XML 74 R14.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Mortgage and Other Indebtedness | 9 Months Ended
--- | ---
Sep. 30, 2014
Debt Disclosure [Abstract] |
Mortgage and Other Indebtedness | Mortgage and Other Indebtedness Debt of the Company CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that the Operating Partnership 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 5.25% senior notes, issued by the Operating Partnership in November 2013, 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 two unsecured term loans as of September 30, 2014. CBL also has guaranteed 100% of the debt secured by The Promenade in D'Ilberville, MS, which had a balance of $48,110 at September 30, 2014. See Note 16 for a description of senior notes issued by the Operating Partnership subsequent to September 30, 2014, for which CBL is a limited guarantor. Debt of the Operating Partnership Mortgage and other indebtedness consisted of the following:
| September 30, 2014 |  | December 31, 2013
| Amount |  | Weighted- Average Interest Rate (1) |  | Amount |  | Weighted- Average Interest Rate (1)
Fixed-rate debt: |  |  |  |  |  |  |
Non-recourse loans on operating properties (2) | $ | 3,337,037 |  |  | 5.53% |  | $ | 3,527,830 |  |  | 5.54%
Senior unsecured notes (3) | 445,678 |  |  | 5.25% |  | 445,374 |  |  | 5.25%
Other (4) | 6,175 |  |  | 3.50% |  | — |  |  | —%
Financing obligation (5) | — |  |  | —% |  | 17,570 |  |  | 8.00%
Total fixed-rate debt | 3,788,890 |  |  | 5.49% |  | 3,990,774 |  |  | 5.52%
Variable-rate debt: |  |  |  |  |  |  |  |  |
Non-recourse term loans on operating properties | 17,191 |  |  | 2.28% |  | 133,712 |  |  | 3.14%
Recourse term loans on operating properties | 90,374 |  |  | 2.00% |  | 51,300 |  |  | 1.87%
Construction loans | 6,742 |  |  | 2.90% |  | 2,983 |  |  | 2.17%
Unsecured lines of credit | 358,224 |  |  | 1.55% |  | 228,754 |  |  | 1.57%
Unsecured term loans | 450,000 |  |  | 1.70% |  | 450,000 |  |  | 1.71%
Total variable-rate debt | 922,531 |  |  | 1.69% |  | 866,749 |  |  | 1.91%
Total | $ | 4,711,421 |  |  | 4.75% |  | $ | 4,857,523 |  |  | 4.88%
(1) | Weighted-average interest rate includes the effect of debt premiums (discounts), but excludes amortization of deferred financing costs.
(2) | The Company had four interest rate swaps on notional amounts totaling $106,677 as of September 30, 2014 and $109,830 as of December 31, 2013 related to four variable-rate loans on operating properties to effectively fix the interest rate on the respective loans. Therefore, these amounts were reflected in fixed-rate debt at September 30, 2014 and December 31, 2013.
(3) | Net of discount in the amount of $4,322 and $4,626 as of September 30, 2014 and December 31, 2013, respectively.
(4) | A subsidiary of the Management Company entered into a term loan in May 2014.
(5) | This amount represented the noncontrolling partner's unreturned equity contribution related to Pearland Town Center that was accounted for as a financing due to certain terms of the CBL/T-C, LLC joint venture agreement. In March 2014, the Company purchased the noncontrolling interest as described below.
Senior Unsecured Notes In November 2013, the Operating Partnership issued $450,000 of senior unsecured notes that bear interest at 5.25% payable semiannually beginning June 1, 2014 and mature on December 1, 2023 ("the 2023 Notes"). The interest rate will be 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 2023 Notes are redeemable at the Operating Partnership's election, in whole or in part from time to time, on not less than 30 days notice to the holders of the 2023 Notes to be redeemed. The 2023 Notes may be redeemed prior to September 1, 2023 for cash, at a redemption price equal to the greater of (1) 100% of the aggregate principal amount of the 2023 Notes to be redeemed or (2) an amount equal to the sum of the present values of the remaining scheduled payments of principal and interest on the 2023 Notes to be redeemed, discounted to the redemption date on a semi-annual basis at the treasury rate, as defined, plus 0.40%, plus accrued and unpaid interest. On or after September 1, 2023, the 2023 Notes are redeemable for cash at a redemption price equal to 100% of the aggregate principal amount of the 2023 Notes to be redeemed plus accrued and unpaid interest. See Note 16 for a description of senior notes issued by the Operating Partnership subsequent to September 30, 2014. Financing Obligation In the first quarter of 2014, the Company exercised its right to acquire the 12.0% noncontrolling interest in Pearland Town Center, which was accounted for as a financing obligation upon its sale in October 2011, from its joint venture partner. The $17,948 purchase price represents the partner's unreturned capital plus accrued and unpaid preferred return at a rate of 8.0%. 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. Each facility bears interest at LIBOR plus a spread of 100 to 175 basis points based on the Company's credit ratings. As of September 30, 2014, the Company's interest rate based on its credit ratings of Baa3 from Moody's Investors Service ("Moody's") and BBB- from Fitch Ratings ("Fitch") is LIBOR plus 140 basis points. Additionally, the Company pays an annual facility fee that ranges from 0.15% to 0.35% of the total capacity of each facility. As of September 30, 2014, the annual facility fee was 0.30%. The three unsecured lines of credit had a weighted-average interest rate of 1.55% at September 30, 2014. The following summarizes certain information about the Company's unsecured lines of credit as of September 30, 2014:
|  | Total Capacity |  | Total Outstanding |  | Maturity Date |  | Extended Maturity Date (1)
Wells Fargo - Facility A |  | $ | 600,000 |  |  | $ | 201,841 |  | (2) | November 2015 |  | November 2016
First Tennessee |  | 100,000 |  |  | 7,000 |  | (3) | February 2016 |  | N/A
Wells Fargo - Facility B |  | 600,000 |  |  | 149,383 |  | (4) | November 2016 |  | November 2017
|  | $ | 1,300,000 |  |  | $ | 358,224 |  |  |  |  |
(1) | The extension options 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.
(2) | There was an additional $1,525 outstanding on this facility as of September 30, 2014 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit.
(3) | There was an additional $113 outstanding on this facility as of September 30, 2014 for letters of credit. Up to $20,000 of the capacity on this facility can be used for letters of credit.
(4) | There was an additional $123 outstanding on this facility as of September 30, 2014 for letters of credit. Up to $50,000 of the capacity on this facility can be used for letters of credit.
Unsecured Term Loans The Company has a $400,000 unsecured term loan, which bears interest at a variable rate of LIBOR plus 150 basis points based on the Company's current credit ratings and has a maturity date of July 2018. At September 30, 2014, the outstanding borrowings of $400,000 had an interest rate of 1.65%. The Company also has a $50,000 unsecured term loan that bears interest at LIBOR plus 190 basis points and matures in February 2018. At September 30, 2014, the outstanding borrowings of $50,000 had a weighted-average interest rate of 2.06%. Other In May 2014, a consolidated, joint venture subsidiary of the Management Company closed on a $7,000 term loan which bears interest at a fixed rate of 3.50% and matures in May 2017. At September 30, 2014, the loan had an outstanding balance of $6,175 of which the Company's share was $3,087. In May 2014, the subsidiary of the Management Company also obtained a $3,500 revolving line of credit, which bears interest at a variable rate of LIBOR plus 249 basis points and matures in June 2017. At September 30, 2014, the revolver had no amount outstanding. Covenants and Restrictions The agreements for the unsecured lines of credit, the 2023 Notes and unsecured term loans 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 ratios, maximum total indebtedness ratios and limitations on cash flow distributions. The Company believes that it was in compliance with all covenants and restrictions at September 30, 2014. 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 September 30, 2014:
Ratio |  | Required |  | Actual
Debt to total asset value |  | < 60% |  | 50.0%
Unencumbered asset value to unsecured indebtedness |  | > 1.60x |  | 2.42x
Unencumbered NOI to unsecured interest expense |  | > 1.75x |  | 4.47x
EBITDA to fixed charges (debt service) |  | > 1.50x |  | 2.20x
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 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 2023 Notes as of September 30, 2014:
Ratio |  | Required |  | Actual
Total debt to total assets |  | < 60% |  | 53.8%
Secured debt to total assets |  | < 45% (1) |  | 38.9%
Total unencumbered assets to unsecured debt |  | > 150% |  | 233.4%
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%.
The agreements for the 2023 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 2023 Notes. Other 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, created as a requirement under certain loan agreements, 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 The following table presents the loans, secured by the related properties, that have been entered into since January 1, 2014:
Date |  | Property |  | Stated Interest Rate |  | Maturity Date (1) |  | Amount Financed
April |  | The Outlet Shoppes at Oklahoma City - Phase II (2) |  | LIBOR + 2.75% |  | April 2019 | (3) | $ | 6,000 |
April |  | The Outlet Shoppes at Oklahoma City - Phase III (4) |  | LIBOR + 2.75% |  | April 2019 | (3) | 5,400 |
April |  | The Outlet Shoppes at El Paso - Phase II (4) |  | LIBOR + 2.75% |  | April 2018 |  | 7,000 |
(1) | Excludes any extension options.
(2) | Proceeds from the operating property loan for Phase II were distributed to the partners in accordance with the terms of the partnership agreement. The Company's share of the proceeds was used to reduce the balances on its credit facilities.
(3) | The loan has two one-year extension options, which are at the consolidated joint venture's election, for an outside maturity date of April 2021.
(4) | The Operating Partnership has guaranteed 100% of the construction loan for the expansion of the outlet center until construction is complete and certain financial and operational metrics are met.
The Company has repaid the following loan, secured by the related property, since January 1, 2014:
Date |  | Property |  | Interest Rate at Repayment Date |  | Scheduled Maturity Date |  | Principal Balance Repaid (1)
January |  | St. Clair Square (2) |  | 3.25% |  | December 2016 |  | $ | 122,375 |
(1) | The Company retired the loan with borrowings from its credit facilities.
(2) | The Company recorded a loss on extinguishment of debt from a $1,249 prepayment fee.
See Note 16 for information on an operating property loan that was retired subsequent to September 30, 2014. In February 2014, the lender of the non-recourse mortgage loan secured by Chapel Hill Mall in Akron, OH notified the Company that the loan had been placed in default. The lender on the loan began receiving the net operating cash flows of the property each month in May 2014. Chapel Hill Mall generated insufficient income levels to cover the debt service on the mortgage and, in September 2014, the Company conveyed Chapel Hill Mall to the mortgage lender by a deed-in-lieu of foreclosure. The mortgage loan had a balance of $68,563 at the time of transfer. As a result of the conveyance, the Company recognized a gain on extinguishment of debt of $18,259 in the third quarter of 2014 representing the amount by which the outstanding debt balance exceeded the book value of the debt extinguished over the net book value of the property as of the transfer date. See Note 4 for further information. In the third quarter of 2013, the lender of the non-recourse mortgage loan secured by Citadel Mall in Charleston, SC sent a formal notice of default and initiated foreclosure proceedings. Citadel Mall generated insufficient income levels to cover the debt service on the mortgage and, in the second quarter of 2013, the lender on the loan began receiving the net operating cash flows of the property each month. A foreclosure sale occurred in January 2014 and the lender received the deed to the property in satisfaction of the non-recourse debt, which had a balance of $68,169 at the time of foreclosure. The Company recognized a gain of $43,932 related to the extinguishment of debt in the first quarter of 2014. See Note 4 for further information. 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 generated insufficient income levels to cover the debt service on the mortgage, which had a balance of $27,265 at September 30, 2014 and a contractual maturity date of September 2013. The lender on the loan received the net operating cash flows of the property each month. Subsequent to September 30, 2014, the mall was conveyed to the lender through a deed-in-lieu of foreclosure. See Note 16 for additional information. Scheduled Principal Payments As of September 30, 2014, 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, term loans, the notes and lines of credit, are as follows:
2014 | $ | 207,268 |
2015 | 729,861 |
2016 | 802,137 |
2017 | 495,409 |
2018 | 676,511 |
Thereafter | 1,796,419 |
| 4,707,605 |
Net unamortized premiums | 3,816 |
| $ | 4,711,421 |
Of the $207,268 of scheduled principal payments in 2014, $161,510 relates to the maturing principal balances of two operating property loans, $18,493 represents scheduled principal amortization and $27,265 related to the principal balance of one operating property loan secured by Columbia Place with a maturity date of September 2013. Subsequent to September 30, 2014, the Company retired the $113,400 operating property loan on Mall del Norte leaving one maturing operating property loan with a principal balance of $48,110 outstanding as of September 30, 2014 that has an extension available at the Company's option. Additionally, Columbia Place was conveyed to the lender subsequent to September 30, 2014. See Note 16 for further information about these transactions. The Company’s mortgage and other indebtedness had a weighted-average maturity of 4.3 years as of September 30, 2014 and 4.7 years as of December 31, 2013. 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 September 30, 2014, 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 Swaps |  | 4 |  | $ | 106,677 |
Instrument Type |  | Location in Condensed Consolidated Balance Sheet |  | Notional Amount Outstanding |  | Designated Benchmark Interest Rate |  | Strike Rate |  | Fair Value at 9/30/14 |  | Fair Value at 12/31/13 |  | Maturity Date
Cap |  | Intangible lease assets and other assets |  | N/A |  | 3-month LIBOR |  | 5.000% |  | N/A |  | $ | — |  |  | Jan 2014
Pay fixed/ Receive variable Swap |  | Accounts payable and accrued liabilities |  | $51,566 (amortizing to $48,337) |  | 1-month LIBOR |  | 2.149% |  | $ | (1,260 | ) |  | $ | (1,915 | ) |  | Apr 2016
Pay fixed/ Receive variable Swap |  | Accounts payable and accrued liabilities |  | $32,291 (amortizing to $30,276) |  | 1-month LIBOR |  | 2.187% |  | (807 | ) |  | (1,226 | ) |  | Apr 2016
Pay fixed/ Receive variable Swap |  | Accounts payable and accrued liabilities |  | $12,069 (amortizing to $11,313) |  | 1-month LIBOR |  | 2.142% |  | (294 | ) |  | (446 | ) |  | Apr 2016
Pay fixed/ Receive variable Swap |  | Accounts payable and accrued liabilities |  | $10,751 (amortizing to $10,083) |  | 1-month LIBOR |  | 2.236% |  | (276 | ) |  | (420 | ) |  | Apr 2016
|  |  |  |  |  |  |  |  |  | $ | (2,637 | ) |  | $ | (4,007 | ) |  |
|  | Gain 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 September 30, |  |  | Three Months Ended September 30, |  |  | Three Months Ended September 30,
| 2014 |  | 2013 |  |  | 2014 |  | 2013 |  |  | 2014 |  | 2013
Interest rate contracts |  | $ | 597 |  |  | $ | 117 |  |  | Interest Expense |  | $ | (551 | ) |  | $ | (568 | ) |  | Interest Expense |  | $ | — |  |  | $ | — |
|  | Gain 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 |  | Nine Months Ended September 30, |  |  | Nine Months Ended September 30, |  |  | Nine Months Ended September 30,
| 2014 |  | 2013 |  |  | 2014 |  | 2013 |  |  | 2014 |  | 2013
Interest rate contracts |  | $ | 1,371 |  |  | $ | 1,398 |  |  | Interest Expense |  | $ | (1,650 | ) |  | $ | (1,687 | ) |  | Interest Expense |  | $ | — |  |  | $ | — |
As of September 30, 2014, the Company expects to reclassify approximately $2,023 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 September 30, 2014 and the respective dates of termination will vary the projected reclassification amount.

X
- Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration