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CHATTANOOGA, TN-CBL & Associates Properties Inc. may repurchase $60 million of its common stock on the open market over the next 13 months. The move is part of a plan to offset the Series K Special Common Units expected to be issued in connection with its recent agreement to purchase a portfolio of three malls for $517 million.

The KSCUs are exchangeable for shares of CBL common stock on a one-for-one basis and will be issued at a value of $47.50 per underlying share of common stock. Any common stock repurchases by CBL to offset the issuance will be funded through the company’s available cash and lines of credit.

In early October, CBL closed on $452 million in five new fixed-rate loans to pay off $289.5 million in loans that were maturing at higher interest rates and to pay down its lines of credit. CBL chief executive Charles Lebovitz said the the move will save the company money on interest and, by paying down credit lines, will provide the company with additional capcity to complete future acquisitions.

The seven loans being paid off had a weighted average interest rate of 7.0% and were maturing over the next 18-months. The new loans are ten-year non-recourse with a weighted average interest rate of 5.0%. CBL’s IR director Katie Reinsmidt told GlobeSt.com that as of June 30 the interest rate on its lines of credit were 4.26%. As part of the transaction, CBL incurred a one-time charge of approximately $5.4 million for prepayment penalties and the write-off of unamortized deferred financing costs. The charge will be included in GAAP Net Income and FFO in the fourth quarter 2005.

Inmid-October, CBL announced it has agreed to acquire 3 million sf of retail space in three malls in the Midwest for $516.9 million. The properties are Oak Park Mall in the Kansas City area, Hickory Point Mall in Decatur, IL and Eastland Mall in Bloomington, IL. The transaction is expected to close this month.

The initial blended cap rate, based on income in place and after management fees and a structural reserve, is estimated at 5.7%. The company expects to fund the acquisition with $79.3 million of cash, the assumption of approximately $386 million of new long-term, fixed-rate non-recourse mortgage debt, and the issuance of $51.7 million in KSCUs of the company’s operating partnership. CBL expects to issue approximately 1.09 million units at a value of $47.50 per unit. The units will pay a dividend at a rate of 6.0% of the issue price for the first two years following the close of the transaction and 6.25% thereafter.

CBL is the fourth largest mall REIT in North America and the largest owner of malls and shopping centers in the Southeast, ranked by gross leasable area. CBL owns, holds interests in or manages 68 million sf in 124 properties in 24 states, and has an additional1.1 million sf under construction in three new centers and two expansions.

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