Edgar Filing: CBL & ASSOCIATES PROPERTIES INC

form10q.htm

UNITED STATES

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 SEPTEMBER 30, 2010

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.

(Exact Name of registrant as specified in its charter)

______________

DELAWARE 62-1545718

(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.

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).

Yes x No o

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

Large accelerated filer x Accelerated filer o

Non-accelerated filer o(Do not check if smaller reporting company) Smaller Reporting Company o

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

Yes o No x

As of November 3, 2010, there were 138,078,208 shares of common stock, par value $0.01 per share, outstanding.

CBL & Associates Properties, Inc.

Table of Contents

PART I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009	3

	Condensed Consolidated Statements of Operations for the Three and Nine Month Ended September 30, 2010 and 2009	4

	Condensed Consolidated Statements of Equity for the Nine Months Ended September 30, 2010 and 2009	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009	8

	Notes to Unaudited Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	51

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67

Item 3.	Defaults Upon Senior Securities	67

Item 4.	(Removed and Reserved)	67

Item 5.	Other Information	67

Item 6.	Exhibits	67

	SIGNATURE	68

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

CBL & Associates Properties, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

	September 30, 2010			December 31, 2009
ASSETS
Real estate assets:
Land	$	944,821		$	946,750
Buildings and improvements		7,568,635			7,569,015
		8,513,456			8,515,765
Less accumulated depreciation		(1,665,563	)		(1,505,840	)
		6,847,893			7,009,925
Held for sale		1,366			-
Developments in progress		121,299			85,110
Net investment in real estate assets		6,970,558			7,095,035
Cash and cash equivalents		56,668			48,062
Receivables:
Tenant, net of allowance for doubtful accounts of $3,193 in 2010 and $3,101 in 2009		73,942			73,170
Other		12,671			8,162
Mortgage and other notes receivable		37,866			38,208
Investments in unconsolidated affiliates		196,083			186,523
Intangible lease assets and other assets		267,692			279,950
	$	7,615,480		$	7,729,110

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness	$	5,424,870		$	5,616,139
Accounts payable and accrued liabilities		306,929			248,333
Total liabilities		5,731,799			5,864,472
Commitments and contingencies
Redeemable noncontrolling interests:
Redeemable noncontrolling partnership interests		27,650			22,689
Redeemable noncontrolling preferred joint venture interest		423,834			421,570
Total redeemable noncontrolling interests		451,484			444,259
Shareholders' equity:
Preferred Stock, $.01 par value, 15,000,000 shares authorized:
7.75% Series C Cumulative Redeemable Preferred Stock, 460,000 shares outstanding		5			5
7.375% Series D Cumulative Redeemable Preferred Stock, 1,330,000 and 700,000 shares outstanding in 2010 and 2009, respectively		13			7
Common Stock, $.01 par value, 350,000,000 shares authorized, 138,075,818 and 137,888,408 issued and outstanding in 2010 and 2009, respectively		1,381			1,379
Additional paid-in capital		1,504,421			1,399,654
Accumulated other comprehensive income		5,398			491
Accumulated deficit		(353,208	)		(283,640	)
Total shareholders' equity		1,158,010			1,117,896
Noncontrolling interests		274,187			302,483
Total equity		1,432,197			1,420,379
	$	7,615,480		$	7,729,110

The accompanying notes are an integral part of these balance sheets.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
REVENUES:
Minimum rents	$	171,240		$	168,577		$	509,911		$	510,586
Percentage rents		2,602			2,849			8,743			9,257
Other rents		4,259			3,377			13,417			11,788
Tenant reimbursements		78,957			78,463			234,900			241,353
Management, development and leasing fees		1,369			1,312			4,676			5,392
Other		7,404			7,881			21,875			20,946
Total revenues		265,831			262,459			793,522			799,322
EXPENSES:
Property operating		38,420			40,203			114,492			123,155
Depreciation and amortization		73,333			71,161			215,953			225,069
Real estate taxes		25,555			25,785			75,368			74,357
Maintenance and repairs		13,145			13,116			42,728			42,350
General and administrative		10,495			8,808			31,890			31,180
Loss on impairment of real estate		-			-			25,435			-
Other		6,351			7,714			19,467			18,785
Total expenses		167,299			166,787			525,333			514,896
Income from operations		98,532			95,672			268,189			284,426
Interest and other income		832			1,246			2,831			4,189
Interest expense		(72,053	)		(71,120	)		(218,854	)		(215,847	)
Loss on impairment of investments		-			(1,143	)		-			(8,849	)
Gain on sales of real estate assets		591			1,535			2,606			1,468
Equity in earnings (losses) of unconsolidated affiliates		(1,558	)		271			(610	)		1,867
Income tax benefit		1,264			1,358			5,052			603
Income from continuing operations		27,608			27,819			59,214			67,857
Operating income (loss) of discontinued operations		69			15			183			(67	)
Gain (loss) on discontinued operations		-			10			-			(62	)
Net income		27,677			27,844			59,397			67,728
Net income attributable to noncontrolling interests in:
Operating partnership		(3,605	)		(4,758	)		(4,992	)		(11,173	)
Other consolidated subsidiaries		(6,133	)		(6,497	)		(18,394	)		(19,208	)
Net income attributable to the Company		17,939			16,589			36,011			37,347
Preferred dividends		(8,359	)		(5,455	)		(22,745	)		(16,364	)
Net income attributable to common shareholders	$	9,580		$	11,134		$	13,266		$	20,983

The accompanying notes are an integral part of these statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

(Continued)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Basic per share data:
Income from continuing operations, net of preferred dividends	$	0.07	$	0.08	$	0.10	$	0.22
Discontinued operations		-		-		-		-
Net income attributable to common shareholders	$	0.07	$	0.08	$	0.10	$	0.22
Weighted average common shares outstanding		138,075		137,860		138,037		95,746
Diluted per share data:
Income from continuing operations, net of preferred dividends	$	0.07	$	0.08	$	0.10	$	0.22
Discontinued operations		-		-		-		-
Net income attributable to common shareholders	$	0.07	$	0.08	$	0.10	$	0.22
Weighted average common and potential dilutive common shares outstanding		138,121		137,897		138,079		95,782
Amounts attributable to common shareholders:
Income from continuing operations, net of preferred dividends	$	9,500	$	11,116	$	13,133	$	21,067
Discontinued operations		80		18		133		(84	)
Net income attributable to common shareholders	$	9,580	$	11,134	$	13,266	$	20,983

Dividends declared per common share	$	0.20	$	0.05	$	0.60	$	0.53

The accompanying notes are an integral part of these statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except per share data)

				Equity
				Shareholders' Equity
	Redeemable Noncontrolling Partnership Interests			Preferred Stock		Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Shareholders' Equity			Noncontrolling Interests			Total Equity

Balance, January 1, 2009	$	18,393		$	12	$	664	$	993,941		$	(12,786	)	$	(193,307	)	$	788,524		$	380,472		$	1,168,996
Net income		5,210			-		-		-			-			37,347			37,347			9,658			47,005
Other comprehensive income:
Net unrealized gain (loss) on available-for-sale securities		273			-		-		-			1,023			-			1,023			(16	)		1,007
Net unrealized gain on hedging instruments		574			-		-		-			5,459			-			5,459			2,402			7,861
Realized loss on foreign currency translation adjustment		3			-		-		-			44			-			44			28			72
Net unrealized gain on foreign currency translation adjustment		480			-		-		-			3,874			-			3,874			1,677			5,551
Total other comprehensive income		1,330																10,400			4,091			14,491
Dividends declared - common stock		-			-		-		-			-			(46,630	)		(46,630	)		-			(46,630	)
Dividends declared - preferred stock		-			-		-		-			-			(16,364	)		(16,364	)		-			(16,364	)
Issuance of common stock and restricted common stock		-			-		1		562			-			-			563			-			563
Issuance of common stock for dividend		-			-		48		14,691			-			-			14,739			-			14,739
Issuance of common stock in equity offering		-			-		666		381,157			-			-			381,823			-			381,823
Cancellation of restricted common stock		-			-		-		(117	)		-			-			(117	)		-			(117	)
Accrual under deferred compensation arrangements		-			-		-		46			-			-			46			-			46
Amortization of deferred compensation		-			-		-		1,877			-			-			1,877			-			1,877
Additions to deferred financing costs		-			-		-		-			-			-			-			35			35
Transfer from noncontrolling interests to redeemable noncontrolling interests		82,970			-		-		-			-			-			-			(82,970	)		(82,970	)
Issuance of noncontrolling interests for distribution		-			-		-		-			-			-			-			4,140			4,140
Distributions to noncontrolling interests		(11,271	)		-		-		-			-			-			-			(38,363	)		(38,363	)
Purchase of noncontrolling interest in other consolidated subsidiaries		-			-		-		217			-			-			217			(717	)		(500	)
Adjustment for noncontrolling interests		(4,521	)		-		-		21,215			-			-			21,215			(16,694	)		4,521
Adjustment to record redeemable noncontrolling interests at redemption value		4,009			-		-		(4,009	)		-			-			(4,009	)		-			(4,009	)
Balance, September 30, 2009	$	96,120		$	12	$	1,379	$	1,409,580		$	(2,386	)	$	(218,954	)	$	1,189,631		$	259,652		$	1,449,283

The accompanying notes are an integral part of these statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except per share data)

				Equity
				Shareholders' Equity
	Redeemable Noncontrolling Partnership Interests			Preferred Stock		Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Total Shareholders' Equity			Noncontrolling Interests			Total Equity

Balance, January 1, 2010	$	22,689		$	12	$	1,379	$	1,399,654		$	491		$	(283,640	)	$	1,117,896		$	302,483		$	1,420,379
Net income		2,997			-		-		-			-			36,011			36,011			4,935			40,946
Other comprehensive income (loss):
Net unrealized gain on available-for-sale securities		44			-		-		-			3,879			-			3,879			1,431			5,310
Net unrealized gain on hedging instruments		21			-		-		-			1,867			-			1,867			681			2,548
Realized loss on foreign currency translation adjustment		1			-		-		-			123			-			123			45			168
Net unrealized gain (loss) on foreign currency translation adjustment		(397	)		-		-		-			(962	)		-			(962	)		1,203			241
Total other comprehensive income (loss)		(331	)															4,907			3,360			8,267
Dividends declared - common stock		-			-		-		-			-			(82,834	)		(82,834	)		-			(82,834	)
Dividends declared - preferred stock		-			-		-		-			-			(22,745	)		(22,745	)		-			(22,745	)
Issuance of Series D preferred stock		-			6		-		121,262			-			-			121,268			-			121,268
Issuance of common stock and restricted common stock		-			-		1		164			-			-			165			-			165
Cancellation of restricted common stock		-			-		-		(175	)		-			-			(175	)		-			(175	)
Exercise of stock options		-			-		1		941			-			-			942			-			942
Accrual under deferred compensation arrangements		-			-		-		30			-			-			30			-			30
Amortization of deferred compensation		-			-		-		1,844			-			-			1,844			-			1,844
Income tax effect of share-based compensation		(10	)		-		-		(1,468	)		-			-			(1,468	)		(337	)		(1,805	)
Distributions to noncontrolling interests		(7,787	)		-		-		-			-			-			-			(43,993	)		(43,993	)
Adjustment for noncontrolling interests		2,311			-		-		(10,050	)		-			-			(10,050	)		7,739			(2,311	)
Adjustment to record redeemable noncontrolling interests at redemption value		7,781			-		-		(7,781	)		-			-			(7,781	)		-			(7,781	)
Balance, September 30, 2010	$	27,650		$	18	$	1,381	$	1,504,421		$	5,398		$	(353,208	)	$	1,158,010		$	274,187		$	1,432,197

The accompanying notes are an integral part of these statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2010			2009

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	59,397		$	67,728
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		147,013			145,389
Amortization		69,003			79,976
Amortization of deferred finance costs and debt premiums (discounts)		5,219			(767	)
Net amortization of intangible lease assets and liabilities		(1,481	)		(2,061	)
Gain on sales of real estate assets		(2,606	)		(1,468	)
Realized foreign currency loss		169			76
Loss on discontinued operations		-			62
Write-off of development projects		420			1,346
Share-based compensation expense		1,932			2,363
Income tax effect of share-based compensation		(1,815	)		-
Loss on impairment of investments		-			8,849
Loss on impairment of real estate		25,435			-
Equity in (earnings) losses of unconsolidated affiliates		610			(1,867	)
Distributions of earnings from unconsolidated affiliates		3,554			8,175
Provision for doubtful accounts		2,950			4,487
Change in deferred tax accounts		2,245			386
Changes in:
Tenant and other receivables		(8,623	)		(2,868	)
Other assets		(5,918	)		(6,028	)
Accounts payable and accrued liabilities		(7,666	)		(5,931	)
Net cash provided by operating activities		289,838			297,847

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets		(80,689	)		(174,163	)
Distributions from restricted cash		16,837			2,700
Proceeds from sales of real estate assets		5,485			7,183
Additions to mortgage notes receivable		-			(3,851	)
Payments received on mortgage notes receivable		1,485			14,297
Purchases of available-for-sale securities		(9,975	)		-
Additional investments in and advances to unconsolidated affiliates		(22,019	)		(56,895	)
Distributions in excess of equity in earnings of unconsolidated affiliates		28,548			60,614
Changes in other assets		(4,089	)		27,424
Net cash used in investing activities		(64,417	)		(122,691	)

The accompanying notes are an integral part of these statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

(Continued)

	Nine Months Ended September 30,
	2010			2009


CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	637,113		$	456,362
Principal payments on mortgage and other indebtedness		(824,371	)		(868,120	)
Additions to deferred financing costs		(4,418	)		(13,422	)
Proceeds from issuances of common stock		104			381,928
Proceeds from issuances of preferred stock		121,268			-
Proceeds from exercises of stock options		942			-
Income tax benefit from share-based compensation		1,815			-
Purchase of noncontrolling interest in other consolidated subsidiaries		-			(500	)
Distributions to noncontrolling interests		(64,409	)		(54,530	)
Dividends paid to holders of preferred stock		(22,745	)		(16,364	)
Dividends paid to common shareholders		(62,114	)		(49,564	)
Net cash used in financing activities		(216,815	)		(164,210	)

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH		-			1,329
NET CHANGE IN CASH AND CASH EQUIVALENTS		8,606			12,275
CASH AND CASH EQUIVALENTS, beginning of period		48,062			51,227
CASH AND CASH EQUIVALENTS, end of period	$	56,668		$	63,502

SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	212,343		$	218,911

The accompanying notes are an integral part of these statements.

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CBL & Associates Properties, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except per share data)

Note 1 – Organization and Basis of Presentation

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 centers, community centers and office properties. Its properties are located in 28 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”).At September 30, 2010, the Operating Partnership owned controlling interests in 76 regional malls/open-air centers (including one mixed-use center), 30 associated centers (each located adjacent to a regional mall), ten community centers, and 13 office buildings, including CBL’s corporate office building. 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 variable interest entity. At September 30, 2010, the Operating Partnership owned non-controlling interests in eight regional malls, four associated centers, four community centers and six office buildings. Because one or more of the other partners have substantive participating rights, the Operating Partnership does not control these partnerships and joint ventures and, accordingly, accounts for these investments using the equity method. The Operating Partnership had controlling interests in one mall expansion, one community center expansion, and one community center, owned in a 75/25 joint venture, under construction at September 30, 2010. 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 September 30, 2010, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.1% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned a 71.6% limited partner interest for a combined interest held by CBL of 72.7%.

The noncontrolling interest in the Operating Partnership is held primarily by CBL & Associates, Inc. and its affiliates (collectively “CBL’s Predecessor”) and by affiliates of The Richard E. Jacobs Group, Inc. (“Jacobs”). CBL’s Predecessor 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. Jacobs contributed their interests in certain real estate properties and joint ventures to the Operating Partnership in exchange for limited partner interests when the Operating Partnership acquired the majority of Jacobs’ interests in 23 properties in January 2001 and the balance of such interests in February 2002. At September 30, 2010, CBL’s Predecessor owned a 9.8% limited partner interest, Jacobs owned a 12.1% limited partner interest and third parties owned a 5.4% limited partner interest in the Operating Partnership. CBL’s Predecessor also owned 7.3 million shares of CBL’s common stock at September 30, 2010, for a total combined effective interest of 13.6% in the Operating Partnership.

The Operating Partnership conducts CBL’s property management and development activities through CBL & Associates Management, Inc. (the “Management Company”) to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”). The Operating Partnership owns 100% of both of the Management Company’s preferred stock and common stock.

CBL, the Operating Partnership and the Management Company are collectively referred to herein as “the Company”.

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. 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. Material

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intercompany transactions have been eliminated. The results for the interim period ended September 30, 2010 are not necessarily indicative of the results to be obtained for the full fiscal year.

Certain historical amounts have been reclassified to conform to the current year presentation. The financial results of certain properties are reported as discontinued operations in the condensed consolidated financial statements. Except where noted, the information presented in the Notes to Unaudited Condensed Consolidated Financial Statements excludes discontinued operations.

In April 2009, the Company paid its first quarter dividend on its common stock of $0.37 per share in cash and shares of common stock. The Company issued 4,754,355 shares of its common stock in connection with the dividend, which resulted in an increase of approximately 7.2% in the number of shares outstanding. The Company elected to treat the issuance of its common stock as a stock dividend for earnings per share (“EPS”) purposes pursuant to accounting guidance that was in effect at that time. Therefore, all share and per share information related to EPS was adjusted proportionately to reflect the additional common stock issued on a retrospective basis. However, in January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-01, Accounting for Stock Dividends, Including Distributions to Shareholders with Components of Stock and Cash (“ASU 2010-01”) requiring that stock dividends such as the one the Company made in April 2009 be treated as a stock issuance that is reflected in share and per share information related to EPS on a prospective basis. Pursuant to the provisions of ASU 2010-01, the Company adopted this guidance on a retrospective basis. Thus, the share and per share information related to EPS for the three and nine months ended September 30, 2009 as previously presented in the Company’s Form 10-Q for the quarterly period ended September 30, 2009, has been revised herein to reflect this adoption.

These condensed consolidated financial statements should be read in conjunction with CBL’s audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 22, 2010, as amended on March 31, 2010.

Note 2 – New Accounting Guidance

Effective January 1, 2010, the Company adopted ASU No. 2010-06, Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 provides that significant transfers in or out of measurements classified as Levels 1 or 2 should be disclosed separately along with reasons for the transfers. Information regarding purchases, sales, issuances and settlements related to measurements classified as Level 3 are also to be presented separately. Existing disclosures have been updated to include fair value measurement disclosures for each class of assets and liabilities and information regarding the valuation techniques and inputs used to measure fair value in measurements classified as either Levels 2 or 3. The guidance was effective for fiscal years beginning after December 15, 2009, excluding the provision relating to the rollforward of Level 3 activity which has been deferred until January 1, 2011. The adoption did not have an impact on the Company’s condensed consolidated financial statements.

Effective January 1, 2010, the Company adopted ASU No. 2009-16, Transfers and Servicing: Accounting for Transfers of Financial Assets (“ASU 2009-16”). The guidance eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets and requires additional related disclosures. The adoption did not have an impact on the Company’s condensed consolidated financial statements.

Effective January 1, 2010, the Company adopted ASU No. 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (“ASU 2009-17”). ASU 2009-17 modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting, or similar, rights should be consolidated. The guidance clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. This guidance requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. It also requires additional disclosure about a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. The adoption did not have an impact on the Company’s condensed consolidated financial statements.

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On February 24, 2010, the FASB issued ASU No. 2010-09, Subsequent Events: Amendments to Certain Recognition and Disclosure Requirements (“ASU 2010-09”). ASU 2010-09 amends the disclosure provision related to subsequent events by removing the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated. The new accounting guidance was effective immediately and was adopted by the Company upon the date of issuance.

Note 3 – Fair Value Measurements

The Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy 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 following tables set forth information regarding the Company’s financial instruments that are measured at fair value in the condensed consolidated balance sheets as of September 30, 2010 and December 31, 2009:

			Fair Value Measurements at Reporting Date Using
	Fair Value at September 30, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Assets:
Available-for-sale securities	$	19,369	$	19,369	$	-	$	-
Privately held debt and equity securities		2,475		-		-		2,475
Interest rate caps		3		-		3		-

Liabilities:
Interest rate swaps	$	144	$	-	$	144	$	-

			Fair Value Measurements at Reporting Date Using
	Fair Value at December 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Assets:
Available-for-sale securities	$	4,039	$	4,039	$	-	$	-
Privately held debt and equity securities		2,475		-		-		2,475
Interest rate cap		2		-		2		-

Liabilities:
Interest rate swaps	$	2,907	$	-	$	2,907	$	-

Intangible lease assets and other assets in the condensed consolidated balance sheets include marketable securities consisting of corporate equity securities that are classified as available for sale. Net unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of accumulated other comprehensive income in redeemable noncontrolling interests, shareholders’ equity and noncontrolling interests. If a decline in the value of an investment is deemed to be other than temporary, the investment is written down to fair value and an impairment loss is recognized in the current period to the extent of the decline in value. During the three and nine month periods ended September 30, 2010 and 2009, the Company did not recognize any realized gains and losses or write-downs related to sales or disposals of marketable securities or other-than-temporary impairments. The fair value of the Company’s available-for-sale securities is based on quoted market prices and, thus, is classified under Level 1. The following is a summary of the equity securities held by the Company as of September 30, 2010 and December 31, 2009:

			Gross Unrealized
	Adjusted Cost		Gains		Losses		Fair Value

September 30, 2010	$	14,182	$	5,191	$	4	$	19,369
December 31, 2009	$	4,207	$	-	$	168	$	4,039

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In February 2007, the Company received a secured convertible promissory note from, and a warrant to acquire shares of, Jinsheng Group (“Jinsheng”), in which the Company also holds a cost-method investment. The secured convertible note is non-interest bearing and is secured by shares of Jinsheng. Since the secured convertible note is non-interest bearing and there is no active market for Jinsheng’s debt, the Company performed an analysis on the note considering credit risk and discounting factors to determine the fair value. The warrant was initially valued using estimated share price and volatility variables in a Black Scholes model. Due to the significant estimates and assumptions used in the valuation of the note and warrant, the Company has classified these under Level 3. As part of its investment review as of March 31, 2009, the Company determined that its investment in Jinsheng was impaired on an other-than-temporary basis due to a decline in expected future cash flows as a result of declining occupancy and sales related to the then downturn of the real estate market in China. An impairment charge of $2,400 was recorded in the Company’s condensed consolidated statement of operations for the nine month period ended September 30, 2009, to reduce the carrying values of the secured convertible note and warrant to their estimated fair values. The warrant expired in January 2010 and had no value. The Company performed qualitative and quantitative analyses of its investment as of September 30, 2010 and determined that the current balance of the secured convertible note of $2,475 is not impaired. See Note 4 for further discussion.

The Company uses interest rate swaps to mitigate the effect of interest rate movements on its variable-rate debt. The Company currently has two interest rate swaps included in accounts payable and accrued liabilities and two interest rate caps included in intangible lease assets and other assets in the accompanying condensed consolidated balance sheets that qualify as hedging instruments and are designated as cash flow hedges. The swaps and caps have predominantly met the effectiveness test criteria since inception and changes in their fair values are, thus, primarily reported in other comprehensive income and are reclassified into earnings in the same period or periods during which the hedged items affect earnings. The fair values of the Company’s interest rate hedge instruments, classified under Level 2, are determined using a proprietary model which is based on prevailing market data for contracts with matching durations, current and anticipated London Interbank Offered Rate (“LIBOR”) information, consideration of the Company’s credit standing, credit risk of the counterparties and reasonable estimates about relevant future market conditions. See Note 5 for further information regarding the Company’s interest rate hedging activity.

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 notes receivable is a reasonable estimate of fair value. The estimated fair value of mortgage and other indebtedness was $5,865,680 and $5,830,722 at September 30, 2010 and December 31, 2009, respectively. The estimated fair value was calculated by discounting future cash flows for the mortgage and other indebtedness using estimated market rates at which similar loans would be made currently.

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The fair value of long-lived assets measured on a nonrecurring basis is classified as Level 3 due to the use of significant unobservable inputs. The Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when its estimated future undiscounted cash flows are less than its carrying value. If it is determined that impairment has occurred, the amount of the impairment charge is equal to the excess of the asset’s carrying value over its estimated fair value. The Company’s estimates of undiscounted cash flows expected to be generated by each property are based on a number of assumptions such as leasing expectations, operating budgets, estimated useful lives, future maintenance expenditures, intent to hold for use and capitalization rates. These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter the assumptions used, the future cash flows estimated in the Company’s impairment analyses may not be achieved. During the course of the Company’s normal quarterly impairment review process for the second quarter of 2010, it was determined that a write-down of the depreciated book value of Oak Hollow Mall in High Point, NC, to its estimated fair value was necessary, resulting in a non-cash loss on impairment of real estate assets of $25,435 for the nine months ended September 30, 2010.

Note 4 – Unconsolidated Affiliates, Noncontrolling Interests and Cost Method Investments

Unconsolidated Affiliates

At September 30, 2010, 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

CBL-TRS Joint Venture, LLC	Friendly Center, The Shops at Friendly Center and a portfolio of six office buildings		50.0	%
CBL-TRS Joint Venture II, LLC	Renaissance Center		50.0	%
Governor’s Square IB	Governor’s Plaza		50.0	%
Governor’s Square Company	Governor’s Square		47.5	%
High Pointe Commons, LP	High Pointe Commons		50.0	%
High Pointe Commons II-HAP, LP	High Pointe Commons - Christmas Tree Shop		50.0	%
Imperial Valley Mall L.P.	Imperial Valley Mall		60.0	%
Imperial Valley Peripheral L.P.	Imperial Valley Mall (vacant land)		60.0	%
JG Gulf Coast Town Center LLC	Gulf Coast Town Center		50.0	%
Kentucky Oaks Mall Company	Kentucky Oaks Mall		50.0	%
Mall of South Carolina L.P.	Coastal Grand—Myrtle Beach		50.0	%
Mall of South Carolina Outparcel L.P.	Coastal Grand—Myrtle Beach (Coastal Grand Crossing and vacant land)		50.0	%
Parkway Place L.P.	Parkway Place (1)		50.0	%
Port Orange I, LLC	The Pavilion at Port Orange Phase I		50.0	%
Triangle Town Member LLC	Triangle Town Center, Triangle Town Commons and Triangle Town Place		50.0	%
West Melbourne I, LLC	Hammock Landing Phase I and II		50.0	%
York Town Center, LP	York Town Center		50.0	%

(1)	The Company acquired its joint venture partner's 50.0% interest in Parkway Place in October 2010.

Although the Company has majority ownership of certain of these joint ventures, it has evaluated these investments and concluded that the other partners or owners in these joint ventures have 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;

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·	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.

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

	Total for the Three Months Ended September 30,						Company's Share for the Three Months Ended September 30,
	2010			2009			2010			2009

Revenues	$	38,814		$	41,087		$	17,884		$	22,873
Depreciation and amortization expense		(13,712	)		(12,883	)		(5,681	)		(7,343	)
Interest expense		(14,228	)		3,140			(5,658	)		(7,330	)
Other operating expenses (1)		(12,535	)		(14,098	)		(8,047	)		(8,164	)
Gain (loss) on sales of real estate assets		(1	)		(2	)		(47	)		231
Operating income (loss) of discontinued operations		(19	)		8			(9	)		4
Net income (loss)	$	(1,681	)	$	17,252		$	(1,558	)	$	271

	Total for the Nine Months Ended September 30,						Company's Share for the Nine Months Ended September 30,
	2010			2009			2010			2009

Revenues	$	116,187		$	122,182		$	60,195		$	70,216
Depreciation and amortization expense		(40,957	)		(38,422	)		(20,885	)		(22,237	)
Interest expense		(41,929	)		(38,374	)		(21,269	)		(22,548	)
Other operating expenses		(36,162	)		(41,142	)		(18,800	)		(24,468	)
Gain on sales of real estate assets		1,289			1,687			73			877
Operating income of discontinued operations		151			54			76			27
Net income (loss)	$	(1,421	)	$	5,985		$	(610	)	$	1,867

(1)	The Company's share of other operating expenses for the three months ended September 30, 2010 includes an adjustment of $2,119 to true up the earnings allocated to it based on the terms of certain joint venture agreements. There is no effect of this adjustment on any other period presented.

Mall Shopping Center Company

In June 2010, the Company’s 50.6% owned unconsolidated joint venture, Mall Shopping Center Company, sold Plaza del Sol in Del Rio, TX. The joint venture recognized a gain of $1,244 from the sale, of which the Company’s share was $75, net of the excess of its basis over its underlying equity in the amount of $554. The results of operations of Mall Shopping Center Company have been reclassified to discontinued operations in the tables above for all periods presented.

CBL Macapa

In September 2008, the Company entered into a condominium partnership agreement with several individual investors to acquire a 60% interest in a new retail development in Macapa, Brazil. The Company provided total funding of $1,189 related to the development. In December 2009, the Company entered into an agreement to sell its 60% interest in this partnership with one of the condominium partnership’s investors for a gross sales price of $1,263, less closing costs for a net sales price of $1,201. The sale closed in March 2010. Upon closing, the buyer paid $200 and gave the Company two notes receivable totaling $1,001, both with an interest rate of 10%, for the remaining balance of the purchase price. There was no gain or loss on this sale. On April 22, 2010, the buyer paid the first note of $300, due on April 23, 2010, plus applicable interest. Upon maturity of the second note of $701, due on June 8, 2010, the buyer requested additional time for payment. The

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Company and buyer have agreed to revised terms regarding the second note of which the buyer will pay monthly installments of $45 from July 2010 to June 2011, with a final balloon installment of $161 due in July 2011. Interest on the revised note is payable at maturity.

Parkway Place L.P.

In October 2010, the Company acquired the remaining 50% interest in Parkway Place in Huntsville, AL, from its joint venture partner. The interest was acquired for total consideration of $38,775, which consisted of $17,831 in cash and the assumption of the remaining $20,944 interest in the loan secured by Parkway Place.

Noncontrolling Interests

Noncontrolling interests include 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. Noncontrolling interests also includes the aggregate noncontrolling ownership interest in the Company’s other 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. As of September 30, 2010, the total noncontrolling interests of $274,187 consisted of third-party interests in the Operating Partnership and in other consolidated subsidiaries of $273,577 and $610, respectively. The total noncontrolling interests at December 31, 2009 of $302,483 consisted of third-party interests in the Operating Partnership and in other consolidated subsidiaries of $301,808 and $675, respectively.

Redeemable noncontrolling interests include a noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which the partnership agreement includes redemption provisions that may require the Company to redeem the partnership interest for real property. Redeemable noncontrolling interests also includes the aggregate noncontrolling ownership interest in other consolidated subsidiaries that is held by third parties and for which the related partnership agreements contain redemption provisions at the holder’s election that allow for redemption through cash and/or properties. The total redeemable noncontrolling partnership interests of $27,650 as of September 30, 2010 consisted of third-party interests in the Operating Partnership and in the Company’s consolidated subsidiary that provides security and maintenance services to third parties of $21,112 and $6,538, respectively. At December 31, 2009, the total redeemable noncontrolling partnership interests of $22,689 consisted of third-party interests in the Operating Partnership and in the Company’s consolidated security and maintenance services subsidiary of $16,194 and $6,495, respectively.

The redeemable noncontrolling preferred joint venture interest includes the preferred joint venture units (“PJV units”) issued to the Westfield Group (“Westfield”) for the acquisition of certain properties during 2007. See Note 9 for additional information related to the PJV units. Activity related to the redeemable noncontrolling preferred joint venture interest represented by the PJV units is as follows:

	Nine Months Ended September 30,
	2010			2009
Beginning Balance	$	421,570		$	421,279
Net income attributable to redeemable noncontrolling preferred joint venture interest		15,454			15,513
Distributions to redeemable noncontrolling preferred joint venture interest		(15,336	)		(15,278	)
Issuance of preferred joint venture units		2,146			-
Ending Balance	$	423,834		$	421,514

During the third quarter of 2010, the Company issued $2,146 of additional PJV units to Westfield in conjunction with a true-up of amounts that were estimated at the time of the joint venture’s formation.

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OK City Outlets, LLC

In October 2010, the Company announced that it had formed a 75/25 joint venture, OK City Outlets, LLC, with Horizon Group Properties, Inc. to develop The Outlet Shoppes at Oklahoma City in Oklahoma City, OK. The partners contributed equity of $16,187 at formation, of which the Company contributed $12,140. The joint venture has received a construction loan commitment of $48,900 and the Company will guarantee the entire amount.

Cost Method Investments

In February 2007, the Company acquired a 6.2% noncontrolling interest in subsidiaries of Jinsheng, an established mall operating and real estate development company located in Nanjing, China, for $10,125. As of September 30, 2010, Jinsheng owns controlling interests in four home decor shopping centers, two general retail shopping centers and four development sites.

Jinsheng also issued to the Company a secured convertible promissory note in exchange for cash of $4,875. The note is secured by 16,565,534 Series 2 Ordinary Shares of Jinsheng. The secured note is non-interest bearing and matures upon the earlier to occur of (i) January 22, 2012, (ii) the closing of the sale, transfer or other disposition of substantially all of Jinsheng’s assets, (iii) the closing of a merger or consolidation of Jinsheng or (iv) an event of default, as defined in the secured note. In lieu of the Company’s right to demand payment on the maturity date, the Company may, at its sole option, convert the outstanding amount of the secured note into 16,565,534 Series A-2 Preferred Shares of Jinsheng (which equates to a 2.275% ownership interest).

Jinsheng also granted the Company a warrant to acquire 5,461,165 Series A-3 Preferred Shares for $1,875. The warrant expired on January 22, 2010.

The Company accounts for its noncontrolling interest in Jinsheng using the cost method because the Company does not exercise significant influence over Jinsheng and there is no readily determinable market value of Jinsheng’s shares since they are not publicly traded. The Company initially recorded the secured note at its estimated fair value of $4,513, which included a discount of $362 due to the fact that it is non-interest bearing. The discount was amortized to interest income over the term of the secured note using the effective interest method through March 2009, at which time the Company recorded an other-than-temporary impairment charge partially related to the secured note. See Note 3 for further discussion. The noncontrolling interest and the secured note are reflected as investment in unconsolidated affiliates in the accompanying condensed consolidated balance sheets.

As part of its investment review as of March 31, 2009, the Company determined that its noncontrolling interest in Jinsheng was impaired on an other-than-temporary basis due to a decline in expected future cash flows. The decrease resulted from declining occupancy rates and sales due to the then downturn of the real estate market in China. An impairment charge of $5,306 was recorded in the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2009 to reduce the carrying value of the Company’s cost-method investment to its estimated fair value. The Company performed qualitative and quantitative analyses of its noncontrolling investment as of September 30, 2010 and determined that the current balance of its investment is not impaired.

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Note 5 – Mortgage and Other Indebtedness

Mortgage and other indebtedness consisted of the following at September 30, 2010 and December 31, 2009, respectively:

	September 30, 2010					December 31, 2009
	Amount		Weighted Average Interest Rate (1)			Amount		Weighted Average Interest Rate (1)
Fixed-rate debt:
Non-recourse loans on operating properties (2)	$	3,723,900		5.82	%	$	3,932,572		6.02	%
Recourse loans on operating properties (2)		71,204		4.55	%		117,146		4.64	%
Total fixed-rate debt		3,795,104		5.79	%		4,049,718		5.99	%
Variable-rate debt:
Non-recourse term loans on operating properties		43,750		2.51	%		-		0.00	%
Recourse term loans on operating properties		399,154		2.51	%		242,763		1.68	%
Secured lines of credit		744,044		3.75	%		759,206		4.19	%
Unsecured term facilities		437,494		1.64	%		437,494		1.73	%
Construction loans		5,324		3.43	%		126,958		2.48	%
Total variable-rate debt		1,629,766		2.84	%		1,566,421		2.97	%
Total	$	5,424,870		4.91	%	$	5,616,139		5.15	%

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

(2)

The Company has an interest rate swap on a notional amount of $40,000 as of September 30, 2010 and two interest rate swaps on notional amounts totaling $127,500 as of December 31, 2009 related to its variable-rate loans on operating properties to effectively fix the interest rates on the respective loans. Therefore, these amounts are reflected in fixed-rate debt in each applicable period.

Secured Lines of Credit

The Company has three secured lines of credit that are used for mortgage retirement, working capital, construction and acquisition purposes, as well as issuances of letters of credit. Each of these lines is secured by mortgages on certain of the Company’s operating properties. Borrowings under the secured lines of credit bear interest at LIBOR, subject to a floor of 1.50%, plus a margin ranging from 1.45% to 4.25% and had a weighted average interest rate of 3.75% at September 30, 2010. The Company also pays fees based on the amount of unused availability under its two largest secured lines of credit at an annual rate of 0.35% of unused availability. The following summarizes certain information about the secured lines of credit as of September 30, 2010:

Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date
$	560,000	$	518,920		August 2011	April 2014
	525,000		220,124	(1)	February 2012	February 2013
	105,000		5,000		June 2012	N/A
$	1,190,000	$	744,044

(1)	There was an additional $7,291 outstanding on this secured line of credit as of September 30, 2010 for letters of credit. Up to $50,000 of the capacity on this line can be used for letters of credit.

In July 2010, the Company closed on the extension and modification of its secured credit facility with total capacity of $105,000. The facility’s maturity date was extended to June 2012 at its existing interest rate of LIBOR, subject to a floor of 1.50%, plus a margin of 300 basis points. The total capacity on this line of credit was scheduled to decrease to $82,500 at June 1, 2011 due to an exiting participant lender that has provided $22,500 of this facility’s total capacity, unless a replacement lender was found. The Company executed an agreement with a replacement lender on November 2, 2010 for the full amount of the exiting participant’s portion of the facility’s total capacity.

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Unsecured Term Loans

The Company has an unsecured term loan with total capacity of $228,000 that bears interest at LIBOR plus a margin of 1.50% to 1.80% based on the Company’s leverage ratio, as defined in the loan agreement. At September 30, 2010, the outstanding borrowings of $228,000 under the unsecured term loan had a weighted average interest rate of 1.87%. The loan matures in April 2011 and has two one-year extension options, which are at the Company’s election, for an outside maturity date of April 2013.

The Company has an unsecured term loan that was obtained for the exclusive purpose of acquiring certain properties from the Starmount Company or its affiliates. At September 30, 2010, the outstanding borrowings of $209,494 under this loan had a weighted average interest rate of 1.38%. The Company completed its acquisition of the properties in February 2008 and, as a result, no further draws can be made against the loan. The unsecured term loan bears interest at LIBOR plus a margin of 0.95% to 1.40% based on the Company’s leverage ratio, as defined in the agreement to the loan. Net proceeds from a sale, or the Company’s share of excess proceeds from any refinancings, of any of the properties originally purchased with borrowings from this unsecured term loan must be used to pay down any remaining outstanding balance. The loan matures in November 2010 and has two one-year extension options, which are at the Company’s election, for an outside maturity date of November 2012.

Letters of Credit

At September 30, 2010, the Company had additional secured and unsecured lines of credit with a total commitment of $20,971 that can only be used for issuing letters of credit. The letters of credit outstanding under these lines of credit totaled $17,655 at September 30, 2010.

Mortgages on Operating Properties

During the third quarter of 2010, the Company repaid four commercial mortgage-backed securities (“CMBS”) loans with borrowings from the $560,000 credit facility. The principal balances that were repaid and the properties securing each loan were as follows: $29,710 secured by Stroud Mall in Stroudsburg, PA; $47,449 secured by York Galleria in York, PA; and $55,360 secured by Parkdale Mall and Parkdale Crossing in Beaumont, TX. Each of these properties was added to the collateral pool securing the $560,000 facility.

Also during the third quarter of 2010, the Company closed on a $65,000 ten-year, non-recourse CMBS loan with a fixed interest rate of 6.50% secured by Valley View Mall in Roanoke, VA. The new loan replaced an existing loan with a principal balance of $40,639 that was scheduled to mature in September 2010. The excess proceeds received from the refinancing were used to pay down the Company’s secured credit facilities.

During the second quarter of 2010, the Company entered into an $83,000 ten-year, non-recourse CMBS loan with a fixed interest rate of 6.00% secured by Burnsville Center in Minneapolis, MN. The loan replaced an existing $60,683 loan that was scheduled to mature in August 2010. The Company also entered into an eight-year $115,000 loan with a fixed interest rate of 6.98% secured by CoolSprings Galleria in Nashville, TN. Proceeds from the new loan, plus cash on hand, were used to retire an existing loan of $120,463 that was scheduled to mature in September 2010. Additionally, the Company closed on a new ten-year $14,800 loan with a fixed interest rate of 7.25% secured by The Terrace, a community center in Chattanooga, TN. Excess proceeds from these financing activities were used to pay down the Company’s secured credit facilities.

Also during the second quarter, the Company repaid a CMBS loan with a principal balance of $8,988 secured by WestGate Crossing in Spartanburg, SC with borrowings from the $560,000 credit facility and the property was added to the collateral pool securing that facility.

During the first quarter of 2010, the Company closed on a variable-rate $72,000 non-recourse loan that bears interest at LIBOR plus a margin of 400 basis points secured by St. Clair Square in Fairview Heights, IL. The new loan replaced an existing loan with a principal balance of $57,237. The Company has an interest rate cap in place on this loan to limit the LIBOR rate to a maximum of 3.00%. The cap matures in January 2012. The excess proceeds received from the refinancing were used to pay down the Company’s secured credit facilities.

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Also during the first quarter, the Company repaid a CMBS loan secured by Park Plaza Mall in Little Rock, AK with a principal balance of $38,856 with borrowings from the $560,000 credit facility and the property was added to the collateral pool securing that facility.

Covenants and Restrictions

The $560,000 and $525,000 secured line of credit agreements contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum net worth requirements, and limitations on cash flow distributions. The Company was in compliance with all covenants and restrictions at September 30, 2010.

The agreements to the $560,000 and $525,000 secured credit facilities and the two unsecured term facilities described above, each with the same lender, contain default and cross-default provisions customary for transactions of this nature (with applicable customary grace periods) in the event (i) there is a default in the payment of any indebtedness owed by the Company to any institution which is a part of the lender groups for the credit facilities, or (ii) there is any other type of default with respect to any indebtedness owed by the Company to any institution which is a part of the lender groups for the credit facilities and such lender accelerates the payment of the indebtedness owed to it as a result of such default. The credit facility agreements provide that, upon the occurrence and continuation of an event of default, payment of all amounts outstanding under these credit facilities and those facilities with which these agreements reference cross-default provisions may be accelerated and the lenders’ commitments may be terminated. Additionally, any default in the payment of any recourse indebtedness greater than $50,000 or any non-recourse indebtedness greater than $100,000, regardless of whether the lending institution is a part of the lender groups for the credit facilities, will constitute an event of default under the agreements to the credit facilities.

Several of the Company's malls/open-air centers, associated centers and community centers in addition to the corporate office building, are owned by special purpose entities that are included in the Company’s 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.

Scheduled Principal Payments

As of September 30, 2010, the scheduled principal payments of the Company’s consolidated debt, excluding extensions available at the Company’s option, on all mortgage and other indebtedness, including construction loans and lines of credit, are as follows:

2010	$	317,460
2011		1,471,366
2012		835,510
2013		456,434
2014		190,377
Thereafter		2,149,895
		5,421,042
Net unamortized premiums		3,828
	$	5,424,870

Of the $317,460 of scheduled principal payments remaining in 2010, $299,562 relates to maturing principal balances and $17,898 to principal amortization. Maturing debt with principal balances of $273,759 outstanding as of September 30, 2010 have extensions available at the Company’s option, leaving approximately $25,803 of loan maturities on two operating properties that must be retired or refinanced. The Company has term sheets or availability on its lines of credit to address all of the remaining 2010 debt maturities.

The Company’s mortgage and other indebtedness had a weighted average maturity of 3.51 years as of September 30, 2010 and 3.66 years as of December 31, 2009.

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Interest Rate Hedge Instruments

The Company records its derivative instruments in its condensed consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the derivative has been designated as a hedge and, if so, whether the hedge has met the criteria necessary to apply hedge accounting.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Such derivatives are used to hedge the variable cash flows associated with variable-rate debt.

As of September 30, 2010, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative	Number of Instruments		Notional Amount
Interest Rate Swaps		1	$	40,000
Interest Rate Caps		2	$	152,000

Instrument Type	Location in Consolidated Balance Sheet	Notional Amount		Designated Benchmark Interest Rate	Strike Rate			Fair Value at 9/30/10			Fair Value at 12/31/09			Maturity Date
Cap	Intangible lease assets and other assets	$	72,000 (amortizing to $69,375)	3-month LIBOR		3.000	%	$	3		$	-		Jan-12
Cap	Intangible lease assets and other assets		80,000	USD-SIFMA Municipal Swap Index		4.000	%		-			2		Dec-10
Pay fixed/ Receive variable Swap	Accounts payable and accrued liabilities		40,000	1-month LIBOR		2.175	%		(144	)		(636	)	Nov-10

	Gain Recognized in OCI (Effective Portion)				Location of Losses Reclassified from AOCI into Earnings	Loss Recognized in Earnings (Effective Portion)						Location of Gain Recognized in Earnings	Gain Recognized in Earnings (Ineffective Portion)
Hedging Instrument	Three Months Ended September 30,				(Effective Portion)	Three Months Ended September 30,						(Ineffective Portion)	Three Months Ended September 30,
	2010		2009			2010			2009				2010		2009
Interest rate hedges	$	1,054	$	3,312	Interest Expense	$	(889	)	$	(4,322	)	Interest Expense	$	7	$	7

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	Gain Recognized in OCI (Effective Portion)				Location of Losses Reclassified from AOCI into Earnings	Loss Recognized in Earnings (Effective Portion)						Location of Gain Recognized in Earnings	Gain Recognized in Earnings (Ineffective Portion)
Hedging Instrument	Nine Months Ended September 30,				(Effective Portion)	Nine Months Ended September 30,						(Ineffective Portion)	Nine Months Ended September 30,
	2010		2009			2010			2009				2010		2009
Interest rate hedges	$	2,569	$	8,435	Interest Expense	$	(2,773	)	$	(12,632	)	Interest Expense	$	23	$	28

As of September 30, 2010, the Company expects to reclassify approximately $345 of losses currently reported in accumulated other comprehensive income to interest expense within the next twelve months due to the amortization of one interest rate swap and two interest rate caps. Fluctuations in fair values of these derivatives between September 30, 2010 and the date of termination will vary the projected reclassification amount.

Note 6 – Comprehensive Income

Comprehensive income 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. Other comprehensive income (“OCI”) includes changes in unrealized gains (losses) on available-for-sale securities, interest rate hedge agreements and foreign currency translation adjustments. The computation of comprehensive income for the three and nine months ended September 30, 2010 and 2009 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010			2009
Net income	$	27,677	$	27,844	$	59,397		$	67,728
Other comprehensive income:
Net unrealized gain on hedging agreements		1,054		3,312		2,569			8,435
Net unrealized gain on available-for-sale securities		458		1,144		5,354			1,280
Realized loss on foreign currency translation adjustment		-		-		169			75
Net unrealized gain (loss) on foreign currency translation adjustment		-		1,852		(156	)		6,031
Total other comprehensive income		1,512		6,308		7,936			15,821
Comprehensive income	$	29,189	$	34,152	$	67,333		$	83,549

The components of accumulated other comprehensive income (loss) as of September 30, 2010 and December 31, 2009 are as follows:

	September 30, 2010
	As reported in:
	Redeemable Noncontrolling Interests		Shareholders' Equity		Noncontrolling Interests			Total
Net unrealized gain (loss) on hedging agreements	$	421	$	1,548	$	(2,360	)	$	(391	)
Net unrealized gain on available-for-sale securities		305		3,850		1,031			5,186
Accumulated other comprehensive income (loss)	$	726	$	5,398	$	(1,329	)	$	4,795

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	December 31, 2009
	As reported in:
	Redeemable Noncontrolling Interests		Shareholders' Equity			Noncontrolling Interests			Total
Net unrealized gain (loss) on hedging agreements	$	400	$	(319	)	$	(3,041	)	$	(2,960	)
Net unrealized gain (loss) on available-for-sale securities		261		(29	)		(400	)		(168	)
Net unrealized gain (loss) on foreign currency translation adjustment		396		839			(1,248	)		(13	)
Accumulated other comprehensive income (loss)	$	1,057	$	491		$	(4,689	)	$	(3,141	)

Note 7 – 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 September 30, 2010	Malls			Associated Centers			Community Centers			All Other (2)			Total
Revenues	$	236,037		$	10,691		$	8,007		$	11,096		$	265,831
Property operating expenses (1)		(80,927	)		(2,796	)		(991	)		7,594			(77,120	)
Interest expense		(57,580	)		(1,921	)		(1,904	)		(10,648	)		(72,053	)
Other expense		-			-			-			(6,351	)		(6,351	)
Gain (loss) on sales of real estate assets		(71	)		-			567			95			591
Segment profit	$	97,459		$	5,974		$	5,679		$	1,786			110,898
Depreciation and amortization expense														(73,333	)
General and administrative expense														(10,495	)
Interest and other income														832
Equity in losses of unconsolidated affiliates														(1,558	)
Income tax benefit														1,264
Income from continuing operations													$	27,608
Capital expenditures (3)	$	27,891		$	2,413		$	120		$	13,748		$	44,172

Three Months Ended September 30, 2009	Malls			Associated Centers			Community Centers			All Other (2)			Total
Revenues	$	237,268		$	9,904		$	4,579		$	10,708		$	262,459
Property operating expenses (1)		(82,237	)		(2,600	)		(1,488	)		7,221			(79,104	)
Interest expense		(61,364	)		(2,073	)		(977	)		(6,706	)		(71,120	)
Other expense		2			-			-			(7,716	)		(7,714	)
Gain (loss) on sales of real estate assets		1,525			-			(2	)		12			1,535
Segment profit	$	95,194		$	5,231		$	2,112		$	3,519			106,056
Depreciation and amortization expense														(71,161	)
General and administrative expense														(8,808	)
Interest and other income														1,246
Loss on impairment of investments														(1,143	)
Equity in earnings of unconsolidated affiliates														271
Income tax benefit														1,358
Income from continuing operations													$	27,819
Capital expenditures (3)	$	23,448		$	916		$	20,432		$	51,301		$	96,097

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Nine Months Ended September 30, 2010	Malls			Associated Centers			Community Centers			All Other (2)			Total
Revenues	$	706,135		$	31,545		$	22,261		$	33,581		$	793,522
Property operating expenses (1)		(237,190	)		(8,375	)		(6,210	)		19,187			(232,588	)
Interest expense		(174,052	)		(5,899	)		(5,584	)		(33,319	)		(218,854	)
Other expense		-			-			-			(19,467	)		(19,467	)
Gain on sales of real estate assets		1,042			-			1,551			13			2,606
Segment profit (loss)	$	295,935		$	17,271		$	12,018		$	(5	)		325,219
Depreciation and amortization expense														(215,953	)
General and administrative expense														(31,890	)
Interest and other income														2,831
Loss on impairment of real estate														(25,435	)
Equity in losses of unconsolidated affiliates														(610	)
Income tax benefit														5,052
Income from continuing operations													$	59,214
Total assets	$	6,526,150		$	328,504		$	67,427		$	693,399		$	7,615,480
Capital expenditures (3)	$	83,699		$	7,578		$	2,852		$	32,765		$	126,894

Nine Months Ended September 30, 2009	Malls			Associated Centers			Community Centers			All Other (2)			Total
Revenues	$	721,579		$	30,662		$	13,636		$	33,445		$	799,322
Property operating expenses (1)		(245,960	)		(8,113	)		(4,560	)		18,771			(239,862	)
Interest expense		(183,924	)		(6,413	)		(2,997	)		(22,513	)		(215,847	)
Other expense		-			-			-			(18,785	)		(18,785	)
Gain (loss) on sales of real estate assets		1,524			-			96			(152	)		1,468
Segment profit	$	293,219		$	16,136		$	6,175		$	10,766			326,296
Depreciation and amortization expense														(225,069	)
General and administrative expense														(31,180	)
Interest and other income														4,189
Loss on impairment of investments														(8,849	)
Equity in earnings of unconsolidated affiliates														1,867
Income tax benefit														603
Income from continuing operations													$	67,857
Total assets	$	6,878,826		$	334,259		$	70,127		$	650,472		$	7,933,684
Capital expenditures (3)	$	94,524		$	9,763		$	21,816		$	115,663		$	241,766

(1)	Property operating expenses include property operating, real estate taxes and maintenance and repairs.
(2)	The All Other category includes mortgage notes receivable, Office Buildings, the Management Company and the Company’s subsidiary that provides security and maintenance services.
(3)	Amounts include acquisitions of real estate assets and investments in unconsolidated affiliates. Developments in progress are included in the All Other category.

Note 8 – Earnings Per Share

During the first quarter of 2010, the Company completed an underwritten public offering of 6,300,000 depositary shares, each representing 1/10th of a share of the Company’s 7.375% Series D Cumulative Redeemable Preferred Stock, having a liquidation preference of $25.00 per depositary share. The depositary shares were sold at $20.30 per share including accrued dividends of $0.37 per share. The net proceeds, after underwriting costs and related expenses, of approximately $123,599 were used to reduce outstanding borrowings under the Company’s credit facilities and for general corporate purposes. The net proceeds included aggregate accrued dividends of $2,331 that were received as part of the offering price.

On October 18, 2010, the Company completed an underwritten public offering of 4,400,000 depositary shares, each representing 1/10th of a share of the Company’s 7.375% Series D Cumulative Redeemable Preferred Stock, having a liquidation preference of $25.00 per depositary share. The depositary shares were sold at $23.1954 per share including accrued dividends of $0.1485 per share. On October 19, 2010, the underwriters of the offering exercised their option to purchase an additional 450,000 depositary shares. As a result of the exercise of this option, the Company sold a total of 4,850,000 depositary shares in the offering for net proceeds of $108,677 after underwriting costs and related expenses. The net proceeds included aggregate accrued dividends of $720 that were received as part of the offering price. The net proceeds were used to reduce outstanding borrowings under the Company’s credit facilities and for general corporate purposes.

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Including the shares issued in these offerings, the Company currently has 18,150,000 depositary shares outstanding, each representing 1/10th of a share of its 7.375% Series D Cumulative Redeemable Preferred Stock. The securities are redeemable at liquidation preference totaling $453,750, plus accrued and unpaid dividends, at any time at the option of the Company. These securities have no stated maturity, sinking fund or mandatory redemption provisions and are not convertible into any other securities of the Company.

In June 2009, the Company completed a public offering of 66,630,000 shares of its $0.01 par value common stock for $6.00 per share. The net proceeds, after underwriting costs and related expenses, of approximately $381,823 were used to repay outstanding borrowings under the Company’s credit facilities.

In February 2009, the Company’s Board of Directors declared a quarterly dividend for the Company's common stock of $0.37 per share for the quarter ended March 31, 2009, to be paid in a combination of cash and shares of the Company’s common stock. The dividend was paid on 66,407,096 shares of common stock outstanding on the record date. The Company issued 4,754,355 shares of its common stock in connection with the dividend, which resulted in an increase of 7.2% in the number of shares outstanding. The Company initially elected to treat the issuance of its common stock as a stock dividend for per share purposes and adjusted all share and per share information related to earnings per share on a retrospective basis to reflect the additional common stock issued. However, in January 2010, the FASB issued ASU No. 2010-01, requiring that stock dividends such as the one the Company made in April 2009 be treated as a stock issuance that is reflected in share and per share information related to EPS on a prospective basis. Pursuant to its provisions, the Company adopted this guidance effective January 1, 2009 on a retrospective basis. Thus, the information presented for the three and six months ended June 30, 2009, has been revised to reflect this guidance.

Basic 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.

The following summarizes the impact of potential dilutive common shares on the denominator used to compute earnings per share:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Denominator – basic earnings per share		138,075		137,860		138,037		95,746
Dilutive effect of deemed shares related to deferred compensation arrangements		46		37		42		36
Denominator – diluted earnings per share		138,121		137,897		138,079		95,782

Note 9 – Contingencies

CBL’s Predecessor and certain officers of the Company have a significant noncontrolling interest in the construction company that the Company engaged to build substantially all of the Company’s development properties. On March 11, 2010, The Promenade D’Iberville, LLC, a subsidiary of the Company, filed a lawsuit in the Circuit Court of Harrison County, Mississippi, against multiple defendants, including this construction company, seeking damages for, among other things, alleged property damage arising out of work on a shopping center development in D’Iberville, Mississippi. The construction company filed an answer and counterclaim denying liability and seeking damages from the subsidiary based upon various contractual, quasi-contractual and equitable claims. Charles B. Lebovitz, Chairman of the Board of the Company, resigned as a director of the construction company effective May 1, 2010.

The Company is currently involved in certain litigation that arises in the ordinary course of business. It is management’s opinion that the pending litigation will not materially affect the financial position or results of operations of the Company.

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The Company consolidates its investment in a joint venture, CW Joint Venture, LLC (“CWJV”), with Westfield. The terms of the joint venture agreement require that CWJV pay an annual preferred distribution at a rate of 5.0%, which increases to 6.0% on July 1, 2013, on the preferred liquidation value of the PJV units of CWJV that are held by Westfield. Westfield has the right to have all or a portion of the PJV units redeemed by CWJV with property owned by CWJV, and subsequent to October 16, 2012, with either cash or property owned by CWJV, in each case for a net equity amount equal to the preferred liquidation value of the PJV units. At any time after January 1, 2013, Westfield may propose that CWJV acquire certain qualifying property that would be used to redeem the PJV units at their preferred liquidation value. If CWJV does not redeem the PJV units with such qualifying property (a “Preventing Event”), then the annual preferred distribution rate on the PJV units increases to 9.0% beginning July 1, 2013. The Company will have the right, but not the obligation, to offer to redeem the PJV units after January 31, 2013 at their preferred liquidation value, plus accrued and unpaid distributions. If the Company fails to make such an offer, the annual preferred distribution rate on the PJV units increases to 9.0% for the period from July 1, 2013 through June 30, 2016, at which time it decreases to 6.0% if a Preventing Event has not occurred. If, upon redemption of the PJV units, the fair value of the Company’s common stock is greater than $32.00 per share, then such excess (but in no case greater than $26,000 in the aggregate) shall be added to the aggregate preferred liquidation value payable on account of the PJV units. The Company accounts for this contingency using the method prescribed for earnings or other performance measure contingencies. As such, should this contingency result in additional consideration to Westfield, the Company will record the current fair value of the consideration issued as a purchase price adjustment at the time the consideration is paid or payable.

Guarantees

The Company 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 Company’s investment in the joint venture. The Company may receive a fee from the joint venture for providing the guaranty. Additionally, when the Company issues a guaranty, the terms of the joint venture agreement typically provide that the Company may receive indemnification from the joint venture.

The Company owns a parcel of land that it is ground leasing to a third party developer for the purpose of developing a shopping center. The Company has guaranteed 27% of the third party’s construction loan and bond line of credit (the “loans”) of which the maximum guaranteed amount is $24,379. The total amount outstanding at September 30, 2010 on the loans was $77,201 of which the Company has guaranteed $20,844. The Company recorded an obligation of $315 in the accompanying condensed consolidated balance sheets as of September 30, 2010 and December 31, 2009 to reflect the estimated fair value of its guaranty.

The Company has guaranteed 100% of the construction and land loans of West Melbourne I, LLC (“West Melbourne”), an unconsolidated affiliate in which the Company owns a 50% interest, of which the maximum guaranteed amount is $50,678. West Melbourne developed Hammock Landing, a community center in West Melbourne, FL that opened in April 2009. The total amount outstanding at September 30, 2010 on the loans was $45,610. The guaranty will expire upon repayment of the debt. The land loan, representing $3,276 of the amount outstanding at September 30, 2010, matures in August 2011. The construction loan, representing $42,334 of the amount outstanding at September 30, 2010, matures in August 2011 and has two one-year extension options available. The Company recorded an obligation of $670 in the accompanying condensed consolidated balance sheets as of September 30, 2010 and December 31, 2009 to reflect the estimated fair value of this guaranty.

The Company has guaranteed 100% of the construction loan of Port Orange I, LLC (“Port Orange”), an unconsolidated affiliate in which the Company owns a 50% interest, of which the maximum guaranteed amount is $97,183. Port Orange developed and, in March 2010, opened The Pavilion at Port Orange, a community center in Port Orange, FL. The total amount outstanding at September 30, 2010 on the loan was $69,363. The guaranty will expire upon repayment of the debt. The loan matures in December 2011 and has two one-year extension options available. The Company has recorded an obligation of $1,120 in the accompanying condensed consolidated balance sheets as of September 30, 2010 and December 31, 2009 to reflect the estimated fair value of this guaranty.

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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 $18,800 as of September 30, 2010. 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 record an obligation for this guaranty because it determined that the fair value of the guaranty is not material.

The Company has guaranteed 100% of a construction loan of JG Gulf Coast Town Center, LLC, an unconsolidated affiliate in which the Company owns a 50% interest, of which the maximum guaranteed amount is $11,561. Proceeds from the construction loan are designated for the development of Phase III of Gulf Coast Town Center, an open-air center in Fort Myers, FL. The total amount outstanding at September 30, 2010 on the loans was $11,561. The guaranty will expire upon repayment of the debt. The loan matures in April 2011 and has a one year extension option available. The Company did not record an obligation for this guaranty because it determined that the fair value of the guaranty is not material.

Performance Bonds

The Company has issued various bonds that it would have to satisfy in the event of non-performance. At September 30, 2010 and December 31, 2009, the total amount outstanding on these bonds was $29,940 and $34,429, respectively.

Note 10 – Share-Based Compensation

Share-based compensation expense was $371 and $488 for the three months ended September 30, 2010 and 2009, respectively, and $1,932 and $2,363 for the nine months ended September 30, 2010 and 2009, respectively. Share-based compensation cost capitalized as part of real estate assets was $37 and $60 for the three months ended September 30, 2010 and 2009, respectively, and $131 and $192 for the nine months ended September 30, 2010 and 2009, respectively.

The Company’s stock option activity for the nine months ended September 30, 2010 is summarized as follows:

	Shares			Weighted Average Exercise Price
Outstanding at January 1, 2010		566,334		$	16.06
Exercised		(77,509	)		12.14
Cancelled		(1,200	)		18.27
Outstanding at September 30, 2010		487,625			16.68
Vested and exercisable at September 30, 2010		487,625			16.68

A summary of the status of the Company’s stock awards as of September 30, 2010, and changes during the nine months ended September 30, 2010, is presented below:

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	Shares			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2010		156,120		$	33.16
Granted		119,100			10.34
Vested		(83,350	)		34.54
Cancelled		(3,990	)		18.13
Nonvested at September 30, 2010		187,880			18.41

As of September 30, 2010, there was $2,198 of total unrecognized compensation cost related to nonvested stock awards granted under the plan, which is expected to be recognized over a weighted average period of 2.7 years. In February 2010, the Company granted restricted stock awards for 113,600 shares of common stock to employees that will vest in equal installments over the next five years. In January 2010, the Company granted restricted stock awards for a total of 4,500 shares of common stock to its non-employee directors and granted an additional award of 1,000 shares in conjunction with the election of a new non-employee director in May 2010.

Note 11 – Noncash Investing and Financing Activities

The Company’s noncash investing and financing activities were as follows for the nine months ended September 30, 2010 and 2009:

	Nine Months Ended September 30,
	2010		2009
Accrued dividends and distributions payable	$	43,116	$	19,685
Additions to real estate assets accrued but not yet paid		20,409		13,304
Notes receivable from sale of interest in unconsolidated affiliate		1,001		1,750
Distribution of real estate assets received from unconsolidated affiliate		12,210		-
Issuance of additional redeemable noncontrolling preferred joint venture interests		2,146		-
Issuance of common stock for dividend		-		14,739
Issuance of noncontrolling interests in Operating Partnership for distribution		-		4,140
Additions to real estate assets from forgiveness of mortgage note receivable		-		6,502

Note 12 – Income Taxes

The Company is qualified as a REIT under the provisions of the 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. 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 $1,084 and $1,526 during the three months ended September 30, 2010 and 2009, respectively, and $3,348 and $5,151 during the nine months ended September 30, 2010 and 2009, 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.

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The Company recorded an income tax benefit of $1,264 and $1,358 for the three months ended September 30, 2010 and 2009, respectively. The income tax benefit in 2010 consisted of a current and deferred tax benefit of $928 and $336, respectively. The income tax benefit in 2009 consisted of a current and deferred tax benefit of $260 and $1,098, respectively.

The Company recorded an income tax benefit of $5,052 and $603 for the nine months ended September 30, 2010 and 2009, respectively. The income tax benefit in 2010 consisted of a current tax benefit of $7,297 and a deferred tax provision of $2,245. The income tax benefit in 2009 consisted of a current income tax provision of $815 and a deferred tax benefit of $1,418.

The Company had deferred tax assets, reported in intangible lease assets and other assets, of $4,666 and $3,634 at September 30, 2010 and December 31, 2009, respectively. The Company had a deferred tax liability, reported in accounts payable and accrued liabilities, of $2,941 at September 30, 2010. There was no deferred tax liability as of December 31, 2009. The deferred taxes at September 30, 2010 and December 31, 2009 consisted primarily 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 statement 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 nine months ended September 30, 2010 and 2009, respectively.

Note 13 – Subsequent Events

The Company has evaluated subsequent events through the date of issuance of these financial statements.

On October 14, 2010, the Company completed the sale of Pemberton Square, located in Vicksburg, MS, for a sales price of $1,863 less commissions and customary closing costs for a net sales price of $1,782. The Company expects to record a gain of approximately $379 attributable to the sale in the fourth quarter of 2010. Proceeds from the sale were used to reduce the outstanding borrowings on the Company’s $525,000 secured credit facility. This property is classified as held-for-sale portfolio as of September 30, 2010, and its results of operations are included in discontinued operations for all periods presented.

See Note 4 for information regarding activity related to the Company’s joint ventures subsequent to September 30, 2010.

See Note 8 for information regarding the Company’s underwritten public offering completed in October 2010.

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”, “our” and the “Company” refer to CBL & Associates Properties, Inc. and its subsidiaries.

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. 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,” or 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.

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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 II, Item 1A. of this report, 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;

·	competition from other companies and retail formats;

·	changes in retail 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; and

·	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 business.

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 real estate investment trust (“REIT”) that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air centers, community centers and office properties. Our properties are located in 28 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.

As of September 30, 2010, we owned controlling interests in 76 regional malls/open-air centers (including one mixed-use center), 30 associated centers (each located adjacent to a regional mall), ten community centers and 13 office buildings, including our corporate office building. We consolidate the financial statements of all entities in which we have a controlling financial interest or where we are the primary beneficiary of a variable interest entity. As of September 30, 2010, we owned noncontrolling interests in eight regional malls, four associated centers, four community centers and six office buildings. Because one or more of the other partners have substantive participating rights, we do not control these partnerships and joint ventures and, accordingly, account for these investments using the equity method. We had controlling interests in one mall expansion, one community center expansion, and one community center, owned in a 75/25 joint venture, under construction at September 30, 2010. We also hold options to acquire certain development properties owned by third parties.

Results for the third quarter of 2010 were encouraging. We have been focused this year on stabilizing and growing the operating income of each of our existing properties. We are pleased that our results for this quarter show progress in this area. Our stabilized mall portfolio occupancy level increased 130 basis points over the third quarter of the prior year and we completed lease signings for more than 1.0 million square feet of space in our operating portfolio. Same-store sales per square foot for the nine months ended September 30, 2010 for reporting stabilized mall tenants increased 2.7% over the prior-year period.

During the third quarter, we completed a refinancing of $65.0 million secured by one of our operating properties, generating excess proceeds of $24.4 million after repayment of an existing loan, and repaid four commercial mortgage-backed securities (“CMBS”) loans with an aggregate principal balance of $132.5 million secured by four operating properties with proceeds from our $560.0 million secured line of credit. In addition, we extended the maturity date of our secured line of credit with total capacity of $105.0 million from June 2011 to

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June 2012. We have term sheets or availability on our lines of credit to address all of our remaining 2010 debt maturities. Including the use of the net proceeds received from our preferred stock offering in the first quarter of 2010, we have reduced our overall debt level by almost $266.5 million at September 30, 2010 as compared to September 30, 2009.

Subsequent to September 30, 2010, we completed an underwritten public offering in which we sold 4,850,000 depositary shares, each representing 1/10th of a share of our 7.375% Series D Cumulative Redeemable Preferred Stock, having a liquidation preference of $25.00 per depositary share. The net proceeds, after underwriting costs and related expenses, of approximately $108.7 million were used to reduce outstanding borrowings under our credit facilities and for general corporate purposes.

These accomplishments emphasize the strength of our company and validate our strategic focus. While the current retail real estate environment remains challenging, we have begun to see signs of economic improvement in the retail sector and we are optimistic that the positive trends will continue. We are focused on capturing the growth potential in our portfolio, continuing to improve occupancy and taking advantage of opportunities to gain traction in our lease negotiations. We believe our company is emerging in a slow recovery with more efficient operations, an aggressive leasing strategy and continued success in securing capital on favorable terms. We will look to maintain improvements in the performance of our portfolio over the remainder of the year and consistently build on our achievements.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2010 to the Three Months Ended September 30, 2009

We have acquired or opened five community centers since January 1, 2009 (collectively referred to as the “New Properties”). These transactions impact the comparison of the results of operations for the three and nine months ended September 30, 2010 to the results of operations for the comparable periods ended September 30, 2009. Properties that were in operation as of January 1, 2009 and September 30, 2010 are referred to as the “Comparable Properties.” We do not consider a property to be one of the Comparable Properties until it has been owned or open for one complete calendar year. The New Properties are as follows:

Property	Location	Date Opened
New Developments:
Hammock Landing (1)	West Melbourne, FL	April 2009
Summit Fair (2)	Lee's Summit, MO	August 2009
Settlers Ridge	Robinson Township, PA	October 2009
The Promenade	D'Iberville, MS	October 2009
The Pavilion at Port Orange (1)	Port Orange, FL	March 2010

(1)	This property represents a 50/50 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 consolidated statements of operations.

(2)	CBL’s interest represents cost of the land underlying the project for which it receives ground rent and a participation in the project’s net operating cash flows.

Any reference to the New Properties in the discussion below excludes those properties that are accounted for using the equity method of accounting.

Revenues

Total revenues increased $3.4 million for the three months ended September 30, 2010 compared to the prior-year period. Rental revenues and tenant reimbursements increased $3.8 million due to an increase of $4.1 million from the New Properties, partially offset by a decrease of $0.3 million from the Comparable Properties. The decrease in revenues of the Comparable Properties was driven by declines of $0.7 million in tenant reimbursements and $0.3 million in percentage rents, partially offset by an increase of $0.9 million in other rents. Tenant reimbursements have decreased primarily due to certain tenants converting their lease payment terms to percent in lieu or base rent. Other rents have increased primarily due to increases in sponsorship income and specialty leasing.

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Our cost recovery ratio improved to 102.4% for the quarter ended September 30, 2010 from 99.2% for the prior-year period primarily due to a decrease in property operating expenses, as discussed further below.

Management, development and leasing fees were flat for the quarter ended September 30, 2010 compared to the prior year quarter. Other revenues decreased $0.4 million primarily due to a decline in revenues related to our subsidiary that provides security and maintenance services to third parties.

Operating Expenses

Total expenses increased $0.5 million for the three months ended September 30, 2010 compared to the prior-year period. Property operating expenses, including real estate taxes and maintenance and repairs, decreased $2.0 million due to lower expenses of $2.5 million related to the Comparable Properties, partially offset by an increase of $0.5 million of expenses attributable to the New Properties. The decrease in property operating expenses of the Comparable Properties is primarily attributable to reductions of $1.2 million in real estate tax expense, $0.6 million in contracted security costs, $0.3 million in land rent expense, $0.2 million in legal fees and $0.2 million in state tax expense.

The increase in depreciation and amortization expense of $2.2 million resulted from an increase of $0.8 million from the Comparable Properties and an increase of $1.4 million related to the New Properties. The increase attributable to the Comparable Properties is primarily due to ongoing capital expenditures for renovations, expansions, tenant allowances and deferred maintenance.

General and administrative expenses increased $1.7 million primarily as a result of increases of $0.6 million in consulting fees, $0.5 million in legal fees, $0.4 million in payroll and related expenses, and $0.4 million in travel expenses, partially offset by a reduction of $0.2 million in state tax expense. As a percentage of revenues, general and administrative expenses were 3.9% and 3.4% for the third quarters of 2010 and 2009, respectively.

Other expenses decreased $1.3 million primarily due to a decrease in abandoned projects expense of $1.1 million and a decrease of $0.2 million in expenses related to our subsidiary that provides security and maintenance services to third parties.

Other Income and Expenses

Interest expense increased $1.0 million for the three months ended September 30, 2010 compared to the prior-year period primarily due to an increase in the variable interest rates on our credit facilities and a decline in capitalized interest due to the opening of the New Properties in 2009. Additionally, interest expense during the third quarter of 2010 includes amortization of costs incurred in connection with the extension of our credit facilities in the latter portion of 2009.

During the third quarter of 2009, we recorded a non-cash impairment charge of $1.1 million related to the then pending sale of our interest in Plaza Macaé in Macaé, Brazil to reflect the fair value of the investment.

During the third quarter of 2010, we recognized a gain on sales of real estate assets of $0.6 million compared to a $1.5 million gain during the third quarter of 2009. The 2010 gain related to the sale of three parcels of land during the quarter. The 2009 gain related to the sale of two parcels of land during the quarter.

Equity in earnings of unconsolidated affiliates decreased by $1.8 million during the third quarter of 2010, primarily due to capital transactions related to two of our joint venture properties that are owned with the same partner. During the third quarter of 2010, our joint venture partner contributed a significant amount of capital to one of the properties and we received a substantial non-cash distribution from the other property. These capital events had a one-time negative effect due to the resulting change in the allocation of earnings based on the waterfall provisions of each joint venture agreement.

The income tax benefit of $1.3 million for the three months ended September 30, 2010 relates to our taxable REIT subsidiary and consists of a current and deferred tax benefit of $0.9 million and $0.4 million,

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respectively. During the three months ended September 30, 2009, we recorded an income tax benefit $1.4 million, consisting of a current and deferred tax benefit of $0.3 million and $1.1 million, respectively.

Income from discontinued operations for the three months ended September 30, 2010 and 2009 reflects the operating results of one mall that was sold in October 2010 and the true up of estimated expenses to actual amounts for properties sold during previous years. Gain on discontinued operations for the three months ended September 30, 2009 reflects the true up of estimated expenses to actual amounts for properties sold during previous years.

Comparison of the Nine Months Ended September 30, 2010 to the Nine Months Ended September 30, 2009

Revenues

Total revenues declined by $5.8 million for the nine months ended September 30, 2010 compared to the prior-year period. Rental revenues and tenant reimbursements declined by $6.0 million due to a decrease of $14.8 million from the Comparable Properties, partially offset by an increase of $8.8 million from the New Properties. The decrease in revenues of the Comparable Properties was driven by declines of $8.4 million in tenant reimbursements, $2.1 million in lease termination fees, $2.1 million in net below market lease amortization, $1.5 million in straight-line rents and $1.1 million in base rents. Tenant reimbursements have decreased primarily due to certain tenants converting their lease payment terms to percent in lieu or base rent. Base rents and tenant reimbursements have both been impacted by negative leasing spreads over the past year.

Our cost recovery ratio increased to 101.0% for the nine months ended September 30, 2010 from 100.6% for the prior-year period primarily due to a decrease in property operating expenses, as discussed further below.

The decrease in management, development and leasing fees of $0.7 million was mainly attributable to lower development fee income due to the completion in the prior year of certain joint venture developments that were under construction during the prior-year period.

Other revenues increased $1.0 million primarily due to higher revenues related to our subsidiary that provides security and maintenance services to third parties.

Operating Expenses

Total expenses increased $10.4 million for the nine months ended September 30, 2010 compared to the prior-year period, primarily as a result of a $25.4 million loss on impairment of real estate, as discussed further below. However, property operating expenses, including real estate taxes and maintenance and repairs, decreased $7.3 million due to lower expenses of $9.9 million related to the Comparable Properties, partially offset by an increase of $2.6 million of expenses attributable to the New Properties. The decrease in property operating expenses of the Comparable Properties is primarily attributable to reductions of $2.5 million in promotion-related costs, $2.5 million in contracted security and maintenance expenses, $1.4 million in bad debt expense, $1.3 million in utilities expense, $0.7 million in real estate taxes, $0.6 million in legal fees, $0.5 million in land rent expense and $0.5 million in state tax expense. Property operating expenses continued to benefit from the cost containment program that we implemented in late 2008 and 2009.

The decrease in depreciation and amortization expense of $9.1 million resulted from a decrease of $13.3 million from the Comparable Properties, partially offset by an increase of $4.2 million related to the New Properties. The decrease attributable to the Comparable Properties is primarily due to a decline in amortization of tenant allowances compared to the prior-year period, which included write-offs of certain unamortized tenant allowances related to several store closings.

General and administrative expenses increased $0.7 million primarily as a result of a reduction in capitalized overhead of $1.0 million coupled with an increase of $0.8 million in consulting fees and $0.4 million in travel expenses, partially offset by a decline of $1.3 million in state tax expense. As a percentage of revenues, general and administrative expenses were 4.0% and 3.9% for the nine months ended September 30, 2010 and 2009, respectively.

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During the course of our normal quarterly impairment review process for the second quarter of 2010, it was determined that a write-down of the depreciated book value of Oak Hollow Mall in High Point, NC, to its estimated fair value of approximately $11.6 million was necessary. This resulted in a non-cash loss on impairment of real estate assets of $25.4 million for the nine months ended September 30, 2010.

Other expenses increased $0.7 million primarily due to higher expenses related to our subsidiary that provides security and maintenance services to third parties, partially offset by a decrease in abandoned projects expense.

Other Income and Expenses

Interest expense increased $3.0 million for the nine months ended September 30, 2010 compared to the prior-year period primarily due to an increase in the variable interest rates on our credit facilities. Our weighted average interest rate on total variable-rate debt increased 102 basis points compared to the prior-year period largely as a result of LIBOR floors and increased spreads. Additionally, capitalized interest has declined due to the opening of the New Properties in 2009 and interest expense during the first part of 2010 includes amortization of costs incurred in connection with the extension of our credit facilities in the latter part of 2009.

During the nine months ended September 30, 2009, we incurred non-cash impairment losses totaling $8.8 million. We recorded a charge of $7.7 million on our investment in Jinsheng Group (“Jinsheng”), an established mall operating and real estate development company located in Nanjing, China, due to a decline in expected future cash flows. The decrease was a result of declining occupancy and sales due to the then downturn of the real estate market in China. We also recorded a $1.1 million charge related to the then pending sale of our interest in Plaza Macaé in Macaé, Brazil to reflect the fair value of the investment.

During the nine months ended September 30, 2010, we recognized a gain on sales of real estate assets of $2.6 million related to the sale of six parcels of land. We recognized a gain on sales of real estate assets of $1.5 million during the nine months ended September 30, 2009. A gain of $1.6 million resulted from the sale of two parcels of land, partially offset by a loss of $0.1 million related to the disposition of our investment in Brazil.

Equity in earnings of unconsolidated affiliates decreased by $2.5 million during the nine months ended September 30, 2010 primarily due to capital transactions related to two of our joint venture properties that are owned with the same partner. During the third quarter of 2010, our joint venture partner contributed a significant amount of capital to one of the properties and we received a substantial non-cash distribution from the other property. These capital events had a one-time negative effect due to the resulting change in the allocation of earnings based on the waterfall provisions of each joint venture agreement.

The income tax benefit of $5.1 million for the nine months ended September 30, 2010 relates to our taxable REIT subsidiary and consists of a current tax benefit of $7.3 million, partially offset by a deferred income tax provision of $2.2 million. During the nine months ended September 30, 2009, we recorded an income tax benefit of $0.6 million, consisting of a deferred tax benefit of $1.4 million, partially offset by a provision for current income taxes of $0.8 million, partially offset by a deferred tax benefit of $1.4 million.

Income (loss) from discontinued operations for the nine months ended September 30, 2010 and 2009 includes the operating results of one mall that was sold in October 2010 and the true up of estimated expenses to actual amounts for properties sold during previous years. Loss on discontinued operations for the nine months ended September 30, 2009 includes the true up of estimated expenses to actual amounts for properties sold during previous years.

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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 two categories – malls that have completed their initial lease-up are referred to as stabilized malls and malls that are in their initial lease-up phase and have not been open for three calendar years are referred to as non-stabilized malls. Alamance Crossing in Burlington, NC, which opened in August 2007, and our mixed-use center, Pearland Town Center (the financial results of which are classified in Malls), which opened in July 2008, are our only non-stabilized malls as of September 30, 2010.

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

	Nine Months Ended September 30,
	2010			2009
Malls		89.0	%		90.3	%
Associated centers		4.0	%		3.8	%
Community centers		2.8	%		1.7	%
Mortgages, office buildings and other		4.2	%		4.2	%

Mall store sales per square foot for the nine months ended September 30, 2010 for our portfolio increased 2.7% from the prior-year period. Mall store sales for the trailing twelve months ended September 30, 2010 on a comparable per square foot basis were $319 per square foot compared with $317 per square foot in the prior-year period, an increase of 0.6%. Third quarter continued the favorable sales trend that we have seen earlier in the year for our portfolio. Back-to-school season provided encouraging sales results and shoppers have taken advantage of available promotions and events such as sales tax holidays. While retailers continue to watch inventory levels closely and are highly promotional, we anticipate a solid holiday sales season.

Occupancy

Our portfolio occupancy is summarized in the following table:

	At September 30,
	2010			2009
Total portfolio occupancy		91.0	%		89.2	%
Total mall portfolio		91.3	%		89.9	%
Stabilized malls		91.6	%		90.3	%
Non-stabilized malls		78.0	%		74.0	%
Associated centers		92.6	%		90.0	%
Community centers		88.2	%		80.4	%

Occupancy levels at September 30, 2010 are a reflection of the strong relationships that we enjoy with our retail partners. Our occupancy improvements during 2010 are an indication of the demand that we are receiving from retailers and their desire to locate in dominant properties within our portfolio. Total portfolio occupancy increased 180 basis points from the prior-year period to 91.0%. Stabilized mall occupancy increased 130 basis points to 91.6% compared with the prior-year period. Certain re-leased box locations opening in the associated center and community center portfolios, as well as specialty stores continuing to fulfill their expansion plans, have contributed to this growth. We are also benefiting from the increase in expansion plans from a number of retailers including several new concepts opening in our centers.

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During the third quarter of 2010, we experienced limited tenant bankruptcy activity. We are optimistic that tenant bankruptcy and store closure rates will continue to decline over the remainder of the year and remain below the average rates experienced since 2008.

Leasing

During the third quarter of 2010, we signed approximately 1.1 million square feet of leases including 1.0 million square feet of leases in our operating portfolio and approximately 0.1 million square feet of development leases. The leases signed in our operating portfolio included 0.3 million square feet of new leases and 0.7 million square feet of renewals.

Average annual base rents per square foot were as follows for each property type:

	At September 30,
		2010		2009
Stabilized malls		$	28.82	$	29.04
Non-stabilized malls			25.57		26.04
Associated centers			11.78		11.74
Community centers			14.56		14.83
Office buildings			18.41		19.11

Results from new and renewal leasing of comparable small shop space during the three and nine months ended September 30, 2010 for spaces that were previously occupied are as follows:

	Square Feet		Prior Gross Rent PSF		New Initial Gross Rent PSF		% Change Initial			New Average Gross Rent PSF (2)		% Change Average
Quarter:
All Property Types (1)		670,401	$	38.73	$	35.75		-7.7	%	$	36.88		-4.8	%
Stabilized malls		596,503		41.14		37.91		-7.9	%		39.12		-4.9	%
New leases		151,439		43.78		44.43		1.5	%		46.79		6.9	%
Renewal leases		445,064		40.25		35.69		-11.3	%		36.51		-9.3	%

Year to Date:
All Property Types (1)		1,933,317		38.79		34.43		-11.2	%		35.46		-8.6	%
Stabilized malls		1,750,045		40.77		36.15		-11.3	%		37.22		-8.7	%
New leases		489,760		43.50		39.43		-9.4	%		41.45		-4.7	%
Renewal leases		1,260,285		39.71		34.87		-12.2	%		35.58		-10.4	%

(1)	Includes stabilized malls, associated centers, community centers and offices.
(2)	Average Gross Rent does not incorporate allowable future increases for recoverable common area expenses.

During the third quarter of 2010, rental rates were signed at an average decrease of 4.8% from the prior gross rent per square foot on a same space basis for new and renewal leases. While we are pleased with the significant improvement this quarter, we are still working hard to get the lease spreads into positive territory. We are concurrently seeking longer term leases with the deals that achieve positive rental rate growth. For leases with terms longer than three years, our average lease spread increase was almost 10.0%. During the third quarter of 2010, approximately 51.0% of the leases signed had terms longer than three years, which is an improvement over the prior-year quarter.

We are continuing to sign shorter term leases in locations where space is not currently renting at favorable rates. Fortunately, we are seeing a diminished frequency of these situations. We are pleased by this trend and believe this will continue throughout the year as the economy recovers. We will also be looking to improve the rental rates on shorter term deals that we have signed over the last twelve months as they expire.

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LIQUIDITY AND CAPITAL RESOURCES

During the first quarter of 2010, we completed an equity offering of 6,300,000 depositary shares, each representing 1/10th of a share of our 7.375% Series D Cumulative Redeemable Preferred Stock, having a liquidation preference of $25.00 per share. The depositary shares were sold at $20.30 per share including accrued dividends of $0.37 per share. The net proceeds, after underwriting costs and related expenses, of approximately $123.6 million were used to reduce outstanding borrowings under our credit facilities and for general corporate purposes. The net proceeds included accrued dividends of $2.3 million that were received as part of the offering price.

On October 18, 2010, we completed an underwritten public offering of 4,400,000 depositary shares, each representing 1/10th of a share of our 7.375% Series D Cumulative Redeemable Preferred Stock, having a liquidation preference of $25.00 per depositary share. The depositary shares were sold at $23.1954 per share including accrued dividends of $0.1485 per share. On October 19, 2010, the underwriters of the offering exercised their option to purchase an additional 450,000 depositary shares. As a result of the exercise of this option, we sold a total of 4,850,000 depositary shares in the offering for net proceeds of approximately $108.7 million after underwriting costs and related expenses. The net proceeds included aggregate accrued dividends of $0.7 million that were received as part of the offering price. The net proceeds were used to reduce outstanding borrowings under our credit facilities and for general corporate purposes.

In June 2010, our 50.6% owned unconsolidated joint venture, Mall Shopping Center Company, sold Plaza del Sol in Del Rio, TX. The joint venture recognized a gain of $1.2 million from the sale, of which our share was $0.1 million, net of the excess of our basis over our underlying equity in the amount of $0.6 million.

Subsequent to September 30, 2010, we completed the sale of Pemberton Square, located in Vicksburg, MS, for a sales price of $1.9 million less commissions and customary closing costs for a net sales price of $1.8 million. We expect to record a gain of approximately $0.4 million attributable to the sale in the fourth quarter of 2010. Proceeds from the sale were used to reduce the outstanding borrowings on our $525.0 million secured credit facility.

In October 2010, we acquired the remaining 50% interest in Parkway Place in Huntsville, AL, from our joint venture partner. The interest was acquired for total consideration of $38.8 million, which consisted of $17.8 million in cash and the assumption of the remaining $21.0 million interest in the loan secured by Parkway Place.

Also in October 2010, we announced that we had formed a 75/25 joint venture, OK City Outlets, LLC, with Horizon Group Properties, Inc. to develop The Outlet Shoppes at Oklahoma City in Oklahoma City, OK. The partners contributed aggregate equity of $16.2 million at formation, of which we contributed $12.1 million. The joint venture has received a construction loan commitment of $48.9 million and we will guarantee the entire amount for which we will receive a guaranty fee.

During the nine months ended September 30, 2010, we entered into financing transactions related to our pro rata share of consolidated and unconsolidated debt totaling $370.8 million secured by six operating properties, one of which is unconsolidated. After payment of the existing loans with principal balances totaling $304.5 million, plus accrued interest and closing costs, excess proceeds were used to pay down our secured credit facilities.

Also during the nine months ended September 30, 2010, we repaid six CMBS loans, each secured by an operating property, totaling $180.3 million with borrowings from the $560.0 million credit facility. The six operating properties were added to the collateral pool securing that facility.

In July 2010, we closed on the extension and modification of our secured credit facility with total capacity of $105.0 million, extending the facility’s maturity date to June 2012 at its existing interest rate of LIBOR, subject to a floor of 1.50%, plus a margin of 300 basis points. We have term sheets or availability on our lines of credit to address all of our remaining 2010 debt maturities.

We are encouraged by the positive changes in the capital and credit markets. We are looking at opportunities to take advantage of the current attractive rates available and are exploring placing property-specific

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loans on several of the properties currently covered by our $560.0 million secured credit facility. This would allow us to essentially swap out recourse floating rate debt into non-recourse fixed rate debt at current favorable interest rates. In addition, it would provide us with further availability on that facility to pay off future loans maturing in 2011 and 2012. As of September 30, 2010, we had approximately $438.7 million available on our lines of credit.

We derive a majority of our revenues from leases with retail tenants, which has 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 lines of credit 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, equity offerings, joint venture investments, issuances of noncontrolling interests in our Operating Partnership, decreasing the amount of expenditures we make related to tenant construction allowances and other capital expenditures and implementing further cost containment initiatives. We also generate revenues from sales of peripheral land at the properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.

Cash Flows From Operations

There was $56.7 million of unrestricted cash and cash equivalents as of September 30, 2010, an increase of $8.6 million from December 31, 2009. Cash provided by operating activities during the nine months ended September 30, 2010, decreased $8.0 million to $289.8 million from $297.8 million during the nine months ended September 30, 2009. The decrease was primarily attributable to the decline in rental and other revenues, partially offset by lower operating expenses and the operations of the New Properties.

Debt

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):

	Consolidated		Noncontrolling Interests			Unconsolidated Affiliates		Total		Weighted Average Interest Rate (1)
September 30, 2010:
Fixed-rate debt:
Non-recourse loans on operating properties	$	3,723,900	$	(24,863	)	$	420,545	$	4,119,582		5.81	%
Recourse term loans on operating properties (2)		71,204		-			-		71,204		4.55	%
Total fixed-rate debt		3,795,104		(24,863	)		420,545		4,190,786		5.78	%
Variable-rate debt:
Non-recourse term loans on operating properties		43,750		-			20,118		63,868		1.51	%
Recourse term loans on operating properties		399,154		(928	)		147,378		545,604		2.92	%
Construction loans		5,324		-			-		5,324		3.43	%
Secured lines of credit		744,044		-			-		744,044		3.75	%
Unsecured term loans		437,494		-			-		437,494		1.64	%
Total variable-rate debt		1,629,766		(928	)		167,496		1,796,334		2.93	%
Total	$	5,424,870	$	(25,791	)	$	588,041	$	5,987,120		4.93	%

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	Consolidated		Noncontrolling Interests			Unconsolidated Affiliates		Total		Weighted Average Interest Rate (1)
December 31, 2009:
Fixed-rate debt:
Non-recourse loans on operating properties	$	3,932,572	$	(23,737	)	$	404,104	$	4,312,939		5.99	%
Recourse term loans on operating properties (2)		117,146		-			-		117,146		5.28	%
Total fixed-rate debt		4,049,718		(23,737	)		404,104		4,430,085		5.96	%
Variable-rate debt:
Recourse term loans on operating properties		242,763		(928	)		98,708		340,543		1.97	%
Construction loans		126,958		-			88,179		215,137		3.37	%
Land loans		-					3,276		3,276		2.23	%
Secured lines of credit		759,206		-			-		759,206		4.19	%
Unsecured term loans		437,494		-			-		437,494		1.73	%
Total variable-rate debt		1,566,421		(928	)		190,163		1,755,656		3.04	%
Total	$	5,616,139	$	(24,665	)	$	594,267	$	6,185,741		5.13	%

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

(2)

We have entered into an interest rate swap on a notional amount totaling $40,000 as of September 30, 2010 and December 31, 2009 related to one of our variable-rate loans on operating properties to effectively fix the interest rate on that loan. Therefore, this amount is currently reflected in fixed-rate debt.

During the remainder of 2010, a total of $299.6 million of our pro rata share of consolidated and unconsolidated debt is scheduled to mature. However, we have extensions of $273.8 million available at our option that we intend to exercise, leaving approximately $25.8 million of maturities in 2010 related to two property-specific loans that must be retired or refinanced. We have term sheets or availability on our lines of credit to address all of our remaining 2010 debt maturities.

The weighted average remaining term of our total share of consolidated and unconsolidated debt was 3.5 years at September 30, 2010 and 3.7 years at December 31, 2009. The weighted average remaining term of our pro rata share of fixed-rate debt was 4.7 years and 4.5 years at September 30, 2010 and December 31, 2009, respectively.

As of September 30, 2010 and December 31, 2009, our pro rata share of consolidated and unconsolidated variable-rate debt represented 30.0% and 28.4%, respectively, of our total pro rata share of debt. As of September 30, 2010, our share of consolidated and unconsolidated variable-rate debt represented 20.2% of our total market capitalization (see Equity below) as compared to 21.1% as of December 31, 2009.

Secured Lines of Credit

We have three secured lines of credit that are used for mortgage retirement, working capital, construction and acquisition purposes, as well as issuances of letters of credit. Each of these lines is secured by mortgages on certain of our operating properties. Borrowings under the secured lines of credit bear interest at LIBOR, subject to a floor of 1.50%, plus a margin ranging from 1.45% to 4.25% and had a weighted average interest rate of 3.75% at September 30, 2010. The Company also pays fees based on the amount of unused availability under its two largest secured lines of credit at an annual rate of 0.35% of unused availability. The following summarizes certain information about the secured lines of credit as of September 30, 2010 (in thousands):

Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date
$	560,000	$	518,920		August 2011	April 2014
	525,000		220,124	(1)	February 2012	February 2013
	105,000		5,000		June 2012	N/A
$	1,190,000	$	744,044

(1)	There was an additional $7,291 outstanding on this secured line of credit as of September 30, 2010 for letters of credit. Up to $50,000 of the capacity on this line can be used for letters of credit.

During the third quarter of 2010, we closed on the extension and modification of our secured credit facility with total capacity of $105.0 million. The facility’s maturity date was extended to June 2012 at its existing interest rate of LIBOR, subject to a floor of 1.50%, plus a margin of 300 basis points. The total capacity on this line of credit was scheduled to decrease to $82.5 million at June 1, 2011 due to an exiting participant lender that has provided $22.5 million of this line’s total capacity, unless a replacement lender was found. We

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executed an agreement with a replacement lender on November 2, 2010 for the full amount of the exiting participant’s portion of the facility’s total capacity.

We also have secured and unsecured lines of credit with a total commitment of $21.0 million that are used only to issue letters of credit. There was $17.7 million outstanding under these lines at September 30, 2010.

Unsecured Term Loans

We have an unsecured term loan with total availability of $228.0 million that bears interest at LIBOR plus a margin of 1.50% to 1.80% based on our leverage ratio, as defined in the loan agreement. At September 30, 2010, the outstanding borrowings of $228.0 million under the unsecured term loan had a weighted average interest rate of 1.87%. The loan matures in April 2011 and has two one-year extension options, which are at our election, for an outside maturity date of April 2013.

We have an unsecured term loan that was obtained for the exclusive purpose of acquiring certain properties from the Starmount Company or its affiliates. At September 30, 2010, the outstanding borrowings of $209.5 million under this loan had a weighted average interest rate of 1.38%. We completed our acquisition of the properties in February 2008 and, as a result, no further draws can be made against the loan. The unsecured term loan bears interest at LIBOR plus a margin of 0.95% to 1.40% based on our leverage ratio, as defined in the loan agreement. Net proceeds from a sale or our share of excess proceeds from any refinancings of any of the properties originally purchased with borrowings from this unsecured term loan must be used to pay down any remaining outstanding balance. The loan matures in November 2010 and has two one-year extension options, which are at our election, for an outside maturity date of November 2012.

The agreements to the $560.0 million and $525.0 million secured credit facilities and the two unsecured term loans described above, each with the same lender, contain default and cross-default provisions customary for transactions of this nature (with applicable customary grace periods) in the event (i) there is a default in the payment of any indebtedness owed by us to any institution which is a part of the lender groups for the credit facilities, or (ii) there is any other type of default with respect to any indebtedness owed by us to any institution which is a part of the lender groups for the credit facilities and such lender accelerates the payment of the indebtedness owed to it as a result of such default. The credit facility agreements provide that, upon the occurrence and continuation of an event of default, payment of all amounts outstanding under these credit facilities and those facilities with which these agreements reference cross-default provisions may be accelerated and the lenders’ commitments may be terminated. Additionally, any default in the payment of any recourse indebtedness greater than $50.0 million or any non-recourse indebtedness greater than $100.0 million, regardless of whether the lending institution is a part of the lender groups for the credit facilities, will constitute an event of default under the agreements to the credit facilities. We were not in default with regard to any of these provisions as of September 30, 2010.

Mortgages on Operating Properties

During the third quarter of 2010, we repaid four CMBS loans with aggregate principal balances of $132.5 million that were secured by Stroud Mall in Stroudsburg, PA, York Galleria in York, PA, and Parkdale Mall and Parkdale Crossing in Beaumont, TX with borrowings from the $560.0 million credit facility. The properties were added to the collateral pool securing that facility.

Also during the third quarter of 2010, we closed on a $65.0 million ten-year, non-recourse CMBS loan with a fixed interest rate of 6.50% secured by Valley View Mall in Roanoke, VA. The new loan replaced an existing loan with a principal balance of $40.6 million that was scheduled to mature in September 2010. The excess proceeds received from the refinancing were used to pay down our secured credit facilities.

During the second quarter of 2010, we entered into an $83.0 million ten-year, non-recourse CMBS loan with a fixed interest rate of 6.00% secured by Burnsville Center in Minneapolis, MN. The loan replaced an existing $60.7 million loan that was scheduled to mature in August 2010. We also entered into an eight-year $115.0 million loan with a fixed interest rate of 6.98% secured by CoolSprings Galleria in Nashville, TN. Proceeds from the new loan, plus cash on hand, were used to retire an existing loan of $120.5 million that was

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scheduled to mature in September 2010. Additionally, we closed on a new ten-year $14.8 million loan with a fixed interest rate of 7.25% secured by The Terrace in Chattanooga, TN. Excess proceeds from these financing activities were used to pay down our secured credit facilities.

Also during the second quarter, we repaid a CMBS loan with a principal balance of $9.0 million secured by WestGate Crossing in Spartanburg, SC with borrowings from the $560.0 million credit facility and the property was added to the collateral pool securing that facility.

In addition, we entered into a $21.0 million ten-year, non-recourse CMBS loan with a fixed interest rate of 6.50% secured by Parkway Place, an unconsolidated operating property in Huntsville, AL. The $21.0 million loan represents our 50% share of the total $42.0 million loan obtained on the property. The loan replaced an existing $51.0 million loan that was scheduled to mature in June 2010, of which our 50% share was $25.5 million. In October 2010, we acquired our joint venture partner's 50% ownership interest in Parkway Place and as a result, assumed their $21.0 million share of this loan.

During the first quarter of 2010, we closed on a variable-rate $72.0 million non-recourse loan that bears interest at LIBOR plus a margin of 400 basis points secured by St. Clair Square in Fairview Heights, IL. The new loan replaced an existing loan with a principal balance of $57.2 million. We have an interest rate cap in place on this loan to limit the LIBOR rate to a maximum of 3.00%. The cap matures in January 2012. The excess proceeds received from the refinancing were used to pay down our secured credit facilities. Also during the first quarter, we repaid a CMBS loan secured by Park Plaza Mall in Little Rock, AK with a principal balance of $38.9 million with borrowings from the $560.0 million credit facility and the property was added to the collateral pool securing that facility.

We own a parcel of land that we are ground leasing to a third party developer for the purpose of developing a shopping center. We have guaranteed 27% of the third party’s construction loan and bond line of credit (the “loans”) of which the maximum guaranteed amount is $24.4 million. The total amount outstanding at September 30, 2010 on the loans was $77.2 million of which we have guaranteed $20.8 million. The $20.8 million guaranteed amount is included in our pro rata share of consolidated and unconsolidated debt at September 30, 2010.

Interest Rate Hedging Instruments

($ in 000's)

Instrument Type

Location in

Consolidated

Balance Sheet

Notional

Amount

Designated

Benchmark

Interest

Rate

Strike

Rate

Fair

Value at

9/30/10

Fair

Value at

12/31/09

Maturity

Date

Cap

Intangible lease assets and other assets

$ 72,000

(amortizing

to $69,375)

3-month LIBOR

3.000%

$ 3

$ -

Jan-12

Cap

Intangible lease assets and other assets

80,000

USD-SIFMA Municipal Swap Index

4.000%

Dec-10

Pay fixed/ Receive

variable Swap

Accounts payable and accrued liabilities

40,000

1-month LIBOR

2.175%

(144)

(636)

Nov-10

Equity

In March 2010, we completed an underwritten public offering of 6,300,000 depositary shares, each representing 1/10th of a share of our 7.375% Series D Cumulative Redeemable Preferred Stock, having a liquidation preference of $25.00 per depositary share. The depositary shares were sold at $20.30 per share including accrued dividends of $0.37 per share. The net proceeds, after underwriting costs and related expenses, of approximately $123.6 million, including accrued dividends of $2.3 million, were used to reduce outstanding borrowings under our credit facilities and for general corporate purposes.

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Including the shares issued in these offerings, we now have 18,150,000 depositary shares outstanding, each representing 1/10th of a share of our 7.375% Series D Cumulative Redeemable Preferred Stock. The securities are redeemable at liquidation preference totaling $453.8 million, plus accrued and unpaid dividends, at any time at our option. These securities have no stated maturity, sinking fund or mandatory redemption provisions and are not convertible into any of our other securities.

During the nine months ended September 30, 2010, we paid cash dividends of $84.9 million to holders of our common stock and our preferred stock, as well as $64.4 million in distributions to the noncontrolling interest investors in our Operating Partnership and other consolidated subsidiaries.

On August 31, 2010, we announced a third quarter 2010 common stock dividend of $0.20 per share payable in cash, that was paid on October 15, 2010. On June 2, 2010, we announced a second quarter 2010 common stock dividend of $0.20 per share payable in cash, that was paid on July 15, 2010. On February 22, 2010, we announced a first quarter 2010 common stock dividend of $0.20 per share payable in cash, that was paid on April 16, 2010. Future dividends payable will be determined by our Board of Directors based upon circumstances at the time of declaration.

As 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 Securities and Exchange Commission 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. There is no limit to the offering price or number of securities that we may issue under this shelf registration statement.

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 as follows at September 30, 2010 (in thousands, except stock prices):

	Shares Outstanding		Stock Price (1)		Value
Common stock and operating partnership units		190,024	$	13.06	$	2,481,713
7.75% Series C Cumulative Redeemable Preferred Stock		460		250.00		115,000
7.375% Series D Cumulative Redeemable Preferred Stock		1,330		250.00		332,500
Total market equity						2,929,213
Company’s share of total debt						5,987,120
Total market capitalization					$	8,916,333
Debt-to-total-market capitalization ratio						67.1	%

(1)	Stock price for common stock and Operating Partnership units equals the closing price of the common stock on September 30, 2010. The stock price for the preferred stock represents the liquidation preference of each respective series of preferred stock.

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Capital Expenditures

Including our share of unconsolidated affiliates’ capital expenditures, we spent $12.6 million and $30.3 million during the three and nine month periods ended September 30, 2010, respectively, for tenant allowances, which generally generate increased rents from tenants over the terms of their leases. Deferred maintenance expenditures were $8.0 million for the three months ended September 30, 2010 and included $1.4 million for roof replacements and $6.6 million for various other capital expenditures. Deferred maintenance expenditures were $14.8 million for the nine months ended September 30, 2010 and included $3.2 million for roof replacements and repairs and $11.6 million for various other 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 approximately 30% is recovered from tenants over a 5 to 15-year period. We are recovering these costs through fixed amounts with annual increases or pro rata cost reimbursements based on the tenant’s occupied space.

As part of our strategy to strengthen our liquidity position, we have focused on reducing capital expenditures related to renovations and tenant allowances. Since the vast majority of our properties have been renovated within the last ten years, we decided to delay any renovation plans during 2009 and do not have any renovations scheduled for 2010.

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 table summarizes our development projects as of September 30, 2010 (dollars in thousands):

Properties Opened During the Nine Months Ended September 30, 2010

(Dollars in thousands)

Total

Project

CBL's Share of

Property

Location

Square

Feet

Total

Cost (d)

Cost

to Date (e)

Date Opened

Initial

Yield

Community Center:

The Pavilion at Port Orange (Phase I and Phase 1A) (a)

Port Orange, FL

494,025

67,742

61,367

Fall-09/Spring-10

7.3

Properties Under Development at September 30, 2010

(Dollars in thousands)

		Total
		Project			CBL's Share of			Expected
Property	Location	Square Feet		Total Cost (d)		Cost to Date (e)		Opening Date	Initial Yield
Mall Expansion:
Alamance West	Burlington, NC		235,938	$	16,176	$	3,096	Fall-11		10.9	%

Community Center Expansion:
Settlers Ridge Phase II	Robinson Township, PA		86,617		11,598		3,729	Summer-11		10.4	%

Community/Outlet Centers:
The Forum at Grandview Phase I (b)	Madison, MS		110,690		18,591		20,857	Fall-10		6.3	%*
The Outlet Shoppes at Oklahoma City (c)	Oklahoma City, OK		325,200		60,828		-	Fall-11		10.3	%
			758,445	$	107,193	$	27,682

(a)	The Pavilion at Port Orange is a 50/50 joint venture.
(b)	The Forum at Grandview is a 75/25 joint venture.
(c)	The Outlet Shoppes at Oklahoma City was owned by Horizon Group Properties, Inc. ("Horizon") at September 30, 2010. The Company entered into a 75/25 joint venture with Horizon in October 2010 related to this property.
(d)	Total Cost is presented net of reimbursements to be received.
(e)	Cost to Date does not reflect reimbursements until they are received.

*	Pro forma initial yields for phased projects reflect full land cost in Phase I. Combined pro forma yields are higher than Phase I project yields.

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We celebrated the grand opening of the first phase of The Pavilion at Port Orange, a 492,000-square-foot-open-air development in Port Orange, FL, on March 10, 2010. The project opened approximately 92% leased or committed with anchors including Hollywood Theaters, Belk, HomeGoods, Marshalls, Michaels, PETCO and ULTA.

In March 2010, we began construction on The Forum at Grandview, the first phase of a 75/25 joint venture community center project in Madison, MS. We converted our ground lease position into a 75% ownership interest in the development. This project will serve to meet the strong retail demand in the Madison area of greater Jackson, MS. The first phase of this project is 110,000 square feet comprised of anchors including Dick’s Sporting Goods, Best Buy and Stein Mart. The project is 100% leased and will open in November 2010.

During the third quarter of 2010, we began construction on second phases of our centers in Burlington, NC and Pittsburgh, PA. In 2007, we opened Alamance Crossing and have now started construction on Alamance West, a 210,000-square-foot second phase. The project will include a wholesale club, a sporting goods store and an 80,000-square-foot fashion anchor. Alamance West is scheduled to open in fall 2011.

We are also starting construction on a 78,000-square-foot expansion of Settlers Ridge, which we opened last year. The project will include Michaels, Ross Dress for Less and an additional junior anchor. The project is scheduled to open in spring 2011.

We have entered into one option agreement for the development of a future shopping center. Except for the projects presented above, we do not have any other material capital commitments as of September 30, 2010.

Acquisitions

Dispositions

On October 14, 2010, we completed the sale of Pemberton Square, located in Vicksburg, MS, for a sales price of $1.9 million less commissions and customary closing costs for a net sales price of $1.8 million. We expect to record a gain of approximately $0.4 million attributable to the sale in the fourth quarter of 2010. Proceeds from the sale were used to reduce the outstanding borrowings on our $525.0 million secured credit facility.

Off-Balance Sheet Arrangements

Unconsolidated Affiliates

We have ownership interests in 17 unconsolidated affiliates as of September 30, 2010, that are described in Note 4 to the consolidated financial statements. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the 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

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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 partner or have the ability to increase our ownership interest.

We own a parcel of land that we are ground leasing to a third party developer for the purpose of developing a shopping center. We have guaranteed 27% of the third party’s construction loan and bond line of credit (the “loans”) of which the maximum guaranteed amount is $24.4 million. The total amount outstanding at September 30, 2010 on the loans was $77.2 million of which we have guaranteed $20.8 million. The third party’s loans mature in July 2012. We have recorded an obligation of $0.3 million in our condensed consolidated balance sheets as of September 30, 2010 and December 31, 2009 to reflect the estimated fair value of the guaranty.

We have guaranteed 100% of the construction and land loans of West Melbourne I, LLC (“West Melbourne”), an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $50.7 million. West Melbourne developed and, in April 2009, opened Hammock Landing, a community center in West Melbourne, FL. The total amount outstanding at September 30, 2010 on the loans was $45.6 million. The guaranty will expire upon repayment of the debt. The land loan, representing $3.3 million of the amount outstanding at September 30, 2010, matures in August 2011. The construction loan, representing $42.3 million of the amount outstanding at September 30, 2010, matures in August 2011 and has two one-year extension options available. We have recorded an obligation of $0.7 million in the accompanying condensed consolidated balance sheets as of September 30, 2010 and December 31, 2009 to reflect the estimated fair value of this guaranty.

We have guaranteed 100% of the construction loan of Port Orange I, LLC (“Port Orange”), an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $97.2 million. Port Orange developed and, in March 2010, opened The Pavilion at Port Orange, a community center in Port Orange, FL. The total amount outstanding at September 30, 2010 on the loan was $69.4 million. The guaranty will expire upon repayment of debt. The loan matures in December 2011 and has two one-year extension options available. We have recorded an obligation of $1.1 million in the accompanying condensed consolidated balance sheets as of September 30, 2010 and December 31, 2009 to reflect the estimated fair value of this guaranty.

We have guaranteed the lease performance of York Town Center, LP (“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 $18.8 million as of September 30, 2010. 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 record an obligation for this guaranty because we determined that the fair value of the guaranty is not material.

We have guaranteed 100% of a construction loan of JG Gulf Coast town Center, LLC, an unconsolidated affiliate in which we own a 50% interest, of which the maximum guaranteed amount is $11.6 million. Proceeds

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from the construction loan are designated for the development of Phase III of Gulf Coast Town Center, an open-air center in Fort Myers, FL. The total amount outstanding at September 30, 2010 on the loan was $11.6 million. The guaranty will expire upon repayment of the debt. The loan matures in April 2011 and has a one year extension option available. We did not record an obligation for this guaranty because we determined that the fair value of the guaranty is not material.

Our guarantees and the related accounting are more fully described in Note 9 to the condensed consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are disclosed in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2009. The following discussion describes our most critical accounting policies, which are those that are both important to the presentation of our financial condition and results of operations and that require significant judgment or use of complex estimates.

Revenue Recognition

Minimum rental revenue from operating leases is recognized on a straight-line basis over the initial terms of the related leases. Certain tenants are required to pay percentage rent if their sales volumes exceed thresholds specified in their lease agreements. Percentage rent is recognized as revenue when the thresholds are achieved and the amounts become determinable.

We receive reimbursements from tenants for real estate taxes, insurance, common area maintenance, and other recoverable operating expenses as provided in the lease agreements. Tenant reimbursements are recognized as revenue in the period the related operating expenses are incurred. Tenant reimbursements related to certain capital expenditures are billed to tenants over periods of 5 to 15 years and are recognized as revenue when billed.

We receive management, leasing and development fees from third parties and unconsolidated affiliates. Management fees are charged as a percentage of revenues (as defined in the management agreement) and are recognized as revenue when earned. Development fees are recognized as revenue on a pro rata basis over the development period. Leasing fees are charged for newly executed leases and lease renewals and are recognized as revenue when earned. Development and leasing fees received from unconsolidated affiliates during the development period are recognized as revenue to the extent of the third-party partners’ ownership interest. Fees to the extent of our ownership interest are recorded as a reduction to our investment in the unconsolidated affiliate.

Gains on sales of real estate assets are recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, our receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. When we have an ownership interest in the buyer, gain is recognized to the extent of the third party partner’s ownership interest and the portion of the gain attributable to our ownership interest is deferred.

Real Estate Assets

We capitalize predevelopment project costs paid to third parties. All previously capitalized predevelopment costs are expensed when it is no longer probable that the project will be completed. Once development of a project commences, all direct costs incurred to construct the project, including interest and real estate taxes, are capitalized. Additionally, certain general and administrative expenses are allocated to the projects and capitalized based on the amount of time applicable personnel work on the development project. Ordinary repairs and maintenance are expensed as incurred. Major replacements and improvements are capitalized and depreciated over their estimated useful lives.

All acquired real estate assets are accounted for using the purchase method of accounting and accordingly, the results of operations are included in the consolidated statements of operations from the respective dates of acquisition. The purchase price is allocated to (i) tangible assets, consisting of land, buildings and improvements, as if vacant, and tenant improvements and (ii) identifiable intangible assets and liabilities generally consisting of above- and below-market leases and in-place leases. We use estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation methods to allocate the purchase price to the acquired tangible and intangible assets. Liabilities assumed generally consist of mortgage debt on the

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real estate assets acquired. Assumed debt with a stated interest rate that is significantly different from market interest rates is recorded at its fair value based on estimated market interest rates at the date of acquisition.

Depreciation is computed on a straight-line basis over estimated lives of 40 years for buildings, 10 to 20 years for certain improvements and 7 to 10 years for equipment and fixtures. Tenant improvements are capitalized and depreciated on a straight-line basis over the term of the related lease. Lease-related intangibles from acquisitions of real estate assets are amortized over the remaining terms of the related leases. The amortization of above- and below-market leases is recorded as an adjustment to minimum rental revenue, while the amortization of all other lease-related intangibles is recorded as amortization expense. Any difference between the face value of the debt assumed and its fair value is amortized to interest expense over the remaining term of the debt using the effective interest method.

Carrying Value of Long-Lived Assets

We periodically evaluate long-lived assets to determine if there has been any impairment in their carrying values and record impairment losses if there are indicators of impairment and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. If it is determined that an impairment has occurred, the excess of the asset’s carrying value over its estimated fair value is charged to operations.

During the course of our normal quarterly impairment review process for the second quarter of 2010, it was determined that a write-down of the depreciated book value of Oak Hollow Mall in High Point, NC, to its estimated fair value was necessary, resulting in a non-cash loss on impairment of real estate assets of $25.4 million for the nine months ended September 30, 2010.

No impairments of the carrying values of long-lived assets were incurred during the three months ended September 30, 2010 and the three and nine months ended September 30, 2009.

Allowance for Doubtful Accounts

We periodically perform a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances. Our estimate of the allowance for doubtful accounts requires significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income. We recorded a provision for doubtful accounts of $3.0 million and $4.5 million for the nine months ended September 30, 2010 and 2009, respectively.

Investments in Unconsolidated Affiliates

Initial investments in joint ventures that are in economic substance a capital contribution to the joint venture are recorded in an amount equal to our historical carryover basis in the real estate contributed. Initial investments in joint ventures that are in economic substance the sale of a portion of our interest in the real estate are accounted for as a contribution of real estate recorded in an amount equal to our historical carryover basis in the ownership percentage retained and as a sale of real estate with profit recognized to the extent of the other joint venturers’ interests in the joint venture. Profit recognition assumes that we have no commitment to reinvest with respect to the percentage of the real estate sold and the accounting requirements of the full accrual method are met.

We account for our investment in joint ventures where we own a non-controlling interest or where we are not the primary beneficiary of a variable interest entity using the equity method of accounting. Under the equity method, our cost of investment is adjusted for our share of equity in the earnings of the unconsolidated affiliate and reduced by distributions received. Generally, distributions of cash flows from operations and capital events are first made to partners to pay cumulative unpaid preferences on unreturned capital balances and then to the partners in accordance with the terms of the joint venture agreements.

Any differences between the cost of our investment in an unconsolidated affiliate and our underlying equity as reflected in the unconsolidated affiliate’s financial statements generally result from costs of our investment that are not reflected on the unconsolidated affiliate’s financial statements, capitalized interest on our investment and our share of development and leasing fees that are paid by the unconsolidated affiliate to us for development and leasing services provided to the unconsolidated affiliate during any development periods. The net difference between our investment in unconsolidated affiliates and the underlying equity of unconsolidated affiliates is generally amortized over a period of 40 years.

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On a periodic basis, we assess whether there are any indicators that the fair value of our investments in unconsolidated affiliates may be impaired. An investment is impaired only if our estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment. Our estimates of fair value for each investment are based on a number of assumptions such as future leasing expectations, operating forecasts, discount rates and capitalization rates, among others. These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the fair values estimated in the impairment analyses may not be realized.

During the three and nine months ended September 30, 2009, we recorded a non-cash impairment charge of $1.1 million related to the then pending sale of our interest in Plaza Macaé in Macaé, Brazil to reflect the fair value of the investment.

During the nine months ended September 30, 2009, we recorded a non-cash impairment charge of $7.7 million related to our cost-method investment in Jinsheng due to a decline in expected future cash flows. The projected decrease was a result of declining occupancy and sales due to the downturn of the real estate market in China in early 2009. No impairments of investments in unconsolidated affiliates were incurred during the nine months ended September 30, 2010.

Recent Accounting Pronouncements

Effective January 1, 2010, we adopted ASU No. 2010-06, Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 provides that significant transfers in or out of measurements classified as Levels 1 or 2 should be disclosed separately along with reasons for the transfers. Information regarding purchases, sales, issuances and settlements related to measurements classified as Level 3 are also to be presented separately. Existing disclosures have been updated to include fair value measurement disclosures for each class of assets and liabilities and information regarding the valuation techniques and inputs used to measure fair value in measurements classified as either Levels 2 or 3. The guidance is effective for fiscal years beginning after December 15, 2009. The adoption of this guidance did not have an impact on our condensed consolidated financial statements.

Effective January 1, 2010, we adopted ASU No. 2009-16, Transfers and Servicing: Accounting for Transfers of Financial Assets (“ASU 2009-16”). The guidance eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets and requires additional related disclosures. The new accounting guidance is effective for fiscal years beginning after November 15, 2009. The adoption of this guidance did not have an impact on our condensed consolidated financial statements.

Effective January 1, 2010, we adopted ASU No. 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (“ASU 2009-17”). ASU 2009-17 modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting, or similar, rights should be consolidated. The guidance clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. This guidance requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. It also requires additional disclosure about a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. The guidance is effective for fiscal years beginning after November 15, 2009. The adoption of this guidance did not have an impact on our condensed consolidated financial statements.

On February 24, 2010, the FASB issued ASU No. 2010-09, Subsequent Events: Amendments to Certain Recognition and Disclosure Requirements (“ASU 2010-09”). ASU 2010-09 amends the disclosure provision related to subsequent events by removing the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated. The new accounting guidance was effective immediately and we adopted ASU No. 2010-09 upon the date of issuance.

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Impact of Inflation

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 late 2009, the markets that were impacted by the economic crisis that arose primarily in the fourth quarter of 2008 seemed to stabilize and related bankruptcy activity started to decline. The credit and investment markets have been slowly, but steadily, showing signs of improvement. Retailers seem to have revised their business plans to better adapt to the current economic environment and are starting to report improving margins and profitability. The primary focus has begun to shift to planning for a market recovery.

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, or 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.

Funds From Operations

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

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 of our Operating Partnership and FFO allocable to common shareholders, as we believe that both are useful performance measures. We believe FFO of our Operating Partnership 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 available to common shareholders.

In our reconciliation of net income available to common shareholders to FFO allocable to common shareholders that is presented below, we make an adjustment to add back noncontrolling interest in income of our Operating Partnership in order to arrive at FFO of our Operating Partnership. We then apply a percentage to FFO of our Operating Partnership to arrive at FFO allocable to common shareholders. The percentage is computed by taking the weighted average number of common shares outstanding for the period and dividing it by the sum of the weighted average number of common shares and the weighted average number of Operating Partnership units outstanding during the period (excluding those operating partnership units held by subsidiaries of the Company which correspond to the outstanding common shares).

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During the nine months ended September 30, 2010, we recorded a non-cash loss on impairment of real estate assets related to one operating property. Considering the significance and nature of the impairment, we believe that it is important to identify the impact of the charge on our FFO measures for a reader to have a complete understanding of our results of operations. Therefore, we have also presented our FFO measure excluding the impairment charge.

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 for purposes of evaluating our operating performance or to cash flow as a measure of liquidity.

FFO of the Operating Partnership decreased 5.0% to $89.5 million for the three months ended September 30, 2010 from $94.2 million for the same period in 2009 primarily as result of a $2.9 million increase in preferred dividends, a $1.0 million increase in interest expense, and a $0.9 million decline in gains on sales of real estate assets. FFO of the Operating Partnership decreased 9.8% for the nine months ended September 30, 2010 to $251.7 million compared to $279.0 million for the same period in 2009, primarily as a result of the aforementioned impairment charge. Excluding the impairment charge, FFO of the Operating Partnership decreased 0.6% for the nine months ended September 30, 2010, compared to the prior-year period.

The reconciliation of FFO to net income (loss) available to common shareholders is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009

Net income available to common shareholders	$	9,580		$	11,134		$	13,266		$	20,983
Noncontrolling interest in income of operating partnership		3,605			4,758			4,992			11,173
Depreciation and amortization expense of:
Consolidated properties		73,333			71,161			215,953			225,069
Unconsolidated affiliates		5,681			7,428			21,052			22,492
Discontinued operations		19			100			63			296
Non-real estate assets		(2,463	)		(241	)		(2,901	)		(731	)
Noncontrolling investors' share of depreciation and amortization		(243	)		(120	)		(699	)		(385	)
(Gain) loss on discontinued operations		-			(10	)		-			62
Funds from operations of the Operating Partnership		89,512			94,210			251,726			278,959
Loss on impairment of real estate		-			-			25,435			-
Funds from operations of the Operating Partnership, excluding loss on impairment of real estate	$	89,512		$	94,210		$	277,161		$	278,959

The reconciliations of FFO of the Operating Partnership to FFO allocable to the Company shareholders, including and excluding the loss on impairment of real estate, are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009

Funds from operations of the operating partnership	$	89,512		$	94,210		$	251,726		$	278,959
Percentage allocable to Company shareholders (1)		72.66	%		72.63	%		72.66	%		65.05	%
Funds from operations allocable to Company shareholders	$	65,039		$	68,425		$	182,904		$	181,463

Funds from operations of the operating partnership, excluding loss on impairment of real estate	$	89,512		$	94,210		$	277,161		$	278,959
Percentage allocable to Company shareholders (1)		72.66	%		72.63	%		72.66	%		65.05	%
Funds from operations allocable to Company shareholders, excluding loss on impairment of real estate	$	65,039		$	68,425		$	201,385		$	181,463

(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 outstanding during the period.

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ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risk exposures, including interest rate risk and foreign exchange 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 and foreign exchange 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 5 of the notes to consolidated financial statements for further discussions of the qualitative aspects of market risk, including derivative financial instrument activity.

Based on our proportionate share of consolidated and unconsolidated variable-rate debt at September 30, 2010, a 0.5% increase or decrease in interest rates on variable rate debt would increase or decrease annual cash flows by approximately $4.6 million and, after the effect of capitalized interest, annual earnings by approximately $4.6 million.

Based on our proportionate share of total consolidated and unconsolidated debt at September 30, 2010, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $82.1 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $84.2 million.

ITEM 4: Controls and Procedures

Disclosure Controls and Procedures

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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 our 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 our disclosure controls and procedures are effective to ensure that information that we 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 Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our 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

None

ITEM 1A. Risk Factors

The following information updates the information disclosed in “Item 1A – Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2009, by providing information that is current as of September 30, 2010:

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RISKS RELATED TO REAL ESTATE INVESTMENTS

Real property investments are subject to various risks, many of which are beyond our control, that could cause declines in the operating revenues and/or the underlying value of one or more of our Properties.

A number of factors may decrease the income generated by a retail shopping center property, including:

National, regional and local economic climates, which may be negatively impacted by loss of jobs, production slowdowns, adverse weather conditions, natural disasters, acts of violence, war or terrorism, declines in residential real estate activity and other factors which tend to reduce consumer spending on retail goods.

Adverse changes in levels of consumer spending, consumer confidence and seasonal spending (especially during the holiday season when many retailers generate a disproportionate amount of their annual profits).

Local real estate conditions, such as an oversupply of, or reduction in demand for, retail space or retail goods, and the availability and creditworthiness of current and prospective tenants.

Increased operating costs, such as increases in repairs and maintenance, real property taxes, utility rates and insurance premiums.

Delays or cost increases associated with the opening of new or renovated properties, due to higher than estimated construction costs, cost overruns, delays in receiving zoning, occupancy or other governmental approvals, lack of availability of materials and labor, weather conditions, and similar factors which may be outside our ability to control.

Perceptions by retailers or shoppers of the safety, convenience and attractiveness of the shopping center.

The willingness and ability of the shopping center’s owner to provide capable management and maintenance services.

The convenience and quality of competing retail properties and other retailing options, such as the Internet.

In addition, other factors may adversely affect the value of our Properties without affecting their current revenues, including:

Adverse changes in governmental regulations, such as local zoning and land use laws, environmental regulations or local tax structures that could inhibit our ability to proceed with development, expansion, or renovation activities that otherwise would be beneficial to our Properties.

Potential environmental or other legal liabilities that reduce the amount of funds available to us for investment in our Properties.

Any inability to obtain sufficient financing (including construction financing and permanent debt), or the inability to obtain such financing on commercially favorable terms, to fund repayment of maturing loans, new developments, acquisitions, and property expansions and renovations which otherwise would benefit our Properties.

An environment of rising interest rates, which could negatively impact both the value of commercial real estate such as retail shopping centers and the overall retail climate.

Illiquidity of real estate investments could significantly affect our ability to respond to adverse changes in the performance of our Properties and harm our financial condition.

Substantially all of our total consolidated assets consist of investments in real properties. Because real estate investments are relatively illiquid, our ability to quickly sell one or more properties in our portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand for space, that are beyond our control. We cannot predict whether we will be able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. In addition, current economic and capital market conditions might make it more difficult for us to sell properties or might adversely affect the price we receive for properties

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that we do sell, as prospective buyers might experience increased costs of debt financing or other difficulties in obtaining debt financing.

Moreover, there are some limitations under federal income tax laws applicable to REITs that limit our ability to sell assets. In addition, because our Properties are generally mortgaged to secure our debts, we may not be able to obtain a release of a lien on a mortgaged property without the payment of the associated debt and/or a substantial prepayment penalty, which restricts our ability to dispose of a property, even though the sale might otherwise be desirable. Furthermore, the number of prospective buyers interested in purchasing shopping centers is limited. Therefore, if we want to sell one or more of our Properties, we may not be able to dispose of it in the desired time period and may receive less consideration than we originally invested in the Property.

Before a property can be sold, we may be required to make expenditures to correct defects or to make improvements. We cannot assure you that we will have funds available to correct those defects or to make those improvements, and if we cannot do so, we might not be able to sell the property, or might be required to sell the property on unfavorable terms. In acquiring a property, we might agree to provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as limitations on the amount of debt that can be placed or repaid on that property. These factors and any others that would impede our ability to respond to adverse changes in the performance of our Properties could adversely affect our financial condition and results of operations.

We may elect not to proceed with certain development or expansion projects once they have been undertaken, resulting in charges that could have a material adverse effect on our results of operations for the period in which the charge is taken.

We intend to pursue development and expansion activities as opportunities arise. In connection with any development or expansion, we will incur various risks, including the risk that development or expansion opportunities explored by us may be abandoned for various reasons including, but not limited to, credit disruptions that require the Company to conserve its cash until the capital markets stabilize or alternative credit or funding arrangements can be made. Developments or expansions also include the risk that construction costs of a project may exceed original estimates, possibly making the project unprofitable. Other risks include the risk that we may not be able to refinance construction loans which are generally with full recourse to us, the risk that occupancy rates and rents at a completed project will not meet projections and will be insufficient to make the project profitable, and the risk that we will not be able to obtain anchor, mortgage lender and property partner approvals for certain expansion activities.

When we elect not to proceed with a development opportunity, the development costs ordinarily are charged against income for the then-current period. Any such charge could have a material adverse effect on our results of operations for the period in which the charge is taken.

Certain of our Properties are subject to ownership interests held by third parties, whose interests may conflict with ours and thereby constrain us from taking actions concerning these properties which otherwise would be in the best interests of the Company and our stockholders.

We own partial interests in 22 malls, 13 associated centers, five community centers and eight office buildings. We manage all but three of these properties. Governor’s Square, Governor’s Plaza and Kentucky Oaks are all owned by joint ventures and are managed by a property manager that is affiliated with the third party managing general partner. The property manager performs the property management and leasing services for these three Properties and receives a fee for its services. The managing partner of the Properties controls the cash flow distributions, although our approval is required for certain major decisions.

Where we serve as managing general partner (or equivalent) of the entities that own our Properties, we may have certain fiduciary responsibilities to the other owners of those entities. In certain cases, the approval or consent of the other owners is required before we may sell, finance, expand or make other significant changes in the operations of such Properties. To the extent such approvals or consents are required, we may experience difficulty in, or may be prevented from, implementing our plans with respect to expansion, development, financing or other similar transactions with respect to such Properties.

With respect to those Properties for which we do not serve as managing general partner (or equivalent), we do not have day-to-day operational control or control over certain major decisions, including leasing and the

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timing and amount of distributions, which could result in decisions by the managing entity that do not fully reflect our interests. This includes decisions relating to the requirements that we must satisfy in order to maintain our status as a REIT for tax purposes. However, decisions relating to sales, expansion and disposition of all or substantially all of the assets and financings are subject to approval by the Operating Partnership.

Bankruptcy of joint venture partners could impose delays and costs on us with respect to the jointly owned retail properties.

In addition to the possible effects on our joint ventures of a bankruptcy filing by us, the bankruptcy of one of the other investors in any of our jointly owned shopping centers could materially and adversely affect the relevant property or properties. Under the bankruptcy laws, we would be precluded from taking some actions affecting the estate of the other investor without prior approval of the bankruptcy court, which would, in most cases, entail prior notice to other parties and a hearing in the bankruptcy court. At a minimum, the requirement to obtain court approval may delay the actions we would or might want to take. If the relevant joint venture through which we have invested in a property has incurred recourse obligations, the discharge in bankruptcy of one of the other investors might result in our ultimate liability for a greater portion of those obligations than we would otherwise bear.

We may incur significant costs related to compliance with environmental laws, which could have a material adverse effect on our results of operations, cash flows and the funds available to us to pay dividends.

Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of petroleum, certain hazardous or toxic substances on, under or in such real estate. Such laws typically impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances. The costs of remediation or removal of such substances may be substantial. The presence of such substances, or the failure to promptly remove or remediate such substances, may adversely affect the owner’s or operator’s ability to lease or sell such real estate or to borrow using such real estate as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of such substances at the disposal or treatment facility, regardless of whether such facility is owned or operated by such person. Certain laws also impose requirements on conditions and activities that may affect the environment or the impact of the environment on human health. Failure to comply with such requirements could result in the imposition of monetary penalties (in addition to the costs to achieve compliance) and potential liabilities to third parties. Among other things, certain laws require abatement or removal of friable and certain non-friable asbestos-containing materials in the event of demolition or certain renovations or remodeling. Certain laws regarding asbestos-containing materials require building owners and lessees, among other things, to notify and train certain employees working in areas known or presumed to contain asbestos-containing materials. Certain laws also impose liability for release of asbestos-containing materials into the air and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with asbestos-containing materials. In connection with the ownership and operation of properties, we may be potentially liable for all or a portion of such costs or claims.

All of our Properties (but not properties for which we hold an option to purchase but do not yet own) have been subject to Phase I environmental assessments or updates of existing Phase I environmental assessments. Such assessments generally consisted of a visual inspection of the Properties, review of federal and state environmental databases and certain information regarding historic uses of the property and adjacent areas and the preparation and issuance of written reports. Some of the Properties contain, or contained, underground storage tanks used for storing petroleum products or wastes typically associated with automobile service or other operations conducted at the Properties. Certain Properties contain, or contained, dry-cleaning establishments utilizing solvents. Where believed to be warranted, samplings of building materials or subsurface investigations were undertaken. At certain Properties, where warranted by the conditions, we have developed and implemented an operations and maintenance program that establishes operating procedures with respect to asbestos-containing materials. The cost associated with the development and implementation of such programs was not material. We have also obtained environmental insurance coverage at certain of our Properties.

We believe that our Properties are in compliance in all material respects with all federal, state and local ordinances and regulations regarding the handling, discharge and emission of hazardous or toxic substances. As of September 30, 2010, we have recorded in our financial statements a liability of $2.9 million related to potential

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future asbestos abatement activities at our Properties which are not expected to have a material impact on our financial condition or results of operations. We have not been notified by any governmental authority, and are not otherwise aware, of any material noncompliance, liability or claim relating to hazardous or toxic substances in connection with any of our present or former Properties. Therefore, we have not recorded any liability related to hazardous or toxic substances. Nevertheless, it is possible that the environmental assessments available to us do not reveal all potential environmental liabilities. It is also possible that subsequent investigations will identify material contamination, that adverse environmental conditions have arisen subsequent to the performance of the environmental assessments, or that there are material environmental liabilities of which management is unaware. Moreover, no assurances can be given that (i) future laws, ordinances or regulations will not impose any material environmental liability or (ii) the current environmental condition of the Properties has not been or will not be affected by tenants and occupants of the Properties, by the condition of properties in the vicinity of the Properties or by third parties unrelated to us, the Operating Partnership or the relevant Property’s partnership.

Possible terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.

Future terrorist attacks in the United States, and other acts of violence, including terrorism or war, might result in declining consumer confidence and spending, which could harm the demand for goods and services offered by our tenants and the values of our Properties, and might adversely affect an investment in our securities. A decrease in retail demand could make it difficult for us to renew or re-lease our Properties at lease rates equal to or above historical rates and, to the extent our tenants are affected, could adversely affect their ability to continue to meet obligations under their existing leases. Terrorist activities also could directly affect the value of our Properties through damage, destruction or loss. Furthermore, terrorist acts might result in increased volatility in national and international financial markets, which could limit our access to capital or increase our cost of obtaining capital.

RISKS RELATED TO OUR BUSINESS AND THE MARKET FOR OUR STOCK

Declines in economic conditions, including increased volatility in the capital and credit markets, could adversely affect our business, results of operations and financial condition.

An economic recession can result in extreme volatility and disruption of our capital and credit markets. The resulting economic environment may be affected by dramatic declines in the stock and housing markets, increases in foreclosures, unemployment and costs of living, as well as limited access to credit. This economic situation can, and most often will, impact consumer spending levels, which can result in decreased revenues for our tenants and related decreases in the values of our Properties. A sustained economic downward trend could impact our tenants’ ability to meet their lease obligations due to poor operating results, lack of liquidity, bankruptcy or other reasons. Our ability to lease space and negotiate rents at advantageous rates could also be affected in this type of economic environment. Additionally, access to capital and credit markets could be disrupted over an extended period, which may make it difficult to obtain the financing we may need for future growth and/or to meet our debt service obligations as they mature. Any of these events could harm our business, results of operations and financial condition.

Both our June 2009 common stock offering and the payment of a portion of our common stock dividend for the first quarter of 2009 in shares of common stock were dilutive, and there may be future dilution of our common stock.

In June 2009, we completed a public offering of 66,630,000 shares of our newly-issued common stock. In April 2009, we issued 4,754,355 shares of common stock in connection with the payment of a portion of our first quarter 2009 common stock dividend. These transactions have had a dilutive effect on our earnings per share and funds from operations per share for the three and nine months ended September 30, 2010. We are not restricted by our organizational documents, contractual arrangements or otherwise from issuing additional common stock, including any securities that are convertible into or exchangeable or exercisable for, or that represent the right to receive, common stock or any substantially similar securities in the future. Future sales or issuances of substantial amounts of our common stock may be at prices below the then-current market price of our common stock and may adversely impact the market price of our common stock. Additionally, the market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market after our recent common stock offering or the perception that such sales could occur.

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The market price of our common stock or other securities may fluctuate significantly.

The market price of our common stock or other securities may fluctuate significantly in response to many factors, including:

·	actual or anticipated variations in our operating results, funds from operations, cash flows or liquidity;

·	changes in our earnings estimates or those of analysts;

·	changes in our dividend policy;

·	impairment charges affecting the carrying value of one or more of our Properties or other assets;

·	publication of research reports about us, the retail industry or the real estate industry generally;

·	increases in market interest rates that lead purchasers of our securities to seek higher dividend or interest rate yields;

·	changes in market valuations of similar companies;

·	adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt in the near and medium term and our ability to refinance such debt and the terms thereof or our plans to incur additional debt in the future;

·	additions or departures of key management personnel;

·	actions by institutional security holders;

·	speculation in the press or investment community;

·	the occurrence of any of the other risk factors included in, or incorporated by reference in, this report; and

·	general market and economic conditions.

Many of the factors listed above are beyond our control. Those factors may cause the market price of our common stock or other securities to decline significantly, regardless of our financial performance and condition and prospects. It is impossible to provide any assurance that the market price of our common stock or other securities will not fall in the future, and it may be difficult for holders to sell such securities at prices they find attractive, or at all.

The issuance of additional preferred stock may adversely affect the earnings per share available to common shareholders and amounts available to common shareholders for payments of dividends.

In March 2010, we completed an equity offering of 6,300,000 depositary shares, each representing 1/10th of a share of our 7.375% Series D Cumulative Redeemable Preferred Stock, having a liquidation preference of $25.00 per share. The securities are redeemable at liquidation preference, plus accrued and unpaid dividends, at any time at the option of the Company. The shares issued in the March 2010 offering will accrue dividends totaling approximately $11.6 million annually, decreasing earnings per share available to our common shareholders and the amounts available to our common shareholders for dividend payments.

In October 2010, we completed an additional equity offering of 4,400,000 depositary shares, each representing 1/10th of a share of our 7.375% Series D Cumulative Redeemable Preferred Stock, having a liquidation preference of $25.00 per share. Subsequent thereto, the underwriters of the offering exercised their option to purchase an additional 450,000 depositary shares. As a result of the exercise of this option, the Company sold a total of 4,850,000 depositary shares in the offering. The securities are redeemable at liquidation preference, plus accrued and unpaid dividends, at any time at the option of the Company. The shares issued in the October 2010 offering will accrue dividends totaling approximately $8.9 million annually, decreasing earnings per share available to our common shareholders and the amounts available to our common shareholders for dividend payments.

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We are not restricted by our organizational documents, contractual arrangements or otherwise from issuing additional preferred shares, including any securities that are convertible into or exchangeable or exercisable for, or that represent the right to receive, preferred stock or any substantially similar securities in the future.

Competition could adversely affect the revenues generated by our Properties, resulting in a reduction in funds available for distribution to our stockholders.

There are numerous shopping facilities that compete with our Properties in attracting retailers to lease space. In addition, retailers at our Properties face competition for customers from:

discount shopping centers;

outlet malls;

wholesale clubs;

direct mail;

television shopping networks; and

shopping via the internet.

Each of these competitive factors could adversely affect the amount of rents and tenant reimbursements that we are able to collect from our tenants, thereby reducing our revenues and the funds available for distribution to our stockholders.

We compete with many commercial developers, real estate companies and major retailers for prime development locations and for tenants. New regional malls or other retail shopping centers with more convenient locations or better rents may attract tenants or cause them to seek more favorable lease terms at, or prior to, renewal.

Increased operating expenses and decreased occupancy rates may not allow us to recover the majority of our common area maintenance (CAM) and other operating expenses from our tenants, which could adversely affect our financial position, results of operations and funds available for future distributions.

Energy costs, repairs, maintenance and capital improvements to common areas of our Properties, janitorial services, administrative, property and liability insurance costs and security costs are typically allocable to our Properties’ tenants. Our lease agreements typically provide that the tenant is liable for a portion of the CAM and other operating expenses. While historically our lease agreements provided for variable CAM provisions, the majority of our current leases require an equal periodic tenant reimbursement amount for our cost recoveries which serves to fix our tenants’ CAM contributions to us. In these cases, a tenant will pay a single specified rent amount, or a set expense reimbursement amount, subject to annual increases, regardless of the actual amount of operating expenses. The tenant’s payment remains the same regardless of whether operating expenses increase or decrease, causing us to be responsible for any excess amounts or to benefit from any declines. As a result, the CAM and tenant reimbursements that we receive may or may not allow us to recover a substantial portion of these operating costs.

Additionally, in the event that our Properties are not fully occupied, we would be required to pay the portion of any operating, redevelopment or renovation expenses allocable to the vacant space(s) that would otherwise typically be paid by the residing tenant(s).

The loss of one or more significant tenants, due to bankruptcies or as a result of ongoing consolidations in the retail industry, could adversely affect both the operating revenues and value of our Properties.

Regional malls are typically anchored by well-known department stores and other significant tenants who generate shopping traffic at the mall. A decision by an anchor tenant or other significant tenant to cease operations at one or more Properties could have a material adverse effect on those Properties and, by extension, on our financial condition and results of operations. The closing of an anchor or other significant tenant may allow other anchors and/or tenants at an affected Property to terminate their leases, to seek rent relief and/or cease operating their stores or otherwise adversely affect occupancy at the Property. In addition, key tenants at one or more Properties might terminate their leases as a result of mergers, acquisitions, consolidations, dispositions or

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bankruptcies in the retail industry. The bankruptcy and/or closure of one or more significant tenants, if we are not able to successfully re-tenant the affected space, could have a material adverse effect on both the operating revenues and underlying value of the Properties involved, reducing the likelihood that we would be able to sell the Properties if we decided to do so, or we may be required to incur redevelopment costs in order to successfully obtain new anchors or other significant tenants when such vacancies exist.

Our Properties may be subject to impairment charges which can adversely affect our financial results.

We periodically evaluate long-lived assets to determine if there has been any impairment in their carrying values and record impairment losses if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts or if there are other indicators of impairment. If it is determined that an impairment has occurred, the amount of the impairment charge is equal to the excess of the asset’s carrying value over its estimated fair value, which could have a material adverse effect on our financial results in the accounting period in which the adjustment is made. Our estimates of undiscounted cash flows expected to be generated by each property are based on a number of assumptions such as leasing expectations, operating budgets, estimated useful lives, future maintenance expenditures, intent to hold for use and capitalization rates. These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the future cash flows estimated in our impairment analyses may not be achieved. During the second quarter of 2010, we recorded a non-cash loss on impairment of real estate of $25.4 million related to one of our Properties.

Inflation or deflation may adversely affect our financial condition and results of operations.

Increased inflation could have a pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may adversely affect tenant leases with stated rent increases, which could be lower than the increase in inflation at any given time. Inflation could also have an adverse effect on consumer spending which could impact our tenants' sales and, in turn, our percentage rents, where applicable.

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.

Certain agreements with prior owners of Properties that we have acquired may inhibit our ability to enter into future sale or refinancing transactions affecting such Properties, which otherwise would be in the best interests of the Company and our stockholders.

Certain Properties that we originally acquired from third parties had unrealized gain attributable to the difference between the fair market value of such Properties and the third parties’ adjusted tax basis in the Properties immediately prior to their contribution of such Properties to the Operating Partnership pursuant to our acquisition. For this reason, a taxable sale by us of any of such Properties, or a significant reduction in the debt encumbering such Properties, could result in adverse tax consequences to the third parties who contributed these Properties in exchange for interests in the Operating Partnership. Under the terms of these transactions, we have generally agreed that we either will not sell or refinance such an acquired Property for a number of years in any transaction that would trigger adverse tax consequences for the parties from whom we acquired such Property, or else we will reimburse such parties for all or a portion of the additional taxes they are required to pay as a result of the transaction. Accordingly, these agreements may cause us not to engage in future sale or refinancing transactions affecting such Properties which otherwise would be in the best interests of the Company and our stockholders, or may increase the costs to us of engaging in such transactions.

Uninsured losses could adversely affect our financial condition, and in the future our insurance may not include coverage for acts of terrorism.

We carry a comprehensive blanket policy for general liability, property casualty (including fire, earthquake and flood) and rental loss covering all of the Properties, with specifications and insured limits customarily carried for similar properties. However, even insured losses could result in a serious disruption to our

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business and delay our receipt of revenue. Furthermore, there are some types of losses, including lease and other contract claims, as well as some types of environmental losses, that generally are not insured or are not economically insurable. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenues from the Property. If this happens, we, or the applicable Property’s partnership, may still remain obligated for any mortgage debt or other financial obligations related to the Property.

The general liability and property casualty insurance policies on our Properties currently include coverage for losses resulting from acts of terrorism, whether foreign or domestic. While we believe that the Properties are adequately insured in accordance with industry standards, the cost of general liability and property casualty insurance policies that include coverage for acts of terrorism has risen significantly subsequent to September 11, 2001. The cost of coverage for acts of terrorism is currently mitigated by the Terrorism Risk Insurance Act (“TRIA”). If TRIA is not extended beyond its current expiration date of December 31, 2014, we may incur higher insurance costs and greater difficulty in obtaining insurance that covers terrorist-related damages. Our tenants may also experience similar difficulties.

The U.S. federal income tax treatment of corporate dividends may make our stock less attractive to investors, thereby lowering our stock price.

The maximum U.S. federal income tax rate for qualified dividends received by individual taxpayers has been reduced generally from 38.6% to 15.0% (currently effective from January 1, 2003 through December 31, 2010). However, dividends payable by REITs are generally not eligible for such treatment. Although this legislation did not have a directly adverse effect on the taxation of REITs or dividends paid by REITs, the more favorable treatment for certain non-REIT dividends could cause individual investors to consider investments in non-REIT corporations as more attractive relative to an investment in a REIT, which could have an adverse impact on the market price of our stock.

RISKS RELATED TO DEBT AND FINANCIAL MARKETS

A deterioration of the capital and credit markets could adversely affect our ability to access funds and the capital needed to refinance debt or obtain new debt.

We are significantly dependent upon external financing to fund the growth of our business and ensure that we meet our debt servicing requirements. Our access to financing depends on the willingness of lending institutions to grant credit to us and conditions in the capital markets in general. An economic recession may cause extreme volatility and disruption in the capital and credit markets. We rely upon our largest credit facilities as sources of funding for numerous transactions. Our access to these funds is dependent upon the ability of each of the participants to the credit facilities to meet their funding commitments. When markets are volatile, access to capital and credit markets could be disrupted over an extended period of time and many financial institutions may not have the available capital to meet their previous commitments. The failure of one or more significant participants to our credit facilities to meet their funding commitments could have an adverse affect on our financial condition and results of operations. This may make it difficult to obtain the financing we may need for future growth and/or to meet our debt service obligations as they mature. Although we have successfully obtained debt for refinancings of our maturing debt, acquisitions and the construction of new developments in the past, we cannot make any assurances as to whether we will be able to obtain debt in the future, or that the financing options available to us will be on favorable or acceptable terms.

Our indebtedness is substantial and could impair our ability to obtain additional financing.

After payment of the underwriting discount and our other offering expenses, we received approximately $123.6 million in net proceeds, including accrued dividends, from the sale of additional shares of our 7.375% Series D Cumulative Redeemable Preferred Stock in our offering which closed in March 2010 and approximately $108.7 million from the offering which closed in October 2010. These proceeds were used to reduce amounts outstanding under our current credit facilities and for general corporate purposes.

On a pro forma basis as of September 30, 2010, assuming completion of the October 2010 offering and the use of the net proceeds as discussed above, our total share of consolidated and unconsolidated debt would have been approximately $5,878.4 million and our total share of consolidated and unconsolidated debt maturing

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in 2010, 2011 and 2012, giving effect to all maturity extensions received to date, would have been approximately $25.8 million, $414.2 million and $984.4 million, respectively.

At September 30, 2010, our total share of consolidated and unconsolidated debt outstanding was approximately $5,987.1 million, which represented approximately 67.1% of our total market capitalization at that time, and our total share of consolidated and unconsolidated debt maturing in 2010, 2011 and 2012, giving effect to all maturity extensions that are available at our election, was approximately $25.8 million, $414.2 million and $989.4 million, respectively. Our substantial leverage could have important consequences. For example, it could:

·	result in the acceleration of a significant amount of debt for non-compliance with the terms of such debt or, if such debt contains cross-default or cross-acceleration provisions, other debt;

·	result in the loss of assets due to foreclosure or sale on unfavorable terms, which could create taxable income without accompanying cash proceeds;

·	materially impair our ability to borrow unused amounts under existing financing arrangements or to obtain additional financing or refinancing on favorable terms or at all;

·	require us to dedicate a substantial portion of our cash flow to paying principal and interest on our indebtedness, reducing the cash flow available to fund our business, to pay dividends, including those necessary to maintain our REIT qualification, or to use for other purposes;

·	increase our vulnerability to an economic downturn;

·	limit our ability to withstand competitive pressures; or

·	reduce our flexibility to respond to changing business and economic conditions.

If any of the foregoing occurs, our business, financial condition, liquidity, results of operations and prospects could be materially and adversely affected, and the trading price of our common stock or other securities could decline significantly.

Rising interest rates could both increase our borrowing costs, thereby adversely affecting our cash flows and the amounts available for distributions to our stockholders, and decrease our stock price, if investors seek higher yields through other investments.

An environment of rising interest rates could lead holders of our securities to seek higher yields through other investments, which could adversely affect the market price of our stock. One of the factors that may influence the price of our stock in public markets is the annual distribution rate we pay as compared with the yields on alternative investments. Numerous other factors, such as governmental regulatory action and tax laws, could have a significant impact on the future market price of our stock. In addition, increases in market interest rates could result in increased borrowing costs for us, which may adversely affect our cash flow and the amounts available for distributions to our stockholders.

As of September 30, 2010, our total share of consolidated and unconsolidated variable rate debt was $1,796.3 million. Increases in interest rates will increase our cash interest payments on the variable rate debt we have outstanding from time to time. If we do not have sufficient cash flow from operations, we might not be able to make all required payments of principal and interest on our debt, which could result in a default or have a material adverse effect on our financial condition and results of operations, and which might adversely affect our cash flow and our ability to make distributions to shareholders. These significant debt payment obligations might also require us to use a significant portion of our cash flow from operations to make interest and principal payments on our debt rather than for other purposes such as working capital, capital expenditures or distributions on our common equity.

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Certain of our credit facilities, the loss of which could have a material, adverse impact on our financial condition and results of operations, are conditioned upon the Operating Partnership continuing to be managed by certain members of its current senior management and by such members of senior management continuing to own a significant direct or indirect equity interest in the Operating Partnership.

Certain of the Operating Partnership’s lines of credit are conditioned upon the Operating Partnership continuing to be managed by certain members of its current senior management and by such members of senior management continuing to own a significant direct or indirect equity interest in the Operating Partnership (including both units of limited partnership in the Operating Partnership and shares of our common stock owned by such members of senior management). If the failure of one or more of these conditions resulted in the loss of these credit facilities and we were unable to obtain suitable replacement financing, such loss could have a material, adverse impact on our financial position and results of operations.

Our hedging arrangements might not be successful in limiting our risk exposure, and we might be required to incur expenses in connection with these arrangements or their termination that could harm our results of operations or financial condition.

From time to time, we use interest rate hedging arrangements to manage our exposure to interest rate volatility, but these arrangements might expose us to additional risks, such as requiring that we fund our contractual payment obligations under such arrangements in relatively large amounts or on short notice. Developing an effective interest rate risk strategy is complex, and no strategy can completely insulate us from risks associated with interest rate fluctuations. We cannot assure you that our hedging activities will have a positive impact on our results of operations or financial condition. We might be subject to additional costs, such as transaction fees or breakage costs, if we terminate these arrangements. In addition, although our interest rate risk management policy establishes minimum credit ratings for counterparties, this does not eliminate the risk that a counterparty might fail to honor its obligations, particularly given current market conditions.

The covenants in our credit facilities might adversely affect us.

Our credit facilities require us to satisfy certain affirmative and negative covenants and to meet numerous financial tests. The financial covenants under the credit facilities require, among other things, that our Debt to Gross Asset Value ratio, as defined in the agreements to our credit facilities, be less than 65%, that our Interest Coverage ratio, as defined, be greater than 1.75, and that our Debt Service Coverage ratio, as defined, be greater than 1.50. Compliance with each of these ratios is dependent upon our financial performance. The Debt to Gross Asset Value ratio is based, in part, on applying a capitalization rate to our earnings before income taxes, depreciation and amortization (“EBITDA”), as defined in the agreements to our credit facilities. Based on this calculation method, decreases in EBITDA would result in an increased Debt to Gross Asset Value ratio, although overall debt levels remain constant. As of September 30, 2010, the Debt to Gross Asset Value ratio was 54.1% and we were in compliance with all other covenants related to our credit facilities.

RISKS RELATED TO GEOGRAPHIC CONCENTRATIONS

Since our Properties are located principally in the Southeastern and Midwestern United States, our financial position, results of operations and funds available for distribution to shareholders are subject generally to economic conditions in these regions.

Our Properties are located principally in the southeastern and midwestern United States. Our Properties located in the southeastern United States accounted for approximately 47.4% of our total revenues from all Properties for the nine months ended September 30, 2010 and currently include 44 malls, 20 associated centers, nine community centers and 18 office buildings. Our Properties located in the midwestern United States accounted for approximately 33.3% of our total revenues from all Properties for the nine months ended September 30, 2010 and currently include 26 malls and four associated centers. Our results of operations and funds available for distribution to shareholders therefore will be subject generally to economic conditions in the southeastern and midwestern United States. While we already have Properties located in eight states across the southwestern, northeastern and western regions, we will continue to look for opportunities to geographically diversify our portfolio in order to minimize dependency on any particular region; however, the expansion of the portfolio through both acquisitions and developments is contingent on many factors including consumer demand, competition and economic conditions.

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Our financial position, results of operations and funds available for distribution to shareholders could be adversely affected by any economic downturn affecting the operating results at our Properties in the St. Louis, MO, Nashville, TN, Kansas City (Overland Park), KS, Madison, WI, and Chattanooga, TN metropolitan areas, which are our five largest markets.

Our Properties located in the St. Louis, MO, Nashville, TN, Kansas City (Overland Park), KS, Madison, WI, and Chattanooga, TN metropolitan areas accounted for approximately 9.9%, 4.0%, 3.1%, 2.8% and 2.7%, respectively, of our total revenues for the nine months ended September 30, 2010. No other market accounted for more than 2.6% of our total revenues for the nine months ended September 30, 2010. Our financial position and results of operations will therefore be affected by the results experienced at Properties located in these metropolitan areas.

RISKS RELATED TO INTERNATIONAL INVESTMENTS

Ownership interests in investments or joint ventures outside the United States present numerous risks that differ from those of our domestic investments.

We have an investment in a mall operating and real estate development company in China that is currently immaterial to our consolidated financial position. International development and ownership activities yield additional risks that differ from those related to our domestic properties and operations. These additional risks include, but are not limited to:

·	Impact of adverse changes in exchange rates of foreign currencies;

·	Difficulties in the repatriation of cash and earnings;

·	Differences in managerial styles and customs;

·	Changes in applicable laws and regulations in the United States that affect foreign operations;

·	Changes in foreign political, legal and economic environments; and

·	Differences in lending practices.

Our international activities are currently limited in their scope. However, should our investments in international joint ventures or investments grow, these additional risks could increase in significance and adversely affect our results of operations.

RISKS RELATED TO DIVIDENDS

We may change the dividend policy for our common stock in the future.

We issued 4,754,355 shares of common stock for a portion of our dividend payment for the first quarter of 2009. All subsequent dividend payments through the date of issuance of this report have been paid in cash. Depending upon our liquidity needs, we reserve the right to pay any or all of a dividend in a combination of cash and shares of common stock, in accordance with applicable revenue procedures of the IRS. In the event that we pay a portion of our dividends in shares of our common stock pursuant to such procedures, taxable U.S. stockholders would be required to pay tax on the entire amount of the dividend, including the portion paid in shares of common stock, in which case such stockholders may have to use cash from other sources to pay such tax. If a U.S. stockholder sells the common stock it receives as a dividend in order to pay its taxes, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold federal tax with respect to our dividends, including dividends that are paid in common stock. In addition, if a significant number of our stockholders sell shares of our common stock in order to pay taxes owed on dividends, such sales would put downward pressure on the market price of our common stock.

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The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Directors and will depend on our earnings, taxable income, funds from operations, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness and preferred stock, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), Delaware law and such other factors as our Board of Directors deems relevant. Any dividends payable will be determined by our Board of Directors based upon the circumstances at the time of declaration. Any change in our dividend policy could have a material adverse effect on the market price of our common stock.

Since we conduct substantially all of our operations through our Operating Partnership, our ability to pay dividends on our common and preferred stock depends on the distributions we receive from our Operating Partnership.

Because we conduct substantially all of our operations through our Operating Partnership, our ability to pay dividends on our common and preferred stock will depend almost entirely on payments and distributions we receive on our interests in our Operating Partnership. Additionally, the terms of some of the debt to which our Operating Partnership is a party may limit its ability to make some types of payments and other distributions to us. This in turn may limit our ability to make some types of payments, including payment of dividends to our stockholders, unless we meet certain financial tests. As a result, if our Operating Partnership fails to pay distributions to us, we generally will not be able to pay dividends to our stockholders for one or more dividend periods.

RISKS RELATED TO FEDERAL INCOME TAX LAWS

We conduct a portion of our business through taxable REIT subsidiaries, which are subject to certain tax risks.

We have established several taxable REIT subsidiaries including our management company. Despite our qualification as a REIT, our taxable REIT subsidiaries must pay income tax on their taxable income. In addition, we must comply with various tests to continue to qualify as a REIT for federal income tax purposes, and our income from and investments in our taxable REIT subsidiaries generally do not constitute permissible income and investments for these tests. While we will attempt to ensure that our dealings with our taxable REIT subsidiaries will not adversely affect our REIT qualification, we cannot provide assurance that we will successfully achieve that result. Furthermore, we may be subject to a 100% penalty tax, or our taxable REIT subsidiaries may be denied deductions, to the extent our dealings with our taxable REIT subsidiaries are not deemed to be arm’s length in nature.

If we fail to qualify as a REIT in any taxable year, our funds available for distribution to stockholders will be reduced.

We intend to continue to operate so as to qualify as a REIT under the Internal Revenue Code. Although we believe that we are organized and operate in such a manner, no assurance can be given that we currently qualify and in the future will continue to qualify as a REIT. Such qualification involves the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial or administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify. In addition, no assurance can be given that legislation, new regulations, administrative interpretations or court decisions will not significantly change the tax laws with respect to qualification or its corresponding federal income tax consequences. Any such change could have a retroactive effect.

If in any taxable year we were to fail to qualify as a REIT, we would not be allowed a deduction for distributions to stockholders in computing our taxable income and we would be subject to federal income tax on our taxable income at regular corporate rates. Unless entitled to relief under certain statutory provisions, we also would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. As a result, the funds available for distribution to our stockholders would be reduced for each of the years involved. This would likely have a significant adverse effect on the value of our securities and our ability to raise additional capital. In addition, we would no longer be required to make distributions to our

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stockholders. We currently intend to operate in a manner designed to qualify as a REIT. However, it is possible that future economic, market, legal, tax or other considerations may cause our Board of Directors, with the consent of a majority of our stockholders, to revoke the REIT election.

Any issuance or transfer of our capital stock to any person in excess of the applicable limits on ownership necessary to maintain our status as a REIT would be deemed void ab initio, and those shares would automatically be transferred to a non-affiliated charitable trust.

To maintain our status as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of a taxable year. Our certificate of incorporation generally prohibits ownership of more than 6% of the outstanding shares of our capital stock by any single stockholder determined by vote, value or number of shares (other than Charles Lebovitz, Executive Chairman of our board of directors and our former Chief Executive Officer, David Jacobs, Richard Jacobs and their affiliates under the Internal Revenue Code’s attribution rules). The affirmative vote of 66 2/3% of our outstanding voting stock is required to amend this provision.

Our board of directors may, subject to certain conditions, waive the applicable ownership limit upon receipt of a ruling from the IRS or an opinion of counsel to the effect that such ownership will not jeopardize our status as a REIT. Absent any such waiver, however, any issuance or transfer of our capital stock to any person in excess of the applicable ownership limit or any issuance or transfer of shares of such stock which would cause us to be beneficially owned by fewer than 100 persons, will be null and void and the intended transferee will acquire no rights to the stock. Instead, such issuance or transfer with respect to that number of shares that would be owned by the transferee in excess of the ownership limit provision would be deemed void ab initio and those shares would automatically be transferred to a trust for the exclusive benefit of a charitable beneficiary to be designated by us, with a trustee designated by us, but who would not be affiliated with us or with the prohibited owner. Any acquisition of our capital stock and continued holding or ownership of our capital stock constitutes, under our certificate of incorporation, a continuous representation of compliance with the applicable ownership limit.

In order to maintain our status as a REIT and avoid the imposition of certain additional taxes under the Internal Revenue Code, we must satisfy minimum requirements for distributions to shareholders, which may limit the amount of cash we might otherwise have been able to retain for use in growing our business.

To maintain our status as a REIT under the Internal Revenue Code, we generally will be required each year to distribute to our stockholders at least 90% of our taxable income after certain adjustments. However, to the extent that we do not distribute all of our net capital gains or distribute at least 90% but less than 100% of our REIT taxable income, as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates, as the case may be. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which certain distributions paid by us during each calendar year are less than the sum of 85% of our ordinary income for such calendar year, 95% of our capital gain net income for the calendar year and any amount of such income that was not distributed in prior years. In the case of property acquisitions, including our initial formation, where individual Properties are contributed to our Operating Partnership for Operating Partnership units, we have assumed the tax basis and depreciation schedules of the entities’ contributing Properties. The relatively low tax basis of such contributed Properties may have the effect of increasing the cash amounts we are required to distribute as dividends, thereby potentially limiting the amount of cash we might otherwise have been able to retain for use in growing our business. This low tax basis may also have the effect of reducing or eliminating the portion of distributions made by us that are treated as a non-taxable return of capital.

Complying with REIT requirements might cause us to forego otherwise attractive opportunities.

In order to qualify as a REIT for U.S. federal income tax purposes, we must satisfy tests concerning, among other things, our sources of income, the nature of our assets, the amounts we distribute to our shareholders and the ownership of our stock. We may also be required to make distributions to our shareholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with REIT requirements may cause us to forego opportunities we would otherwise pursue. In addition, the REIT provisions of the Internal Revenue Code impose a 100% tax on income from “prohibited transactions.” “Prohibited transactions” generally include sales of assets that constitute inventory or other property held for sale in the ordinary course of business, other than foreclosure property. This 100% tax could impact our desire to sell

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assets and other investments at otherwise opportune times if we believe such sales could be considered “prohibited transactions.”

Our holding company structure makes us dependent on distributions from the Operating Partnership.

Because we conduct our operations through the Operating Partnership, our ability to service our debt obligations and pay dividends to our shareholders is strictly dependent upon the earnings and cash flows of the Operating Partnership and the ability of the Operating Partnership to make distributions to us. Under the Delaware Revised Uniform Limited Partnership Act, the Operating Partnership is prohibited from making any distribution to us to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the Operating Partnership (other than some non-recourse liabilities and some liabilities to the partners) exceed the fair value of the assets of the Operating Partnership. Additionally, the terms of some of the debt to which our Operating Partnership is a party may limit its ability to make some types of payments and other distributions to us. This in turn may limit our ability to make some types of payments, including payment of dividends on our outstanding capital stock, unless we meet certain financial tests or such payments or dividends are required to maintain our qualification as a REIT or to avoid the imposition of any federal income or excise tax on undistributed income. Any inability to make cash distributions from the Operating Partnership could jeopardize our ability to pay dividends on our outstanding shares of capital stock and to maintain qualification as a REIT.

RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

The ownership limit described above, as well as certain provisions in our amended and restated certificate of incorporation and bylaws, and certain provisions of Delaware law, may hinder any attempt to acquire us.

There are certain provisions of Delaware law, our amended and restated certificate of incorporation, our bylaws, and other agreements to which we are a party that may have the effect of delaying, deferring or preventing a third party from making an acquisition proposal for us. These provisions may also inhibit a change in control that some, or a majority, of our stockholders might believe to be in their best interest or that could give our stockholders the opportunity to realize a premium over the then-prevailing market prices for their shares. These provisions and agreements are summarized as follows:

The Ownership Limit – As described above, to maintain our status as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the last half of a taxable year. Our certificate of incorporation generally prohibits ownership of more than 6% of the outstanding shares of our capital stock by any single stockholder determined by value (other than Charles Lebovitz, David Jacobs, Richard Jacobs and their affiliates under the Internal Revenue Code’s attribution rules). In addition to preserving our status as a REIT, the ownership limit may have the effect of precluding an acquisition of control of us without the approval of our board of directors.

Classified Board of Directors; Removal for Cause – Our certificate of incorporation provides for a board of directors divided into three classes, with one class elected each year to serve for a three-year term. As a result, at least two annual meetings of stockholders may be required for the stockholders to change a majority of our board of directors. In addition, our stockholders can only remove directors for cause and only by a vote of 75% of the outstanding voting stock. Collectively, these provisions make it more difficult to change the composition of our board of directors and may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue non-negotiated takeover attempts.

Advance Notice Requirements for Stockholder Proposals – Our bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures generally require advance written notice of any such proposals, containing prescribed information, to be given to our Secretary at our principal executive offices not less than 60 days or no more than 90 days prior to the meeting.

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Vote Required to Amend Bylaws – A vote of 66 2/3% of our outstanding voting stock (in addition to any separate approval that may be required by the holders of any particular class of stock) is necessary for stockholders to amend our bylaws.

Delaware Anti-Takeover Statute – We are a Delaware corporation and are subject to Section 203 of the Delaware General Corporation Law. In general, Section 203 prevents an “interested stockholder” (defined generally as a person owning 15% or more of a company’s outstanding voting stock) from engaging in a “business combination” (as defined in Section 203) with us for three years following the date that person becomes an interested stockholder unless:

(a)

before that person became an interested holder, our board of directors approved the transaction in which the interested holder became an interested stockholder or approved the business combination;

(b)

upon completion of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owns 85% of our voting stock outstanding at the time the transaction commenced (excluding stock held by directors who are also officers and by employee stock plans that do not provide employees with the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer); or

(c)

following the transaction in which that person became an interested stockholder, the business combination is approved by our board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least two-thirds of our outstanding voting stock not owned by the interested stockholder.

Under Section 203, these restrictions also do not apply to certain business combinations proposed by an interested stockholder following the announcement or notification of certain extraordinary transactions involving us and a person who was not an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of our directors, if that extraordinary transaction is approved or not opposed by a majority of the directors who were directors before any person became an interested stockholder in the previous three years or who were recommended for election or elected to succeed such directors by a majority of directors then in office.

Certain ownership interests held by members of our senior management may tend to create conflicts of interest between such individuals and the interests of the Company and our Operating Partnership.

Tax Consequences of the Sale or Refinancing of Certain Properties – Since certain of our Properties had unrealized gain attributable to the difference between the fair market value and adjusted tax basis in such Properties immediately prior to their contribution to the Operating Partnership, a taxable sale of any such Properties, or a significant reduction in the debt encumbering such Properties, could cause adverse tax consequences to the members of our senior management who owned interests in our predecessor entities. As a result, members of our senior management might not favor a sale of a property or a significant reduction in debt even though such a sale or reduction could be beneficial to us and the Operating Partnership. Our bylaws provide that any decision relating to the potential sale of any property that would result in a disproportionately higher taxable income for members of our senior management than for us and our stockholders, or that would result in a significant reduction in such property’s debt, must be made by a majority of the independent directors of the board of directors. The Operating Partnership is required, in the case of such a sale, to distribute to its partners, at a minimum, all of the net cash proceeds from such sale up to an amount reasonably believed necessary to enable members of our senior management to pay any income tax liability arising from such sale.

Interests in Other Entities; Policies of the Board of Directors – Certain entities owned in whole or in part by members of our senior management, including the construction company that built or renovated most of our properties, may continue to perform services for, or transact business with, us and the Operating Partnership. Furthermore, certain property tenants are affiliated with members of our senior management. Accordingly, although our bylaws provide that any contract or transaction between us or the Operating Partnership and one or more of our directors or officers, or between us or the Operating Partnership and any other entity in which one or more of our directors or officers are directors or officers or have a

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financial interest, must be approved by our disinterested directors or stockholders after the material facts of the relationship or interest of the contract or transaction are disclosed or are known to them, these affiliations could nevertheless create conflicts between the interests of these members of senior management and the interests of the Company, our shareholders and the Operating Partnership in relation to any transactions between us and any of these entities.

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

None

ITEM 3: Defaults Upon Senior Securities

None

ITEM 4: (Removed and Reserved)

ITEM 5: Other Information

(a)

On November 2, 2010, we amended and restated our $105.0 million secured credit facility with First Tennessee Bank NA, as administrative agent. The amended and restated agreement reflects the removal and replacement of a participant lender providing $22.5 million of this line's total capacity. In addition, it reflects the conversion of the facility from a loan with participating lenders to a syndication arrangement with the lenders, with each lender providing funding directly to us. The terms of the amended and restated facility otherwise are identical to those of the prior agreement.

ITEM 6: Exhibits

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

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CBL & ASSOCIATES PROPERTIES, INC.

/s/ John N. Foy

_____________________________________

John N. Foy

Vice Chairman of the Board, Chief Financial

Officer, Treasurer and Secretary

(Authorized Officer and Principal Financial Officer)

Date: November 9, 2010

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INDEX TO EXHIBITS

Exhibit Number	Description
4.9.2*	Second Amended and Restated Certificate of Designations, dated October 14, 2010, relating to the Company’s 7.375% Series D Cumulative Redeemable Preferred Stock*
10.1.4*	Second Amended and Restated Certificate of Designation, dated October 14, 2010, of 7.375% Series D Cumulative Redeemable Preferred Units*
12.1	Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends.
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.
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.
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.
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.
101**	CBL & Associates Properties, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010, formatted in XBRL: (i) Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and 2009; (iii) Condensed Consolidated Statements of Equity for the nine months ended September 30, 2010 and 2009; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009; and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.

*	Incorporated by reference from the Company’s Current Report on Form 8-K, dated October 14, 2010, filed on October 18, 2010. Commission File No. 1-12494.
**	In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”