CBL & Associates Properties Reports Fourth Quarter and Annual 2008 Results

CBL & Associates Properties, Inc. (NYSE:CBL):

• FFO per share was $0.80 and $3.22 in the fourth quarter and year ended December 31, 2008, respectively.
• Portfolio occupancy was 92.3% as of December 31, 2008 compared with 93.2% as of December 31, 2007.
• Same Center NOI declined 1.5% for the year ended December 31, 2008.
• The Company entered into more than $1.0 billion of new financings and loan extensions in the year ended December 31, 2008.

CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the fourth quarter and year ended December 31, 2008. A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure is located at the end of this news release.

Funds from Operations ("FFO”) allocable to common shareholders for the fourth quarter ended December 31, 2008 was $52,774,000 or $0.80 per diluted share, compared with $54,519,000, or $0.83 per diluted share for the fourth quarter ended December 31, 2007. FFO allocable to common shareholders for the year ended December 31, 2008 was $212,933,000, or $3.22 per diluted share, compared with $203,613,000, or $3.10 per diluted share, for the year ended December 31, 2007, representing an increase of 3.9% on a per diluted share basis. FFO allocable to common shareholders for the fourth quarter and year ended December 31, 2008 was impacted by an increase in abandoned projects expense of $8,146,000 and $10,135,000, respectively, related to the write-off of predevelopment costs for projects the Company is no longer pursuing. The write-offs were related to projects in various stages of pre-development, but did not impact any projects that are currently under construction.

FFO of the operating partnership for the fourth quarter ended December 31, 2008, was $93,207,000, compared with $96,614,000 for the fourth quarter ended December 31, 2007. FFO of the operating partnership for the year ended December 31, 2008, was $376,273,000, compared with $361,528,000 for the year ended December 31, 2007.

Net loss available to common shareholders for the fourth quarter ended December 31, 2008, was ($10,055,000), or ($0.15) per diluted share, compared with net income of $13,418,000, or $0.20 per diluted share for the prior-year period. Net income available to common shareholders for the year ended December 31, 2008, was $9,768,000, or $0.15 per diluted share, compared with $59,372,000, or $0.90 per diluted share, for the year ended December 31, 2007.

Net income (loss) available to common shareholders for the fourth quarter and year ended December 31, 2008 included $29,298,000 and $40,300,000, respectively, of additional depreciation expense resulting from the write-offs of tenant improvements, deferred lease costs, and in-place lease intangibles for tenants that closed during the fourth quarter 2008. Net income (loss) available to common shareholders for the fourth quarter and year ended December 31, 2008 was also impacted by an increase in abandoned projects expense over the prior year periods of $8,146,000 and $10,135,000, respectively, related to the write-off of predevelopment costs for projects the Company is no longer pursuing.

HIGHLIGHTS

• Total revenues increased 2.0% during the fourth quarter ended December 31, 2008, to $299,398,000 from $293,638,000 in the prior-year period. Total revenues increased 9.4% during the year ended December 31, 2008 to $1,138,218,000 from $1,039,944,000 in the prior year.
• Same-center net operating income ("NOI”), for the fourth quarter and year ended December 31, 2008, declined 4.0% and 1.5%, respectively, over the prior year periods. Same-center NOI was primarily impacted by loss of rent and an increase in bad debt expense from bankruptcy and stores closures.
• Same-store sales for mall tenants of 10,000 square feet or less for stabilized malls as of December 31, 2008, declined 4.3% to $331 per square foot compared with $346 per square foot in the prior year period.
• The debt-to-total-market capitalization ratio as of December 31, 2008, was 86.3% based on the common stock closing price of $6.50 and a fully converted common stock share count of 117,010,000 shares as of the same date. The debt-to-total-market capitalization ratio as of December 31, 2007, was 64.0% based on the common stock closing price of $23.91 and a fully converted common stock share count of 116,814,000 shares as of the same date.
• Consolidated and unconsolidated variable rate debt of $1,629,869,000 represents 21.2% of the total market capitalization for the Company and 24.6% of the Company's share of total consolidated and unconsolidated debt.

CBL’s Chairman and Chief Executive Officer, Charles B. Lebovitz, said, "While 2008 represented the most challenging year in our history, the underlying strength and resilience of our portfolio reinforces our dominant mall strategy that has generated an impressive thirty year track record. In the face of a record level of bankruptcy activity in 2008, we experienced only a 90 basis point decline in portfolio occupancy and achieved a record level of lease signings at positive spreads due to the collective efforts of the leasing and property level management teams. We will continue this aggressive and proactive approach in the current economic environment and are confident that we will be successful despite the challenges that lay ahead.

"In addition to maximizing the performance of our existing portfolio, strengthening our balance sheet remains a top priority. We completed more than $1.0 billion of new financings in 2008 and are making excellent progress in addressing 2009 loan maturities. We have continued our efforts to reduce operating expenses and achieve efficiencies in our organization with meaningful results to-date. The leadership of CBL will continue to make the prudent and sometimes difficult decisions necessary to preserve CBL's long-term shareholder value.”

DISPOSITIONS

In December 2008, CBL completed the sale of an office building and adjacent land in Greensboro, NC, for $14.6 million.

In 2008, CBL completed the sale of seven community centers, one community center expansion and two office buildings for approximately $67.8 million.

FINANCING

During the fourth quarter, CBL closed the previously announced $40.0 million term loan secured by Meridian Mall in Lansing, MI.

In 2008, CBL completed more than $1.0 billion of financings including eight new construction loans with total capacity of approximately $331.0 million, more than $365.0 million of new financings or extensions on maturing mortgages and approximately $344.0 million of new term facilities.

OUTLOOK AND GUIDANCE

Based on today's outlook and the Company's fourth quarter results, the Company is providing guidance for 2009 FFO of $3.10 to $3.25 per share. The full year guidance assumes $0.08 to $0.11 of outparcel sales and same-center NOI growth in the range of (1.5%) to (3.5%), excluding the impact of lease termination fees from both applicable periods. The guidance excludes the impact of any future unannounced acquisitions or dispositions. The Company expects to update its annual guidance after each quarter's results.

INVESTOR CONFERENCE CALL AND SIMULCAST

CBL & Associates Properties, Inc. will conduct a conference call at 11:00 a.m. ET on Thursday, February 5, 2009, to discuss the fourth quarter results. The number to call for this interactive teleconference is (303) 262-2130. A seven-day replay of the conference call will be available by dialing (303) 590-3000 and entering the passcode 11111004#. A transcript of the Company's prepared remarks will be furnished on a Form 8-K following the conference call.

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

The Company will also provide an online Web simulcast and rebroadcast of its 2008 fourth quarter earnings release conference call. The live broadcast of CBL's quarterly conference call will be available online at the Company's Web site at cblproperties.com, as well as www.streetevents.com and www.earnings.com, Thursday, February 5, 2009, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue through February 12, 2009.

CBL is one of the largest and most active owners and developers of malls and shopping centers in the United States. CBL owns, holds interests in or manages 158 properties, including 87 regional malls/open-air centers. The properties are located in 27 states and total 85.8 million square feet including 2.2 million square feet of non-owned shopping centers managed for third parties. CBL currently has seven projects under construction totaling 3.0 million square feet including Settlers Ridge in Pittsburgh, PA; The Pavilion at Port Orange in Port Orange, FL; Hammock Landing in West Melbourne, FL; The Promenade in D’Iberville, MS; two lifestyle/associated centers, and one mall expansion. Headquartered in Chattanooga, TN, CBL has regional offices in Boston (Waltham), MA, Dallas, TX, and St. Louis, MO. Additional information can be found at cblproperties.com.

NON-GAAP FINANCIAL MEASURES

Funds From Operations

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

The Company believes that FFO provides an additional indicator of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of well-maintained real estate assets have historically risen with market conditions, the Company believes that FFO enhances investors’ understanding of its operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of the Company’s properties and interest rates, but also by its capital structure.

The Company presents both FFO of its operating partnership and FFO allocable to common shareholders, as it believes that both are useful performance measures. The Company believes FFO of its operating partnership is a useful performance measure since it conducts substantially all of its business through its operating partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company’s common shareholders and the minority interest in the operating partnership. The Company believes 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) available to common shareholders.

In the reconciliation of net income (loss) available to common shareholders to FFO allocable to common shareholders, the Company makes an adjustment to add back minority interest in earnings of its operating partnership in order to arrive at FFO of its operating partnership. The Company then applies a percentage to FFO of its operating partnership 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 outstanding during the period.

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

Same-Center Net Operating Income

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

Similar to FFO, the Company computes NOI based on its pro rata share of both consolidated and unconsolidated properties. The Company's definition of NOI may be different than that used by other companies and, accordingly, the Company's NOI may not be comparable to that of other companies. A reconciliation of same-center NOI to net income (loss) is located at the end of this earnings release.

Since NOI includes only those revenues and expenses related to the operations of its shopping center properties, the Company believes that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates and operating costs and the impact of those trends on the Company's results of operations. Additionally, there are instances when tenants terminate their leases prior to the scheduled expiration date and pay the Company one-time, lump-sum termination fees. These one-time lease termination fees may distort same-center NOI trends and may result in same-center NOI that is not indicative of the ongoing operations of the Company's shopping center properties. Therefore, the Company believes that presenting same-center NOI, excluding lease termination fees, is useful to investors.

Pro Rata Share of Debt

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

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