The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes that are included in this Form 10-Q. 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. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. In addition to the risk factors described in Part II, Item 1A. of this report, such risks and uncertainties include, without limitation, general industry, economic and business conditions, interest rate fluctuations, costs of capital and capital requirements, availability of real estate properties, inability to consummate acquisition opportunities, competition from other companies and retail formats, changes in retail rental rates in the Company's 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, 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. 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 shopping center properties are located in 27 domestic states and in Brazil, 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, 2008, we owned controlling interests in 75 regional malls/open-air centers, 29 associated centers (each adjacent to a regional mall), seven community centers, one mixed-use center 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, 2008, we owned noncontrolling interests in nine regional malls/open-air centers, three 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 four shopping center expansions and six community/open-air centers (five of which are owned in joint ventures) under construction at September 30, 2008.

The majority of our revenues is derived from leases with retail tenants and generally includes base minimum rents, percentage rents based on tenants' sales volumes and reimbursements from tenants for expenditures, including property operating expenses, real estate taxes and maintenance and repairs, as well as certain capital expenditures. We also generate revenues from sales of outparcel land at the properties and from sales of operating real estate assets when it is determined that we can realize the maximum value of the assets. Proceeds from such sales are generally used to pay off related construction loans or reduce borrowings on our credit facilities.

As we continue to face challenges in the capital markets and economy in general, our two primary objectives are creating liquidity and maintaining our earnings growth. We are focused on achieving these goals through a number of methods. While we have a pool of unencumbered properties and continue to work closely with lenders to meet our liquidity needs, we also have other potential sources of capital through dispositions of assets, emphasizing our held-for-sale portfolio of properties, and joint venture opportunities. We recently announced the reduction of the quarterly dividend rate on our common stock, which is expected to generate additional cash of approximately $80.0 million annually. We have reduced our spending, focusing on cost containment actions at all levels of our business, including reducing capital expenditures for renovations, tenant allowances and deferred maintenance. We have also reexamined our development projects, carefully assessing those that that may need to be placed on hold until a more favorable market environment emerges.

Store closures and bankruptcies have significantly increased in 2008, and while the majority of our retailers continue to operate with strong financial fundamentals, we believe that we will continue to see some bankruptcy and store closure activity throughout 2009. In an effort to minimize the impact from any store closures, we have a group dedicated to exploring various backfill strategies, including temporary tenants, options for space redevelopment, signing junior anchor replacements, and other alternative uses.

We achieved positive growth in our Funds From Operations ("FFO") for the three and nine months ended September 30, 2008 compared with the respective prior year periods. FFO was positively impacted by the properties acquired in 2007 and higher lease termination fees, management, development and leasing fees and gains on outparcel sales. Partially offsetting these increases were higher income tax expense, bad debt expense and impairment of marketable securities. FFO is a key performance measure for real estate companies. Please see the more detailed discussion of this measure on page 47.

Our business is built on a strategy of financial discipline, proactive management and preservation of excellent relationships with our retail and financial partners. We recognize that we are facing challenging times, but we are positive that our organization and our properties are positioned to move forward effectively. We have weathered previous market and economic difficulties and we are confident that our strategy, experience and expertise will serve to help us successfully overcome these challenges.

RESULTS OF OPERATIONS

We have acquired or opened a total of six malls/open-air centers, one associated center, 12 community centers, one mixed-use center and 19 office buildings since January 1, 2007. Of these properties, five malls/open-air centers, one associated center, two community centers, one mixed-use center and one office building are included in the Company's continuing operations on a consolidated basis (collectively referred to as the "New Properties"). The transactions related to the New Properties impact the comparison of the results of operations for the three and nine months ended September 30, 2008 to the results of operations for the comparable periods ended September 30, 2007. Properties that

were in operation as of January 1, 2007 and September 30, 2008 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:

                                                           Date Acquired/
            Property                      Location             Opened
---------------------------------   --------------------   --------------
Acquisitions:
Chesterfield Mall                   St. Louis, MO                  Oct-07
Mid Rivers Mall                     St. Peters, MO                 Oct-07
South County Center                 St. Louis, MO                  Oct-07
West County Center                  St. Louis, MO                  Oct-07

New Developments:
The Shoppes at St. Clair Square     Fairview Heights, IL           Mar-07
Alamance Crossing East              Burlington, NC                 Aug-07
Cobblestone Village at Palm Coast   Palm Coast, FL                 Oct-07
Milford Marketplace                 Milford, CT                    Oct-07
CBL Center II                       Chattanooga, TN                Jan-08
Pearland Town Center                Pearland, TX                   Jul-08

Of the total properties acquired or opened since January 1, 2007, one mall, two community centers and six office properties are held in entities that are accounted for using the equity method of accounting. Therefore, the results of operations for these properties are included in equity in earnings of unconsolidated affiliates in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2008. These properties are as follows:

                                                       Date Acquired /
             Property                    Location          Opened
----------------------------------    --------------   ---------------
Acquisitions:
Friendly Center and The Shops at
Friendly (50/50 joint venture)        Greensboro, NC            Nov-07
Portfolio of Six Office Buildings
(50/50 joint venture)                 Greensboro, NC            Nov-07
Renaissance Center (50/50 joint
venture)                              Durham, NC                Feb-08

New Developments:
York Town Center (50/50 joint
venture)                              York, PA                  Sep-07

Of the total properties acquired since January 1, 2007, eight community centers and twelve office properties are classified as held-for-sale. Therefore, the results of operations for these properties are included in discontinued operations in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2008. These properties are as follows:

                                                            Date Acquired /
               Property                      Location           Opened
--------------------------------------   ----------------   ---------------
Brassfield Square (1)                    Greensboro, NC              Nov-07
Caldwell Court (1)                       Greensboro, NC              Nov-07
Garden Square (1)                        Greensboro, NC              Nov-07
Hunt Village (1)                         Greensboro, NC              Nov-07
New Garden Center (3)                    Greensboro, NC              Nov-07
Northwest Centre (1)                     Greensboro, NC              Nov-07
Oak Hollow Square                        High Point, NC              Nov-07
Westridge Square                         Greensboro, NC              Nov-07
1500 Sunday Drive Office Building        Raleigh, NC                 Nov-07
Portfolio of Five Office Buildings (2)   Greensboro, NC              Nov-07
Portfolio of Two Office Buildings        Chesapeake, VA              Nov-07
Portfolio of Four Office Buildings       Newport News, VA            Nov-07

(1) These properties were sold in April 2008.
(2) One office building was sold in June 2008.
(3) This property was sold in August 2008.

Comparison of the Three Months Ended September 30, 2008 to the Three Months Ended September 30, 2007

Revenues

Total revenues increased 12.5% to $282.5 million for the three months ended September 30, 2008, compared to $251.0 million for the prior year quarter. Rental revenues and tenant reimbursements increased $19.3 million of which $25.2 million was attributable to the New Properties, partially offset by a decrease of $5.9 million from the Comparable Properties. The decrease in revenues from the Comparable Properties was primarily driven by lower straight line adjustment income, below-market lease amortization and real estate tax reimbursements, partially offset by an increase in lease termination fees. Straight line adjustment income decreased, for the most part, as a result of increased store closings. Below-market lease amortization decreased due to a higher amount of write-offs in the prior year quarter combined with an increasing number of tenant leases becoming fully amortized in the prior year. Real estate tax reimbursements decreased due to adjustments for tax-related settlements which occurred in, and positively impacted, the prior year quarter. There were no real estate tax settlements of this nature in the current quarter. The lease termination fees were primarily attributable to one tenant that closed stores at several property locations during the current quarter.

Our cost recovery ratio declined to 97.2% for the three months ended September 30, 2008 from 105.0% for the prior-year quarter, primarily due to increased bad debt expense. We are in the final phases of converting tenants to a fixed common area maintenance ("CAM") charge as compared to a pro rata charge that was applicable to more tenants in the prior year quarter. Approximately 80% of our leases have currently been converted to fixed CAM. Due to the conversion, the recovery ratio will fluctuate during the year as seasonal items impact the ratio.

Management, development and leasing fees increased $10.1 million over the prior year quarter, primarily due to higher management and development fee income. During the third quarter of 2008, management fee income increased approximately $8.4 million over the prior year quarter, mainly attributable to fees totaling $8.0 million received from Centro related to a joint venture in 2005 with Galileo America, Inc. Development fees increased approximately $1.1 million in the current year quarter as compared to the prior year period, largely due to fees received from two of our joint venture projects.

Other revenues increased $2.1 million compared to the prior year period due to higher revenues related to our subsidiary that provides security and maintenance services to third parties.

Operating Expenses

The increase in property operating expenses, including real estate taxes and maintenance and repairs, of $7.6 million resulted from an increase of $8.2 million attributable to the New Properties, partially offset by a decrease of $0.6 million related to the Comparable Properties. The decrease in property operating expenses of the Comparable Properties is principally due to lower real estate taxes. This decline largely resulted from higher than usual real estate tax expense in the prior year quarter due to tax settlements at certain properties that covered a range of tax years. In addition to real estate taxes, we experienced a decrease at the Comparable Properties in our property and fire insurance expense. Partially offsetting these decreased expenses is an increase in bad debt expense. Bad debt expense has increased due to the larger number of store closings and bankruptcies experienced during the current year. We also experienced higher central energy expense and janitorial services during the current year quarter as compared to the prior year period.

The increase in depreciation and amortization expense of $23.1 million resulted from an increase of $12.1 million from the New Properties and $11.0 million from the Comparable Properties. Approximately $10.5 million of the increase attributable to the Comparable Properties is due to the write-off of certain tenant allowances and intangible lease assets related to early lease terminations.

General and administrative expenses increased $1.3 million over the prior year quarter, primarily as a result of decreased capitalized overhead and increased state taxes. These were partially offset by a decrease in our group health insurance expense. As a percentage of revenues, general and administrative expenses remained relatively stable at 3.4% for the third quarter of 2008 compared with 3.3% for the prior year quarter.

Other expenses increased $1.5 million primarily due to increased expenses of $1.8 million related to our subsidiary that provides security and maintenance services to third parties, partially offset by a decrease of $0.3 million in abandoned projects expense.

Other Income and Expenses

Interest expense increased $4.3 million primarily due to the debt on the New Properties, and an unsecured term facility that was obtained for the acquisition of certain properties from the Starmount Company or its affiliates. While we experienced a decrease in the weighted average fixed and variable interest rates as compared to the third quarter of 2007, the total outstanding principal amounts have increased.

As of September 30, 2008, we recorded a $5.8 million non-cash write-down related to certain investments in marketable securities. The impairment resulted from a significant and sustained decline in the market value of the securities. There were no realized investment losses in the third quarter of 2007.

During the third quarter of 2008, we recognized gain on sales of real estate assets of $4.8 million related to the sale of four parcels of land during the quarter. The gain of $4.3 million in the third quarter of 2007 related to the sale of four parcels of land.

Equity in earnings of unconsolidated affiliates decreased by $0.6 million during the third quarter of 2008 compared to the prior year quarter, primarily due to higher interest expense on debt and higher depreciation and amortization expense from both the acquisition of new properties by CBL-TRS Joint Venture, LLC and write-offs of tenant allowances and intangible lease assets associated with various store

closures.

The income tax provision of $8.6 million for the three months ended September 30, 2008 relates to the earnings of our taxable REIT subsidiary. The income tax provision increased by $6.0 million primarily due to the recognition of the aforementioned $8.0 million fee income, in addition to a significantly larger amount of gains in the current year period related to sales of outparcels and income from discontinued operations attributable to the taxable REIT subsidiary. Income from discontinued operations in the prior year period primarily related to the sale of an operating property that was not owned by the taxable REIT subsidiary. The provision consists of current and deferred income taxes of $5.5 million and $3.1 million, respectively. During the three months ended September 30, 2007, we recorded an income tax provision of $2.6 million, consisting of a provision for current income taxes of $3.2 million, partially offset by a deferred tax benefit of $0.6 million.

We recognized income from discontinued operations of $2.2 million during the third quarter of 2008, compared to $0.9 million during the third quarter of 2007. Discontinued operations for the three months ended September 30, 2008 reflect the operating results of 13 retail and office properties that meet the criteria for held-for-sale classification. These properties were originally acquired in the fourth quarter of 2007. Discontinued operations for the 2008 quarter also includes the true up of estimated expenses to actual amounts for properties sold during previous periods. Discontinued operations for the three months ended September 30, 2007 reflect the results of operations of Twin Peaks Mall and The Shops at Pineda Ridge, plus the true up of estimated expenses to actual amounts for properties sold during previous periods.

We recognized a gain on the sale of discontinued operations of $0.7 million during the three months ended September 30, 2008, due to the sale of one community center located in Greensboro, NC, for a sales price of $19.5 million.

Comparison of the Nine Months Ended September 30, 2008 to the Nine Months Ended September 30, 2007

Revenues

The $69.7 million increase in rental revenues and tenant reimbursements was attributable to an increase of $76.6 million from the New Properties, partially offset by a decrease of $6.9 million from the Comparable Properties. The decrease in revenues of the Comparable Properties was driven by a decline in percentage rents and tenant reimbursements. Percentage rents declined due to reduced sales. The current period tenant reimbursements reflect a decrease in reimbursements for real estate taxes which were higher in the prior year due to tax-related settlements covering several tax years, resulting in higher real estate tax expense.

Our cost recovery ratio declined to 96.7% for the nine months ended September 30, 2008 from 102.2% for the prior-year period. The decline in the current period results primarily from increases in bad debt expense.

Management, development and leasing fees increased $10.3 million over the prior year, primarily due to higher management and development fee income. During the nine months ended September 30, 2008, management fee income increased approximately $9.0 million over the prior year-to-date period, mainly attributable to fees totaling $8.0 million received during the third quarter of 2008 from Centro related to a joint venture in 2005 with Galileo America, Inc. Development fees increased approximately $2.0 million in the current year as compared to the prior year period, largely due to fees received from two of our joint venture projects.

Other revenues increased by $3.7 million primarily due to increased income related to our subsidiary that provides security and maintenance services to third parties.

Operating Expenses

Property operating expenses, including real estate taxes and maintenance and repairs, increased $27.9 million as a result of $22.4 million of expenses attributable to the New Properties and an increase of $5.5 million of expenses related to the Comparable Properties. The increase in property operating expenses of the Comparable Properties is attributable to increases in annual compensation for property management personnel, bad debt expense and utilities expense.

The increase in depreciation and amortization expense of $52.7 million resulted from increases of $37.4 million from the New Properties and $15.3 million from the Comparable Properties. The increase attributable to the Comparable Properties is primarily due to write-offs of approximately $12.0 million for certain tenant allowances and intangible lease assets related to early lease terminations. The remaining increase in depreciation and amortization related to the Comparable Properties is primarily attributable to ongoing capital expenditures for renovations, expansions, tenant allowances and deferred maintenance.

General and administrative expenses increased $4.2 million primarily as a result of increases in payroll and state taxes, in addition to certain benefits related to the retirement of our Senior Vice President and Director of Corporate Leasing during the first quarter of 2008. As a percentage of revenues, general and administrative expenses remained relatively stable at 4.0% for the nine months ended September 30, 2008 compared with 3.9% for the prior year-to-date period.

Other expenses increased $6.6 million primarily due to increased expenses of $4.6 million related to our subsidiary that provides security and maintenance services to third parties and due to an increase of $2.0 million in abandoned projects expense.

Other Income and Expenses

Interest expense increased $26.0 million primarily due to debt on the New Properties, an unsecured term facility that was obtained for the acquisition of certain properties from the Starmount Company or its affiliates, refinancings that were completed with increased principal amounts in the prior year on the Comparable Properties and borrowings outstanding that were used to redeem our 8.75% Series B Cumulative Redeemable Preferred Stock (the "Series B Preferred Stock") in June 2007. While we experienced a decrease in the weighted average fixed and variable interest rates as compared to the comparable period of 2007, the total outstanding principal amounts have increased.

As of September 30, 2008, we recorded a $5.8 million non-cash write-down related to certain investments in marketable securities. The impairment resulted from a significant and sustained decline in the market value of the securities. There were no realized investment losses in the prior year period.

During the nine months ended September 30, 2008, we recognized gain on sales of real estate assets of $12.1 million related to the sale of 13 parcels of land during the period and one parcel of land for which the gain had previously been deferred. The gain of $10.6 million in the nine months ended September 30, 2007 related to the sale of eleven land parcels and two parcels of land for which the gains had previously been deferred.

Equity in earnings of unconsolidated affiliates decreased by $1.5 million during the nine months ended September 30, 2008, primarily due to higher interest expense on debt, the write-off of an above-market lease intangible and higher depreciation and amortization expense from both the acquisition of new properties by CBL-TRS Joint Venture, LLC and write-offs associated with various store closures.

The income tax provision of $12.8 million for the nine months ended September 30, 2008 relates to the earnings of our taxable REIT subsidiary. The income tax provision increased by $8.4 million

primarily due to the recognition of the aforementioned $8.0 million fee income, in addition to a significantly larger amount of gains in the current year period related to sales of outparcels and income from discontinued operations attributable to the taxable REIT subsidiary. Income from discontinued operations in the prior year period primarily related to the sale of an operating property that was not owned by the taxable REIT subsidiary. The provision consists of current and deferred income taxes of $9.2 million and $3.6 million, respectively. During the nine months ended September 30, 2007, we recorded an income tax provision of $4.4 million, consisting of a provision for current and deferred income taxes of $4.2 million and $0.2 million, respectively.

We recognized income from discontinued operations of $6.4 million during the nine months ended September 30, 2008, compared to $1.5 million during the nine months ended September 30, 2007. Discontinued operations for the nine months ended September 30, 2008 reflect the operating results of 19 retail and office properties that meet the criteria for held-for-sale classification. These properties were originally acquired in the fourth quarter of 2007. Discontinued operations for 2008 also include the results of Chicopee Marketplace III, a community center located in Chicopee, MA, plus the true up of estimated expense to actual amounts for properties sold during previous years. Discontinued operations for the nine months ended September 30, 2007 reflect the results of operations of Twin Peaks Mall and The Shops at Pineda Ridge, plus the true up of estimated expenses to actual amounts for properties sold during previous years.

We recognized a gain on the sale of discontinued operations of $3.8 million during the nine months ended September 30, 2008, compared to $3.9 million during the nine months ended September 30, 2007. During the nine months ended September . . .