REDEEMABLE INTERESTS AND NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interests and Noncontrolling Interests of the Company

Partnership Interests in the Operating Partnership that Are Not Owned by the Company

The common units that the Company does not own are reflected in the Company's consolidated balance sheets as redeemable noncontrolling interest and noncontrolling interests in the Operating Partnership.

Series S Special Common Units

Redeemable noncontrolling interest includes a noncontrolling partnership interest in the Operating Partnership for which the partnership agreement includes redemption provisions that may require the Operating Partnership to redeem the partnership interest for real property. In July 2004, the Operating Partnership issued 1,560,940 Series S special common units (“S-SCUs”), all of which are outstanding as of December 31, 2016, in connection with the acquisition of Monroeville Mall. Under the terms of the Operating Partnership’s limited partnership agreement, the holder of the S-SCUs has the right to exchange all or a portion of its partnership interest for shares of the Company’s common stock or, at the Company’s election, their cash equivalent. The holder has the additional right to, at any time after the seventh anniversary of the issuance of the S-SCUs, require the Operating Partnership to acquire a qualifying property and distribute it to the holder in exchange for the S-SCUs. Generally, the acquisition price of the qualifying property cannot be more than the lesser of the consideration that would be received in a normal exchange, as discussed above, or $20,000, subject to certain limited exceptions. Should the consideration that would be received in a normal exchange exceed the maximum property acquisition price as described in the preceding sentence, the excess portion of its partnership interest could be exchanged for shares of the Company’s stock or, at the Company’s election, their cash equivalent. The S-SCUs received a minimum distribution of $2.53825 per unit per year for the first five years, and receive a minimum distribution of $2.92875 per unit per year thereafter.

Series L Special Common Units

In June 2005, the Operating Partnership issued 571,700 L-SCUs, all of which are outstanding as of December 31, 2016, in connection with the acquisition of Laurel Park Place. The L-SCUs receive a minimum distribution of $0.7572 per unit per quarter ($3.0288 per unit per year). Upon the earlier to occur of June 1, 2020, or when the distribution on the common units exceeds $0.7572 per unit for four consecutive calendar quarters, the L-SCUs will thereafter receive a distribution equal to the amount paid on the common units. In December 2012, the Operating Partnership issued 622,278 common units valued at $14,000 to acquire the remaining 30% noncontrolling interest in Laurel Park Place.

Series K Special Common Units

In November 2005, the Operating Partnership issued 1,144,924 K-SCUs, all of which are outstanding as of December 31, 2016, in connection with the acquisition of Oak Park Mall, Eastland Mall and Hickory Point Mall. The K-SCUs received a dividend at a rate of 6.0%, or $2.85 per K-SCU, for the first year following the close of the transaction and receive a dividend at a rate of 6.25%, or $2.96875 per K-SCU, thereafter. When the quarterly distribution on the Operating Partnership’s common units exceeds the quarterly K-SCU distribution for four consecutive quarters, the K-SCUs will receive distributions at the rate equal to that paid on the Operating Partnership’s common units. At any time following the first anniversary of the closing date, the holders of the K-SCUs may exchange them, on a one-for-one basis, for shares of the Company’s common stock or, at the Company’s election, their cash equivalent.

Outstanding rights to convert redeemable noncontrolling interests and noncontrolling interests in the Operating Partnership to common stock were held by the following parties at December 31, 2016 and 2015:



	December 31,
	2016	2015
CBL’s Predecessor	18,172,690	18,172,690
Third parties	10,119,697	11,084,493
	28,292,387	29,257,183

The assets and liabilities allocated to the Operating Partnership’s redeemable noncontrolling interest and noncontrolling interests are based on their ownership percentages of the Operating Partnership at December 31, 2016 and 2015. The ownership percentages are determined by dividing the number of common units held by each of the redeemable noncontrolling interest and the noncontrolling interests at December 31, 2016 and 2015 by the total common units outstanding at December 31, 2016 and 2015, respectively. The redeemable noncontrolling interest ownership percentage in assets and liabilities of the Operating Partnership was 0.8% at December 31, 2016 and 2015. The noncontrolling interest ownership percentage in assets and liabilities of the Operating Partnership was 13.4% and 14.3% at December 31, 2016 and 2015, respectively.

Income is allocated to the Operating Partnership’s redeemable noncontrolling interest and noncontrolling interests based on their weighted-average ownership during the year. The ownership percentages are determined by dividing the weighted-average number of common units held by each of the redeemable noncontrolling interest and noncontrolling interests by the total weighted-average number of common units outstanding during the year.

A change in the number of shares of common stock or common units changes the percentage ownership of all partners of the Operating Partnership. A common unit is considered to be equivalent to a share of common stock since it generally is exchangeable for shares of the Company’s common stock or, at the Company’s election, their cash equivalent. As a result, an allocation is made between redeemable noncontrolling interests, shareholders’ equity and noncontrolling interests in the Operating Partnership in the Company's accompanying balance sheets to reflect the change in ownership of the Operating Partnership’s underlying equity when there is a change in the number of shares and/or common units outstanding. During 2016, 2015 and 2014, the Company allocated $2,454, $2,981 and $2,937, respectively, from shareholders’ equity to redeemable noncontrolling interest. During 2016 the Company allocated $13,625 from shareholders' equity to noncontrolling interest. During 2015 and 2014, the Company allocated $207 and $322, respectively, from noncontrolling interest to shareholders' equity.

The total redeemable noncontrolling interest in the Operating Partnership was $17,996 and $19,744 at December 31, 2016 and 2015, respectively. The total noncontrolling interest in the Operating Partnership was $100,035 and $109,753 at December 31, 2016 and 2015, respectively.

Redeemable Noncontrolling Interests and Noncontrolling Interests in Other Consolidated Subsidiaries

Redeemable noncontrolling interests included the aggregate noncontrolling ownership interest in four of the Company’s other consolidated subsidiaries held by third parties which were redeemed in the fourth quarter of 2016 for $3,800, which was comprised of $300 in cash and a $3,500 promissory note. See Note 10 for additional information on the note. The Company recognized a net loss of $2,602 on the disposal of its interests. The loss is included in Gain on Investments in the consolidated statements of operations. The total redeemable noncontrolling interests in other consolidated subsidiaries was $5,586 at December 31, 2015. The redeemable noncontrolling interests in other consolidated subsidiaries included the third party interest in the Company’s former subsidiary that provides security and maintenance services.

The Company had 25 and 23 other consolidated subsidiaries at December 31, 2016 and 2015, respectively, that had noncontrolling interests 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. The total noncontrolling interests in other consolidated subsidiaries were $12,103 and $4,876 at December 31, 2016 and 2015, respectively.

The assets and liabilities allocated to the redeemable noncontrolling interests and noncontrolling interests in other consolidated subsidiaries are based on the third parties’ ownership percentages in each subsidiary at December 31, 2016 and 2015. Income is allocated to the redeemable noncontrolling interests and noncontrolling interests in other consolidated subsidiaries based on the third parties’ weighted-average ownership in each subsidiary during the year.

Redeemable Interests and Noncontrolling Interests of the Operating Partnership

The aggregate noncontrolling ownership interest in four of the Company’s other consolidated subsidiaries described above that were reflected as redeemable noncontrolling interest in the Company's consolidated balance sheets were also reflected as redeemable noncontrolling interest in the Operating Partnership's consolidated balance sheets.

The S-SCUs described above that are reflected as redeemable noncontrolling interests in the Company's consolidated balance sheets are reflected as redeemable common units in the Operating Partnership's consolidated balance sheets.

The noncontrolling interests in other consolidated subsidiaries that are held by third parties that are reflected as a component of noncontrolling interests in the Company's consolidated balance sheets comprise the entire amount that is reflected as noncontrolling interests in the Operating Partnership's consolidated balance sheets.

Variable Interest Entities

As discussed in Note 2, the Company adopted ASU 2015-02 as of January 1, 2016 using a modified retrospective approach. As a result, the Operating Partnership and certain of its subsidiaries are deemed to have the characteristics of a VIE primarily because the limited partners of these entities do not collectively possess substantive kick-out or participating rights. However, the Company was not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, the adoption of ASU 2015-02 affected disclosure only and did not change amounts within the consolidated financial statements.

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

The table below lists the Company's VIEs as of December 31, 2016 and 2015, which do not reflect the elimination of any internal debt the consolidated VIE has with the Operating Partnership:



	As of December 31,
	2016					2015
	Assets		Liabilities			Assets		Liabilities
Consolidated VIEs:
Atlanta Outlet Outparcels, LLC	$	914	$	4		⁽¹⁾
Atlanta Outlet JV, LLC	63,361		81,128		⁽²⁾	⁽¹⁾
CBL Terrace LP	16,714		13,509			⁽¹⁾
El Paso Outlet Center Holding, LLC	103,232		69,535			$	107,337	$	63,458
El Paso Outlet Center II, LLC	8,638		7,028		⁽³⁾	⁽¹⁾
Foothills Mall Associates	9,811		34,997			⁽¹⁾
Gettysburg Outlet Center Holding, LLC	36,542		39,476			⁽¹⁾
Gettysburg Outlet Center, LLC	7,203		37			37,463		38,450
High Point Development LP II	1,104		55			⁽¹⁾
Jarnigan Road LP	41,392		20,988			⁽¹⁾
Laredo Outlet JV, LLC ⁽⁴⁾	89,353		58,822		⁽⁵⁾	⁽¹⁾
Lebcon Associates	47,721		121,529			⁽¹⁾
Lebcon I, Ltd	9,290		9,711			⁽¹⁾
Lee Partners	1,195		—			⁽¹⁾
Louisville Outlet Outparcels, LLC	62		—			⁽¹⁾
Louisville Outlet Shoppes, LLC	76,831		85,132		⁽⁶⁾	⁽¹⁾
Madison Grandview Forum, LLC	33,196		13,622			⁽¹⁾
The Promenade at D'Iberville	84,470		46,570			⁽¹⁾
Statesboro Crossing, LLC	18,869		11,058			⁽¹⁾
Village at Orchard Hills, LLC	498		—			⁽¹⁾
Woodstock GA Investments, LLC	9,098		3,185			⁽¹⁾
	$	659,494	$	616,386		$	144,800	$	101,908



	As of December 31,
	2016				2015
	Assets		Liabilities		Assets		Liabilities

Unconsolidated VIEs:
Ambassador Infrastructure, LLC	$	14,279	14,279		⁽¹⁾
G&I VIII CBL Triangle LLC ⁽⁷⁾	172,470		149,195		⁽¹⁾
JG Gulf Coast Town Center LLC	⁽⁸⁾				$	142,021	$	195,892
Triangle Town Member LLC	⁽⁸⁾				98,408		171,092
	$	186,749	$	163,474	$	240,429	$	366,984


(1)	The joint venture was classified as a VIE in 2016 in accordance with the criteria in ASU 2015-02 noted above. Prior to the adoption of ASU 2015-02, the joint venture was not considered to be a VIE.


(2)	Of this total, $4,839 related to The Outlet Shoppes at Atlanta - Phase II, is guaranteed by the Operating Partnership.


(3)	Of this total, $6,745 related to The Outlet Shoppes at El Paso - Phase II, is guaranteed by the Operating Partnership.

(4)

In the second quarter of 2016, the Company formed a 65/35 joint venture, Laredo Outlet JV, LLC, to develop, own and operate The Outlet Shoppes at Laredo in Laredo, TX. The Company initially contributed $7,714, which consisted of a cash contribution of $2,434 and its interest in a note receivable of $5,280 (see Note 10), and the third party partner contributed $10,686, which included land and construction costs to date. The Company contributed 100% of the capital to fund the project until the pro rata 65% contribution of $19,846 was reached in the third quarter of 2016. All subsequent future contributions will be funded on a 65/35 pro rata basis. The Company determined that the new consolidated affiliate represents an interest in a VIE based upon the criteria noted above.


(5)	Of this total, $39,263 related to The Outlet Shoppes at Laredo, is guaranteed by the Operating Partnership.


(6)	Of this total, $10,101 relates to The Outlet Shoppes of the Bluegrass - Phase II, is guaranteed by the Operating Partnership.


(7)	Upon, the sale of the Company's 50% interest in Triangle Town Member LLC to G&I VIII CBL Triangle LLC in the first quarter of 2016, the Company determined that the new unconsolidated affiliate represents an interest in a VIE based upon the criteria noted above.


(8)	This joint venture is not a VIE as of December 31, 2016. See description of reconsideration event below.

Variable Interest Entities - Reconsideration Events

Triangle Town Member LLC

The Company held a 50% ownership interest in this joint venture, which represented an interest in a VIE as of December 31, 2015. As noted above, the Company's 50% interest in this joint venture was sold to G&I VIII CBL Triangle LLC in the first quarter of 2016.

JG Gulf Coast Town Center LLC

The Company holds a 50% ownership interest in this joint venture. In the second quarter of 2016, the foreclosure process was complete and Phases I and II of Gulf Coast Town Center in Ft. Myers, FL were returned to the lender in satisfaction of the non-recourse mortgage loan secured by the Properties. The Company determined that the unconsolidated affiliate, JG Gulf Coast Town Center LLC no longer represents a VIE based upon the criteria noted above.