CBL & Associates Properties, Inc. (NYSE:CBL) announced that the Board of Directors declared a 10.7% increase in the regular quarterly cash dividend for the Company's Common Stock to $0.725 per share for the quarter ending December 31, 2003.
The dividend, which equates to an annual rate of $2.90 per share compared to the previous annual rate of $2.62 per share, is payable on January 16, 2004, to shareholders of record as of December 31, 2003.
The Board declared a quarterly cash dividend of $1.0938 per share for the quarter ending December 31, 2003, for the Company's 8.75% Series B Cumulative Redeemable Preferred Stock. The dividend, which equates to an annual dividend payment of $4.375 per share, is payable on December 30, 2003, to shareholders of record as of December 18, 2003.
The Board declared a quarterly cash dividend of $0.484375 per depository share for the quarter ending December 31, 2003, for the Company's 7.75% Series C Cumulative Redeemable Preferred Stock. The dividend, which equates to an annual dividend payment of $1.9375 per share, is payable on December 30, 2003, to shareholders of record as of December 18, 2003.
CBL & Associates Properties also announced results for the third quarter and the nine months ended September 30, 2003. Reconciliations of non-GAAP financial measures are included in the figures.
The third quarter results exclude the impact of SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity," since the Financial Accounting Standards Board indefinitely deferred SFAS No. 150's provisions related to noncontrolling interests in limited life subsidiaries on October 29, 2003.
Net income available to common shareholders increased 15.8% in the third quarter of 2003 to $20,225,000 from $17,465,000 in the prior-year period. On a diluted per share basis, net income available to common shareholders for the third quarter of 2003 increased 14.0% to $0.65 compared with $0.57 in the prior-year period. Net income available to common shareholders increased 19.1% in the nine months of 2003 to $64,023,000 from $53,763,000 in the nine months of 2002, or a 12.0% per share increase to $2.06 from $1.84.
Funds from operations (FFO) increased 15.4% to $65,801,000 for the third quarter 2003, from $57,011,000 for the third quarter of 2002. FFO per share on a diluted, fully converted basis increased 12.6% to $1.16 for the third quarter of 2003 from $1.03 in the prior-year period. FFO increased 16.7% to $200,504,000 for the nine months of 2003 from $171,876,000 in the nine months of 2002. FFO per share increased 11.3% on a diluted, fully converted basis in the nine months in 2003 to $3.54 from $3.18 per share in the prior-year period.
The Company began to include gains on sales of outparcels in FFO during the first quarter of 2003 to comply with the Securities and Exchange Commission's rules related to disclosure of non-GAAP financial measures since NAREIT's definition of FFO includes gains on sales of outparcels. FFO for the prior-year period has been restated to include gains on sales of outparcels. Gains on sales of outparcels for the third quarter of 2003 were $0.01 per diluted, fully converted share versus $0.01 for the third quarter one-year ago.
HIGHLIGHTS
-- Effective with the fourth quarter of 2003 the regular quarterly cash dividend for the Company's common stock will be increased by 10.7% from $0.655 to $0.725 per share. This increase is a result of the Company's compound annual FFO growth of 11.8% per share since the Company's initial public offering in 1993. The Company currently expects to maintain an annualized dividend of at least $2.90 per share throughout 2004.
-- Income from operations increased 13.2% in the third quarter of 2003 to $77,800,000 from $68,702,000 in the third quarter of 2002. Income from operations increased 12.6% in the first nine months of 2003 to $233,744,000 from $207,609,000 in the nine months of 2002.
-- Revenues increased 13.0% in the third quarter to $165,476,000 from $146,443,000 in the prior-year period. Revenues increased 13.3% in the nine months to $496,315,000 from $438,181,000 in the comparable period a year ago. Revenues for the third quarter of 2003 include $588,000 in lease termination fees received from tenants compared with $989,000 during the same period one year ago.
-- Year to date as of September 30, 2003, same center net operating income for the portfolio improved by 4.3% compared with an 8.1% increase for the same period one year ago. Same center net operating income for the portfolio improved in the third quarter by 2.0% compared with a 1.4% increase for the prior year period.
-- Same store sales improved 3.1% for the third quarter of 2003. Same-store sales for mall tenants of 10,000 square feet or less for stabilized malls increased 0.4% for those tenants who have reported year to date sales compared with a decrease of 1.5% for the nine months ended one year ago.
CBL's chairman and chief executive officer, Charles B. Lebovitz, stated, "We are celebrating our tenth year as a publicly traded company with the announcement today that our Board has increased our dividend by 10.7% effective with the fourth quarter this year. During the past decade, our portfolio has grown from 15 million square feet to 63 million square feet and we have posted a compound annual FFO growth per share of 11.8%. Our annual dividend has increased from $1.50 ten years ago to $2.90 per share, a compound annual increase of 6.9%. We have produced a total return to our IPO shareholders in excess of 274%.
"While past results are not indicative of future performance, they do reflect the success of a focus that has remained consistent. For 25 years, CBL's strategy has been to develop, acquire and aggressively manage well-located, dominant regional malls and shopping centers. As we look ahead, we expect that our strategy combined with new opportunities such as our Australian joint venture with Galileo America REIT will continue to provide CBL with opportunities to create additional shareholder value.
"New acquisitions continued during the third quarter as we closed on the first regional mall of a four-mall portfolio from Faison Enterprises and subsequently closed on the next two malls on October 1. Our development pipeline remains active with several projects under construction including one mall, one associated center and two community centers. We also remain committed to the redevelopment of our properties with renovations and expansions scheduled for completion later this year at four malls. We completed renovations at two regional malls earlier this year. In addition, we held the grand opening for a new community center, Waterford Commons in Waterford, Connecticut, subsequent to the end of the quarter."
OPERATIONAL HIGHLIGHTS September 30,
2003 2002
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Portfolio occupancy: 92.4% 92.8%
Mall portfolio 91.7% 91.8%
Stabilized malls (54) 92.1% 92.1%
Non-stabilized malls (2) 80.2% 87.0%
Associated centers 90.6% 95.8%
Community centers 94.2% 94.3%
Comparable mall shop sales - year to date 0.4% (1.5)%
PROJECTS UNDER CONSTRUCTION OPENING DATES
- The Shoppes at Panama City -
Panama City, FL February 2004
- Coastal Grand - Myrtle Beach, SC March 2004
- Garden City Plaza Expansion -
Garden City, KS March 2004
- Wilkes-Barre Township MarketPlace -
Wilkes-Barre Township, PA May 2004
- Charter Oak Marketplace - Hartford, CT November 2004
- East Towne Mall Expansion - Madison, WI November 2004
- West Towne Mall Expansion - Madison, WI November 2004
PROJECTS UNDER RENOVATION COMPLETION DATES
- Eastgate Mall - Cincinnati, OH November 2003
- East Towne Mall - Madison, WI November 2003
- St. Clair Square - Fairview Heights, IL November 2003
- West Towne Mall - Madison, WI November 2003
DEBT
The Company's share of consolidated and unconsolidated debt as of
September 30, 2003 and 2002, is as follows (in thousands):
September 30, 2003 September 30, 2002
------------------- -------------------
Weighted Weighted
Avg. Avg.
Interest Interest
Amount Rate(1) Amount Rate(1)
---------- -------- ---------- --------
Fixed-rate debt:
Non-recourse loans on
operating properties $2,251,405 6.78% $1,880,597 7.19%
---------- ----------
Variable-rate debt:
Recourse term loans on
operating properties 156,869 2.57% 284,262 4.32%
Lines of credit 257,000 2.12% 104,000 2.84%
Construction loans 29,571 2.87% 34,285 3.37%
---------- ----------
Total variable-rate debt 443,440 2.33% 422,547 3.88%
---------- ----------
Total $2,694,845 6.05% $2,303,144 6.58%
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(1) Weighted average interest rate before amortization of deferred
financing costs.
Debt-to-total-market capitalization ratio as of September 30, 2003, was 46.9% based on the common stock closing price of $49.90 and a fully converted common stock share count of 55,433,565 as of the same date. The debt-to-total-market capitalization ratio as of September 30, 2002, was 50.3%, based on the common stock closing price of $38.75.
In August the Company sold 4,600,000 depositary shares at $25.00 per depositary share, raising $115 million in gross offering proceeds. Subsequent to the end of the quarter, the Company announced the planned redemption of the 9% Series A Cumulative Redeemable Preferred Stock that was issued in 1998.
In September the Company closed $196 million of long-term, non-recourse, fixed-rate mortgage loans secured by three of the Company's regional malls and one associated center. The loans have a blended rate of 4.85% and replaced short-term, variable rate debt on each property. The weighted average maturity is 6.5 years, with individual loan terms ranging from five to ten years.
During the third quarter the Company announced that it was forming a joint venture with Galileo America REIT ("Galileo"), the U.S. affiliate of Australia-based Galileo America Shopping Trust, to invest in power and community centers throughout the United States. CBL agreed to contribute to the joint venture 90% of its ownership interest in 51 power and community centers for gross consideration of approximately $516 million and to retain a 10% interest in the joint venture. The joint venture closed on October 23, 2003 with the first phase generating cash proceeds to the Company of approximately $255 million.
During the third quarter, the Company sold two community centers, Signal Hills Village and Chester Plaza for a combined gain of $623,000.
DIVIDENDS
CBL's regular quarterly cash dividend of $0.655 per share for the third quarter was paid on October 17, 2003, to shareholders of record as of September 30, 2003. The third quarter cash dividend of $0.5625 per share for the Company's 9% Series A Cumulative Redeemable Preferred Stock, the third quarter cash dividend of $1.0938 per share for the Company's 8.75% Series B Cumulative Redeemable Preferred Stock and the third quarter cash dividend of $0.215278 per depositary share for the Company's 7.75% Series C Cumulative Redeemable Preferred Stock were all paid on September 30, 2003, to shareholders of record as of September 18, 2003.
OUTLOOK AND GUIDANCE
Based on today's outlook and the Company's third quarter results, management is comfortable with the Thomson/First Call consensus estimate for 2003 as of October 29, 2003. In connection with the recently completed Galileo transaction, the FFO loss due to the sale of the community centers in Phase I and Phase II is $0.42 per share based on the results for the nine months of 2003. Considering the impact of this loss of FFO, the Company expects FFO to be in the range of $4.85 to $5.00 per share for 2004.
Low High
Expected diluted Earnings per Common Share $ 1.52 $ 1.57
Add: real estate depreciation and amortization 2.04 2.09
Add: joint venture depreciation and
amortization 0.08 0.08
Add: minority interest 1.21 1.26
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Expected FFO per diluted Common Share $ 4.85 $ 5.00
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CBL & Associates Properties, Inc. owns or holds interests in 164 properties, including 59 enclosed regional malls. The properties are located in 25 states and total 63.0 million square feet including 2.6 million square feet of non-owned shopping centers managed for third parties. The Company has seven projects under construction totaling approximately 1.8 million square feet, including one mall - Coastal Grand - Myrtle Beach, SC, one associated center, two community centers, three expansions plus four mall renovations. In addition to its office in Chattanooga, TN, the Company has a regional office in Boston (Waltham), MA.