 15, 2026; July 15, 2024; and September 1, 2023, respectively, for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date and a make-whole premium calculated in accordance with the indenture. On or after the redemption date, the Notes are redeemable for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest. If redeemed prior to the respective dates noted above, each issuance of Notes is redeemable at the treasury rate plus 0.50%, 0.35% and 0.40% for the 2026 Notes, the 2024 Notes and the 2023 Notes, respectively.
(4)
On September 1, 2017, the Operating Partnership issued and sold an additional $225,000 of the 2026 Notes. Interest was payable with respect to the additional issuance on December 15, 2017. After deducting underwriting discounts and other offering expenses of $1,879 and a discount of $3,938, the net proceeds from the sale were approximately $219,183. The Operating Partnership used the net proceeds to reduce amounts outstanding under its unsecured credit facilities and for general business purposes.
Unsecured Lines of Credit     
The Company has three unsecured credit facilities that are used for retirement of secured loans, repayment of term loans, working capital, construction and acquisition purposes, and issuances of letters of credit.
Each facility bears interest at LIBOR plus a spread of 87.5 to 155 basis points based on credit ratings for the Operating Partnership's senior unsecured long-term indebtedness. As of December 31, 2017, the Operating Partnership's interest rate based on the credit ratings of its unsecured long-term indebtedness of Baa3 from Moody's Investors Service ("Moody's"), BBB- from Standard & Poor's Rating Services ("S&P") and BB+ from Fitch Ratings ("Fitch"), is LIBOR plus 120 basis points.

127


Subsequent to December 31, 2017, the Moody's rating was downgraded. See Note 19 for more information.
Additionally, the Company pays an annual facility fee that ranges from 0.125% to 0.300%, based on the credit ratings described above. As of December 31, 2017, the annual facility fee was 0.25%. The three unsecured lines of credit had a weighted-average interest rate of 2.56% at December 31, 2017.
The following summarizes certain information about the Company's unsecured lines of credit as of December 31, 2017:
 
Total
Capacity
 
Total
Outstanding
 
Maturity
Date
 
Extended
Maturity
Date
 
Wells Fargo - Facility A
$
500,000

 
$
—

(1) 
October 2019
 
October 2020
(2) 
First Tennessee
100,000

 
55,899

(3) 
October 2019
 
October 2020
(4) 
Wells Fargo - Facility B
500,000

 
37,888

(1) 
October 2020
 
 
 
 
$
1,100,000

 
$
93,787

(5) 
 
 
 
 
(1)
Up to $30,000 of the capacity on this facility can be used for letters of credit.
(2)
The extension option on the facility is at the Company's election, subject to continued compliance with the terms of the facility, and has a one-time extension fee of 0.15% of the commitment amount of the credit facility.
(3)
Up to $20,000 of the capacity on this facility can be used for letters of credit.
(4)
The extension option on the facility is at the Company's election, subject to continued compliance with the terms of the facility, and has a one-time extension fee of 0.20% of the commitment amount of the credit facility.
(5)
See debt covenant section below for limitation on excess capacity.
Unsecured Term Loans 
The Company has a $350,000 unsecured term loan, which bears interest at a variable rate of LIBOR plus a spread of 0.90% to 1.75% based on the credit ratings for the Operating Partnership's senior unsecured long-term indebtedness. Based on the current credit ratings for the Operating Partnership's senior unsecured long-term indebtedness, the term loan bears interest at LIBOR plus 1.35%. In July 2017, the Company exercised its option to extend the maturity date to October 2018. The term loan has a one-year extension option to extend the maturity date to October 2019. At December 31, 2017, the outstanding borrowings of $350,000 had an interest rate of 2.71%.
In July 2017, the Company closed on the modification and extension of its $400,000 unsecured term loan, with an increase in the principal balance to $490,000. The variable interest rate remains at LIBOR plus 1.50%, based on the credit ratings for the Operating Partnership's senior unsecured long-term indebtedness. In July 2018, the principal balance will be reduced to $300,000. The loan matures in July 2020 and has two one-year extension options, the second of which is at the lenders' discretion, for a July 2022 extended maturity date. At December 31, 2017, the outstanding borrowings of $490,000 had an interest rate of 2.86%.
In July 2017, the Company modified its $50,000 unsecured term loan to reduce the principal balance to $45,000 and change the interest rate to a variable rate of LIBOR plus 1.65%. The loan matures in June 2021 and has a one-year extension option at the Company's election, subject to continued compliance with the terms of the loan agreement, for an outside maturity date of June 2022. At December 31, 2017, the outstanding borrowings of $45,000 had an interest rate of 3.01%.
Fixed-Rate Debt
As of December 31, 2017, fixed-rate loans on operating Properties bear interest at stated rates ranging from 4.00% to 8.00%. Outstanding borrowings under fixed-rate loans include a net unamortized debt premium of $199 that was recorded when the Company assumed debt to acquire real estate assets that were at an above-market interest rate compared to similar debt instruments at the date of acquisition. Fixed-rate loans on operating Properties generally provide for monthly payments of principal and/or interest and mature at various dates through June 2026, with a weighted-average maturity of 3.6 years.

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Financings
The following table presents the fixed-rate loans, secured by the related consolidated Properties, that were entered into in 2016:
Date
 
Property 
 
Stated
Interest
Rate
 
Maturity Date (1)
 
Amount
Financed or
Extended
April
 
Hickory Point Mall (2)
 
5.85%
 
December 2018
(3) 
$
27,446

June
 
Hamilton Place (4)
 
4.36%
 
June 2026
 
107,000

December
 
Cary Towne Center (5)
 
4.00%
 
March 2019
(6) 
46,716

December
 
Greenbrier Mall (7)
 
5.00%
 
December 2019
(8) 
70,801

(1)
Excludes any extension options.
(2)
The loan was modified to extend the maturity date. The interest rate remains at 5.85% but the loan is now interest-only.
(3)
The loan has a one-year extension option at the Company's election for an outside maturity date of December 2019.
(4)
Proceeds from the non-recourse loan were used to retire an existing $98,181 loan with an interest rate of 5.86% that was scheduled to mature in August 2016. The Company's share of excess proceeds was used to reduce outstanding balances on its credit facilities.
(5)
The loan was restructured to extend the maturity date and reduce the interest rate from 8.5% to 4.0% interest-only payments. The Company plans to utilize excess cash flows from the mall to fund a proposed redevelopment. The original maturity date is contingent on the Company's redevelopment plans.
(6)
The loan has one two-year extension option, which is at the Company's option and contingent on the Company having met specified redevelopment criteria, for an outside maturity date of March 2021.
(7)
The loan was restructured, with an effective date of November 2016, to extend the maturity date and reduce the interest rate from 5.91% to 5.00% interest-only payments through December 2017. The interest rate will increase to 5.4075% on January 1, 2018 and thereafter require monthly principal payments of $225 and $300 in 2018 and 2019, respectively, in addition to interest.
(8)
The loan has a one-year extension option, at the Company's election, which is contingent on the mall meeting specified debt service and operational metrics. If the loan is extended, monthly principal payments of $325 will be required in 2020 in addition to interest.
Loan Repayments
The Company repaid the following fixed-rate loans, secured by the related consolidated Properties, in 2017 and 2016:
Date
 
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
Repaid (1)
2017:
 
 
 
 
 
 
 
 
January
 
The Plaza at Fayette
 
5.67%
 
April 2017
 
$
37,146

January
 
The Shoppes at St. Clair Square
 
5.67%
 
April 2017
 
18,827

February
 
Hamilton Corner
 
5.67%
 
April 2017
 
14,227

March
 
Layton Hills Mall
 
5.66%
 
April 2017
 
89,526

April
 
The Outlet Shoppes at Oklahoma City (2)
 
5.73%
 
January 2022
 
53,386

April
 
The Outlet Shoppes at Oklahoma City - Phase II (2)
 
3.53%
 
April 2019
 
5,545

April
 
The Outlet Shoppes at Oklahoma City - Phase III (2)
 
3.53%
 
April 2019
 
2,704

September
 
Hanes Mall (3)
 
6.99%
 
October 2018
 
144,325

September
 
The Outlet Shoppes at El Paso
 
7.06%
 
December 2017
 
61,561

 
 
 
 
 
 
 
 
$
427,247

 
 
 
 
 
 
 
 
 
2016:
 
 
 
 
 
 
 
 
April
 
CoolSprings Crossing
 
4.54%
 
April 2016
 
$
11,313

April
 
Gunbarrel Pointe
 
4.64%
 
April 2016
 
10,083

April
 
Stroud Mall
 
4.59%
 
April 2016
 
30,276

April
 
York Galleria
 
4.55%
 
April 2016
 
48,337


129


Date
 
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
Repaid (1)
June
 
Hamilton Place (4)
 
5.86%
 
August 2016
 
98,181

August
 
Dakota Square Mall
 
6.23%
 
November 2016
 
55,103

October
 
Southaven Towne Center
 
5.50%
 
January 2017
 
38,314

 
 
 
 
 
 
 
 
$
291,607

(1)
The Company retired the loans with borrowings from its credit facilities unless otherwise noted.
(2)
The loan was retired in conjunction with the sale of the Property which secured the loan. The Company recorded an $8,500 loss on extinguishment of debt due to a prepayment fee on the early retirement. See Note 4 for more information.
(3)
We recorded a $371 loss on extinguishment of debt due to a prepayment fee on the early retirement.
(4)
The joint venture retired the loan with proceeds from a $107,000 fixed-rate non-recourse loan. See Financings section above for more information.
Additionally, the $38,150 loan secured by Fashion Square was assumed by the buyer in conjunction with the sale of the mall in July 2016. The fixed-rate loan bore interest at 4.95% and had a maturity date of June 2022.
Subsequent to December 31, 2017, an operating Property loan was retired. See Note 19 for more information.
The following is a summary of the Company's 2017 dispositions for which the title to the consolidated mall securing the related fixed-rate debt was transferred to the lender in satisfaction of the non-recourse debt:    
Date
 
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Balance of
Non-recourse
 Debt
 
Gain on
Extinguishment
of Debt
January
 
Midland Mall
 
6.10%
 
August 2016
 
$
31,953

 
$
3,760

June
 
Chesterfield Mall
 
5.74%
 
September 2016
 
140,000

 
29,187

August
 
Wausau Center
 
5.85%
 
April 2021
 
17,689

 
6,851

 
 
 
 
 
 
 
 
$
189,642

 
$
39,798

Other
In conjunction with the divestiture of the Company's interests in a consolidated joint venture, the Company was relieved of its funding obligation related to the loan secured by vacant land owned by the joint venture, which had a principal balance of $2,466 upon the disposition of its interests in 2017. See Note 12 and Note 15 for more information.        
Variable-Rate Debt
Term loans for the Company’s operating Properties bear interest at variable interest rates indexed to the LIBOR rate. At December 31, 2017, interest rates on such variable-rate loans varied from 3.37% to 4.11%. These loans mature at various dates from April 2018 to July 2020, with a weighted-average maturity of 1.3 years, and have extension options of up to two years.

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Financings
The following table presents the variable-rate loan, secured by the related consolidated Property, that was extended in 2017 and 2016:
Date
 
Property
 
Stated
Interest
Rate
 
Maturity Date
 
Amount
Extended
2017:
 
 
 
 
 
 
 
 
March
 
Statesboro Crossing (1)
 
LIBOR + 1.80%
 
June 2018
 
$
10,930

 
 
 
 
 
 
 
 
 
2016:
 
 
 
 
 
 
 
 
June
 
Statesboro Crossing (2)
 
LIBOR + 1.80%
 
June 2017
(3) 
$
11,035

(1)
The Company exercised the extension option under the mortgage loan.
(2)
The loan was modified to extend the maturity date.
(3)
The loan had a one-year extension option for an outside maturity date of June 2018.
Construction Loan
Financing    
The following table presents the construction loan, secured by the related consolidated Property, that was entered into in 2016:
Date
 
Property
 
Stated
Interest
Rate
 
Maturity Date
 
Amount
Financed
May
 
The Outlet Shoppes at Laredo (1)
 
LIBOR + 2.5%
(2) 
May 2019
(3) 
$
91,300

(1)
The consolidated 65/35 joint venture closed on a construction loan for the development of The Outlet Shoppes at Laredo, an outlet center located in Laredo, TX. The Operating Partnership has guaranteed 100% of the loan.
(2)
The interest rate will be reduced to LIBOR plus 2.25% once the development is complete and certain debt and operational metrics are met.
(3)
The loan has one 24-month extension option, which is at the joint venture's election, subject to continued compliance with the terms of the loan agreement, for an outside maturity date of May 2021.
Loan Repayment
The Company repaid the following construction loan, secured by the related consolidated Property, in 2016:
Date
 
Property
 
Interest
Rate at
Repayment Date
 
Scheduled
Maturity Date
 
Principal
Balance
Repaid
December
 
The Outlet Shoppes at Atlanta - Parcel Development (1)
 
3.02%
 
December 2019
 
$
2,124

(1)
In conjunction with its sale in December 2016, a portion of the net proceeds was used to retire the loan secured by the Property.
Financial Covenants and Restrictions 
The agreements for the unsecured lines of credit, the Notes and unsecured term loans contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum unencumbered asset and interest ratios, maximum secured indebtedness ratios, maximum total indebtedness ratios and limitations on cash flow distributions.  The Company believes that it was in compliance with all financial covenants and restrictions at December 31, 2017.

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Unsecured Lines of Credit and Unsecured Term Loans
The following presents the Company's compliance with key covenant ratios, as defined, of the credit facilities and term loans as of December 31, 2017:
Ratio
 
Required
 
Actual
 
Debt to total asset value
 
< 60%
 
50%
 
Unsecured indebtedness to unencumbered asset value (1)
 
< 60%
 
48%
(2) 
Unencumbered NOI to unsecured interest expense
 
> 1.75x
 
3.3x
 
EBITDA to fixed charges (debt service)
 
> 1.5x
 
2.4x
 
 
(1)
The debt covenant was modified in the third quarter of 2017 to reduce the ratio from 62.5% to 60.0%. The definition of unencumbered asset value was also modified with respect to the assets that are included in the unencumbered asset pool.
(2)
The debt covenant limits the total amount of unsecured indebtedness the Company may have outstanding, which varies over time based on the ratio. Based on the Company’s outstanding unsecured indebtedness as of December 31, 2017, the total amount available to the Company to borrow on its lines of credit was $429,678 less than the total capacity of the lines of credit resulting in total availability of $576,535 as of December 31, 2017.

The agreements for the unsecured credit facilities and unsecured term loans described above contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000 or any single non-recourse indebtedness greater than $150,000 (for the Company's ownership share) of CBL, the Operating Partnership or any Subsidiary, as defined, will constitute an event of default under the agreements to the credit facilities. The credit facilities also restrict the Company's ability to enter into any transaction that could result in certain changes in its ownership or structure as described under the heading “Change of Control/Change in Management” in the agreements for the credit facilities.
Senior Unsecured Notes
The following presents the Company's compliance with key covenant ratios, as defined, of the Notes as of December 31, 2017:
Ratio
 
Required
 
Actual
Total debt to total assets
 
< 60%
 
52%
Secured debt to total assets
 
  <45% (1)
 
23%
Total unencumbered assets to unsecured debt
 
>150%
 
208%
Consolidated income available for debt service to annual debt service charge
 
> 1.5x
 
3.1x
(1)
On January 1, 2020 and thereafter, secured debt to total assets must be less than 40% for the 2023 Notes and the 2024 Notes. The required ratio of secured debt to total assets for the 2026 Notes is 40% or less.
The agreements for the Notes described above contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000 of the Operating Partnership will constitute an event of default under the Notes.
Other
Several of the Company’s Properties are owned by special purpose entities, created as a requirement under certain loan agreements that are included in the Company’s consolidated financial statements. The sole business purpose of the special purpose entities is to own and operate these Properties. The real estate and other assets owned by these special purpose entities are restricted under the loan agreements in that they are not available to settle other debts of the Company. However, so long as the loans are not under an event of default, as defined in the loan agreements, the cash flows from these Properties, after payments of debt service, operating expenses and reserves, are available for distribution to the Company.

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Scheduled Principal Payments 
As of December 31, 2017, the scheduled principal amortization and balloon payments of the Company’s consolidated debt, excluding extensions available at the Company’s option, on all mortgage and other indebtedness, including construction loans and lines of credit, are as follows:
2018
$
667,720

2019
361,411

2020
544,957

2021
498,168

2022
431,331

Thereafter
1,635,792

 
4,139,379

Net unamortized discounts and premium
(12,031
)
Unamortized deferred financing costs
(18,938
)
Principal balance of loan secured by Lender Mall in foreclosure (1)
122,435

Total mortgage and other indebtedness, net
$
4,230,845

(1)
Represents the principal balance of the non-recourse loan, secured by Acadiana Mall, which is in default. The loan had an April 2017 maturity date.
Of the $667,720 of scheduled principal payments in 2018, $82,190 relates to the maturing principal balances of four operating Property loans, $540,000 represents the aggregate principal balance due of two unsecured term loans (the $350,000 unsecured term loan and $190,000, which matures in July 2018, of the $490,000 unsecured term loan) and $45,530 relates to scheduled principal amortization. Of the 2018 maturities, an operating Property loan with a principal balance of $27,446 has a one-year extension option and the $350,000 unsecured term loan has a one-year extension option, which are at the Company's option and subject to compliance with the terms of the respective lender agreements, leaving approximately $244,744 of loan maturities in 2018 that must be retired or refinanced. Subsequent to December 31, 2017, the Company retired an operating Property loan. See Note 19 for details.
Interest Rate Hedging Instruments
The Company recorded its derivative instruments in its consolidated balance sheets at fair value.  The accounting for changes in the fair value of derivatives depended on the intended use of the derivative, whether the derivative was designated as a hedge and, if so, whether the hedge met the criteria necessary to apply hedge accounting.
The Company’s objectives in using interest rate derivatives was to add stability to interest expense and to manage its exposure to interest rate movements.  To accomplish these objectives, the Company primarily used interest rate swaps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involved the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  
The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges was recorded in AOCI/L and was subsequently reclassified into earnings in the period that the hedged forecasted transaction affected earnings.  Such derivatives were used to hedge the variable cash flows associated with variable-rate debt.
The Company's outstanding interest rate derivatives, that were designated as cash flow hedges of interest rate risk, matured on April 1, 2016. 

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The following table provides further information of the gains and losses related to the Company’s interest rate derivatives that were designated as cash flow hedges of interest rate risk in 2016 and 2015: 
Hedging Instrument
 
Gain Recognized in OCI/L
(Effective Portion)
 
Location of
Losses
Reclassified
from AOCI/L
into Earnings
(Effective Portion)
 
Loss Recognized in Earnings
(Effective Portion)
 
Location of
Gains
Recognized in
Earnings
(Ineffective
Portion)
 
Gain
Recognized in
Earnings
(Ineffective Portion)
 
2016
2015
 
 
2016
2015
 
 
2016
2015
Interest rate contracts
 
$
434

$
1,915

 
Interest Expense
 
$
(443
)
$
(2,196
)
 
Interest Expense
 
$
—

$
—

     See Note 2 and Note 15 for additional information regarding the Company’s former interest rate hedging instruments.
NOTE 7. SHAREHOLDERS’ EQUITY AND PARTNERS' CAPITAL 
Common Stock and Common Units
The Company's authorized common stock consists of 350,000,000 shares at $0.01 par value per share. The Company had 171,088,778 and 170,792,645 shares of common stock issued and outstanding as of December 31, 2017 and 2016, respectively.
Partners in the Operating Partnership hold their ownership through common and special common units of limited partnership interest, hereinafter referred to as "common units." A common unit and a share of CBL's common stock have essentially the same economic characteristics, as they effectively participate equally in the net income and distributions of the Operating Partnership. For each share of common stock issued by CBL, the Operating Partnership has issued a corresponding number of common units to CBL in exchange for the proceeds from the stock issuance. The Operating Partnership had 199,297,151 and 199,085,032 common units outstanding as of December 31, 2017 and 2016, respectively.
Each limited partner in the Operating Partnership has the right to exchange all or a portion of its common units for shares of CBL's common stock, or at the Company's election, their cash equivalent. When an exchange for common stock occurs, the Company assumes the limited partner's common units in the Operating Partnership. The number of shares of common stock received by a limited partner of the Operating Partnership upon exercise of its exchange rights will be equal, on a one-for-one basis, to the number of common units exchanged by the limited partner. If the Company elects to pay cash, the amount of cash paid by the Operating Partnership to redeem the limited partner's common units will be based on the five-day trailing average of the trading price, at the time of exchange, of the shares of common stock that would otherwise have been received by the limited partner in the exchange. Neither the common units nor the shares of CBL's common stock are subject to any right of mandatory redemption.
At-The-Market Equity Program
On March 1, 2013, the Company entered into the Sales Agreements (collectively, the "Sales Agreements") with a number of sales agents to sell shares of CBL's common stock, having an aggregate offering price of up to $300,000, from time to time in the ATM equity offerings (as defined in Rule 415 of the Securities Act of 1933, as amended) or in negotiated transaction (the "ATM program"). In accordance with the Sales Agreements, the Company will set the parameters for the sales of shares, including the number of shares to be issued, the time period during which sales are to be made and any minimum price below which sales may not be made. The Sales Agreements provide that the sales agents will be entitled to compensation for their services at a mutually agreed commission rate not to exceed 2.0% of the gross proceeds from the sales of shares sold through the ATM program. For each share of common stock issued by CBL, the Operating Partnership issues a corresponding number of common units of limited partnership interest to CBL in exchange for the contribution of the proceeds from the stock issuance. The Company includes only share issuances that have settled in the calculation of shares outstanding at the end of each period.
Since inception, the Company has sold $211,493 shares of common stock through the ATM program, at a weighted-average sales price of $25.12, generating net proceeds of $209,596, which were used to reduce the balances on the Company's credit facilities. Since the commencement of the ATM program, the Company has issued 8,419,298 shares of common stock and approximately $88,507 remains available that may be sold under this program as of

134


December 31, 2017. The Company has not sold any shares under the ATM program since 2013. Actual future sales under this program, if any, will depend on a variety of factors including but not limited to market conditions, the trading price of CBL's common stock and the Company's capital needs. The Company has no obligation to sell the remaining shares available under the ATM program.
Common Unit Activity
During 2017, the Operating Partnership elected to pay cash of $656 to five holders of 84,014 common units in the Operating Partnership upon the exercise of their conversion rights.
During 2016, the Operating Partnership elected to pay cash of $11,754 to four holders of 964,796 common units in the Operating Partnership upon the exercise of their conversion rights.
During 2015, no holders of common units exercised their conversion rights.
Preferred Stock and Preferred Units
The Company's authorized preferred stock consists of 15,000,000 shares at $0.01 par value per share. A description of the Company's cumulative redeemable preferred stock is listed below. The Operating Partnership issues an equivalent number of preferred units to CBL in exchange for the contribution of the proceeds from CBL to the Operating Partnership when CBL issues preferred stock. The preferred units generally have the same terms and economic characteristics as the corresponding series of preferred stock.
The Company has 6,900,000 depositary shares, each representing 1/10th of a share of CBL's 6.625% Series E Preferred Stock with a par value of $0.01 per share, outstanding as of December 31, 2017 and 2016. The Series E Preferred Stock has a liquidation preference of $250.00 per share ($25.00 per depositary share). The dividends on the Series E Preferred Stock are cumulative, accrue from the date of issuance and are payable quarterly in arrears at a rate of $16.5625 per share ($1.65625 per depositary share) per annum. The Series E Preferred Stock generally has no stated maturity, is not subject to any sinking fund or mandatory redemption, and is not convertible into any other securities of the Company, except under certain circumstances in connection with a change of control. Owners of the depositary shares representing Series E Preferred Stock generally have no voting rights except under dividend default. The Company may redeem shares, in whole or in part, at any time for a cash redemption price of $250.00 per share ($25.00 per depositary share) plus accrued and unpaid dividends.
The Company has 18,150,000 depositary shares, each representing 1/10th of a share of CBL's 7.375% Series D Preferred Stock with a par value of $0.01 per share, outstanding as of December 31, 2017 and 2016. The Series D Preferred Stock has a liquidation preference of $250.00 per share ($25.00 per depositary share). The dividends on the Series D Preferred Stock are cumulative, accrue from the date of issuance and are payable quarterly in arrears at a rate of $18.4375 per share ($1.84375 per depositary share) per annum. The Series D Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption, and is not convertible into any other securities of the Company. The Company may redeem shares, in whole or in part, at any time for a cash redemption price of 250.00 per share ($25.00 per depositary share) plus accrued and unpaid dividends.
Dividends - CBL 
CBL paid first, second and third quarter 2017 cash dividends on its common stock of $0.265 per share on April 17th, July 17th and October 16th 2017, respectively.  On November 2, 2017, CBL's Board of Directors declared a fourth quarter cash dividend of $0.200 per share that was paid on January 16, 2018, to shareholders of record as of December 29, 2017. The dividend declared in the fourth quarter of 2017, totaling $34,217, is included in accounts payable and accrued liabilities at December 31, 2017.  The total dividend included in accounts payable and accrued liabilities at December 31, 2016 was $45,259.

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The allocations of dividends declared and paid for income tax purposes are as follows:
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
Dividends declared:
 
 
 
 
 
Common stock
$
0.98

(1) 
$
0.88

(2) 
$
1.06

Series D preferred stock
$
18.44

 
$
18.44

 
$
18.44

Series E preferred stock
$
16.56

 
$
16.56

 
$
16.56

 
 
 
 
 
 
Allocations:
 

 
 

 
 

Common stock
 

 
 

 
 

Ordinary income
85.37
%
 
100.00
%
 
100.00
%
Capital gains 25% rate
—
%
 
—
%
 
—
%
Return of capital
14.63
%
 
—
%
 
—
%
Total
100.00
%
 
100.00
%
 
100.00
%
 
 
 
 
 
 
Preferred stock (3)
 

 
 

 
 

Ordinary income
100.00
%
 
100.00
%
 
100.00
%
Capital gains 25% rate
—
%
 
—
%
 
—
%
Total
100.00
%
 
100.00
%
 
100.00
%
 
(1)
Of the $0.200 per share dividend declared on November 2, 2017 and paid January 16, 2018, $0.200 will be reported and is taxable in 2018.
(2)
Of the $0.265 per share dividend declared on November 3, 2016 and paid January 16, 2017, $0.081 is taxable in 2016 and $0.184 per share will be reported and is taxable in 2017.
(3)
The allocations for income tax purposes are the same for each series of preferred stock for each period presented.
Distributions - The Operating Partnership
The Operating Partnership paid first, second and third quarter 2017 cash distributions on its redeemable common units and common units of $0.7322 and $0.2692 per share, respectively, on April 17th, July 17th and October 16th 2017, respectively.  On November 2, 2017, the Operating Partnership declared a fourth quarter cash distribution on its redeemable common units and common units of $0.7322 and $0.2048 per share, respectively, that was paid on January 16, 2018. The distribution declared in the fourth quarter of 2017, totaling $7,412, is included in accounts payable and accrued liabilities at December 31, 2017.  The total dividend included in accounts payable and accrued liabilities at December 31, 2016 was $9,054.
NOTE 8. REDEEMABLE INTERESTS AND NONCONTROLLING INTERESTS
Redeemable Noncontrolling Interests and Noncontrolling Interests of the Company
Partnership Interests in the Operating Partnership that Are Not Owned by the Company
The common units that the Company does not own are reflected in the Company's consolidated balance sheets as redeemable noncontrolling interest and noncontrolling interests in the Operating Partnership.
Series S Special Common Units
Redeemable noncontrolling interest includes a noncontrolling partnership interest in the Operating Partnership for which the partnership agreement includes redemption provisions that may require the Operating Partnership to redeem the partnership interest for real property.  In July 2004, the Operating Partnership issued 1,560,940 Series S special common units (“S-SCUs”), all of which are outstanding as of December 31, 2017, in connection with the acquisition of Monroeville Mall. Under the terms of the Operating Partnership’s limited partnership agreement, the holder of the S-SCUs has the right to exchange all or a portion of its partnership interest for shares of the Company’s common stock or, at the Company’s election, their cash equivalent. The holder has the additional right to require the Operating Partnership to acquire a qualifying property and distribute it to the holder in exchange for the S-SCUs.

136


Generally, the acquisition price of the qualifying property cannot be more than the lesser of the consideration that would be received in a normal exchange, as discussed above, or $20,000, subject to certain limited exceptions.  Should the consideration that would be received in a normal exchange exceed the maximum property acquisition price as described in the preceding sentence, the excess portion of its partnership interest could be exchanged for shares of CBL's stock or, at the Company’s election, their cash equivalent.  The S-SCUs receive a minimum distribution of $2.92875 per unit per year.
Series L Special Common Units
In June 2005, the Operating Partnership issued 571,700 L-SCUs, all of which are outstanding as of December 31, 2017, in connection with the acquisition of Laurel Park Place. The L-SCUs receive a minimum distribution of $0.7572 per unit per quarter ($3.0288 per unit per year). Upon the earlier to occur of June 1, 2020, or when the distribution on the common units exceeds $0.7572 per unit for four consecutive calendar quarters, the L-SCUs will thereafter receive a distribution equal to the amount paid on the common units. In December 2012, the Operating Partnership issued 622,278 common units valued at $14,000 to acquire the remaining 30% noncontrolling interest in Laurel Park Place.
Series K Special Common Units
In November 2005, the Operating Partnership issued 1,144,924 K-SCUs, all of which are outstanding as of December 31, 2017, in connection with the acquisition of Oak Park Mall, Eastland Mall and Hickory Point Mall. The holders of the K-SCUs receive a dividend at a rate of 6.25%, or $2.96875 per K-SCU. 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. The holders of the K-SCUs may exchange them, on a one-for-one basis, for shares of CBL’s common stock or, at the Company’s election, their cash equivalent.
Outstanding rights to convert redeemable noncontrolling interests and noncontrolling interests in the Operating Partnership to common stock were held by the following parties at December 31, 2017 and 2016:
 
December 31,
 
2017
 
2016
CBL’s Predecessor
18,172,690

 
18,172,690

Third parties
10,035,683

 
10,119,697

 
28,208,373

 
28,292,387

The assets and liabilities allocated to the Operating Partnership’s redeemable noncontrolling interest and noncontrolling interests are based on their ownership percentages of the Operating Partnership at December 31, 2017 and 2016.  The ownership percentages are determined by dividing the number of common units held by each of the redeemable noncontrolling interest and the noncontrolling interests at December 31, 2017 and 2016 by the total common units outstanding at December 31, 2017 and 2016, respectively.  The redeemable noncontrolling interest ownership percentage in assets and liabilities of the Operating Partnership was 0.8% at December 31, 2017 and 2016.  The noncontrolling interest ownership percentage in assets and liabilities of the Operating Partnership was 13.4% at December 31, 2017 and 2016. 
Income is allocated to the Operating Partnership’s redeemable noncontrolling interest and noncontrolling interests based on their weighted-average ownership during the year. The ownership percentages are determined by dividing the weighted-average number of common units held by each of the redeemable noncontrolling interest and noncontrolling interests by the total weighted-average number of common units outstanding during the year. 
A change in the number of shares of common stock or common units changes the percentage ownership of all partners of the Operating Partnership.  A common unit is considered to be equivalent to a share of common stock since it generally is exchangeable for shares of the Company’s common stock or, at the Company’s election, their cash equivalent. As a result, an allocation is made between redeemable noncontrolling interests, shareholders’ equity and noncontrolling interests in the Operating Partnership in the Company's accompanying balance sheets to reflect the change in ownership of the Operating Partnership’s underlying equity when there is a change in the number of shares and/or common units outstanding.  During 2017, 2016 and 2015, the Company allocated $3,049, $2,454 and $2,981, respectively, from shareholders’ equity to redeemable noncontrolling interest. During 2017 and 2016, the Company

137


allocated $4,290 and $13,625, respectively, from shareholders' equity to noncontrolling interest. During 2015, the Company allocated $207 from noncontrolling interest to shareholders' equity.
The total redeemable noncontrolling interest in the Operating Partnership was $8,835 and $17,996 at December 31, 2017 and 2016, respectively.  The total noncontrolling interest in the Operating Partnership was $86,773 and $100,035 at December 31, 2017 and 2016, respectively.
Redeemable Noncontrolling Interests and Noncontrolling Interests in Other Consolidated Subsidiaries 
Redeemable noncontrolling interests included the aggregate noncontrolling ownership interest in four of the Company’s other consolidated subsidiaries held by third parties which were redeemed in the fourth quarter of 2016 for $3,800, which was comprised of $300 in cash and a $3,500 promissory note. See Note 10 for additional information on the note. The Company recognized a net loss of $2,602 on the disposal of its interests. The loss is included in gain on investments in the consolidated statements of operations.
 The Company had 22 and 25 other consolidated subsidiaries at December 31, 2017 and 2016, respectively, that had noncontrolling interests held by third parties and for which the related partnership agreements either do not include redemption provisions or are subject to redemption provisions that do not require classification outside of permanent equity. The total noncontrolling interests in other consolidated subsidiaries were $9,701 and $12,103 at December 31, 2017 and 2016, respectively. 
The assets and liabilities allocated to the redeemable noncontrolling interests and noncontrolling interests in other consolidated subsidiaries are based on the third parties’ ownership percentages in each subsidiary at December 31, 2017 and 2016. Income is allocated to the redeemable noncontrolling interests and noncontrolling interests in other consolidated subsidiaries based on the third parties’ weighted-average ownership in each subsidiary during the year. 
Redeemable Interests and Noncontrolling Interests of the Operating Partnership
The S-SCUs described above that are reflected as redeemable noncontrolling interests in the Company's consolidated balance sheets are reflected as redeemable common units in the Operating Partnership's consolidated balance sheets.
The noncontrolling interests in other consolidated subsidiaries that are held by third parties that are reflected as a component of noncontrolling interests in the Company's consolidated balance sheets comprise the entire amount that is reflected as noncontrolling interests in the Operating Partnership's consolidated balance sheets.
Variable Interest Entities
In accordance with the guidance in ASU 2015-02 and ASU 2016-17, as discussed in Note 2, the Operating Partnership and certain of its subsidiaries are deemed to have the characteristics of a VIE primarily because the limited partners of these entities do not collectively possess substantive kick-out or participating rights. The Company adopted ASU 2015-02 as of January 1, 2016 and ASU 2016-17 was adopted as of January 1, 2017 on a modified retrospective basis. The adoption of ASU 2016-17 did not change any of the Company's consolidation conclusions made under ASU 2015-02 and did not change amounts within the consolidated financial statements.
The Company consolidates the Operating Partnership, which is a VIE, for which the Company is the primary beneficiary. The Company, through the Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether the Company is the primary beneficiary of a VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Company's investment; the obligation or likelihood for the Company or other investors to provide financial support; and the similarity with and significance to the Company's business activities and the business activities of the other investors.     

138


The table below lists the Company's consolidated VIEs as of December 31, 2017 and 2016, which do not reflect the elimination of any internal debt the consolidated VIE has with the Operating Partnership:
 
As of December 31,
 
 
2017
 
2016
 
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
Consolidated VIEs:
 
 
 
 
 
 
 
 
Atlanta Outlet Outparcels, LLC
$
878

 
$
—

 
$
914

 
$
4

 
Atlanta Outlet JV, LLC
60,476

 
79,769

(1) 
63,361

 
81,128

 
CBL Terrace LP
16,472

 
13,313

 
16,714

 
13,509

 
El Paso Outlet Center Holding, LLC
93,139

 
65,149

 
103,232

 
69,535

 
El Paso Outlet Center II, LLC
8,512

 
6,955

(2) 
8,638

 
7,028

 
Foothills Mall Associates
—

 
—

(3) 
9,811

 
34,997

 
Gettysburg Outlet Center Holding, LLC
36,386

 
39,049

 
36,542

 
39,476

 
Gettysburg Outlet Center, LLC
7,218

 
74

 
7,203

 
37

 
High Point Development LP II
1,084

 
69

 
1,104

 
55

 
Jarnigan Road LP
41,671

 
20,229

 
41,392

 
20,988

 
Laredo Outlet JV, LLC
110,174

 
81,618

(4) 
89,353

 
58,822

 
Lebcon Associates
59,375

 
120,879

 
47,721

 
121,529

 
Lebcon I, Ltd
9,034

 
9,463

 
9,290

 
9,711

 
Lee Partners
1,011

 
—

 
1,195

 
—

 
Louisville Outlet Outparcels, LLC
74

 
—

 
62

 
—

 
Louisville Outlet Shoppes, LLC
73,173

 
83,543

(5) 
76,831

 
85,132

 
Madison Grandview Forum, LLC
32,692

 
13,198

 
33,196

 
13,622

 
The Promenade at D'Iberville
81,500

 
46,568

 
84,470

 
46,570

 
Statesboro Crossing, LLC
18,403

 
10,988

 
18,869

 
11,058

 
Village at Orchard Hills, LLC
—

 
—

(3) 
498

 
—

 
Woodstock GA Investments, LLC
—

 
—

(3) 
9,098

 
3,185

 
 
$
651,272

 
$
590,864

 
$
659,494

 
$
616,386

 
(1)
Of this total, $4,707 related to The Outlet Shoppes at Atlanta - Phase II, is guaranteed by the Operating Partnership.
(2)
Of this total, $6,613 related to The Outlet Shoppes at El Paso - Phase II, is guaranteed by the Operating Partnership.
(3)
This joint venture is not a VIE as of December 31, 2017. See description of reconsideration event below.
(4)
Of this total, $80,145 related to The Outlet Shoppes at Laredo, is guaranteed by the Operating Partnership.
(5)
Of this total, $9,722 relates to The Outlet Shoppes of the Bluegrass - Phase II, is guaranteed by the Operating Partnership.
The table below lists the Company's unconsolidated VIEs as of December 31, 2017:
Unconsolidated VIEs:
 
Investment in
Real Estate
Joint Ventures
and
Partnerships
 
Maximum
Risk of Loss
 
Ambassador Infrastructure, LLC (1)
 
$
—

 
$
11,035

(2) 
EastGate Storage, LLC (3)
 
228

 
6,500

 
G&I VIII CBL Triangle LLC (1)
 
1,616

 
1,616

(2) 
Shoppes at Eagle Point, LLC (3)
 
14,656

 
36,400

(2) 
 
 
$
16,500

 
$
55,551

 
(1)
This unconsolidated affiliate was classified as a VIE as of December 31, 2016.
(2)
See Note 14 for information on guarantees of debt.
(3)
See Note 5 for more information on this new unconsolidated affiliate.

139


Variable Interest Entities - Reconsideration Events    
Woodstock GA, Investments, LLC
In 2017, the Company divested its interests in the 75/25 consolidated joint venture and was relieved of its funding obligation related to the loan secured by the vacant land owned by the joint venture. See Note 6 and Note 15 for more information.
Foothills Mall Associates
The Company held a 95% interest in this consolidated joint venture, which represented an interest in a VIE. The property was sold in 2017. See Note 4 for more information.
Village at Orchard Hills, LLC
The joint venture completed the sale of its outparcels, distributed the cash in 2017 and no longer has any assets.
NOTE 9. MINIMUM RENTS 
The Company receives rental income by leasing retail shopping center space under operating leases. Future minimum rents are scheduled to be received under non-cancellable tenant leases at December 31, 2017, as follows:
2018
$
523,498

2019
446,591

2020
380,600

2021
321,156

2022
257,231

Thereafter
656,777

 
$
2,585,853

Future minimum rents do not include percentage rents or tenant reimbursements that may become due.
NOTE 10. MORTGAGE AND OTHER NOTES RECEIVABLE
Each of the Company's mortgage notes receivable is collateralized by either a first mortgage, a second mortgage or by an assignment of 100% of the partnership interests that own the real estate assets.  Other notes receivable include amounts due from tenants or government sponsored districts and unsecured notes received from third parties as whole or partial consideration for property or investments.  The Company reviews its mortgage and other notes receivable to determine if the balances are realizable based on factors affecting the collectability of those balances.  Factors may include credit quality, timeliness of required periodic payments, past due status and management discussions with obligors. 
Mortgage and other notes receivable consist of the following:
 
 
 
 
As of December 31, 2017
 
As of December 31, 2016
 
 
Maturity Date
 
Interest Rate
 
Balance
 
Interest Rate
 
Balance
Mortgages:
 
 
 
 
 
 
 
 
 
 
Columbia Place Outparcel
 
Feb 2022
 
5.00%
 
$
302

 
5.00%
 
$
321

One Park Place
 
May 2022
 
5.00%
 
1,010

 
5.00%
 
1,194

Village Square (1)
 
Mar 2018
 
4.00%
 
1,596

 
3.75%
 
1,644

Other (2)
 
Dec 2016 -
Jan 2047
 
4.07% - 9.50%
 
2,510

 
3.27% - 9.50%
 
2,521

 
 
 
 
 
 
5,418

 
 
 
5,680


140


 
 
 
 
As of December 31, 2017
 
As of December 31, 2016
 
 
Maturity Date
 
Interest Rate
 
Balance
 
Interest Rate
 
Balance
Other Notes Receivable:
 
 
 
 
 
 
 
 
 
 
ERMC
 
Sep 2021
 
4.00%
 
2,855

 
4.00%
 
3,500

Horizon Group (3)
 
N/A
 
—%
 
—

 
7.00%
 
300

RED Development Inc. (4)
 
N/A
 
—%
 
—

 
5.00%
 
6,588

Southwest Theaters LLC
 
Apr 2026
 
5.00%
 
672

 
5.00%
 
735

 
 
 
 
 
 
3,527

 
 
 
11,123

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
8,945

 
 
 
$
16,803

(1)
The interest rate increased to 4.0% from April 2017 through the maturity date.
(2)
The $1,100 note for The Promenade at D'Iberville with a maturity date of December 2016 is in default.
(3)
In January 2017, the loan was extended to July 2017 and paid off in May 2017.
(4)
The loan was paid off in December 2017.
NOTE 11. SEGMENT INFORMATION
The Company measures performance and allocates resources according to property type, which is determined based on certain criteria such as type of tenants, capital requirements, economic risks, leasing terms, and short- and long-term returns on capital. Rental income and tenant reimbursements from tenant leases provide the majority of revenues from all segments. The accounting policies of the reportable segments are the same as those described in Note 2.
The Company's segment information for the years ended December 31, 2017, 2016 and 2015 has been retrospectively revised from previously reported amounts to reflect a change in our reportable segments. The Company no longer separately presents quantitatively and qualitatively insignificant reportable segments. Information on the Company’s reportable segments is presented as follows:
Year Ended December 31, 2017
 
Malls
 
All
Other (1)
 
Total
Revenues
 
$
847,979

 
$
79,273

 
$
927,252

Property operating expenses (2)
 
(244,282
)
 
(16,271
)
 
(260,553
)
Interest expense
 
(120,414
)
 
(98,266
)
 
(218,680
)
Other expense
 
—

 
(5,180
)
 
(5,180
)
Gain on sales of real estate assets
 
75,980

 
17,812

 
93,792

Segment profit (loss)
 
$
559,263

 
$
(22,632
)
 
536,631

Depreciation and amortization expense
 
 

 
 

 
(299,090
)
General and administrative expense
 
 

 
 

 
(58,466
)
Interest and other income
 
 

 
 

 
1,706

Gain on extinguishment of debt
 
 

 
 

 
30,927

Loss on impairment
 
 

 
 

 
(71,401
)
Loss on investment
 
 
 
 
 
(6,197
)
Equity in earnings of unconsolidated affiliates
 
 

 
 

 
22,939

Net income before income tax benefit
 
 

 
 

 
$
157,049

Total assets
 
$
5,152,789

 
$
552,019

 
$
5,704,808

Capital expenditures (3)
 
$
174,327

 
$
8,790

 
$
183,117



141


Year Ended December 31, 2016
 
Malls
 
All
Other (1)
 
Total
Revenues
 
$
928,214

 
$
100,043

 
$
1,028,257

Property operating expenses (2)
 
(268,898
)
 
(12,558
)
 
(281,456
)
Interest expense
 
(143,903
)
 
(72,415
)
 
(216,318
)
Other expense
 
—

 
(20,326
)
 
(20,326
)
Gain on sales of real estate assets
 
481

 
29,086

 
29,567

Segment profit
 
$
515,894

 
$
23,830

 
539,724

Depreciation and amortization expense
 
 

 
 

 
(292,693
)
General and administrative expense
 
 

 
 

 
(63,332
)
Interest and other income
 
 

 
 

 
1,524

Loss on impairment
 
 
 
 
 
(116,822
)
Gain on investments
 
 
 
 
 
7,534

Income tax benefit
 
 
 
 
 
2,063

Equity in earnings of unconsolidated affiliates
 
 
 
 

 
117,533

Income from continuing operations
 
 

 
 

 
$
195,531

Total assets
 
$
5,383,937

 
$
720,703

 
$
6,104,640

Capital expenditures (3)
 
$
165,230

 
$
102,573

 
$
267,803


Year Ended December 31, 2015
 
Malls
 
All
Other (1)
 
Total
Revenues
 
$
944,553

 
$
110,465

 
$
1,055,018

Property operating expenses (2)
 
(274,288
)
 
(9,057
)
 
(283,345
)
Interest expense
 
(166,922
)
 
(62,421
)
 
(229,343
)
Other expense
 
(19
)
 
(26,938
)
 
(26,957
)
Gain on sales of real estate assets
 
264

 
31,968

 
32,232

Segment profit
 
$
503,588

 
$
44,017

 
547,605

Depreciation and amortization expense
 
 

 
 

 
(299,069
)
General and administrative expense
 
 

 
 

 
(62,118
)
Interest and other income
 
 

 
 

 
6,467

Gain on extinguishment of debt
 
 
 
 
 
256

Loss on impairment
 
 

 
 

 
(105,945
)
Gain on investment
 
 
 
 
 
16,560

Income tax provision
 
 
 
 
 
(2,941
)
Equity in earnings of unconsolidated affiliates
 
 
 
 

 
18,200

Income from continuing operations 
 
 

 
 

 
$
119,015

Total assets
 
$
5,766,084

 
$
713,907

 
$
6,479,991

Capital expenditures (3)
 
$
393,194

 
$
31,619

 
$
424,813

(1)
The All Other category includes associated centers, community centers, mortgage and other notes receivable, office buildings, the Management Company and, prior to the redemption of the Company's redeemable noncontrolling interests during the fourth quarter of 2016, the Company’s former consolidated subsidiary that provided security and maintenance services to third parties (see Note 8). Management, development and leasing fees are included in the All Other category.
(2)
Property operating expenses include property operating, real estate taxes and maintenance and repairs.
(3)
Amounts include acquisitions of real estate assets and investments in unconsolidated affiliates.  Developments in progress are included in the All Other category.

142



NOTE 12. SUPPLEMENTAL AND NONCASH INFORMATION
The Company paid cash for interest, net of amounts capitalized, in the amount of $220,099, $209,566 and $226,233 during 2017, 2016 and 2015, respectively.
The Company’s noncash investing and financing activities for 2017, 2016 and 2015 were as follows:
 
2017
 
2016
 
2015
Accrued dividends and distributions payable
$
41,628

 
$
54,313

 
$
54,489

Additions to real estate assets accrued but not yet paid
5,490

 
24,881

 
26,345

Transfer of real estate assets in settlement of mortgage debt obligations: (1)
 
 
 
 
 
Decrease in real estate assets
(149,722
)
 
—

 
—

Decrease in mortgage and other indebtedness
181,992

 
—

 
—

Decrease in operating assets and liabilities
10,744

 
—

 
—

Decrease in intangible lease and other assets
(3,216
)
 
 
 
 
Discount on issuance of 5.95% Senior Notes due 2026 (2)
3,938

 
5,740

 
—

Consolidation of joint venture: (3)
 
 
 

 
 

Decrease in investment in unconsolidated affiliates
(2,818
)
 
—

 
—

Increase in real estate assets
7,463

 
—

 
—

Increase in intangible lease and other assets
120

 
—

 
—

Decrease in mortgage notes receivable
(4,118
)
 
—

 
—

Decrease in operating assets and liabilities
(647
)
 
—

 
—

Deconsolidation upon formation or assignment of interests in joint ventures: (4)
 
 
 

 
 

Decrease in real estate assets
(9,363
)
 
(14,025
)
 
—

Decrease in mortgage and other indebtedness
2,466

 
—

 
—

Increase in investment in unconsolidated affiliates
232

 
14,030

 
—

Increase (decrease) in operating assets and liabilities
1,286

 
(5
)
 
—

Decrease in noncontrolling interest and joint venture interest
2,232

 
—

 
—

Capital contribution of note receivable to joint venture
—

 
5,280

 
—

Capital contribution from noncontrolling interest to joint venture
—

 
155

 
—

Write-off of notes receivable
—

 
1,846

 
—

Mortgage debt assumed by buyer of real estate assets
—

 
38,150

 
14,570

(1)
See Note 4 and Note 6 for more information.
(2)
See Note 6 for more information.
(3)
See Note 4 and Note 5 for more information. 
(4)
See Note 5 and Note 15 for more information.
NOTE 13. RELATED PARTY TRANSACTIONS 
Certain executive officers of the Company and members of the immediate family of Charles B. Lebovitz, Chairman of the Board of the Company, collectively had a significant noncontrolling interest in EMJ Corporation ("EMJ"), a construction company that the Company engaged to build substantially all of the Company’s development Properties. The Company paid approximately $26,993 to EMJ in 2015 for construction and development activities. This noncontrolling interest was sold in 2015.
The Management Company provides management, development and leasing services to the Company’s unconsolidated affiliates and other affiliated partnerships. Revenues recognized for these services amounted to $7,598, $9,144 and $7,748 in 2017, 2016 and 2015, respectively. 

143


NOTE 14. CONTINGENCIES
Litigation
The Company is currently involved in certain litigation that arises in the ordinary course of business, most of which is expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company.
Environmental Contingencies
The Company evaluates potential loss contingencies related to environmental matters using the same criteria described above related to litigation matters. Based on current information, an unfavorable outcome concerning such environmental matters, both individually and in the aggregate, is considered to be reasonably possible. However, the Company believes its maximum potential exposure to loss would not be material to its results of operations or financial condition. The Company has a master insurance policy that provides coverage through 2022 for certain environmental claims up to $10,000 per occurrence and up to $50,000 in the aggregate, subject to deductibles and certain exclusions.
Guarantees 
The Operating Partnership may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on the Operating Partnership's investment in the joint venture. The Operating Partnership may receive a fee from the joint venture for providing the guaranty. Additionally, when the Operating Partnership issues a guaranty, the terms of the joint venture agreement typically provide that the Operating Partnership may receive indemnification from the joint venture or have the ability to increase its ownership interest. The guarantees expire upon repayment of the debt, unless noted otherwise.
The following table represents the Operating Partnership's guarantees of unconsolidated affiliates' debt as reflected in the accompanying consolidated balance sheets as of December 31, 2017 and 2016:
 
 
As of December 31, 2017
 
Obligation
recorded to reflect
guaranty
Unconsolidated Affiliate
 
Company's
Ownership
Interest
 
Outstanding
Balance
 
Percentage
Guaranteed by the
Operating Partnership
 
Maximum
Guaranteed
Amount
 
Debt
Maturity
Date (1)
 
12/31/2017
 
12/31/2016
West Melbourne I, LLC - Phase I (2)
 
50%
 
$
42,247

 
20%
 
$
8,449

 
Feb-2018
(3) 
$
86

 
$
86

West Melbourne I, LLC - Phase II (2)
 
50%
 
16,317

 
20%
 
3,263

 
Feb-2018
(3) 
33

 
33

Port Orange I, LLC
 
50%
 
57,088

 
20%
 
11,418

 
Feb-2018
(3) 
116

 
116

Ambassador Infrastructure, LLC
 
65%
 
11,035

 
100%
(4) 
11,035

 
Aug-2020
 
177

 
177

Shoppes at Eagle Point, LLC
 
50%
 
5,977

 
100%
(5) 
36,400

 
Oct-2020
(6) 
364

 
—

EastGate Storage, LLC
 
50%
 
—

 
100%
(7) 
6,500

 
Dec-2022
 
65

 
—

 
 
 
 
 
 
Total guaranty liability
 
$
841

 
$
412

(1)
Excludes any extension options.
(2)
The loan is secured by Hammock Landing - Phase I and Hammock Landing - Phase II, respectively.
(3)
The loan was extended subsequent to December 31, 2017. See Note 19 for more information.
(4)
In 2017, the loan was amended and modified to extend the maturity date as well as the terms of the guaranty. See Note 5 for more information.

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(5)
The Company received a 1% fee for this guaranty when the loan was issued in October 2017. The guaranty will be reduced to 35% once construction is complete.
(6)
The loan has one two-year extension option, at the joint venture's election, for an outside maturity date of October 2022.
(7)
Once construction is complete, the guaranty will be reduced to 50%. The guaranty will be further reduced to 25% once certain debt and operational metrics are met.
The Company has guaranteed the lease performance of York Town Center, LP ("YTC"), an unconsolidated affiliate in which it owns a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. The Company has guaranteed YTC’s performance under this agreement up to a maximum of $22,000, which decreases by $800 annually until the guaranteed amount is reduced to $10,000. The guaranty expires on December 31, 2020.  The maximum guaranteed obligation was $13,200 as of December 31, 2017.  The Company entered into an agreement with its joint venture partner under which the joint venture partner has agreed to reimburse the Company 50% of any amounts it is obligated to fund under the guaranty.  The Company did not record an obligation for this guaranty because it determined that the fair value of the guaranty was not material as of December 31, 2017 and 2016.
Performance Bonds 
The Company has issued various bonds that it would have to satisfy in the event of non-performance. The total amount outstanding on these bonds was $16,998 and $21,446 at December 31, 2017 and 2016, respectively. 
Ground Leases 
The Company is the lessee of land at certain of its Properties under long-term operating leases, which include scheduled increases in minimum rents.  The Company recognizes these scheduled rent increases on a straight-line basis over the initial lease terms.  Most leases have initial terms of at least 20 years and contain one or more renewal options, generally for a minimum of five or ten year periods.  Lease expense recognized in the consolidated statements of operations for 2017, 2016 and 2015 was $980, $1,301 and $1,215, respectively.
The future obligations under these operating leases at December 31, 2017, are as follows:
2018
 
$
622

2019
 
629

2020
 
635

2021
 
639

2022
 
467

Thereafter
 
12,121

 
 
$
15,113

     
NOTE 15. FAIR VALUE MEASUREMENTS
The Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosure, ("ASC 820") based on whether the inputs to valuation techniques are observable or unobservable.  The fair value hierarchy contains three levels of inputs that may be used to measure fair value as follows:
Level 1 -
Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.
Level 2 -
Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.
Level 3 -
Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability.  Market

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valuations must often be determined using discounted cash flow methodologies, pricing models or similar techniques based on the Company’s assumptions and best judgment.
The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions and risk of nonperformance.
Fair Value Measurements on a Recurring Basis
The Company sold all of its marketable securities, which consisted of corporate equity securities that were classified as available-for-sale, during 2015 and realized a gain of $16,560 for the difference between the net proceeds of $20,755 less the adjusted cost of $4,195.  During the year ended December 31, 2015, the Company did not recognize any write-downs for other-than-temporary impairments related to these securities.  
The Company used interest rate swaps to mitigate the effect of interest rate movements on its variable-rate debt.  The Company had four interest rate swaps, which matured on April 1, 2016, that qualified as hedging instruments and were designated as cash flow hedges.  The swaps predominantly met the effectiveness test criteria since inception and changes in their fair values were, thus, primarily reported in OCI/L and reclassified into earnings in the same period or periods during which the hedged item affected earnings. See Note 2 and Note 6 for additional information regarding the Company’s former interest rate hedging instruments.
The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short-term nature of these financial instruments. Based on the interest rates for similar financial instruments, the carrying value of mortgage and other notes receivable is a reasonable estimate of fair value. The estimated fair value of mortgage and other indebtedness was $4,199,357 and $4,737,077 at December 31, 2017 and 2016, respectively. The fair value was calculated using Level 2 inputs by discounting future cash flows for mortgage and other indebtedness using estimated market rates at which similar loans would be made currently.    
Fair Value Measurements on a Nonrecurring Basis
The Company measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company considers both quantitative and qualitative factors in its impairment analysis of long-lived assets. Significant quantitative factors include historical and forecasted information for each Property such as NOI, occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition of the Property and tenant mix. Due to the significant unobservable estimates and assumptions used in the valuation of long-lived assets that experience impairment, the Company classifies such long-lived assets under Level 3 in the fair value hierarchy. Level 3 inputs primarily consist of sales and market data, independent valuations and discounted cash flow models. See below for a description of the estimates and assumptions the Company used in its impairment analysis. See Note 2 for additional information describing the Company's impairment review process.
The following table sets forth information regarding the Company’s assets that are measured at fair value on a nonrecurring basis and related impairment charges for the years ended December 31, 2017 and 2016:
 
 
 
Fair Value Measurements at Reporting Date Using
 
 
 
Total
 
Quoted Prices in Active
Markets
for Identical
Assets (Level 1)
 
Significant
Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs (Level 3)
 
Total Losses
2017:
 
 
 
 
 
 
 
 
 
Long-lived assets
$
81,350

 
$
—

 
$
—

 
$
81,350

 
$
71,401

 
 
 
 
 
 
 
 
 
 
2016:
 
 
 
 
 
 
 
 
 
Long-lived assets
$
46,200

 
$
—

 
$
—

 
$
46,200

 
$
116,822


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Long-lived Assets Measured at Fair Value in 2017
During the year ended December 31, 2017, the Company recognized impairments of real estate of $71,401 primarily related to two malls, a parcel project near an outlet center and one outparcel. The Properties were classified for segment reporting purposes as listed below (see section below for information on outparcels). See Note 11 for segment information.
Impairment
Date
 
Property
 
Location
 
Segment
Classification
 
Loss on
Impairment
 
Fair
Value
 
March
 
Vacant land (1)
 
Woodstock, GA
 
Malls
 
$
3,147

 
$
—

(2) 
June
 
Acadiana Mall (3)
 
Lafayette, LA
 
Malls
 
43,007

 
67,300

 
June / September
 
Prior period sales adjustments (4)
 
Various
 
Malls/
All Other
 
606

 
—

(2) 
September
 
Hickory Point Mall (5)
 
Forsyth, IL
 
Malls
 
24,525

 
14,050

 
 
 
 
 
 
 
 
 
$
71,285

 
$
81,350

 
(1)
The Company wrote down the book value of its interest in a consolidated joint venture that owned land adjacent to one of its outlet malls upon the divestiture of its interests to a fair value of $1,000. In conjunction with the divestiture and assignment of the Company's interests in this consolidated joint venture, the Company was relieved of its debt obligation by the joint venture partner. See Note 6 for more information.
(2)
The long-lived asset was not included in the Company's consolidated balance sheets at December 31, 2017 as the Company no longer had an interest in the property.
(3)
Acadiana Mall - In accordance with the Company's quarterly impairment review process, the Company wrote down the book value of the mall to its estimated fair value of $67,300. Management determined the fair value of Acadiana Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 15.5% and a discount rate of 15.75%. The mall has experienced declining tenant sales and cash flows as a result of the downturn of the economy in its market area and an anchor announced in the second quarter 2017 that it will close its store later in 2017. The loan secured by Acadiana Mall matured in April 2017 and is in default. See Note 6 for more information. The revenues of Acadiana Mall accounted for approximately 1.9% of total consolidated revenues for the year ended December 31, 2017.
(4)
Relates to true-ups of estimated expenses to actual expenses for properties sold in prior periods.
(5)
Hickory Point Mall - In accordance with the Company's quarterly impairment review process, the Company wrote down the book value of the mall to its estimated fair value of $14,050. Management determined the fair value of Hickory Point Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 18.0% and a discount rate of 19.0%. The mall has experienced decreased occupancy and cash flows as a result of the downturn of the economy in its market area. The Company is in preliminary discussions with the lender to modify the loan secured by the mall due to the additional deterioration in its operating metrics. The revenues of Hickory Point Mall accounted for approximately 0.5% of total consolidated revenues for the year ended December 31, 2017.
Other Impairment Loss in 2017    
During the year ended December 31, 2017, the Company recorded an impairment of $116 related to the sale of one outparcel. Outparcels are classified for segment reporting purposes in the All Other category. See Note 11 for segment information.
Long-lived Assets Measured at Fair Value in 2016:    
During the year ended December 31, 2016, the Company recognized impairments of real estate of $116,822 when it wrote down nine malls, an associated center, a community center, three office buildings and three outparcels to their estimated fair values. The Properties are classified for segment reporting purposes as listed below (see section below for information on outparcels). See Note 11 for segment information.

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Impairment
Date
 
Property
 
Location
 
Segment
Classification
 
Loss on
Impairment
 
Fair
Value
 
March
 
Bonita Lakes Mall & Crossing (1)
 
Meridian, MS
 
Malls/
All Other
 
$
5,323

 
$
—

(2) 
March
 
Midland Mall (3)
 
Midland, MI
 
Malls
 
4,681

 
29,200

 
March
 
River Ridge Mall (4)
 
Lynchburg, VA
 
Malls
 
9,594

 
—

(2) 
June
 
The Lakes Mall & Fashion Square (5)
 
Muskegon, MI & Saginaw, MI
 
Malls
 
32,096

 
—

(2) 
June
 
Wausau Center (6)
 
Wausau, WI
 
Malls
 
10,738

 
11,000

 
September
 
Randolph Mall, Regency Mall & Walnut Square (7)
 
Asheboro, NC; Racine, WI &
Dalton, GA
 
Malls
 
43,144

 
—

(2) 
September
 
One Oyster Point & Two Oyster Point (8)
 
Newport News, VA
 
All Other
 
3,844

 
6,000

 
September
 
Oak Branch Business Center (9)
 
Greensboro, NC
 
All Other
 
100

 
—

(2) 
September
 
Cobblestone Village at
Palm Coast (10)
 
Palm Coast, FL
 
All Other
 
6,448

 
—

(2) 
 
 
 
 
 
 
 
 
$
115,968

 
$
46,200

 
(1)
Bonita Lakes Mall & Crossing - The Company adjusted the book value of Bonita Lakes Mall and Bonita Lakes Crossing ("Bonita Lakes") to its estimated fair value of $27,440, which represented the contractual sales price of $27,910 with a third party buyer, adjusted to reflect estimated disposition costs. The revenues of Bonita Lakes accounted for approximately 0.7% of total consolidated revenues for the trailing twelve months ended March 31, 2016. See Note 4 for further information on the sale that closed in the second quarter of 2016.
(2)
The long-lived asset was not included in the Company's consolidated balance sheets at December 31, 2016 as the Company no longer had an interest in the property.
(3)
Midland Mall - The Company wrote down the mall to its estimated fair value. The fair value analysis used a discounted cash flow methodology with assumptions including a ten-year holding period with a sale at the end of the holding period, a capitalization rate of 9.75%, a discount rate of 11.5% and estimated selling costs of 2.0%. The Company notified the lender that it would not pay off the loan that was scheduled to mature in August 2016 and the mall went into receivership in September 2016. The revenues of Midland Mall accounted for approximately 0.6% of total consolidated revenues for the year ended December 31, 2016. The mall was returned to the lender during the first quarter of 2017 as the foreclosure process was complete. See Note 4 and Note 6 for further information.
(4)
River Ridge Mall - The Company sold a 75% interest in its wholly owned investment in River Ridge Mall to a newly formed joint venture in March 2016 and recognized a loss on impairment of $9,510 in the first quarter of 2016 when it adjusted the book value of the mall to its estimated net sales price based upon a contract with a third party buyer, adjusted to reflect estimated disposition costs. The impairment loss included a $2,100 reserve for a roof and electrical work that the Company subsequently funded. An additional loss on impairment of $84 was recognized in the fourth quarter of 2016 to reflect actual closing costs. The revenues of River Ridge Mall accounted for approximately 0.6% of total consolidated revenues for the trailing twelve months ended March 31, 2016. The Company's investment in River Ridge was included in investments in unconsolidated affiliates on the Company's consolidated balance sheets until the sale of its interests to its partner in the third quarter of 2017. See Note 5 for further information.
(5)
The Lakes Mall & Fashion Square - The Company adjusted the book value of the malls to their estimated fair value of $65,447 based upon the sales price of $66,500 in the signed contract with a third party buyer, adjusted to reflect estimated disposition costs. The revenues of The Lakes Mall and Fashion Square accounted for approximately 1.6% of total consolidated revenues for the trailing twelve months ended June 30, 2016. These Properties were sold in July 2016. See Note 4 for additional information.
(6)
Wausau Center - In accordance with the Company's quarterly impairment review process, the Company recorded impairment to write down the depreciated book value of the mall to its estimated fair value. After evaluating redevelopment options, the Company determined that an appropriate risk-adjusted return was not achievable and reduced its holding period. The mall was encumbered by a non-recourse loan with a balance of $17,689 as of December 31, 2016 and had experienced declining sales and the loss of two anchor stores. With the assistance of a third-party appraiser, management determined the fair value of Wausau Center using a discounted cash flow methodology. The discounted cash flow used assumptions including a ten-year holding period with a sale at the end of the holding period, a capitalization rate of 13.25%, a discount rate of 13.0% and estimated selling costs of 4.0%. As these assumptions are subject to economic and market uncertainties, they are difficult to predict and are subject to future events that may alter the assumptions used or management's estimates of future possible outcomes. The revenues of Wausau Center accounted for approximately 0.3% of total consolidated revenues for the year ended December 31, 2016. The Company notified the lender that it would not make its scheduled July 1, 2016 debt payment and the foreclosure process was completed and the mall was subsequently returned to the lender during the third quarter of 2017. See Note 4 and Note 6 for more information.
(7)
Randolph Mall, Regency Mall & Walnut Square - The Company wrote down the book values of the three malls to their estimated fair value of $31,318 and recorded a loss on impairment of $43,294 in the third quarter of 2016 based upon a sales price of $32,250 in a signed contract with a third party buyer, adjusted to reflect estimated disposition costs. The Company reduced the loss on impairment in the fourth quarter of 2016 by $150 to reflect actual closing costs. The revenues of the malls accounted for approximately 1.5% of total consolidated revenues for the trailing twelve months ended September 30, 2016. The malls were sold in December 2016.

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(8)
One & Two Oyster Point - In accordance with the Company's quarterly impairment review process, the Company recorded impairment to write down the depreciated book value of two office buildings to their estimated fair value as a result of a change in the expected holding period to a range of one to two years. Other factors used in the discounted cash flow analysis included a capitalization rate of 8.0%, a discount rate of 10.0% and estimated selling costs of 2.0%. The office buildings were classified as held for sale as of December 31, 2016 until their subsequent sale in the first quarter of 2017. The revenues of the office buildings accounted for approximately 0.3% of total consolidated revenues for the year ended December 31, 2016. See Note 4 for more information.
(9)
Oak Branch Business Center - The office building was sold in September 2016. A loss on impairment of $122 was recorded in the third quarter of 2016 to adjust the book value to its estimated value based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs. The loss on impairment was reduced by $22 in the fourth quarter of 2016 to reflect actual closing costs. See Note 4 for more information.
(10)
Cobblestone Village at Palm Coast - In accordance with the Company's quarterly impairment review process, the Company recorded a loss on impairment of $6,298 in the third quarter of 2016 based upon a signed contract with a third party buyer, adjusted to reflect estimated disposition costs. Other factors used in the discounted cash flow analysis included a capitalization rate of 9.0%, a discount rate of 10.75% and estimated selling costs of 2.0%. The revenue of the community center accounted for approximately 0.1% of total consolidated revenues for the trailing twelve months ended September 30, 2016. An additional impairment loss of $150 was recognized in the fourth quarter of 2016 for an adjustment to the sales price when the sale closed in December 2016. See Note 4.
Other Impairment Loss in 2016
During the year ended December 31, 2016, the Company recorded impairments of $854 related to the sales of three outparcels. These outparcels were classified for segment reporting purposes in the All Other category. See Note 11 for segment information.
Long-lived Assets Measured at Fair Value in 2015
During the year ended December 31, 2015, the Company wrote down four properties to their estimated fair values. These Properties were Chesterfield Mall, Mayfaire Community Center, Chapel Hill Crossing and Madison Square. Of these four Properties, all but Chesterfield Mall were disposed of as of December 31, 2015 as described below. Chesterfield Mall was subsequently returned to the lender in 2017. For segment reporting purposes, Properties other than Malls are classified in the All Other category. See Note 11 for segment information.
Impairment
Date
 
Property
 
Location
 
Segment
Classification
 
Loss on
Impairment
 
Fair
Value
 
April
 
Madison Square (1)
 
Huntsville, AL
 
Mall
 
$
2,620

 
$
—

(2) 
December
 
Chapel Hill Crossing (3)
 
Akron, OH
 
All Other
 
1,914

 
—

(2) 
December
 
Chesterfield Mall (4)
 
Chesterfield, MO
 
Mall
 
99,969

 
125,000

 
December
 
Mayfaire Community Center (5)
 
Wilmington, NC
 
All Other
 
397

 
—

(2) 
 
 
 
 
 
 
 
 
$
104,900

 
$
125,000

 
(1)
Madison Square - The Company adjusted the book value of Madison Square to its net sales price of $5,000. See Note 4 for further information on the sale that closed in the second quarter of 2015.
(2)
The long-lived asset was not included in the Company's consolidated balance sheets at December 31, 2015 as the Company no longer had an interest in the property.
(3)
Chapel Hill Crossing - The Company wrote down the book value of Chapel Hill Crossing to its net sales price of $2,300 and recognized a non-cash impairment of real estate. See Note 4 for additional information on the sale that closed in the fourth quarter of 2015.
(4)
Chesterfield Mall - In accordance with the Company's quarterly impairment review process, the Company recorded impairment of real estate to write-down the depreciated book value of the mall to its estimated fair value. The mall had experienced declining cash flows as competition from several new outlet shopping centers in the area impacted its sales. The fair value analysis used assumptions including an 11-year holding period with a sale at the end of the holding period, a capitalization rate of 8.25% and a discount rate of 8.25%. The revenues of the mall accounted for approximately 1.5% of total consolidated revenues for the year ended December 31, 2015. Foreclosure of the mall was completed in the second quarter of 2017. See Note 4 and Note 6 for more information.
(5)
Mayfaire Community Center - The Company wrote down the book value of Mayfaire Community Center to its net sales price of $56,300 and recognized a non-cash impairment of real estate. See Note 4 for additional information on the sale that closed in the fourth quarter of 2015.
Other Impairment Loss in 2015
During 2015, the Company recorded an impairment of real estate of $161 related to the sale of a building at a formerly owned mall for total net proceeds after sales costs of $750, which was less than its carrying amount of $911. The Company also recognized $884 of impairment from the sale of two outparcels. Outparcels are classified for segment reporting purposes in the All Other category. See Note 11 for segment information.

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NOTE 16. SHARE-BASED COMPENSATION 
As of December 31, 2017, there was one share-based compensation plan under which the Company has outstanding awards, the CBL & Associates Properties, Inc. 2012 Stock Incentive Plan ("the 2012 Plan"), which was approved by the Company's shareholders in May 2012. The 2012 Plan permits the Company to issue stock options and common stock to selected officers, employees and non-employee directors of the Company up to a total of 10,400,000 shares. As the primary operating subsidiary of the Company, the Operating Partnership participates in and bears the compensation expense associated with the Company's share-based compensation plan.  The Compensation Committee of the Board of Directors (the “Committee”) administers the 2012 Plan.
The Company adopted ASU 2016-09 effective January 1, 2017 as described in Note 2. In accordance with the provisions of ASU 2016-09, which are designed to simplify the accounting for share-based payments transactions, the Company elected to account for forfeitures of share-based payments as they occur rather than continuing to estimate them in advance. The Company elected not to record a cumulative effect adjustment as the impact of estimated forfeitures on the Company's cumulative share-based compensation expense recorded through December 31, 2016 was nominal.
Restricted Stock Awards 
Under the 2012 Plan, common stock may be awarded either alone, in addition to, or in tandem with other granted stock awards. The Committee has the authority to determine eligible persons to whom common stock will be awarded, the number of shares to be awarded and the duration of the vesting period, as defined. Generally, an award of common stock vests either immediately at grant or in equal installments over a period of five years. Stock awarded to independent directors is fully vested upon grant; however, the independent directors may not transfer such shares during their board term.  The Committee may also provide for the issuance of common stock under the 2012 Plan on a deferred basis pursuant to deferred compensation arrangements. The fair value of common stock awarded under the 2012 Plan is determined based on the market price of CBL’s common stock on the grant date and the related compensation expense is recognized over the vesting period on a straight-line basis. 
The Company may make restricted stock awards to independent directors, officers and its employees under the 2012 Plan. These awards are generally granted based on the performance of the Company and its employees. None of these awards have performance requirements other than a service condition of continued employment, unless otherwise provided. Compensation expense is recognized on a straight-line basis over the requisite service period.
The share-based compensation cost related to the restricted stock awards was $3,907, $4,681 and $4,287 for 2017, 2016 and 2015, respectively. Share-based compensation cost resulting from share-based awards is recorded at the Management Company, which is a taxable entity. Share-based compensation cost capitalized as part of real estate assets was $405, $351 and $274 in 2017, 2016 and 2015, respectively. 
A summary of the status of the Company’s nonvested restricted stock awards as of December 31, 2017, and changes during the year ended December 31, 2017, is presented below:
 
 
Shares
 
Weighted-
Average
Grant-Date
Fair Value
Nonvested at January 1, 2017
602,162

 
$
15.41

Granted
326,739

 
$
10.75

Vested
(276,467
)
 
$
15.07

Forfeited
(10,075
)
 
$
12.97

Nonvested at December 31, 2017
642,359

 
$
13.23

The weighted-average grant-date fair value of shares granted during 2017, 2016 and 2015 was $10.75, $10.02 and $20.30, respectively. The total fair value of shares vested during 2017, 2016 and 2015 was $2,791, $2,605 and $4,298, respectively. 
As of December 31, 2017, there was $5,914 of total unrecognized compensation cost related to nonvested stock awards granted under the 2012 Plan, which is expected to be recognized over a weighted-average period of 2.6 years.

150


Long-Term Incentive Program
In 2015, the Company adopted a long-term incentive program ("LTIP") for its named executive officers, which consists of performance stock unit ("PSU") awards and annual restricted stock awards, that may be issued under the 2012 Plan. The number of shares related to the PSU awards that each named executive officer may receive upon the conclusion of a three-year performance period is determined based on the Company's achievement of specified levels of long-term total stockholder return ("TSR") performance relative to the NAREIT Retail Index, provided that at least a "Threshold" level must be attained for any shares to be earned.
Annual Restricted Stock Awards
Under the LTIP, annual restricted stock awards consist of shares of time-vested restricted stock awarded based on a qualitative evaluation of the performance of the Company and the named executive officer during the fiscal year. Annual restricted stock awards under the LTIP vest 20% on the date of grant with the remainder vesting in four annual equal installments.
Performance Stock Units    
The Company granted the following PSUs in the first quarter of the respective years. A summary of PSU activity as of December 31, 2017, and changes during the year ended December 31, 2017, is presented below:
 
PSUs
 
Weighted-Average
Grant Date
Fair Value
2015 PSUs granted
138,680

 
$
15.52

2016 PSUs granted
282,995

 
$
4.98

Outstanding at January 1 , 2017
421,675

 
$
8.45

2017 PSUs granted
277,376

 
$
6.86

2015 PSUs canceled (1)
(138,680
)
 
$
15.52

Outstanding at December 31, 2017 (2)
560,371

 
$
5.91

(1)
Based on the Company's TSR relative to the NAREIT Retail Index for the three-year performance period ended December 31, 2017, none of the 2015 PSU were earned as of December 31, 2017.
(2)
None of the PSUs outstanding at December 31, 2017 were vested.
Shares earned pursuant to the PSU awards vest 60% at the conclusion of the performance period while the remaining 40% of the PSU award vests 20% on each of the first two anniversaries thereafter.
Compensation cost is recognized on a tranche-by-tranche basis using the accelerated attribution method. The resulting expense is recorded regardless of whether any PSU awards are earned as long as the required service period is met. Share-based compensation expense related to the PSUs was $1,501, $1,033 and $624 in 2017, 2016 and 2015, respectively. Unrecognized compensation costs related to the PSUs was $2,162 as of December 31, 2017, which is expected to be recognized over a weighted-average period of 3.5 years. 
    

151


The following table summarizes the assumptions used in the Monte Carlo simulation pricing model related to the 2017 PSUs and the 2016 PSUs:
 
2017 PSUs
 
2016 PSUs
Grant date
February 7, 2017
 
February 10, 2016
Fair value per share on valuation date (1)
$
6.86

 
$
4.98

Risk-free interest rate (2)
1.53
%
 
0.92
%
Expected share price volatility (3)
32.85
%
 
30.95
%
(1)
The value of the PSU awards is estimated on the date of grant using a Monte Carlo Simulation model. The valuation consisted of computing the fair value using CBL's simulated stock price as well as TSR over a three-year performance period. The award is modeled as a contingent claim in that the expected return on the underlying shares is risk-free and the rate of discounting the payoff of the award is also risk-free. The weighted-average fair value per share related to the 2017 PSUs consists of 115,082 shares at a fair value of $5.62 per share and 162,294 shares at a fair value of $7.74 per share.
(2)
The risk-free interest rate was based on the yield curve on zero-coupon U.S. Treasury securities in effect as of the valuation date.
(3)
The computation of expected volatility was based on a blend of the historical volatility of CBL's shares of common stock based on annualized daily total continuous returns over a three-year period and implied volatility data based on the trailing month average of daily implied volatilities implied by stock call option contracts that were both closest to the terms shown and closest to the money.    
NOTE 17. EMPLOYEE BENEFIT PLANS 
401(k) Plan 
The Management Company maintains a 401(k) profit sharing plan, which is qualified under Section 401(a) and Section 401(k) of the Code to cover employees of the Management Company. All employees who have attained the age of 21 and have completed at least 60 days of service are eligible to participate in the plan. The plan provides for employer matching contributions on behalf of each participant equal to 50% of the portion of such participant’s contribution that does not exceed 2.5% of such participant’s annual gross salary for the plan year. Additionally, the Management Company has the discretion to make additional profit-sharing-type contributions not related to participant elective contributions. Total contributions by the Management Company were $1,034, $987 and $997 in 2017, 2016 and 2015, respectively. 
Employee Stock Purchase Plan 
The Company maintains an employee stock purchase plan that allows eligible employees to acquire shares of the Company’s common stock in the open market without incurring brokerage or transaction fees. Under the plan, eligible employees make payroll deductions that are used to purchase shares of CBL’s common stock. The shares are purchased at the prevailing market price of the stock at the time of purchase. 
Deferred Compensation Arrangements 
The Company had entered into an agreement with an officer that allowed the officer to defer receipt of selected salary increases and/or bonus compensation for periods ranging from five to ten years. The deferred compensation arrangement provided that bonus compensation was deferred in the form of a note payable to the officer. Interest accumulated on these notes at 5.0%. At December 31, 2016, the Company had notes payable, including accrued interest of $122 related to this arrangement. This agreement was terminated in June 2017 and the amount due to the officer related to this arrangement was included in the officer's severance agreement.

152


NOTE 18. QUARTERLY INFORMATION (UNAUDITED)
 Year Ended December 31, 2017
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
Total (1)
Total revenues
 
$
238,013

 
$
229,233

 
$
224,650

 
$
235,356

 
$
927,252

Income from operations (2)
 
77,099

 
22,306

 
50,161

 
82,996

 
232,562

Net income (3)
 
38,518

 
70,627

 
9,299

 
40,538

 
158,982

Net income attributable to the Company
 
34,115

 
41,396

 
8,965

 
36,464

 
120,940

Net income (loss) attributable to common shareholders
 
22,892

 
30,173

 
(2,258
)
 
25,241

 
76,048

Basic per share data attributable to common shareholders:
 
 

 
 

Net income (loss) attributable to common
   shareholders
 
$
0.13

 
$
0.18

 
$
(0.01
)
 
$
0.15

 
$
0.44

Diluted per share data attributable to common shareholders:
 
 

 
 

Net income (loss) attributable to common
  shareholders
 
$
0.13

 
$
0.18

 
$
(0.01
)
 
$
0.15

 
$
0.44

(1)
The sum of quarterly EPS differs from annual EPS due to rounding.
(2)
Income from operations for the quarters ended June 30, 2017 and September 30, 2017 includes losses on impairment of real estate assets of $43,007 and $24,525 related to the impairments of Acadiana Mall and Hickory Point Mall, respectively (see Note 15).
(3)
Net Income for the quarter ended June 30, 2017 includes the following items:
–
a gain of $75,434 (of which the Company's share was approximately $48,800) related to the sale of The Outlet Shoppes at Oklahoma City, a 75/25 joint venture (see Note 4 ).
–
a gain on extinguishment of debt of $20,420, which primarily represents the gain related to the foreclosure of Chesterfield Mall, which was partially offset by a prepayment fee for the early retirement of debt on The Outlet Shoppes at Oklahoma City (see Note 6).
–
a $5,843 loss on investment related to the disposition of River Ridge Mall (see Note 5).
Net income for the quarter ended September 30, 2017 includes a $6,851 gain on extinguishment of debt attributable to the foreclosure of Wausau Center (see Note 6).

 Year Ended December 31, 2016
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
Total  
Total revenues
 
$
263,078

 
$
254,965

 
$
251,721

 
$
258,493

 
$
1,028,257

Income from operations (1)
 
63,830

 
52,056

 
36,727

 
101,015

 
253,628

Net income (2)
 
41,892

 
73,097

 
670

 
79,872

 
195,531

Net income attributable to the Company
 
40,074

 
62,919

 
1,059

 
68,830

 
172,882

Net income (loss) attributable to common shareholders
 
28,851

 
51,696

 
(10,164
)
 
57,607

 
127,990

Basic per share data attributable to common shareholders:
 
 

 
 

Net income (loss) attributable to common
   shareholders
 
$
0.17

 
$
0.30

 
$
(0.06
)
 
$
0.34

 
$
0.75

Diluted per share data attributable to common shareholders:
 
 

 
 

Net income (loss) attributable to common
  shareholders
 
$
0.17

 
$
0.30

 
$
(0.06
)
 
$
0.34

 
$
0.75

 
(1)
Income from operations for the quarters ended March 31, 2016; June 30, 2016; and September 30, 2016 includes losses on impairment of real estate assets of $19,685; $43,493; and $53,558 respectively, primarily related to properties which were sold during 2016 (see Note 4 and Note 15).
(2)
Net income for the quarter ended March 31, 2016 includes a gain of $26,395 related to the sale of a 50% interest in Triangle Town Center to a new 10/90 joint venture. Net income for the quarter ended June 30, 2016 includes a gain of $29,267 related to the foreclosure of Gulf Coast Town Center and a gain of $29,437 from the sale of Renaissance Center. The Company's share of the gain is included in equity in earnings of unconsolidated affiliates in the consolidated statements of operations (see Note 5).

153


NOTE 19. SUBSEQUENT EVENTS
In January 2018, the Company retired an operating Property loan with a principal balance $37,295 as of December 31, 2017, with borrowings from its unsecured credit facilities. The loan was secured by Kirkwood Mall in Bismarck, ND and was scheduled to mature in April 2018.
As described in Note 6, the Company's credit ratings for its unsecured credit facilities and two unsecured term loans are based upon the credit ratings for the Operating Partnership's unsecured long-term indebtedness. In February 2018, Moody's downgraded this rating from Baa3 to Ba1 with a negative outlook. This downgrade did not change the Company's current interest rates.
In February 2018, the loans secured by the following unconsolidated Properties, Hammock Landing - Phase I and Phase II and The Pavilion at Port Orange, were amended to extend the maturity date to April 2018. The loans had an aggregate principal balance of $115,652 at December 31, 2017 and had an original maturity date of February 2018.


154


Schedule II
 
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

 
 
Year Ended December 31,
 
2017
 
2016
 
2015
Tenant receivables - allowance for doubtful accounts:
 
 
 
 
 
Balance, beginning of year
$
1,910

 
$
1,923

 
$
2,368

Additions in allowance charged to expense
3,782

 
4,058

 
2,254

Bad debts charged against allowance
(3,681
)
 
(4,071
)
 
(2,699
)
Balance, end of year
$
2,011

 
$
1,910

 
$
1,923

 
 
 
 
 
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
Other receivables - allowance for doubtful accounts:
 
 
 
 
 
Balance, beginning of year
$
838

 
$
1,276

 
$
1,285

Additions in allowance charged to expense
—

 
—

 
277

Bad debts charged against allowance
—

 
(438
)
 
(286
)
Balance, end of year
$
838

 
$
838

 
$
1,276





155

Schedule III
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2017
(In thousands)




 
 
 
 
Initial Cost (1)
 
 
 
 
 
Gross Amounts at Which Carried at Close of Period
 
 
Description /Location
 
Encumbrances (2)
 
Land
 
Buildings and Improvements
 
Costs
 Capitalized Subsequent to Acquisition
 
Sales of Outparcel
  Land
 
Land
 
Buildings and Improvements
 
Total (3)
 
Accumulated Depreciation (4)
 
 Date of Construction
 / Acquisition
 MALLS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Acadiana Mall, Lafayette, LA
 
$
122,435

 
$
22,511

 
$
145,769

 
$
(101,239
)
 
$
—

 
$
5,722

 
$
61,319

 
$
67,041

 
$
(1,763
)
 
2005
 Alamance Crossing, Burlington, NC
 
46,337

 
20,853

 
63,105

 
39,634

 
(2,803
)
 
18,051

 
102,738

 
120,789

 
(33,958
)
 
2007
 Arbor Place, Atlanta (Douglasville), GA
 
111,448

 
7,862

 
95,330

 
28,164

 
—

 
7,862

 
123,494

 
131,356

 
(65,818
)
 
1998-1999
 Asheville Mall, Asheville, NC
 
68,008

 
7,139

 
58,747

 
65,419

 
(805
)
 
6,334

 
124,166

 
130,500

 
(54,990
)
 
1998
 Brookfield Square, Brookfield, WI
 
—

 
8,996

 
84,250

 
77,878

 
(18
)
 
25,392

 
145,714

 
171,106

 
(70,871
)
 
2001
 Burnsville Center, Burnsville, MN
 
69,615

 
12,804

 
71,355

 
59,357

 
(1,157
)
 
16,102

 
126,257

 
142,359

 
(61,024
)
 
1998
 Cary Towne Center, Cary, NC
 
46,716

 
23,688

 
74,432

 
31,752

 
—

 
25,901

 
103,971

 
129,872

 
(44,007
)
 
2001
 CherryVale Mall, Rockford, IL
 
—

 
11,892

 
63,973

 
58,028

 
(1,667
)
 
11,608

 
120,618

 
132,226

 
(51,651
)
 
2001
 Cross Creek Mall, Fayetteville, NC
 
119,545

 
19,155

 
104,353

 
49,457

 
—

 
31,539

 
141,426

 
172,965

 
(54,965
)
 
2003
 Dakota Square Mall, Minot, ND
 
—

 
4,552

 
87,625

 
25,872

 
—

 
4,552

 
113,497

 
118,049

 
(20,032
)
 
2012
 East Towne Mall, Madison, WI
 
—

 
4,496

 
63,867

 
62,471

 
(715
)
 
3,781

 
126,338

 
130,119

 
(49,240
)
 
2001
 EastGate Mall, Cincinnati, OH
 
35,635

 
13,046

 
44,949

 
33,616

 
(1,017
)
 
16,827

 
73,767

 
90,594

 
(29,692
)
 
2003
 Eastland Mall, Bloomington, IL
 
—

 
5,746

 
75,893

 
7,864

 
(753
)
 
6,002

 
82,748

 
88,750

 
(32,671
)
 
2005
 Fayette Mall, Lexington, KY
 
157,387

 
25,205

 
84,256

 
105,684

 
—

 
25,205

 
189,940

 
215,145

 
(61,756
)
 
2001
 Frontier Mall, Cheyenne, WY
 
—

 
2,681

 
15,858

 
20,973

 
(80
)
 
2,601

 
36,831

 
39,432

 
(24,019
)
 
1981
 Greenbrier Mall, Chesapeake, VA
 
70,801

 
3,181

 
107,355

 
17,147

 
(626
)
 
2,555

 
124,502

 
127,057

 
(44,067
)
 
2004
 Hamilton Place, Chattanooga, TN
 
104,317

 
3,532

 
42,623

 
61,473

 
(441
)
 
8,484

 
98,703

 
107,187

 
(55,322
)
 
1986-1987
 Hanes Mall, Winston-Salem, NC
 
—

 
17,176

 
133,376

 
56,679

 
(948
)
 
18,629

 
187,654

 
206,283

 
(79,178
)
 
2001
 Harford Mall, Bel Air, MD
 
—

 
8,699

 
45,704

 
22,887

 
—

 
8,699

 
68,591

 
77,290

 
(28,104
)
 
2003
 Hickory Point Mall, Forsyth, IL
 
27,446

 
10,731

 
31,728

 
(24,207
)
 
(293
)
 
4,336

 
13,623

 
17,959

 
(842
)
 
2005
 Honey Creek Mall, Terre Haute, IN
 
25,417

 
3,108

 
83,358

 
19,563

 
—

 
3,108

 
102,921

 
106,029

 
(38,411
)
 
2004
 Imperial Valley Mall, El Centro, CA
 
—

 
35,378

 
70,549

 
3,922

 
—

 
35,378

 
74,471

 
109,849

 
(12,716
)
 
2012
 Janesville Mall, Janesville, WI
 
—

 
8,074

 
26,009

 
22,531

 
—

 
8,074

 
48,540

 
56,614

 
(20,792
)
 
1998
 Jefferson Mall, Louisville, KY
 
64,747

 
13,125

 
40,234

 
40,046

 
(521
)
 
17,850

 
75,034

 
92,884

 
(31,580
)
 
2001
 Kirkwood Mall, Bismarck, ND
 
37,295

 
3,368

 
118,945

 
24,238

 
—

 
3,368

 
143,183

 
146,551

 
(21,210
)
 
2012
 Laurel Park Place, Livonia, MI
 
—

 
13,289

 
92,579

 
20,671

 
—

 
13,289

 
113,250

 
126,539

 
(47,331
)
 
2005
 Layton Hills Mall, Layton, UT
 
—

 
20,464

 
99,836

 
(4,734
)
 
(340
)
 
13,885

 
101,341

 
115,226

 
(34,063
)
 
2006
 Mall del Norte, Laredo, TX
 
—

 
21,734

 
142,049

 
51,295

 
—

 
21,734

 
193,344

 
215,078

 
(83,039
)
 
2004

156

Schedule III
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2017
(In thousands)



 
 
 
 
Initial Cost (1)
 
 
 
 
 
Gross Amounts at Which Carried at Close of Period
 
 
Description /Location
 
Encumbrances (2)
 
Land
 
Buildings and Improvements
 
Costs
 Capitalized Subsequent to Acquisition
 
Sales of Outparcel
  Land
 
Land
 
Buildings and Improvements
 
Total (3)
 
Accumulated Depreciation (4)
 
 Date of Construction
 / Acquisition
 Mayfaire Town Center, Wilmington, NC
 
—

 
26,333

 
101,087

 
15,712

 
—

 
26,333

 
116,799

 
143,132

 
(8,592
)
 
2015
 Meridian Mall, Lansing, MI
 
—

 
529

 
103,678

 
80,804

 
—

 
2,232

 
182,779

 
185,011

 
(88,679
)
 
1998
 Mid Rivers Mall, St. Peters, MO
 
—

 
16,384

 
170,582

 
16,465

 
(2,050
)
 
14,334

 
187,047

 
201,381

 
(60,034
)
 
2007
 Monroeville Mall, Pittsburgh, PA
 
—

 
22,911

 
177,214

 
79,105

 
—

 
25,432

 
253,798

 
279,230

 
(87,876
)
 
2004
 Northgate Mall, Chattanooga, TN
 
—

 
2,330

 
8,960

 
26,245

 
(123
)
 
3,274

 
34,138

 
37,412

 
(9,922
)
 
2011
 Northpark Mall, Joplin, MO
 
—

 
9,977

 
65,481

 
48,398

 
—

 
10,962

 
112,894

 
123,856

 
(45,028
)
 
2004
 Northwoods Mall, North Charleston, SC
 
66,544

 
14,867

 
49,647

 
24,754

 
(2,339
)
 
12,528

 
74,401

 
86,929

 
(31,154
)
 
2001
 Old Hickory Mall, Jackson, TN
 
—

 
15,527

 
29,413

 
8,845

 
—

 
15,531

 
38,254

 
53,785

 
(16,976
)
 
2001
The Outlet Shoppes at Atlanta, Woodstock, GA
 
79,407

 
8,598

 
100,613

 
(37,409
)
 
(740
)
 
7,858

 
63,204

 
71,062

 
(16,251
)
 
2013
The Outlet Shoppes at El Paso, El Paso, TX
 
6,613

 
7,345

 
98,602

 
10,852

 
—

 
7,569

 
109,230

 
116,799

 
(20,419
)
 
2012
The Outlet Shoppes at Gettysburg, Gettysburg, PA
 
38,354

 
20,779

 
22,180

 
1,863

 
—

 
20,778

 
24,044

 
44,822

 
(5,477
)
 
2012
The Outlet Shoppes at Laredo, Laredo, TX
 
80,145

 
11,000

 
97,711

 
—

 
—

 
11,000

 
97,711

 
108,711

 
(3,285
)
 
2017
The Outlet Shoppes of the Bluegrass, Simpsonville, KY
 
82,990

 
3,193

 
72,962

 
3,846

 
—

 
3,193

 
76,808

 
80,001

 
(13,970
)
 
2014
 Park Plaza Mall, Little Rock, AR
 
84,084

 
6,297

 
81,638

 
44,837

 
—

 
6,304

 
126,468

 
132,772

 
(51,198
)
 
2004
 Parkdale Mall, Beaumont, TX
 
81,108

 
23,850

 
47,390

 
63,881

 
(307
)
 
25,333

 
109,481

 
134,814

 
(45,229
)
 
2001
 Parkway Place, Huntsville, AL
 
35,608

 
6,364

 
67,067

 
6,903

 
—

 
6,364

 
73,970

 
80,334

 
(18,384
)
 
2010
 Pearland Town Center, Pearland, TX
 
—

 
16,300

 
108,615

 
20,375

 
(857
)
 
15,443

 
128,990

 
144,433

 
(42,952
)
 
2008
 Post Oak Mall, College Station, TX
 
—

 
3,936

 
48,948

 
16,680

 
(327
)
 
3,609

 
65,628

 
69,237

 
(36,072
)
 
1982
 Richland Mall, Waco, TX
 
—

 
9,874

 
34,793

 
20,716

 
(1,225
)
 
8,662

 
55,496

 
64,158

 
(23,072
)
 
2002
 South County Center, St. Louis, MO
 
—

 
15,754

 
159,249

 
15,830

 
—

 
15,754

 
175,079

 
190,833

 
(52,942
)
 
2007
 Southaven Towne Center, Southaven, MS
 
—

 
8,255

 
29,380

 
7,434

 
—

 
8,896

 
36,173

 
45,069

 
(13,336
)
 
2005
 Southpark Mall, Colonial Heights, VA
 
61,036

 
9,501

 
73,262

 
38,039

 
—

 
11,282

 
109,520

 
120,802

 
(43,696
)
 
2003
 St. Clair Square, Fairview Heights, IL
 
—

 
11,027

 
75,620

 
35,962

 
—

 
11,027

 
111,582

 
122,609

 
(55,751
)
 
1996
 Stroud Mall, Stroudsburg, PA
 
—

 
14,711

 
23,936

 
23,007

 
—

 
14,711

 
46,943

 
61,654

 
(19,792
)
 
1998
 Sunrise Mall, Brownsville, TX
 
—

 
11,156

 
59,047

 
16,752

 
—

 
11,156

 
75,799

 
86,955

 
(26,322
)
 
2003
 Turtle Creek Mall, Hattiesburg, MS
 
—

 
2,345

 
26,418

 
20,509

 
—

 
3,535

 
45,737

 
49,272

 
(25,218
)
 
1993-1994
 Valley View Mall, Roanoke, VA
 
55,107

 
15,985

 
77,771

 
23,706

 
—

 
15,999

 
101,463

 
117,462

 
(38,647
)
 
2003
 Volusia Mall, Daytona Beach, FL
 
43,722

 
2,526

 
120,242

 
31,492

 
—

 
8,945

 
145,315

 
154,260

 
(50,781
)
 
2004
 West Towne Mall, Madison, WI
 
—

 
9,545

 
83,084

 
50,229

 
—

 
9,545

 
133,313

 
142,858

 
(54,298
)
 
2001
 WestGate Mall, Spartanburg, SC
 
34,991

 
2,149

 
23,257

 
51,917

 
(432
)
 
1,742

 
75,149

 
76,891

 
(40,075
)
 
1995

157

Schedule III
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2017
(In thousands)



 
 
 
 
Initial Cost (1)
 
 
 
 
 
Gross Amounts at Which Carried at Close of Period
 
 
Description /Location
 
Encumbrances (2)
 
Land
 
Buildings and Improvements
 
Costs
 Capitalized Subsequent to Acquisition
 
Sales of Outparcel
  Land
 
Land
 
Buildings and Improvements
 
Total (3)
 
Accumulated Depreciation (4)
 
 Date of Construction
 / Acquisition
 Westmoreland Mall, Greensburg, PA
 
—

 
4,621

 
84,215

 
28,744

 
(397
)
 
4,224

 
112,959

 
117,183

 
(44,138
)
 
2002
 York Galleria, York, PA
 
—

 
5,757

 
63,316

 
18,065

 
—

 
5,757

 
81,381

 
87,138

 
(35,236
)
 
1999
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Property Types
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 840 Greenbrier Circle, Chesapeake, VA
 
—

 
2,096

 
3,091

 
379

 
—

 
2,096

 
3,470

 
5,566

 
(1,357
)
 
2007
 850 Greenbrier Circle, Chesapeake, VA
 
—

 
3,154

 
6,881

 
(289
)
 
—

 
3,154

 
6,592

 
9,746

 
(1,985
)
 
2007
 Annex at Monroeville, Pittsburgh, PA
 
—

 
—

 
29,496

 
321

 
—

 
—

 
29,817

 
29,817

 
(9,971
)
 
2004
 CBL Center, Chattanooga, TN
 
18,522

 
140

 
24,675

 
1,982

 
—

 
1,864

 
24,933

 
26,797

 
(14,569
)
 
2001
 CBL Center II, Chattanooga, TN
 
—

 
—

 
13,648

 
1,759

 
—

 
358

 
15,049

 
15,407

 
(5,134
)
 
2008
 CoolSprings Crossing, Nashville, TN
 
—

 
2,803

 
14,985

 
5,830

 
—

 
3,554

 
20,064

 
23,618

 
(13,122
)
 
1991-1993
 Courtyard at Hickory Hollow, Nashville, TN
—

 
3,314

 
2,771

 
(1,603
)
 
(231
)
 
1,500

 
2,751

 
4,251

 
(983
)
 
1998
 The Forum at Grandview, Madison, MS
 
—

 
9,234

 
17,285

 
21,323

 
(684
)
 
8,652

 
38,506

 
47,158

 
(5,862
)
 
2010
 Frontier Square, Cheyenne, WY
 
—

 
346

 
684

 
434

 
(86
)
 
260

 
1,118

 
1,378

 
(729
)
 
1985
 Gulf Coast Town Center, Ft. Myers, FL
 
—

 
628

 
6,835

 
—

 
—

 
628

 
6,835

 
7,463

 
—

 
2005-2017
 Gunbarrel Pointe, Chattanooga, TN
 
—

 
4,170

 
10,874

 
3,748

 
—

 
4,170

 
14,622

 
18,792

 
(6,362
)
 
2000
 Hamilton Corner, Chattanooga, TN
 
—

 
630

 
5,532

 
8,179

 

 
734

 
13,607

 
14,341

 
(7,300
)
 
1986-1987
 Hamilton Crossing, Chattanooga, TN
 
9,102

 
4,014

 
5,906

 
7,004

 
(1,370
)
 
2,644

 
12,910

 
15,554

 
(7,265
)
 
1987
 Harford Annex, Bel Air, MD
 
—

 
2,854

 
9,718

 
1,357

 
—

 
2,854

 
11,075

 
13,929

 
(3,986
)
 
2003
 The Landing at Arbor Place, Atlanta (Douglasville), GA
—

 
4,993

 
14,330

 
3,512

 
(2,242
)
 
2,751

 
17,842

 
20,593

 
(9,684
)
 
1998-1999
 Layton Hills Convenience Center, Layton, UT
—

 
—

 
8

 
6,270

 
—

 
2,794

 
3,484

 
6,278

 
(1,711
)
 
2005
 Layton Hills Plaza, Layton, UT
 
—

 
—

 
2

 
982

 
—

 
673

 
311

 
984

 
(241
)
 
2005
 Parkdale Crossing, Beaumont, TX
 
—

 
2,994

 
7,408

 
2,482

 
(355
)
 
2,639

 
9,890

 
12,529

 
(3,769
)
 
2002
  Parkway Plaza, Fort Oglethorpe, GA
 
—

 
2,675

 
13,435

 
22

 
—

 
2,675

 
13,457

 
16,132

 
(1,335
)
 
2015
 Pearland Hotel, Pearland, TX
 
—

 
—

 
16,149

 
2,266

 
—

 
—

 
18,415

 
18,415

 
(5,054
)
 
2008
 Pearland Office, Pearland, TX
 
—

 
—

 
7,849

 
2,594

 
—

 
—

 
10,443

 
10,443

 
(3,176
)
 
2009
 Pearland Residential Mgmt, Pearland, TX
 
—

 
—

 
9,666

 
9

 
—

 
—

 
9,675

 
9,675

 
(2,531
)
 
2008
 The Plaza at Fayette, Lexington, KY
 
—

 
9,531

 
27,646

 
2,308

 
—

 
9,531

 
29,954

 
39,485

 
(9,796
)
 
2006
 The Promenade, D'Iberville, MS
 
—

 
16,278

 
48,806

 
25,035

 
(706
)
 
17,953

 
71,460

 
89,413

 
(18,791
)
 
2009
 The Shoppes At Hamilton Place, Chattanooga, TN
—

 
4,894

 
11,700

 
(575
)
 
—

 
2,811

 
13,208

 
16,019

 
(4,799
)
 
2003
 The Shoppes at St. Clair Square, Fairview Heights, IL
 
—

 
8,250

 
23,623

 
552

 
(5,044
)
 
3,206

 
24,175

 
27,381

 
(9,883
)
 
2007

158

Schedule III
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2017
(In thousands)



 
 
 
 
Initial Cost (1)
 
 
 
 
 
Gross Amounts at Which Carried at Close of Period
 
 
Description /Location
 
Encumbrances (2)
 
Land
 
Buildings and Improvements
 
Costs
 Capitalized Subsequent to Acquisition
 
Sales of Outparcel
  Land
 
Land
 
Buildings and Improvements
 
Total (3)
 
Accumulated Depreciation (4)
 
 Date of Construction
 / Acquisition
 Statesboro Crossing, Statesboro, GA
 
10,836

 
2,855

 
17,805

 
2,368

 
(235
)
 
2,840

 
19,953

 
22,793

 
(5,547
)
 
2008
 Sunrise Commons, Brownsville, TX
 
—

 
1,013

 
7,525

 
2,520

 
—

 
1,013

 
10,045

 
11,058

 
(3,790
)
 
2003
 The Terrace, Chattanooga, TN
 
12,709

 
4,166

 
9,929

 
8,475

 
—

 
6,536

 
16,034

 
22,570

 
(6,573
)
 
1997
 West Towne Crossing, Madison, WI
 
—

 
1,151

 
2,955

 
7,940

 
—

 
2,126

 
9,920

 
12,046

 
(3,346
)
 
1998
 WestGate Crossing, Spartanburg, SC
 
—

 
1,082

 
3,422

 
8,348

 
—

 
1,082

 
11,770

 
12,852

 
(5,128
)
 
1997
 Westmoreland Crossing, Greensburg, PA
 
—

 
2,898

 
21,167

 
9,252

 
—

 
2,898

 
30,419

 
33,317

 
(11,683
)
 
2002
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 DISPOSITIONS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Chesterfield Mall, Chesterfield, MO
 
—

 
11,083

 
282,140

 
(293,223
)
 
—

 
—

 
—

 
—

 
—

 
2007
 College Square, Morristown, TN
 
—

 
2,954

 
17,787

 
(20,653
)
 
(88
)
 
—

 
—

 
—

 
—

 
1987-1988
 Foothills Mall, Maryville, TN
 
—

 
5,558

 
25,244

 
(30,802
)
 
—

 
—

 
—

 
—

 
—

 
1996
 Midland Mall, Midland, MI
 
—

 
10,321

 
29,429

 
(39,750
)
 
—

 
—

 
—

 
—

 
—

 
2001
 One Oyster Point, Newport News, VA
 
—

 
1,822

 
3,623

 
(5,445
)
 
—

 
—

 
—

 
—

 
—

 
2007
The Outlet Shoppes at Oklahoma City, Oklahoma City, OK
 
—

 
7,402

 
50,268

 
(57,670
)
 
—

 
—

 
—

 
—

 
—

 
2011
 Two Oyster Point, Newport News, VA
 
—

 
1,543

 
3,974

 
(5,517
)
 
—

 
—

 
—

 
—

 
—

 
2007
 Wausau Center, Wausau, WI
 
—

 
5,231

 
24,705

 
(24,705
)
 
(5,231
)
 
—

 
—

 
—

 
—

 
2001
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Other
 
—

 
2,777

 
4,002

 
(1,385
)
 
(324
)
 
3,214

 
1,856

 
5,070

 
(1,719
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Developments in progress consisting of
construction and Development Properties
 
—

 
—

 
—

 
85,346

 
—

 
—

 
85,346

 
85,346

 
—

 
 
 TOTALS
 
$
1,908,027

 
$
837,065

 
$
5,390,463

 
$
1,431,979

 
$
(37,577
)
 
$
813,390

 
$
6,808,540

 
$
7,621,930

 
$
(2,465,095
)
 
 
(1)
Initial cost represents the total cost capitalized including carrying cost at the end of the first fiscal year in which the Property opened or was acquired.
(2)
Encumbrances represent the face amount of the mortgage and other indebtedness balance at December 31, 2017, excluding debt premium or discount, if applicable.
(3)
The aggregate cost of land and buildings and improvements for federal income tax purposes is approximately $7.721 billion.
(4)
Depreciation for all Properties is computed over the useful life which is generally 40 years for buildings, 10-20 years for certain improvements and 7-10 years for equipment and fixtures.

159

Schedule III
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
At December 31, 2017
(In thousands)



 
The changes in real estate assets and accumulated depreciation for the years ending December 31, 2017, 2016, and 2015 are set forth below (in thousands):

 
Year Ended December 31,
 
2017
 
2016
 
2015
REAL ESTATE ASSETS:
 
 
 
 
 
Balance at beginning of period
$
7,947,647

 
$
8,240,521

 
$
8,187,183

Additions during the period:
 

 
 

 
 

Additions and improvements
177,482

 
263,265

 
230,990

Acquisitions of real estate assets
78,516

 
—

 
182,747

Deductions during the period:
 

 
 

 
 

Disposals, deconsolidations and accumulated depreciation on impairments
(506,399
)
 
(435,331
)
 
(249,716
)
Transfers from real estate assets
(3,915
)
 
(3,986
)
 
(4,738
)
Impairment of real estate assets
(71,401
)
 
(116,822
)
 
(105,945
)
Balance at end of period
$
7,621,930

 
$
7,947,647

 
$
8,240,521

 
 
 
 
 
 
ACCUMULATED DEPRECIATION:
 

 
 

 
 

Balance at beginning of period
$
2,427,108

 
$
2,382,568

 
$
2,240,007

Depreciation expense
272,945

 
272,697

 
274,544

Accumulated depreciation on real estate assets sold, retired, deconsolidated or impaired
(234,958
)
 
(228,157
)
 
(131,983
)
Balance at end of period
$
2,465,095

 
$
2,427,108

 
$
2,382,568




160


 
 
 
 
 
 
 
 
 
 
 
 
 
Schedule IV
 
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
MORTGAGE NOTES RECEIVABLE ON REAL ESTATE
At December 31, 2017
(In thousands)
Name Of Center/Location
 
Interest
Rate
 
Final Maturity Date
 
Monthly
Payment
Amount (1)
 
Balloon Payment
At
Maturity
 
Prior
Liens
 
Face
Amount Of
Mortgage
 
Carrying
Amount Of
Mortgage (2)
 
Principal
Amount Of
Mortgage
Subject To
Delinquent
Principal
Or Interest
FIRST MORTGAGES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Columbia Place Outparcel
 
5.00%
 
Feb-2022
 
$
3

 
 
$
210

 
None
 
$
360

 
$
302

 
$
—

One Park Place - Chattanooga, TN
 
5.00%
 
May-2022
 
21

 
 
—

 
None
 
3,200

 
1,010

 
—

Village Square - Houghton Lake, MI
 
4.00%
 
Mar-2018
 
10

 
 
1,583

 
None
 
2,627

 
1,596

 
—

Other
 
4.07% - 9.50%
(3)
 Dec-2016 / Jan-2047
(4)
14


 
2,534

 
 
 
2,597

 
2,510

 
1,100

 
 
 
 
 
 
$
48

 
 
$
4,327

 
 
 
$
8,784

 
$
5,418

 
$
1,100

 
(1)
Equal monthly installments comprised of principal and interest, unless otherwise noted.
(2)
The aggregate carrying value for federal income tax purposes was $5,418 at December 31, 2017.
(3)
Mortgage notes receivable aggregated in Other include a variable-rate note that bears interest at prime plus 2.0%, currently at 6.50%, and a variable-rate note that bears interest at LIBOR plus 2.50%.
(4)
A $1,100 note for The Promenade at D'Iberville with a maturity date of December 2016 is in default at December 31, 2017. See Note 10 to the consolidated financial statements for additional information.

The changes in mortgage notes receivable were as follows (in thousands):
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
Beginning balance
$
5,680

 
$
7,776

 
$
9,323

Additions
1,802

 
—

 
—

Payments
(2,064
)
 
(250
)
 
(1,547
)
Write-Offs (1)
—

 
(1,846
)
 
—

Ending balance
$
5,418

 
$
5,680

 
$
7,776

(1)
See Note 10 to the consolidated financial statements for more information.


161


EXHIBIT INDEX
Exhibit
Number
 
 
Description
 
 
4.1
 
See Amended and Restated Certificate of Incorporation of the Company, as amended, and Third Amended and Restated Bylaws of the Company relating to the Common Stock, Exhibits 3.1 and 3.2 above
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

162


Exhibit
Number
 
 
Description
 
 
 
 
 
 
 
 
 
 
 
 
 
10.3.1
 
Form of Indemnification Agreements between the Company and the Management Company and their officers and directors, for agreements executed prior to 2013 (bb)
 
10.4.1
 
Employment Agreement for Charles B. Lebovitz† (cc)
10.4.2
 
Employment Agreement for Stephen D. Lebovitz† (cc)
 
 
10.5
 
Option Agreement relating to Outparcels (cc)
 
 
 
 
 
 
 
 
 

163


Exhibit
Number
 
 
Description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

164


Exhibit
Number
 
 
Description
 
 
 
 
 
 
 
101.INS
 
XBRL Instance Document
101.SCH
 
XBRL Taxonomy Extension Schema Document
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document

(a)
Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.**
(b)
Incorporated by reference from the Company’s Current Report on Form 8-K, filed on February 16, 2016.**
(c)
Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001.*
(d)
Incorporated by reference from the Company's Current Report on Form 8-K, dated June 10, 2002, filed on June 17, 2002.*
(e)
Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002.*
(f)
Incorporated by reference from the Company's Registration Statement on Form 8-A, filed on August 21, 2003.*
(g)
Incorporated by reference from the Company's Registration Statement on Form 8-A, filed on December 10, 2004.*
(h)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on March 1, 2010.*
(i)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on October 18, 2010.*
(j)
Incorporated by reference from the Company's Registration Statement on Form 8-A, filed on October 1, 2012.*
(k)
Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004.*
(l)
Incorporated by reference from the Company's Quarterly Report on Form 10-Q, for the quarter ended June 30, 2005.*

165


(m)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on November 22, 2005.*
(n)
Incorporated by reference from the Company's Current Report on Form 8-K, dated and filed on November 26, 2013.**
(o)
Incorporated by reference from the Company’s Current Report on Form 8-K, filed December 13, 2016.**
(p)
Incorporated by reference from the Company’s Current Report on Form 8-K, filed October 8, 2014.**
(q)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on September 1, 2017.**
(r)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on November 5, 2010.*
(s)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on October 5, 2012.*
(t)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on May 10, 2012.*
(u)
Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012.*
(v)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on May 17, 2013.*
(w)
Incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.**
(x)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on May 12, 2017.*
(y)
Incorporated by reference from the Company’s Current Report on Form 8-K, filed on March 27, 2015.**
(z)
Incorporated by reference from the Company’s Current Report on Form 8-K, filed on February 13, 2017.**
(aa)
Incorporated by reference from the Company’s Current Report on Form 8-K, filed on February 16, 2018.**
(bb)
Incorporated by reference to Pre-Effective Amendment No. 1 to the Company's Registration Statement on Form S-11 (No. 33-67372), as filed with the Commission on October 5, 1993. Exhibit originally filed in paper format and as such, a hyperlink is not available.*
(cc)
Incorporated by reference to Post-Effective Amendment No. 1 to the Company's Registration Statement on Form S-11 (No. 33-67372), as filed with the Commission on January 27, 1994. Exhibit originally filed in paper format and as such, a hyperlink is not available.*
(dd)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on November 9, 2012.*
(ee)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on February 6, 2001.*
(ff)
Incorporated by reference from the Company's Quarterly Report on Form 10-Q, for the quarter ended September 30, 2017.**
(gg)
Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2005.*
(hh)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on August 5, 2013.*
(ii)
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.**
(jj)
Incorporated by reference from the Company's Current Report on Form 8-K/A, filed on August 29, 2017.**
(kk)
Incorporated by reference from the Company's Current Report on Form 8-K, filed on March 1, 2013.*

†
A management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of this report.
  
* Commission File No. 1-12494
** Commission File No. 1-12494 and 333-182515-01

166


SIGNATURES

 
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant)
 
 
By:
/s/ Farzana Khaleel
 
Farzana Khaleel
 
Executive Vice President -
Chief Financial Officer and Treasurer
Dated: March 1, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature
 
Title
Date
/s/ Charles B. Lebovitz
Chairman of the Board
March 1, 2018
Charles B. Lebovitz
 
 
 
 
/s/ Stephen D. Lebovitz
Director, President and Chief Executive Officer (Principal Executive Officer)
March 1, 2018
Stephen D. Lebovitz
 
 
 
 
/s/ Farzana Khaleel
Executive Vice President - Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)
March 1, 2018
Farzana Khaleel
 
 
 
 
/s/ Gary L. Bryenton*
Director
March 1, 2018
Gary L. Bryenton
 
 
 
 
/s/ A. Larry Chapman*
Director
March 1, 2018
A. Larry Chapman
 
 
 
 
 
/s/ Matthew S. Dominski*
Director
March 1, 2018
Matthew S. Dominski
 
 
 
 
/s/ John D. Griffith*
Director
March 1, 2018
John D. Griffith
 
 
 
 
/s/ Richard J. Lieb*
Director
March 1, 2018
Richard J. Lieb
 
 
 
 
/s/ Gary J. Nay*
Director
March 1, 2018
Gary J. Nay
 
 
 
 
/s/ Kathleen M. Nelson*
Director
March 1, 2018
Kathleen M. Nelson
 
 
 
 
*By: /s/ Farzana Khaleel
Attorney-in-Fact
March 1, 2018
Farzana Khaleel

167


SIGNATURES

 
Pursuant to the requirements of Section 13 or 15(d) 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 LIMITED PARTNERSHIP
(Registrant)
By: CBL HOLDINGS I, INC., its general partner
 
 
By:
/s/ Farzana Khaleel
 
Farzana Khaleel
 
Executive Vice President -
Chief Financial Officer and Treasurer
Dated: March 1, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature
 
Title
Date
/s/ Charles B. Lebovitz
Chairman of the Board of CBL Holdings I, Inc., general partner of the Registrant
March 1, 2018
Charles B. Lebovitz
 
 
 
 
/s/ Stephen D. Lebovitz
Director, President and Chief Executive Officer of CBL Holdings I, Inc., general partner of the Registrant (Principal Executive Officer)
March 1, 2018
Stephen D. Lebovitz
 
 
 
 
 
 
 
 
/s/ Farzana Khaleel
Executive Vice President - Chief Financial Officer and Treasurer of CBL Holdings, I, Inc., general partner of the Registrant (Principal Financial Officer and Principal Accounting Officer)
March 1, 2018
Farzana Khaleel

168