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Mortgage and Other Indebtedness | 6 Months Ended
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Jun. 30, 2013
Debt Disclosure [Abstract] |
Mortgage and Other Indebtedness | Mortgage and Other Indebtedness Mortgage and other indebtedness consisted of the following:
| June 30, 2013 |  | December 31, 2012
| Amount |  | Weighted- Average Interest Rate (1) |  | Amount |  | Weighted- Average Interest Rate (1)
Fixed-rate debt: |  |  |  |  |  |  |
Non-recourse loans on operating properties (2) | $ | 3,516,429 |  |  | 5.56% |  | $ | 3,776,245 |  |  | 5.42%
Financing method obligation (3) | 18,264 |  |  | 8.00% |  | 18,264 |  |  | 8.00%
Total fixed-rate debt | 3,534,693 |  |  | 5.57% |  | 3,794,509 |  |  | 5.43%
Variable-rate debt: |  |  |  |  |  |  |  |  |
Non-recourse term loans on operating properties | 134,525 |  |  | 3.00% |  | 123,875 |  |  | 3.36%
Recourse term loans on operating properties | 78,820 |  |  | 2.33% |  | 97,682 |  |  | 1.78%
Construction loans | 40,963 |  |  | 2.94% |  | 15,366 |  |  | 2.96%
Unsecured lines of credit | 783,394 |  |  | 1.60% |  | 475,626 |  |  | 2.07%
Secured line of credit (4) | — |  |  | —% |  | 10,625 |  |  | 2.46%
Unsecured term loans | 50,000 |  |  | 2.09% |  | 228,000 |  |  | 1.82%
Total variable-rate debt | 1,087,702 |  |  | 1.90% |  | 951,174 |  |  | 2.20%
Total | $ | 4,622,395 |  |  | 4.71% |  | $ | 4,745,683 |  |  | 4.79%
(1) | Weighted-average interest rate includes the effect of debt premiums (discounts), but excludes amortization of deferred financing costs.
(2) | The Company has four interest rate swaps on notional amounts totaling $111,881 as of June 30, 2013 and $113,885 as of December 31, 2012 related to four variable-rate loans on operating properties to effectively fix the interest rate on the respective loans. Therefore, these amounts are reflected in fixed-rate debt at June 30, 2013 and December 31, 2012.
(3) | This amount represents the noncontrolling partner's equity contributions related to Pearland Town Center that is accounted for as a financing due to certain terms of the CBL/T-C, LLC joint venture agreement.
(4) | The Company converted its secured line of credit to unsecured in February 2013.
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, as well as issuances of letters of credit. Wells Fargo Bank NA serves as the administrative agent for a syndicate of financial institutions for the Company's two unsecured $600,000 credit facilities ("Facility A" and "Facility B"). Facility A matures in November 2015 and has a one-year extension option for an outside maturity date of November 2016. Facility B matures in November 2016 and has a one-year extension option for an outside maturity date of November 2017. The extension options on both facilities are at the Company's election, subject to continued compliance with the terms of the facilities, and have a one-time extension fee of 0.20% of the commitment amount of each credit facility. In the first quarter of 2013, the Company amended and restated its $105,000 secured credit facility with First Tennessee Bank, NA. The facility was converted from secured to unsecured with a capacity of $100,000 and a maturity date of February 2016. Prior to May 14, 2013, borrowings under the three unsecured lines of credit bore interest at LIBOR plus a spread ranging from 155 to 210 basis points based on the Company’s leverage ratio. The Company also paid annual unused facility fees, on a quarterly basis, at rates of either 0.25% or 0.30% based on any unused commitment of each facility. In May 2013, the Company obtained an investment grade rating from Moody's Investors Service ("Moody's") and, effective May 14, 2013, made a one-time irrevocable election to use its credit rating to determine the interest rate on each facility. Under the credit rating election, each facility now bears interest at LIBOR plus a spread of 100 to 175 basis points. As of June 30, 2013, the Company's interest rate based on its credit rating from Moody's is LIBOR plus 140 basis points. Additionally, the Company will pay an annual facility fee that ranges from 0.15% to 0.35% of the total capacity of each facility rather than the unused commitment fees as described above. As of June 30, 2013, the annual facility fee is 0.30%. The three unsecured lines of credit had a weighted-average interest rate of 1.60% at June 30, 2013. The following summarizes certain information about the Company's unsecured lines of credit as of June 30, 2013:
|  | Total Capacity |  | Total Outstanding |  | Maturity Date |  | Extended Maturity Date
Facility A |  | $ | 600,000 |  |  | $ | 300,297 |  | (1) | November 2015 |  | November 2016
First Tennessee |  | 100,000 |  |  | 52,679 |  |  | February 2016 |  | N/A
Facility B |  | 600,000 |  |  | 430,418 |  | (2) | November 2016 |  | November 2017
|  | $ | 1,300,000 |  |  | $ | 783,394 |  |  |  |  |
(1) There was an additional $475 outstanding on this facility as of June 30, 2013 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit. (2) There was an additional $617 outstanding on this facility as of June 30, 2013 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit. Unsecured Term Loans In April 2013, the Company retired a $228,000 unsecured term loan at its maturity date with borrowings from the Company's credit facilities. In the first quarter of 2013, under the terms of the Company's amended and restated agreement with First Tennessee Bank, NA described above, the Company obtained a $50,000 unsecured term loan that bears interest at LIBOR plus 1.90% and matures in February 2018. At June 30, 2013, the outstanding borrowings of $50,000 had a weighted-average interest rate of 2.09%. See Note 16 for information related to a new unsecured term loan the Company obtained subsequent to June 30, 2013. Covenants and Restrictions The agreements to the unsecured lines of credit contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum net worth requirements, minimum unencumbered asset and interest ratios, maximum secured indebtedness and limitations on cash flow distributions. The Company believes that it was in compliance with all covenants and restrictions at June 30, 2013. The following presents the Company's compliance with key unsecured debt covenant compliance ratios as of June 30, 2013:
Ratio |  | Required |  | Actual
Debt to total asset value |  | < 60% |  | 50.3%
Ratio of unencumbered asset value to unsecured indebtedness |  | > 1.60x |  | 3.65x
Ratio of unencumbered NOI to unsecured interest expense |  | > 1.75x |  | 8.80x
Ratio of EBITDA to fixed charges (debt service) |  | > 1.50x |  | 2.09x
The agreements for the unsecured credit facilities 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 non-recourse indebtedness greater than $150,000 (for the Company's ownership share) of the Company, 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 to the credit facilities. Prior to obtaining an investment grade rating in May 2013, the obligations of the Company under the agreements were unconditionally guaranteed, jointly and severally, by any subsidiary of the Company to the extent such subsidiary was a material subsidiary and was not otherwise an excluded subsidiary, as defined in the agreements. In accordance with the agreements, once the Company obtained an investment grade rating, guarantees by material subsidiaries of the Company are no longer required. Several of the Company’s malls/open-air centers, associated centers and community centers, in addition to the corporate office building, are owned by special purpose entities that are included in the Company’s condensed 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. Mortgages on Operating Properties In June 2013, the Company closed on a three-year $11,400 non-recourse loan secured by Statesboro Crossing in Statesboro, GA. The loan bears interest at LIBOR plus 180 basis points. The loan matures in June 2016 and has two one-year extension options, which are at the Company's election, for an outside maturity date of June 2018. Proceeds from the loan were used to pay down the Company's credit facilities. The Company also retired an $88,410 loan in June 2013, which was secured by Mid Rivers Mall in St. Peters, MO, with borrowings from its credit facilities. The loan was scheduled to mature in May 2021 and bore interest at a fixed rate of 5.88%. The Company recorded an $8,936 loss on extinguishment of debt, which consisted of an $8,708 prepayment fee and $228 of unamortized debt issuance costs. In April 2013, the Company retired a $71,740 loan, secured by South County Center in St. Louis, MO, with borrowings from its credit facilities. The loan was scheduled to mature in October 2013. In connection with this prepayment, the Company recorded a loss on extinguishment of debt of $172 from the write-off of an unamortized discount. In the first quarter of 2013, the Company retired two loans with an aggregate balance of $77,099, including a $13,460 loan secured by Statesboro Crossing in Statesboro, GA and a $63,639 loan secured by Westmoreland Mall in Greensburg, PA, with borrowings from the Company's credit facilities. Both loans were scheduled to mature in the first quarter of 2013. The lender of the non-recourse mortgage loan secured by Columbia Place in Columbia, SC notified the Company in the first quarter of 2012 that the loan had been placed in default. Columbia Place generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $27,265 at June 30, 2013, and a contractual maturity date of September 2013. The lender on the loan receives the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments. The lender of the non-recourse mortgage loan secured by Citadel Mall in Charleston, SC notified the Company in July 2013 that the loan had been placed in default. Citadel Mall generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $68,282 at June 30, 2013, and a contractual maturity date of April 2017. In June 2013, the lender on the loan began receiving the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments. See Note 16 for information concerning a loan payoff subsequent to June 30, 2013. Scheduled Principal Payments As of June 30, 2013, 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:
2013 | $ | 89,731 |
2014 | 219,168 |
2015 | 890,611 |
2016 | 1,271,515 |
2017 | 550,368 |
Thereafter | 1,589,235 |
| 4,610,628 |
Net unamortized premiums | 11,767 |
| $ | 4,622,395 |
Of the $89,731 of scheduled principal payments in 2013, $53,466 relates to the maturing principal balances of three operating property loans and $36,265 represents scheduled principal amortization. Two maturing operating property loans with principal balances totaling $26,200 as of June 30, 2013 have extensions available at the Company's option, leaving approximately $27,266 of loan maturities in 2013 that the Company intends to retire or refinance. Subsequent to June 30, 2013, the Company retired one operating property loan with an outstanding balance of $16,000 as of June 30, 2013. The Company may use its three unsecured credit facilities to retire loans maturing in 2013 as well as to provide flexibility for liquidity purposes. The Company’s mortgage and other indebtedness had a weighted-average maturity of 4.6 years as of June 30, 2013 and 4.9 years as of December 31, 2012. Interest Rate Hedge Instruments The Company records its derivative instruments in its condensed consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the derivative has been designated as a hedge and, if so, whether the hedge has met the criteria necessary to apply hedge accounting. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve 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. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in AOCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Such derivatives are used to hedge the variable cash flows associated with variable-rate debt. As of June 30, 2013, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
Interest Rate Derivative |  | Number of Instruments |  | Notional Amount Outstanding
Interest Rate Cap |  | 1 |  | $ | 123,125 |
Interest Rate Swaps |  | 4 |  | $ | 111,881 |
Instrument Type |  | Location in Condensed Consolidated Balance Sheet |  | Notional Amount Outstanding |  | Designated Benchmark Interest Rate |  | Strike Rate |  | Fair Value at 6/30/2013 |  | Fair Value at 12/31/12 |  | Maturity Date
Cap |  | Intangible lease assets and other assets |  | $123,125 (amortizing to $122,375) |  | 3-month LIBOR |  | 5.000% |  | $ | — |  |  | $ | — |  |  | Jan 2014
Pay fixed/ Receive variable Swap |  | Accounts payable and accrued liabilities |  | $54,086 (amortizing to $48,337) |  | 1-month LIBOR |  | 2.149% |  | $ | (2,162 | ) |  | $ | (2,775 | ) |  | Apr 2016
Pay fixed/ Receive variable Swap |  | Accounts payable and accrued liabilities |  | $33,863 (amortizing to $30,276) |  | 1-month LIBOR |  | 2.187% |  | (1,386 | ) |  | (1,776 | ) |  | Apr 2016
Pay fixed/ Receive variable Swap |  | Accounts payable and accrued liabilities |  | $12,660 (amortizing to $11,313) |  | 1-month LIBOR |  | 2.142% |  | (504 | ) |  | (647 | ) |  | Apr 2016
Pay fixed/ Receive variable Swap |  | Accounts payable and accrued liabilities |  | $11,272 (amortizing to $10,083) |  | 1-month LIBOR |  | 2.236% |  | (476 | ) |  | (607 | ) |  | Apr 2016
|  |  |  |  |  |  |  |  |  | $ | (4,528 | ) |  | $ | (5,805 | ) |  |
|  | Gain (Loss) Recognized in OCI/L (Effective Portion) |  | Location of Losses Reclassified from AOCI into Earnings (Effective Portion) |  | Loss Recognized in Earnings (Effective Portion) |  | Location of Gain Recognized in Earnings (Ineffective Portion) |  | Gain Recognized in Earnings (Ineffective Portion)
Hedging Instrument |  | Three Months Ended June 30, |  |  | Three Months Ended June 30, |  |  | Three Months Ended June 30,
| 2013 |  | 2012 |  |  | 2013 |  | 2012 |  |  | 2013 |  | 2012
Interest rate contracts |  | $ | 1,005 |  |  | $ | (765 | ) |  | Interest Expense |  | $ | (562 | ) |  | $ | (567 | ) |  | Interest Expense |  | $ | — |  |  | $ | — |
|  | Gain (Loss) Recognized in OCI/L (Effective Portion) |  | Location of Losses Reclassified from AOCI into Earnings(Effective Portion) |  | Loss Recognized in Earnings (Effective Portion) |  | Location of Gain Recognized in Earnings (Ineffective Portion) |  | Gain Recognized in Earnings (Ineffective Portion)
Hedging Instrument |  | Six Months Ended June 30, |  |  | Six Months Ended June 30, |  |  | Six Months Ended June 30,
| 2013 |  | 2012 |  |  | 2013 |  | 2012 |  |  | 2013 |  | 2012
Interest rate contracts |  | $ | 1,282 |  |  | $ | (481 | ) |  | Interest Expense |  | $ | (1,119 | ) |  | $ | (1,129 | ) |  | Interest Expense |  | $ | — |  |  | $ | — |
As of June 30, 2013, the Company expects to reclassify approximately $2,141 of losses currently reported in AOCI to interest expense within the next twelve months due to amortization of its outstanding interest rate contracts. Fluctuations in fair values of these derivatives between June 30, 2013 and the respective dates of termination will vary the projected reclassification amount.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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