Remarkable CBL & Associates Properties, Inc. 2014 Annual Report Redevelop Relationships Reinvent Revitalize Return Return. Reinvent. Redevelop. Revitalize. Relationships. At CBL, we bring these words to life every day by executing our strategic priorities, increasing shareholder value and creating superior destinations for consumers and retailers. And as a result, our results are remarkable. The strong retail demand for space at CBL’s As part of CBL’s revitalization efforts, we properties generates opportunities to expand renovate four to five properties each year. This existing centers and transform underperforming includes installing energy management systems anchor stores. By adding hotels, entertainment, and focusing on sustainable choices, while restaurants and non-traditional anchors, we lightening and brightening to ensure that CBL add more excitement for consumers. malls remain the first choice for shoppers. Redevelop Revitalize 508 thousand $27 square feet million expanded or redeveloped in renovations We are continually inventing new reasons to visit CBL’s strong results including 2.4% same- CBL malls. In 2014, we added to the experience center NOI growth helped create significant at our centers by opening unique concepts like value for shareholders in 2014. CBL generated Ivivva, 4EverMen and White Barn Candle and a total return of 13.7% for the year and we brought existing favorites such as ULTA, delivered an 8.2% increase to the common Nordstrom Rack and Forever 21 to new markets. dividend rate. Reinvent Return 1.3 8.2% million increase in common dividend square feet $1.06 Annualized Rate versus $0.98 of new leases executed Charles B. Lebovitz Chairman of the Board Stephen D. Lebovitz President and Chief Executive Officer Dear Shareholders: As we reflect on CBL’s performance in 2014, we’re pleased to report that our key metrics reveal the best year the company has had since before the recession. We opened successful new projects, continued to upgrade our balance sheet and announced a new portfolio transformation strategy. All of this helped create a positive backdrop for CBL to achieve even more success going forward. Industry dynamics had a positive impact on CBL in 2014. With and executed two successful unsecured bond offerings. The little new shopping center construction, demand for retail space latest raised $300 million at a 4.6% interest rate, representing an improved and occupancy levels remained high. In addition, a improvement of 65 basis points from the inaugural offering. As number of major online retailers opened physical locations. we have grown the size and quality of our unencumbered asset This trend validated the importance of brick-and-mortar stores pool, we have also reduced the company’s debt and lowered in retailers’ omni-channel strategy to enable customers to shop our borrowing rate, leading to further improvements in key the way they prefer – in person as well as online. financial metrics. CBL maintained its focus on developing relationships with Reinvest emerging retail leaders and our efforts have paid off, with sev- Our reinvestment strategy remains a cornerstone in our eral of the most popular brands opening stores at our properties. goal of creating a positive return for shareholders. We have Furthermore, with fewer ground-up developments being built successfully redeployed capital generated from the sale of non- nationally, retailers have continued to look for attractive existing core properties into the best performers in the CBL portfolio locations, especially those in the market’s primary retail hub, and we continue to market properties for disposition. These which is CBL’s sweet spot. properties are stable, but do not have the growth profile we are now seeking in our portfolio. As a result, we look to sell These dynamics have led to CBL’s ability to generate double- them and use the proceeds to reinvest in properties that have digit lease rate increases, which translate into improved the characteristics we believe will lead to higher growth for top-line revenue and net operating income (NOI) growth. CBL overall. This strategy will lead to a stronger portfolio of Return properties that is built for future growth. With the help of a recovering economy and the proven strength, Redevelop stability and value of our strategy and properties, CBL created The evolution of today’s malls is ongoing with the addition of significant value for our shareholders in 2014. new uses and we have contributed to this shift by re-imagining The resilience of CBL’s portfolio is reflected in improved the components of our shopping centers. CBL’s properties now operating performance metrics, including same-center NOI include a healthy infusion of unique offerings such as hotels, growth of 2.4% and an increase in funds from operations (FFO), entertainment, dining options and non-traditional anchors. as adjusted, of 3% to $2.28 per share. Mall occupancy was near As such, our properties are being transformed into regional peak at 94.9% and same-center sales-per-square foot recovered shopping and entertainment destinations – far from yesterday’s from the year’s tough start to reach $360. CBL also delivered concept of being simply a mall. an 8.2% increase to its common dividend rate. We have actively worked to take full advantage of underper- CBL’s attractiveness as an investment has increased as the forming anchor stores at our properties to attract new, leading company has transitioned from a higher leveraged, secured retailers, thereby appealing to more consumers and boosting balance sheet to one that is stronger, more flexible and more sales. A great example is the Fayette Mall Sears redevelopment, stable. Since announcing the balance sheet transition strategy which opened in late 2014, delivering exciting new stores to in early 2013, CBL has achieved two investment-grade ratings the Lexington, KY, market. These included L’Occitaine, Aveda, Oakley, Vera Bradley and Clarks as well as new restaurants. CBL has achieved two investment-grade CBL’s fundamental strategy ratings and executed two successful bond remains unchanged. We own offerings, the latest of which raised $300 million, thereby furthering the transition from a higher the dominant property in leverage balance sheet to one that is stronger, more flexible and more stable. markets with attractive growth potential. These markets have powerful economic engines and Reinforce high employment levels that contribute to the stability of our business going forward. $300 million unsecured bond issuance at 4.6% Strong relationships with development partners The remarkable people that give CBL its heart and such as Horizon Group Properties and Stirling soul not only work diligently to make the company Properties have enabled CBL to grow new areas successful, but also give tirelessly to campaigns of business and open successful developments, like Give Kids a Chance and Random Acts of including The Outlet Shoppes of the Bluegrass in Kindness, along with organizations such as United Kentucky and Fremaux Town Center in Louisiana. Way and Boys and Girls Club of America. Relationships Remarkable CBL Malls partnered with more than 500 community organizations While the investment community continues to focus on the The relationships we have established with some of today’s downside of the Sears and JCPenney store closures, we want hottest retailers are extremely important to CBL’s success. to stress that we have fully anticipated these closures and have Brands such as H&M, lululemon, Oakley, Michael Kors, J.Crew, made significant progress in our plans to redevelop the loca- Clarks, Athleta and Vera Bradley now complement the long- tions with new stores and restaurants that will generate higher term relationships we have with our core retailers, such as traffic and productivity. In fact, the closure of underperforming Foot Locker, Victoria’s Secret and The Buckle, among others. anchor stores continues to be one of the best value-creation Our relationships with financial institutions are also fundamen- opportunities we have today as we breathe new life into these tal to CBL’s success. They provide strong access to capital and spaces at our properties. help finance the company’s future growth. The strengthening Revitalize of the CBL balance sheet through deleveraging and transitioning Many other value-creation opportunities exist within the CBL to unsecured bond offerings has fueled new growth in portfolio. These include underutilized facilities and excess these relationships. parking space where we can develop additional stores and Finally, we take great pride in the relationships we have with restaurants, further adding productivity to the properties. the remarkable people who work for CBL. We appreciate their To fuel future growth, we have also remerchandised malls with dedication and pride in their work. Beyond that, we are thankful higher-demand retailers. The repositioning of the Monroeville for their outstanding volunteerism and service in the com- Mall in Pittsburgh, PA, is an example of a Tier-3 property that munities where CBL properties are located. Among the major we will transform to a Tier-2 property over time. Since 2011, we initiatives CBL participated in last year was the Give Kids a have opened more than 370,000 square feet of new shopping, Winning Chance campaign in conjunction with the Boys and entertainment and dining options at Monroeville Mall, includ- Girls Clubs of America and our partner, Coca-Cola. This cam- ing H&M, Forever 21, Dick’s Sporting Goods and a 12-screen paign collected gently used sports equipment, games and art Cinemark Theater. supplies for local clubs. Similar activity is occurring across the CBL portfolio. In 2014 Remaining remarkable alone, we opened nearly 30 boxes and over 20 restaurants, As we look back on 2014, we recognize and applaud CBL’s including the prestigious Cheesecake Factory at Fayette Mall successes. However, we are not content to rest on our accom- in Lexington, KY, and another one at CoolSprings Galleria in plishments.