UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~MARCH 31,~~JUNE 30, 2017

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO _______________

COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)

COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)

______________

CBL & ASSOCIATES PROPERTIES, INC.

CBL & ASSOCIATES LIMITED PARTNERSHIP

(Exact Name of registrant as specified in its charter)

______________



DELAWARE (CBL & ASSOCIATES PROPERTIES, INC.)		62-1545718
DELAWARE (CBL & ASSOCIATES LIMITED PARTNERSHIP)		62-1542285
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN 37421-6000

(Address of principal executive office, including zip code)

423.855.0001

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



CBL & Associates Properties, Inc.	Yes x	No o
CBL & Associates Limited Partnership	Yes x	No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



CBL & Associates Properties, Inc.	Yes x	No o
CBL & Associates Limited Partnership	Yes x	No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



CBL & Associates Properties, Inc.
Large accelerated filer x		Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o
Emerging growth company o

CBL & Associates Limited Partnership
Large accelerated filer o		Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)		Smaller reporting company o
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



CBL & Associates Properties, Inc.	Yes o	No x
CBL & Associates Limited Partnership	Yes o	No x

As of ~~May 5,~~August 4, 2017, there were ~~171,096,104~~171,097,098 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2017 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we," "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.

The Company is a real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At ~~March 31,~~June 30, 2017, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 84.8% limited partner interest for a combined interest held by the Company of 85.8%.

As the sole general partner of the Operating Partnership, the Company's subsidiary, CBL Holdings I, Inc., has exclusive control of the Operating Partnership's activities. Management operates the Company and the Operating Partnership as one business. The management of the Company consists of the same individuals that manage the Operating Partnership. The Company's only material asset is its indirect ownership of partnership interests of the Operating Partnership. As a result, the Company conducts substantially all its business through the Operating Partnership as described in the preceding paragraph. The Company also issues public equity from time to time and guarantees certain debt of the Operating Partnership. The Operating Partnership holds all of the assets and indebtedness of the Company and, through affiliates, retains the ownership interests in the Company's joint ventures. Except for the net proceeds of offerings of equity by the Company, which are contributed to the Operating Partnership in exchange for partnership units on a one-for-one basis, the Operating Partnership generates all remaining capital required by the Company's business through its operations and its incurrence of indebtedness.

We believe that combining the two quarterly reports on Form 10-Q for the Company and the Operating Partnership provides the following benefits:

enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;

eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the differences between the Company and the Operating Partnership, this report provides separate condensed consolidated financial statements for the Company and the Operating Partnership. Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the condensed consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to condensed consolidated financial statements is presented that includes separate discussions for the Company and the Operating Partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.

In order to highlight the differences between the Company and the Operating Partnership, this report includes the following sections that provide separate financial and other information for the Company and the Operating Partnership:

condensed consolidated financial statements;

certain accompanying notes to condensed consolidated financial statements, including Note 5 - Unconsolidated Affiliates and Noncontrolling Interests; Note 6 - Mortgage and Other Indebtedness, Net; Note 7 - Comprehensive Income; and Note 11 - Earnings per Share and Earnings per Unit;

controls and procedures in Item 4 of Part I of this report;

information concerning unregistered sales of equity securities and use of proceeds in Item 2 of Part II of this report; and

certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4.

CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

Table of Contents



PART I	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

CBL & Associates Properties, Inc.
	Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2017 and December 31, 2016	1

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended ~~March 31,~~June 30, 2017 and 2016	2

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended ~~March 31,~~June 30, 2017 and 2016	3

	Condensed Consolidated Statements of Equity for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2017 and 2016	4

	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2017 and 2016	6

CBL & Associates Limited Partnership
	Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2017 and December 31, 2016	8

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended ~~March 31,~~June 30, 2017 and 2016	9

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended ~~March 31,~~June 30, 2017 and 2016	10

	Condensed Consolidated Statements of Capital for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2017 and 2016	11

	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2017 and 2016	13

CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
	Notes to Unaudited Condensed Consolidated Financial Statements	15
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3540
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5462
Item 4.	Controls and Procedures	5462

PART II	OTHER INFORMATION	5563

Item 1.	Legal Proceedings	5563
Item 1A.	Risk Factors	5563
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5563
Item 3.	Defaults Upon Senior Securities	5563
Item 4.	Mine Safety Disclosures	5563
Item 5.	Other Information	5563
Item 6.	Exhibits	5563

	SIGNATURES	5664

PART I – FINANCIAL INFORMATION

ITEM 1: Financial Statements

CBL & Associates Properties, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)


ASSETS ⁽¹⁾	March 31, 2017			December 31, 2016			June 30, 2017			December 31, 2016
Real estate assets:
Land	$	851,977		$	820,979		$	818,550		$	820,979
Buildings and improvements	6,964,175			6,942,452			6,687,134			6,942,452
	7,816,152			7,763,431			7,505,684			7,763,431
Accumulated depreciation	(2,477,356		)	(2,427,108		)	(2,374,071		)	(2,427,108		)
	5,338,796			5,336,323			5,131,613			5,336,323
Held for sale	—			5,861			—			5,861
Developments in progress	185,228			178,355			94,698			178,355
Net investment in real estate assets	5,524,024			5,520,539			5,226,311			5,520,539
Cash and cash equivalents	27,553			18,951			29,622			18,951
Receivables:
Tenant, net of allowance for doubtful accounts of $1,875 and $1,910 in 2017 and 2016, respectively	90,485			94,676
Tenant, net of allowance for doubtful accounts of $2,091 and $1,910 in 2017 and 2016, respectively							84,472			94,676
Other, net of allowance for doubtful accounts of $838 in 2017 and 2016	11,519			6,227			7,699			6,227
Mortgage and other notes receivable	16,347			16,803			17,414			16,803
Investments in unconsolidated affiliates	262,216			266,872			254,522			266,872
Intangible lease assets and other assets	194,005			180,572			188,293			180,572
	$	6,126,149		$	6,104,640		$	5,808,333		$	6,104,640

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness, net	$	4,522,480		$	4,465,294		$	4,249,440		$	4,465,294
Accounts payable and accrued liabilities	273,745			280,498			244,542			280,498
Total liabilities ⁽¹⁾	4,796,225			4,745,792			4,493,982			4,745,792
Commitments and contingencies (Note 6 and Note 12)
Redeemable noncontrolling interests	15,472			17,996			13,392			17,996
Shareholders' equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding	18			18			18			18
6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding	7			7			7			7
Common stock, $.01 par value, 350,000,000 shares authorized, 171,093,900 and 170,792,645 issued and outstanding in 2017 and 2016, respectively	1,711			1,708
Common stock, $.01 par value, 350,000,000 shares authorized, 171,094,642 and 170,792,645 issued and outstanding in 2017 and 2016, respectively							1,711			1,708
Additional paid-in capital	1,971,155			1,969,059			1,972,070			1,969,059
Dividends in excess of cumulative earnings	(764,524		)	(742,078		)	(779,693		)	(742,078		)
Total shareholders' equity	1,208,367			1,228,714			1,194,113			1,228,714
Noncontrolling interests	106,085			112,138			106,846			112,138
Total equity	1,314,452			1,340,852			1,300,959			1,340,852
	$	6,126,149		$	6,104,640		$	5,808,333		$	6,104,640


(1)	As of ~~March 31,~~June 30, 2017, includes ~~$663,290~~$655,236 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and ~~$444,033~~$451,661 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 5.

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Properties, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)	CBL & Associates Properties, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)						CBL & Associates Properties, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2017			2016
REVENUES:
Minimum rents	$	159,750		$	170,629		$	157,609		$	167,216		$	317,359		$	337,845
Percentage rents	2,389			4,673			1,738			2,692			4,127			7,365
Other rents	3,652			5,062			3,729			4,819			7,381			9,881
Tenant reimbursements	67,291			73,366			62,231			70,096			129,522			143,462
Management, development and leasing fees	3,452			2,581			2,577			4,067			6,029			6,648
Other	1,479			6,767			1,349			6,075			2,828			12,842
Total revenues	238,013			263,078			229,233			254,965			467,246			518,043

OPERATING EXPENSES:
Property operating	34,914			38,628			30,041			31,060			64,955			69,688
Depreciation and amortization	71,220			76,506			82,509			72,205			153,729			148,711
Real estate taxes	22,083			23,028			18,687			22,834			40,770			45,862
Maintenance and repairs	13,352			14,548			11,716			11,790			25,068			26,338
General and administrative	16,082			17,168			15,752			16,475			31,834			33,643
Loss on impairment	3,263			19,685			43,203			43,493			46,466			63,178
Other	—			9,685			5,019			5,052			5,019			14,737
Total operating expenses	160,914			199,248			206,927			202,909			367,841			402,157
Income from operations	77,099			63,830			22,306			52,056			99,405			115,886
Interest and other income	1,404			360			31			251			1,435			611
Interest expense	(56,201		)	(55,231		)	(55,065		)	(53,187		)	(111,266		)	(108,418		)
Gain on extinguishment of debt	4,055			6			20,420			—			24,475			6
Loss on investment							(5,843		)	—			(5,843		)	—
Income tax benefit	800			537			2,920			51			3,720			588
Equity in earnings of unconsolidated affiliates	5,373			32,390			6,325			64,349			11,698			96,739
Income from continuing operations before gain on sales of real estate assets	32,530			41,892
Income (loss) from continuing operations before gain on sales of real estate assets							(8,906		)	63,520			23,624			105,412
Gain on sales of real estate assets	5,988			—			79,533			9,577			85,521			9,577
Net income	38,518			41,892			70,627			73,097			109,145			114,989
Net (income) loss attributable to noncontrolling interests in:
Operating Partnership	(3,690		)	(4,945		)	(5,093		)	(8,483		)	(8,783		)	(13,428		)
Other consolidated subsidiaries	(713		)	3,127			(24,138		)	(1,695		)	(24,851		)	1,432
Net income attributable to the Company	34,115			40,074			41,396			62,919			75,511			102,993
Preferred dividends	(11,223		)	(11,223		)	(11,223		)	(11,223		)	(22,446		)	(22,446		)
Net income attributable to common shareholders	$	22,892		$	28,851		$	30,173		$	51,696		$	53,065		$	80,547

Basic and diluted per share data attributable to common shareholders:
Net income attributable to common shareholders	$	0.13		$	0.17		$	0.18		$	0.30		$	0.31		$	0.47
Weighted-average common and potential dilutive common shares outstanding	170,989			170,669			171,095			170,792			171,042			170,731

Dividends declared per common share	$	0.265		$	0.265		$	0.265		$	0.265		$	0.530		$	0.530

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2017			2016
Net income	$	38,518		$	41,892		$	70,627		$	73,097		$	109,145		$	114,989

Other comprehensive income:
Unrealized gain on hedging instruments	—			877			—			—			—			877
Reclassification of hedging effect on earnings	—			(443		)	—			—			—			(443		)
Total other comprehensive income	—			434			—			—			—			434

Comprehensive income	38,518			42,326			70,627			73,097			109,145			115,423
Comprehensive (income) loss attributable to noncontrolling interests in:
Operating Partnership	(3,690		)	(5,008		)	(5,093		)	(8,483		)	(8,783		)	(13,491		)
Other consolidated subsidiaries	(713		)	3,127			(24,138		)	(1,695		)	(24,851		)	1,432
Comprehensive income attributable to the Company	$	34,115		$	40,445		$	41,396		$	62,919		$	75,511		$	103,364

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)


				Equity																									Equity
				Shareholders' Equity																									Shareholders' Equity
	Redeemable Noncontrolling Interests			Preferred Stock		Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests			Preferred Stock		Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, January 1, 2016	$	25,330		$	25	$	1,705	$	1,970,333		$	1,935		$	(689,028	)	$	1,284,970		$	114,629		$	1,399,599		$	25,330		$	25	$	1,705	$	1,970,333		$	1,935		$	(689,028	)	$	1,284,970		$	114,629		$	1,399,599
Net income (loss)	(3,225		)	—		—		—			—			40,074			40,074			5,043			45,117			(1,975		)	—		—		—			—			102,993			102,993			13,971			116,964
Other comprehensive income	3			—		—		—			371			—			371			60			431			3			—		—		—			371			—			371			60			431
Dividends declared - common stock	—			—		—		—			—			(45,261		)	(45,261		)	—			(45,261		)	—			—		—		—			—			(90,520		)	(90,520		)	—			(90,520		)
Dividends declared - preferred stock	—			—		—		—			—			(11,223		)	(11,223		)	—			(11,223		)	—			—		—		—			—			(22,446		)	(22,446		)	—			(22,446		)
Issuances of 323,353 shares of common stock and restricted common stock	—			—		3		339			—			—			342			—			342
Cancellation of 23,066 shares of restricted common stock	—			—		—		(214		)	—			—			(214		)	—			(214		)
Issuances of 327,326 shares of common stock and restricted common stock																										—			—		3		385			—			—			388			—			388
Cancellation of 28,407 shares of restricted common stock																										—			—		—		(224		)	—			—			(224		)	—			(224		)
Performance stock units	—			—		—		258			—			—			258			—			258			—			—		—		516			—			—			516			—			516
Amortization of deferred compensation	—			—		—		1,254			—			—			1,254			—			1,254			—			—		—		1,969			—			—			1,969			—			1,969
Redemption of Operating Partnership common units																										—			—		—		—			—			—			—			(146		)	(146		)
Adjustment for noncontrolling interests	288			—		—		(1,490		)	(2,306		)	—			(3,796		)	3,509			(287		)	1,000			—		—		(3,130		)	(2,306		)	—			(5,436		)	4,436			(1,000		)
Adjustment to record redeemable noncontrolling interests at redemption value	592			—		—		(592		)	—			—			(592		)	—			(592		)	(2,314		)	—		—		1,742			—			—			1,742			572			2,314
Contributions from noncontrolling interests																										—			—		—		—			—			—			—			10,686			10,686
Distributions to noncontrolling interests	(2,134		)	—		—		—			—			—			—			(9,528		)	(9,528		)	(4,211		)	—		—		—			—			—			—			(19,163		)	(19,163		)
Balance, March 31, 2016	$	20,854		$	25	$	1,708	$	1,969,888		$	—		$	(705,438	)	$	1,266,183		$	113,713		$	1,379,896
Balance, June 30, 2016																										$	17,833		$	25	$	1,708	$	1,971,591		$	—		$	(699,001	)	$	1,274,323		$	125,045		$	1,399,368

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)

(Continued)


				Equity																						Equity
				Shareholders' Equity																						Shareholders' Equity
	Redeemable Noncontrolling Interests			Preferred Stock		Common Stock		Additional Paid-in Capital			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests			Preferred Stock		Common Stock		Additional Paid-in Capital			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, January 1, 2017	$	17,996		$	25	$	1,708	$	1,969,059		$	(742,078	)	$	1,228,714		$	112,138		$	1,340,852		$	17,996		$	25	$	1,708	$	1,969,059		$	(742,078	)	$	1,228,714		$	112,138		$	1,340,852
Net income	204			—		—		—			34,115			34,115			4,199			38,314			485			—		—		—			75,511			75,511			33,149			108,660
Dividends declared - common stock	—			—		—		—			(45,338		)	(45,338		)	—			(45,338		)	—			—		—		—			(90,680		)	(90,680		)	—			(90,680		)
Dividends declared - preferred stock	—			—		—		—			(11,223		)	(11,223		)	—			(11,223		)	—			—		—		—			(22,446		)	(22,446		)	—			(22,446		)
Issuances of 330,938 shares of common stock and restricted common stock	—			—		3		371			—			374			—			374
Cancellation of 29,683 shares of restricted common stock	—			—		—		(294		)	—			(294		)	—			(294		)
Issuances of 336,475 shares of common stock and restricted common stock																							—			—		3		423			—			426			—			426
Redemptions of Operating Partnership common units																							—			—		—		—			—			—			(530		)	(530		)
Cancellation of 34,478 shares of restricted common stock																							—			—		—		(304		)	—			(304		)	—			(304		)
Performance stock units	—			—		—		344			—			344			—			344			—			—		—		729			—			729			—			729
Amortization of deferred compensation	—			—		—		1,246			—			1,246			—			1,246			—			—		—		2,275			—			2,275			—			2,275
Adjustment for noncontrolling interests	730			—		—		(1,572		)	—			(1,572		)	842			(730		)	1,483			—		—		(3,821		)	—			(3,821		)	2,338			(1,483		)
Adjustment to record redeemable noncontrolling interests at redemption value	(2,315		)	—		—		2,001			—			2,001			314			2,315			(4,286		)	—		—		3,709			—			3,709			577			4,286
Deconsolidation of investment	—			—		—		—			—			—			(2,231		)	(2,231		)	—			—		—		—			—			—			(2,232		)	(2,232		)
Contributions from noncontrolling interests	—			—		—		—			—			—			263			263			—			—		—		—			—			—			263			263
Distributions to noncontrolling interests	(1,143		)	—		—		—			—			—			(9,440		)	(9,440		)	(2,286		)	—		—		—			—			—			(38,857		)	(38,857		)
Balance, March 31, 2017	$	15,472		$	25	$	1,711	$	1,971,155		$	(764,524	)	$	1,208,367		$	106,085		$	1,314,452
Balance, June 30, 2017																							$	13,392		$	25	$	1,711	$	1,972,070		$	(779,693	)	$	1,194,113		$	106,846		$	1,300,959

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)	CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)						CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)

	Three Months Ended March 31,						Six Months Ended June 30,
	2017			2016			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	38,518		$	41,892		$	109,145		$	114,989
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	71,220			76,506			153,729			148,711
Net amortization of deferred financing costs, debt premiums and discounts	1,113			717			2,126			1,476
Net amortization of intangible lease assets and liabilities	(748		)	(622		)	(883		)	(288		)
Gain on sales of real estate assets	(5,988		)	—			(85,521		)	(9,577		)
Loss on investment							5,843			—
Write-off of development projects	—			1			5,019			33
Share-based compensation expense	1,912			1,802			3,324			2,851
Loss on impairment	3,263			19,685			46,466			63,178
Gain on extinguishment of debt	(4,055		)	—			(24,475		)	(6		)
Equity in earnings of unconsolidated affiliates	(5,373		)	(32,390		)	(11,698		)	(96,739		)
Distributions of earnings from unconsolidated affiliates	3,995			4,113			9,640			8,582
Provision for doubtful accounts	1,744			2,104			2,374			2,223
Change in deferred tax accounts	1,608			99			3,750			(320		)
Changes in:
Tenant and other receivables	(2,838		)	(4,458		)	(3,098		)	(13,595		)
Other assets	(4,816		)	(5,115		)	(6,638		)	(5,616		)
Accounts payable and accrued liabilities	5,321			(18,557		)	(3,776		)	(1,741		)
Net cash provided by operating activities	104,876			85,777			205,327			214,161

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets	(51,522		)	(34,304		)	(93,535		)	(103,322		)
Acquisitions of real estate assets	(79,799		)	—			(79,799		)	—
Additions to restricted cash	(412		)	(3,133		)	(6,315		)	(8,064		)
Proceeds from sales of real estate assets	13,716			33,425			194,632			88,583
Additions to mortgage and other notes receivable	—			(2,484		)	—			(3,259		)
Payments received on mortgage and other notes receivable	456			231			1,190			515
Additional investments in and advances to unconsolidated affiliates	(2,723		)	(4,363		)	(4,853		)	(3,650		)
Distributions in excess of equity in earnings of unconsolidated affiliates	7,907			9,023			11,573			60,060
Changes in other assets	(7,749		)	(528		)	(11,203		)	(2,498		)
Net cash used in investing activities	(120,126		)	(2,133		)
Net cash provided by investing activities							11,690			28,365

CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued)	CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued)						CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued)

	Three Months Ended March 31,						Six Months Ended June 30,
	2017			2016			2017			2016
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	389,391		$	90,702		$	494,103		$	439,113
Principal payments on mortgage and other indebtedness	(298,374		)	(118,102		)	(536,406		)	(570,838		)
Additions to deferred financing costs	(120		)	(79		)	(872		)	(79		)
Additions to debt issuance costs							—			(837		)
Prepayment fees on extinguishment of debt							(8,500		)	—
Proceeds from issuances of common stock	49			40			102			87
Purchase of noncontrolling interests in the Operating Partnership							(530		)	(146		)
Contributions from noncontrolling interests	263			—			263			10,686
Payment of tax withholdings for restricted stock awards	(292		)	—			(298		)	—
Distributions to noncontrolling interests	(10,582		)	(11,662		)	(41,162		)	(23,378		)
Dividends paid to holders of preferred stock	(11,223		)	(11,223		)	(22,446		)	(22,446		)
Dividends paid to common shareholders	(45,260		)	(45,181		)	(90,600		)	(90,441		)
Net cash provided by (used in) financing activities	23,852			(95,505		)
Net cash used in financing activities							(206,346		)	(258,279		)

NET CHANGE IN CASH AND CASH EQUIVALENTS	8,602			(11,861		)	10,671			(15,753		)
CASH AND CASH EQUIVALENTS, beginning of period	18,951			36,892			18,951			36,892
CASH AND CASH EQUIVALENTS, end of period	$	27,553		$	25,031		$	29,622		$	21,139

SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	37,063		$	45,115		$	116,349		$	109,109

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Limited Partnership

Condensed Consolidated Balance Sheets

(In thousands, except unit data)

(Unaudited)


ASSETS ⁽¹⁾	March 31, 2017			December 31, 2016			June 30, 2017			December 31, 2016
Real estate assets:
Land	$	851,977		$	820,979		$	818,550		$	820,979
Buildings and improvements	6,964,175			6,942,452			6,687,134			6,942,452
	7,816,152			7,763,431			7,505,684			7,763,431
Accumulated depreciation	(2,477,356		)	(2,427,108		)	(2,374,071		)	(2,427,108		)
	5,338,796			5,336,323			5,131,613			5,336,323
Held for sale	—			5,861			—			5,861
Developments in progress	185,228			178,355			94,698			178,355
Net investment in real estate assets	5,524,024			5,520,539			5,226,311			5,520,539
Cash and cash equivalents	27,547			18,943			29,622			18,943
Receivables:
Tenant, net of allowance for doubtful accounts of $1,875 and $1,910 in 2017 and 2016, respectively	90,485			94,676
Tenant, net of allowance for doubtful accounts of $2,091 and $1,910 in 2017 and 2016, respectively							84,472			94,676
Other, net of allowance for doubtful accounts of $838 in 2017 and 2016	11,470			6,179			7,651			6,179
Mortgage and other notes receivable	16,347			16,803			17,414			16,803
Investments in unconsolidated affiliates	262,748			267,405			255,053			267,405
Intangible lease assets and other assets	193,883			180,452			188,173			180,452
	$	6,126,504		$	6,104,997		$	5,808,696		$	6,104,997

LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness, net	$	4,522,480		$	4,465,294		$	4,249,440		$	4,465,294
Accounts payable and accrued liabilities	273,807			280,528			244,604			280,528
Total liabilities ⁽¹⁾	4,796,287			4,745,822			4,494,044			4,745,822
Commitments and contingencies (Note 6 and Note 12)
Redeemable common units	15,472			17,996			13,392			17,996
Partners' capital:
Preferred units	565,212			565,212			565,212			565,212
Common units:
General partner	7,528			7,781			7,368			7,781
Limited partners	732,686			756,083			716,743			756,083
Total partners' capital	1,305,426			1,329,076			1,289,323			1,329,076
Noncontrolling interests	9,319			12,103			11,937			12,103
Total capital	1,314,745			1,341,179			1,301,260			1,341,179
	$	6,126,504		$	6,104,997		$	5,808,696		$	6,104,997

(1)

As of ~~March 31,~~June 30, 2017, includes ~~$663,290~~$655,236 of assets related to consolidated variable interest entities that can only be used to settle obligations of the consolidated variable interest entities and ~~$444,033~~$451,661 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Operating Partnership. See Note 5.

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Limited Partnership Condensed Consolidated Statements of Operations (In thousands, except per unit data) (Unaudited)	CBL & Associates Limited Partnership Condensed Consolidated Statements of Operations (In thousands, except per unit data) (Unaudited)						CBL & Associates Limited Partnership Condensed Consolidated Statements of Operations (In thousands, except per unit data) (Unaudited)

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2017			2016
REVENUES:
Minimum rents	$	159,750		$	170,629		$	157,609		$	167,216		$	317,359		$	337,845
Percentage rents	2,389			4,673			1,738			2,692			4,127			7,365
Other rents	3,652			5,062			3,729			4,819			7,381			9,881
Tenant reimbursements	67,291			73,366			62,231			70,096			129,522			143,462
Management, development and leasing fees	3,452			2,581			2,577			4,067			6,029			6,648
Other	1,479			6,767			1,349			6,075			2,828			12,842
Total revenues	238,013			263,078			229,233			254,965			467,246			518,043

OPERATING EXPENSES:
Property operating	34,914			38,628			30,041			31,060			64,955			69,688
Depreciation and amortization	71,220			76,506			82,509			72,205			153,729			148,711
Real estate taxes	22,083			23,028			18,687			22,834			40,770			45,862
Maintenance and repairs	13,352			14,548			11,716			11,790			25,068			26,338
General and administrative	16,082			17,168			15,752			16,475			31,834			33,643
Loss on impairment	3,263			19,685			43,203			43,493			46,466			63,178
Other	—			9,685			5,019			5,052			5,019			14,737
Total operating expenses	160,914			199,248			206,927			202,909			367,841			402,157
Income from operations	77,099			63,830			22,306			52,056			99,405			115,886
Interest and other income	1,404			360			31			251			1,435			611
Interest expense	(56,201		)	(55,231		)	(55,065		)	(53,187		)	(111,266		)	(108,418		)
Gain on extinguishment of debt	4,055			6			20,420			—			24,475			6
Loss on investment							(5,843		)	—			(5,843		)	—
Income tax benefit	800			537			2,920			51			3,720			588
Equity in earnings of unconsolidated affiliates	5,373			32,390			6,325			64,349			11,698			96,739
Income from continuing operations before gain on sales of real estate assets	32,530			41,892
Income (loss) from continuing operations before gain on sales of real estate assets							(8,906		)	63,520			23,624			105,412
Gain on sales of real estate assets	5,988			—			79,533			9,577			85,521			9,577
Net income	38,518			41,892			70,627			73,097			109,145			114,989
Net (income) loss attributable to noncontrolling interests	(713		)	3,127			(24,138		)	(1,695		)	(24,851		)	1,432
Net income attributable to the Operating Partnership	37,805			45,019			46,489			71,402			84,294			116,421
Distributions to preferred unitholders	(11,223		)	(11,223		)	(11,223		)	(11,223		)	(22,446		)	(22,446		)
Net income attributable to common unitholders	$	26,582		$	33,796		$	35,266		$	60,179		$	61,848		$	93,975

Basic and diluted per unit data attributable to common unitholders:
Net income attributable to common unitholders	$	0.13		$	0.17		$	0.18		$	0.30		$	0.31		$	0.47
Weighted-average common and potential dilutive common units outstanding	199,281			199,926			199,371			200,045			199,326			199,986

Distributions declared per common unit	$	0.273		$	0.273		$	0.273		$	0.273		$	0.546		$	0.546

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2017			2016
Net income	$	38,518		$	41,892		$	70,627		$	73,097		$	109,145		$	114,989

Other comprehensive income:
Unrealized gain on hedging instruments	—			877			—			—			—			877
Reclassification of hedging effect on earnings	—			(443		)	—			—			—			(443		)
Total other comprehensive income	—			434			—			—			—			434

Comprehensive income	38,518			42,326			70,627			73,097			109,145			115,423
Comprehensive (income) loss attributable to noncontrolling interests	(713		)	3,127			(24,138		)	(1,695		)	(24,851		)	1,432
Comprehensive income of the Operating Partnership	$	37,805		$	45,453		$	46,489		$	71,402		$	84,294		$	116,855

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Capital

(In thousands)

(Unaudited)


	Redeemable Interests									Number of						Common Units																		Redeemable Interests									Number of						Common Units
	Redeemable Noncontrolling Interests			Redeemable Common Units			Total Redeemable Interests			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Income (Loss)			Total Partners' Capital			Noncontrolling Interests			Total Capital			Redeemable Noncontrolling Interests			Redeemable Common Units			Total Redeemable Interests			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Income (Loss)			Total Partners' Capital			Noncontrolling Interests			Total Capital
Balance, January 1, 2016	$	5,586		$	19,744		$	25,330		25,050	199,748		$	565,212		$	8,435		$	822,383		$	(868	)	$	1,395,162		$	4,876		$	1,400,038		$	5,586		$	19,744		$	25,330		25,050	199,748		$	565,212		$	8,435		$	822,383		$	(868	)	$	1,395,162		$	4,876		$	1,400,038
Net income (loss)	(3,489		)	264			(3,225		)	—	—		11,223			344			33,188			—			44,755			362			45,117			(2,691		)	716			(1,975		)	—	—		22,446			954			92,305			—			115,705			1,259			116,964
Other comprehensive income	—			3			3			—	—		—			—			—			431			431			—			431			—			3			3			—	—		—			—			—			431			431			—			431
Distributions declared - common units	—			(1,143		)	(1,143		)	—	—		—			(533		)	(52,895		)	—			(53,428		)	—			(53,428		)	—			(2,286		)	(2,286		)	—	—		—			(1,064		)	(105,790		)	—			(106,854		)	—			(106,854		)
Distributions declared - preferred units	—			—			—			—	—		(11,223		)	—			—			—			(11,223		)	—			(11,223		)	—			—			—			—	—		(22,446		)	—			—			—			(22,446		)	—			(22,446		)
Issuances of common units	—			—			—			—	323		—			—			342			—			342			—			342			—			—			—			—	327		—			—			388			—			388			—			388
Redemption of common units																																		—			—			—			—	(15	)	—			—			(146		)	—			(146		)	—			(146		)
Cancellation of restricted common stock	—			—			—			—	(23	)	—			—			(214		)	—			(214		)	—			(214		)	—			—			—			—	(28	)	—			—			(224		)	—			(224		)	—			(224		)
Performance stock units	—			—			—			—	—		—			3			255			—			258			—			258			—			—			—			—	—		—			5			511			—			516			—			516
Amortization of deferred compensation	—			—			—			—	—		—			12			1,242			—			1,254			—			1,254			—			—			—			—	—		—			20			1,949			—			1,969			—			1,969
Allocation of partners' capital	—			288			288			—	—		—			(31		)	(496		)	437			(90		)	—			(90		)	—			1,000			1,000			—	—		—			(55		)	(1,491		)	437			(1,109		)	—			(1,109		)
Adjustment to record redeemable interests at redemption value	592			—			592			—	—		—			(6		)	(586		)	—			(592		)	—			(592		)	1,784			(4,098		)	(2,314		)	—	—		—			24			2,290			—			2,314			—			2,314
Contributions from noncontrolling interests																																		—			—			—			—	—		—			—			—			—			—			10,686			10,686
Distributions to noncontrolling interests	(991		)	—			(991		)	—	—		—			—			—			—			—			(1,361		)	(1,361		)	(1,925		)	—			(1,925		)	—	—		—			—			—			—			—			(2,829		)	(2,829		)
Balance, March 31, 2016	$	1,698		$	19,156		$	20,854		25,050	200,048		$	565,212		$	8,224		$	803,219		$	—		$	1,376,655		$	3,877		$	1,380,532
Balance, June 30, 2016																																		$	2,754		$	15,079		$	17,833		25,050	200,032		$	565,212		$	8,319		$	812,175		$	—		$	1,385,706		$	13,992		$	1,399,698

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Capital

(In thousands)

(Unaudited)

(Continued)


				Number of						Common Units																		Number of						Common Units
	Redeemable Common Units			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Total Partners' Capital			Noncontrolling Interests			Total Capital			Redeemable Common Units			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Total Partners' Capital			Noncontrolling Interests			Total Capital
Balance, January 1, 2017	$	17,996		25,050	199,085		$	565,212		$	7,781		$	756,083		$	1,329,076		$	12,103		$	1,341,179		$	17,996		25,050	199,085		$	565,212		$	7,781		$	756,083		$	1,329,076		$	12,103		$	1,341,179
Net income	204			—	—		11,223			271			26,107			37,601			713			38,314			485			—	—		22,446			631			60,732			83,809			24,851			108,660
Distributions declared - common units	(1,143		)	—	—		—			(533		)	(52,716		)	(53,249		)	—			(53,249		)	(2,286		)	—	—		—			(1,066		)	(105,423		)	(106,489		)	—			(106,489		)
Distributions declared - preferred units	—			—	—		(11,223		)	—			—			(11,223		)	—			(11,223		)	—			—	—		(22,446		)	—			—			(22,446		)	—			(22,446		)
Issuances of common units	—			—	331		—			—			374			374			—			374			—			—	336		—			—			426			426			—			426
Redemptions of common units																									—			—	—		—			—			(530		)	(530		)	—			(530		)
Cancellation of restricted common stock	—			—	(30	)	—			—			(294		)	(294		)	—			(294		)	—			—	(35	)	—			—			(304		)	(304		)	—			(304		)
Performance stock units	—			—	—		—			3			341			344			—			344			—			—	—		—			7			722			729			—			729
Amortization of deferred compensation	—			—	—		—			13			1,233			1,246			—			1,246			—			—	—		—			23			2,252			2,275			—			2,275
Allocation of partners' capital	730			—	—		—			(31		)	(733		)	(764		)	—			(764		)	1,483			—	—		—			(52		)	(1,457		)	(1,509		)	—			(1,509		)
Adjustment to record redeemable interests at redemption value	(2,315		)	—	—		—			24			2,291			2,315			—			2,315			(4,286		)	—	—		—			44			4,242			4,286			—			4,286
Deconsolidation of investment	—			—	—		—			—			—			—			(2,231		)	(2,231		)	—			—	—		—			—			—			—			(2,232		)	(2,232		)
Contributions from noncontrolling interests	—			—	—		—			—			—			—			263			263			—			—	—		—			—			—			—			263			263
Distributions to noncontrolling interests	—			—	—		—			—			—			—			(1,529		)	(1,529		)	—			—	—		—			—			—			—			(23,048		)	(23,048		)
Balance, March 31, 2017	$	15,472		25,050	199,386		$	565,212		$	7,528		$	732,686		$	1,305,426		$	9,319		$	1,314,745
Balance, June 30, 2017																									$	13,392		25,050	199,386		$	565,212		$	7,368		$	716,743		$	1,289,323		$	11,937		$	1,301,260

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)	CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)						CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)

	Three Months Ended March 31,						Six Months Ended June 30,
	2017			2016			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	38,518		$	41,892		$	109,145		$	114,989
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	71,220			76,506			153,729			148,711
Net amortization of deferred financing costs, debt premiums and discounts	1,113			717			2,126			1,476
Net amortization of intangible lease assets and liabilities	(748		)	(622		)	(883		)	(288		)
Gain on sales of real estate assets	(5,988		)	—			(85,521		)	(9,577		)
Loss on investment							5,843			—
Write-off of development projects	—			1			5,019			33
Share-based compensation expense	1,912			1,802			3,324			2,851
Loss on impairment	3,263			19,685			46,466			63,178
Gain on extinguishment of debt	(4,055		)	—			(24,475		)	(6		)
Equity in earnings of unconsolidated affiliates	(5,373		)	(32,390		)	(11,698		)	(96,739		)
Distributions of earnings from unconsolidated affiliates	3,995			4,113			9,641			8,610
Provision for doubtful accounts	1,744			2,104			2,374			2,223
Change in deferred tax accounts	1,608			99			3,750			(320		)
Changes in:
Tenant and other receivables	(2,838		)	(4,410		)	(3,098		)	(13,546		)
Other assets	(4,816		)	(5,115		)	(6,638		)	(5,616		)
Accounts payable and accrued liabilities	5,323			(18,605		)	(3,769		)	(1,820		)
Net cash provided by operating activities	104,878			85,777			205,335			214,159

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets	(51,522		)	(34,304		)	(93,535		)	(103,322		)
Acquisition of real estate assets	(79,799		)	—			(79,799		)	—
Additions to restricted cash	(412		)	(3,133		)	(6,315		)	(8,064		)
Proceeds from sales of real estate assets	13,716			33,425			194,632			88,583
Additions to mortgage and other notes receivable	—			(2,484		)	—			(3,259		)
Payments received on mortgage and other notes receivable	456			231			1,190			515
Additional investments in and advances to unconsolidated affiliates	(2,723		)	(4,363		)	(4,853		)	(3,650		)
Distributions in excess of equity in earnings of unconsolidated affiliates	7,907			9,023			11,573			60,060
Changes in other assets	(7,749		)	(528		)	(11,203		)	(2,498		)
Net cash used in investing activities	(120,126		)	(2,133		)
Net cash provided by investing activities							11,690			28,365

CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued)	CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued)						CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued)

	Three Months Ended March 31,						Six Months Ended June 30,
	2017			2016			2017			2016
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	389,391		$	90,702		$	494,103		$	439,113
Principal payments on mortgage and other indebtedness	(298,374		)	(118,102		)	(536,406		)	(570,838		)
Additions to deferred financing costs	(120		)	(79		)	(872		)	(79		)
Additions to debt issuance costs							—			(837		)
Prepayment fees on extinguishment of debt							(8,500		)	—
Proceeds from issuances of common units	49			40			102			87
Redemptions of common units							(530		)	(146		)
Contributions from noncontrolling interests	263			—			263			10,686
Payment of tax withholdings for restricted stock awards	(292		)	—			(298		)	—
Distributions to noncontrolling interests	(2,672		)	(2,352		)	(25,333		)	(7,044		)
Distributions to preferred unitholders	(11,223		)	(11,223		)	(22,446		)	(22,446		)
Distributions to common unitholders	(53,170		)	(54,491		)	(106,429		)	(106,775		)
Net cash provided by (used in) financing activities	23,852			(95,505		)
Net cash used in financing activities							(206,346		)	(258,279		)

NET CHANGE IN CASH AND CASH EQUIVALENTS	8,604			(11,861		)	10,679			(15,755		)
CASH AND CASH EQUIVALENTS, beginning of period	18,943			36,887			18,943			36,887
CASH AND CASH EQUIVALENTS, end of period	$	27,547		$	25,026		$	29,622		$	21,132

SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	37,063		$	45,115		$	116,349		$	109,109

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except per share and per unit data)

Note 1 – Organization and Basis of Presentation

Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries.

CBL & Associates Properties, Inc. (“CBL”), a Delaware corporation, is a self-managed, self-administered, fully-integrated real estate investment trust (“REIT”) that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers and office properties. Its properties are located in 2726 states, but are primarily in the southeastern and midwestern United States.

CBL conducts substantially all of its business through CBL & Associates Limited Partnership (the “Operating Partnership”), which is a variable interest entity ("VIE"). In accordance with the guidance in Accounting Standards Codification ("ASC") 810, Consolidations, the Company is exempt from providing further disclosures related to the Operating Partnership's VIE classification. The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a VIE. As of ~~March 31,~~June 30, 2017, the Operating Partnership owned interests in the following properties:


	Malls ⁽¹⁾	Associated Centers	Community Centers	Office Buildings		Total	Malls ⁽¹⁾	Associated Centers	Community Centers	Office Buildings		Total
Consolidated properties	64	20	4	5	⁽²⁾	93	61	20	4	5	⁽²⁾	90
Unconsolidated properties ⁽³⁾	9	3	5	—		17	9	3	5	—		17
Total	73	23	9	5		110	70	23	9	5		107


(1)	Category consists of regional malls, open-air centers and outlet centers (including one mixed-use center).


(2)	Includes CBL's two corporate office buildings.


(3)	The Operating Partnership accounts for these investments using the equity method because one or more of the other partners have substantive participating rights.

At ~~March 31,~~June 30, 2017, the Operating Partnership had interests in the following consolidated properties under development:


	Malls	Associated Centers	Malls	Associated Centers
Development	1	—
Expansions	2	—	2	—
Redevelopments	7	1	3	1

The Operating Partnership also holds options to acquire certain development properties owned by third parties.

CBL is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At ~~March 31,~~June 30, 2017, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 84.8% limited partner interest for a combined interest held by CBL of 85.8%.

As used herein, the term "Company" includes CBL & Associates Properties, Inc. and its subsidiaries, including CBL & Associates Limited Partnership and its subsidiaries, unless the context indicates otherwise. The term "Operating Partnership" refers to CBL & Associates Limited Partnership and its subsidiaries.

The noncontrolling interest in the Operating Partnership is held by CBL & Associates, Inc., its shareholders and affiliates and certain senior officers of the Company (collectively "CBL's Predecessor"), all of which contributed their interests in certain real estate properties and joint ventures to the Operating Partnership in exchange for a limited partner interest when the Operating Partnership was formed in November 1993, and by various third parties. At ~~March 31,~~June 30, 2017, CBL’s Predecessor owned a 9.1% limited partner interest and third parties owned a 5.1% limited partner interest in the Operating Partnership. CBL's Predecessor also owned 3.8 million shares of CBL’s common stock at ~~March 31,~~June 30, 2017, for a total combined effective interest of 11.0% in the Operating Partnership.

The Operating Partnership conducts the Company’s property management and development activities through its wholly owned subsidiary, CBL & Associates Management, Inc. (the “Management Company”), to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

The accompanying condensed consolidated financial statements are unaudited; however, they have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. All intercompany transactions have been eliminated. The results for the interim period ended ~~March 31,~~June 30, 2017 are not necessarily indicative of the results to be obtained for the full fiscal year.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2016.

Note 2 – Recent Accounting Pronouncements

Accounting Guidance Adopted

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 identifies areas for simplification of accounting for share-based payment transactions. ASU 2016-09 allows an entity to make an accounting policy election to either (1) recognize forfeitures as they occur or (2) continue to estimate the number of awards expected to be forfeited. The Company elected to account for forfeitures of share-based payments as they occur. As the amount of the retrospective adjustment was nominal, the Company elected not to record the change. See Note 13 for further information on the adoption of this guidance. The guidance also requires that when an employer withholds shares upon the vesting of restricted shares for the purpose of meeting tax withholding requirements, that the cash paid for withholding taxes is classified as a financing activity on the statement of cash flows. The Company previously included these amounts within operating activities. For public companies, ASU 2016-09 was effective for fiscal years beginning after December 15, 2016 including interim periods within that reporting period and was to be applied on a modified retrospective basis as a cumulative-effect adjustment to retained earnings as of the date of adoption. The Company adopted ASU 2016-09 as of January 1, 2017 and it did not have a material impact on its condensed consolidated financial statements and related disclosures. The change in the Company's condensed consolidated statements of cash flows related to the prior-year periods is as follows:



	Three Months Ended
	March 31,			June 30,			September 30,			December 31,
	2016
Net cash provided by operating activities ⁽¹⁾	$	85,777		$	128,384		$	125,464		$	128,954
Reclassification of cash payments for withheld shares	202			87			(69		)	60
Net cash provided by operating activities ⁽²⁾	$	85,979		$	128,471		$	125,395		$	129,014

Net cash used in financing activities ⁽¹⁾	$	(95,505	)	$	(162,774	)	$	(89,447	)	$	(137,348	)
Reclassification of cash payments for withheld shares	(202		)	(87		)	69			(60		)
Net cash used in financing activities ⁽²⁾	$	(95,707	)	$	(162,861	)	$	(89,378	)	$	(137,408	)


(1)	Prior to adoption of ASU 2016-09.


(2)	Subsequent to adoption of ASU 2016-09.

In October 2016, the FASB issued ASU 2016-17, Interests Held Through Related Parties That Are under Common Control, ("ASU 2016-17") which amended the consolidation guidance in ASU 2015-02, Amendments to the Consolidation Analysis ("ASU 2015-02"), to change how a reporting entity that is a single decision maker of a VIE should consider indirect interests in a VIE held through related parties that are under common control with the entity when determining whether it is the primary beneficiary of the VIE. ASU 2016-17 simplifies the analysis to require consideration of only an entity's proportionate indirect interest in a VIE held through a party under common control. For public companies, ASU 2016-17 was effective for fiscal years beginning after December 15, 2016 including interim periods therein. The guidance was applied retrospectively to all periods in fiscal year 2016, which is the period in which ASU 2015-02 was adopted by the Company. The Company adopted ASU 2016-17 as of January 1, 2017 and it did not have a material impact on its condensed consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, ("ASU 2017-01"), which provides a more narrow definition of a business to be used in determining the accounting treatment of an acquisition. Under ASC 805, Business Combinations, the Company generally accounted for acquisitions of shopping center properties as acquisitions of a business. Under ASU 2017-01, more acquisitions are expected to be accounted for as acquisitions of assets. Transaction costs for asset acquisitions are capitalized while those related to business acquisitions are expensed. For public companies, ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods therein and is to be applied prospectively to any transactions occurring within the period of adoption. Early adoption is permitted. The Company adopted ASU 2017-01 as of January 1, 2017. The Company expects most of its future acquisitions of shopping center properties will be accounted for as acquisitions of assets in accordance with the guidance in ASU 2017-01.

In January 2017, the FASB issued ASU 2017-03, Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings, ("ASU 2017-03"), which provides guidance related to the disclosure of the potential impact that the adoption of ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"); ASU 2016-02, Leases ("ASU 2016-02") and ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") could have on the Company's condensed consolidated financial statements. ASU 2017-03 was effective upon issuance and the Company has incorporated this guidance within its current disclosures.

Accounting Guidance Not Yet Effective

Revenue Recognition guidance and implementation update

In May 2014, the FASB and the International Accounting Standards Board jointly issued ASU 2014-09. The objective of this converged standard is to enable financial statement users to better understand and analyze revenue by replacing current transaction and industry-specific guidance with a more principles-based approach to revenue recognition. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that the entity expects to be entitled to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other guidance such as lease and insurance contracts. In August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date, ("ASU 2015-14") which allows an additional one year deferral of ASU 2014-09. As a result, ASU 2014-09 is effective for annual periods beginning after December 15, 2017 and interim periods within those years using one of two retrospective application methods. Early adoption would be permitted only for annual reporting periods beginning after December 15, 2016 and interim periods within those years. ~~In March 2016, the FASB issued ASU 2016-08,~~ ~~Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~ ~~("ASU 2016-08")~~. ~~The guidance in ASU 2016-08 clarifies the implementation of ASU 2014-09 on principal versus agent considerationand has the same effective date as ASU 2014-09, as deferred by ASU 2015-14. During the quarter ended June 30, 2016, the FASB issued ASU 2016-10,~~ ~~Identifying Performance Obligations and Licensing, ASU 2016-11,~~ ~~Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting,~~ ~~and ASU 2016-12,~~ ~~Narrow Scope Improvements and Practical Expedients.~~ ~~In December 2016, the FASB issued ASU 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.~~ ~~These amendments are intended to improve and clarify the implementation guidance of ASU 2014-09 and have the same effective date as ASU 2014-09, as deferred by ASU 2015-14.~~ As the majority of the Company's revenue is derived from real estate lease contracts, the Company does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements. The Company expects to adopt the guidance using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company's adoption, which will be January 1, 2018.

The following updates, which are effective as of the same date as ASU 2014-09 as deferred by ASU 2015-14, were issued by the FASB to clarify the implementation of the revenue guidance:



Issuance Date		Accounting Standards Update
March 2016		ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net)
April 2016		ASU 2016-10, Identifying Performance Obligations and Licensing
May 2016		ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting
May 2016		ASU 2016-12, Narrow Scope Improvements and Practical Expedients
December 2016		ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers

The Company's revenues largely consist of income earned from leasing, which approximated 95% of the Company's revenues over the three-year period ended December 31, 2016. Other revenue streams primarily include earnings from third-party management and joint venture contracts in addition to marketing income and financing fees. As part of the implementation process, the Company completed an initial review to ascertain which contracts are in the scope of the revenue guidance noted above. For those contracts in scope, these were evaluated using the prescribed five-step method which included the identification of the contract and performance obligations, determining the transaction price, allocating the transaction price to performance obligations and recognizing revenue. Based on its initial evaluation of contracts, the Company does not expect any material changes in the amount or timing of its revenues and expects to have the contract review, for contracts that are expected to have open performance obligations as of January 1, 2018, finalized in the next few months. Once the contract review is complete, the Company will provide an estimate of the expected modified retrospective adjustment that will be booked as well as additional disclosures.

Leasing guidance and implementation update

In February 2016, the FASB issued ASU 2016-02. The objective of ASU 2016-02 is to increase transparency and comparability by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, lessees will be required to recognize a right-of-use asset and corresponding lease liability on the balance sheet for all leases with terms greater than 12 months. The guidance applied by a lessor under ASU 2016-02 is substantially similar to existing GAAP. For public companies, ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted. Lessees and lessors are required to use a modified retrospective transition method for all leases existing at, or entered into after, the date of initial application. Accordingly, they would apply the new accounting model for the earliest year presented in the financial statements. A number of practical expedients may also be elected. Under the new guidance, common area maintenance recoveries must be accounted for as a non-lease component. The Company is evaluating whether the bifurcation of common area maintenance will affect the timing or recognition of certain lease revenues. Also, only direct leasing costs may be capitalized under ASU 2016-02. Current guidance also allows the capitalization of indirect leasing costs. Additionally, the Company is analyzing its current ground lease obligations under ASU 2016-02. The Company has done a preliminary assessment and continues to evaluate the potential impact the guidance may have on its condensed consolidated financial statements and related disclosures and will adopt ASU 2016-02 as of January 1, 2019.

As a lessor, the Company expects substantially all leases will continue to be classified as operating leases under the new leasing guidance. Under the new guidance, certain common area maintenance ("CAM") recoveries must be accounted for as non-lease components under the new revenue guidance. The FASB clarified in June 2017 that entities, which do not adopt ASU 2016-02 concurrently with the new revenue recognition guidance, will only be required to evaluate CAM as a non-lease component for new leases executed after the effective date, which would be January 1, 2019 for the Company. The Company is evaluating how the bifurcation of CAM may affect the timing or recognition of certain lease revenues. Additionally, the Company expects to expense certain deferred lease costs due to the narrowed definition of indirect costs that may be capitalized. As a lessee, the Company has 11 ground lease arrangements in which the Company is the lessee for land. As of June 30, 2017, these ground leases have future contractual payments of approximately $15,346 with maturity dates ranging from January 2019 through July 2089.

Other Guidance

In June 2016, the FASB issued ASU 2016-13. The objective of ASU 2016-13 is to provide financial statement users with information about expected credit losses on financial assets and other commitments to extend credit by a reporting entity. The guidance replaces the current incurred loss impairment model, which reflects credit events, with a current expected credit loss model, which recognizes an allowance for credit losses based on an entity's estimate of contractual cash flows not expected to be collected. For public companies that are SEC filers, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. Early adoption is permitted. The guidance is to be applied on a modified retrospective basis. The Company plans to adopt ASU 2016-13 as of January 1, 2020 and is evaluating the impact that this update may have on its condensed consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). The objective of ASU 2016-15 is to reduce diversity in practice in the classification of certain items in the statement of cash flows, including the classification of distributions received from equity method investees. For public companies, ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The guidance is to be applied on a retrospective basis. The Company plans to adopt ASU 2016-15 as of January 1, 2018 and does not expect the guidance to have a material impact on its condensed consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Restricted Cash, ("ASU 2016-18") to address diversity in practice related to the classification and presentation of changes in restricted cash. The update requires a reporting entity to explain the change in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents in reconciling the beginning-of-period and end-of-period total amounts on the statement of cash flows. For public companies, ASU 2016-18 is effective on a retrospective basis for fiscal years beginning after December 15, 2017, including interim periods therein. Early adoption is permitted. The Company plans to adopt the update as of January 1, 2018 and does not expect ASU 2016-18 to have a material impact on its condensed consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"), which will apply to the partial sale or transfer of nonfinancial assets, including real estate assets, to unconsolidated joint ventures. ASU 2017-05 requires 100% of the gain or loss to be recognized for nonfinancial assets transferred to an unconsolidated joint venture and any noncontrolling interest received in such nonfinancial assets to be measured at fair value. ASU 2017-05 has the same effective date as ASU 2014-09, as deferred by ASU 2015-14, and is effective for the Company on January 1, 2018. ASU 2017-05 is to be applied using either a full or modified retrospective transition method. This adjustment will (1) mark investments in unconsolidated joint ventures to fair value as of the date of contribution to the unconsolidated joint ventures, and (2) recognize the remainder of the gain or loss associated with transferring the assets to the unconsolidated joint venture. The Company is in the process of determining which method to use for the application of this guidance and is identifying transactions related to the partial sale of real estate assets in prior periods that it expects the guidance in ASU 2017-05 will impact. The Company expects the application of this guidance will result in higher gains due to the requirement to recognize 100% of the gain on the sale of the partial interest and record the retained noncontrolling interest at fair value.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting ("ASU 2017-09") which provides guidance on the types of changes to the terms or conditions of a share-based payment award to which an entity would be required to apply modification accounting under ASC 718, Compensation - Stock Compensation. ASU 2017-09 is effective for public companies on a prospective basis to awards modified on or after the adoption date for fiscal years beginning after December 15, 2017, including interim periods therein. Early adoption is permitted. The Company plans to adopt the update as of January 1, 2018 and does not expect ASU 2017-09 to have a material impact on its condensed consolidated financial statements.

Note 3 – Fair Value Measurements

The Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosure, ("ASC 820") based on whether the inputs to valuation techniques are observable or unobservable. The fair value hierarchy contains three levels of inputs that may be used to measure fair value as follows:

Level 1 – Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.

Level 2 – Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.

Level 3 – Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability. Market valuations must often be determined using discounted cash flow methodologies, pricing models or similar techniques based on the Company’s assumptions and best judgment.

The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions and risk of nonperformance.

Fair Value Measurements on a Recurring Basis

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short-term nature of these financial instruments. Based on the interest rates for similar financial instruments, the carrying value of mortgage and other notes receivable is a reasonable estimate of fair value. The estimated fair value of mortgage and other indebtedness was ~~$4,759,526~~$4,488,714 and $4,737,077 at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively. The fair value was calculated using Level 2 inputs by discounting future cash flows for mortgage and other indebtedness using estimated market rates at which similar loans would be made currently. The carrying amount of net mortgage and other indebtedness was ~~$4,522,480~~$4,249,440 and $4,465,294 at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.

Fair Value Measurements on a Nonrecurring Basis

The Company measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company considers both quantitative and qualitative factors in its impairment analysis of long-lived assets. Significant quantitative factors include historical and forecasted information for each property such as net operating income ("NOI"), occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition of the property and tenant mix. Due to the significant unobservable estimates and assumptions used in the valuation of long-lived assets that experience impairment, the Company classifies such long-lived assets under Level 3 in the fair value hierarchy. Level 3 inputs primarily consist of sales and market data, independent valuations and discounted cash flow models as noted below.

The following table sets forth information regarding the Company's assets that are measured at fair value on a nonrecurring basis and related impairment charges for the six months ended June 30, 2017:



			Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Loss
Long-lived assets	$	67,300	$	—	$	—	$	67,300	$	46,466

Long-lived Assets Measured at Fair Value in 2017

During the ~~three~~six months ended ~~March 31,~~June 30, 2017, the Company recognized impairments of real estate of ~~$3,263 when it divested its interests in~~$46,466 primarily related to a mall, a parcel project near an outlet center and ~~wrote down~~ one ~~outparcel to its estimated fair value upon its sale.~~outparcel. The properties were classified for segment reporting purposes as listed below (see section below for information on outparcels). See Note 9 for segment information.

Impairment Date

Property

Location

Segment Classification

Loss on Impairment

Fair

Value ⁽¹⁾

Property

Location

Segment Classification

Loss on Impairment

Fair

Value

March

Vacant land ⁽²⁾

Woodstock, GA

Malls

3,147

—

Vacant land ⁽¹⁾

Woodstock, GA

Malls

3,147

—

⁽²⁾

June

Acadiana Mall ⁽³⁾

Lafayette, LA

Malls

43,007

67,300

June

Adjustments related to prior period sales ⁽⁴⁾

Various

Malls/Office Buildings

196

—

⁽²⁾

46,350

67,300


(1)	~~The long-lived asset is not included in the Company's consolidated balance sheets at March 31, 2017 as the Company no longer has an interest in the consolidated joint venture as described below.~~

~~(2)~~

The Company wrote down the book value of its interest in a consolidated joint venture that owned land adjacent to one of its outlet malls upon the divestiture of its interests in March 2017 to a fair value of $1,000. In conjunction with the divestiture and assignment of the Company's interests in this consolidated joint venture, the Company was relieved of its debt obligation by the joint venture partner. See Note 6 for more information.


(2)	The long-lived asset is not included in the Company's condensed consolidated balance sheets at June 30, 2017 as the Company no longer has an interest in the property.

(3)

In accordance with the Company's quarterly impairment review process, the Company wrote down the book value of the mall to its estimated fair value of $67,300 in the second quarter of 2017. Management determined the fair value of Acadiana Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of 10 years, with a sale at the end of the holding period, a capitalization rate of 15.50% and a discount rate of 15.75%. The mall has experienced declining tenant sales and cash flows as a result of the downturn of the economy in its market area and an anchor announced in the second quarter 2017 that it will close its store later in 2017. The revenues of Acadiana Mall accounted for approximately 1.9% of total consolidated revenues for the trailing twelve months ended June 30, 2017.


(4)	Relates to true-ups of estimated expenses to actual expenses for properties sold in prior periods.

During the ~~three~~six months ended ~~March 31,~~June 30, 2017, the Company recorded an impairment of $116 related to the sale of one outparcel. Outparcels are classified for segment reporting purposes in the All Other category. See Note 9 for segment information.

Note 4 – Acquisitions and Dispositions

Asset Acquisitions

During the ~~three~~six months ended ~~March 31,~~June 30, 2017, the Company acquired several Sears and Macy's stores, which include land, buildings and improvements, for future redevelopment at the related malls. These transactions are accounted for as asset acquisitions in accordance with ASU 2017-01.

In January 2017, the Company purchased five Sears department stores and two Sears Auto Centers for $72,765 in cash, which includes $265 of capitalized transaction costs. Sears will continue to operate the department stores under new ten-year leases for which the Company will receive an aggregate initial annual base rent of $5,075. Annual base rent will be reduced by 0.25% for the third through tenth years of the leases. Sears will be responsible for paying ~~common area maintenance~~CAM charges, taxes, insurance and utilities under the terms of the leases. The Company has the right to terminate each Sears lease at any time (except November 15 through January 15), with six month's advance notice. With six month's advance notice, Sears has the right to terminate ~~the~~one lease ~~at one mall~~ after a four-year period and may terminate the ~~leases at the~~ four other ~~department stores~~leases after a two-year period. The leases on the Sears Auto Centers may be terminated by Sears after one year, with six month's advance notice.

The Company also acquired four Macy's stores in January 2017 for $7,034 in cash, which includes $34 of capitalized transaction costs. Three of these locations closed in March 2017. The Company entered into a lease with Macy's at the fourth store under which Macy's will continue to operate the store through March 2019 for annual base rent and fixed common area maintenance charges of $19 per year, subject to certain operating covenants. If Macy's ceases to operate at this location, the Company will be reimbursed for the pro rata portion of the amount paid for the operating covenant based on the remaining lease term.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the respective acquisition dates:



	Sears Stores			Macy's Stores			Total
Land	$	45,028		$	4,635		$	49,663
Building and improvements	14,814			1,965			16,779
Tenant improvements	4,234			377			4,611
Above-market leases	681			—			681
In-place leases	8,364			579			8,943
Total assets	73,121			7,556			80,677
Below-market leases	(356		)	(522		)	(878		)
Net assets acquired	$	72,765		$	7,034		$	79,799

The intangible assets and liabilities acquired with the acquisition of the Sears and Macy's stores have weighted-average amortization periods as of the respective acquisition dates as follows (in years):



	Sears Stores	Macy's Stores
Above-market leases	2.0	—
In-place leases	2.2	2.2
Below-market leases	5.4	2.2

Dispositions

The Company evaluates its disposals utilizing the guidance in ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Based on its analysis, the Company determined that the dispositions described below do not meet the criteria for classification as discontinued operations and are not considered to be significant disposals based on its quantitative and qualitative evaluation. Thus, the results of operations of the shopping center properties described below, as well as any related gain or impairment loss, are included in net income for all periods presented, as applicable.

2017 Dispositions

Net proceeds realized from the 2017 dispositions were used to reduce the outstanding balances on the Company's credit facilities. The following is a summary of the Company's 2017 ~~dispositions:~~dispositions by sale:


				Sales Price									Sales Price
Sales Date	Property	Property Type	Location	Gross		Net		Gain		Property	Property Type	Location	Gross		Net		Gain
January	One Oyster Point & Two Oyster Point ⁽¹⁾	Office Building	Newport News, VA	$	6,250	$	6,142	$	—	One Oyster Point & Two Oyster Point ⁽¹⁾	Office Building	Newport News, VA	$	6,250	$	6,142	$	—
April										The Outlet Shoppes at Oklahoma City ⁽²⁾	Mall	Oklahoma City, OK	130,000		55,368		75,434
May										College Square Mall & Foothills Mall	Mall	Morristown, TN / Maryville, TN	53,500		50,566		1,994
													$	189,750	$	112,076	$	77,428


(1)	The Company recorded a loss on impairment of $3,844 in the third quarter of 2016 to write down the office buildings to their estimated fair value based upon a signed contract with the third party buyer, adjusted to reflect disposition costs.


(2)	In conjunction with the sale of this 75/25 consolidated joint venture, three loans secured by the mall were retired. See Note 6 for more information. The Company's share of the gain from the sale was approximately $48,800. In accordance with the joint venture agreement, the joint venture partner received a priority return of $7,477 from the proceeds of the sale.

The Company also realized a gain of $8,093 primarily related to the sale of six outparcels during the six months ended June 30, 2017. The Company received a note receivable related to the sale of an outparcel in the second quarter of 2017. See Note 8 for more information.

The Company recognized a gain on extinguishment of debt for the ~~property~~properties listed below, which represented the amount by which the outstanding debt balance exceeded the net book value of the property as of the transfer date. See Note 6 for additional information. The following is a summary of the Company's other 2017 ~~disposition:~~dispositions:

Transfer

Date

Property

Property Type

Location

Balance of

Non-recourse

Debt

Gain on

Extinguishment

of Debt

Property

Property Type

Location

Balance of

Non-recourse

Debt

Gain on

Extinguishment

of Debt

January

Midland Mall ⁽¹⁾

Mall

Midland. MI

31,953

4,055

Midland Mall ⁽¹⁾

Mall

Midland. MI

31,953

3,760

June

Chesterfield Mall ⁽²⁾

Mall

Chesterfield, MO

140,000

29,215

171,953

32,975


(1)	The mortgage lender completed the foreclosure process and received title to the mall in satisfaction of the non-recourse debt secured by the property. A loss on impairment of real estate of $4,681 was recorded in the first quarter of 2016 to write down the book value of the mall to its then estimated fair value. The Company also recorded $479 of aggregate non-cash default interest expense.


(2)	The mortgage lender completed the foreclosure process and received title to the mall in satisfaction of the non-recourse debt secured by the property. A loss on impairment of real estate of $99,969 was recorded in the fourth quarter of 2015 to write down the book value of the mall to its then estimated fair value. The Company also recorded $4,324 of aggregate non-cash default interest expense.

~~The Company also realized a gain of $5,988 primarily related to the sale of five outparcels during the first quarter of 2017.~~

~~Subsequent to March 31, 2017, the Company closed on the sale of an outlet center. See~~ ~~Note 16~~ ~~for more information.~~

Note 5 – Unconsolidated Affiliates and Noncontrolling Interests

Unconsolidated Affiliates

At ~~March 31,~~June 30, 2017, the Company had investments in the following 17 entities, which are accounted for using the equity method of accounting:



Joint Venture	Property Name	Company's Interest
Ambassador Infrastructure, LLC	Ambassador Town Center - Infrastructure Improvements	65.0%
Ambassador Town Center JV, LLC	Ambassador Town Center	65.0%
CBL/T-C, LLC	CoolSprings Galleria, Oak Park Mall and West County Center	50.0%
CBL-TRS Joint Venture, LLC	Friendly Center and The Shops at Friendly Center	50.0%
El Paso Outlet Outparcels, LLC	The Outlet Shoppes at El Paso (vacant land)	50.0%
Fremaux Town Center JV, LLC	Fremaux Town Center - Phases I and II	65.0%
G&I VIII CBL Triangle LLC	Triangle Town Center and Triangle Town Commons	10.0%
Governor’s Square IB	Governor’s Square Plaza	50.0%
Governor’s Square Company	Governor’s Square	47.5%
JG Gulf Coast Town Center LLC	Gulf Coast Town Center - Phase III	50.0%
Kentucky Oaks Mall Company	Kentucky Oaks Mall	50.0%
Mall of South Carolina L.P.	Coastal Grand	50.0%
Mall of South Carolina Outparcel L.P.	Coastal Grand Crossing and vacant land	50.0%
Port Orange I, LLC	The Pavilion at Port Orange - Phase I	50.0%
River Ridge Mall JV, LLC	River Ridge Mall	25.0%
West Melbourne I, LLC	Hammock Landing - Phases I and II	50.0%
York Town Center, LP	York Town Center	50.0%

Although the Company had majority ownership of certain joint ventures during 2017 and 2016, it evaluated the investments and concluded that the other partners or owners in these joint ventures had substantive participating rights, such as approvals of:

the pro forma for the development and construction of the project and any material deviations or modifications thereto;

the site plan and any material deviations or modifications thereto;

the conceptual design of the project and the initial plans and specifications for the project and any material deviations or modifications thereto;

any acquisition/construction loans or any permanent financings/refinancings;

the annual operating budgets and any material deviations or modifications thereto;

the initial leasing plan and leasing parameters and any material deviations or modifications thereto; and

any material acquisitions or dispositions with respect to the project.

As a result of the joint control over these joint ventures, the Company accounts for these investments using the equity method of accounting.

All of the debt on the properties owned by the unconsolidated affiliates listed above is non-recourse, except for debt secured by Ambassador Infrastructure, Hammock Landing and The Pavilion at Port Orange. See Note 12 for a description of guarantees the Company has issued related to certain unconsolidated affiliates.

Subsequent to June 30, 2017, an unconsolidated affiliate retired a loan. See Note 16 for more information.

See Note 16 for subsequent event related to River Ridge Mall JV, LLC.

Condensed Combined Financial Statements - Unconsolidated Affiliates

Condensed combined financial statement information of the unconsolidated affiliates is as follows:


ASSETS	March 31, 2017			December 31, 2016			June 30, 2017			December 31, 2016
Investment in real estate assets	$	2,142,570		$	2,137,666		$	2,149,393		$	2,137,666
Accumulated depreciation	(580,084		)	(564,612		)	(595,825		)	(564,612		)
	1,562,486			1,573,054			1,553,568			1,573,054
Developments in progress	11,182			9,210			12,533			9,210
Net investment in real estate assets	1,573,668			1,582,264			1,566,101			1,582,264
Other assets	212,682			223,347			212,655			223,347
Total assets	$	1,786,350		$	1,805,611		$	1,778,756		$	1,805,611

LIABILITIES
Mortgage and other indebtedness, net	$	1,260,645		$	1,266,046		$	1,256,445		$	1,266,046
Other liabilities	41,864			46,160			43,314			46,160
Total liabilities	1,302,509			1,312,206			1,299,759			1,312,206

OWNERS' EQUITY
The Company	224,340			228,313			222,817			228,313
Other investors	259,501			265,092			256,180			265,092
Total owners' equity	483,841			493,405			478,997			493,405
Total liabilities and owners' equity	$	1,786,350		$	1,805,611		$	1,778,756		$	1,805,611


	Total for the Three Months Ended March 31,						Total for the Three Months Ended June 30,
	2017			2016			2017			2016
Total revenues	$	59,699		$	64,204		$	58,156		$	62,854
Depreciation and amortization	(20,629		)	(20,610		)	(19,496		)	(22,248		)
Interest income	400			336			430			332
Interest expense	(12,838		)	(13,489		)	(13,146		)	(14,181		)
Operating expenses	(18,748		)	(20,072		)	(16,639		)	(18,333		)
Gain on extinguishment of debt							—			63,294
Income from continuing operations before gain on sales of real estate assets	7,884			10,369			9,305			71,718
Gain (loss) on sales of real estate assets	(71		)	80,959			(6		)	60,377
Net income ⁽¹⁾	$	7,813		$	91,328		$	9,299		$	132,095


(1)	The Company's pro rata share of net income is $6,325 and $64,349 for the three months ended June 30, 2017 and 2016, respectively.



	Total for the Six Months Ended June 30,
	2017			2016
Total revenues	$	117,855		$	127,058
Depreciation and amortization	(40,125		)	(42,858		)
Interest income	830			668
Interest expense	(25,984		)	(27,670		)
Operating expenses	(35,387		)	(38,405		)
Gain on extinguishment of debt	—			63,294
Income from continuing operations before gain on sales of real estate assets	17,189			82,087
Gain (loss) on sales of real estate assets	(77		)	141,336
Net income ⁽¹⁾	$	17,112		$	223,423


(1)	The Company's pro rata share of net income is ~~$5,373~~$11,698 and ~~$32,390~~$96,739 for the ~~three~~six months ended ~~March 31,~~June 30, 2017 and 2016, respectively.

Redeemable Interests of the Operating Partnership

Redeemable common units of ~~$15,472~~$13,392 and $17,996 at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively, include a partnership interest in the Operating Partnership for which the partnership agreement includes redemption provisions that may require the Operating Partnership to redeem the partnership interest for real property.

Noncontrolling Interests of the Operating Partnership

Noncontrolling interests include the aggregate noncontrolling ownership interest in the Operating Partnership's consolidated subsidiaries that is held by third parties and for which the related partnership agreements either do not include redemption provisions or are subject to redemption provisions that do not require classification outside of permanent equity. Total noncontrolling interests were ~~$9,319~~$11,937 and $12,103, as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.

Noncontrolling Interests of the Company

The noncontrolling interests of the Company include the third party interests discussed above as well as the aggregate noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which each of the noncontrolling limited partners has the right to exchange all or a portion of its partnership interests for shares of the Company’s common stock or, at the Company’s election, their cash equivalent. As of ~~March 31,~~June 30, 2017, the Company's total noncontrolling

interests of ~~$106,085~~$106,846 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of ~~$96,766~~$94,909 and ~~$9,319,~~$11,937, respectively. The Company's total noncontrolling interests at December 31, 2016 of $112,138 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of $100,035 and $12,103, respectively.

In April 2017, the Operating Partnership elected to pay $59 to one holder of 6,424 common units in the Operating Partnership upon the exercise of the holder's conversion rights. In June 2017, the Operating Partnership elected to pay $471 to two holders of 59,480 common units in the Operating Partnership upon the exercise of their conversion rights.

Variable Interest Entities

In accordance with the guidance in ASU 2015-02 and ASU 2016-17, as discussed in Note 2, the Operating Partnership and certain of its subsidiaries are deemed to have the characteristics of a VIE primarily because the limited partners of these entities do not collectively possess substantive kick-out or participating rights. The Company adopted ASU 2015-02 as of January 1, 2016 and ASU 2016-17 was adopted as of January 1, 2017 on a modified retrospective basis. The adoption of ASU 2016-17 did not change any of the Company's consolidation conclusions made under ASU 2015-02 and did not change amounts within the condensed consolidated financial statements.

The Company consolidates the Operating Partnership, which is a VIE, for which the Company is the primary beneficiary. The Company, through the Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether the Company is the primary beneficiary of a VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Company's investment; the obligation or likelihood for the Company or other investors to provide financial support; and the similarity with and significance to the Company's business activities and the business activities of the other investors.

The table below lists the Company's consolidated VIEs as of ~~March 31,~~June 30, 2017:



Consolidated VIEs:		Property Name
Atlanta Outlet Outparcels, LLC		The Outlet Shoppes at Atlanta (vacant land)
Atlanta Outlet JV, LLC		The Outlet Shoppes at Atlanta
CBL Terrace LP		The Terrace
El Paso Outlet Center Holding, LLC		The Outlet Shoppes at El Paso
El Paso Outlet Center II, LLC
~~Foothills Mall Associates~~	The Outlet Shoppes at El Paso - Phase II
Gettysburg Outlet Center Holding, LLC		The Outlet Shoppes at Gettysburg
Gettysburg Outlet Center, LLC		The Outlet Shoppes at Gettysburg (vacant land)
High Point Development LP II		Oak Hollow - Barnes & Noble
Jarnigan Road LP		CBL Center, CBL Center II, The Shoppes at Hamilton Place and Regal Cinema
Laredo Outlet JV, LLC		The Outlet Shoppes at Laredo
Lebcon Associates		Hamilton Place and outparcel, Hamilton Corner, Hamilton Place - Sears Parcel
Lebcon I, Ltd		Hamilton Crossing and Hamilton Crossing - Expansion
Lee Partners		One Park Place
Louisville Outlet Outparcels, LLC		The Outlet Shoppes of the Bluegrass (vacant land)
Louisville Outlet Shoppes, LLC		The Outlet Shoppes of the Bluegrass
Madison Grandview Forum, LLC		The Forum at Grandview
The Promenade at D'Iberville		The Promenade
Statesboro Crossing, LLC		Statesboro Crossing

The table below lists the Company's unconsolidated VIEs as of June 30, 2017:



Unconsolidated VIEs:	Investment in Real Estate Joint Ventures and Partnerships		Maximum Risk of Loss
Ambassador Infrastructure, LLC ⁽¹⁾	$	—	$	11,035
G&I VIII CBL Triangle LLC	2,103		2,103

~~Village at Orchard Hills, LLC~~
(1)
~~Unconsolidated VIEs:~~
~~Ambassador Infrastructure, LLC~~
~~G&I VIII CBL Triangle LLC~~ The debt is guaranteed by the Operating Partnership at 100%. See Note 12 for more information.

Variable Interest Entities - Reconsideration ~~Event~~Events

Woodstock GA, Investments, LLC

In March 2017, the Company divested its interests in the 75/25 consolidated joint venture and was relieved of its funding obligation related to the loan secured by the vacant land owned by the joint venture. See Note 3 and Note 6 for more information.

Foothills Mall Associates

The Company held a 95% interest in this consolidated joint venture, which represented an interest in a VIE. The property was sold in May 2017. See Note 4 for more information.

Village at Orchard Hills, LLC

The joint venture completed the sale of its outparcels and distributed the cash in the second quarter of 2017. The consolidated joint venture no longer has any assets as of June 30, 2017.

Note 6 – Mortgage and Other Indebtedness, Net

Debt of the Company

CBL is a limited guarantor of the 5.25%, 4.60%, and 5.95% senior unsecured notes (collectively, the "Notes"), issued by the Operating Partnership in November 2013, October 2014, and December 2016, respectively, 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 three unsecured term loans as of ~~March 31,~~June 30, 2017.

Debt of the Operating Partnership

Mortgage and other indebtedness, net consisted of the following:


	March 31, 2017				December 31, 2016				June 30, 2017				December 31, 2016
	Amount			Weighted- Average Interest Rate ⁽¹⁾	Amount			Weighted- Average Interest Rate ⁽¹⁾	Amount			Weighted- Average Interest Rate ⁽¹⁾	Amount			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating properties	$	2,248,936		5.53%	$	2,453,628		5.55%	$	2,043,402		5.51%	$	2,453,628		5.55%
Senior unsecured notes due 2023 ⁽²⁾	446,656			5.25%	446,552			5.25%	446,761			5.25%	446,552			5.25%
Senior unsecured notes due 2024⁽³⁾	299,941			4.60%	299,939			4.60%	299,943			4.60%	299,939			4.60%
Senior unsecured notes due 2026 ⁽⁴⁾	394,367			5.95%	394,260			5.95%	394,474			5.95%	394,260			5.95%
Total fixed-rate debt	3,389,900			5.46%	3,594,379			5.48%	3,184,580			5.44%	3,594,379			5.48%
Variable-rate debt:
Non-recourse term loans on operating properties	16,488			2.90%	19,055			3.13%	10,899			3.03%	19,055			3.13%
Recourse term loans on operating properties	24,727			3.46%	24,428			3.29%	89,298			3.68%	24,428			3.29%
Construction loan(5)	56,243			3.28%	39,263			3.12%	—			—%	39,263			3.12%
Unsecured lines of credit	252,105			2.03%	6,024			1.82%	181,069			2.25%	6,024			1.82%
Unsecured term loans	800,000			2.23%	800,000			2.04%	800,000			2.49%	800,000			2.04%
Total variable-rate debt	1,149,563			2.28%	888,770			2.15%	1,081,266			2.55%	888,770			2.15%
Total fixed-rate and variable-rate debt	4,539,463			4.65%	4,483,149			4.82%	4,265,846			4.71%	4,483,149			4.82%
Unamortized deferred financing costs	(16,983		)		(17,855		)		(16,406		)		(17,855		)
Total mortgage and other indebtedness, net	$	4,522,480			$	4,465,294			$	4,249,440			$	4,465,294


(1)	Weighted-average interest rate includes the effect of debt premiums and discounts, but excludes amortization of deferred financing costs.


(2)	The balance is net of an unamortized discount of ~~$3,344~~$3,239 and $3,448 as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.


(3)	The balance is net of an unamortized discount of ~~$59~~$57 and $61 as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.


(4)	The balance is net of an unamortized discount of ~~$5,633~~$5,526 and $5,740 as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.


(5)	The Outlet Shoppes at Laredo opened in April 2017 and the construction loan balance is included in recourse term loans on operating properties as of June 30, 2017.

Senior Unsecured Notes



Description	Issued ⁽¹⁾	Amount		Interest Rate ⁽²⁾	Maturity Date⁽³⁾
2026 Notes	December 2016	$	400,000	5.95%	December 2026
2024 Notes	October 2014	300,000		4.60%	October 2024
2023 Notes	November 2013	450,000		5.25%	December 2023


(1)	Issued by the Operating Partnership. CBL is a limited guarantor of the Operating Partnership's obligations under the Notes as described above.

(2)

Interest is payable semiannually in arrears. Interest was payable for the 2026 Notes, the 2024 Notes and the 2023 Notes beginning June 15, 2017; April 15, 2015; and June 1, 2014, respectively. The interest rate for the 2024 Notes and the 2023 Notes is 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 required ratio of secured debt to total assets for the 2026 Notes is 40% or less. As of ~~March 31,~~June 30, 2017, this ratio was 27% as shown below.

(3)

The Notes are redeemable at the Operating Partnership's election, in whole or in part from time to time, on not less than 30 days and not more than 60 days' notice to the holders of the Notes to be redeemed. The 2026 Notes, the 2024 Notes and the 2023 Notes may be redeemed prior to September 15, 2026; July 15, 2024; and September 1, 2023, respectively, for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date and a make-whole premium calculated in accordance with the indenture. On or after the respective dates noted above, the Notes are redeemable for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest. If redeemed prior to the respective dates noted above, each issuance of Notes is redeemable at the treasury rate plus 0.50%, 0.35% and 0.40% for the 2026 Notes, the 2024 Notes and the 2023 Notes, respectively.

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 0.875% to 1.55% based on the Company's credit ratings. As of ~~March 31,~~June 30, 2017, the Company's interest rate based on its credit ratings of Baa3 from Moody's Investors Service ("Moody's") and BBB- from Standard & Poor's ("S&P") and Fitch Ratings ("Fitch") is LIBOR plus 120 basis points. Additionally, the Company pays an annual facility fee that ranges from 0.125% to 0.300% of the total capacity of each facility based on the Company's credit ratings. As of ~~March 31,~~June 30, 2017, the annual facility fee was 0.25%. The three unsecured lines of credit had a weighted-average interest rate of ~~2.03%~~2.25% at ~~March 31,~~June 30, 2017.

The following summarizes certain information about the Company's unsecured lines of credit as of ~~March 31,~~June 30, 2017:


	Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date		Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date
Wells Fargo - Facility A	$	500,000	$	—	⁽¹⁾	October 2019	October 2020	⁽²⁾	$	500,000	$	—	⁽¹⁾	October 2019	October 2020	⁽²⁾
First Tennessee	100,000		27,400		⁽³⁾	October 2019	October 2020	⁽⁴⁾	100,000		15,384		⁽³⁾	October 2019	October 2020	⁽⁴⁾
Wells Fargo - Facility B	500,000		224,705		⁽⁵⁾	October 2020			500,000		165,685		⁽⁵⁾	October 2020
	$	1,100,000	$	252,105					$	1,100,000	$	181,069


(1)	There was $150 outstanding on this facility as of ~~March 31,~~June 30, 2017 for letters of credit. Up to $30,000 of the capacity on this facility can be used for letters of credit.


(2)	The extension option is at the Company's election, subject to continued compliance with the terms of the facility, and has a one-time extension fee of 0.15% of the commitment amount of the credit facility.


(3)	Up to $20,000 of the capacity on this facility can be used for letters of credit.


(4)	The extension option on the facility is at the Company's election, subject to continued compliance with the terms of the facility, and has a one-time extension fee of 0.20% of the commitment amount of the credit facility.


(5)	Up to $30,000 of the capacity on this facility can be used for letters of credit.

See Note 16 for information on the modification of a debt covenant on the two $500,000 unsecured lines of credit subsequent to June 30, 2017.

Unsecured Term Loans

The Company has a $350,000 unsecured term loan, which bears interest at a variable rate of LIBOR plus 1.35% based on the Company's current credit ratings. The loan matures in October 2017 and has two one-year extension options, subject to continued compliance with the terms of the loan agreement, for an outside maturity date of October 2019. At ~~March 31,~~June 30, 2017, the outstanding borrowings of $350,000 had an interest rate of ~~2.13%~~2.40%.

The Company has a $400,000 unsecured term loan, which bears interest at a variable rate of LIBOR plus 1.50% based on the Company's current credit ratings and has a maturity date of July 2018. At ~~March 31,~~June 30, 2017, the outstanding borrowings of $400,000 had an interest rate of ~~2.28%~~2.55%.

The Company also has a $50,000 unsecured term loan that matures in February 2018. The term loan bears interest at a variable rate of LIBOR plus 1.55%. At ~~March 31,~~June 30, 2017, the outstanding borrowings of $50,000 had a weighted-average interest rate of ~~2.53%~~2.60%.

See Note 16 for information on the various extensions and modifications of the unsecured term loans made subsequent to June 30, 2017.

Covenants and Restrictions

The agreements for the unsecured lines of credit, the Notes and unsecured term loans contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, 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 financial covenants and restrictions at ~~March 31,~~June 30, 2017.

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 ~~March 31,~~June 30, 2017:



Ratio	Required	Actual
Debt to total asset value	< 60%	~~49%~~50%
Unencumbered asset value to unsecured indebtedness	> 1.6x	2.3x	⁽¹⁾
Unencumbered NOI to unsecured interest expense	> 1.75x	~~3.7x~~3.5x
EBITDA to fixed charges (debt service)	> 1.5x	~~2.5x~~2.4x


(1)	The debt covenant limits the total amount of unsecured indebtedness the Company may have outstanding, which varies over time based on the ratio. Based on the Company’s outstanding unsecured indebtedness as of June 30, 2017, the total amount available to the Company to borrow on its lines of credit was $33,539 less than the total capacity of the lines of credit.

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~~$50,000 or any non-recourse indebtedness greater than ~~$150,000~~$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.

See Note 16 for information on the modification of the debt covenant related to the two $500,000 unsecured lines of credit and unsecured term loans subsequent to June 30, 2017.

Senior Unsecured Notes

The following presents the Company's compliance with key covenant ratios, as defined, of the Notes as of ~~March 31,~~June 30, 2017:



Ratio	Required	Actual
Total debt to total assets	< 60%	~~53%~~52%
Secured debt to total assets	< 45%⁽¹⁾	27%
Total unencumbered assets to unsecured debt	> 150%	~~211%~~213%
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% for the 2023 Notes and the 2024 Notes. The required ratio of secured debt to total assets for the 2026 Notes is 40% or less.

The agreements for the 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 Notes.

Other

Several of the Company’s malls/open-air centers, associated centers and community centers, in addition to the corporate office buildings, 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

~~Other~~Loan Repayments

The ~~non-recourse~~Company repaid the following loans, secured by ~~Chesterfield Mall~~the related consolidated Properties, in 2017:



Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Principal Balance Repaid ⁽¹⁾
January	The Plaza at Fayette	5.67%	April 2017	$	37,146
January	The Shoppes at St. Clair Square	5.67%	April 2017	18,827
February	Hamilton Corner	5.67%	April 2017	14,227
March	Layton Hills Mall	5.66%	April 2017	89,526
April	The Outlet Shoppes at Oklahoma City ⁽²⁾	5.73%	January 2022	53,386
April	The Outlet Shoppes at Oklahoma City - Phase II⁽²⁾	3.53%	April 2019	5,545
April	The Outlet Shoppes at Oklahoma City - Phase III ⁽²⁾	3.53%	April 2019	2,704
				$	221,361


(1)	The Company retired the loans with borrowings from its credit facilities unless otherwise noted.


(2)	The loan was retired in conjunction with the sale of the property which secured the loan. See Note 4 for more information. The Company recorded an $8,500 loss on extinguishment of debt due to a prepayment fee on the early retirement.

The following is a summary of the Company's 2017 dispositions for which the consolidated mall securing the related fixed-rate debt was transferred to the lender:



Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Balance of Non-recourse Debt		Gain on Extinguishment of Debt
January	Midland Mall ⁽¹⁾	6.10%	August 2016	$	31,953	$	3,760
June	Chesterfield Mall ⁽¹⁾	5.74%	September 2016	140,000		29,215
				$	171,953	$	32,975


(1)	The mortgage lender completed the foreclosure process and received the title to the mall in satisfaction of the non-recourse debt.

Other

The non-recourse loan secured by Wausau Center ~~are~~is in default and in receivership at ~~March 31,~~June 30, 2017. The ~~malls generate~~mall generates insufficient income levels to cover the debt service on the ~~mortgages,~~mortgage, which had ~~an aggregate~~a balance of ~~$157,689~~$17,689 at ~~March 31,~~June 30, 2017. The Company plans to return ~~these malls~~this mall to the ~~respective lenders~~lender when foreclosure proceedings are complete, which ~~are~~is expected to occur in the ~~second~~third quarter of 2017. In January 2017, the Company recognized a gain on extinguishment of debt of $4,055 upon the transfer of Midland Mall to the lender in satisfaction of the non-recourse debt secured by the mall, which had a principal balance of $31,953. See ~~Note 4~~ ~~for additional information.~~

In conjunction with the divestiture of the Company's interests in a consolidated joint venture, the Company was relieved of its funding obligation related to the loan secured by vacant land owned by the joint venture, which had a principal balance of $2,466 upon the disposition of its interests in ~~March~~the first quarter of 2017.

~~Loan Repayments~~

~~The Company repaid~~In the ~~following fixed-rate loans, secured by the related consolidated Properties, in 2017:~~

Date Property
Interest
Rate at
Repayment Date

Scheduled
Maturity Date

Principal
Balance
Repaid ⁽¹⁾
January The Plaza at Fayette 5.67% April 2017 $ 37,146
January The Shoppes at St. Clair Square 5.67% April 2017 18,827
February Hamilton Corner 5.67% April 2017 14,227
March Layton Hills Mall 5.66% April 2017 89,526
Total $ 159,726


~~(1)~~	~~The Company retired the loans with borrowings from its credit facilities.~~

~~In March~~first quarter of 2017, the Company exercised an option to extend the loan secured by Statesboro Crossing to June 2018.

Subsequent to March 31, 2017, the Company retired several operating property loans in conjunction with the sale of its interest in The Outlet Shoppes at Oklahoma City, a consolidated joint venture, as described in ~~Note 16~~.

Scheduled Principal Payments

As of ~~March 31,~~June 30, 2017, the scheduled principal amortization and balloon payments on all of the Company’s consolidated mortgage and other indebtedness, excluding extensions available at the Company’s option, are as follows:


2017	$	571,982		$	566,930
2018	722,481			720,639
2019	318,457			300,255
2020	433,689			372,753
2021	455,026			453,168
Thereafter ⁽¹⁾	1,887,555			1,842,125
	4,389,190			4,255,870
Unamortized premiums and discounts, net	(7,416		)	(7,713		)
Unamortized deferred financing costs	(16,983		)	(16,406		)
Principal balance of loans secured by Lender Malls in foreclosure ⁽²⁾	157,689
Principal balance of loan secured by Wausau Center				17,689
Total mortgage and other indebtedness, net	$	4,522,480		$	4,249,440


(1)	Excludes the $17,689 non-recourse loan balance secured by Wausau Center, which is in default and receivership.


~~(2)~~	Represents the non-recourse loan balance of $140,000 secured by Chesterfield Mall, which is in default and receivership, and the principal balance of the loan secured by Wausau Center, as described above.

Of the ~~$571,982~~$566,930 of scheduled principal maturities in 2017, ~~$187,046~~$185,916 relates to the maturing principal balance of two operating property loans, ~~$34,936~~$31,014 represents scheduled principal amortization and $350,000 relates to an unsecured term ~~loan.~~

loan which was extended subsequent to June 30, 2017 (see Note 16). The ~~$124,998~~$124,156 loan secured by Acadiana Mall matured in April 2017. The Company ~~is in discussions~~has a preliminary agreement with the lender to ~~restructure~~modify the loan and extend its maturity date.

The Company’s mortgage and other indebtedness had a weighted-average maturity of ~~4.3~~4.2 years as of ~~March 31,~~June 30, 2017 and 4.4 years as of December 31, 2016.

Interest Rate Hedging Instruments

The Company recorded derivative instruments in its 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 were to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily used interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involved 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.

The effective portion of changes in the fair value of derivatives that was designated as, and that qualified as, cash flow hedges was recorded in accumulated other comprehensive income (loss) ("AOCI/L") and then subsequently reclassified into earnings in the period that the hedged forecasted transaction affected earnings. Such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

The Company's ~~outstanding~~ interest rate derivatives, that were designated as cash flow hedges of interest rate risk, matured on April 1, 2016. The following tables provide further information relating to the Company’s interest rate derivatives that were designated as cash flow hedges of interest rate risk in 2016:


	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)							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 March 31,					Three Months Ended March 31,									Three Months Ended March 31,							Six Months Ended June 30,								Six Months Ended June 30,									Six Months Ended June 30,
	2017		2016			Location of Losses Reclassified from AOCI into Earnings (Effective Portion)	2017			2016					Location of Gain Recognized in Earnings (Ineffective Portion)	2017			2016				2017			2016				Location of Losses Reclassified from AOCI into Earnings (Effective Portion)	2017			2016					Location of Gain Recognized in Earnings (Ineffective Portion)	2017			2016
Interest rate contracts	$	—	$	434			Interest Expense	$	—		$	(443	)			Interest Expense	$	—		$	—			$	—		$	434			Interest Expense	$	—		$	(443	)			Interest Expense	$	—		$	—

Note 7 – Comprehensive Income

Accumulated Other Comprehensive Income (Loss) of the Company

Comprehensive income (loss) of the Company includes all changes in redeemable noncontrolling interests and total equity during the period, except those resulting from investments by shareholders and partners, distributions to shareholders and partners and redemption valuation adjustments. OCI/L includes changes in unrealized gains (losses) on interest rate hedge agreements.

The Company did not have any changes in AOCI/L for the three months or six months ended ~~March 31,~~June 30, 2017. ~~The~~There were also no changes in ~~the components of~~ AOCI/L for the three months ended ~~March 31,~~June 30, 2016.

The changes in the components of AOCI for the six months ended June 30, 2016 ~~are~~were as follows:


	Redeemable Noncontrolling Interests			The Company			Noncontrolling Interests						Redeemable Noncontrolling Interests			The Company			Noncontrolling Interests
	Unrealized Gains (Losses) - Hedging Agreements									Total			Unrealized Gains (Losses) - Hedging Agreements									Total
Beginning balance, January 1, 2016	$	433		$	1,935		$	(2,802	)	$	(434	)	$	433		$	1,935		$	(2,802	)	$	(434	)
OCI before reclassifications	3			814			60			877			3			814			60			877
Amounts reclassified from AOCI ⁽¹⁾	(436		)	(2,749		)	2,742			(443		)	(436		)	(2,749		)	2,742			(443		)
Net current quarterly period OCI/L	(433		)	(1,935		)	2,802			434
Ending balance, March 31, 2016	$	—		$	—		$	—		$	—
Net current year-to-date period OCI													(433		)	(1,935		)	2,802			434
Ending balance, June 30, 2016													$	—		$	—		$	—		$	—


(1)	Reclassified $443 of interest on cash flow hedges to Interest Expense in the condensed consolidated statement of operations. The cash flow hedges matured April 1, 2016.

Accumulated Other Comprehensive Income (Loss) of the Operating Partnership

Comprehensive income (loss) of the Operating Partnership includes all changes in redeemable common units and partners' capital during the period, except those resulting from investments by unitholders, distributions to unitholders and redemption valuation adjustments. OCI/L includes changes in unrealized gains (losses) on interest rate hedge agreements.

The Operating Partnership did not have any changes in AOCI/L for the three months or six months ended ~~March 31,~~June 30, 2017. There were also no changes in AOCI/L for the three months ended June 30, 2016.

The changes in the components of AOCI/L for the ~~three~~six months ended ~~March 31,~~June 30, 2016 ~~are~~were as follows:


	Redeemable Common Units			Partners' Capital						Redeemable Common Units			Partners' Capital
	Unrealized Gains (Losses) - Hedging Agreements						Total			Unrealized Gains (Losses) - Hedging Agreements						Total
Beginning balance, January 1, 2016	$	434		$	(868	)	$	(434	)	$	434		$	(868	)	$	(434	)
OCI before reclassifications	3			874			877			3			874			877
Amounts reclassified from AOCI ⁽¹⁾	(437		)	(6		)	(443		)	(437		)	(6		)	(443		)
Net current quarterly period OCI/L	(434		)	868			434			(434		)	868			434
Ending balance, March 31, 2016	$	—		$	—		$	—
Ending balance, June 30, 2016										$	—		$	—		$	—


(1)	Reclassified $443 of interest on cash flow hedges to Interest Expense in the condensed consolidated statement of operations. The cash flow hedges matured April 1, 2016.

Note 8 – Mortgage and Other Notes Receivable

Each of the Company’s mortgage notes receivable is collateralized by either a first mortgage, a second mortgage, or by an assignment of 100% of the partnership interests that own the real estate assets. Other notes receivable include amounts due from tenants or government-sponsored districts and unsecured notes received from third parties as whole or partial consideration for property or investments. The Company believes that its mortgage and other notes receivable balance is collectable as of ~~March 31,~~June 30, 2017.

Mortgage and other notes receivable consist of the following:


		As of March 31, 2017			As of December 31, 2016				As of June 30, 2017			As of December 31, 2016
	Maturity Date	Interest Rate	Balance		Interest Rate	Balance		Maturity Date	Interest Rate	Balance		Interest Rate	Balance
Mortgages:
Columbia Place Outparcel	Feb 2022	5.00%	$	317	5.00%	$	321	Feb 2022	5.00%	$	312	5.00%	$	321
The Landing at Arbor Place Outparcel ⁽¹⁾								Aug 2017	3.00%	1,802		—%	—
One Park Place	May 2022	5.00%	1,128		5.00%	1,194		May 2022	5.00%	1,095		5.00%	1,194
Village Square	Mar 2018	3.75%	1,633		3.75%	1,644		Mar 2018	3.75%	1,620		3.75%	1,644
Other ⁽¹⁾	Dec 2016 - Jan 2047	6.00% - 9.50%	2,521		3.27% - 9.50%	2,521
Other ⁽²⁾								Dec 2016 - Jan 2047	6.25% - 9.50%	2,510		3.27% - 9.50%	2,521
			5,599			5,680				7,339			5,680
Other Notes Receivable:
ERMC	Sep 2021	4.00%	3,341		4.00%	3,500		Sep 2021	4.00%	3,181		4.00%	3,500
Horizon Group ⁽²⁾	Jul 2017	7.00%	300		7.00%	300
Horizon Group ⁽³⁾								Jul 2017	7.00%	—		7.00%	300
RED Development Inc.	Oct 2023	5.00%	6,388		5.00%	6,588		Oct 2023	5.00%	6,185		5.00%	6,588
Southwest Theaters	Apr 2026	5.00%	719		5.00%	735		Apr 2026	5.00%	709		5.00%	735
			10,748			11,123				10,075			11,123

			$	16,347		$	16,803			$	17,414		$	16,803


(1)	In June 2017, the Company received a mortgage note receivable as partial consideration for the sale of an outparcel at an associated center.


(2)	The $1,100 note for The Promenade at D'Ilberville with a maturity date of December 2016 is in default.


~~(2)~~(3)	In January 2017, the maturity date was extended to July 2017. The loan was paid off in May 2017.

Note 9 – Segment Information

The Company measures performance and allocates resources according to property type, which is determined based on certain criteria such as type of tenants, capital requirements, economic risks, leasing terms, and short and long-term returns on capital. Rental income and tenant reimbursements from tenant leases provide the majority of revenues from all segments. Information on the Company’s reportable segments is presented as follows:


Three Months Ended March 31, 2017	Malls			Associated Centers			Community Centers			All Other ⁽¹⁾			Total
Three Months Ended June 30, 2017																Malls			Associated Centers			Community Centers			All Other ⁽¹⁾			Total
Revenues	$	221,931		$	9,716		$	4,564		$	1,802		$	238,013		$	213,793		$	9,760		$	4,509		$	1,171		$	229,233
Property operating expenses ⁽²⁾	(66,530		)	(1,914		)	(725		)	(1,180		)	(70,349		)	(56,794		)	(2,166		)	(826		)	(658		)	(60,444		)
Interest expense	(33,245		)	(642		)	(76		)	(22,238		)	(56,201		)	(31,314		)	(584		)	(82		)	(23,085		)	(55,065		)
Other expense																—			—			—			(5,019		)	(5,019		)
Gain on sales of real estate assets	—			—			—			5,988			5,988			77,428			—			—			2,105			79,533
Segment profit (loss)	$	122,156		$	7,160		$	3,763		$	(15,628	)	117,451			$	203,113		$	7,010		$	3,601		$	(25,486	)	188,238
Depreciation and amortization expense													(71,220		)													(82,509		)
General and administrative expense													(16,082		)													(15,752		)
Interest and other income													1,404															31
Gain on extinguishment of debt													4,055															20,420
Loss on impairment													(3,263		)													(43,203		)
Loss on investment																												(5,843		)
Income tax benefit													800															2,920
Equity in earnings of unconsolidated affiliates													5,373															6,325
Net income													$	38,518														$	70,627
Capital expenditures⁽³⁾	$	40,696		$	567		$	465		$	2,128		$	43,856		$	38,348		$	517		$	240		$	636		$	39,741

Three Months Ended March 31, 2016 Malls
Associated
Centers

Community
Centers

All Other⁽¹⁾
Total
Revenues $ 238,742
$ 10,242
$ 5,482
$ 8,612
$ 263,078
Property operating expenses ⁽²⁾
(75,377 ) (2,572 ) (1,143 ) 2,888
(76,204 )
Interest expense (34,395 ) (1,702 ) (298 ) (18,836 ) (55,231 )
Other expense —
—
—
(9,685 ) (9,685 )
Segment profit (loss) $ 128,970
$ 5,968
$ 4,041
$ (17,021 ) 121,958
Depreciation and amortization expense

(76,506 )
General and administrative expense

(17,168 )
Interest and other income

360
Gain on extinguishment of debt 6
Loss on impairment (19,685 )
Income tax benefit

537
Equity in earnings of unconsolidated affiliates 32,390
Net income

$ 41,892
Capital expenditures⁽³⁾
$ 48,551
$ 1,426
$ 428
$ 741
$ 51,146

Total Assets Malls
Associated
Centers

Community
Centers

All Other ⁽¹⁾
Total
March 31, 2017 $ 5,376,810
$ 249,857
$ 239,745
$ 259,737
$ 6,126,149

December 31, 2016 $ 5,383,937
$ 259,966
$ 215,917
$ 244,820
$ 6,104,640



Three Months Ended June 30, 2016	Malls			Associated Centers			Community Centers			All Other⁽¹⁾			Total
Revenues	$	232,746		$	9,857		$	4,488		$	7,874		$	254,965
Property operating expenses ⁽²⁾	(65,409		)	(2,127		)	(1,260		)	3,112			(65,684		)
Interest expense	(35,486		)	(1,431		)	(66		)	(16,204		)	(53,187		)
Other expense	—			—			—			(5,052		)	(5,052		)
Gain on sales of real estate assets	140			478			3,281			5,678			9,577
Segment profit (loss)	$	131,991		$	6,777		$	6,443		$	(4,592	)	140,619
Depreciation and amortization expense													(72,205		)
General and administrative expense													(16,475		)
Interest and other income													251
Loss on impairment													(43,493		)
Income tax benefit													51
Equity in earnings of unconsolidated affiliates													64,349
Net income													$	73,097
Capital expenditures⁽³⁾	$	12,770		$	1,671		$	540		$	16,393		$	31,374



Six Months Ended June 30, 2017	Malls			Associated Centers			Community Centers			All Other⁽¹⁾			Total
Revenues	$	435,724		$	19,476		$	9,073		$	2,973		$	467,246
Property operating expenses ⁽²⁾	(123,324		)	(4,080		)	(1,551		)	(1,838		)	(130,793		)
Interest expense	(64,559		)	(1,226		)	(158		)	(45,323		)	(111,266		)
Other expense	—			—			—			(5,019		)	(5,019		)
Gain on sales of real estate assets	77,428			—			—			8,093			85,521
Segment profit (loss)	$	325,269		$	14,170		$	7,364		$	(41,114	)	305,689
Depreciation and amortization expense													(153,729		)
General and administrative expense													(31,834		)
Interest and other income													1,435
Gain on extinguishment of debt													24,475
Loss on impairment													(46,466		)
Loss on investment													(5,843		)
Income tax benefit													3,720
Equity in earnings of unconsolidated affiliates													11,698
Net income													$	109,145
Capital expenditures⁽³⁾	$	79,044		$	1,084		$	705		$	2,764		$	83,597



Six Months Ended June 30, 2016	Malls			Associated Centers			Community Centers			All Other⁽¹⁾			Total
Revenues	$	471,488		$	20,099		$	9,970		$	16,486		$	518,043
Property operating expenses ⁽²⁾	(140,786		)	(4,699		)	(2,403		)	6,000			(141,888		)
Interest expense	(69,881		)	(3,133		)	(364		)	(35,040		)	(108,418		)
Other expense	—			—			—			(14,737		)	(14,737		)
Gain on sales of real estate assets	140			478			3,281			5,678			9,577
Segment profit (loss)	$	260,961		$	12,745		$	10,484		$	(21,613	)	262,577
Depreciation and amortization expense													(148,711		)
General and administrative expense													(33,643		)
Interest and other income													611
Gain on extinguishment of debt													6
Loss on impairment													(63,178		)
Income tax benefit													588
Equity in earnings of unconsolidated affiliates													96,739
Net income													$	114,989
Capital expenditures⁽³⁾	$	61,321		$	3,097		$	968		$	17,134		$	82,520



Total Assets	Malls		Associated Centers		Community Centers		All Other ⁽¹⁾		Total
June 30, 2017	$	5,225,213	$	259,600	$	210,315	$	113,205	$	5,808,333

December 31, 2016	$	5,383,937	$	259,966	$	215,917	$	244,820	$	6,104,640


(1)	The All Other category includes mortgage and other notes receivable, office buildings, the Management Company and, prior to the redemption of the Company's redeemable noncontrolling interests during the fourth quarter of 2016, the Company’s former consolidated subsidiary that provided security and maintenance services to third parties.


(2)	Property operating expenses include property operating, real estate taxes and maintenance and repairs.


(3)	Amounts include acquisitions of real estate assets and investments in unconsolidated affiliates. Developments in progress are included in the All Other category.

Note 10 – Equity and Capital

At-The-Market Equity Program

On March 1, 2013, the Company entered into separate controlled equity offering sales agreements (collectively, the "Sales Agreements") with a number of sales agents to sell shares of CBL's common stock, having an aggregate offering price of up to $300,000, from time to time in "at-the-market" equity offerings (as defined in Rule 415 of the Securities Act of 1933, as amended) or in negotiated transactions (the "ATM program"). In accordance with the Sales Agreements, the Company sets the parameters for the sales of shares, including the number of shares to be issued, the time period during which sales are to be made and any minimum price below which sales may not be made. The Sales Agreements provide that the sales agents are entitled to compensation for their services at a mutually agreed commission rate not to exceed 2.0% of the gross proceeds from the sales of shares sold through the ATM program. For each share of common stock issued by CBL, the Operating Partnership issues a corresponding number of common units of limited partnership interest to CBL in exchange for the contribution of the proceeds from the stock issuance. The Company includes only share issuances that have settled in the calculation of shares outstanding at the end of each period.

The Company has not sold any shares under the ATM program since 2013. Since the commencement of the ATM program, CBL has issued 8,419,298 shares of common stock, at a weighted-average sales price of $25.12 per share, and approximately $88,507 remains available that may be sold under this program as of ~~March 31,~~June 30, 2017. Actual future sales under this program, if any, will depend on a variety of factors including but not limited to market conditions, the trading price of CBL's common stock and the Company's capital needs. The Company has no obligation to sell the remaining shares available under the ATM program.

Note 11 – Earnings per Share and Earnings per Unit

Earnings per Share of the Company

Basic earnings per share (“EPS”) is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS assumes the issuance of common stock for all potential dilutive common shares outstanding. The limited partners’ rights to convert their noncontrolling interests in the Operating Partnership into shares of common stock are not dilutive.

There were no potential dilutive common shares and there were no anti-dilutive shares for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016.

Earnings per Unit of the Operating Partnership

Basic earnings per unit (“EPU”) is computed by dividing net income attributable to common unitholders by the weighted-average number of common units outstanding for the period. Diluted EPU assumes the issuance of common units for all potential dilutive common units outstanding.

There were no potential dilutive common units and there were no anti-dilutive units for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016.

Note 12 – Contingencies

Litigation

The Company is currently involved in certain litigation that arises in the ordinary course of business, most of which is expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company.

Environmental Contingencies

The Company evaluates potential loss contingencies related to environmental matters using the same criteria described above related to litigation matters. Based on current information, an unfavorable outcome concerning such environmental matters, both individually and in the aggregate, is considered to be reasonably possible. However, the Company believes its maximum potential exposure to loss would not be material to its results of operations or financial condition. The Company has a master

insurance policy that provides coverage through 2022 for certain environmental claims up to $10,000 per occurrence and up to $50,000 in the aggregate, subject to deductibles and certain exclusions. At certain locations, individual policies are in place.

Guarantees

The Operating Partnership may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on the Operating Partnership’s investment in the joint venture. The Operating Partnership may receive a fee from the joint venture for providing the guaranty. Additionally, when the Operating Partnership issues a guaranty, the terms of the joint venture agreement typically provide that the Operating Partnership may receive indemnification from the joint venture partner or have the ability to increase its ownership interest. The guarantees expire upon repayment of the debt, unless noted otherwise.

The following table represents the Operating Partnership's guarantees of unconsolidated affiliates' debt as reflected in the accompanying condensed consolidated balance sheets as of ~~March 31,~~June 30, 2017 and December 31, 2016:


	As of March 31, 2017									Obligation recorded to reflect guaranty				As of June 30, 2017									Obligation recorded to reflect guaranty
Unconsolidated Affiliate	Company's Ownership Interest	Outstanding Balance		Percentage Guaranteed by the Operating Partnership		Maximum Guaranteed Amount		Debt Maturity Date ⁽¹⁾		3/31/2017		12/31/2016		Company's Ownership Interest	Outstanding Balance		Percentage Guaranteed by the Operating Partnership		Maximum Guaranteed Amount		Debt Maturity Date ⁽¹⁾		6/30/2017		12/31/2016
West Melbourne I, LLC - Phase I ⁽²⁾	50%	$	42,697	20%		$	8,539	Feb-2018	⁽³⁾	$	86	$	86	50%	$	42,547	20%		$	8,509	Feb-2018	⁽³⁾	$	86	$	86
West Melbourne I, LLC - Phase II ⁽²⁾	50%	16,497		20%		3,299		Feb-2018	⁽³⁾	33		33		50%	16,437		20%		3,287		Feb-2018	⁽³⁾	33		33
Port Orange I, LLC	50%	57,718		20%		11,544		Feb-2018	⁽³⁾	116		116		50%	57,508		20%		11,502		Feb-2018	⁽³⁾	116		116
Ambassador Infrastructure, LLC	65%	11,035		100%	⁽⁴⁾	11,035		Dec-2017	⁽⁵⁾	177		177		65%	11,035		100%	⁽⁴⁾	11,035		Dec-2017	⁽⁵⁾	177		177
				Total guaranty liability						$	412	$	412				Total guaranty liability						$	412	$	412


(1)	Excludes any extension options.


(2)	The loan is secured by Hammock Landing - Phase I and Hammock Landing - Phase II, respectively.


(3)	The loan has a one-year extension option, which is at the unconsolidated affiliate's election, for an outside maturity date of February 2019.


(4)	The guaranty will be reduced to 50% on March ~~1st~~1 of such year as payment-in-lieu of taxes ("PILOT") payments received and attributed to the prior calendar year by Ambassador Infrastructure and delivered to the lender are $1,200 or more, provided no event of default exists. The guaranty will be reduced to 20% when the PILOT payments are $1,400 or more, provided no event of default exists.


(5)	The loan has two one-year extension options, which are at the unconsolidated affiliate's election, for an outside maturity date of December 2019.

The Company has guaranteed the lease performance of York Town Center, LP ("YTC"), an unconsolidated affiliate in which the Company owns a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. The Company has guaranteed YTC’s performance under this agreement up to a maximum of $22,000, which decreases by $800 annually until the guaranteed amount is reduced to $10,000. The guaranty expires on December 31, 2020. The maximum guaranteed obligation was $14,000 as of ~~March 31,~~June 30, 2017. The Company entered into an agreement with its joint venture partner under which the joint venture partner has agreed to reimburse the Company 50% of any amounts it is obligated to fund under the guaranty. The Company did not include an obligation for this guaranty because it determined that the fair value of the guaranty was not material as of ~~March 31,~~June 30, 2017 and December 31, 2016.

Performance Bonds

The Company has issued various bonds that it would have to satisfy in the event of non-performance. The total amount outstanding on these bonds was ~~$16,828~~$17,141 and $21,446 at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.

Note 13 – Share-Based Compensation

As of ~~March 31,~~June 30, 2017, there ~~were two~~was one share-based compensation ~~plans~~plan under which the Company has outstanding awards, the CBL & Associates Properties, Inc. 2012 Stock Incentive Plan ("the 2012 Plan") ~~and the CBL & Associates Properties, Inc. Second Amended and Restated Stock Incentive Plan ("the 1993 Plan"). The Company can only make new awards under the 2012 Plan,~~, which was approved by the Company's shareholders in May 2012. The 2012 Plan permits the Company to issue stock options and common stock to selected officers, employees and non-employee directors of the Company up to a total of 10,400,000

shares. The Company did not issue any new awards under the 1993 Plan, which was approved by the Company's shareholders in May 2003, between the adoption of the 2012 Plan to replace the 1993 Plan in May 2012 and the termination of the 1993 Plan (as to new awards) on May 5, 2013. As the primary operating subsidiary

of the Company, the Operating Partnership participates in and bears the compensation expense associated with the Company's share-based compensation plans.

The Company adopted ASU 2016-09 effective January 1, 2017 as described in Note 2. In accordance with the provisions of ASU 2016-09, which are designed to simplify the accounting for share-based payments transactions, the Company elected to account for forfeitures of share-based payments as they occur rather than continuing to estimate them in advance. The Company elected not to record a cumulative effect adjustment as the impact of estimated forfeitures on the Company's cumulative share-based compensation expense recorded through December 31, 2016 was nominal.

Restricted Stock Awards

The Company may make restricted stock awards to independent directors, officers and its employees under the 2012 Plan. These awards are generally granted based on the performance of the Company and its employees. None of these awards have performance requirements other than a service condition of continued employment, unless otherwise provided. Compensation expense is recognized on a straight-line basis over the requisite service period.

Share-based compensation expense related to the restricted stock awards was ~~$1,430~~$933 and ~~$1,544~~$707 for the three months ended ~~March 31,~~June 30, 2017 and 2016, respectively, and $2,363 and $1,948 for the six months ended June 30, 2017 and 2016, respectively. Share-based compensation cost capitalized as part of real estate assets was ~~$129~~$85 and ~~$114~~$77 for the three months ended ~~March 31,~~June 30, 2017 and 2016, respectively, and $214 and $191 for the six months ended June 30, 2017 and 2016, respectively.

A summary of the status of the Company’s nonvested restricted stock awards as of ~~March 31,~~June 30, 2017, and changes during the ~~three~~six months ended ~~March 31,~~June 30, 2017,, is presented below:


	Shares		Weighted Average Grant-Date Fair Value		Shares		Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2017	602,162		$	15.41	602,162		$	15.41
Granted	326,424		$	10.75	326,424		$	10.75
Vested	(228,634	)	$	14.83	(245,409	)	$	14.79
Forfeited	(2,110	)	$	13.96	(6,440	)	$	13.20
Nonvested at March 31, 2017	697,842		$	13.43
Nonvested at June 30, 2017					676,737		$	13.41

As of ~~March 31,~~June 30, 2017, there was ~~$8,755~~$7,652 of total unrecognized compensation cost related to nonvested stock awards granted under the plans, which is expected to be recognized over a weighted-average period of ~~3.1~~2.9 years.

Long-Term Incentive Program

In 2015, the Company adopted a long-term incentive program ("LTIP") for its named executive officers, which consists of performance stock unit ("PSU") awards and annual restricted stock awards, that may be issued under the 2012 Plan. The number of shares related to the PSU awards that each named executive officer may receive upon the conclusion of a three-year performance period is determined based on the Company's achievement of specified levels of long-term total stockholder return ("TSR") performance relative to the National Association of Real Estate Investment Trusts ("NAREIT") Retail Index, provided that at least a "Threshold" level must be attained for any shares to be earned.

Annual Restricted Stock Awards

Under the LTIP, annual restricted stock awards consist of shares of time-vested restricted stock awarded based on a qualitative evaluation of the performance of the Company and the named executive officer during the fiscal year. Annual restricted stock awards under the LTIP vest 20% on the date of grant with the remainder vesting in four equal annual installments.

Performance Stock Units

InThe Company granted the following PSUs in the first quarter of ~~2017,~~ the Company granted 277,376 PSUs at a grant-date weighted-average fair value of $6.86 per PSU. In the first quarter of 2016, the Company granted 282,995 PSUs at a grant-date fair value of $4.98 per PSU (the "2016 PSUs"). In the first quarter of 2015, the Company granted 138,680 PSUs at a grant-date fair value of $15.52 per PSU (the "2015 PSUs"). respective years as follows:



	PSUs granted	Weighted-Average Grant Date Fair Value
2015 PSUs	138,680	$	15.52
2016 PSUs	282,995	$	4.98
2017 PSUs	277,376	$	6.86

Shares earned pursuant to the PSU awards vest 60% at the conclusion of the performance period while the remaining 40% of the PSU award vests 20% on each of the first two anniversaries thereafter.

Compensation cost is recognized on a tranche-by-tranche basis using the accelerated attribution method. The resulting expense is recorded regardless of whether any PSU awards are earned as long as the required service period is met. Share-based compensation expense related to the PSUs was ~~$344~~$385 and $258 for the three months ended ~~March 31,~~June 30, 2017 and 2016, respectively. Share-based compensation expense related to the PSUs was $729 and $516 for the six months ended June 30, 2017 and 2016 respectively. Unrecognized compensation costs related to the PSUs was ~~$3,564~~$2,934 as of ~~March 31,~~June 30, 2017.

The following table summarizes the assumptions used in the Monte Carlo simulation pricing model related to the 2017 PSUs and the 2016 PSUs:



	2017 PSUs			2016 PSUs
Grant date	February 7, 2017			February 10, 2016
Fair value per share on valuation date ⁽¹⁾	$	6.86		$	4.98
Risk-free interest rate ⁽²⁾	1.53		%	0.92		%
Expected share price volatility⁽³⁾	32.85		%	30.95		%

(1)

The value of the PSU awards ~~are~~is estimated on the date of grant using a Monte Carlo Simulation model. The valuation consisted of computing the fair value using CBL's simulated stock price as well as TSR over a three-year performance period. The award is modeled as a contingent claim in that the expected return on the underlying shares is risk-free and the rate of discounting the payoff of the award is also risk-free. The weighted-average fair value per share related to the 2017 PSUs consists of 115,082 shares at a fair value of $5.62 per share and 162,294 shares at a fair value of $7.74 per share.


(2)	The risk-free interest rate was based on the yield curve on zero-coupon U.S. Treasury securities in effect as of the valuation date.


(3)	The computation of expected volatility was based on a blend of the historical volatility of CBL's shares of common stock based on annualized daily total continuous returns over a three-year period and implied volatility data based on the trailing month average of daily implied volatilities implied by stock call option contracts that were both closest to the terms shown and closest to the money.

Note 14 – Noncash Investing and Financing Activities

The Company’s noncash investing and financing activities were as ~~follows for the three months ended March 31, 2017 and~~ ~~2016~~:follows:


	Three Months Ended March 31,						Six Months Ended June 30,
	2017			2016			2017			2016
Accrued dividends and distributions payable	$	54,394		$	54,569		$	54,376		$	54,565
Additions to real estate assets accrued but not yet paid	14,513			5,326			15,842			12,571
Deconsolidation upon assignment of interests in joint venture: ⁽¹⁾
Note receivable from sale of outparcel ⁽¹⁾							1,802			—
Deconsolidation upon assignment of interests in joint venture: ⁽²⁾
Decrease in real estate assets	(9,131		)	—			(9,131		)	—
Decrease in mortgage and other indebtedness	2,466			—			2,466			—
Decrease in operating assets and liabilities	1,287			—			1,286			—
Decrease in noncontrolling interest and joint venture interest	2,231			—			2,232			—
Transfer of real estate assets in settlement of mortgage debt obligation: ⁽²⁾
Transfer of real estate assets in settlement of mortgage debt obligation: ⁽³⁾
Decrease in real estate assets	(28,218		)	—			(139,623		)	—
Decrease in mortgage and other indebtedness	31,953			—			171,953			—
Decrease in operating assets and liabilities	320			—			645			—
Deconsolidation upon formation of joint venture:
Decrease in real estate assets	—			(14,025		)
Increase in investment in unconsolidated affiliate	—			14,030
Decrease in accounts payable and accrued liabilities	—			(5		)


(1)	See Note 4 and Note 8 for more information.


(2)	See Note 3 and Note 6 for further details.


~~(2)~~(3)	See Note 4 and Note 6 for more information.

Note 15 – Income Taxes

The Company is qualified as a REIT under the provisions of the Internal Revenue Code. To maintain qualification as a REIT, the Company is required to distribute at least 90% of its taxable income to shareholders and meet certain other requirements.

As a REIT, the Company is generally not liable for federal corporate income taxes. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal and state income taxes on its taxable income at regular corporate tax rates and it may not be able to qualify as a REIT for four subsequent years. Even if the Company maintains its qualification as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and

excise taxes on its undistributed income. State tax expense was ~~$872~~$957 and ~~$1,027~~$997 during the three months ended ~~March 31,~~June 30, 2017 and 2016, respectively, and $1,829 and $2,025 during the six months ended June 30, 2017 and 2016, respectively.

The Company has also elected taxable REIT subsidiary status for some of its subsidiaries. This enables the Company to receive income and provide services that would otherwise be impermissible for REITs. For these entities, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if the Company believes all or some portion of the deferred tax asset may not be realized. An increase or decrease in the valuation allowance resulting from changes in circumstances that may affect the realizability of the related deferred tax asset is included in income or expense, as applicable.

The Company recorded an income tax benefit as follows for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016:

Three Months Ended
March 31,
2017 2016
Current tax benefit $ 2,408
$ 636
Deferred tax provision (1,608 ) (99 )
Income tax benefit $ 800
$ 537



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Current tax benefit (provision)	$	5,062		$	(368	)	$	7,470		$	268
Deferred tax benefit (provision)	(2,142		)	419			(3,750		)	320
Income tax benefit	$	2,920		$	51		$	3,720		$	588

The Company had a net deferred tax asset of ~~$6,641~~$8,889 and $5,841 at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively. The net deferred tax asset is included in intangible lease assets and other assets. These balances primarily consisted of operating expense accruals and differences between book and tax depreciation.

The Company reports any income tax penalties attributable to its properties as property operating expenses and any corporate-related income tax penalties as general and administrative expenses in its condensed consolidated statements of operations. In addition, any interest incurred on tax assessments is reported as interest expense. The Company reported nominal interest and penalty amounts for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016, respectively.

Note 16 – Subsequent Events

In ~~April~~July 2017, JG Gulf Coast Town Center, a 50/50 unconsolidated joint venture, retired a loan secured by phase three of Gulf Coast Town Center, which had a balance of $4,118 and was scheduled to mature in July 2017.

In July 2017, the Company ~~sold~~exercised its option to extend the maturity date of its $350,000 unsecured term loan to October 2018.

In July 2017, the Company closed on the modification and extension of its $400,000 unsecured term loan, with an increase in the principal balance to $490,000. The variable interest rate spread remains unchanged. In July 2018, the principal balance will be reduced to $300,000. Additionally, the debt covenant related to the maximum ratio of unsecured indebtedness to unencumbered asset value was modified to reduce the ratio from 62.5% to 60.0%. The definition of unencumbered asset value was also modified with respect to the assets that are included in ~~a consolidated joint venture,~~the unencumbered asset pool. The ~~Outlet Shoppes~~loan will mature in July 2020 and has two one-year extension options, the second of which is at ~~Oklahoma City, located in Oklahoma City, OK,~~the lenders' discretion, for a ~~gross sales price~~July 2022 extended maturity date.

For consistency, the changes to the debt covenant noted above were also made to the Company's two unsecured credit facilities that each have a total capacity of ~~$130,000. Concurrent~~$500,000 and to the Company's $350,000 unsecured term loan in July 2017. The ratio of unsecured indebtedness to unencumbered asset value may vary over time and could potentially limit the Company's ability to access the full capacity of its unsecured credit facilities. As of June 30, 2017, the Company's ability to utilize its total borrowing capacity would have been limited by $196,888 under the modified covenant compared to $33,539, under the existing covenant. The effect of this change to the debt covenant does not impact the Company's past compliance with this ratio.

In July 2017, the ~~sale,~~Company modified its $50,000 unsecured term loan to reduce the ~~loans secured by Phases 1 through III of the mall, which had an aggregate~~ principal balance to $45,000 and change the interest rate to a variable rate of ~~$61,779 as of March 31, 2017 were retired.~~LIBOR plus 165 basis points. The ~~Company expects to record~~loan will mature in June 2021 and has a ~~gain on sales of real estate assets,~~one-year extension option, at the Company's ~~share,~~election, for a June 2022 extended maturity date.

In August 2017, River Ridge Mall JV, LLC, a subsidiary of ~~approximately $50,138.~~the Company, entered into a binding contract to sell its 25% interest in River Ridge Mall, located in Lynchburg, VA, to its joint venture partner for $9,000 in cash. The Company ~~also expects to record~~recorded a $5,843 loss on ~~extinguishment of debt in the second quarter of 2017 of approximately~~ ~~$5,525, at the Company's share,~~investment related to the ~~costs associated with retiring~~pending disposition. The sale is expected to close in the ~~loans prior to their scheduled maturity dates.~~third quarter of 2017.

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and accompanying notes that are included in this Form 10-Q. Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the condensed consolidated financial statements. In this discussion, the terms “we,” “us” and “our” refer to the Company or the Company and the Operating Partnership collectively, as the text requires.

Certain statements made in this section or elsewhere in this report may be deemed “forward-looking statements” within the meaning of the federal securities laws. All statements other than statements of historical fact should be considered to be forward-looking statements. In many cases, these forward-looking statements may be identified by the use of words such as “will,” “may,” “should,” “could,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “projects,” “goals,” “objectives,” “targets,” “predicts,” “plans,” “seeks,” and variations of these words and similar expressions. Any forward-looking statement speaks only as of the date on which it is made and is qualified in its entirety by reference to the factors discussed throughout this report.

Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance or results and we can give no assurance that these expectations will be attained. It is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of known and unknown risks and uncertainties. In addition to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016, such known risks and uncertainties include, without limitation:

general industry, economic and business conditions;

interest rate fluctuations;

costs and availability of capital and capital requirements;

costs and availability of real estate;

inability to consummate acquisition opportunities and other risks associated with acquisitions;

competition from other companies and retail formats;

changes in retail demand and rental rates in our markets;

shifts in customer demands;

tenant bankruptcies or store closings;

changes in vacancy rates at our properties;

changes in operating expenses;

changes in applicable laws, rules and regulations;

sales of real property;

cyber-attacks or acts of cyber-terrorism;

changes in our credit ratings;

the ability to obtain suitable equity and/or debt financing and the continued availability of financing, in the amounts and on the terms necessary to support our future refinancing requirements and business; and

other risks referenced from time to time in filings with the SEC and those factors listed or incorporated by reference into this report

This list of risks and uncertainties is only a summary and is not intended to be exhaustive. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

EXECUTIVE OVERVIEW

We are a self-managed, self-administered, fully integrated REIT that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers and office properties. Our properties are located in 2726 states, but are primarily in the southeastern and midwestern United States. We have elected to be taxed as a REIT for federal income tax purposes.

We conduct substantially all of our business through the Operating Partnership. The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a VIE.

As of ~~March 31,~~June 30, 2017, we owned interests in the following properties:


	Malls⁽¹⁾	Associated Centers	Community Centers	Office Buildings		Total	Malls⁽¹⁾	Associated Centers	Community Centers	Office Buildings		Total
Consolidated properties	64	20	4	5	⁽²⁾	93	61	20	4	5	⁽²⁾	90
Unconsolidated properties ⁽³⁾	9	3	5	—		17	9	3	5	—		17
Total	73	23	9	5		110	70	23	9	5		107


(1)	Category consists of regional malls, open-air centers and outlet centers (including one mixed-use center).


(2)	Includes our two corporate office buildings.


(3)	We account for these investments using the equity method because one or more of the other partners have substantive participating rights.

At ~~March 31,~~June 30, 2017, we had interests in the following consolidated properties under development:


	Malls	Associated Centers	Malls	Associated Centers
Development	1	—
Expansions	2	—	2	—
Redevelopments	7	1	3	1

We also hold options to acquire certain development properties owned by third parties.

Net income for the three months ended June 30, 2017 was $70.6 million compared to $73.1 million in the prior-year period, representing a decrease of 3.4% for the quarter. Net income for the six months ended June 30, 2017 was $109.1 million compared to $115.0 million in the prior-year period, representing a decrease of 5.1% for the year-to-date period. We recorded net income attributable to common shareholders of ~~$22.9~~$30.2 million and $53.1 million for the ~~quarter~~three and six months ended ~~March 31,~~June 30, 2017 compared to ~~net income of $28.9~~$51.7 million and $80.5 million for the three and six months ended June 30, 2016. Net income for the quarter and year-to-date period, as compared to the prior-year period, was down primarily due to gains recognized in equity in earnings from the sale of several unconsolidated affiliates in 2016. Revenues were also down for the three and six months ended ~~March 31, 2016.~~June 30, 2017 as consumer spending lagged and the challenging retail environment continued. Net income and revenues were also impacted by the dilution from asset sales. Same-center NOI (see below) decreased 1.3% for the quarter and 1.0% for the ~~quarter~~six months ended June 30, 2017, primarily due to revenue declines ~~in percentage rents,~~driven by lower occupancy and tenant ~~reimbursements and other rents resulting from the challenging retail environment in the first quarter of 2017,~~sales, which were partially offset by ~~savings~~lower real estate taxes and maintenance and repairs expense.

Earnings per share attributable to common shareholders were $0.18 and $0.31 per share for the three and six months ended June 30, 2017, respectively, as compared to $0.30 and $0.47 per share for the same periods in ~~operating costs.~~2016. FFO ~~as adjusted,~~ per diluted share (see below) decreased to ~~$0.52 per share~~$0.58 and $1.12 for the ~~quarter~~three and six months ended June 30, 2017, respectively, as compared to ~~$0.56~~$0.73 and $1.41 for the three and six months ended June 30, 2016. FFO was negatively impacted by dilution from asset sales completed in the ~~prior-year period due to~~prior year and current year-to-date periods, abandoned projects expense and the revenue declines noted above, ~~and dilution from asset sales made in the prior year,~~ although an increase in average annual base rents and operating cost efficiencies helped partially offset some of these unfavorable variances.

~~While changing consumer preferences and on-line shopping has an impact~~Second quarter results were in-line with expectations given the adverse retail climate. We continue to focus on ~~our business, our ability~~leasing efforts to ~~adapt and reinvent the use of the properties in our portfolio is ongoing. We are redeveloping anchor stores to bring in-demand retailers and~~

~~restaurants~~deliver replacement income for vacated spaces from tenant store closings as well as ~~fresh new uses including fitness, entertainment~~diversify our tenant mix. The Outlet Shoppes at Laredo opened in April 2017. We also are progressing in our plans for anchor redevelopments related to the Sears and more. Through these redevelopments and our other leasing efforts, we are transitioning our properties into suburban town centers designed to appeal to evolving consumer preferences. The long-term results only serve to increaseMacy's stores that were acquired earlier in the ~~value of our shopping centers and correspondingly drive our metrics in a positive direction.~~

year. For leases signed in the ~~first~~second quarter of 2017, leasing spreads for comparable space under 10,000 square feet ~~in our total portfolio were 2.0% and 1.8% in~~declined approximately 0.9% on average for our stabilized malls, which included an increase of ~~17.9%~~8.1% in new lease spreads and a decrease of ~~3.4%~~3.5% in renewal lease spreads. For the trailing twelve months ended ~~March 31,~~June 30, 2017, stabilized mall same-center sales decreased ~~2.6%~~2.4% to ~~$372~~$373 per square foot as compared to $382 per square foot in the prior-year period. Occupancy for our total portfolio ~~increased 50~~declined 100 basis points to ~~92.1%~~91.6% as of ~~March 31,~~June 30, 2017 as compared to ~~91.6%~~92.6% in the prior-year period while occupancy for our same-center malls declined by ~~100~~140 basis points to ~~90.5%~~90.6% as of ~~March 31,~~June 30, 2017 as compared to ~~91.5%~~92.0% for the ~~quarter ended March 31, 2016.~~prior-year period. Average annual base rents per square foot for our same-center stabilized malls increased to ~~$32.61~~$33.00 compared to ~~$32.02~~$32.41 in the prior-year period.

We sold two ~~office buildings~~malls and one outlet center during the quarter for an aggregate gross sales price of $183.5 million and ~~closed~~recorded a gain on ~~the sale~~sales of ~~an outlet center subsequent to March 31, 2017. The foreclosure~~real estate assets of ~~Midland Mall was complete in January 2017 and we~~$77.4 million. We also recognized a ~~$4.1~~$29.2 million gain on extinguishment of debt upon the foreclosure of Chesterfield Mall in ~~connection with the transfer of the property to the lender~~June 2017 in settlement of the non-recourse debt ~~which~~that it secured. ~~Additionally,~~Subsequent to June 30, 2017, we ~~continued~~modified and extended two unsecured term loans and reached a preliminary agreement to ~~add~~modify and extend the loan secured by Acadiana Mall. We also exercised an option to extend our ~~pool~~$350.0 million unsecured term loan to October 2018. We continue to focus on strengthening our balance sheet to take advantage of ~~unencumbered properties by retiring four operating property loans~~opportunities for future growth as well as reinvest in ~~the first quarter of 2017.~~our current portfolio.

Same-center NOI and FFO are non-GAAP measures. For a description of same-center NOI, a reconciliation from net income to same-center NOI, and an explanation of why we believe this is a useful performance measure, see Non-GAAP Measure - Same-center Net Operating Income in “Results of Operations.” For a description of FFO, a reconciliation from net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders, and an explanation of why we believe this is a useful performance measure, see "Non-GAAP Measure - Funds from Operations."

RESULTS OF OPERATIONS

Properties that were in operation for the entire year during 2016 and the ~~three~~six months ended ~~March 31,~~June 30, 2017 are referred to as the “Comparable Properties.” Since January 1, 2016, we have opened one community center development and one outlet center development as follows:



Property	Location	Date Opened
New ~~Development:~~Developments:
Ambassador Town Center ⁽¹⁾	Lafayette, LA	April 2016
The Outlet Shoppes at Laredo⁽²⁾	Laredo, TX	April 2017


(1)	Ambassador Town Center is a 65/35 joint venture that is accounted for using the equity method of accounting and is included in equity in earnings of unconsolidated affiliates in the accompanying condensed consolidated statements of operations.


(2)	The Outlet Shoppes at Laredo is a 65/35 joint venture, which is included in the accompanying condensed consolidated statements of operations on a consolidated basis.

Of these properties, The Outlet Shoppes at Laredo is included in our operations on a consolidated basis and is referred to as the "New Property". The transactions related to the New Property impact the comparison of results of operations for the three and six months ended June 30, 2017 to the results of operations for the three and six months ended June 30, 2016.

Comparison of the Three Months Ended ~~March 31,~~June 30, 2017 to the Three Months Ended ~~March 31,~~June 30, 2016

Revenues

Total revenues decreased ~~$25.1~~$25.7 million for the three months ended ~~March 31,~~June 30, 2017 compared to the prior-year period. Rental revenues and tenant reimbursements declined by ~~$20.6~~$19.5 million due to decreases of ~~$14.0~~$13.3 million related to dispositions and ~~$6.6~~$8.4 million attributable to the Comparable ~~Properties.~~Properties, which was partially offset by an increase of $2.2 million attributable to the New Property. The ~~$6.6~~$8.4 million decrease in revenues at the Comparable Properties was primarily due to a decrease of ~~$5.3~~$7.4 million at our core properties and a ~~$1.3~~$1.0 million decrease related to non-core properties and those in redevelopment. The decline in revenues at our core properties ~~was directly impacted by~~continues due to the challenging retail environment, ~~in the first quarter of 2017,~~ including retailer bankruptcies, which manifested in a decrease in percentage rents due to lower retail sales, as well as lower tenant reimbursements and specialty leasing and branding ~~income. These decreases were partially offset by an increase~~income in ~~base rents primarily from contractual~~addition to straight-line rent ~~increases and positive leasing spreads achieved in past periods.~~write-offs.

Our cost recovery ratio for the quarter ended ~~March 31,~~June 30, 2017 was ~~95.7%~~103.0% compared with ~~96.3%~~106.7% for the prior-year ~~period primarily due to lower occupancy in the mall portfolio due to tenant closures.~~period.

The ~~increase~~decrease of ~~$0.9~~$1.5 million in management, development and leasing fees was primarily attributable to ~~increases~~decreases in management fees ~~from new contracts,~~as a result of the sale of three malls owned by third parties, which ~~began~~the Company had been managing, and two leasing agreements, which ended subsequent to June 30, 2016. Additionally, we received $0.7 million in the ~~second quarter of 2016, to manage six malls and one community center for third parties. Other increases were due to development~~prior-year period from financing fees related to the ~~construction of an outlet center~~loans secured by Ambassador Town Center and ~~corporate sponsorship income.~~Fremaux Town Center, which closed in June 2016.

Other revenues decreased ~~$5.3~~$4.7 million primarily due to the divestiture, in the fourth quarter of 2016, of our joint venture interest in the consolidated subsidiary that provided security and maintenance services to third parties.

Operating Expenses

Total operating expenses ~~decreased $38.3~~increased $4.0 million for the three months ended ~~March 31,~~June 30, 2017 compared to the prior-year ~~period. The decrease was~~period primarily due to a $10.3 million increase in depreciation and amortization expense, which was partially offset by a decrease of ~~$37.1~~$5.2 million ~~from dispositions. Property~~in property operating expenses, including real estate taxes and maintenance and ~~repairs, decreased $5.9 million primarily due to a $6.7~~repairs. The $5.2 million decrease was attributable to decreases of $6.2 million from dispositions, and $0.1 million related to the Comparable Properties, which was partially offset by an increase of ~~$1.0~~$1.1 million related to the Comparable Properties. The $1.0 million increase at the Comparable Properties was primarily driven by an increase in bad debt expense and an increase in real estate taxes from higher tax assessments. These increases were partially offset by lower snow removal costs and utilities expense in addition to a decrease in payroll and related costs.New Property.

The ~~decrease~~increase in depreciation and amortization expense of ~~$5.3~~$10.3 million primarily resulted from ~~decreases~~increases of ~~$4.0~~$14.3 million attributable to ~~dispositions and $1.3 million from~~ the Comparable ~~Properties.~~Properties and $1.1 million related to the New Property, which were partially offset by a decrease of $5.1 million related to dispositions. The ~~$1.3~~$14.3 million ~~decrease~~increase related to the Comparable Properties includes ~~decreases~~increases of ~~$0.3~~$13.9 million attributable to our core properties and ~~$1.0~~$0.4 million related to non-core properties. The $13.9 million increase includes $5.4 million of tenant improvement write-offs and $5.0 million of depreciation and amortization expense related to the acquired Sears and Macy's buildings. The remaining increase is primarily due to amortization of tenant improvements at several outlet centers.

General and administrative expenses decreased ~~$1.1~~$0.7 million primarily due to a decrease in consulting and legal fees and an increase in capitalized overhead related to development projects. These decreases were partially offset by ~~an increased~~increases in information technology expenses and in payroll and related expenses. ~~As a percentage of revenues, general and administrative expenses were 6.8% and 6.5% for the first quarters of 2017 and 2016, respectively.~~

In the ~~first~~second quarter of 2017, we recognized impairment of real estate of ~~$3.3~~$43.2 million to write down the book value of our interest in a joint venture that owned vacant land adjacent to one of our outlet centers upon the divestiture of our interest and one outparcel. In the first quarter of 2016, we recognized an impairment of real estate of $19.7 millionwhich was primarily to write down the book value of ~~three malls and an associated center.~~a mall. See Note 3 to the condensed consolidated financial statements for additional information. In the second quarter of 2016, we recognized an impairment of real estate of $43.5 million to write down the book value of three malls and two outparcels.

Other expenses decreased ~~$9.7~~less than $0.1 million due to a $5.0 million decrease from the divestiture of our interest, in the fourth quarter of 2016, in our consolidated subsidiary that provided security and maintenance services to third parties, which was partially offset by a $5.0 million increase in abandoned projects expense.

Other Income and Expenses

Interest and other income decreased $0.2 million for the three months ended June 30, 2017 compared to the prior-year period.

Interest expense increased $1.9 million for the three months ended June 30, 2017 compared to the prior-year period. The $1.9 million increase consists of increases of $6.3 million from the issuance of the 2026 Notes in the fourth quarter of 2016 and $0.6 million related to the New Property, which were partially offset by a $4.9 million decrease in interest expense related to property-level debt that was retired and a decrease of $0.4 million related to dispositions.

During the three months ended June 30, 2017, we recorded a $20.4 million gain on extinguishment of debt which primarily consisted of a $29.2 million gain, related to the conveyance of a mall to the lender in satisfaction of the non-recourse debt secured by the property, which was partially offset by an $8.5 million loss related to prepayment fees for the early retirement of debt. See Note 4 and Note 6 to the condensed consolidated financial statements for more information.

During the three months ended June 30, 2017, we recognized a $5.8 million loss on investment related to the impending disposition of our 25% interest in an unconsolidated joint venture, which is expected to close in the third quarter of 2017. See Note 16 to the condensed consolidated financial statements for additional information.

Equity in earnings of unconsolidated affiliates decreased by $58.0 million during the second quarter of 2017 compared to the prior-year period. The decrease is due to a $29.4 million gain related to the sale of an unconsolidated affiliate in the second quarter of 2016 as well as a gain of $29.2 million recognized in the second quarter of 2016 related to the foreclosure of Gulf Coast Town Center (owned in a 50/50 joint venture).

The income tax benefit of $2.9 million for the three months ended June 30, 2017 relates to the Management Company, which is a taxable REIT subsidiary, and consists of a current tax benefit of less than $5.1 million and a deferred tax provision of $2.1 million. During the three months ended June 30, 2016, we recorded an income tax benefit of $0.1 million, consisting of a current tax provision of less than $0.4 million and a deferred tax benefit of $0.4 million.

In the second quarter of 2017, we recognized a $79.5 million gain on sales of real estate assets, primarily related to the sale of two malls, an outlet center and one outparcel. We recognized a $9.6 million gain on sales of real estate assets in the second quarter of 2016, which consisted primarily of $7.3 million related to the sale of a community center, an associated center and two outparcels and $2.2 million related to a parking deck project.

Comparison of the Six Months Ended June 30, 2017 to the Six Months Ended June 30, 2016

Revenues

Total revenues decreased $50.8 million for the six months ended June 30, 2017 compared to the prior-year period. Rental revenues and tenant reimbursements declined by $40.2 million due to decreases of $28.7 million related to dispositions and $13.8 million attributable to the Comparable Properties, which were partially offset by an increase of $2.3 million attributable to the New Property. The $13.8 million decrease in revenues at the Comparable Properties was primarily due to a decrease of $12.1 million at our core properties and a $1.7 million decrease related to non-core properties and those in redevelopment. Revenues were down throughout the portfolio due to lower sales and retailer bankruptcies, which drove decreases in rental revenues and tenant reimbursements.

Our cost recovery ratio for the six months ended June 30, 2017 was 99.0% compared with 101.1% for the prior-year period.

The decrease of $0.6 million in management, development and leasing fees was primarily attributable to $0.7 million received in the prior-year period from financing fees related to the loans secured by Ambassador Town Center and Fremaux Town Center, which closed in June 2016.

Other revenues decreased $10.0 million primarily due to the divestiture, in the fourth quarter of 2016, of our joint venture interest in the consolidated subsidiary that provided security and maintenance services to third parties.

Operating Expenses

Total operating expenses decreased $34.3 million for the six months ended June 30, 2017 compared to the prior-year period. The decrease was primarily due to a decrease of $72.9 million from dispositions, which was partially offset by increases of $36.4 million and $2.2 million attributable to the Comparable Properties and New Property, respectively. Property operating expenses, including real estate taxes and maintenance and repairs, decreased $11.1 million primarily due to a $13.5 million decrease attributable to dispositions, which was partially offset by increases of $1.3 million related to the Comparable Properties and $1.1 million attributable to the New Property. The $1.3 million increase at the Comparable Properties was primarily driven by increases in bad debt expense and maintenance costs, which were partially offset by a decrease in real estate taxes.

The increase in depreciation and amortization expense of $5.0 million primarily resulted from increases of $14.4 million attributable to the Comparable Properties and $1.1 million from the New Property, which were partially offset by a decrease of $10.5 million related to dispositions. The $14.4 million increase related to the Comparable Properties includes increases of $14.2 million attributable to our core properties and $0.2 million related to non-core properties. The $14.2 million increase includes $6.8 million of tenant improvement write-offs and $5.7 million of depreciation and amortization expense related to the acquired Sears and Macy's buildings. The remaining increase is primarily due to amortization of tenant improvements at several outlet centers.

General and administrative expenses decreased $1.8 million primarily due to a decrease in consulting and legal fees and an increase in capitalized overhead related to development projects. These decreases were partially offset by an increase in payroll and related expenses.

In the six months ended June 30, 2017, we recognized impairment of real estate of $46.5 million primarily to write down the book value of one mall, a parcel project near an outlet center and one outparcel. See Note 3 to the condensed consolidated financial statements for additional information. In the six months ended June 30, 2016, we recognized an impairment of real estate of $63.2 million to write down the book value of six malls, an associated center and three outparcels.

Other expenses decreased $9.7 million due to a $14.7 million decrease from the divestiture of our interest, in the fourth quarter of 2016, in our consolidated subsidiary that provided security and maintenance services to third parties, which was partially offset by a $5.0 million increase in abandoned projects expense.

Other Income and Expenses

Interest and other income increased ~~$1.0~~$0.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2017 compared to the prior-year period primarily due to $0.9 million received in the current year as an insurance reimbursement for nonrecurring professional fees expense (which represent one-time expenses that are not part of our normal operations) related to the SEC investigation that occurred in 2016.

Interest expense increased ~~$1.0~~$2.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2017 compared to the prior-year period. The ~~$1.0~~$2.8 million increase consists of an increase of $1.7 million attributable to the Comparable Properties, which was partially offset by a decrease of $0.7 million related to dispositions. The $1.7 million increase related to the Comparable Properties primarily consists of increases of ~~$6.1~~$12.4 million ~~in interest expense~~ from the issuance of the 2026 Notes in the fourth quarter of 2016 and ~~$1.2~~$0.7 million ~~in accrued default interest~~ related to ~~two malls that are in foreclosure proceedings,~~the New Property, which were partially offset by a ~~$5.4~~decrease of $1.4 million ~~decrease in interest expense~~ related to ~~our~~dispositions and $8.7 million related to property-level debt that was retired.

During the ~~three~~six months ended ~~March 31,~~June 30, 2017, we recorded a ~~$4.1~~$24.5 million gain on extinguishment of debt which primarily consisted of a $33.0 million gain related to the conveyance of ~~a mall~~two malls to the ~~lender~~respective lenders in satisfaction of the non-recourse

debt secured by the ~~property.~~properties. This was partially offset by an $8.5 million loss related to prepayment fees for the early retirement of debt. See Note 4 and Note 6 to the condensed consolidated financial statements for more information.

During the six months ended June 30, 2017, we recognized a $5.8 million loss on investment related to the impending disposition of our 25% interest in an unconsolidated joint venture, which is expected to close in the third quarter of 2017. See Note 16 to the condensed consolidated financial statements for additional information.

Equity in earnings of unconsolidated affiliates decreased by $85.0 million during the six months ended June 30, 2017 compared to the prior-year period. The decrease is primarily due to a gain of $29.2 related to the foreclosure of Gulf Coast Town Center (owned in a 50/50 joint venture) million and $55.8 million from the sale of two unconsolidated affiliates in 2016.

The income tax benefit of ~~$0.8~~$3.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2017 relates to the Management Company, which is a taxable REIT subsidiary, and consists of a current tax benefit of ~~$2.4~~less than $7.5 million and a deferred tax provision of ~~$1.6~~$3.7 million. During the ~~three~~six months ended ~~March 31,~~June 30, 2016, we recorded an income tax benefit of ~~$0.5~~$0.6 million, consisting of a current and deferred tax benefit of ~~$0.6~~$0.3 million and ~~a deferred tax provision of $0.1 million.~~$0.3 million, respectively.

~~Equity in earnings of unconsolidated affiliates decreased by $27.0 million during~~During the ~~first quarter of 2017 compared to the prior-year period. The decrease is primarily due to a gain of $26.4 million from the sale of an unconsolidated affiliate in the first quarter of 2016.~~

~~In the first quarter of~~six months ended June 30, 2017, we recognized ~~a $6.0~~an $85.5 million gain on sales of real estate assets, primarily related to the sale of ~~five~~two malls, an outlet center and six outparcels. We recognized a $9.6 million gain on sales of real estate assets during the six months ended June 30, 2016, which consisted primarily of $7.3 million related to the sale of a community center, an associated center and two outparcels and $2.2 million related to a parking deck project.

Non-GAAP Measure

Same-center Net Operating Income

NOI is a supplemental non-GAAP measure of the operating performance of our shopping centers and other properties. We define NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).

We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated properties. We believe that presenting NOI and same-center NOI (described below) based on our Operating Partnership’s pro rata share of both consolidated and unconsolidated properties is useful since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in the Operating Partnership. Our definition of NOI may be different than that used by other companies, and accordingly, our calculation of NOI may not be comparable to that of other companies.

Since NOI includes only those revenues and expenses related to the operations of our shopping center properties, we believe that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on our results of operations. Our calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, and amortization of above and below market lease intangibles in order to enhance the comparability of results from one period to another.

We include a property in our same-center pool when we have owned all or a portion of the property since January 1 of the preceding calendar year and it has been in operation for both the entire preceding calendar year and current year-to-date period. New Properties are excluded from same-center NOI, until they meet this criteria. Properties excluded from the same-center pool that would otherwise meet this criteria are properties which are being repositioned or properties where we are considering alternatives for repositioning, where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender and those in which we own a noncontrolling interest of 25% or less. ~~Lender properties consisted of Chesterfield Mall and~~ Wausau Center was classified as a Lender Mall as of ~~March 31,~~June 30, 2017. Properties that we are currently repositioning are Cary Towne Center and Hickory Point Mall at ~~March 31,~~June 30, 2017. Properties in which we own a noncontrolling interest at ~~March 31,~~June 30, 2017 include Triangle Town Center and River Ridge Mall.

Due to the exclusions noted above, same-center NOI should only be used as a supplemental measure of our performance and not as an alternative to GAAP operating income (loss) or net income (loss). A reconciliation of our same-center NOI to net income for the three and six month periods ended ~~March 31,~~June 30, 2017 and 2016 is as follows (in thousands):


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2017			2016
Net income	$	38,518		$	41,892		$	70,627		$	73,097		$	109,145		$	114,989
Adjustments: ⁽¹⁾
Depreciation and amortization	78,784			83,291			89,224			79,306			168,008			162,597
Interest expense	60,656			60,137			59,605			58,602			120,261			118,739
Abandoned projects expense	—			1			5,019			32			5,019			33
Gain on sales of real estate assets	(5,953		)	(26,395		)	(52,891		)	(68,504		)	(58,844		)	(94,899		)
Loss on investment							5,843			—			5,843			—
Gain on extinguishment of debt	(4,055		)	(6		)	(23,395		)	—			(27,450		)	(6		)
Loss on impairment	3,263			19,685			43,203			43,493			46,466			63,178
Income tax benefit	(800		)	(537		)	(2,920		)	(51		)	(3,720		)	(588		)
Lease termination fees	(247		)	(951		)	(864		)	(394		)	(1,111		)	(1,345		)
Straight-line rent and above- and below-market lease amortization	(1,291		)	(1,225		)	(1,757		)	(2,317		)	(3,048		)	(3,542		)
Net (income) loss attributable to noncontrolling interests in other consolidated subsidiaries	(713		)	3,127			(24,138		)	(1,695		)	(24,851		)	1,432
General and administrative expenses	16,082			17,168			15,752			16,475			31,834			33,643
Management fees and non-property level revenues	(5,257		)	(4,776		)	(2,293		)	(6,293		)	(7,550		)	(11,069		)
Operating Partnership's share of property NOI	178,987			191,411			181,015			191,751			360,002			383,162
Non-comparable NOI	(5,951		)	(16,564		)	(8,587		)	(16,997		)	(17,887		)	(37,497		)
Total same-center NOI	$	173,036		$	174,847		$	172,428		$	174,754		$	342,115		$	345,665


(1)	Adjustments are based on our Operating Partnership's pro rata ownership share, including our share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties.

Same-center NOI decreased ~~1.0%~~1.3% for the three months ended ~~March 31,~~June 30, 2017 as compared to the prior-year period. The ~~$1.8~~$2.3 million decrease for the three month period ended ~~March 31,~~June 30, 2017 compared to the same period in 2016 consisted of a ~~$2.6~~$4.3 million decrease in revenues, which was partially offset by a decrease of $2.0 million in operating expenses. Our operating expenses declined by $2.0 million on a same-center basis primarily due to a decrease of $1.0 million in maintenance and repairs expense and $1.0 million in lower real estate taxes due to lower tax assessments.

The 1.0% decrease in same-center NOI for the six months ended June 30, 2017 as compared to the prior-year period includes a $6.4 million decrease in revenues, primarily due to ~~a $4.6~~an $8.1 million decrease in revenues from percentage rents, other rents and tenant reimbursements, ~~and other rents,~~ which ~~were~~was partially offset by ana $1.7 million increase ~~of $2.0 million~~ in minimum rents and other income. ~~Our~~We also benefited from a $2.8 million decrease in operating expenses ~~declined by $0.8 million on a same-center basis~~primarily due to ~~lower snow removal costs~~a $2.7 million decrease in maintenance and ~~utilities expense, which were partially offset by an increase in bad debt expense and $1.4 million in higher real estate taxes due to higher tax assessments.~~

repairs expense.

The decline in revenues for the three and six months ended ~~March 31,~~June 30, 2017 was driven by decreases of ~~1.0%~~1.5% in occupancy in our same-center mall portfolio and ~~2.6%~~2.4% in stabilized mall same-center sales per square foot for the rolling 12-month period ended ~~March 31,~~June 30, 2017. These decreases were partially offset by an increase of 1.8% in average annual base rents for our same-center stabilized malls ~~for the three month period ended March 31,~~as of June 30, 2017 as compared to the prior-year period.

Operational Review

The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during the fourth quarter due to the holiday season, which generally results in higher percentage rents in the fourth quarter. Additionally, the malls earn most of their rents from short-term tenants during the holiday period. Thus, occupancy levels and revenue production are generally the highest in the fourth quarter of each year. Results of operations realized in any one quarter may not be indicative of the results likely to be experienced over the course of the fiscal year.

We classify our regional malls into three categories:


(1)	Stabilized ~~malls~~Malls – Malls that have completed their initial lease-up and have been open for more than three complete calendar years.

(2)

Non-stabilized ~~malls~~Malls - Malls that are in their initial lease-up phase. After three complete calendar years of operation, they are reclassified on January 1 of the fourth calendar year to the stabilized mall category. The Outlet Shoppes at Laredo and The Outlet Shoppes of the Bluegrass ~~was~~were classified as a non-stabilized ~~mall~~malls as of ~~March 31,~~June 30, 2017. The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Atlanta were classified as non-stabilized malls as of ~~March 31,~~June 30, 2016.


(3)	Excluded ~~malls~~Malls - We exclude malls from our core portfolio if they fall in the following categories, for which operational metrics are excluded:

Lender Malls - Malls for which we are working or intend to work with the lender on a restructure of the terms of the loan secured by the property or convey the secured property to the lender. As of ~~March 31,~~June 30, 2017, Wausau Center was classified as a Lender Mall. As of June 30, 2016, Chesterfield Mall, Midland Mall and Wausau Center were classified as Lender Malls. ~~As of March 31, 2016, Chesterfield Mall, Gulf Coast Town Center and Midland Mall were classified as Lender Malls.~~ The ~~foreclosure~~foreclosures of Midland Mall ~~was~~and Chesterfield Mall were complete in the first quarter and second quarter of ~~2017.~~2017, respectively. Lender Malls are excluded from our same-center pool as decisions made while in discussions with the lender may lead to metrics that do not provide relevant information related to the condition of these properties or they may be under cash management agreements with the respective servicers.

Repositioning Malls - Malls that are currently being repositioned or where we have determined that the current format of the mall no longer represents the best use of the mall and we are in the process of evaluating alternative strategies for the mall. This may include major redevelopment or an alternative retail or non-retail format, or after evaluating alternative strategies for the mall, we may determine that the mall no longer meets our criteria for long-term investment. The steps taken to reposition these malls, such as signing tenants to short-term leases, which are not included in occupancy percentages, or leasing to regional or local tenants, which typically do not report sales, may lead to metrics which do not provide relevant information related to the condition of these malls. Therefore, traditional performance measures, such as occupancy percentages and leasing metrics, exclude Repositioning Malls. Cary Towne Center and Hickory Point Mall were classified as Repositioning Malls as of ~~March 31, 2017. Cary Towne Center, Hickory Point Mall~~June 30, 2017 and ~~Wausau Center were categorized as Repositioning Malls as of March 31,~~June 30, 2016. Wausau Center was moved from Repositioning to the Lender Mall category in the second quarter of 2016 when it was determined, after evaluating redevelopment options that an appropriate risk-adjusted return was not achievable and the mall should be returned to the lender.


c.	Minority Interest Malls - Malls in which we have a 25% or less ownership interest. As of ~~March 31,~~June 30, 2017 and ~~March 31,~~June 30, 2016, Triangle Town Center and River Ridge Mall were classified as Minority Interest Malls. Triangle Town Place was also classified as a Minority Interest property as of ~~March 31,~~June 30, 2016 until its sale in the fourth quarter of 2016.

We derive the majority of our revenues from the mall properties. The sources of our revenues by property type were as follows:


	Three Months Ended March 31,		Six Months Ended June 30,
	2017	2016	2017	2016
Malls	93.2%	90.7%	93.3%	91.3%
Associated centers	4.1%	3.9%	4.2%	3.9%
Community centers	1.9%	2.1%	1.9%	1.7%
Mortgages, office buildings and other	0.8%	3.3%	0.6%	3.1%

Mall Store Sales

Mall store sales include reporting mall tenants of 10,000 square feet or less for stabilized malls and exclude license agreements, which are retail contracts that are temporary or short-term in nature and generally last more than three months but less than twelve months. The following is a comparison of our same-center sales per square foot for mall tenants of 10,000 square feet or less:

Twelve Months Ended March 31,
2017 2016 % Change
Stabilized mall same-center sales per square foot $372 $382 (2.6)%



	Twelve Months Ended June 30,
	2017	2016	% Change
Stabilized mall same-center sales per square foot	$373	$382	(2.4)%

Occupancy

Our portfolio occupancy is summarized in the following table ⁽¹⁾:


	As of March 31,		As of June 30,
	2017	2016	2017	2016
Total portfolio	92.1%	91.6%	91.6%	92.6%
Total mall portfolio	90.5%	90.9%	90.2%	91.6%
Same-center malls	90.5%	91.5%	90.6%	92.0%
Stabilized malls	90.5%	90.9%	90.5%	91.6%
Non-stabilized malls⁽²⁾	92.7%	91.4%	81.8%	92.3%
Associated centers	97.7%	91.5%	95.5%	95.6%
Community centers	98.2%	96.0%	97.0%	96.8%


(1)	As noted above, excluded properties are not included in occupancy metrics.


(2)	Represents occupancy for The Outlet Shoppes at Laredo and The Outlet Shoppes of the Bluegrass as of ~~March 31,~~June 30, 2017 and occupancy for The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Atlanta as of ~~March 31,~~June 30, 2016.

Leasing

The following is a summary of the total square feet of leases signed in the ~~three~~six month period ended ~~March 31,~~June 30, 2017 as compared to the prior-year period:

Three Months Ended
March 31,
2017 2016
Operating portfolio:
New leases 288,972
329,599
Renewal leases 549,569
760,925
Development portfolio:
New leases 101,088
131,686
Total leased 939,629
1,222,210



	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Operating portfolio:
New leases	449,138	492,265	738,110	821,864
Renewal leases	537,809	673,185	1,087,378	1,434,110
Development portfolio:
New leases	25,914	378,382	127,002	510,068
Total leased	1,012,861	1,543,832	1,952,490	2,766,042

Average annual base rents per square foot are based on contractual rents in effect as of ~~March 31,~~June 30, 2017 and 2016, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each property type ⁽¹⁾:


	As of March 31,				As of June 30,
	2017		2016		2017		2016
Same-center stabilized malls	$	32.61	$	32.02	$	33.00	$	32.41
Stabilized malls	32.76		31.76		33.16		31.92
Non-stabilized malls ⁽²⁾	25.65		26.09		25.69		26.06
Associated centers	13.74		13.93		13.84		13.99
Community centers	15.98		15.87		16.06		15.33
Office buildings	19.03		19.69		19.06		19.67


(1)	As noted above, excluded properties are not included in base rent. Average base rents for associated centers, community centers and office buildings include all leased space, regardless of size.


(2)	Represents average annual base rents for The Outlet Shoppes at Laredo and The Outlet Shoppes of the Bluegrass as of ~~March 31,~~June 30, 2017 and average annual base rents for The Outlet Shoppes of the Bluegrass and The Outlet Shoppes at Atlanta as of ~~March 31,~~June 30, 2016.

Results from new and renewal leasing of comparable small shop space of less than 10,000 square feet during the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2017 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows:


Property Type	Square Feet	Prior Gross Rent PSF		New Initial Gross Rent PSF		% Change Initial		New Average Gross Rent PSF⁽¹⁾		% Change Average		Square Feet	Prior Gross Rent PSF		New Initial Gross Rent PSF		% Change Initial		New Average Gross Rent PSF⁽¹⁾		% Change Average
Quarter:
All Property Types ⁽²⁾	575,849	$	41.52	$	41.12	(1.0	)%	$	42.33	2.0	%	485,184	$	42.40	$	41.32	(2.5	)%	$	42.05	(0.8	)%
Stabilized malls	527,407	42.76		42.28		(1.1	)%	43.55		1.8	%	464,098	42.98		41.86		(2.6	)%	42.58		(0.9	)%
New leases	131,342	42.27		47.65		12.7	%	49.84		17.9	%	114,842	38.73		40.20		3.8	%	41.87		8.1	%
Renewal leases	396,065	42.92		40.50		(5.6	)%	41.46		(3.4	)%	349,256	44.38		42.41		(4.4	)%	42.82		(3.5	)%

Year-to-Date:
All Property Types ⁽²⁾												1,061,033	$	41.92	$	41.21	(1.7	)%	$	42.20	0.7	%
Stabilized malls												991,505	42.86		42.08		(1.8	)%	43.10		0.6	%
New leases												246,184	40.62		44.17		8.7	%	46.12		13.5	%
Renewal leases												745,321	43.60		41.39		(5.1	)%	42.10		(3.4	)%


(1)	Average gross rent does not incorporate allowable future increases for recoverable common area expenses.


(2)	Includes stabilized malls, associated centers, community centers and office buildings.

New and renewal leasing activity of comparable small shop space of less than 10,000 square feet for the ~~three~~six month period ended ~~March 31,~~June 30, 2017 based on the lease commencement date is as follows:


	Number of Leases	Square Feet	Term (in years)	Initial Rent PSF		Average Rent PSF		Expiring Rent PSF		Initial Rent Spread					Average Rent Spread					Number of Leases	Square Feet	Term (in years)	Initial Rent PSF		Average Rent PSF		Expiring Rent PSF		Initial Rent Spread					Average Rent Spread
Commencement 2017:
New	95	261,997	8.35	$	49.90	$	52.61	$	41.87	$	8.03		19.2	%	$	10.74		25.7	%	136	370,541	8.05	$	45.79	$	48.99	$	40.41	$	5.38		13.3	%	$	8.58		21.2	%
Renewal	261	739,011	3.68	37.94		38.70		39.27		(1.33		)	(3.4	)%	(0.57		)	(1.5	)%	371	1,034,745	3.54	39.22		39.80		40.48		(1.26		)	(3.1	)%	(0.68		)	(1.7	)%
Commencement 2017 Total	356	1,001,008	4.92	$	41.07	$	42.34	$	39.95	$	1.12		2.8	%	$	2.39		6.0	%	507	1,405,286	4.75	$	40.95	$	42.22	$	40.46	$	0.49		1.2	%	$	1.76		4.3	%

Commencement 2018:
New	3	14,598	7.86	$	48.39	$	49.23	$	39.20	$	9.19		23.4	%	$	10.03		25.6	%	7	26,269	7.23	$	48.21	$	49.79	$	42.61	$	5.60		13.1	%	$	7.18		16.9	%
Renewal	38	114,389	4.95	48.32		49.82		46.09		2.23			4.8	%	3.73			8.1	%	53	165,514	4.89	43.47		44.68		44.44		(0.97		)	(2.2	)%	0.24			0.5	%
Commencement 2018 Total	41	128,987	5.16	$	48.33	$	49.75	$	45.31	$	3.02		6.7	%	$	4.44		9.8	%	60	191,783	5.16	$	44.12	$	45.38	$	44.19	$	(0.07	)	(0.2	)%	$	1.19		2.7	%

Total 2017/2018	397	1,129,995	4.95	$	41.90	$	43.19	$	40.56	$	1.34		3.3	%	$	2.63		6.5	%	567	1,597,069	4.79	$	41.33	$	42.60	$	40.91	$	0.42		1.0	%	$	1.69		4.1	%

LIQUIDITY AND CAPITAL RESOURCES

As of ~~March 31,~~June 30, 2017, we had approximately ~~$252.1~~$181.1 million outstanding on our three unsecured credit facilities leaving approximately ~~$847.9~~$885.4 million of availability. In the ~~first~~second quarter of 2017, we ~~used our credit lines to retire four~~retired three loans with an aggregate principal balance of ~~$159.7~~$61.6 million ~~which were secured by Hamilton Corner, Layton Hills Mall,~~in conjunction with the sale of The Outlet Shoppes at ~~St. Clair Square and The Plaza at Fayette.~~Oklahoma City for $130.0 million. Our consolidated unencumbered properties generated approximately ~~51.6%~~52.3% of total consolidated NOI for the ~~three~~six months ended ~~March 31,~~June 30, 2017 (excluding ~~Lender~~dispositions and Excluded Malls). We have ~~two malls~~one mall in the foreclosure process, which we anticipate will be completed during the ~~second~~third quarter of 2017. We recognized a ~~$4.1~~$29.2 million gain on extinguishment of debt related to the foreclosure of ~~Midland~~Chesterfield Mall in ~~January~~June 2017. WeIn May 2017, we also closed on the sale of two ~~office buildings during the quarter~~Tier 3 malls, College Square and Foothills Mall, which generated gross proceeds of ~~$6.3~~$53.5 million.

Subsequent to ~~March 31,~~June 30, 2017, we ~~sold The Outlet Shoppes at Oklahoma City~~extended and modified two unsecured term loans. We also modified our two unsecured credit facilities, that each have a capacity of $500.0 million, and our $350.0 million unsecured term loan to modify a debt covenant for ~~a gross sales price~~consistency with the modification of ~~$130 million. Approximately~~our $400.0 million unsecured term loan. See ~~$61.8 million~~Note 16 ~~in loans~~to the condensed consolidated financial statements for details. We also retired the $4.1 million unconsolidated loan secured by the ~~mall were retired~~third phase of Gulf Coast Town Center, entered into a preliminary agreement with the lender to modify and extend the loan secured by Acadiana Mall in July 2017 and exercised an option to extend our $350.0 million term loan to October 2018. In August 2017, we entered into a binding contract to sell our remaining 25% interest in River Ridge Mall to our joint venture partner for $9.0 million in cash. A $5.8 million loss on

investment was recorded in the second quarter of 2017 in conjunction with the ~~sale. Our share of net proceeds,~~impending sale, which ~~approximated $34.8 million, was used~~is expected to ~~reduce outstanding balances on our lines of credit.~~close in the third quarter.

We derive a majority of our revenues from leases with retail tenants, which have historically been the primary source for funding short-term liquidity and capital needs such as operating expenses, debt service, tenant construction allowances, recurring capital expenditures, dividends and distributions. We believe that the combination of cash flows generated from our operations, combined with our debt and equity sources and the availability under our credit facilities and proceeds from dispositions will, for the foreseeable future, provide adequate liquidity to meet our cash needs. In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, debt and equity offerings, joint venture investments, issuances of noncontrolling interests in our Operating Partnership, and decreasing expenditures related to tenant construction allowances and other capital expenditures. We also generate revenues from sales of peripheral land at our properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.

Cash Flows - Operating, Investing and Financing Activities

The Company had ~~$27.6~~$29.6 million of unrestricted cash and cash equivalents as of ~~March 31,~~June 30, 2017, an increase of ~~$8.6~~$10.7 million from December 31, 2016. Our net cash flows are summarized as follows (in thousands):


	Three Months Ended March 31,									Six Months Ended June 30,
	2017			2016			Change			2017			2016			Change
Net cash provided by operating activities	$	104,876		$	85,777		$	19,099		$	205,327		$	214,161		$	(8,834	)
Net cash used in investing activities	(120,126		)	(2,133		)	(117,993		)
Net cash provided by (used in) financing activities	23,852			(95,505		)	119,357
Net cash provided by investing activities										11,690			28,365			(16,675		)
Net cash used in financing activities										(206,346		)	(258,279		)	51,933
Net cash flows	$	8,602		$	(11,861	)	$	20,463		$	10,671		$	(15,753	)	$	26,424

Cash Provided by Operating Activities

Cash provided by operating activities ~~increased $19.1~~decreased $8.8 million primarily due to ~~timing differences related to working capital items, which were~~the impact of lower occupancy on revenues, partially offset by ~~a decrease~~reductions in ~~same-center NOI related to lower sales for~~operating expenses, and the ~~current period and~~ operating cash flows of the properties that were disposed of in 2016.

Cash ~~Used in~~Provided by Investing Activities

Cash flows ~~used in~~provided by investing activities ~~was $120.1~~decreased $16.7 million ~~representing a $118.0 million difference~~ as compared to the prior-year period. The cash ~~used in~~flows provided by investing activities in 2016 related primarily to proceeds from the sales of ~~$2.1 million during the prior year period. The increase was~~real estate assets and distributions in excess of equity in earnings of unconsolidated affiliates, primarily due to proceeds from the ~~asset acquisitions related~~sales of several consolidated and unconsolidated properties. While proceeds from sales of real estate assets were higher in 2017, these were partially offset by the cash used to acquire the Macy's and Sears' locations at several ~~malls as well as increased spending related to redevelopment and expansion projects throughout the portfolio.~~malls.

Cash ~~Provided by (Used in)~~Used in Financing Activities

Cash flows ~~provided by (used in)~~used in financing activities ~~had a net change of $119.4~~decreased $51.9 million as compared to the prior-year period. In 2017, we utilized our lines of credit to acquire the Macy's and Sears' locations ~~fund development projects~~for $79.8 million and to retire four operating property loans totaling $159.7 million. These borrowings were partially offset by a prepayment fee of $8.5 million from the early retirement of the loans which were paid off in conjunction with the sale of an outlet center and a higher amount of distributions to ~~add~~noncontrolling interests as we distributed our partner’s share of the net proceeds from the sale of one property. In 2016 we utilized a greater amount of proceeds from sales of properties to reduce the outstanding balances on our ~~unencumbered pool.~~lines of credit.

Debt

Debt of the Company

CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of our debt. CBL is a limited guarantor of the Notes, issued by the Operating Partnership in November 2013, October 2014 and December 2016, respectively, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. We also provide a similar limited guarantee of the Operating Partnership's obligations with respect to our unsecured credit facilities and three unsecured term loans as of ~~March 31,~~June 30, 2017.

Debt of the Operating Partnership

The following tables summarize debt based on our pro rata ownership share, including our pro rata share of unconsolidated affiliates and excluding noncontrolling investors’ share of consolidated properties, because we believe this provides investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands):


March 31, 2017	Consolidated			Noncontrolling Interests			Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽¹⁾
June 30, 2017														Consolidated			Noncontrolling Interests			Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating properties	$	2,248,936		$	(107,197	)	$	528,040		$	2,669,779		5.37%	$	2,043,402		$	(93,377	)	$	526,136		$	2,476,161		5.22%
Senior unsecured notes due 2023 ⁽²⁾	446,656			—			—			446,656			5.25%	446,761			—			—			446,761			5.25%
Senior unsecured notes due 2024 ⁽³⁾	299,941			—			—			299,941			4.60%	299,943			—			—			299,943			4.60%
Senior unsecured notes due 2026 ⁽⁴⁾	394,367			—			—			394,367			5.95%	394,474			—			—			394,474			5.95%
Total fixed-rate debt	3,389,900			(107,197		)	528,040			3,810,743			5.28%	3,184,580			(93,377		)	526,136			3,617,339			5.25%
Variable-rate debt:
Non-recourse term loans on operating properties	16,488			(6,855		)	2,142			11,775			3.00%	10,899			(5,449		)	2,059			7,509			3.05%
Recourse term loans on operating properties(5)	24,727			—			70,157			94,884			2.97%	89,298			—			69,943			159,241			3.41%
Construction loan	56,243			—			—			56,243			3.28%
Unsecured lines of credit	252,105			—			—			252,105			2.03%	181,069			—			—			181,069			2.25%
Unsecured term loans	800,000			—			—			800,000			2.23%	800,000			—			—			800,000			2.49%
Total variable-rate debt	1,149,563			(6,855		)	72,299			1,215,007			2.31%	1,081,266			(5,449		)	72,002			1,147,819			2.58%
Total fixed-rate and variable-rate debt	4,539,463			(114,052		)	600,339			5,025,750			4.56%	4,265,846			(98,826		)	598,138			4,765,158			4.61%
Unamortized deferred financing costs	(16,983		)	903			(2,651		)	(18,731		)		(16,406		)	765			(2,506		)	(18,147		)
Total mortgage and other indebtedness, net	$	4,522,480		$	(113,149	)	$	597,688		$	5,007,019			$	4,249,440		$	(98,061	)	$	595,632		$	4,747,011


December 31, 2016	Consolidated			Noncontrolling Interests			Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽¹⁾	Consolidated			Noncontrolling Interests			Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating properties	$	2,453,628		$	(109,162	)	$	530,062		$	2,874,528		5.29%	$	2,453,628		$	(109,162	)	$	530,062		$	2,874,528		5.29%
Senior unsecured notes due 2023 ⁽²⁾	446,552			—			—			446,552			5.25%	446,552			—			—			446,552			5.25%
Senior unsecured notes due 2024 ⁽³⁾	299,939			—			—			299,939			4.60%	299,939			—			—			299,939			4.60%
Senior unsecured notes due 2026 ⁽⁴⁾	394,260			—			—			394,260			5.95%	394,260			—			—			394,260			5.95%
Total fixed-rate debt	3,594,379			(109,162		)	530,062			4,015,279			5.30%	3,594,379			(109,162		)	530,062			4,015,279			5.30%
Variable-rate debt:
Non-recourse term loans on operating properties	19,055			(7,504		)	2,226			13,777			3.18%	19,055			(7,504		)	2,226			13,777			3.18%
Recourse term loans on operating properties	24,428			—			71,037			95,465			2.80%	24,428			—			71,037			95,465			2.80%
Construction loans(5)	39,263			—			—			39,263			3.12%	39,263			—			—			39,263			3.12%
Unsecured lines of credit	6,024			—			—			6,024			1.82%	6,024			—			—			6,024			1.82%
Unsecured term loans	800,000			—			—			800,000			2.04%	800,000			—			—			800,000			2.04%
Total variable-rate debt	888,770			(7,504		)	73,263			954,529			2.18%	888,770			(7,504		)	73,263			954,529			2.18%
Total fixed-rate and variable-rate debt	4,483,149			(116,666		)	603,325			4,969,808			4.70%	4,483,149			(116,666		)	603,325			4,969,808			4.70%
Unamortized deferred financing costs	(17,855		)	945			(2,806		)	(19,716		)		(17,855		)	945			(2,806		)	(19,716		)
Total mortgage and other indebtedness, net	$	4,465,294		$	(115,721	)	$	600,519		$	4,950,092			$	4,465,294		$	(115,721	)	$	600,519		$	4,950,092


(1)	Weighted-average interest rate includes the effect of debt premiums (discounts), but excludes amortization of deferred financing costs.


(2)	The balance is net of an unamortized discount of ~~$3,344~~$3,239 and $3,448 as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.


(3)	The balance is net of an unamortized discount of ~~$59~~$57 and $61 as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.


(4)	The balance is net of an unamortized discount of ~~$5,633~~$5,526 and $5,740 as of ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.


(5)	The Outlet Shoppes at Laredo opened in April 2017, and the construction loan balance is included in recourse term loans on operating properties as of June 30, 2017.

The following table presents our pro rata share of consolidated and unconsolidated debt as of ~~March 31,~~June 30, 2017, excluding debt premiums and discounts, that is scheduled to mature in 2017 (in thousands):


	Balance			Balance
	Original Maturity Date			Original Maturity Date
2017 Maturities:
Operating property debt:
Consolidated Properties:
Acadiana Mall	$	124,998	⁽¹⁾	$	124,156	⁽¹⁾
The Outlet Shoppes at El Paso	46,536			46,320
	171,534			170,476
Unconsolidated Properties:
Ambassador Town Center Infrastructure Improvements	11,035		⁽²⁾	11,035		⁽²⁾
Gulf Coast Town Center - Phase III	2,142			2,059		⁽³⁾
	13,177			13,094

Operating Partnership debt:
$350,000 unsecured term loan	350,000		⁽³⁾	350,000		⁽⁴⁾

Total 2017 Maturities at pro rata share	$	534,711		$	533,570


(1)	The Company ~~is in negotiations~~has a preliminary agreement with the lender to ~~restructure~~modify the loan and extend the maturity date.


(2)	The loan has two one-year extension options, at the unconsolidated affiliate's election, for an outside maturity date of December 2019.


(3)	Subsequent to June 30, 2017, the loan secured by Gulf Coast Town Center - Phase III was retired.


(4)	The unsecured term loan has two one-year extension options, at the Company's election, for an outside maturity date of October 2019. Subsequent to June 30, 2017, the Company exercised an option to extend the maturity date to October 2018.

As of ~~March 31,~~June 30, 2017, ~~$534.7~~$533.6 million of our pro rata share of consolidated and unconsolidated debt, excluding debt premiums and discounts, is scheduled to mature during 2017. Of the ~~$534.7~~$533.6 million of 2017 maturities, the $350.0 million unsecured term loan and the Ambassador Town Center Infrastructure loan, with a principal balance of $11.0 million have extension options ~~available~~available. The $2.1 million loan secured by phase three of Gulf Coast Town Center was retired subsequent to June 30, 2017 and the $350.0 million unsecured term loan was extended to October 2018, leaving a remaining balance of ~~$173.7~~$170.5 million of 2017 maturities that must be either retired or refinanced. We ~~are in negotiations~~have a preliminary agreement with the lender to ~~restructure~~modify and extend the ~~$125.0~~$124.2 million loan secured by Acadiana Mall, which matured in April 2017, and expect to refinance the ~~two loans secured by joint venture properties, which had an aggregate principal balance of $48.7~~$46.3 million ~~as of March 31, 2017. Additionally, $140.0 million relates to an operating property~~ loan secured by ~~Chesterfield Mall, which matured in 2016 and is in foreclosure. The~~the joint venture property. A $17.7 million loan secured by Wausau Center, which is scheduled to mature in 2021, is ~~also~~ in ~~foreclosure. Both foreclosures are~~foreclosure, which is expected to be complete in the ~~second~~third quarter of 2017.

The weighted-average remaining term of our total share of consolidated and unconsolidated debt was ~~4.6~~4.7 years and 5.4 years at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively. The weighted-average remaining term of our pro rata share of fixed-rate debt was ~~5.5~~5.4 years and 3.8 years at ~~March 31,~~June 30, 2017 and December 31, 2016, respectively.

As of ~~March 31,~~June 30, 2017 and December 31, 2016, our pro rata share of consolidated and unconsolidated variable-rate debt represented ~~24.2%~~24.1% and 19.3%, respectively, of our total pro rata share of debt. As of ~~March 31,~~June 30, 2017, our share of consolidated and unconsolidated variable-rate debt represented ~~16.1%~~16.2% of our total market capitalization (see Equity below) as compared to 12.1% as of December 31, 2016. The increase is primarily due to the decline in our stock price from $11.50 at December 30, 2016 to ~~$9.54~~$8.43 at ~~March 31,~~June 30, 2017.

See Note 6 to the condensed consolidated financial statements for additional information concerning the amount and terms of our outstanding indebtedness and compliance with applicable covenants and restrictions as of ~~March 31,~~June 30, 2017. See Note 16 to the condensed consolidated financial statements for various extensions and modifications made to several unsecured term loans and credit facilities subsequent to June 30, 2017.

Mortgages on Operating Properties

Loan Repayments

We repaid the following loans, secured by the related consolidated properties, in 2017 (in thousands):


Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Principal Balance Repaid ⁽¹⁾		Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Principal Balance Repaid ⁽¹⁾
January	The Plaza at Fayette	5.67%	April 2017	$	37,146	The Plaza at Fayette	5.67%	April 2017	$	37,146
January	The Shoppes at St. Clair Square	5.67%	April 2017	18,827		The Shoppes at St. Clair Square	5.67%	April 2017	18,827
February	Hamilton Corner	5.67%	April 2017	14,227		Hamilton Corner	5.67%	April 2017	14,227
March	Layton Hills Mall	5.66%	April 2017	89,526		Layton Hills Mall	5.66%	April 2017	89,526
April						The Outlet Shoppes at Oklahoma City ⁽²⁾	5.73%	January 2022	53,386
April						The Outlet Shoppes at Oklahoma City - Phase II⁽²⁾	3.53%	April 2019	5,545
April						The Outlet Shoppes at Oklahoma City - Phase III ⁽²⁾	3.53%	April 2019	2,704
	Total			$	159,726				$	221,361


(1)	We retired the loans with borrowings from our credit ~~facilities.~~facilities unless otherwise noted.


(2)	The loan was retired in conjunction with the sale of the property which secured the loan. See Note 4 to the accompanying condensed consolidated financial statements for more information. We recorded an $8,500 loss on extinguishment of debt due to a prepayment fee on the early retirement.

In March 2017, we exercised an extension to extend the loan secured by Statesboro Crossing to June 2018.

Subsequent to ~~March 31,~~June 30, 2017, we also retired ~~several operating property loans in conjunction with~~ the ~~sale~~loan secured by phase three of Gulf Coast Town Center.

Other

The following is a summary of our ~~interest in a~~2017 dispositions for which the consolidated ~~joint venture as described in~~ ~~Note 16~~mall securing the related fixed-rate debt was transferred to the ~~condensed consolidated financial statements.~~lender (in thousands):



Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Balance of Non-recourse Debt		Gain on Extinguishment of Debt
January	Midland Mall ⁽¹⁾	6.10%	August 2016	$	31,953	$	3,760
June	Chesterfield Mall ⁽¹⁾	5.74%	September 2016	140,000		29,215
				$	171,953	$	32,975


(1)	The mortgage lender completed the foreclosure process and received the title to the mall in satisfaction of the non-recourse debt.

Other

The non-recourse ~~loans~~loan secured by ~~Chesterfield Mall and~~ Wausau Center ~~are~~is in default and in receivership at ~~March 31,~~June 30, 2017. The ~~malls generate~~mall generates insufficient income levels to cover the debt service on the ~~mortgages,~~mortgage, which had ~~an aggregate~~a balance of ~~$157.7~~$17.7 million at ~~March 31,~~June 30, 2017. We plan to return ~~these malls~~this mall to the ~~respective lenders~~lender when foreclosure proceedings are complete, which is expected to occur in the ~~second~~third quarter of 2017.

In conjunction with the divestiture of our interests in a consolidated joint venture, we were relieved of our funding obligation related to the loan secured by vacant land owned by the joint venture, which had a principal balance of $2.5 million upon the disposition of our interests in ~~March~~the first quarter of 2017.

Unencumbered Portfolio Statistics


		Sales Per Square Foot for the Twelve Months Ended ^{(1) (2)}				Occupancy⁽²⁾				% of Consolidated Unencumbered NOI for the Three Months Ended 03/31/17 ⁽³⁾			Sales Per Square Foot for the Twelve Months Ended ^{(1) (2)}				Occupancy⁽²⁾				% of Consolidated Unencumbered NOI for the Six Months Ended 6/30/17 ⁽³⁾
		03/31/17		03/31/16		03/31/17		03/31/16					06/30/17		06/30/16		06/30/17		06/30/16
Unencumbered consolidated properties:	Unencumbered consolidated properties:											Unencumbered consolidated properties:
Tier 1 Malls	Tier 1 Malls	$	424	$	439	91.1	%	88.8	%	28.5	%	Tier 1 Malls	$	421	$	438	90.9	%	89.2	%	27.6	%
Tier 2 Malls	Tier 2 Malls	327		343		88.9	%	91.6	%	52.9	%	Tier 2 Malls	327		339		88.8	%	92.2	%	53.9	%
Tier 3 Malls	Tier 3 Malls	264		266		87.4	%	87.1	%	7.9	%	Tier 3 Malls	261		265		86.0	%	84.9	%	6.3	%
Total Malls	Total Malls	$	343	$	357	89.3	%	90.4	%	89.3	%	Total Malls	$	343	$	357	93.9	%	90.7	%	87.8	%

Total Associated Centers	Total Associated Centers	N/A		N/A		97.6	%	92.7	%	6.0	%	Total Associated Centers	N/A		N/A		94.0	%	95.3	%	7.4	%

Total Community Centers	Total Community Centers	N/A		N/A		99.0	%	99.0	%	3.5	%	Total Community Centers	N/A		N/A		99.3	%	98.9	%	3.5	%

Total Office Buildings and Other	Total Office Buildings and Other	N/A		N/A		90.3	%	94.1	%	1.2	%	Total Office Buildings and Other	N/A		N/A		94.1	%	95.3	%	1.3	%

Total Unencumbered Consolidated Portfolio	Total Unencumbered Consolidated Portfolio	$	343	$	357	91.4	%	91.4	%	100.0	%	Total Unencumbered Consolidated Portfolio	$	343	$	357	90.8	%	92.2	%	100.0	%


(1)	Represents same-center sales per square foot for mall tenants 10,000 square feet or less for stabilized malls.


(2)	Operating metrics are included for unencumbered operating properties and do not include sales or occupancy of unencumbered outparcels.


(3)	Our consolidated unencumbered properties generated approximately ~~51.6%~~52.3% of total consolidated NOI of ~~$164,689~~$320,713,384 (which excludes NOI related to dispositions) for the ~~three~~six months ended ~~March 31,~~June 30, 2017.

Equity

During the ~~three~~six months ended ~~March 31,~~June 30, 2017, we paid dividends of ~~$56.5~~$113.0 million to holders of CBL's common stock and preferred stock, as well as ~~$10.6~~$41.2 million in distributions to the noncontrolling interest investors in the Operating Partnership and other consolidated subsidiaries. The Operating Partnership paid distributions of ~~$11.2~~$22.4 million and ~~$53.2~~$106.4 million on the preferred units and common units, respectively, as well as distributions of ~~$2.7~~$25.4 million to the noncontrolling interests in other consolidated subsidiaries.

On June 2, 2017, we announced a second quarter 2017 common stock dividend of $0.265 per share payable in cash that was paid on July 17, 2017. On February 24, 2017, we announced a first quarter 2017 common stock dividend of $0.265 per share payable in cash that was ~~payable~~paid on April 17, 2017. Future dividends payable will be determined by our Board of Directors based upon circumstances at the time of declaration. Our dividend payout ratio was 54.6% and 53.5% for the three and six months ended June 30, 2017, respectively.

As a publicly traded company and, as a subsidiary of a publicly traded company, we have access to capital through both the public equity and debt markets. We currently have a shelf registration statement on file with the SEC authorizing us to publicly issue senior and/or subordinated debt securities, shares of preferred stock (or depositary shares representing fractional interests therein), shares of common stock, warrants or rights to purchase any of the foregoing securities, and units consisting of two or more of these classes or series of securities and limited guarantees of debt securities issued by the Operating Partnership. Pursuant to the shelf registration statement, the Operating Partnership is also authorized to publicly issue unsubordinated debt securities. There is no limit to the offering price or number of securities that we may issue under this shelf registration statement.

At-The-Market Equity Program

On March 1, 2013, we entered into Sales Agreements with a number of sales agents to sell shares of CBL's common stock, having an aggregate offering price of up to $300.0 million, from time to time through an ATM program. In accordance with the Sales Agreements, we will set the parameters for the sales of shares, including the number of shares to be issued, the time period during which sales are to be made and any minimum price below which sales may not be made. The Sales Agreements provide that the sales agents will be entitled to compensation for their services at a mutually agreed commission rate not to exceed 2.0% of the gross proceeds from the sales of shares sold through the ATM program. For each share of common stock issued by CBL, the Operating Partnership issues a corresponding number of common units of limited partnership interest to CBL in exchange for the contribution of the proceeds from the stock issuance. We include only share issuances that have settled in the calculation of shares outstanding at the end of each period.

We have not sold any shares under the ATM program since 2013. Since the commencement of the ATM program, CBL has issued 8,419,298 shares of common stock, at a weighted-average sales price of $25.12 per share, and approximately $88.5 million remains available that may be sold under this program as of ~~March 31,~~June 30, 2017. Actual future sales under this program, if any, will depend on a variety of factors including but not limited to market conditions, the trading price of CBL's common stock and our capital needs. We have no obligation to sell the remaining shares available under the ATM program.

Debt-To-Total Market Capitalization

Our strategy is to maintain a conservative debt-to-total-market capitalization ratio in order to enhance our access to the broadest range of capital markets, both public and private. Based on our share of total consolidated and unconsolidated debt and the market value of equity, our debt-to-total-market capitalization (debt plus market value of equity) ratio was ~~66.5%~~67.4% at ~~March 31,~~June 30, 2017, compared to ~~63.9%~~67.2% at ~~March 31, 2016. The increase in the debt-to-total-market capitalization ratio is primarily due to a decrease in CBL's stock price to $9.54 at March 31, 2017 from $11.90 at March 31,~~June 30, 2016. Our debt-to-total-market capitalization ratio at ~~March 31,~~June 30, 2017 was computed as follows (in thousands, except stock prices):


	Shares Outstanding	Stock Price⁽¹⁾		Value			Shares Outstanding	Stock Price⁽¹⁾		Value
Common stock and operating partnership units	199,386	$	9.54	$	1,902,142		199,321	$	8.43	$	1,680,276
7.375% Series D Cumulative Redeemable Preferred Stock	1,815	250.00		453,750			1,815	250.00		453,750
6.625% Series E Cumulative Redeemable Preferred Stock	690	250.00		172,500			690	250.00		172,500
Total market equity				2,528,392						2,306,526
Company’s share of total debt				5,025,750						4,765,158
Total market capitalization				$	7,554,142					$	7,071,684
Debt-to-total-market capitalization ratio				66.5		%				67.4		%


(1)	Stock price for common stock and Operating Partnership units equals the closing price of CBL's common stock on ~~March 31,~~June 30, 2017. The stock prices for the preferred stock represent the liquidation preference of each respective series of preferred stock.

Capital Expenditures

Deferred maintenance expenditures are generally billed to tenants as common area maintenance expense, and most are recovered over a 5 to 15-year period. Renovation expenditures are primarily for remodeling and upgrades of malls, of which a portion is recovered from tenants over a 5 to 15-year period. We recover these costs through fixed amounts with annual increases or pro rata cost reimbursements based on the tenant’s occupied space.

The following table, which excludes expenditures for developments and expansions, summarizes these capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2017 compared to the same ~~period~~periods in 2016 (in thousands):


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2017		2016
Tenant allowances⁽¹⁾	$	9,516	$	11,645	$	10,600	$	21,251	$	20,116	$	32,896

Renovations	502		3,114		3,563		1,507		4,065		4,621

Deferred maintenance:
Parking lot and parking lot lighting	1,825		720		2,436		2,045		4,261		2,765
Roof repairs and replacements	614		669		2,449		374		3,063		1,043
Other capital expenditures	5,215		4,125		5,002		1,703		10,217		5,828
Total deferred maintenance	7,654		5,514		9,887		4,122		17,541		9,636

Capitalized overhead	2,307		1,326		1,984		1,622		4,291		2,948

Capitalized interest	839		548		385		448		1,224		996

Total capital expenditures	$	20,818	$	22,147	$	26,419	$	28,950	$	47,237	$	51,097


(1)	Tenant allowances primarily relate to new leases. Tenant allowances related to renewal leases were not material for the periods presented.

Our total investment in renovations that are scheduled for 2017 is projected to be $10.2 million, which includes exterior and floor renovations, as well as other eco-friendly green renovations. Annual capital expenditures budgets are prepared for each of our properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, will provide the necessary funding for these expenditures.

Developments and Expansions

The following tables summarize our development projects as of ~~March 31,~~June 30, 2017.

Properties Opened During the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2017

(Dollars in thousands)

CBL's Share of
Property Location CBL
Ownership
Interest Total
Project
Square Feet
Total
Cost ⁽¹⁾

Cost to
Date ⁽²⁾

Opening Date Initial
Unleveraged
Yield
Mall Expansion:
Mayfaire Town Center - Phase I Wilmington, NC 100% 67,766
$ 19,073
$ 9,627
Feb-17 8.4%

Mall Redevelopment:
College Square - Partial Belk Redevelopment (Planet Fitness) Morristown, TN 100% 20,000
1,549
1,444
Mar-17 9.9%

Total Properties Opened 87,766
$ 20,622
$ 11,071

(1) Total Cost is presented net of reimbursements to be received.
(2) Cost to Date does not reflect reimbursements until they are received.

~~The expansion at Mayfaire Towne Center, which opened in the first quarter of 2017, features retailers H&M and Palmetto Moon, among others.~~

~~Properties Under Development at March 31, 2017~~

~~(Dollars in thousands)~~


					CBL's Share of										CBL's Share of
Property		Location	CBL Ownership Interest	Total Project Square Feet	Total Cost ⁽¹⁾		Cost to Date ⁽²⁾		Expected Opening Date	Initial Unleveraged Yield		Location	CBL Ownership Interest	Total Project Square Feet	Total Cost ⁽¹⁾		Cost to Date ⁽²⁾		Opening Date	Initial Unleveraged Yield
Outlet Center:
The Outlet Shoppes at Laredo		Laredo, TX	65%	357,756	$	69,936	$	62,619	April-17	9.6%		Laredo, TX	65%	357,755	$	69,936	$	65,402	April-17	9.6%

Mall Expansions:
Kirkwood Mall - Lucky 13 (Lucky's Pub)		Bismarck, ND	100%	6,500	3,200		710		Fall-17	7.6%
Parkdale Mall - Restaurant Addition		Beaumont, TX	100%	4,700	1,277		5		Winter-17	10.7%
Mall Expansion:
Mayfaire Town Center - Phase I												Wilmington, NC	100%	67,766	19,073		10,166		Feb-17	8.4%
				11,200	4,477		715
Mall Redevelopments:
College Square - Partial Belk Redevelopment (Planet Fitness) ⁽³⁾												Morristown, TN	100%	20,000	1,549		1,434		Mar-17	9.9%
Dakota Square Mall - Partial Miracle Mart Redevelopment (T.J. Maxx)		Minot, ND	100%	20,755	1,929		1,571		Summer-17	12.3%		Minot, ND	100%	20,755	1,929		1,543		May-17	12.3%
Hickory Point Mall - T.J. Maxx/Shops		Forsyth, IL	100%	50,030	4,070		448		Fall-17	8.9%
Pearland Town Center - Sports Authority Redevelopment (Dick's Sporting Goods)		Pearland, TX	100%	48,582	7,069		4,344		April-17	12.2%		Pearland, TX	100%	48,582	7,069		5,822		April-17	12.2%
South County Center - DXL		St. Louis, MO	100%	6,817	1,358		789		Summer-17	19.7%		St. Louis, MO	100%	6,792	1,266		1,131		June-17	21.1%
Stroud Mall - Beauty Academy		Stroudsburg, PA	100%	10,494	2,167		1,682		May-17	6.6%		Stroudsburg, PA	100%	10,494	2,167		1,910		June-17	6.6%
Turtle Creek Mall - ULTA		Hattiesburg, MS	100%	20,782	3,050		1,488		Spring-17	6.7%		Hattiesburg, MS	100%	20,782	3,050		1,716		April-17	6.7%
York Galleria - Partial JCP Redevelopment (H&M/Shops)		York, PA	100%	42,672	5,582		4,226		Spring-17	7.8%		York, PA	100%	42,672	5,582		4,377		April-17	7.8%
York Galleria - Partial JCP Redevelopment (Gold's Gym/Shops)		York, PA	100%	40,832	6,476		3,008		Spring-17	11.5%
Total Properties Opened														170,077	22,612		17,933
				240,964	31,701		17,556

Associated Center Redevelopment:
The Landing at Arbor Place - Ollie's		Atlanta (Douglasville), GA	100%	28,446	1,946		1,273		Fall-17	8.0%

Total Properties Under Development				638,366	$	108,060	$	82,163
Total Properties Opened														595,598	$	111,621	$	93,501

(1) Total Cost is presented net of reimbursements to be received.	(1) Total Cost is presented net of reimbursements to be received.										(1) Total Cost is presented net of reimbursements to be received.
(2) Cost to Date does not reflect reimbursements until they are received.	(2) Cost to Date does not reflect reimbursements until they are received.										(2) Cost to Date does not reflect reimbursements until they are received.
(3) This property was sold in June 2017.											(3) This property was sold in June 2017.

In April 2017, we held the grand opening of The Outlet Shoppes at Laredo, our 65/35 joint venture with Horizon. The shopping center was approximately 82% leased at its opening and features a broad assortment of new retailers. We also completed several anchor redevelopments.

~~We began construction~~

Properties Under Development at June 30, 2017

(Dollars in ~~the first quarter on several redevelopments. These include the addition of T. J. Maxx at Dakota Square Mall and Hickory Point Mall as well as anchor redevelopment projects at several malls.~~thousands)



				CBL's Share of
Property	Location	CBL Ownership Interest	Total Project Square Feet	Total Cost ⁽¹⁾		Cost to Date ⁽²⁾		Expected Opening Date	Initial Unleveraged Yield
Mall Expansions:
Kirkwood Mall - Lucky 13 (Lucky's Pub)	Bismarck, ND	100%	6,500	$	3,200	$	2,224	Fall-17	7.6%
Parkdale Mall - Restaurant Addition	Beaumont, TX	100%	4,700	1,481		253		Fall-17	9.2%
			11,200	4,681		2,477

Mall Redevelopments:
East Towne Mall - Flix Brewhouse	Madison, WI	100%	40,795	9,855		905		Spring-18	8.5%
East Towne Mall - Lucky 13	Madison, WI	100%	7,758	3,135		593		Summer-17	6.3%
Hickory Point Mall - T.J. Maxx/Shops	Forsyth, IL	100%	50,030	4,070		1,261		Fall-17	8.9%
York Galleria - Partial JCP Redevelopment (Gold's Gym/Shops)	York, PA	100%	40,832	6,476		3,720		Summer-17	11.5%
			139,415	23,536		6,479

Associated Center Redevelopment:
The Landing at Arbor Place - Ollie's	Atlanta (Douglasville), GA	100%	28,446	1,946		1,760		Fall-17	8.0%

Total Properties Under Development			179,061	$	30,163	$	10,716

(1) Total Cost is presented net of reimbursements to be received.
(2) Cost to Date does not reflect reimbursements until they are received.

We are working on plans for the three Macy's locations which were purchased in January 2017 as well as the five Sears' stores which we gained control of in a sales-leaseback transaction. We expect to announce more substantive plans for several locations later this year as leases are finalized. These asset acquisitions afford us the opportunity to reinvent and transition our properties into suburban town centers designed to appeal to evolving consumer preferences.

We own land and hold options to acquire certain development properties owned by third parties. Except for the projects presented above, we do not have any other material capital commitments as of ~~March 31,~~June 30, 2017.

Acquisitions and Dispositions

See Note 4 and Note 5 to the condensed consolidated financial statements for a description of our acquisition and disposition activity related to consolidated and unconsolidated affiliates.

Gain on Extinguishment of Debt

In ~~January~~June 2017, we recognized a gain on extinguishment of debt of ~~$4.1~~$29.2 million upon the transfer of ~~Midland~~Chesterfield Mall to the lender in satisfaction of the non-recourse debt secured by the mall, which had a principal balance of $140.0 million. We also recognized a gain on extinguishment of debt of $3.8 million upon the transfer of Midland Mall in January 2017 to the lender in satisfaction of the non-recourse debt secured by the mall, which had a principal balance of $32.0 million. These gains were partially offset by an $8.5 million loss on extinguishment of debt from prepayment fees for the early retirement of debt related to three loans secured by The Outlet Shoppes at Oklahoma City, which were retired in conjunction with its sale in April 2017.

Loss on Investment

Subsequent to June 30, 2017, River Ridge Mall JV, LLC, a subsidiary of the Company, entered into a binding contract to sell its 25% interest in River Ridge Mall, located in Lynchburg, VA, to its joint venture partner for $9.0 million in cash. The Company recorded a $5.8 million loss on investment related to the pending disposition. The sale is expected to close in the third quarter of 2017.

Impairment of Real Estate Assets

During the six months ended June 30, 2017, we recorded a loss on impairment of $46.5 million which primarily relates to one mall, a parcel project near an outlet mall and one outparcel. See Note 3 to the condensed consolidated financial statements for more information.

Gain on Sales of Real Estate Assets

During the six months ended June 30, 2017, we recognized an $85.5 million gain on sales of real estate assets, primarily related to the sale of two malls, an outlet center and six outparcels.

Off-Balance Sheet Arrangements

Unconsolidated Affiliates

We have ownership interests in 17 unconsolidated affiliates as of ~~March 31,~~June 30, 2017 that are described in Note 5 to the condensed consolidated financial statements. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the condensed consolidated balance sheets as “Investments in Unconsolidated Affiliates.” The following are circumstances when we may consider entering into a joint venture with a third party:

Third parties may approach us with opportunities in which they have obtained land and performed some pre-development activities, but they may not have sufficient access to the capital resources or the development and leasing expertise to bring the project to fruition. We enter into such arrangements when we determine such a project is viable and we can achieve a satisfactory return on our investment. We typically earn development fees from the joint venture and provide management and leasing services to the property for a fee once the property is placed in operation.

We determine that we may have the opportunity to capitalize on the value we have created in a property by selling an interest in the property to a third party. This provides us with an additional source of capital that can be used to develop or acquire additional real estate assets that we believe will provide greater potential for growth. When we retain an interest in an asset rather than selling a 100% interest, it is typically because this allows us to continue to manage the property, which provides us the ability to earn fees for management, leasing, development and financing services provided to the joint venture.

Guarantees

We may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on our investment in the joint venture. We may receive a fee from the joint venture for providing the guaranty. Additionally, when we issue a guaranty, the terms of the joint venture agreement typically provide that we may receive indemnification from the joint venture or have the ability to increase our ownership interest.

The following table represents our guarantees of unconsolidated affiliates' debt as reflected in the accompanying condensed consolidated balance sheets as of ~~March 31,~~June 30, 2017 and December 31, 2016 (in thousands):


	As of March 31, 2017									Obligation recorded to reflect guaranty				As of June 30, 2017									Obligation recorded to reflect guaranty
Unconsolidated Affiliate	Company's Ownership Interest	Outstanding Balance		Percentage Guaranteed by the Operating Partnership		Maximum Guaranteed Amount		Debt Maturity Date ⁽¹⁾		3/31/2017		12/31/2016		Company's Ownership Interest	Outstanding Balance		Percentage Guaranteed by the Operating Partnership		Maximum Guaranteed Amount		Debt Maturity Date ⁽¹⁾		6/30/2017		12/31/2016
West Melbourne I, LLC - Phase I ⁽²⁾	50%	$	42,697	20%		$	8,539	Feb-2018	⁽²⁾	$	86	$	86	50%	$	42,547	20%		$	8,509	Feb-2018	⁽³⁾	$	86	$	86
West Melbourne I, LLC - Phase II ⁽²⁾	50%	16,497		20%		3,299		Feb-2018	⁽²⁾	33		33		50%	16,437		20%		3,287		Feb-2018	⁽³⁾	33		33
Port Orange I, LLC	50%	57,718		20%		11,544		Feb-2018	⁽²⁾	116		116		50%	57,508		20%		11,502		Feb-2018	⁽³⁾	116		116
Ambassador Infrastructure, LLC	65%	11,035		100%	⁽³⁾	11,035		Dec-2017	⁽⁴⁾	177		177		65%	11,035		100%	⁽⁴⁾	11,035		Dec-2017	⁽⁵⁾	177		177
				Total guaranty liability						$	412	$	412				Total guaranty liability						$	412	$	412


(1)	Excludes any extension options.


(2)	The loan is secured by Hammock Landing - Phase I and Hammock Landing - Phase II, respectively.


(3)	The loan has a one-year extension option, which is at the unconsolidated affiliate's election, for an outside maturity date of February 2019.


~~(3)~~(4)	The guaranty will be reduced to 50% on March ~~1st~~1 of such year as PILOT payments received and attributed to the prior calendar year by Ambassador Infrastructure and delivered to the lender are $1,200 or more, provided no event of default exists. The guaranty will be reduced to 20% when the PILOT payments are $1,400 or more, provided no event of default exists.


~~(4)~~(5)	The loan has two one-year extension options, which are the unconsolidated affiliate's election, for an outside maturity date of December 2019.

We have guaranteed the lease performance of YTC, an unconsolidated affiliate in which we own a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. We have guaranteed YTC’s performance under this agreement up to a maximum of $22.0 million, which decreases by $0.8 million annually until the guaranteed amount is reduced to $10.0 million. The guaranty expires on December 31, 2020. The maximum guaranteed obligation was $14.0 million as of ~~March 31,~~June 30, 2017. We entered into an agreement with our joint venture partner under which the joint venture partner has agreed to reimburse us 50% of any amounts we are obligated to fund under the guaranty. We did not include an obligation for this guaranty because we determined that the fair value of the guaranty was not material as of ~~March 31,~~June 30, 2017 and December 31, 2016.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgment about the effect of matters that are inherently uncertain and that may change in subsequent periods. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our Annual Report on Form 10-K for the year ended December 31, 2016 contains a discussion of our critical accounting policies and estimates in the Management's Discussion and Analysis of Financial Condition and Results of Operations section. There have been no material changes to these policies and estimates during the ~~three~~six months ended ~~March 31,~~June 30, 2017. Our significant accounting policies are disclosed in Note 2 to the consolidated financial statements included in our Annual Report on Form ~~10-K~~10‑K for the year ended December 31, 2016.

Recent Accounting Pronouncements

See Note 2 to the condensed consolidated financial statements for information on recently issued accounting pronouncements.

Impact of Inflation and Deflation

Deflation can result in a decline in general price levels, often caused by a decrease in the supply of money or credit. The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand. Restricted lending practices could impact our ability to obtain financings or refinancings for our properties and our tenants’ ability to obtain credit. Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.

During inflationary periods, substantially all of our tenant leases contain provisions designed to mitigate the impact of inflation. These provisions include clauses enabling us to receive percentage rent based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. In addition, many of the leases are for terms of less than 10 years, which may provide us the opportunity to replace existing leases with new leases at higher base and/or percentage rent if rents of the existing leases are below the then existing market rate. Most of the leases require the tenants to pay a fixed amount, subject to annual increases, for their share of operating expenses, including common area maintenance, real estate taxes, insurance and certain capital expenditures, which reduces our exposure to increases in costs and operating expenses resulting from inflation.

Non-GAAP Measure

Funds from Operations

FFO is a widely used non-GAAP measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. NAREIT defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships, joint ventures and noncontrolling interests are calculated on the same basis. We define FFO as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

We believe that FFO provides an additional indicator of the operating performance of our 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, we believe that FFO enhances investors’ understanding of our operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of our properties and interest rates, but also by our capital structure.

We present both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as we believe that both are useful performance measures. We believe FFO allocable to Operating Partnership common unitholders is a useful performance measure since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in our Operating Partnership. We believe 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) attributable to common shareholders.

In our reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders that is presented below, we make an adjustment to add back noncontrolling interest in income (loss) of our Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders. We then apply a percentage to FFO of the Operating Partnership common unitholders 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 held by noncontrolling interests during the period.

FFO does not represent cash flows from operations as defined by GAAP, 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 our operating performance.

The Company believes that it is important to identify the impact of certain significant items on its FFO measures for a reader to have a complete understanding of the Company’s results of operations. Therefore, the Company has also presented adjusted FFO measures excluding these significant items from the applicable periods. Please refer to the reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders below for a description of these adjustments.

FFO of the Operating Partnership decreased ~~2.2%~~20.9% to ~~$106.6~~$116.1 million for the three months ended ~~March 31,~~June 30, 2017 as compared to ~~$135.9~~$146.7 million for the prior-year period, and decreased 21.2% to $222.7 million for the six months ended June 30, 2017 as compared to $282.7 million for the prior-year period. Excluding the adjustments noted below, FFO of the Operating Partnership, as adjusted, decreased ~~7.4%~~15.9% for the three ~~month period~~months ended ~~March 31,~~June 30, 2017 to ~~$103.0~~$99.7 million compared to ~~$111.2~~$118.6 million for the same period in 2016, and decreased 11.8% for the six months ended June 30, 2017 to $202.7 million compared to $229.9 million for the same period in 2016. The decrease in FFO, as adjusted, was primarily driven by ~~lower percentage rent due to decreased sales, a decrease in tenant reimbursements and~~ dilution from asset sales in the prior ~~year. These decreases were partially offset~~year and the current year-to-date period and $5.0 million of abandoned projects expense in the current year periods. FFO, as adjusted, for the current year periods was also impacted by ~~increased rental rates~~higher interest expense, less gains on outparcel sales and ~~savings in operating costs.~~

lower revenues resulting from lower occupancy and bankruptcies.

The reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows (in ~~thousands)~~thousands, except per share data):

Three Months Ended
March 31,
2017 2016
Net income attributable to common shareholders $ 22,892
$ 28,851
Noncontrolling interest in income of Operating Partnership 3,690
4,945
Depreciation and amortization expense of:
Consolidated properties 71,220
76,506
Unconsolidated affiliates 9,543
9,178
Non-real estate assets (864 ) (837 )
Noncontrolling interests' share of depreciation and amortization (1,979 ) (2,393 )
Loss on impairment, net of tax 2,067
19,685
Loss on depreciable property 41
—
FFO allocable to Operating Partnership common unitholders 106,610
135,935
Litigation settlements, net of related expenses ⁽¹⁾
43
1,707
Nonrecurring professional fees reimbursement ⁽¹⁾
(925 ) —
Equity in earnings from disposals of unconsolidated affiliates ⁽²⁾
—
(26,395 )
Non-cash default interest expense 1,307
—
Gain on extinguishment of debt ⁽³⁾
(4,055 ) —
FFO allocable to Operating Partnership common unitholders, as adjusted $ 102,980
$ 111,247

FFO per diluted share $ 0.53
$ 0.68

FFO, as adjusted, per diluted share $ 0.52
$ 0.56

Weighted-average common and potential dilutive common shares outstanding with Operating Partnership units fully converted 199,281
199,758

(1) Litigation expense is included in General and administrative expense in the Consolidated Statements of Operations. Nonrecurring professional fees reimbursement is included in Interest and other income in the Consolidated Statements of Operations.
(2) For the three months ended March 31, 2016, includes $26,373 related to the sale of a 50% interest in an unconsolidated affiliate. This amount is included in Equity in earnings of unconsolidated affiliates in the Consolidated Statements of Operations.
(3) For the three months ended March 31, 2017, represents gain on extinguishment of debt related to the non-recourse loan secured by Midland Mall, which was conveyed to the lender in January 2017.



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net income attributable to common shareholders	$	30,173		$	51,696		$	53,065		$	80,547
Noncontrolling interest in income of Operating Partnership	5,093			8,483			8,783			13,428
Depreciation and amortization expense of:
Consolidated properties	82,509			72,205			153,729			148,711
Unconsolidated affiliates	9,357			9,156			18,900			18,334
Non-real estate assets	(792		)	(722		)	(1,656		)	(1,559		)
Noncontrolling interests' share of depreciation and amortization	(2,642		)	(2,055		)	(4,621		)	(4,448		)
Loss on impairment, net of taxes	43,183			43,493			45,250			63,178
Gain on depreciable property, net of taxes and noncontrolling interests' share	(50,797		)	(35,521		)	(50,756		)	(35,521		)
FFO allocable to Operating Partnership common unitholders	116,084			146,735			222,694			282,670
Litigation expenses ⁽¹⁾	9			—			52			1,707
Nonrecurring professional fees expense (reimbursement) ⁽¹⁾	6			1,119			(919		)	1,119



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Loss on investment ⁽²⁾	5,843			—			5,843			—
Equity in earnings from disposals of unconsolidated affiliates ⁽³⁾	—			(29,235		)	—			(55,630		)
Non-cash default interest expense ⁽⁴⁾	1,187			—			2,494			—
Gain on extinguishment of debt, net of noncontrolling interests' share ⁽⁵⁾	(23,395		)	—			(27,450		)	—
FFO allocable to Operating Partnership common unitholders, as adjusted	$	99,734		$	118,619		$	202,714		$	229,866

FFO per diluted share	$	0.58		$	0.73		$	1.12		$	1.41

FFO, as adjusted, per diluted share	$	0.50		$	0.59		$	1.02		$	1.15

Weighted-average common and potential dilutive common shares outstanding with Operating Partnership units fully converted	199,371			200,045			199,326			199,986

(1) Litigation expense and nonrecurring professional fees expense are included in General and Administrative expense in the Condensed Consolidated Statements of Operations. Nonrecurring professional fees reimbursement is included in Interest and Other Income in the Condensed Consolidated Statements of Operations.
(2) The three months and six months ended June 30, 2017 represents a loss on investment related to the write down of our 25% interest in River Ridge Mall based on the contract price to sell such interest to our joint venture partner.
(3) The three months and six months ended June 30, 2016 includes $29,267 related to the foreclosure of the loan secured by Gulf Coast Town Center. The six months ended June 30, 2016 also includes $26,373 related to the sale of our 50% interest in Triangle Town Center. These amounts are included in Equity in Earnings of Unconsolidated Affiliates in the Condensed Consolidated Statements of Operations.
(4) The three months and six months ended June 30, 2017 includes default interest expense related to Wausau Center and Chesterfield Mall. The six months ended June 30, 2017 also includes default interest expense related to Midland Mall.
(5) The three months and six months ended June 30, 2017 primarily represents gain on extinguishment of debt related to the non-recourse loan secured by Chesterfield Mall, which was conveyed to the lender in the second quarter of 2017. The three months and six months ended June 30, 2017 also includes loss on extinguishment of debt related to a prepayment fee on the early retirement of the loans secured by The Outlet Shoppes at Oklahoma City, which was sold in April 2017. The six months ended June 30, 2017 also includes gain on extinguishment of debt related to the non-recourse loan secured by Midland Mall, which was conveyed to the lender in the first quarter of 2017.

The reconciliation of diluted EPS to FFO per diluted share is as follows (in thousands):


	Three Months Ended March 31,				Three Months Ended June 30,						Six Months Ended June 30,
	2017		2016		2017			2016			2017			2016
Diluted EPS attributable to common shareholders	$	0.13	$	0.17	$	0.18		$	0.30		$	0.31		$	0.47
Eliminate amounts per share excluded from FFO:
Depreciation and amortization expense, including amounts from consolidated properties, unconsolidated affiliates, non-real estate assets and excluding amounts allocated to noncontrolling interests	0.39		0.42		0.44			0.39			0.83			0.81
Loss on impairment, net of tax	0.01		0.09
Loss on impairment, net of taxes					0.22			0.22			0.23			0.31
Gain on depreciable property, net of taxes and noncontrolling interests' share					(0.26		)	(0.18		)	(0.25		)	(0.18		)
FFO per diluted share	$	0.53	$	0.68	$	0.58		$	0.73		$	1.12		$	1.41

The reconciliations of FFO allocable to Operating Partnership common unitholders to FFO allocable to common shareholders, including and excluding the adjustments noted above, are as follows (in thousands):


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016			2017			2016
FFO allocable to Operating Partnership common unitholders	$	106,610		$	135,935		$	116,084		$	146,735		$	222,694		$	282,670
Percentage allocable to common shareholders⁽¹⁾	85.80		%	85.37		%	85.82		%	85.38		%	85.81		%	85.37		%
FFO allocable to common shareholders	$	91,471		$	116,048		$	99,623		$	125,282		$	191,094		$	241,315

FFO allocable to Operating Partnership common unitholders, as adjusted	$	102,980		$	111,247		$	99,734		$	118,619		$	202,714		$	229,866
Percentage allocable to common shareholders ⁽¹⁾	85.80		%	85.37		%	85.82		%	85.38		%	85.81		%	85.37		%
FFO allocable to common shareholders, as adjusted	$	88,357		$	94,972		$	85,592		$	101,277		$	173,949		$	196,237


(1)	Represents the weighted-average number of common shares outstanding for the period divided by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units held by noncontrolling interests during the period.

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risk exposures, including interest rate risk. The following discussion regarding our risk management activities includes forward-looking statements that involve risk and uncertainties. Estimates of future performance and economic conditions are reflected assuming certain changes in interest rates. Caution should be used in evaluating our overall market risk from the information presented below, as actual results may differ. We employ various derivative programs to manage certain portions of our market risk associated with interest rates. See Note 6 of the notes to condensed consolidated financial statements for further discussions of the qualitative aspects of market risk, including derivative financial instrument activity.

Interest Rate Risk

Based on our proportionate share of consolidated and unconsolidated variable-rate debt at ~~March 31,~~June 30, 2017, a 0.5% increase or decrease in interest rates on variable-rate debt would decrease or increase annual cash flows by approximately ~~$6.1~~$5.7 million and ~~$1.9~~$1.8 million, respectively, and increase or decrease annual interest expense, after the effect of capitalized interest, by approximately ~~$6.0~~$5.6 million and ~~$1.7~~$1.6 million, respectively.

Based on our proportionate share of total consolidated and unconsolidated debt at ~~March 31,~~June 30, 2017, a 0.5% increase in interest rates would decrease the fair value of debt by approximately ~~$86.9~~$83.0 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately ~~$90.0~~$85.8 million.

ITEM 4: Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, an evaluation was performed under the supervision of our Chief Executive Officer and Chief Financial Officer and with the participation of our management, of the effectiveness of the design and operation of the Company's and the Operating Partnership's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's and the Operating Partnership's disclosure controls and procedures are effective to ensure that information that the Company and the Operating Partnership are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and to ensure that information we are required to disclose is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company's or the Operating Partnership's internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings

We are currently involved in certain litigation that arises in the ordinary course of business, most of which is expected to be covered by liability insurance. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on our liquidity, results of operations, business or financial condition.

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risks that could materially affect our business, financial condition or results of operations that are discussed under the caption “Risk Factors” in Part I, Item1A of our Annual Report on Form 10-K for the year ended December 31, 2016. There have been no material changes to such risk factors since the filing of our Annual Report.

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds

Period
Total
Number
of Shares
Purchased ⁽¹⁾

Average
Price Paid
per
Share ⁽²⁾

Total Number
of Shares
Purchased as
Part of a
Publicly
Announced
Plan

Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Plan
January 1–31, 2017 —
$ —
—
$ —

February 1–28, 2017 27,335
10.69
—
—

March 1–31, 2017 —
—
—
—

Total 27,335
$ 10.69
—
$ —



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share ⁽²⁾		Total Number of Shares Purchased as Part of a Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
April 1–30, 2017	137	$	9.53	—	$	—
May 1–31, 2017	566	8.06		—	—
June 1–30, 2017	—	—		—	—
Total	703	$	8.35	—	$	—


(1)	Represents shares surrendered to the Company by employees to satisfy federal and state income tax requirements related to the vesting of shares of restricted stock.


(2)	Represents the market value of the common stock on the vesting date for the shares of restricted stock, which was used to determine the number of shares required to be surrendered to satisfy income tax withholding requirements.

Operating Partnership Units

During the three months ended June 30, 2017, the Operating Partnership elected to pay $0.5 million in cash to three holders of 65,904 common units of limited partnership interest in the Operating Partnership upon the exercise of their conversion rights. Of this total, less than $0.1 million was paid to one holder of 6,424 common units in April 2017 and $0.4 million was paid to two holders of 59,480 units in June 2017.

There is no established public trading market for the Operating Partnership’s common units and they are not registered under Section 12 of the Securities Exchange Act of 1934. Each limited partner in the Operating Partnership has the right to exchange all or a portion of its common units for shares of the Company’s common stock, or at the Company’s election, their cash equivalent.

ITEM 3: Defaults Upon Senior Securities

None.

ITEM 4: Mine Safety Disclosures

Not applicable.

ITEM 5: Other Information

None.

ITEM 6: Exhibits

The Exhibit Index attached to this report is incorporated by reference into this Item 6.

SIGNATURES

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/ Farzana Khaleel

Farzana Khaleel

Executive Vice President -

Chief Financial Officer and Treasurer

(Authorized Officer and Principal Financial Officer)

CBL & ASSOCIATES LIMITED PARTNERSHIP

By: CBL HOLDINGS I, INC., its general partner

/s/ Farzana Khaleel

Farzana Khaleel

Executive Vice President -

Chief Financial Officer and Treasurer

(Authorized Officer and Principal Financial Officer)

Date: ~~May 10,~~August 9, 2017

INDEX TO EXHIBITS



Exhibit Number		Description
~~10.2.12~~10.2.13		Amendment No. 2 to CBL & Associates Properties, Inc. ~~Named Executive Officer Annual~~2012 Stock Incentive ~~Compensation~~ Plan ~~(AIP) (Fiscal Year 2017)~~ * †
12.1		Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends of CBL & Associates Properties, Inc.
12.2		Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends of CBL & Associates Limited Partnership
12.3		Computation of Ratio of Earnings to Fixed Charges of CBL & Associates Properties, Inc.
12.4		Computation of Ratio of Earnings to Fixed Charges of CBL & Associates Limited Partnership
31.1		Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Properties, Inc.
31.2		Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Properties, Inc.
31.3		Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Limited Partnership
31.4		Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Limited Partnership
32.1		Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Properties, Inc.
32.2		Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Properties, Inc.
32.3		Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Limited Partnership
32.4		Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Limited Partnership
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

* Incorporated by reference from the Company’s Current Report on Form 8-K, dated May 8, 2017 and filed on May 12, 2017. Commission File No. 1-12494.



*	~~Incorporated by reference from the Company's Current Report on Form 8-K, dated February 7, 2017 and filed on February 13, 2017. Commission File No. 1-12494 and 333-182515-01~~
†	~~A management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of this report.~~

† A management contract or compensatory plan or arrangement.

5765



Three Months Ended March 31, 2016	Malls			Associated Centers			Community Centers			All Other⁽¹⁾			Total
Revenues	$	238,742		$	10,242		$	5,482		$	8,612		$	263,078
Property operating expenses ⁽²⁾	(75,377		)	(2,572		)	(1,143		)	2,888			(76,204		)
Interest expense	(34,395		)	(1,702		)	(298		)	(18,836		)	(55,231		)
Other expense	—			—			—			(9,685		)	(9,685		)
Segment profit (loss)	$	128,970		$	5,968		$	4,041		$	(17,021	)	121,958
Depreciation and amortization expense													(76,506		)
General and administrative expense													(17,168		)
Interest and other income													360
Gain on extinguishment of debt													6
Loss on impairment													(19,685		)
Income tax benefit													537
Equity in earnings of unconsolidated affiliates													32,390
Net income													$	41,892
Capital expenditures⁽³⁾	$	48,551		$	1,426		$	428		$	741		$	51,146



	Twelve Months Ended March 31,
	2017	2016	% Change
Stabilized mall same-center sales per square foot	$372	$382	(2.6)%