-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QtB40cHOIzeeT8FIKTv0o3+AUp9IOM6PeyTIfGs/IS1BwrwBLZQh/9KAxOY+b9Cf uE64CWjp1WQ6vmTExnf6sg== 0000910612-98-000007.txt : 19980415 0000910612-98-000007.hdr.sgml : 19980415 ACCESSION NUMBER: 0000910612-98-000007 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980414 ITEM INFORMATION: FILED AS OF DATE: 19980414 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CBL & ASSOCIATES PROPERTIES INC CENTRAL INDEX KEY: 0000910612 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 621545718 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-12494 FILM NUMBER: 98593080 BUSINESS ADDRESS: STREET 1: ONE PARK PLACE STREET 2: 6148 LEE HWY CITY: CHATTANOOGA STATE: TN ZIP: 37421 BUSINESS PHONE: 4238550001 MAIL ADDRESS: STREET 1: 61048 LEE HIGHWAY STREET 2: ONE PARK PLACE CITY: CHATTANOOGA STATE: TN ZIP: 37421 8-K/A 1 Securities Exchange Act of 1934 -- Form 8-K/A ========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report : April 14, 1998 - -------------------------------------------------------------------------- CBL & ASSOCIATES PROPERTIES, INC. - -------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-12494 62-1545718 - ------------------ ----------------- -------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) Number) 6148 Lee Highway, Suite 300, Chattanooga, Tennessee 37421 - ------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (423) 855-0001 - ------------------------------------------------------------------------- CBL & ASSOCIATES PROPERTIES, INC. ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS ACQUISITION OF BURNSVILLE CENTER, BURNSVILLE, MINNESOTA On January 30, 1998 Burnsville Minnesota, LLC a Minnesota Limited Liability Corporation (the "Burnsville LLC"), a majority-owned subsidiary of CBL & Associates Properties, Inc. (The "Registrant") acquired Burnsville Center, a super regional shopping mall located in Burnsville (Minneapolis), Minnesota, containing approximately 1,082,529 square feet of total gross leasable area ("GLA") including mall store GLA of 421,306 square feet. The property was acquired from Corporate Property Investors ("CPI") pursuant to a Purchase and Sale Agreement between Burnsville LLC and CPI (the "Purchase Agreement"). The assets acquired included, among other things, real property, the buildings, improvements, and fixtures located thereon, certain lease interests, personal property and rights related thereto. The aggregate purchase price, including closing costs, was approximately $81 million and was determined in good faith, arms length negotiations between Registrant and CPI, an unrelated third party. In negotiating the purchase price the Registrant considered, among other facts, the mall's historical and projected cash flow, the nature and term of existing leases, the current operating costs, the physical condition of the property, and the terms and conditions of available financing. There were no independent appraisals obtained by the Registrant. The purchase price consisted of $81 million in cash. The cash consideration was paid from proceeds from the Registrant's lines of credit and proceeds from a promissory note in the amount of $60.8 million which Burnsville LLC placed with U.S. Bank National Association. The Registrant intends to continue operating the mall as currently operated and is leasing space therein to national and local retailers. The description contained herein of the transaction described above does not purport to be complete and is qualified in its entirety by reference to the Purchase and Sale Agreement, which is filed as an exhibit to this document. 2 ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED Report of Independent Public Accountants F-1 Statement of revenues and certain expenses for the year ended December 31, 1997 F-2 Notes to Financial Statements F-3 B) PRO FORMA FINANCIAL INFORMATION OF REGISTRANT Pro forma consolidated statement of operations for the year ended December 31, 1997 F-4 Pro forma consolidated balance sheet as of December 31, 1997 F-6 3 A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED Report of Independent Auditors Board of Trustees Corporate Property Investors We have audited the accompanying statement of revenue and certain expenses of Burnsville Center (the "Property"), as described in Note 2, for the year ended December 31, 1997. This financial statement is the responsibility of the Property's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 2 and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of Burnsville Center, as described in Note 2, for the year ended December 31, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New York, New York March 3, 1998 F-1 BURNSVILLE CENTER STATEMENT OF REVENUE AND CERTAIN EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1997 (In Thousands) Year Ended December 31, 1997 ------------ Revenues: Minimum rent $ 7,544 Overage rent 569 Tenant reimbursements 6,646 Other Income 253 ------ Total revenues 15,012 Certain Expenses: Property operating 3,562 Real estate taxes 4,339 ------ Revenues in excess of certain expenses $ 7,111 ====== The accompanying notes are an integral part of these statements. F-2 BURNSVILLE CENTER NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES NOTE 1: BUSINESS The accompanying statement of revenue and certain expenses relates to the operations of Burnsville Center (the "Property"), a 1,082,529 square foot, multi-tenanted regional shopping center located in Burnsville, Minnesota. The Property was acquired by Burnsville LLC on January 30, 1998. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The accompanying statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission ("SEC") for inclusion in a filing with the SEC to be made by CBL & Associates Properties, Inc. Accordingly, the statement excludes certain historical expenses which may not be comparable with expenses to be incurred in connection with the proposed future operations of the Property. Expenses excluded consist of depreciation of real estate, amortization of tenant related deferred charges and allocation of leasing and certain administrative expenses incurred by CPI. Revenue Recognition: Minimum rental income is recognized on a straight-line basis over the term of the tenants' leases. Percentage rent and recoveries from tenants are recognized as income in the period earned. Rental income includes ($136,128) resulting from the excess of minimum rent due under the leases during the year ended December 31, 1997 over rent recognized on a straight-line basis. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. NOTES 3: MANAGEMENT AND LEASING FEES The Property was managed and leased by its owner, Corporate Property Investors, during 1997, therefore, no management and leasing fees have been included in property expenses. NOTE 4: PROPERTY OPERATING EXPENSES Property operating expenses for the year ended December 31, 1997 include approximately $1,151,461 for utilities, $1,176,495 for repairs and maintenance, $126,770 for insurance, $744,193 for payroll, and $363,421 in general and administrative expenses. F-3 BURNSVILLE CENTER NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES NOTE 5: LEASES The Property is leased to retail tenants under operating leases periods generally range from 5 to 15 years and contain various renewal options. Leases generally provide for minimum rentals plus percentage rentals based on the tenants' sales volume, and also require tenants to pay a portion of real estate taxes and other property operating expenses. At December 31, 1997, future minimum rentals (excluding rentals applicable to renewal option years) to be received under the above-mentioned leases are: Years ending December 31 Amount 1998 $ 6,680,756 1999 6,188,857 2000 5,281,575 2001 4,504,030 2002 4,221,519 Thereafter 13,194,832 ------------ Total $ 40,071,569 ============ F-3 B) PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS The unaudited pro forma consolidated statements of operations are presented as if the acquisition of Burnsville Center had taken place as of the beginning of the year 1997. In management's opinion, all adjustments necessary to present fairly the effects of the acquisition have been made. The unaudited pro forma consolidated statements of operations are not necessarily indicative of what the actual results of operations of CBL & Associates Properties, Inc. (the "Company") would have been assuming the Company had acquired Burnsville Center as of the beginning of each period presented, nor do they purport to represent the results of operations for future periods. CBL & ASSOCIATES PROPERTIES, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (Unaudited And Amounts In Thousands, Except Per Share Amounts) CBL Burnsville Pro Forma Pro Forma Historical Center Adjustments Consolidated ----------- ---------- ----------- ------------ REVENUES: Rentals: Minimum $115,640 $ 7,544 $ - $ 123,184 Percentage 3,660 569 - 4,229 Other 1,949 253 - 2,202 Tenant reimbursements 51,302 6,646 - 57,948 Management and leasing fees 2,378 - - 2,378 Interest and other 2,675 - - 2,675 ------- ------ ------ ------ Total revenues 177,604 15,012 - 192,616 ------- ------ ------ ------ EXPENSES: Property operating 30,585 3,562 - 34,147 Depreciation and amortization 32,308 - 1,715(A) 34,023 Real estate taxes 14,859 4,339 - 19,198 Maintenance and repairs 10,239 - - 10,239 General and administrative 9,049 - - 9,049 Interest 37,830 - 5,287(B) 43,117 Other 330 - - 330 ------- ------ ------ ------ Total expenses 135,200 7,901 7,002 150,103 ------- ------ ------ ------ Income from operations 42,404 7,111 (7,002) 42,513 F-4 Gain on sales of real estate assets 6,040 - - 6,040 Equity in earnings of unconsolidated affiliates 1,916 - - 1,916 Minority interest in earnings: Operating partnership (13,819) - (31)(C) (13,850) Shopping center properties (508) - - (508) ------- ------ ------ ------ Income before extra- ordinary item 36,033 7,111 (7,033) 36,111 Extraordinary loss on extinguishment of debt (1,092) - - (1,092) ------- ------ ------ ------ Net income 34,941 $7,111 $ (7,033) 35,019 ======= ====== ====== ====== BASIC EARNINGS PER COMMON SHARE DATA: Income before extraordinary item $ 1.51 $ 1.51 Extraordinary loss on extinguishment of debt (0.05) (0.05) ------- ------ Net income $ 1.46 $ 1.47 ======= ====== Weighted average shares outstanding 23,895 23,895 ======= ======
(A) Reflects depreciation expense on the Burnsville Center acquisition computed on the straight-line method over the estimated useful life of 40 years. (B) Reflects interest expense associated with the $60,750 mortgage note payable and the $20,190 of borrowings under the Company's line of credit agreement, at LIBOR plus .9% (6.5071%) and LIBOR plus 1.0% (6.6071%), respectively, in connection with the acquisition of Burnsville Center. (C) Reflects the minority interests' share of the income from operations of Burnsville Center and the pro forma adjustments. F-5 PROFORMA CONSOLIDATED BALANCE SHEET The unaudited pro forma consolidated balance sheet is presented as if the acquisition of Burnsville Center had occurred as of December 31, 1997. The unaudited pro forma consolidated balance sheet is not necessarily indicative of what the actual financial position would have been at December 31, 1997, nor does it purport to represent the future financial position of the Company. CBL & ASSOCIATES PROPERTIES, INC. PRO FORMA CONSOLIDATED BALANCE SHEET DECEMBER 31, 1997 (Unaudited And Dollars In Thousands, Except Per Share Amounts) Pro Forma CBL Acquisition Company Historical Adjustments Pro Forma ---------- ----------- --------- ASSETS: (A) Real Estate Assets: Land $ 164,895 $ 12,804 $ 177,699 Buildings and improvements 1,019,283 68,415 1,087,698 ---------- ----------- ---------- 1,184,178 81,219 1,265,397 Less: Accumulated depreciation (145,641) - (145,641) ---------- ----------- ---------- 1,038,537 81,219 1,119,756 ---------- ----------- ---------- Developments in progress 103,787 - 103,787 ---------- ----------- ---------- Net investment in real estate assets 1,142,324 81,219 1,223,543 Cash and cash equivalents 3,124 - 3,124 Cash in escrow 66,108 - 66,108 Receivables: Tenant, net of allowance for doubtful accounts of $1,300 12,891 13 12,904 Other 1,121 - 1,121 Mortgage notes receivable 11,678 - 11,678 Other assets 7,779 183 7,962 ---------- ----------- --------- 1,245,025 81,415 1,326,440 =========== =========== =========
F-6 LIABILITIES AND SHAREHOLDERS' EQUITY: Mortgage and other notes payable 741,413 80,940 822,353 Accounts payable and accrued liabilities 41,978 475 42,453 ---------- ----------- --------- Total liabilities 783,391 81,415 864,806 ---------- ----------- --------- Distributions and losses in excess of investment in unconsolidated affiliates 6,884 - 6,884 ---------- ----------- --------- Minority interest 123,897 - 123,897 ---------- ----------- --------- Commitments and contingencies - - - Shareholders' equity: Preferred stock, $0.01 par value, 5,000,000 shares authorized, none issued - - - Common stock, $0.01 par value, 95,000,000 shares authorized, 24,063,963 shares issued and outstanding at September 30, 1997 241 - 241 Excess stock, $0.01 par value, 100,000,000 shares authorized, none issued - - - Additional paid-in capital 359,541 - 359,541 Accumulated deficit (28,433) - (28,433) Deferred compensation (496) - (496) ---------- ----------- ---------- Total shareholders' equity 330,853 - 330,853 ---------- ----------- ---------- $1,245,025 $81,415 $1,326,440 ========== =========== ==========
(A) Reflects the acquisition of Burnsville Center through the issuance of a $60,750 mortgage note payable, borrowings of $20,190 under the Company's line of credit agreement, and the assumption of certain assets and liabilities. F-7 C) EXHIBITS 2.1 Purchase and Sale Agreement dated December 31, 1997 between Corporate Property Investors A Massachusetts Business Trust (seller) and Development Options, Inc., a Wyoming corporation (Purchaser) (a) 2.2 Loan agreement between Burnsville Minnesota LLC and U.S. Bank National Association dated January 30, 1999 in the amount of $60,750,000. (b) 2.3 Consent of Ernst & Young LLP (a) Incorporated by reference to the Company's 8-K on the acquisition of Burnsville Center which was filed on February 13, 1998. (b) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. SIGNATURE Pursuant to the requirements 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. /s/ John N. Foy ----------------------------- John N. Foy Executive Vice President, Chief Financial Officer and Secretary (Authorized Officer of the Registrant, Principal Financial Officer and Principal Accounting Officer) Date: April 14, 1998 EXHIBITS INDEX Exhibit: 2.1 Purchase and Sale Agreement dated December 31, 1997 between Corporate Property Investors a Massachusetts Business Trust (seller) and Development Options, Inc., a Wyoming corporation (Purchaser) (a) 2.2 Loan agreement between Burnsville Minnesota LLC and U.S. Bank National Association dated January 30, 1999 in the amount of $60,750,000. (b) 2.3 Consent of Ernst & Young LLP (a) Incorporated by reference to the Company's 8-K on the acquisition of Burnsville Center which was filed on February 13, 1998. (b) Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. EX-2.3 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS EXHIBIT 2.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-73376) pertaining to the Stock Incentive Plan of CBL & Associates Properties, Inc. of our report dated March 3, 1998, with respect to the statement of revenue and certain expenses of Burnsville Center included in this Form 8-K/A for the year ended December 31, 1997. We also consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-47041) of CBL & Associates Properties, Inc. and in the related Prospectus of our report dated March 3, 1998, with respect to the statement of revenue and certain expenses of Burnsville Center included in this For 8-K/A for the year ended December 31, 1997. Ernst & Young LLP New York, New York April 13, 1998 -----END PRIVACY-ENHANCED MESSAGE-----