UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 2017
or
☐ | 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(CBL & ASSOCIATES PROPERTIES, INC.)
COMMISSION FILE NO.333-182515-01 (CBL(CBL & ASSOCIATES LIMITED PARTNERSHIP)
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
(Exact Name of registrant as specified in its charter)
Delaware (CBL & ASSOCIATES PROPERTIES, INC.) | 62-1545718 | |
Delaware (CBL & ASSOCIATES LIMITED PARTNERSHIP) | 62-1542285 | |
(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)
Securities registered under Section 12(b) of the Act:
Title of each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.01 par value | CBLAQ | * | ||
7.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value (represented by depositary shares each representing a 1/10th fractional share) | CBLDQ | * | ||
6.625% Series E Cumulative Redeemable Preferred Stock, $0.01 par value (represented by depositary shares each representing a 1/10th fractional share) | CBLEQ | * |
*On November 2, 2020, the NYSE announced that (i) it had suspended trading in the Company’s stock and (ii) it had determined to commence proceedings to delist the Company’s common stock, as well as the depositary shares each representing a 1/10th fractional share of the Company’s 7.375% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”) and the depositary shares each representing a 1/10th fractional share of the Company’s 6.625% Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”), due to such securities no longer being suitable for listing based on “abnormally low” trading price levels, pursuant to Section 802.01D of the NYSE Listed Company Manual. Since November 3, 2020, the Company’s common stock and such depositary shares are currently trading on the OTC Markets, operated by the OTC Markets Group, Inc., under the respective trading symbols listed in the preceding table.
CBL & Associates Limited Partnership: None
Securities registered pursuant to Section 12(g) of the Act:
CBL & Associates Properties, Inc.: None
CBL & Associates Limited Partnership: None
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.
CBL & Associates Properties, Inc. | Yes | ☒ | No | ☐ | |
CBL & Associates Limited Partnership | Yes | ☒ | No | ☐ |
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).
CBL & Associates Properties, Inc. | Yes | ☒ | No | ☐ | |
CBL & Associates Limited Partnership | Yes | ☒ | No | ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
CBL & Associates Properties, Inc. | ||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |
Emerging growth company | ☐ | |||
CBL & Associates Limited Partnership | ||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☒ | Smaller reporting company | ☐ | |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
CBL & Associates Properties, Inc. | Yes | No | |
CBL & Associates Limited Partnership | Yes | No |
As of November 1, 2017,August 10, 2021, there were 171,101,611196,443,846 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.
(Dollars in thousands, except share data)
This report combines the quarterly reports on Form 10-Q for the quarter ended SeptemberJune 30, 20172021 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we," "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.
As previously disclosed in the Current Report on Form 8-K filed on November 2, 2020 by CBL & Associates Properties, Inc. together with its majority owned subsidiary, CBL & Associates Limited Partnership, together with certain of its direct and indirect subsidiaries (collectively, the “Debtors”), commenced the filing of voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of title 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) beginning on November 1, 2020. The Debtors have filed a series of motions with the Bankruptcy Court that, as granted, enable the Debtors to maintain their operations in the ordinary course of business.
The Company is a real estate investment trust ("REIT") whose stock iswas traded on the New York Stock Exchange.Exchange (“NYSE”) prior to the NYSE’s announcement on November 2, 2020, that it had suspended trading in the Company’s stock due to “abnormally low” trading price levels and had determined to commence proceedings to delist the Company’s stock. As discussed further under Delisting of Common Stock and Depositary Shares in Note 2 herein, the Company has appealed this decision in accordance with NYSE rules, and in the meantime the Company’s stock is trading on the OTC Markets, operated by the OTC Markets Group, Inc. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At SeptemberJune 30, 2017,2021, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 84.8%a 96.5% limited partner interest for a combined interest held by the Company of 85.8%97.5%.
As the sole general partner of the Operating Partnership, the Company's subsidiary, CBL Holdings I, Inc., has exclusive control of the Operating Partnership's activities. Management operates the Company and the Operating Partnership as one business. The management of the Company consists of the same individuals that manage the Operating Partnership. The Company's only material asset is its indirect ownership of partnership interests of the Operating Partnership. As a result, the Company conducts substantially all its business through the Operating Partnership as described in the preceding paragraph. The Company also issues public equity from time to time and guarantees certain debt of the Operating Partnership. The Operating Partnership holds all of the assets and indebtedness of the Company and, through affiliates, retains the ownership interests in the Company's joint ventures. Except for the net proceeds of offerings of equity by the Company, which are contributed to the Operating Partnership in exchange for partnership units on a one-for-one basis, the Operating Partnership generates all remaining capital required by the Company's business through its operations and its incurrence of indebtedness.
We believe that combining the two quarterly reports on Form 10-Q for the Company and the Operating Partnership provides the following benefits:
• | enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business; |
• | eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and |
• | creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
To help investors understand the differences between the Company and the Operating Partnership, this report provides separate condensed consolidated financial statements for the Company and the Operating Partnership. Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the condensed consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to condensed consolidated financial statements is presented that includes separate discussions for the Company and the Operating Partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.
In order to highlight the differences between the Company and the Operating Partnership, this report includes the following sections that provide separate financial and other information for the Company and the Operating Partnership:
• | condensed consolidated financial statements; |
• | certain accompanying notes to condensed consolidated financial statements, including Note 8 - Unconsolidated Affiliates and Noncontrolling Interests; Note 9 - Mortgage and Other Indebtedness, Net; and Note 11 - Earnings per Share and Earnings per Unit; |
• | controls and procedures in Item 4 of Part I of this report; |
• | information concerning unregistered sales of equity securities and use of proceeds in Item 2 of Part II of this report; and |
• | certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4. |
CBL & Associates Properties, Inc.
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Table of Contents
PART I | ||
CBL & Associates Properties, Inc. | ||
5 | ||
CBL & Associates Limited Partnership | ||
6 | ||
7 | ||
8 | ||
9 | ||
11 | ||
CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership | ||
12 | ||
Item 2. | 39 | |
59 | ||
60 | ||
61 | ||
61 | ||
61 | ||
61 | ||
61 | ||
61 | ||
61 | ||
62 | ||
63 |
ITEM 1: Financial Statements
CBL & Associates Properties, Inc.
(Debtors-In-Possession)
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
ASSETS (1) |
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Real estate assets: |
|
|
|
|
|
|
|
|
Land |
| $ | 662,045 |
|
| $ | 695,711 |
|
Buildings and improvements |
|
| 4,978,546 |
|
|
| 5,135,074 |
|
|
|
| 5,640,591 |
|
|
| 5,830,785 |
|
Accumulated depreciation |
|
| (2,270,736 | ) |
|
| (2,241,421 | ) |
|
|
| 3,369,855 |
|
|
| 3,589,364 |
|
Developments in progress |
|
| 15,150 |
|
|
| 28,327 |
|
Net investment in real estate assets |
|
| 3,385,005 |
|
|
| 3,617,691 |
|
Cash and cash equivalents |
|
| 143,874 |
|
|
| 61,781 |
|
Available-for-sale securities - at fair value (amortized cost of $183,496 and $233,053 as of June 30, 2021 and December 31, 2020, respectively) |
|
| 183,490 |
|
|
| 233,071 |
|
Receivables: |
|
|
|
|
|
|
|
|
Tenant |
|
| 68,514 |
|
|
| 103,655 |
|
Other |
|
| 2,727 |
|
|
| 5,958 |
|
Mortgage and other notes receivable |
|
| 1,912 |
|
|
| 2,337 |
|
Investments in unconsolidated affiliates |
|
| 261,082 |
|
|
| 279,355 |
|
Intangible lease assets and other assets |
|
| 217,603 |
|
|
| 139,892 |
|
|
| $ | 4,264,207 |
|
| $ | 4,443,740 |
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
|
|
|
|
|
|
|
|
Mortgage and other indebtedness, net |
| $ | 987,592 |
|
| $ | 1,184,831 |
|
Accounts payable and accrued liabilities |
|
| 188,368 |
|
|
| 173,387 |
|
Total liabilities not subject to compromise (1) |
|
| 1,175,960 |
|
|
| 1,358,218 |
|
|
|
|
|
|
|
|
|
|
Liabilities subject to compromise |
|
| 2,591,706 |
|
|
| 2,551,490 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 9 and Note 12) |
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests |
|
| (543 | ) |
|
| (265 | ) |
Shareholders' equity: |
|
|
|
|
|
|
|
|
Preferred Stock, $.01 par value, 15,000,000 shares authorized: |
|
|
|
|
|
|
|
|
7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding |
|
| 18 |
|
|
| 18 |
|
6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding |
|
| 7 |
|
|
| 7 |
|
Common stock, $.01 par value, 350,000,000 shares authorized, 196,444,452 and 196,569,917 issued and outstanding in 2021 and 2020, respectively |
|
| 1,964 |
|
|
| 1,966 |
|
Additional paid-in capital |
|
| 1,986,982 |
|
|
| 1,986,269 |
|
Accumulated other comprehensive income (loss) |
|
| (6 | ) |
|
| 18 |
|
Dividends in excess of cumulative earnings |
|
| (1,492,080 | ) |
|
| (1,456,435 | ) |
Total shareholders' equity |
|
| 496,885 |
|
|
| 531,843 |
|
Noncontrolling interests |
|
| 199 |
|
|
| 2,454 |
|
Total equity |
|
| 497,084 |
|
|
| 534,297 |
|
|
| $ | 4,264,207 |
|
| $ | 4,443,740 |
|
ASSETS (1) | September 30, 2017 | December 31, 2016 | |||||
Real estate assets: | |||||||
Land | $ | 811,742 | $ | 820,979 | |||
Buildings and improvements | 6,668,312 | 6,942,452 | |||||
7,480,054 | 7,763,431 | ||||||
Accumulated depreciation | (2,411,560 | ) | (2,427,108 | ) | |||
5,068,494 | 5,336,323 | ||||||
Held for sale | — | 5,861 | |||||
Developments in progress | 100,106 | 178,355 | |||||
Net investment in real estate assets | 5,168,600 | 5,520,539 | |||||
Cash and cash equivalents | 31,351 | 18,951 | |||||
Receivables: | |||||||
Tenant, net of allowance for doubtful accounts of $2,075 and $1,910 in 2017 and 2016, respectively | 86,947 | 94,676 | |||||
Other, net of allowance for doubtful accounts of $838 in 2017 and 2016 | 5,554 | 6,227 | |||||
Mortgage and other notes receivable | 19,279 | 16,803 | |||||
Investments in unconsolidated affiliates | 251,664 | 266,872 | |||||
Intangible lease assets and other assets | 180,361 | 180,572 | |||||
$ | 5,743,756 | $ | 6,104,640 | ||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | |||||||
Mortgage and other indebtedness, net | $ | 4,216,178 | $ | 4,465,294 | |||
Accounts payable and accrued liabilities | 270,046 | 280,498 | |||||
Total liabilities (1) | 4,486,224 | 4,745,792 | |||||
Commitments and contingencies (Note 6 and Note 12) | |||||||
Redeemable noncontrolling interests | 13,076 | 17,996 | |||||
Shareholders' equity: | |||||||
Preferred stock, $.01 par value, 15,000,000 shares authorized: | |||||||
7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding | 18 | 18 | |||||
6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding | 7 | 7 | |||||
Common stock, $.01 par value, 350,000,000 shares authorized, 171,096,895 and 170,792,645 issued and outstanding in 2017 and 2016, respectively | 1,711 | 1,708 | |||||
Additional paid-in capital | 1,971,447 | 1,969,059 | |||||
Dividends in excess of cumulative earnings | (827,292 | ) | (742,078 | ) | |||
Total shareholders' equity | 1,145,891 | 1,228,714 | |||||
Noncontrolling interests | 98,565 | 112,138 | |||||
Total equity | 1,244,456 | 1,340,852 | |||||
$ | 5,743,756 | $ | 6,104,640 |
(1) | |
As of |
The accompanying notes are an integral part of these condensed consolidated statements.
1
CBL & Associates Properties, Inc.
(Debtors-In-Possession)
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
| $ | 131,316 |
|
| $ | 120,222 |
|
| $ | 259,491 |
|
| $ | 281,395 |
|
Management, development and leasing fees |
|
| 1,449 |
|
|
| 1,055 |
|
|
| 3,108 |
|
|
| 3,147 |
|
Other |
|
| 3,796 |
|
|
| 2,934 |
|
|
| 7,146 |
|
|
| 7,243 |
|
Total revenues |
|
| 136,561 |
|
|
| 124,211 |
|
|
| 269,745 |
|
|
| 291,785 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating |
|
| (19,623 | ) |
|
| (16,906 | ) |
|
| (41,425 | ) |
|
| (42,615 | ) |
Depreciation and amortization |
|
| (47,499 | ) |
|
| (52,663 | ) |
|
| (95,611 | ) |
|
| (108,565 | ) |
Real estate taxes |
|
| (15,110 | ) |
|
| (17,837 | ) |
|
| (31,661 | ) |
|
| (36,285 | ) |
Maintenance and repairs |
|
| (8,784 | ) |
|
| (6,042 | ) |
|
| (19,565 | ) |
|
| (17,250 | ) |
General and administrative |
|
| (11,269 | ) |
|
| (18,727 | ) |
|
| (23,881 | ) |
|
| (36,563 | ) |
Loss on impairment |
|
| — |
|
|
| (13,274 | ) |
|
| (57,182 | ) |
|
| (146,918 | ) |
Litigation settlement |
|
| (57 | ) |
|
| — |
|
|
| 801 |
|
|
| — |
|
Other |
|
| (287 | ) |
|
| (242 | ) |
|
| (287 | ) |
|
| (400 | ) |
Total expenses |
|
| (102,629 | ) |
|
| (125,691 | ) |
|
| (268,811 | ) |
|
| (388,596 | ) |
OTHER INCOME (EXPENSES): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
| 752 |
|
|
| 891 |
|
|
| 1,528 |
|
|
| 3,288 |
|
Interest expense (unrecognized contractual interest expense was $45,279 and $90,043 for the three and six months ended June 30, 2021, respectively) |
|
| (22,299 | ) |
|
| (52,631 | ) |
|
| (46,429 | ) |
|
| (99,623 | ) |
Gain on deconsolidation |
|
| — |
|
|
| — |
|
|
| 55,131 |
|
|
| — |
|
Gain (loss) on sales of real estate assets |
|
| 107 |
|
|
| 2,623 |
|
|
| (192 | ) |
|
| 2,763 |
|
Reorganization items |
|
| (17,073 | ) |
|
| — |
|
|
| (40,006 | ) |
|
| — |
|
Income tax provision |
|
| (705 | ) |
|
| (16,117 | ) |
|
| (1,456 | ) |
|
| (16,643 | ) |
Equity in losses of unconsolidated affiliates |
|
| (4,275 | ) |
|
| (6,079 | ) |
|
| (7,351 | ) |
|
| (5,061 | ) |
Total other expenses |
|
| (43,493 | ) |
|
| (71,313 | ) |
|
| (38,775 | ) |
|
| (115,276 | ) |
Net loss |
|
| (9,561 | ) |
|
| (72,793 | ) |
|
| (37,841 | ) |
|
| (212,087 | ) |
Net loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Partnership |
|
| 230 |
|
|
| 2,077 |
|
|
| 928 |
|
|
| 18,491 |
|
Other consolidated subsidiaries |
|
| 449 |
|
|
| 487 |
|
|
| 1,268 |
|
|
| 694 |
|
Net loss attributable to the Company |
|
| (8,882 | ) |
|
| (70,229 | ) |
|
| (35,645 | ) |
|
| (192,902 | ) |
Preferred dividends undeclared |
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (22,446 | ) |
Net loss attributable to common shareholders |
| $ | (8,882 | ) |
| $ | (81,452 | ) |
| $ | (35,645 | ) |
| $ | (215,348 | ) |
Basic and diluted per share data attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common shareholders |
| $ | (0.05 | ) |
| $ | (0.42 | ) |
| $ | (0.18 | ) |
| $ | (1.16 | ) |
Weighted-average common and potential dilutive common shares outstanding |
|
| 196,458 |
|
|
| 191,962 |
|
|
| 196,484 |
|
|
| 185,547 |
|
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, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
REVENUES: | |||||||||||||||
Minimum rents | $ | 150,836 | $ | 164,444 | $ | 468,195 | $ | 502,289 | |||||||
Percentage rents | 3,000 | 3,225 | 7,127 | 10,590 | |||||||||||
Other rents | 3,790 | 3,866 | 11,171 | 13,747 | |||||||||||
Tenant reimbursements | 63,055 | 69,489 | 192,577 | 212,951 | |||||||||||
Management, development and leasing fees | 2,718 | 4,177 | 8,747 | 10,825 | |||||||||||
Other | 1,251 | 6,520 | 4,079 | 19,362 | |||||||||||
Total revenues | 224,650 | 251,721 | 691,896 | 769,764 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||
Property operating | 31,295 | 35,116 | 96,250 | 104,804 | |||||||||||
Depreciation and amortization | 71,732 | 71,794 | 225,461 | 220,505 | |||||||||||
Real estate taxes | 21,573 | 22,492 | 62,343 | 68,354 | |||||||||||
Maintenance and repairs | 11,254 | 13,236 | 36,322 | 39,574 | |||||||||||
General and administrative | 13,568 | 13,222 | 45,402 | 46,865 | |||||||||||
Loss on impairment | 24,935 | 53,558 | 71,401 | 116,736 | |||||||||||
Other | 132 | 5,576 | 5,151 | 20,313 | |||||||||||
Total operating expenses | 174,489 | 214,994 | 542,330 | 617,151 | |||||||||||
Income from operations | 50,161 | 36,727 | 149,566 | 152,613 | |||||||||||
Interest and other income (loss) | (200 | ) | 451 | 1,235 | 1,062 | ||||||||||
Interest expense | (53,913 | ) | (54,292 | ) | (165,179 | ) | (162,710 | ) | |||||||
Gain on extinguishment of debt | 6,452 | (6 | ) | 30,927 | — | ||||||||||
Loss on investment | (354 | ) | — | (6,197 | ) | — | |||||||||
Income tax benefit | 1,064 | 2,386 | 4,784 | 2,974 | |||||||||||
Equity in earnings of unconsolidated affiliates | 4,706 | 10,478 | 16,404 | 107,217 | |||||||||||
Income (loss) from continuing operations before gain on sales of real estate assets | 7,916 | (4,256 | ) | 31,540 | 101,156 | ||||||||||
Gain on sales of real estate assets | 1,383 | 4,926 | 86,904 | 14,503 | |||||||||||
Net income | 9,299 | 670 | 118,444 | 115,659 | |||||||||||
Net (income) loss attributable to noncontrolling interests in: | |||||||||||||||
Operating Partnership | 81 | 1,372 | (8,702 | ) | (12,056 | ) | |||||||||
Other consolidated subsidiaries | (415 | ) | (983 | ) | (25,266 | ) | 449 | ||||||||
Net income attributable to the Company | 8,965 | 1,059 | 84,476 | 104,052 | |||||||||||
Preferred dividends | (11,223 | ) | (11,223 | ) | (33,669 | ) | (33,669 | ) | |||||||
Net income (loss) attributable to common shareholders | $ | (2,258 | ) | $ | (10,164 | ) | $ | 50,807 | $ | 70,383 | |||||
Basic and diluted per share data attributable to common shareholders: | |||||||||||||||
Net income (loss) attributable to common shareholders | $ | (0.01 | ) | $ | (0.06 | ) | $ | 0.30 | $ | 0.41 | |||||
Weighted-average common and potential dilutive common shares outstanding | 171,096 | 170,792 | 171,060 | 170,751 | |||||||||||
Dividends declared per common share | $ | 0.265 | $ | 0.265 | $ | 0.795 | $ | 0.795 |
The accompanying notes are an integral part of these condensed consolidated statements.
(Debtors-In-Possession)
Condensed Consolidated Statements of Comprehensive Income
(In thousands)thousands, except share data)
(Unaudited)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net loss |
| $ | (9,561 | ) |
| $ | (72,793 | ) |
| $ | (37,841 | ) |
| $ | (212,087 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on available-for-sale securities |
|
| (27 | ) |
|
| (64 | ) |
|
| (24 | ) |
|
| (42 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
| (9,588 | ) |
|
| (72,857 | ) |
|
| (37,865 | ) |
|
| (212,129 | ) |
Comprehensive loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Partnership |
|
| 230 |
|
|
| 2,080 |
|
|
| 928 |
|
|
| 18,494 |
|
Other consolidated subsidiaries |
|
| 449 |
|
|
| 487 |
|
|
| 1,268 |
|
|
| 694 |
|
Comprehensive loss attributable to the Company: |
| $ | (8,909 | ) |
| $ | (70,290 | ) |
| $ | (35,669 | ) |
| $ | (192,941 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 9,299 | $ | 670 | $ | 118,444 | $ | 115,659 | |||||||
Other comprehensive income: | |||||||||||||||
Unrealized gain on hedging instruments | — | — | — | 877 | |||||||||||
Reclassification of hedging effect on earnings | — | — | — | (443 | ) | ||||||||||
Total other comprehensive income | — | — | — | 434 | |||||||||||
Comprehensive income | 9,299 | 670 | 118,444 | 116,093 | |||||||||||
Comprehensive (income) loss attributable to noncontrolling interests in: | |||||||||||||||
Operating Partnership | 81 | 1,372 | (8,702 | ) | (12,119 | ) | |||||||||
Other consolidated subsidiaries | (415 | ) | (983 | ) | (25,266 | ) | 449 | ||||||||
Comprehensive income attributable to the Company | $ | 8,965 | $ | 1,059 | $ | 84,476 | $ | 104,423 |
The accompanying notes are an integral part of these condensed consolidated statements.
(Debtors-In-Possession)
Condensed Consolidated Statements of Equity
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
| Equity |
| |||||||||||||||||||||||||||||
|
|
|
|
|
| Shareholders' Equity |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| Redeemable Noncontrolling Interests |
|
| Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in Capital |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Dividends in Excess of Cumulative Earnings |
|
| Total Shareholders' Equity |
|
| Noncontrolling Interests |
|
| Total Equity |
| |||||||||
Balance, December 31, 2019 |
| $ | 2,160 |
|
| $ | 25 |
|
| $ | 1,741 |
|
| $ | 1,965,897 |
|
| $ | — |
|
| $ | (1,161,351 | ) |
| $ | 806,312 |
|
| $ | 55,553 |
|
| $ | 861,865 |
|
Net loss |
|
| (1,158 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (122,673 | ) |
|
| (122,673 | ) |
|
| (15,463 | ) |
|
| (138,136 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22 |
|
|
| — |
|
|
| 22 |
|
|
| — |
|
|
| 22 |
|
Conversion of 16,333,947 Operating Partnership common units into shares of common stock |
|
| — |
|
|
| — |
|
|
| 163 |
|
|
| 20,888 |
|
|
| — |
|
|
| — |
|
|
| 21,051 |
|
|
| (21,051 | ) |
|
| — |
|
Issuance of 1,633,345 shares of common stock and restricted common stock |
|
| — |
|
|
| — |
|
|
| 17 |
|
|
| 520 |
|
|
| — |
|
|
| — |
|
|
| 537 |
|
|
| — |
|
|
| 537 |
|
Cancellation of 116,781 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (96 | ) |
|
| — |
|
|
| — |
|
|
| (97 | ) |
|
| — |
|
|
| (97 | ) |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| 633 |
|
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| 390 |
|
Adjustment for noncontrolling interests |
|
| 60 |
|
|
| — |
|
|
| — |
|
|
| (10,341 | ) |
|
| — |
|
|
| — |
|
|
| (10,341 | ) |
|
| 10,281 |
|
|
| (60 | ) |
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (731 | ) |
|
| (731 | ) |
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 668 |
|
|
| 668 |
|
Balance, March 31, 2020 |
|
| 1,062 |
|
|
| 25 |
|
|
| 1,920 |
|
|
| 1,977,891 |
|
|
| 22 |
|
|
| (1,284,024 | ) |
|
| 695,834 |
|
|
| 29,257 |
|
|
| 725,091 |
|
Net loss |
|
| (654 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (70,229 | ) |
|
| (70,229 | ) |
|
| (1,910 | ) |
|
| (72,139 | ) |
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (64 | ) |
|
| — |
|
|
| (64 | ) |
|
| — |
|
|
| (64 | ) |
Issuance of 5,891 shares of common stock and restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
Cancellation of 20,059 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (14 | ) |
|
| — |
|
|
| — |
|
|
| (14 | ) |
|
| — |
|
|
| (14 | ) |
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| 379 |
|
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| 384 |
|
Adjustment for noncontrolling interests |
|
| 117 |
|
|
| — |
|
|
| — |
|
|
| 3,812 |
|
|
|
|
|
|
| — |
|
|
| 3,812 |
|
|
| (3,929 | ) |
|
| (117 | ) |
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (94 | ) |
|
| (94 | ) |
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
|
| 25 |
|
Balance, June 30, 2020 |
| $ | 525 |
|
| $ | 25 |
|
| $ | 1,920 |
|
| $ | 1,982,454 |
|
| $ | (42 | ) |
| $ | (1,354,253 | ) |
| $ | 630,104 |
|
| $ | 23,349 |
|
| $ | 653,453 |
|
|
|
|
|
|
| Equity |
| |||||||||||||||||||||||||||||
|
|
|
|
|
| Shareholders' Equity |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| Redeemable Noncontrolling Interests |
|
| Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in Capital |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Dividends in Excess of Cumulative Earnings |
|
| Total Shareholders' Equity |
|
| Noncontrolling Interests |
|
| Total Equity |
| |||||||||
Balance, December 31, 2020 |
| $ | (265 | ) |
| $ | 25 |
|
| $ | 1,966 |
|
| $ | 1,986,269 |
|
| $ | 18 |
|
| $ | (1,456,435 | ) |
| $ | 531,843 |
|
| $ | 2,454 |
|
| $ | 534,297 |
|
Net loss |
|
| (213 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (26,763 | ) |
|
| (26,763 | ) |
|
| (1,304 | ) |
|
| (28,067 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| — |
|
|
| 3 |
|
|
| — |
|
|
| 3 |
|
Cancellation of 111,139 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| (1 | ) |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 304 |
|
|
| — |
|
|
| — |
|
|
| 304 |
|
|
| — |
|
|
| 304 |
|
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 93 |
|
|
| — |
|
|
| — |
|
|
| 93 |
|
|
| — |
|
|
| 93 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11 | ) |
|
| (11 | ) |
Balance, March 31, 2021 |
|
| (478 | ) |
|
| 25 |
|
|
| 1,965 |
|
|
| 1,986,666 |
|
|
| 21 |
|
|
| (1,483,198 | ) |
|
| 505,479 |
|
|
| 1,139 |
|
|
| 506,618 |
|
Net loss |
|
| (70 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,882 | ) |
|
| (8,882 | ) |
|
| (609 | ) |
|
| (9,491 | ) |
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (27 | ) |
|
| — |
|
|
| (27 | ) |
|
| — |
|
|
| (27 | ) |
Cancellation of 14,326 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (17 | ) |
|
| — |
|
|
| — |
|
|
| (18 | ) |
|
| — |
|
|
| (18 | ) |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 256 |
|
|
| — |
|
|
| — |
|
|
| 256 |
|
|
| — |
|
|
| 256 |
|
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 94 |
|
|
| — |
|
|
| — |
|
|
| 94 |
|
|
| — |
|
|
| 94 |
|
Adjustment for noncontrolling interests |
|
| 5 |
|
|
| — |
|
|
| — |
|
|
| (17 | ) |
|
| — |
|
|
| — |
|
|
| (17 | ) |
|
| 12 |
|
|
| (5 | ) |
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (343 | ) |
|
| (343 | ) |
Balance, June 30, 2021 |
| $ | (543 | ) |
| $ | 25 |
|
| $ | 1,964 |
|
| $ | 1,986,982 |
|
| $ | (6 | ) |
| $ | (1,492,080 | ) |
| $ | 496,885 |
|
| $ | 199 |
|
| $ | 497,084 |
|
Equity | |||||||||||||||||||||||||||||||||||
Shareholders' Equity | |||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interests | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Dividends in Excess of Cumulative Earnings | Total Shareholders' Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||
Balance, January 1, 2016 | $ | 25,330 | $ | 25 | $ | 1,705 | $ | 1,970,333 | $ | 1,935 | $ | (689,028 | ) | $ | 1,284,970 | $ | 114,629 | $ | 1,399,599 | ||||||||||||||||
Net income (loss) | (2,119 | ) | — | — | — | — | 104,052 | 104,052 | 13,726 | 117,778 | |||||||||||||||||||||||||
Other comprehensive income | 3 | — | — | — | 371 | — | 371 | 60 | 431 | ||||||||||||||||||||||||||
Purchase of noncontrolling interest in Operating Partnership | — | — | — | — | — | — | — | (11,754 | ) | (11,754 | ) | ||||||||||||||||||||||||
Dividends declared - common stock | — | — | — | — | — | (135,780 | ) | (135,780 | ) | — | (135,780 | ) | |||||||||||||||||||||||
Dividends declared - preferred stock | — | — | — | — | — | (33,669 | ) | (33,669 | ) | — | (33,669 | ) | |||||||||||||||||||||||
Issuances of 331,324 shares of common stock and restricted common stock | — | — | 3 | 429 | — | — | 432 | — | 432 | ||||||||||||||||||||||||||
Cancellation of 31,293 shares of restricted common stock | — | — | — | (226 | ) | — | — | (226 | ) | — | (226 | ) | |||||||||||||||||||||||
Performance stock units | — | — | — | 775 | — | — | 775 | — | 775 | ||||||||||||||||||||||||||
Amortization of deferred compensation | — | — | — | 2,857 | — | — | 2,857 | — | 2,857 | ||||||||||||||||||||||||||
Adjustment for noncontrolling interests | 1,686 | — | — | (11,647 | ) | (2,306 | ) | — | (13,953 | ) | 12,267 | (1,686 | ) | ||||||||||||||||||||||
Adjustment to record redeemable noncontrolling interests at redemption value | 3,617 | — | — | (3,514 | ) | — | — | (3,514 | ) | (103 | ) | (3,617 | ) | ||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 11,240 | 11,240 | ||||||||||||||||||||||||||
Distributions to noncontrolling interests | (5,775 | ) | — | — | — | — | — | — | (29,712 | ) | (29,712 | ) | |||||||||||||||||||||||
Balance, September 30, 2016 | $ | 22,742 | $ | 25 | $ | 1,708 | $ | 1,959,007 | $ | — | $ | (754,425 | ) | $ | 1,206,315 | $ | 110,353 | $ | 1,316,668 |
Equity | |||||||||||||||||||||||||||||||
Shareholders' Equity | |||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interests | Preferred Stock | Common Stock | Additional Paid-in Capital | Dividends in Excess of Cumulative Earnings | Total Shareholders' Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||
Balance, January 1, 2017 | $ | 17,996 | $ | 25 | $ | 1,708 | $ | 1,969,059 | $ | (742,078 | ) | $ | 1,228,714 | $ | 112,138 | $ | 1,340,852 | ||||||||||||||
Net income | 481 | — | — | — | 84,476 | 84,476 | 33,487 | 117,963 | |||||||||||||||||||||||
Dividends declared - common stock | — | — | — | — | (136,021 | ) | (136,021 | ) | — | (136,021 | ) | ||||||||||||||||||||
Dividends declared - preferred stock | — | — | — | — | (33,669 | ) | (33,669 | ) | — | (33,669 | ) | ||||||||||||||||||||
Issuances of 342,008 shares of common stock and restricted common stock | — | — | 3 | 471 | — | 474 | — | 474 | |||||||||||||||||||||||
Redemptions of Operating Partnership common units | — | — | — | — | — | — | (593 | ) | (593 | ) | |||||||||||||||||||||
Cancellation of 37,758 shares of restricted common stock | — | — | — | (327 | ) | — | (327 | ) | — | (327 | ) | ||||||||||||||||||||
Performance stock units | — | — | — | 1,115 | — | 1,115 | — | 1,115 | |||||||||||||||||||||||
Amortization of deferred compensation | — | — | — | 3,135 | — | 3,135 | — | 3,135 | |||||||||||||||||||||||
Adjustment for noncontrolling interests | 2,224 | — | — | (5,635 | ) | — | (5,635 | ) | 3,413 | (2,222 | ) | ||||||||||||||||||||
Adjustment to record redeemable noncontrolling interests at redemption value | (4,196 | ) | — | — | 3,629 | — | 3,629 | 566 | 4,195 | ||||||||||||||||||||||
Deconsolidation of investment | — | — | — | — | — | — | (2,232 | ) | (2,232 | ) | |||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | 263 | 263 | |||||||||||||||||||||||
Distributions to noncontrolling interests | (3,429 | ) | — | — | — | — | — | (48,477 | ) | (48,477 | ) | ||||||||||||||||||||
Balance, September 30, 2017 | $ | 13,076 | $ | 25 | $ | 1,711 | $ | 1,971,447 | $ | (827,292 | ) | $ | 1,145,891 | $ | 98,565 | $ | 1,244,456 |
The accompanying notes are an integral part of these condensed consolidated statements.
4
CBL & Associates Properties, Inc.
(Debtors-In-Possession)
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
| Six Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
| $ | (37,841 | ) |
| $ | (212,087 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 95,611 |
|
|
| 108,565 |
|
Net amortization of deferred financing costs, premiums on available-for-sale securities and debt premiums and discounts |
|
| 1,496 |
|
|
| 4,595 |
|
Net amortization of intangible lease assets and liabilities |
|
| 385 |
|
|
| (753 | ) |
(Gain) loss on sales of real estate assets |
|
| 192 |
|
|
| (2,763 | ) |
Gain on insurance proceeds |
|
| — |
|
|
| (511 | ) |
Gain on deconsolidation |
|
| (55,131 | ) |
|
| — |
|
Write-off of development projects |
|
| 287 |
|
|
| 400 |
|
Share-based compensation expense |
|
| 739 |
|
|
| 2,293 |
|
Loss on impairment |
|
| 57,182 |
|
|
| 146,918 |
|
Equity in losses of unconsolidated affiliates |
|
| 7,351 |
|
|
| 5,061 |
|
Distributions of earnings from unconsolidated affiliates |
|
| 6,676 |
|
|
| 3,797 |
|
Change in estimate of uncollectable revenues |
|
| 15,525 |
|
|
| 41,955 |
|
Change in deferred tax accounts |
|
| — |
|
|
| 15,596 |
|
Changes in: |
|
|
|
|
|
|
|
|
Tenant and other receivables |
|
| 19,352 |
|
|
| (87,298 | ) |
Other assets |
|
| (2,111 | ) |
|
| 753 |
|
Accounts payable and accrued liabilities |
|
| 20,784 |
|
|
| 11,849 |
|
Net cash provided by operating activities |
|
| 130,497 |
|
|
| 38,370 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Additions to real estate assets |
|
| (13,836 | ) |
|
| (36,413 | ) |
Proceeds from sales of real estate assets |
|
| 5,612 |
|
|
| 3,579 |
|
Purchases of available-for-sale securities |
|
| (319,887 | ) |
|
| (153,193 | ) |
Redemptions of available-for-sale securities |
|
| 368,380 |
|
|
| — |
|
Proceeds from insurance |
|
| — |
|
|
| 600 |
|
Payments received on mortgage and other notes receivable |
|
| 425 |
|
|
| 703 |
|
Additional investments in and advances to unconsolidated affiliates |
|
| 124 |
|
|
| (10,990 | ) |
Distributions in excess of equity in earnings of unconsolidated affiliates |
|
| 4,790 |
|
|
| 5,255 |
|
Changes in other assets |
|
| (1,420 | ) |
|
| (920 | ) |
Net cash provided by (used in) investing activities |
|
| 44,188 |
|
|
| (191,379 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from mortgage and other indebtedness |
|
| — |
|
|
| 365,000 |
|
Principal payments on mortgage and other indebtedness |
|
| (23,854 | ) |
|
| (120,467 | ) |
Additions to deferred financing costs |
|
| (1 | ) |
|
| (240 | ) |
Proceeds from issuances of common stock |
|
| — |
|
|
| 5 |
|
Contributions from noncontrolling interests |
|
| — |
|
|
| 693 |
|
Payment of tax withholdings for restricted stock awards |
|
| (11 | ) |
|
| (87 | ) |
Distributions to noncontrolling interests |
|
| (354 | ) |
|
| (825 | ) |
Net cash provided by (used in) financing activities |
|
| (24,220 | ) |
|
| 244,079 |
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 150,465 |
|
|
| 91,070 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
|
| 121,722 |
|
|
| 59,058 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 272,187 |
|
| $ | 150,128 |
|
Reconciliation from condensed consolidated statements of cash flows to condensed consolidated balance sheets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 143,874 |
|
| $ | 123,388 |
|
Restricted cash (1): |
|
|
|
|
|
|
|
|
Restricted cash |
|
| 100,626 |
|
|
| 249 |
|
Mortgage escrows |
|
| 27,687 |
|
|
| 26,491 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 272,187 |
|
| $ | 150,128 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION |
|
|
|
|
|
|
|
|
Cash paid for interest, net of amounts capitalized |
| $ | 26,755 |
|
| $ | 51,703 |
|
Cash paid for reorganization items |
| $ | 35,602 |
|
| $ | — |
|
(1) | Included in intangible lease assets and other assets in the condensed consolidated balance sheets. |
CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 118,444 | $ | 115,659 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 225,461 | 220,505 | |||||
Net amortization of deferred financing costs, debt premiums and discounts | 2,904 | 2,019 | |||||
Net amortization of intangible lease assets and liabilities | (1,235 | ) | (204 | ) | |||
Gain on sales of real estate assets | (86,904 | ) | (14,503 | ) | |||
Loss on investment | 6,197 | — | |||||
Write-off of development projects | 5,151 | 44 | |||||
Share-based compensation expense | 4,569 | 4,011 | |||||
Loss on impairment | 71,401 | 116,736 | |||||
Gain on extinguishment of debt | (30,927 | ) | — | ||||
Equity in earnings of unconsolidated affiliates | (16,404 | ) | (107,217 | ) | |||
Distributions of earnings from unconsolidated affiliates | 16,361 | 12,337 | |||||
Provision for doubtful accounts | 3,353 | 3,377 | |||||
Change in deferred tax accounts | 2,911 | (1,780 | ) | ||||
Changes in: | |||||||
Tenant and other receivables | (4,893 | ) | (7,759 | ) | |||
Other assets | (12,368 | ) | (10,028 | ) | |||
Accounts payable and accrued liabilities | 32,929 | 6,428 | |||||
Net cash provided by operating activities | 336,950 | 339,625 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Additions to real estate assets | (149,302 | ) | (165,091 | ) | |||
Acquisitions of real estate assets | (79,799 | ) | — | ||||
(Additions) reductions to restricted cash | 1,261 | (10,020 | ) | ||||
Proceeds from sales of real estate assets | 201,291 | 125,606 | |||||
Proceeds from disposal of investment | 9,000 | — | |||||
Additions to mortgage and other notes receivable | (4,118 | ) | (3,259 | ) | |||
Payments received on mortgage and other notes receivable | 3,443 | 790 | |||||
Additional investments in and advances to unconsolidated affiliates | (17,199 | ) | (21,805 | ) | |||
Distributions in excess of equity in earnings of unconsolidated affiliates | 15,743 | 74,242 | |||||
Changes in other assets | (14,471 | ) | (4,786 | ) | |||
Net cash used in investing activities | (34,151 | ) | (4,323 | ) |
CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued) | |||||||
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from mortgage and other indebtedness | $ | 1,097,006 | $ | 614,671 | |||
Principal payments on mortgage and other indebtedness | (1,151,494 | ) | (755,579 | ) | |||
Additions to deferred financing costs | (5,003 | ) | (1,169 | ) | |||
Prepayment fees on extinguishment of debt | (8,871 | ) | — | ||||
Proceeds from issuances of common stock | 150 | 131 | |||||
Purchases of noncontrolling interests in the Operating Partnership | (593 | ) | (11,754 | ) | |||
Contributions from noncontrolling interests | 263 | 11,085 | |||||
Payment of tax withholdings for restricted stock awards | (322 | ) | — | ||||
Distributions to noncontrolling interests | (51,925 | ) | (35,742 | ) | |||
Dividends paid to holders of preferred stock | (33,669 | ) | (33,669 | ) | |||
Dividends paid to common shareholders | (135,941 | ) | (135,700 | ) | |||
Net cash used in financing activities | (290,399 | ) | (347,726 | ) | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 12,400 | (12,424 | ) | ||||
CASH AND CASH EQUIVALENTS, beginning of period | 18,951 | 36,892 | |||||
CASH AND CASH EQUIVALENTS, end of period | $ | 31,351 | $ | 24,468 | |||
SUPPLEMENTAL INFORMATION: | |||||||
Cash paid for interest, net of amounts capitalized | $ | 150,816 | $ | 150,512 |
The accompanying notes are an integral part of these condensed consolidated statements.
(Debtors-In-Possession)
Condensed Consolidated Balance Sheets
(In thousands, except unit data)
(Unaudited)
ASSETS (1) |
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Real estate assets: |
|
|
|
|
|
|
|
|
Land |
| $ | 662,045 |
|
| $ | 695,711 |
|
Buildings and improvements |
|
| 4,978,546 |
|
|
| 5,135,074 |
|
|
|
| 5,640,591 |
|
|
| 5,830,785 |
|
Accumulated depreciation |
|
| (2,270,736 | ) |
|
| (2,241,421 | ) |
|
|
| 3,369,855 |
|
|
| 3,589,364 |
|
Developments in progress |
|
| 15,150 |
|
|
| 28,327 |
|
Net investment in real estate assets |
|
| 3,385,005 |
|
|
| 3,617,691 |
|
Cash and cash equivalents |
|
| 143,866 |
|
|
| 61,772 |
|
Available-for-sale securities - at fair value (amortized cost of $183,496 and $233,053 as of June 30, 2021 and December 31, 2020, respectively) |
|
| 183,490 |
|
|
| 233,071 |
|
Receivables: |
|
|
|
|
|
|
|
|
Tenant |
|
| 68,514 |
|
|
| 103,655 |
|
Other |
|
| 2,679 |
|
|
| 5,910 |
|
Mortgage and other notes receivable |
|
| 1,912 |
|
|
| 2,337 |
|
Investments in unconsolidated affiliates |
|
| 261,609 |
|
|
| 279,884 |
|
Intangible lease assets and other assets |
|
| 217,482 |
|
|
| 139,772 |
|
|
| $ | 4,264,557 |
|
| $ | 4,444,092 |
|
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL |
|
|
|
|
|
|
|
|
Mortgage and other indebtedness, net |
| $ | 987,592 |
|
| $ | 1,184,831 |
|
Accounts payable and accrued liabilities |
|
| 188,439 |
|
|
| 173,458 |
|
Total liabilities not subject to compromise (1) |
|
| 1,176,031 |
|
|
| 1,358,289 |
|
|
|
|
|
|
|
|
|
|
Liabilities subject to compromise |
|
| 2,591,706 |
|
|
| 2,551,490 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 9 and Note 12) |
|
|
|
|
|
|
|
|
Redeemable common units |
|
| (543 | ) |
|
| (265 | ) |
Partners' capital: |
|
|
|
|
|
|
|
|
Preferred units |
|
| 565,212 |
|
|
| 565,212 |
|
Common units: |
|
|
|
|
|
|
|
|
General partner |
|
| (697 | ) |
|
| (339 | ) |
Limited partners |
|
| (68,582 | ) |
|
| (33,371 | ) |
Accumulated other comprehensive income (loss) |
|
| (6 | ) |
|
| 18 |
|
Total partners' capital |
|
| 495,927 |
|
|
| 531,520 |
|
Noncontrolling interests |
|
| 1,436 |
|
|
| 3,058 |
|
Total capital |
|
| 497,363 |
|
|
| 534,578 |
|
|
| $ | 4,264,557 |
|
| $ | 4,444,092 |
|
ASSETS (1) | September 30, 2017 | December 31, 2016 | |||||
Real estate assets: | |||||||
Land | $ | 811,742 | $ | 820,979 | |||
Buildings and improvements | 6,668,312 | 6,942,452 | |||||
7,480,054 | 7,763,431 | ||||||
Accumulated depreciation | (2,411,560 | ) | (2,427,108 | ) | |||
5,068,494 | 5,336,323 | ||||||
Held for sale | — | 5,861 | |||||
Developments in progress | 100,106 | 178,355 | |||||
Net investment in real estate assets | 5,168,600 | 5,520,539 | |||||
Cash and cash equivalents | 31,350 | 18,943 | |||||
Receivables: | |||||||
Tenant, net of allowance for doubtful accounts of $2,075 and $1,910 in 2017 and 2016, respectively | 86,947 | 94,676 | |||||
Other, net of allowance for doubtful accounts of $838 in 2017 and 2016 | 5,505 | 6,179 | |||||
Mortgage and other notes receivable | 19,279 | 16,803 | |||||
Investments in unconsolidated affiliates | 252,195 | 267,405 | |||||
Intangible lease assets and other assets | 180,241 | 180,452 | |||||
$ | 5,744,117 | $ | 6,104,997 | ||||
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL | |||||||
Mortgage and other indebtedness, net | $ | 4,216,178 | $ | 4,465,294 | |||
Accounts payable and accrued liabilities | 270,117 | 280,528 | |||||
Total liabilities (1) | 4,486,295 | 4,745,822 | |||||
Commitments and contingencies (Note 6 and Note 12) | |||||||
Redeemable common units | 13,076 | 17,996 | |||||
Partners' capital: | |||||||
Preferred units | 565,212 | 565,212 | |||||
Common units: | |||||||
General partner | 6,806 | 7,781 | |||||
Limited partners | 662,102 | 756,083 | |||||
Total partners' capital | 1,234,120 | 1,329,076 | |||||
Noncontrolling interests | 10,626 | 12,103 | |||||
Total capital | 1,244,746 | 1,341,179 | |||||
$ | 5,744,117 | $ | 6,104,997 |
(1) | |
As of |
The accompanying notes are an integral part of these condensed consolidated statements.
6
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Statements of Operations
(In thousands, except per unit data)
(Unaudited)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
| $ | 131,316 |
|
| $ | 120,222 |
|
| $ | 259,491 |
|
| $ | 281,395 |
|
Management, development and leasing fees |
|
| 1,449 |
|
|
| 1,055 |
|
|
| 3,108 |
|
|
| 3,147 |
|
Other |
|
| 3,796 |
|
|
| 2,934 |
|
|
| 7,146 |
|
|
| 7,243 |
|
Total revenues |
|
| 136,561 |
|
|
| 124,211 |
|
|
| 269,745 |
|
|
| 291,785 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating |
|
| (19,623 | ) |
|
| (16,906 | ) |
|
| (41,425 | ) |
|
| (42,615 | ) |
Depreciation and amortization |
|
| (47,499 | ) |
|
| (52,663 | ) |
|
| (95,611 | ) |
|
| (108,565 | ) |
Real estate taxes |
|
| (15,110 | ) |
|
| (17,837 | ) |
|
| (31,661 | ) |
|
| (36,285 | ) |
Maintenance and repairs |
|
| (8,784 | ) |
|
| (6,042 | ) |
|
| (19,565 | ) |
|
| (17,250 | ) |
General and administrative |
|
| (11,269 | ) |
|
| (18,727 | ) |
|
| (23,881 | ) |
|
| (36,563 | ) |
Loss on impairment |
|
| — |
|
|
| (13,274 | ) |
|
| (57,182 | ) |
|
| (146,918 | ) |
Litigation settlement |
|
| (57 | ) |
|
| — |
|
|
| 801 |
|
|
| — |
|
Other |
|
| (287 | ) |
|
| (242 | ) |
|
| (287 | ) |
|
| (400 | ) |
Total expenses |
|
| (102,629 | ) |
|
| (125,691 | ) |
|
| (268,811 | ) |
|
| (388,596 | ) |
OTHER INCOME (EXPENSES): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
| 752 |
|
|
| 891 |
|
|
| 1,528 |
|
|
| 3,288 |
|
Interest expense (unrecognized contractual interest expense was $45,279 and $90,043 for the three and six months ended June 30, 2021, respectively) |
|
| (22,299 | ) |
|
| (52,631 | ) |
|
| (46,429 | ) |
|
| (99,623 | ) |
Gain on deconsolidation |
|
| — |
|
|
| — |
|
|
| 55,131 |
|
|
| — |
|
Gain (loss) on sales of real estate assets |
|
| 107 |
|
|
| 2,623 |
|
|
| (192 | ) |
|
| 2,763 |
|
Reorganization items |
|
| (17,073 | ) |
|
| — |
|
|
| (40,006 | ) |
|
| — |
|
Income tax provision |
|
| (705 | ) |
|
| (16,117 | ) |
|
| (1,456 | ) |
|
| (16,643 | ) |
Equity in losses of unconsolidated affiliates |
|
| (4,275 | ) |
|
| (6,079 | ) |
|
| (7,351 | ) |
|
| (5,061 | ) |
Total other expenses |
|
| (43,493 | ) |
|
| (71,313 | ) |
|
| (38,775 | ) |
|
| (115,276 | ) |
Net loss |
|
| (9,561 | ) |
|
| (72,793 | ) |
|
| (37,841 | ) |
|
| (212,087 | ) |
Net loss attributable to noncontrolling interests |
|
| 449 |
|
|
| 487 |
|
|
| 1,268 |
|
|
| 694 |
|
Net loss attributable to the Operating Partnership |
|
| (9,112 | ) |
|
| (72,306 | ) |
|
| (36,573 | ) |
|
| (211,393 | ) |
Distributions to preferred unitholders undeclared |
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (22,446 | ) |
Net loss attributable to common unitholders |
| $ | (9,112 | ) |
| $ | (83,529 | ) |
| $ | (36,573 | ) |
| $ | (233,839 | ) |
Basic and diluted per unit data attributable to common unitholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common unitholders |
| $ | (0.05 | ) |
| $ | (0.41 | ) |
| $ | (0.18 | ) |
| $ | (1.16 | ) |
Weighted-average common and potential dilutive common units outstanding |
|
| 201,576 |
|
|
| 201,702 |
|
|
| 201,601 |
|
|
| 201,480 |
|
The accompanying notes are an integral part of these condensed consolidated statements.
7
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Statements of Comprehensive Loss
(In thousands, except per unit data)
(Unaudited)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net loss |
| $ | (9,561 | ) |
| $ | (72,793 | ) |
| $ | (37,841 | ) |
| $ | (212,087 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on available-for-sale securities |
|
| (27 | ) |
|
| (64 | ) |
|
| (24 | ) |
|
| (42 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
| (9,588 | ) |
|
| (72,857 | ) |
|
| (37,865 | ) |
|
| (212,129 | ) |
Comprehensive loss attributable to noncontrolling interests |
|
| 449 |
|
|
| 487 |
|
|
| 1,268 |
|
|
| 694 |
|
Comprehensive loss attributable to the Operating Partnership: |
| $ | (9,139 | ) |
| $ | (72,370 | ) |
| $ | (36,597 | ) |
| $ | (211,435 | ) |
CBL & Associates Limited Partnership Condensed Consolidated Statements of Operations (In thousands, except per unit data) (Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
REVENUES: | |||||||||||||||
Minimum rents | $ | 150,836 | $ | 164,444 | $ | 468,195 | $ | 502,289 | |||||||
Percentage rents | 3,000 | 3,225 | 7,127 | 10,590 | |||||||||||
Other rents | 3,790 | 3,866 | 11,171 | 13,747 | |||||||||||
Tenant reimbursements | 63,055 | 69,489 | 192,577 | 212,951 | |||||||||||
Management, development and leasing fees | 2,718 | 4,177 | 8,747 | 10,825 | |||||||||||
Other | 1,251 | 6,520 | 4,079 | 19,362 | |||||||||||
Total revenues | 224,650 | 251,721 | 691,896 | 769,764 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||
Property operating | 31,295 | 35,116 | 96,250 | 104,804 | |||||||||||
Depreciation and amortization | 71,732 | 71,794 | 225,461 | 220,505 | |||||||||||
Real estate taxes | 21,573 | 22,492 | 62,343 | 68,354 | |||||||||||
Maintenance and repairs | 11,254 | 13,236 | 36,322 | 39,574 | |||||||||||
General and administrative | 13,568 | 13,222 | 45,402 | 46,865 | |||||||||||
Loss on impairment | 24,935 | 53,558 | 71,401 | 116,736 | |||||||||||
Other | 132 | 5,576 | 5,151 | 20,313 | |||||||||||
Total operating expenses | 174,489 | 214,994 | 542,330 | 617,151 | |||||||||||
Income from operations | 50,161 | 36,727 | 149,566 | 152,613 | |||||||||||
Interest and other income (loss) | (200 | ) | 451 | 1,235 | 1,062 | ||||||||||
Interest expense | (53,913 | ) | (54,292 | ) | (165,179 | ) | (162,710 | ) | |||||||
Gain on extinguishment of debt | 6,452 | (6 | ) | 30,927 | — | ||||||||||
Loss on investment | (354 | ) | — | (6,197 | ) | — | |||||||||
Income tax benefit | 1,064 | 2,386 | 4,784 | 2,974 | |||||||||||
Equity in earnings of unconsolidated affiliates | 4,706 | 10,478 | 16,404 | 107,217 | |||||||||||
Income (loss) from continuing operations before gain on sales of real estate assets | 7,916 | (4,256 | ) | 31,540 | 101,156 | ||||||||||
Gain on sales of real estate assets | 1,383 | 4,926 | 86,904 | 14,503 | |||||||||||
Net income | 9,299 | 670 | 118,444 | 115,659 | |||||||||||
Net (income) loss attributable to noncontrolling interests | (415 | ) | (983 | ) | (25,266 | ) | 449 | ||||||||
Net income (loss) attributable to the Operating Partnership | 8,884 | (313 | ) | 93,178 | 116,108 | ||||||||||
Distributions to preferred unitholders | (11,223 | ) | (11,223 | ) | (33,669 | ) | (33,669 | ) | |||||||
Net income (loss) attributable to common unitholders | $ | (2,339 | ) | $ | (11,536 | ) | $ | 59,509 | $ | 82,439 | |||||
Basic and diluted per unit data attributable to common unitholders: | |||||||||||||||
Net income (loss) attributable to common unitholders | $ | (0.01 | ) | $ | (0.06 | ) | $ | 0.30 | $ | 0.41 | |||||
Weighted-average common and potential dilutive common units outstanding | 199,321 | 200,004 | 199,325 | 199,992 | |||||||||||
Distributions declared per common unit | $ | 0.273 | $ | 0.273 | $ | 0.819 | $ | 0.819 |
The accompanying notes are an integral part of these condensed consolidated statements.
(Debtors-In-Possession)
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
|
|
|
|
|
| Number of |
|
|
|
|
|
| Common Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Redeemable Common Units |
|
| Preferred Units |
|
| Common Units |
|
| Preferred Units |
|
| General Partner |
|
| Limited Partners |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Total Partner's Capital |
|
| Noncontrolling Interests |
|
| Total Capital |
| ||||||||||
Balance, December 31, 2019 |
| $ | 2,160 |
|
|
| 25,050 |
|
|
| 200,189 |
|
| $ | 565,212 |
|
| $ | 2,765 |
|
| $ | 270,216 |
|
| $ | — |
|
| $ | 838,193 |
|
| $ | 23,961 |
|
| $ | 862,154 |
|
Net loss |
|
| (1,158 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,406 | ) |
|
| (136,523 | ) |
|
| — |
|
|
| (137,929 | ) |
|
| (207 | ) |
|
| (138,136 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22 |
|
|
| 22 |
|
|
| — |
|
|
| 22 |
|
Issuances of common units |
|
| — |
|
|
| — |
|
|
| 1,633 |
|
|
| — |
|
|
| — |
|
|
| 536 |
|
|
| — |
|
|
| 536 |
|
|
| — |
|
|
| 536 |
|
Cancellation of restricted common units |
|
| — |
|
|
| — |
|
|
| (116 | ) |
|
| — |
|
|
| — |
|
|
| (97 | ) |
|
| — |
|
|
| (97 | ) |
|
| — |
|
|
| (97 | ) |
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| 386 |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| 390 |
|
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 18 |
|
|
| 615 |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| 633 |
|
Allocation of partners' capital |
|
| 60 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (64 | ) |
|
| — |
|
|
| (65 | ) |
|
| — |
|
|
| (65 | ) |
Adjustment to record redeemable interests at redemption value |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8 | ) |
|
| 8 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (731 | ) |
|
| (731 | ) |
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 668 |
|
|
| 668 |
|
Balance, March 31, 2020 |
|
| 1,062 |
|
|
| 25,050 |
|
|
| 201,706 |
|
|
| 565,212 |
|
|
| 1,372 |
|
|
| 135,077 |
|
|
| 22 |
|
|
| 701,683 |
|
|
| 23,691 |
|
|
| 725,374 |
|
Net loss |
|
| (654 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (728 | ) |
|
| (70,924 | ) |
|
| — |
|
|
| (71,652 | ) |
|
| (487 | ) |
|
| (72,139 | ) |
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (64 | ) |
|
| (64 | ) |
|
| — |
|
|
| (64 | ) |
Issuances of common units |
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
Cancellation of restricted common units |
|
| — |
|
|
| — |
|
|
| (21 | ) |
|
| — |
|
|
| — |
|
|
| (14 | ) |
|
| — |
|
|
| (14 | ) |
|
| — |
|
|
| (14 | ) |
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| 375 |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| 379 |
|
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11 |
|
|
| 373 |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| 384 |
|
Allocation of partners' capital |
|
| 117 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (117 | ) |
|
| — |
|
|
| (118 | ) |
|
| — |
|
|
| (118 | ) |
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
|
| 25 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (94 | ) |
|
| (94 | ) |
Balance, June 30, 2020 |
| $ | 525 |
|
|
| 25,050 |
|
|
| 201,691 |
|
| $ | 565,212 |
|
| $ | 658 |
|
| $ | 64,772 |
|
| $ | (42 | ) |
| $ | 630,600 |
|
| $ | 23,135 |
|
| $ | 653,735 |
|
9
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Statements of Capital
(In thousands)
(Unaudited)
|
|
|
|
|
| Number of |
|
|
|
|
|
| Common Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Redeemable Common Units |
|
| Preferred Units |
|
| Common Units |
|
| Preferred Units |
|
| General Partner |
|
| Limited Partners |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Total Partner's Capital |
|
| Noncontrolling Interests |
|
| Total Capital |
| ||||||||||
Balance, December 31, 2020 |
| $ | (265 | ) |
|
| 25,050 |
|
|
| 201,688 |
|
| $ | 565,212 |
|
| $ | (339 | ) |
| $ | (33,371 | ) |
| $ | 18 |
|
| $ | 531,520 |
|
| $ | 3,058 |
|
| $ | 534,578 |
|
Net loss |
|
| (213 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (277 | ) |
|
| (26,971 | ) |
|
| — |
|
|
| (27,248 | ) |
|
| (819 | ) |
|
| (28,067 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| 3 |
|
|
| — |
|
|
| 3 |
|
Cancellation of restricted common units |
|
| — |
|
|
| — |
|
|
| (111 | ) |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| (1 | ) |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| 300 |
|
|
| — |
|
|
| 303 |
|
|
| — |
|
|
| 303 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11 | ) |
|
| (11 | ) |
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| 87 |
|
|
| — |
|
|
| 91 |
|
|
| — |
|
|
| 91 |
|
Balance, March 31, 2021 |
|
| (478 | ) |
|
| 25,050 |
|
|
| 201,577 |
|
|
| 565,212 |
|
|
| (609 | ) |
|
| (59,956 | ) |
|
| 21 |
|
|
| 504,668 |
|
|
| 2,228 |
|
|
| 506,896 |
|
Net loss |
|
| (70 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (92 | ) |
|
| (8,950 | ) |
|
| — |
|
|
| (9,042 | ) |
|
| (449 | ) |
|
| (9,491 | ) |
Other comprehensive loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (27 | ) |
|
| (27 | ) |
|
| — |
|
|
| (27 | ) |
Cancellation of restricted common units |
|
| — |
|
|
| — |
|
|
| (14 | ) |
|
| — |
|
|
| — |
|
|
| (17 | ) |
|
| — |
|
|
| (17 | ) |
|
| — |
|
|
| (17 | ) |
Allocation of partners' capital |
|
| 5 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (7 | ) |
|
| — |
|
|
| (7 | ) |
|
| — |
|
|
| (7 | ) |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| 254 |
|
|
| — |
|
|
| 257 |
|
|
| — |
|
|
| 257 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (343 | ) |
|
| (343 | ) |
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| 94 |
|
|
| — |
|
|
| 95 |
|
|
| — |
|
|
| 95 |
|
Balance, June 30, 2021 |
| $ | (543 | ) |
|
| 25,050 |
|
|
| 201,563 |
|
| $ | 565,212 |
|
| $ | (697 | ) |
| $ | (68,582 | ) |
| $ | (6 | ) |
| $ | 495,927 |
|
| $ | 1,436 |
|
| $ | 497,363 |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 9,299 | $ | 670 | $ | 118,444 | $ | 115,659 | |||||||
Other comprehensive income: | |||||||||||||||
Unrealized gain on hedging instruments | — | — | — | 877 | |||||||||||
Reclassification of hedging effect on earnings | — | — | — | (443 | ) | ||||||||||
Total other comprehensive income | — | — | — | 434 | |||||||||||
Comprehensive income | 9,299 | 670 | 118,444 | 116,093 | |||||||||||
Comprehensive (income) loss attributable to noncontrolling interests | (415 | ) | (983 | ) | (25,266 | ) | 449 | ||||||||
Comprehensive income (loss) of the Operating Partnership | $ | 8,884 | $ | (313 | ) | $ | 93,178 | $ | 116,542 |
The accompanying notes are an integral part of these condensed consolidated statements.
(Debtors-In-Possession)
Condensed Consolidated Statements of Capital
(In thousands)
(Unaudited)
|
| Six Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
| $ | (37,841 | ) |
| $ | (212,087 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 95,611 |
|
|
| 108,565 |
|
Net amortization of deferred financing costs, premiums on available-for-sale securities and debt premiums and discounts |
|
| 1,496 |
|
|
| 4,595 |
|
Net amortization of intangible lease assets and liabilities |
|
| 385 |
|
|
| (753 | ) |
(Gain) loss on sales of real estate assets |
|
| 192 |
|
|
| (2,763 | ) |
Gain on insurance proceeds |
|
| — |
|
|
| (511 | ) |
Gain on deconsolidation |
|
| (55,131 | ) |
|
| — |
|
Write-off of development projects |
|
| 287 |
|
|
| 400 |
|
Share-based compensation expense |
|
| 739 |
|
|
| 2,293 |
|
Loss on impairment |
|
| 57,182 |
|
|
| 146,918 |
|
Equity in losses of unconsolidated affiliates |
|
| 7,351 |
|
|
| 5,061 |
|
Distributions of earnings from unconsolidated affiliates |
|
| 6,676 |
|
|
| 3,797 |
|
Change in estimate of uncollectable revenues |
|
| 15,525 |
|
|
| 41,955 |
|
Change in deferred tax accounts |
|
| — |
|
|
| 15,596 |
|
Changes in: |
|
|
|
|
|
|
|
|
Tenant and other receivables |
|
| 19,352 |
|
|
| (87,298 | ) |
Other assets |
|
| (2,111 | ) |
|
| 753 |
|
Accounts payable and accrued liabilities |
|
| 20,785 |
|
|
| 11,845 |
|
Net cash provided by operating activities |
|
| 130,498 |
|
|
| 38,366 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Additions to real estate assets |
|
| (13,836 | ) |
|
| (36,413 | ) |
Proceeds from sales of real estate assets |
|
| 5,612 |
|
|
| 3,579 |
|
Purchases of available-for-sale securities |
|
| (319,887 | ) |
|
| (153,193 | ) |
Redemptions of available-for-sale securities |
|
| 368,380 |
|
|
| — |
|
Proceeds from insurance |
|
| — |
|
|
| 600 |
|
Payments received on mortgage and other notes receivable |
|
| 425 |
|
|
| 703 |
|
Additional investments in and advances to unconsolidated affiliates |
|
| 124 |
|
|
| (10,990 | ) |
Distributions in excess of equity in earnings of unconsolidated affiliates |
|
| 4,790 |
|
|
| 5,255 |
|
Changes in other assets |
|
| (1,420 | ) |
|
| (920 | ) |
Net cash provided by (used in) investing activities |
|
| 44,188 |
|
|
| (191,379 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from mortgage and other indebtedness |
|
| — |
|
|
| 365,000 |
|
Principal payments on mortgage and other indebtedness |
|
| (23,854 | ) |
|
| (120,467 | ) |
Additions to deferred financing costs |
|
| (1 | ) |
|
| (240 | ) |
Proceeds from issuances of common units |
|
| — |
|
|
| 5 |
|
Contributions from noncontrolling interests |
|
| — |
|
|
| 693 |
|
Payment of tax withholdings for restricted stock awards |
|
| (11 | ) |
|
| (87 | ) |
Distributions to noncontrolling interests |
|
| (354 | ) |
|
| (825 | ) |
Net cash provided by (used in) financing activities |
|
| (24,220 | ) |
|
| 244,079 |
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 150,466 |
|
|
| 91,066 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
|
| 121,713 |
|
|
| 59,054 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 272,179 |
|
| $ | 150,120 |
|
Reconciliation from condensed consolidated statements of cash flows to condensed consolidated balance sheets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 143,866 |
|
| $ | 123,380 |
|
Restricted cash (1): |
|
|
|
|
|
|
|
|
Restricted cash |
|
| 100,626 |
|
|
| 249 |
|
Mortgage escrows |
|
| 27,687 |
|
|
| 26,491 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 272,179 |
|
| $ | 150,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for interest, net of amounts capitalized |
| $ | 26,755 |
|
| $ | 51,703 |
|
Cash paid for reorganization items |
| $ | 35,602 |
|
| $ | — |
|
(1) | Included in intangible lease assets and other assets in the condensed consolidated balance sheets. |
Redeemable Interests | Number of | Common Units | |||||||||||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interests | Redeemable Common Units | Total Redeemable Interests | Preferred Units | Common Units | Preferred Units | General Partner | Limited Partners | Accumulated Other Comprehensive Income (Loss) | Total Partners' Capital | Noncontrolling Interests | Total Capital | ||||||||||||||||||||||||||||||||||
Balance, January 1, 2016 | $ | 5,586 | $ | 19,744 | $ | 25,330 | 25,050 | 199,748 | $ | 565,212 | $ | 8,435 | $ | 822,383 | $ | (868 | ) | $ | 1,395,162 | $ | 4,876 | $ | 1,400,038 | ||||||||||||||||||||||
Net income (loss) | (2,763 | ) | 644 | (2,119 | ) | — | — | 33,669 | 839 | 80,956 | — | 115,464 | 2,314 | 117,778 | |||||||||||||||||||||||||||||||
Other comprehensive income | — | 3 | 3 | — | — | — | — | — | 431 | 431 | — | 431 | |||||||||||||||||||||||||||||||||
Distributions declared - common units | — | (3,429 | ) | (3,429 | ) | — | — | — | (1,600 | ) | (158,422 | ) | — | (160,022 | ) | — | (160,022 | ) | |||||||||||||||||||||||||||
Distributions declared - preferred units | — | — | — | — | — | (33,669 | ) | — | — | — | (33,669 | ) | — | (33,669 | ) | ||||||||||||||||||||||||||||||
Issuances of common units | — | — | — | — | 331 | — | — | 432 | — | 432 | — | 432 | |||||||||||||||||||||||||||||||||
Redemption of common units | — | — | — | — | (965 | ) | — | — | (11,754 | ) | — | (11,754 | ) | — | (11,754 | ) | |||||||||||||||||||||||||||||
Cancellation of restricted common stock | — | — | — | — | (31 | ) | — | — | (226 | ) | — | (226 | ) | — | (226 | ) | |||||||||||||||||||||||||||||
Performance stock units | — | — | — | — | — | — | 8 | 767 | — | 775 | — | 775 | |||||||||||||||||||||||||||||||||
Amortization of deferred compensation | — | — | — | — | — | — | 29 | 2,828 | — | 2,857 | — | 2,857 | |||||||||||||||||||||||||||||||||
Allocation of partners' capital | — | 1,686 | 1,686 | — | — | — | (148 | ) | (2,083 | ) | 437 | (1,794 | ) | — | (1,794 | ) | |||||||||||||||||||||||||||||
Adjustment to record redeemable interests at redemption value | 2,729 | 888 | 3,617 | — | — | — | (37 | ) | (3,580 | ) | — | (3,617 | ) | — | (3,617 | ) | |||||||||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | — | — | — | 11,240 | 11,240 | |||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | (2,346 | ) | — | (2,346 | ) | — | — | — | — | — | — | — | (5,470 | ) | (5,470 | ) | |||||||||||||||||||||||||||||
Balance, September 30, 2016 | $ | 3,206 | $ | 19,536 | $ | 22,742 | 25,050 | 199,083 | $ | 565,212 | $ | 7,526 | $ | 731,301 | $ | — | $ | 1,304,039 | $ | 12,960 | $ | 1,316,999 |
Number of | Common Units | ||||||||||||||||||||||||||||||||
Redeemable Common Units | Preferred Units | Common Units | Preferred Units | General Partner | Limited Partners | Total Partners' Capital | Noncontrolling Interests | Total Capital | |||||||||||||||||||||||||
Balance, January 1, 2017 | $ | 17,996 | 25,050 | 199,085 | $ | 565,212 | $ | 7,781 | $ | 756,083 | $ | 1,329,076 | $ | 12,103 | $ | 1,341,179 | |||||||||||||||||
Net income | 481 | — | — | 33,669 | 607 | 58,421 | 92,697 | 25,266 | 117,963 | ||||||||||||||||||||||||
Distributions declared - common units | (3,429 | ) | — | — | — | (1,600 | ) | (158,124 | ) | (159,724 | ) | — | (159,724 | ) | |||||||||||||||||||
Distributions declared - preferred units | — | — | — | (33,669 | ) | — | — | (33,669 | ) | — | (33,669 | ) | |||||||||||||||||||||
Issuances of common units | — | — | 342 | — | — | 474 | 474 | — | 474 | ||||||||||||||||||||||||
Redemptions of common units | — | — | (73 | ) | — | — | (593 | ) | (593 | ) | — | (593 | ) | ||||||||||||||||||||
Cancellation of restricted common stock | — | — | (38 | ) | — | — | (327 | ) | (327 | ) | — | (327 | ) | ||||||||||||||||||||
Performance stock units | — | — | — | — | 11 | 1,104 | 1,115 | — | 1,115 | ||||||||||||||||||||||||
Amortization of deferred compensation | — | — | — | — | 32 | 3,103 | 3,135 | — | 3,135 | ||||||||||||||||||||||||
Allocation of partners' capital | 2,224 | — | — | — | (68 | ) | (2,191 | ) | (2,259 | ) | — | (2,259 | ) | ||||||||||||||||||||
Adjustment to record redeemable interests at redemption value | (4,196 | ) | — | — | — | 43 | 4,152 | 4,195 | — | 4,195 | |||||||||||||||||||||||
Deconsolidation of investment | — | — | — | — | — | — | — | (2,232 | ) | (2,232 | ) | ||||||||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | — | — | 263 | 263 | ||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | (24,774 | ) | (24,774 | ) | ||||||||||||||||||||||
Balance, September 30, 2017 | $ | 13,076 | 25,050 | 199,316 | $ | 565,212 | $ | 6,806 | $ | 662,102 | $ | 1,234,120 | $ | 10,626 | $ | 1,244,746 |
The accompanying notes are an integral part of these condensed consolidated statements.
CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 118,444 | $ | 115,659 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 225,461 | 220,505 | |||||
Net amortization of deferred financing costs, debt premiums and discounts | 2,904 | 2,019 | |||||
Net amortization of intangible lease assets and liabilities | (1,235 | ) | (204 | ) | |||
Gain on sales of real estate assets | (86,904 | ) | (14,503 | ) | |||
Loss on investment | 6,197 | — | |||||
Write-off of development projects | 5,151 | 44 | |||||
Share-based compensation expense | 4,569 | 4,011 | |||||
Loss on impairment | 71,401 | 116,736 | |||||
Gain on extinguishment of debt | (30,927 | ) | — | ||||
Equity in earnings of unconsolidated affiliates | (16,404 | ) | (107,217 | ) | |||
Distributions of earnings from unconsolidated affiliates | 16,362 | 12,366 | |||||
Provision for doubtful accounts | 3,353 | 3,377 | |||||
Change in deferred tax accounts | 2,911 | (1,780 | ) | ||||
Changes in: | |||||||
Tenant and other receivables | (4,893 | ) | (7,710 | ) | |||
Other assets | (12,368 | ) | (10,028 | ) | |||
Accounts payable and accrued liabilities | 32,935 | 6,349 | |||||
Net cash provided by operating activities | 336,957 | 339,624 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Additions to real estate assets | (149,302 | ) | (165,091 | ) | |||
Acquisition of real estate assets | (79,799 | ) | — | ||||
(Additions) reductions to restricted cash | 1,261 | (10,020 | ) | ||||
Proceeds from sales of real estate assets | 201,291 | 125,606 | |||||
Proceeds from disposal of investments | 9,000 | — | |||||
Additions to mortgage and other notes receivable | (4,118 | ) | (3,259 | ) | |||
Payments received on mortgage and other notes receivable | 3,443 | 790 | |||||
Additional investments in and advances to unconsolidated affiliates | (17,199 | ) | (21,805 | ) | |||
Distributions in excess of equity in earnings of unconsolidated affiliates | 15,743 | 74,242 | |||||
Changes in other assets | (14,471 | ) | (4,786 | ) | |||
Net cash used in investing activities | (34,151 | ) | (4,323 | ) |
CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) (Continued) | |||||||
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from mortgage and other indebtedness | $ | 1,097,006 | $ | 614,671 | |||
Principal payments on mortgage and other indebtedness | (1,151,494 | ) | (755,579 | ) | |||
Additions to deferred financing costs | (5,003 | ) | (1,169 | ) | |||
Prepayment fees on extinguishment of debt | (8,871 | ) | — | ||||
Proceeds from issuances of common units | 150 | 131 | |||||
Redemptions of common units | (593 | ) | (11,754 | ) | |||
Contributions from noncontrolling interests | 263 | 11,085 | |||||
Payment of tax withholdings for restricted stock awards | (322 | ) | — | ||||
Distributions to noncontrolling interests | (28,203 | ) | (11,246 | ) | |||
Distributions to preferred unitholders | (33,669 | ) | (33,669 | ) | |||
Distributions to common unitholders | (159,663 | ) | (160,196 | ) | |||
Net cash used in financing activities | (290,399 | ) | (347,726 | ) | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 12,407 | (12,425 | ) | ||||
CASH AND CASH EQUIVALENTS, beginning of period | 18,943 | 36,887 | |||||
CASH AND CASH EQUIVALENTS, end of period | $ | 31,350 | $ | 24,462 | |||
SUPPLEMENTAL INFORMATION: | |||||||
Cash paid for interest, net of amounts capitalized | $ | 150,816 | $ | 150,512 |
CBL & Associates Properties, Inc.
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Notes to Unaudited Condensed Consolidated Financial Statements
(Dollars in thousands, except per share and per unit data)
Note 1 – Organization and Basis of Presentation
Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries.
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 and mixed-use centers, outlet centers, associated centers, community centers and office properties. Its properties are located in 2624 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”), which is a variable interest entity ("VIE"). In accordance with the guidance in Accounting Standards Codification ("ASC") 810,
As of SeptemberJune 30, 2017,2021, the Operating Partnership owned interests in the following properties:
|
|
|
|
|
| All Other Properties |
|
|
|
|
| |||||||||
|
| Malls (1) |
|
| Associated Centers |
|
| Community Centers |
|
| Office Buildings and Other |
|
| Total |
| |||||
Consolidated Properties (2) |
|
| 49 |
|
|
| 20 |
|
|
| 1 |
|
|
| 4 |
|
|
| 74 |
|
Unconsolidated Properties (3) |
|
| 12 |
|
|
| 3 |
|
|
| 5 |
|
|
| 4 |
|
|
| 24 |
|
Total |
|
| 61 |
|
|
| 23 |
|
|
| 6 |
|
|
| 8 |
|
|
| 98 |
|
Malls (1) | Associated Centers | Community Centers | Office Buildings | Total | |||||
Consolidated properties | 60 | 20 | 4 | 5 | (2) | 89 | |||
Unconsolidated properties (3) | 8 | 3 | 5 | — | 16 | ||||
Total | 68 | 23 | 9 | 5 | 105 |
(1) | |
Category consists of regional malls, open-air centers and outlet centers (including one mixed-use center). |
(2) | |
CBL's |
(3) | |
The Operating Partnership accounts for these investments using the equity method because one or more of the other partners have substantive participating rights. |
The Malls and All Other Properties ("Associated Centers, Community Centers, Office Buildings and Other") are collectively referred to as the “Properties” and individually as a “Property.”
CBL is the 100% owner of two2 qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At SeptemberJune 30, 2017,2021, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 84.8%a 96.5% limited partner interest for a combined interest held by CBL of 85.8%97.5%.
Historically, the noncontrolling interest in the Operating Partnership ishas been held by CBL & Associates, Inc., its shareholders and affiliates and certain senior officers of the Company (collectively "CBL's Predecessor"), all of which 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, and by various third parties. At SeptemberJune 30, 2017,2021, CBL’s Predecessor no longer owned a 9.1%any limited partner interest and third parties owned a 5.1%2.5% limited partner interest in the Operating Partnership. CBL's Predecessor also owned 3.820.0 million shares of CBL’s common stock at SeptemberJune 30, 2017,2021, for a total combined effective interest of 11.0%10.0% in the Operating Partnership.
As used herein, the term "Company" includes CBL & Associates Properties, Inc. and its subsidiaries, including CBL & Associates Limited Partnership and its subsidiaries, unless the context indicates otherwise. The term "Operating Partnership" refers to CBL & Associates Limited Partnership and its subsidiaries.
The Operating Partnership conducts the Company’sCompany's property management and development activities through its wholly owned subsidiary, CBL & Associates Management, Inc. (the “Management Company”Company"), to comply with certain requirements of the Internal Revenue Code.
12
Bankruptcy Accounting
The condensed consolidated financial statements included herein have been prepared as if the Company were a going concern and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852 – Reorganizations (“ASC 852”). See Note 2 for additional details regarding the bankruptcy. As a result, the Company has segregated prepetition unsecured or under secured liabilities and obligations whose treatment and satisfaction are dependent on the outcome of the Chapter 11 proceedings and have classified these items as “Liabilities subject to compromise” on the Company’s condensed consolidated balance sheets. In addition, the Company has classified all expenses that were incurred as a result of the Chapter 11 proceedings since filing as “Reorganization items” in the Company’s condensed consolidated statements of operations. In addition to expenses, reorganization items can include realized gains or losses.
COVID-19
The COVID-19 pandemic has had, and likely will continue to have, repercussions across local, national and global economies and financial markets. COVID-19 has impacted all states where the Company’s tenants operate their businesses or where the Company’s properties are located and measures taken to prevent or remediate COVID-19, including “shelter-in place” or “stay-at-home” orders or other quarantine mandates issued by local, state or federal authorities, have had an adverse effect on its business and the businesses of its tenants. The full extent of the adverse impact on, among other things, the Company’s results of operations, liquidity (including its ability to access capital markets), the possibility of future impairments of long-lived assets or its investments in unconsolidated joint ventures, its compliance with debt covenants, its ability to renew and re-lease its leased space, the outlook for the retail environment, potential bankruptcies or other store closings and its ability to develop, acquire, dispose or lease properties, is unknown and will depend on future developments, which are highly uncertain and cannot be predicted. While the majority of the most restrictive mandates have been lifted, state and local governments and other authorities are in varying stages of lifting or modifying some of the measures used to mitigate or control the spread of the virus. Even though vaccines have started to be administered, the COVID-19 pandemic could worsen at any time, which could cause new or more restrictive measures to be implemented to prevent the spread of the virus. In fact, certain markets have implemented new restrictions as a result of break-through cases and the increased spread of variants of COVID-19, including the Delta variant. Tenants and customers have gradually adapted to current conditions with services such as curbside pickup and increased consumer risk-tolerance, but there is no guarantee that retail will return to levels seen prior to the pandemic. The Company has experienced, and expects to continue to experience, a material adverse impact on its revenues, results of operations, and cash flows throughout 2021. The situation is unpredictable and additional impacts to the business may arise that the Company is not aware of currently.
Note 2 - Chapter 11 Cases and Ability to Continue as a Going Concern
Voluntary Reorganization under Chapter 11
On August 18, 2020, the Company entered into a Restructuring Support Agreement, (the “Original RSA”) with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders of beneficial owners (the “Consenting Noteholders”) representing in excess of 62%, including joining noteholders pursuant to joinder agreements, of the aggregate principal amount of the $450,000 of senior unsecured notes issued by the Operating Partnership in November 2013 that bear interest at 5.25% and mature on December 1, 2023 (the “2023 Notes”), the $300,000 of senior unsecured notes issued by the Operating Partnership in October 2014 that bear interest at 4.60% and mature on October 15, 2024 (the “2024 Notes”) and the $625,000 of senior unsecured notes issued by the Operating Partnership in December 2016 and September 2017 that bear interest at 5.95% and mature on December 15, 2026 (the “2026 Notes” and, collectively with the 2023 Notes and 2024 Notes, the "Notes").
On October 28, 2020, the Operating Partnership was notified by the administrative agent and lenders that they elected to exercise their rights pursuant to the terms of the secured credit facility to (i) require that rents payable by tenants at the properties that are collateral to the secured credit facility be paid directly to the administrative agent and (ii) exercise all voting rights and other ownership rights in respect of all the equity interests in the subsidiaries of the Operating Partnership that are guarantors of the secured credit facility.
Beginning on November 1, 2020 (the “Commencement Date”), CBL and the Operating Partnership, together with certain of its direct and indirect subsidiaries (collectively, the “Debtors”), filed voluntary petitions (the “Chapter 11 Cases”) under chapter 11 of title 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of 1986,Texas (the “Bankruptcy Court”). The Debtors are authorized to continue to operate their businesses and manage their properties as debtors-in-possession pursuant to the Bankruptcy Code. The Debtors’ Chapter 11 Cases are being jointly administered for procedural purposes only under the caption In re CBL & Associates Properties, Inc., et al., Case No. 20-35226.
13
The filing of the Chapter 11 Cases constituted an event of default that results in the automatic acceleration of certain monetary obligations to be immediately due and payable with respect to the secured credit facility and the senior unsecured notes. On November 2, 2020, the Company filed an adversary proceeding in the Bankruptcy Court seeking among other things, a temporary restraining order (the “Order”) and for a preliminary injunction to enjoin, pending a determination of the parties’ rights, the administrative agent or any of its officers, agents, servants, attorneys and successors from taking any action to exercise any and all remedies under the terms of the secured credit facility or other agreements as a result of the events of default asserted by the administrative agent, or any other right or remedy that would otherwise accompany the occurrence of an event of default, including without limitation, any rights of acceleration under the terms of the secured credit facility, rights flowing from the notice of acceleration, rights exercised pursuant to the Notice of Exercise or any other rights or remedies properly exercisable solely upon an actual or determined event of default. On November 2, 2020, the Bankruptcy Court granted the Order, and the Bankruptcy Court took up the other pending claims during the adversarial proceeding, which has now been stayed pending the confirmation of the Company’s plan, discussed below.
Following the Commencement Date, the Bankruptcy Court entered certain interim and final orders facilitating the Debtors’ operational transition into Chapter 11. These orders authorized the Debtors to, among other things, pay certain prepetition employee expenses and benefits, use their existing cash management system, maintain and administer customer programs, pay certain critical service providers, honor insurance-related obligations, and pay certain prepetition taxes and related fees on a final basis.
After engaging in negotiations in a Bankruptcy Court-ordered mediation, on March 21, 2021 (the “Agreement Effective Date”), the Company entered into the First Amended and Restated Restructuring Support Agreement (the “Amended RSA”), with the Consenting Noteholders in excess of 69% (including joinders) of the aggregate principal amount of the Notes and certain lenders party to the Company’s secured credit facility who hold in the aggregate in excess of 96% (including joinders) of the aggregate outstanding principal amount of debt under the secured credit facility (the “Consenting Bank Lenders” and together with the Consenting Noteholders, the “Consenting Stakeholders”). The Amended RSA amends and restates the Original RSA and sets forth, subject to certain conditions, the commitments to and obligations of, on the one hand, the Company, and on the other hand, the Consenting Noteholders and Consenting Bank Lenders, in connection with the restructuring transactions (the “Restructuring Transactions”) set forth in the Amended RSA and the plan term sheet attached as Exhibit B to the Amended RSA (the “Plan Term Sheet”). The Amended RSA contemplates that the restructuring and recapitalization of the Debtors will occur through a joint plan of reorganization in the Chapter 11 Cases.
As required by the Amended RSA, (i) on April 15, 2021, the Company filed an amended Chapter 11 plan of reorganization and accompanying disclosure statement with the Bankruptcy Court; (ii) on May 18, 2021, the Company filed the second amended Chapter 11 plan of reorganization and accompanying disclosure statement, as further amended on May 19, 2021; and (iii) on May 25, 2021, the Company filed the third amended Chapter 11 plan of reorganization and, on August 9, 2021, filed technical modifications thereto (the “Internal Revenue Code”“Plan”) and accompanying disclosure statement (the “Disclosure Statement”), to implement the restructuring transactions. In addition, on May 26, 2021, the Bankruptcy Court entered an order that among other things, approved the Company’s Disclosure Statement and established dates and deadlines related to solicitation of, voting on, and confirmation of the Plan. The Amended RSA provides that the ongoing litigation between the Company and the lenders of the Company’s secured credit facility (the “Bank Lenders”) arising from the prepetition enforcement actions taken by the Bank Lenders is stayed and is to be dismissed upon the order confirming the Plan becoming a “Final Order” (as defined in the Plan).
On August 11, 2021, following the confirmation hearing, the Bankruptcy Court entered an order confirming the Plan. Pursuant to the Amended RSA, the Company is required to have the Plan become effective no later than November 1, 2021. The Company cannot predict the ultimate outcome of its Chapter 11 Cases at this time. For the duration of the Company’s Chapter 11 proceedings, the Company’s operations and ability to develop and execute its business plan are subject to the risks and uncertainties associated with the Chapter 11 process. As a result of these risks and uncertainties, the amount and composition of the Company’s assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 proceedings, and the description of the Company’s operations, properties and liquidity and capital resources included in this quarterly report may not accurately reflect its operations, properties and liquidity and capital resources following the Chapter 11 process.
Once effective, the Plan provides for the elimination of more than $1,681,900 of debt and preferred obligations, including an aggregate cash payment of $195,000 as noted below, as well as a significant reduction in interest expense. In exchange for their approximately $1,375,000 in principal amount of senior unsecured notes and $133,000 in principal amount of the secured credit facility, Consenting Noteholders, other noteholders, and certain holders of unsecured claims against the Company will receive, in the aggregate, $95,000 in cash, $555,000 of new senior secured notes, of which up to $100,000, upon election by the Consenting Noteholders, may be received in the form of new convertible secured notes and 89% in common equity of the newly reorganized company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders will also provide up to $50,000 of new money in exchange for additional convertible secured notes. The transactions outlined in the Plan will be implemented in the Chapter 11 Cases. The Plan provides that the remaining Bank
14
Lenders, holding $983,700 in principal amount under the secured credit facility, will receive $100,000 in cash and a new $883,700 secured term loan. Existing common and preferred shareholders are expected to receive up to 11% of common equity in the newly reorganized company.
In particular, subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assume and assign or reject executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach subject, in the case of the rejection of unexpired leases of real property, to certain caps on damages. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate for such damages. Generally, the assumption or assumption and assignment of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance thereunder. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this quarterly report, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with the Debtors is qualified by any overriding rights the Company has under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the assumption, assumption and assignment or rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto.
Liquidity and Going Concern Considerations
In accordance with the accounting guidance related to the presentation of financial statements, when preparing financial statements for each annual and interim reporting period, management evaluates whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In making its assessment, management considered the Company’s current financial condition and liquidity sources, as well as the status of the Chapter 11 Cases.
The filing of the Chapter 11 Cases by the Debtors constituted an event of default that results in the automatic acceleration of certain monetary obligations to be immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in acceleration of the outstanding principal and other sums due. See Note 8 and Note 9 for further discussion.
Given the acceleration of the secured credit facility, the senior unsecured notes and certain property-level debt, as well as the inherent risks, unknown results and inherent uncertainties associated with the bankruptcy process and the direct correlation between these matters and the Company’s ability to satisfy its financial obligations that may arise, the Company believes that there is substantial doubt that it will continue to operate as a going concern within one year after the date these condensed consolidated financial statements are issued. The Company’s ability to continue as a going concern is contingent upon its ability to successfully implement the Plan. The accompanying condensed consolidated financial statements are unaudited; however, they have been prepared in accordanceconformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial informationapplicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in conjunction with the rules and regulationsnormal course of the Securities and Exchange Commission ("SEC").business. 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. All intercompany transactions have been eliminated. The results for the interim period ended September 30, 2017 are not necessarily indicative of the results to be obtained for the full fiscal year.
Delisting of Common Stock and Depositary Shares
On November 2, 2020, the NYSE announced that (i) it had suspended trading in conjunction with the Company’s audited consolidated financial statementsstock and notes thereto included(ii) it had determined to commence proceedings to delist the Company’s common stock, as well as the depositary shares each representing a 1/10th fractional share of the Company’s 7.375% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”) and the depositary shares each representing a 1/10th fractional share of the Company’s 6.625% Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”), due to such securities no longer being suitable for listing based on “abnormally low” trading price levels, pursuant to Section 802.01D of the NYSE Listed Company Manual. The Company has appealed this decision in accordance with NYSE rules, and the appeal is still in process. In the meantime, effective November 3, 2020, the Company’s common stock and the depositary shares representing fractional interests in its Annual ReportSeries D Preferred Stock and Series E Preferred Stock began trading on Form 10-K for the year ended December 31, 2016.
15
Reorganization Items
Any expenses, gains and losses that are realized or incurred as of or subsequent to recordNovember 1, 2020, the change. See
Liabilities Subject to Compromise
As of June 30, 2021 and December 31, 2020, the Company has reclassified $2,591,706 and $2,551,490, respectively, to the line item “Liabilities subject to compromise” in the Company’s condensed consolidated balance sheets. These liabilities are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less. As of June 30, 2021, the liabilities subject to compromise consisted of $1,375,000 related to the prior-year periodssenior unsecured notes, $675,926 related to the secured line of credit, $438,750 related to the secured term loan, $57,644 in unpaid accrued interest as of the Commencement Date, $39,462 related to the loan secured by The Outlet Shoppes at Laredo, $726 of unpaid accrued interest related to the loan secured by The Outlet Shoppes at Laredo as of May 26, 2021 and $4,198 of prepetition unsecured or under secured liabilities. As of December 31, 2020, the liabilities subject to compromise consisted of $1,375,000 related to the senior unsecured notes, $675,926 related to the secured line of credit, $438,750 related to the secured term loan, $57,644 in unpaid accrued interest as of the Commencement Date and $4,170 of prepetition unsecured or under secured liabilities.
The contractual interest expense on the loan secured by The Outlet Shoppes at Laredo, the senior unsecured notes and secured credit facility is in excess of recorded interest expense by $45,279 and $90,043 for the three and six months ended June 30, 2021, respectively. This excess contractual interest expense is not included as interest expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2021 because the Company discontinued accruing interest on the loan secured by The Outlet Shoppes at Laredo as of May 26, 2021, and the senior unsecured notes and the secured credit facility subsequent to the Commencement Date in accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims. The Company has not made any interest payments on its senior unsecured notes or its secured credit facility since the Chapter 11 Cases commenced on November 1, 2020 and did not make any interest payments on the loan secured by The Outlet Shoppes at Laredo subsequent to its petition date on May 26, 2021.
Condensed combined financial statement information of the Debtors is as follows:
Condensed Combined Financial Statements – Debtors (Debtors-In-Possession)
Condensed Combined Balance Sheets
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
ASSETS: |
|
|
|
|
|
|
|
|
Investment in real estate assets |
| $ | 4,000,429 |
|
| $ | 4,056,257 |
|
Accumulated depreciation |
|
| (1,557,473 | ) |
|
| (1,544,800 | ) |
|
|
| 2,442,956 |
|
|
| 2,511,457 |
|
Developments in progress |
|
| 14,215 |
|
|
| 27,853 |
|
Net investment in real estate assets |
|
| 2,457,171 |
|
|
| 2,539,310 |
|
Available-for-sale securities - at fair value (amortized cost of $183,496 and $233,053 as of June 30, 2021 and December 31, 2020, respectively) |
|
| 183,490 |
|
|
| 233,071 |
|
Cash and cash equivalents |
|
| 131,713 |
|
|
| 46,346 |
|
Restricted cash |
|
| 88,810 |
|
|
| 29,834 |
|
Intercompany due from non-debtor entities |
|
| 76,365 |
|
|
| 76,095 |
|
Intangible lease assets and other assets |
|
| 126,035 |
|
|
| 140,241 |
|
Total assets |
| $ | 3,063,584 |
|
| $ | 3,064,897 |
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY: |
|
|
|
|
|
|
|
|
Other liabilities |
| $ | 113,173 |
|
| $ | 102,910 |
|
Intercompany due to non-debtor entities |
|
| 5,771 |
|
|
| 5,062 |
|
Total liabilities not subject to compromise |
|
| 118,944 |
|
|
| 107,972 |
|
Liabilities subject to compromise |
|
| 2,591,706 |
|
|
| 2,551,490 |
|
Shareholders' equity and noncontrolling interests of the Debtors |
|
| 352,934 |
|
|
| 405,435 |
|
Total liabilities and equity |
| $ | 3,063,584 |
|
| $ | 3,064,897 |
|
Three Months Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2016 | ||||||||||||||||
Net cash provided by operating activities (1) | $ | 85,777 | $ | 128,384 | $ | 125,464 | $ | 128,954 | ||||||||
Reclassification of cash payments for withheld shares | 202 | 87 | (69 | ) | 60 | |||||||||||
Net cash provided by operating activities (2) | $ | 85,979 | $ | 128,471 | $ | 125,395 | $ | 129,014 | ||||||||
Net cash used in financing activities (1) | $ | (95,505 | ) | $ | (162,774 | ) | $ | (89,447 | ) | $ | (137,348 | ) | ||||
Reclassification of cash payments for withheld shares | (202 | ) | (87 | ) | 69 | (60 | ) | |||||||||
Net cash used in financing activities (2) | $ | (95,707 | ) | $ | (162,861 | ) | $ | (89,378 | ) | $ | (137,408 | ) |
16
Condensed Combined Statements of the VIE. ASU 2016-17 simplifies the analysis to require considerationOperations
|
| Three Months Ended June 30, 2021 |
|
| Six Months Ended June 30, 2021 |
| ||
Total revenues |
| $ | 90,191 |
|
| $ | 178,664 |
|
Depreciation and amortization |
|
| (34,228 | ) |
|
| (68,382 | ) |
Loss on impairment |
|
| — |
|
|
| (57,182 | ) |
Expenses |
|
| (41,448 | ) |
|
| (86,839 | ) |
Interest and other income |
|
| 1,568 |
|
|
| 3,356 |
|
Interest expense (unrecognized contractual interest expense was $45,279 and $90,043 for the three and six months ended June 30, 2021, respectively) |
|
| (395 | ) |
|
| (1,027 | ) |
Reorganization items |
|
| (17,073 | ) |
|
| (40,006 | ) |
Gain (loss) on sales of real estate assets |
|
| 107 |
|
|
| (192 | ) |
Income tax provision |
|
| (705 | ) |
|
| (1,456 | ) |
Net loss |
| $ | (1,983 | ) |
| $ | (73,064 | ) |
Condensed Combined Statements of only an entity's proportionate indirect interest in a VIE held through a party under common control. For public companies, ASU 2016-17 was effective for fiscal years beginning after December 15, 2016 including interim periods therein. The guidance was applied retrospectively to all periods in fiscal year 2016, which is the period in
CASH FLOWS FROM OPERATING ACTIVITIES: |
| Six Months Ended June 30, 2021 |
| |
Net loss |
| $ | (73,064 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
Loss on impairment |
|
| 57,182 |
|
Other assets and liabilities, net |
|
| 96,277 |
|
Net cash provided by operating activities |
|
| 80,395 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Purchases of available-for-sale securities |
|
| (319,887 | ) |
Redemptions of available-for-sale securities |
|
| 368,380 |
|
Changes in other assets |
|
| (5,437 | ) |
Net cash provided by investing activities |
|
| 43,056 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Net distributions from non-Debtor subsidiaries |
|
| 20,845 |
|
Other financing activities |
|
| 47 |
|
Net cash provided by financing activities |
|
| 20,892 |
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 144,343 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
|
| 76,180 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 220,523 |
|
Reconciliation from condensed combined statement of cash flows to condensed combined balance sheet: |
|
|
|
|
Cash and cash equivalents |
| $ | 131,713 |
|
Restricted cash |
|
| 88,810 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 220,523 |
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION |
|
|
|
|
Cash paid for reorganization items |
| $ | 35,602 |
|
Note 3 – Summary of January 1, 2017 and it did not have a material impact on its condensed consolidated financial statements and related disclosures.
Accounting Guidance Not Yet EffectiveAdopted
Description | Expected Adoption Date & Application Method | Financial Statement Effect and Other Information | ||||
ASU 2020-04, Reference Rate Reform | On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. This ASU is effective as of March 12, 2020 through December 31, 2022. The Company has not adopted any of the optional expedients or exceptions as of June 30, 2021, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period to determine the impact on its condensed consolidated financial statements. | |||||
17
Accounts Receivable
Receivables include amounts billed and implementation update
The duration of the COVID-19 pandemic and its impact on the Company’s tenants’ ability to pay rents has caused uncertainty in exchangethe Company’s ongoing ability to collect rents when due. Considering the potential impact of these uncertainties, management’s collection assessment also took into consideration the type of retailer, billing disputes, lease negotiation status and executed deferral or abatement agreements, as well as recent rent collection experience and tenant bankruptcies based on the best information available to management at the time of evaluation. For the three months ended June 30, 2021 and 2020, revenues were reduced by $6,704 and $36,912, respectively, associated with uncollectable revenues, which includes the write-off of $2,623 and $1,088, respectively, for those goodsstraight line rent receivables. For the six months ended June 30, 2021 and 2020, revenues were reduced by $15,525 and $40,692, respectively, associated with uncollectable revenues, which includes the write-off of $4,302 and $2,557, respectively, for straight line rent receivables.
Carrying Value of Long-Lived Assets and Investment in Unconsolidated Affiliates
The Company evaluates its real estate assets and investment in unconsolidated affiliates for impairment indicators whenever events or services.changes in circumstances indicate that the carrying value of any of its long-lived assets or investment in unconsolidated affiliates may not be recoverable. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. The guidance also requires additional disclosure aboutprolonged outbreak of the nature, timingCOVID-19 pandemic resulted in sustained closure of the Company’s properties for a period of time during 2020, as well as the cessation of the operations of certain of its tenants, which has resulted and uncertainty of revenuewill likely continue to result in a reduction in the revenues and cash flows arisingof many of its properties due to the adverse financial impacts on its tenants, as well as reductions in other sources of income generated by its properties. In addition to reduced revenues, the Company’s ability to obtain sufficient financing for such properties may be impaired as well as its ability to lease or re-lease properties as a result of market and economic conditions resulting from customer contracts. ASU 2014-09 appliesthe COVID-19 pandemic.
As of June 30, 2021, the Company’s evaluation of impairment of real estate assets considered its estimate of cash flow declines caused by the COVID-19 pandemic, but its other assumptions, including estimated hold period, were generally unchanged given the highly uncertain environment. The worsening of estimated future cash flows due to a change in the Company’s plans, policies, or views of market and economic conditions as it relates to one or more of its properties adversely impacted by the COVID-19 pandemic could result in the recognition of substantial impairment charges on its assets, which could adversely impact its financial results. For the three months ended June 30, 2021, the Company did 0t record any impairment charges. For the six months ended June 30, 2021, the Company recorded impairment charges of $57,182 related to 3 malls. For the three months ended June 30, 2020, the Company recorded an impairment charge of $13,274 related to 1 mall. For the six months ended June 30, 2020, the Company recorded impairment charges of $146,918 related to 3 malls.
18
As of June 30, 2021, the Company’s estimates of fair value for each investment are based on a number of assumptions that 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. Future declines in the fair value of the Company’s investments in unconsolidated affiliates, including those resulting from the adverse impact of the COVID-19 pandemic on the real estate assets owned by the unconsolidated affiliates, could result in the recognition of substantial impairment charges on its investments in unconsolidated affiliates to the extent such declines are determined to be other-than-temporary. NaN impairments of investments in unconsolidated affiliates were recorded in the three and six-month periods ended June 30, 2021 and 2020.
Note 4 – Revenues
Revenues
The following table presents the Company's revenues disaggregated by revenue source:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Rental revenues |
| $ | 131,316 |
|
| $ | 120,222 |
|
| $ | 259,491 |
|
| $ | 281,395 |
|
Revenues from contracts with customers (ASC 606): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense reimbursements (1) |
|
| 1,674 |
|
|
| 2,103 |
|
|
| 3,830 |
|
|
| 4,492 |
|
Management, development and leasing fees (2) |
|
| 1,449 |
|
|
| 1,055 |
|
|
| 3,108 |
|
|
| 3,147 |
|
Marketing revenues (3) |
|
| 520 |
|
|
| 351 |
|
|
| 821 |
|
|
| 1,094 |
|
|
|
| 3,643 |
|
|
| 3,509 |
|
|
| 7,759 |
|
|
| 8,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues |
|
| 1,602 |
|
|
| 480 |
|
|
| 2,495 |
|
|
| 1,657 |
|
Total revenues (4) |
| $ | 136,561 |
|
| $ | 124,211 |
|
| $ | 269,745 |
|
| $ | 291,785 |
|
(1) | Includes $1,582 in the Malls segment and $92in the All Other segment for the three months ended June 30, 2021, and includes $2,024 in the Malls segment and $79 in the All Other segment for the three months ended June 30, 2020. Includes$3,651 in the Malls segment and $179 in the All Other segment for the six months ended June 30, 2021, and includes $4,345 in the Malls segment and $147 in the All Other segment for the six months ended June 30, 2020. |
(2) | Included in All Other segment. |
(3) | Marketing revenues solely relate to the Malls segment for all periods presented. |
(4) | Sales taxes are excluded from revenues. |
See Note 10 for information on the Company's segments.
Revenues from Contracts with Customers
Outstanding Performance Obligations
The Company has outstanding performance obligations related to certain noncancellable contracts with customers except those that are within the scope of other guidance such as lease and insurance contracts. In August 2015, the FASB issued ASU 2015-14,
Performance obligation |
| Less than 5 years |
|
| 5-20 years |
|
| Over 20 years |
|
| Total |
| ||||
Fixed operating expense reimbursements |
| $ | 23,568 |
|
| $ | 46,093 |
|
| $ | 48,128 |
|
| $ | 117,789 |
|
The Company evaluates its performance obligations each period and makes adjustments to the narrowed definition of indirect costs that may be capitalized. As a lessee, the Company has 11 ground lease arrangements inreflect any known additions or cancellations. Performance obligations related to variable consideration, which the Company is the lessee for land. As of September 30, 2017, these ground leases have future contractual payments of approximately $15,199 with maturity dates ranging from January 2019 through July 2089.
Note 5 – Leases
The components of contractual cash flows not expectedrental revenues are as follows:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Fixed lease payments |
| $ | 69,543 |
|
| $ | 99,150 |
|
| $ | 140,770 |
|
| $ | 236,544 |
|
Variable lease payments |
|
| 61,773 |
|
|
| 21,072 |
|
|
| 118,721 |
|
|
| 44,851 |
|
Total rental revenues |
| $ | 131,316 |
|
| $ | 120,222 |
|
| $ | 259,491 |
|
| $ | 281,395 |
|
19
The undiscounted future fixed lease payments to be collected. For public companies that are SEC filers, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. Early adoption is permitted. The guidance is to be applied on a modified retrospective basis. The Company plans to adopt ASU 2016-13received under the Company's operating leases as of January 1, 2020 and is evaluating the impact that this update may have on its condensed consolidated financial statements and related disclosures.June 30, 2021, are as follows:
Years Ending December 31, |
| Operating Leases |
| |
2021 (1) |
| $ | 181,159 |
|
2022 |
|
| 322,208 |
|
2023 |
|
| 270,898 |
|
2024 |
|
| 217,637 |
|
2025 |
|
| 167,910 |
|
2026 |
|
| 120,955 |
|
Thereafter |
|
| 272,145 |
|
Total undiscounted lease payments |
| $ | 1,552,912 |
|
(1) | Reflects rental payments for the fiscal period July 1, 2021 to December 31, 2021. |
Note 36 – Fair Value Measurements
The Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with ASC 820,
Fair Value Measurements and Disclosure, ("ASC 820") 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 asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions. Valuation techniques used maximize the use of observable
Fair Value Measurements on a Recurring Basis
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 and other notes receivable is a reasonable estimate of fair value. The estimated fair value of mortgage and other indebtedness was $4,250,556$941,440 and $4,737,077$1,091,745 at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. The estimated fair value of liabilities subject to compromise was $1,890,020 and $1,606,959 at June 30, 2021 and December 31, 2020, respectively. The fair value was calculated using Level 2 inputs by discounting future cash flows for mortgage and other indebtedness using estimated market rates at which similar loans would be made currently.
20
During the three and six months ended June 30, 2021, the Company has continued to reinvest in U.S. Treasury securities using the cash that was drawn on the secured line of credit to preserve liquidity at the beginning of the COVID-19 pandemic. The carrying amountCompany designated the U.S. Treasury securities purchased as available-for-sale (“AFS”). The following table sets forth information regarding the Company’s AFS securities that were measured at fair value for the six months ended June 30, 2021:
AFS Security |
| Amortized Cost (1) |
|
| Allowance for credit losses (2) |
|
| Total unrealized loss |
|
| Fair value as of June 30, 2021 |
| ||||
U.S. Treasury securities |
| $ | 183,496 |
|
| $ | — |
|
| $ | (6 | ) |
| $ | 183,490 |
|
(1) | The U.S. Treasury securities have maturities ranging from July 2021 through September 2021. |
(2) | U.S Treasury securities have a long history with no credit losses. Additionally, the Company notes that U.S Treasury securities are explicitly fully guaranteed by a sovereign entity that can print its own currency and that the sovereign entity’s currency is routinely held by central banks and other major financial institutions, is used in international commerce, and commonly viewed as a reserve currency, all of which qualitatively indicate that historical credit loss information should be minimally affected by current conditions and reasonable and supportable forecasts. Therefore, the Company did not record expected credit losses for its U.S Treasury securities for the six months ended June 30, 2021. |
Subsequent to June 30, 2021, the Company reinvested proceeds from matured U.S. Treasury securities into additional U.S. Treasury securities. See Note 15 for more information.
During March 2020, the Company purchased U.S. Treasury securities that were scheduled to mature between April 2021 and June 2021. The Company designated these securities as AFS. The fair value of net mortgagethese securities was calculated based on quoted market prices in active markets and other indebtedness was $4,216,178are included in the Level 1 fair value hierarchy. The Company believes the market for U.S. Treasury securities is an actively traded market given the high level of daily trading volume. In December 2020, the Company purchased additional U.S Treasury securities. The U.S. Treasury securities purchased in December 2020 matured between January 2021 and $4,465,294March 2021, and the Company subsequently reinvested in additional U.S. Treasury securities. The Company also designated these as AFS. The following table sets forth information regarding the Company’s AFS securities that were measured at September 30, 2017 andfair value for the year ended December 31, 2016, respectively. 2020:
AFS Security |
| Amortized Cost |
|
| Allowance for credit losses (1) |
|
| Total unrealized gain |
|
| Fair value as of December 31, 2020 |
| ||||
U.S. Treasury securities |
| $ | 233,053 |
|
| $ | — |
|
| $ | 18 |
|
| $ | 233,071 |
|
(1) | U.S Treasury securities have a long history with no credit losses. Additionally, the Company notes that U.S Treasury securities are explicitly fully guaranteed by a sovereign entity that can print its own currency and that the sovereign entity’s currency is routinely held by central banks and other major financial institutions, is used in international commerce, and commonly viewed as a reserve currency, all of which qualitatively indicate that historical credit loss information should be minimally affected by current conditions and reasonable and supportable forecasts. Therefore, the Company did not record expected credit losses for its U.S Treasury securities for the year ended December 31, 2020. |
Fair Value Measurements on a Nonrecurring Basis
The Company measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company’s evaluation of the recoverability of long-lived assets involves the comparison of undiscounted future cash flows expected to be generated by each property over the Company’s expected remaining holding period to the respective carrying amount. The determination of whether the carrying value is recoverable also requires management to make estimates related to probability weighted scenarios impacting undiscounted cash flow models. The Company considers both quantitative and qualitative factors in its impairment analysis of long-lived assets. Significant quantitative factors include historical and forecasted information for each propertyProperty such as net operating income ("NOI"),NOI, occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition of the propertyProperty and tenant mix. The quantitative and qualitative factors impact the selection of the terminal capitalization rate which is used in both an undiscounted and discounted cash flow model and the discount rate used in a discounted cash flow model. Due to the significant unobservable estimates and assumptions used in the valuation of long-lived assets that experience impairment, the Company classifies such long-lived assets under Level 3 in the fair value hierarchy. Level 3 inputs primarily consist of sales and market data, independent valuations and discounted cash flow models as noted below.
Long-lived Assets Measured at Fair Value in 2021
The following table sets forth information regarding the Company's assets that are measured at fair value on a nonrecurring basis and related impairment charges for the
21
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
|
|
|
|
| |||||||||
|
| Total |
|
| Quoted Prices in Active Markets for Identical Assets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
|
| Total Loss on Impairment |
| |||||
2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-lived assets |
| $ | 38,500 |
|
| $ | — |
|
| $ | — |
|
| $ | 38,500 |
|
| $ | 57,182 |
|
Fair Value Measurements at Reporting Date Using | |||||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Loss on Impairment | |||||||||||||||
Long-lived assets | $ | 81,350 | $ | — | $ | — | $ | 81,350 | $ | 71,401 |
During the ninesix months ended SeptemberJune 30, 2017,2021, the Company recognized impairments of real estate of $71,401 primarily$57,182 related to two malls, a parcel project near an outlet center and one outparcel. The properties were classified for segment reporting purposes as listed below (see section below for information on outparcels). See
Impairment Date |
| Property |
| Location |
| Segment Classification |
| Loss on Impairment |
|
| Fair Value |
|
| ||
March |
| Eastland Mall (1) |
| Bloomington, IL |
| Malls |
| $ | 13,243 |
|
| $ | 10,700 |
|
|
March |
| Old Hickory Mall (2) |
| Jackson, TN |
| Malls |
|
| 20,149 |
|
|
| 12,400 |
|
|
March |
| Stroud Mall (3) |
| Stroudsburg, PA |
| Malls |
|
| 23,790 |
|
|
| 15,400 |
|
|
|
|
|
|
|
|
|
| $ | 57,182 |
|
| $ | 38,500 |
|
|
Impairment Date | Property | Location | Segment Classification | Loss on Impairment | Fair Value | ||||||||||
March | Vacant land (1) | Woodstock, GA | Malls | $ | 3,147 | $ | — | (2) | |||||||
June | Acadiana Mall (3) | Lafayette, LA | Malls | 43,007 | 67,300 | ||||||||||
June / September | Prior period sales adjustments (4) | Various | Malls/Office Buildings | 606 | — | (2) | |||||||||
September | Hickory Point Mall (5) | Forsyth, IL | Malls | 24,525 | 14,050 | ||||||||||
$ | 71,285 | $ | 81,350 |
(1) | |
In accordance with the Company's quarterly impairment |
(2) | |
In accordance with the Company's quarterly impairment |
(3) | In accordance with the Company's quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $15,400. The mall |
During the six months ended June 30, 2021, the Company adjusted the combined negative equity in Asheville Mall and Park Plaza to 0 upon deconsolidation, which represents the estimated fair values of the Company’s investments in these properties. See Note 8 for additional information.
Long-lived Assets Measured at Fair Value in 2020
The following table sets forth information regarding the Company's assets that were measured at fair value on a nonrecurring basis and related impairment charges for the six months ended June 30, 2020:
|
|
|
|
|
| Fair Value Measurements at Reporting Date Using |
|
|
|
|
| |||||||||
|
| Total |
|
| Quoted Prices in Active Markets for Identical Assets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
|
| Total Loss on Impairment |
| |||||
2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-lived assets |
| $ | 166,900 |
|
| $ | — |
|
| $ | — |
|
| $ | 166,900 |
|
| $ | 146,918 |
|
During the six months ended June 30, 2020, the Company recognized impairments of real estate of $146,918 related to 3 malls:
22
Impairment Date |
| Property |
| Location |
| Segment Classification |
| Loss on Impairment |
|
| Fair Value |
|
| ||
March |
| Burnsville Center (1) |
| Burnsville, MN |
| Malls |
| $ | 26,562 |
|
| $ | 47,300 |
|
|
March |
| Monroeville Mall (2) |
| Pittsburgh, PA |
| Malls |
|
| 107,082 |
|
|
| 67,000 |
|
|
June |
| Asheville Mall (3) |
| Asheville, NC |
| Malls |
|
| 13,274 |
|
|
| 52,600 |
|
|
|
|
|
|
|
|
|
| $ | 146,918 |
|
| $ | 166,900 |
|
|
(1) | In accordance with the Company's quarterly impairment process, the Company wrote down the book value of the |
(2) | In accordance with the Company’s quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $67,000. The mall had experienced a decline in cash flows due to store closures and rent reductions. Management determined the |
(3) | In accordance with the Company’s quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $52,600. The mall had experienced a decline in cash flows due to store closures and rent reductions. These factors resulted in a reduction of the expected hold period for this asset based on Management’s assessment that there was an increased likelihood that the loan secured by the mall may not be successfully restructured or refinanced. Management determined the fair value of Asheville Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 13.25% and a discount rate of 14.0%. |
Note 7 – Dispositions and Held for segment reporting purposes in the All Other category. See Note 9 for segment information.
Sears Stores | Macy's Stores | Total | ||||||||||
Land | $ | 45,028 | $ | 4,635 | $ | 49,663 | ||||||
Building and improvements | 14,814 | 1,965 | 16,779 | |||||||||
Tenant improvements | 4,234 | 377 | 4,611 | |||||||||
Above-market leases | 681 | — | 681 | |||||||||
In-place leases | 8,364 | 579 | 8,943 | |||||||||
Total assets | 73,121 | 7,556 | 80,677 | |||||||||
Below-market leases | (356 | ) | (522 | ) | (878 | ) | ||||||
Net assets acquired | $ | 72,765 | $ | 7,034 | $ | 79,799 |
Sears Stores | Macy's Stores | |||
Above-market leases | 2.0 | N/A | ||
In-place leases | 2.2 | 2.2 | ||
Below-market leases | 5.4 | 2.2 |
Based on its analysis, the Company determined that the dispositions described below do not meet the criteria for classification as discontinued operations and are not considered to be significant disposals based on its quantitative and qualitative evaluation. Thus, the results of operations of the shopping center properties described below, as well as any related gaingains or impairment loss,losses, are included in net incomeloss for all periods presented, as applicable.
2020 Dispositions
Sales Price | ||||||||||||||||||
Sales Date | Property | Property Type | Location | Gross | Net | Gain | ||||||||||||
January | One Oyster Point & Two Oyster Point (1) | Office Building | Newport News, VA | $ | 6,250 | $ | 6,142 | $ | — | |||||||||
April | The Outlet Shoppes at Oklahoma City (2) | Mall | Oklahoma City, OK | 130,000 | 55,368 | 75,434 | ||||||||||||
May | College Square Mall & Foothills Mall (3) | Mall | Morristown, TN / Maryville, TN | 53,500 | 50,566 | 546 | ||||||||||||
$ | 189,750 | $ | 112,076 | $ | 75,980 |
The Company |
Transfer Date | Property | Property Type | Location | Balance of Non-recourse Debt | Gain on Extinguishment of Debt | |||||||||
January | Midland Mall (1) | Mall | Midland. MI | $ | 31,953 | $ | 3,760 | |||||||
June | Chesterfield Mall (2) | Mall | Chesterfield, MO | 140,000 | 29,187 | |||||||||
August | Wausau Center (3) | Mall | Wausau, WI | 17,689 | 6,851 | |||||||||
$ | 189,642 | $ | 39,798 |
Note 58 – Unconsolidated Affiliates and Noncontrolling Interests
Unconsolidated Affiliates
Although the Company had majority ownership of certain joint ventures during 20172021 and 2016,2020, it evaluated the investments and concluded that the other partners or owners in these joint ventures had 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; |
• | 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.
At June 30, 2021, the Company had investments in 31 entities, which are accounted for using the equity method of accounting. The Company's ownership interest in these unconsolidated affiliates ranges from 20% to 100%. Of these entities, 17 are owned in 50/50 joint ventures.
23
2021 Activity - Unconsolidated Affiliates
Ambassador Infrastructure, LLC
The Company reached an agreement with the Company sold its 25%lender to modify the loan secured by Ambassador Infrastructure. The agreement provides an additional four-year term with a fixed interest rate of 3.0%. The extended loan, maturing in River Ridge Mall JV, LLC to its joint venture partner for $9,000March 2025, had an outstanding balance of $8,250 at June 30, 2021, as $1,110 was paid down in cash. Inconjunction with the second quarter of 2017,modification. Additionally, the Company recordedagreement provides a $5,843 loss on investmentwaiver related to the saledefault triggered as a result of its interestthe Chapter 11 Cases.
Asheville Mall CBMS, LLC and recordedPark Plaza Mall CBMS, LLC
During the six months ended June 30, 2021, the Company deconsolidated Asheville Mall and Park Plaza as a result of the Company losing control of these properties when each was placed in receivership as part of the foreclosure process. The Company evaluated the loss of control of each property and determined that it was no longer the primary beneficiary of the respective wholly owned subsidiaries that own these properties. As a result, the Company adjusted the combined negative equity in the two entities to 0, which represents the estimated fair value of the Company’s investments in these properties, and recognized a gain on deconsolidation of $55,131.
Continental 425 Fund LLC
Subsequent to June 30, 2021, Continental 425 Fund LLC reached an additional $354 loss on investment upon the sale closing in August 2017. The Company's property management agreement with River Ridge Mall JV, LLC ended September 30, 2017.
Port Orange I, LLC
In March 2021, the Company reached an agreement with the lender to modify the loan secured by The Pavilion at Port Orange. The agreement provides an additional four-year term, with a one-year extension option, for a fully extended maturity date of February 2026. Additionally, the agreement provides forbearance related to the default triggered as a result of the Chapter 11 Cases. This loan had an outstanding balance of $52,448 at June 30, 2021.
West Melbourne I, LLC
In March 2021, the Company reached agreements with the lender to modify the loans secured by Hammock Landing Phases I & II. Each agreement provides an additional four-year term, with a one-year extension option, for a fully extended maturity date of February 2026. Additionally, the agreements provide forbearance related to the default triggered as a result of the Chapter 11 Cases. These loans had a combined outstanding loan balance of $53,810 at June 30, 2021.
Impact of Chapter 11 Proceedings
As described in Note 2, the filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which closed subsequentmay have resulted in automatic acceleration of certain monetary obligations or may give the applicable lender the right to Septemberaccelerate such amounts. The loans have an aggregate outstanding balance of $685,875 at June 30, 2017.
Condensed Combined Financial Statements - Unconsolidated Affiliates
Condensed combined financial statement information of the unconsolidated affiliates is as follows:
24
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
ASSETS: |
|
|
|
|
|
|
|
|
Investment in real estate assets |
| $ | 2,457,025 |
|
| $ | 2,346,124 |
|
Accumulated depreciation |
|
| (905,055 | ) |
|
| (862,435 | ) |
|
|
| 1,551,970 |
|
|
| 1,483,689 |
|
Developments in progress |
|
| 15,222 |
|
|
| 28,138 |
|
Net investment in real estate assets |
|
| 1,567,192 |
|
|
| 1,511,827 |
|
Other assets |
|
| 190,859 |
|
|
| 174,966 |
|
Total assets |
| $ | 1,758,051 |
|
| $ | 1,686,793 |
|
LIABILITIES: |
|
|
|
|
|
|
|
|
Mortgage and other indebtedness, net |
| $ | 1,573,118 |
|
| $ | 1,439,454 |
|
Other liabilities |
|
| 73,164 |
|
|
| 45,280 |
|
Total liabilities |
|
| 1,646,282 |
|
|
| 1,484,734 |
|
OWNERS' EQUITY: |
|
|
|
|
|
|
|
|
The Company |
|
| 117,267 |
|
|
| 132,350 |
|
Other investors |
|
| (5,498 | ) |
|
| 69,709 |
|
Total owners' equity |
|
| 111,769 |
|
|
| 202,059 |
|
Total liabilities and owners’ equity |
| $ | 1,758,051 |
|
| $ | 1,686,793 |
|
|
| Three Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total revenues |
| $ | 57,747 |
|
| $ | 46,661 |
|
Net loss (1) |
| $ | (9,698 | ) |
| $ | (6,511 | ) |
|
| |||||||
|
|
|
|
|
|
|
|
|
|
| Six Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total revenues |
| $ | 116,503 |
|
| $ | 107,175 |
|
Net loss (1) |
| $ | (13,019 | ) |
| $ | (1,468 | ) |
ASSETS | September 30, 2017 | December 31, 2016 | |||||
Investment in real estate assets | $ | 2,093,950 | $ | 2,137,666 | |||
Accumulated depreciation | (607,685 | ) | (564,612 | ) | |||
1,486,265 | 1,573,054 | ||||||
Developments in progress | 29,209 | 9,210 | |||||
Net investment in real estate assets | 1,515,474 | 1,582,264 | |||||
Other assets | 204,686 | 223,347 | |||||
Total assets | $ | 1,720,160 | $ | 1,805,611 | |||
LIABILITIES | |||||||
Mortgage and other indebtedness, net | $ | 1,251,994 | $ | 1,266,046 | |||
Other liabilities | 46,538 | 46,160 | |||||
Total liabilities | 1,298,532 | 1,312,206 | |||||
OWNERS' EQUITY | |||||||
The Company | 216,107 | 228,313 | |||||
Other investors | 205,521 | 265,092 | |||||
Total owners' equity | 421,628 | 493,405 | |||||
Total liabilities and owners' equity | $ | 1,720,160 | $ | 1,805,611 |
Total for the Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Total revenues | $ | 57,395 | $ | 59,104 | |||
Depreciation and amortization | (20,151 | ) | (20,227 | ) | |||
Interest income | 356 | 295 | |||||
Interest expense | (12,907 | ) | (14,281 | ) | |||
Operating expenses | (17,431 | ) | (18,216 | ) | |||
Gain on extinguishment of debt | — | (393 | ) | ||||
Income from continuing operations before gain on sales of real estate assets | 7,262 | 6,282 | |||||
Gain on sales of real estate assets | 606 | 16,854 | |||||
Net income (1) | $ | 7,868 | $ | 23,136 |
(1) | |
The Company's pro rata share of net |
Total for the Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Total revenues | $ | 175,250 | $ | 186,162 | |||
Depreciation and amortization | (60,276 | ) | (63,085 | ) | |||
Interest income | 1,186 | 963 | |||||
Interest expense | (38,891 | ) | (41,951 | ) | |||
Operating expenses | (52,818 | ) | (56,621 | ) | |||
Gain on extinguishment of debt | — | 62,901 | |||||
Income from continuing operations before gain on sales of real estate assets | 24,451 | 88,369 | |||||
Gain on sales of real estate assets | 529 | 158,190 | |||||
Net income (1) | $ | 24,980 | $ | 246,559 |
Date | Property | Stated Interest Rate | Maturity Date | Amount Extended | ||||||
August | Ambassador Town Center - Infrastructure Improvements (1) | LIBOR + 2.0% | August 2020 | $ | 11,035 |
Date | Property | Interest Rate at Repayment Date | Scheduled Maturity Date | Principal Balance Repaid (1) | ||||||
July | Gulf Coast Town Center - Phase III (1) | 3.13% | July 2017 | $ | 4,118 |
Variable Interest Entities
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. The Company adopted ASU 2015-02 as of January 1, 2016 and ASU 2016-17 was adopted as of January 1, 2017 on a modified retrospective basis. The adoption of ASU 2016-17 did not change any of the Company's consolidation conclusions made under ASU 2015-02 and did not change amounts within the condensed 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 the Company's business activities and the business activities of the other investors.
Consolidated VIEs
As of June 30, 2021, the Company'sCompany had investments in 12 consolidated VIEs aswith ownership interests ranging from 50% to 92%.
25
Unconsolidated VIEs
The table below lists the Company's unconsolidated VIEs as of SeptemberJune 30, 2017:2021:
Unconsolidated VIEs: |
| Investment in Real Estate Joint Ventures and Partnerships |
|
| Maximum Risk of Loss |
| ||
Ambassador Infrastructure, LLC (1) |
| $ | (11 | ) |
| $ | 8,250 |
|
Asheville Mall CBMS, LLC |
|
| — |
|
|
| — |
|
Atlanta Outlet JV, LLC (1) |
|
| 24,537 |
|
|
| 29,073 |
|
CBL-T/C, LLC |
|
| 64,342 |
|
|
| 64,342 |
|
CBL-TRS Joint Venture, LLC |
|
| 18,938 |
|
|
| 18,938 |
|
Continental 425 Fund LLC |
|
| 4,681 |
|
|
| 4,681 |
|
EastGate Storage, LLC (1) |
|
| 476 |
|
|
| 3,721 |
|
El Paso Outlet Center Holding, LLC |
|
| 9,126 |
|
|
| 9,126 |
|
Fremaux Town Center JV, LLC |
|
| 6,306 |
|
|
| 6,306 |
|
Hamilton Place Self Storage (1) |
|
| 994 |
|
|
| 4,495 |
|
Louisville Outlet Shoppes, LLC (1) |
|
| (11,103 | ) |
|
| 8,632 |
|
Mall of South Carolina L.P. |
|
| (13,863 | ) |
|
| — |
|
Mall of South Carolina Outparcel L.P. |
|
| (2,143 | ) |
|
| — |
|
Park Plaza Mall CBMS, LLC |
|
| — |
|
|
| — |
|
Parkdale Self Storage, LLC (1) |
|
| 604 |
|
|
| 7,104 |
|
PHG-CBL Lexington, LLC |
|
| 35 |
|
|
| 35 |
|
Self Storage at Mid Rivers, LLC (1) |
|
| 510 |
|
|
| 3,504 |
|
Shoppes at Eagle Point, LLC (1) |
|
| 17,887 |
|
|
| 30,627 |
|
Vision - CBL Hamilton Place, LLC |
|
| 3,804 |
|
|
| 3,804 |
|
|
| $ | 125,120 |
|
| $ | 202,638 |
|
Unconsolidated VIEs: | Investment in Real Estate Joint Ventures and Partnerships | Maximum Risk of Loss | ||||||
Ambassador Infrastructure, LLC (1) | $ | — | $ | 11,035 | ||||
Shoppes at Eagle Point, LLC (2) | 14,754 | 14,754 | ||||||
G&I VIII CBL Triangle LLC | 1,464 | 1,464 |
(1) | |
The |
Note 69 – Mortgage and Other Indebtedness, Net
Debt of the Company
CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of the Company's debt. CBL is a limited guarantor of the 5.25%, 4.60%, and 5.95% senior unsecured notes (collectively, the(the "Notes"), issued by the Operating Partnership, as described below, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates.
The Company also provides a similar limited guarantee of the Operating Partnership's obligations with respect to its unsecuredsecured credit facilitiesfacility and three unsecuredsecured term loansloan as of SeptemberJune 30, 2017.
Debt of the Operating Partnership
Mortgage and other indebtedness, net, consisted of the following:
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||||||
|
| Amount |
|
| Weighted- Average Interest Rate (1) |
|
| Amount |
|
| Weighted- Average Interest Rate (1) |
| ||||
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse loans on operating Properties |
| $ | 963,118 |
|
|
| 5.07 | % |
| $ | 1,120,203 |
|
|
| 5.12 | % |
Total fixed-rate debt |
|
| 963,118 |
|
|
| 5.07 | % |
|
| 1,120,203 |
|
|
| 5.12 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse loans on operating Properties |
|
| 27,461 |
|
|
| 2.99 | % |
|
| 68,061 |
|
|
| 4.69 | % |
Total variable-rate debt |
|
| 27,461 |
|
|
| 2.99 | % |
|
| 68,061 |
|
|
| 4.69 | % |
Total fixed-rate and variable-rate debt |
|
| 990,579 |
|
|
| 5.01 | % |
|
| 1,188,264 |
|
|
| 5.10 | % |
Unamortized deferred financing costs (2) |
|
| (2,987 | ) |
|
|
|
|
|
| (3,433 | ) |
|
|
|
|
Total mortgage and other indebtedness, net |
| $ | 987,592 |
|
|
|
|
|
| $ | 1,184,831 |
|
|
|
|
|
Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following:
26
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||||||
|
| Amount |
|
| Weighted- Average Interest Rate (1) |
|
| Amount |
|
| Weighted- Average Interest Rate (1) |
| ||||
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior unsecured notes due 2023 (3) |
| $ | 450,000 |
|
|
| 5.25 | % |
| $ | 450,000 |
|
|
| 5.25 | % |
Senior unsecured notes due 2024 (3) |
|
| 300,000 |
|
|
| 4.60 | % |
|
| 300,000 |
|
|
| 4.60 | % |
Senior unsecured notes due 2026 (3) |
|
| 625,000 |
|
|
| 5.95 | % |
|
| 625,000 |
|
|
| 5.95 | % |
Total fixed-rate debt |
|
| 1,375,000 |
|
|
| 5.43 | % |
|
| 1,375,000 |
|
|
| 5.43 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured line of credit (4) |
|
| 675,926 |
|
|
| 9.50 | % |
|
| 675,926 |
|
|
| 9.50 | % |
Secured term loan (4) |
|
| 438,750 |
|
|
| 9.50 | % |
|
| 438,750 |
|
|
| 9.50 | % |
Recourse loan on operating Property (5) |
|
| 39,462 |
|
|
| 5.76 | % |
|
| — |
|
|
| — |
|
Total variable-rate debt |
|
| 1,154,138 |
|
|
| 9.37 | % |
|
| 1,114,676 |
|
|
| 9.50 | % |
Total fixed-rate and variable-rate debt |
|
| 2,529,138 |
|
|
| 7.23 | % |
|
| 2,489,676 |
|
|
| 7.25 | % |
Unpaid accrued interest (6) |
|
| 58,370 |
|
|
|
|
|
|
| 57,644 |
|
|
|
|
|
Prepetition unsecured or under secured liabilities |
|
| 4,198 |
|
|
|
|
|
|
| 4,170 |
|
|
|
|
|
Total liabilities subject to compromise |
| $ | 2,591,706 |
|
|
|
|
|
| $ | 2,551,490 |
|
|
|
|
|
September 30, 2017 | December 31, 2016 | ||||||||||
Amount | Weighted- Average Interest Rate (1) | Amount | Weighted- Average Interest Rate (1) | ||||||||
Fixed-rate debt: | |||||||||||
Non-recourse loans on operating properties | $ | 1,807,519 | 5.34% | $ | 2,453,628 | 5.55% | |||||
Senior unsecured notes due 2023 (2) | 446,868 | 5.25% | 446,552 | 5.25% | |||||||
Senior unsecured notes due 2024 (3) | 299,944 | 4.60% | 299,939 | 4.60% | |||||||
Senior unsecured notes due 2026 (4) | 615,669 | 5.95% | 394,260 | 5.95% | |||||||
Total fixed-rate debt | 3,170,000 | 5.37% | 3,594,379 | 5.48% | |||||||
Variable-rate debt: | |||||||||||
Non-recourse term loans on operating properties | 10,868 | 3.04% | 19,055 | 3.13% | |||||||
Recourse term loans on operating properties | 89,612 | 3.87% | 24,428 | 3.29% | |||||||
Construction loan (5) | — | —% | 39,263 | 3.12% | |||||||
Unsecured lines of credit | 79,970 | 2.43% | 6,024 | 1.82% | |||||||
Unsecured term loans | 885,000 | 2.69% | 800,000 | 2.04% | |||||||
Total variable-rate debt | 1,065,450 | 2.77% | 888,770 | 2.15% | |||||||
Total fixed-rate and variable-rate debt | 4,235,450 | 4.72% | 4,483,149 | 4.82% | |||||||
Unamortized deferred financing costs | (19,272 | ) | (17,855 | ) | |||||||
Total mortgage and other indebtedness, net | $ | 4,216,178 | $ | 4,465,294 |
(1) | |
Weighted-average interest rate |
(2) | Unamortized deferred financing costs of $2,624 for certain property-level, non-recourse mortgage loans may be required to be written off in the event a waiver or restructuring of terms cannot be negotiated and the debt is either redeemed or otherwise extinguished. |
(3) | In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the senior unsecured notes subsequent to the filing of the Chapter 11 Cases. The outstanding amount of the senior unsecured notes is included in liabilities subject to compromise in the accompanying condensed consolidated balance |
(4) | |
The administrative agent informed the Company that interest will accrue on all outstanding obligations at the post-default rate, which is equal to the rate that otherwise would be in effect plus 5.0%. The post-default interest rate at June 30, 2021 and December 31, 2020 was 9.50%. In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the secured credit facility subsequent to the filing of the Chapter 11 Cases. The outstanding amount of the secured credit facility is included in liabilities subject to compromise in the accompanying condensed consolidated balance |
(5) | |
On May 26, 2021, the |
subsidiary that owns The Outlet Shoppes at Laredo |
(6) | As of June 30, 2021, represents interest accrued on the loan secured by The Outlet Shoppes at Laredo prior to May 26, 2021, and the |
Non-recourse term loans, recourse term loans, the secured line of credit and the secured term loan include loans that are secured by Properties owned by the Company that have a net carrying value of $2,154,326 at June 30, 2021.
Senior Unsecured Notes(1)
Description |
| Issued (2) |
| Amount |
|
| Interest Rate |
|
| Maturity Date | ||
2023 Notes |
| November 2013 |
| $ | 450,000 |
|
|
| 5.25 | % |
| December 2023 |
2024 Notes |
| October 2014 |
|
| 300,000 |
|
|
| 4.60 | % |
| October 2024 |
2026 Notes |
| December 2016 / September 2017 |
|
| 625,000 |
|
|
| 5.95 | % |
| December 2026 |
Description | Issued (1) | Amount | Interest Rate (2) | Maturity Date (3) | ||||||
2026 Notes | December 2016 / September 2017 (4) | $ | 625,000 | 5.95% | December 2026 | |||||
2024 Notes | October 2014 | 300,000 | 4.60% | October 2024 | ||||||
2023 Notes | November 2013 | 450,000 | 5.25% | December 2023 |
(1) | In March 2021, the Company entered into an amended and restated Restructuring Support Agreement with its secured credit facility lenders and senior unsecured noteholders that provides for a fully consensual comprehensive restructuring. |
(2) | Issued by the Operating Partnership. CBL is a limited guarantor of the Operating |
27
Table of secured debt to total assets of the Company, as defined, is greater than
Senior Secured Credit
Total Capacity | Total Outstanding | Maturity Date | Extended Maturity Date | |||||||||||
Wells Fargo - Facility A | $ | 500,000 | $ | — | (1) | October 2019 | October 2020 | (2) | ||||||
First Tennessee | 100,000 | 36,034 | (3) | October 2019 | October 2020 | (4) | ||||||||
Wells Fargo - Facility B | 500,000 | 43,936 | (5) | October 2020 | ||||||||||
$ | 1,100,000 | $ | 79,970 | (6) |
The Company has a $350,000 unsecured term loan,$1,185,000 senior secured credit facility, which bears interest atincludes a variable raterevolving line of LIBOR plus 1.35% based on the credit ratings for the Operating Partnership's senior unsecured long-term indebtedness. In July 2017, the Company exerciseddrawn to its option to extend the maturity date to October 2018. The loan hasmaximum borrowing capacity of $675,926 and a one-year extension option, subject to continued compliance with the terms of the loan agreement, for an outside maturity date of October 2019. At September 30, 2017, the outstanding borrowings of $350,000 had an interest rate of 2.59%.
The variable interest spread remains at LIBOR plus 1.50% based onsecured credit facility is secured by 17 malls and 3 associated centers that are owned by 36 wholly owned subsidiaries of the credit ratingsOperating Partnership (collectively the “Combined Guarantor Subsidiaries”). The Combined Guarantor Subsidiaries own an additional 4 malls, 2 associated centers and 4 mortgage notes receivable that are not collateral for the Operating Partnership's senior unsecured long-term indebtedness. In July 2018,secured credit facility. The properties that are collateral for the principal balance will be reducedsecured credit facility and the properties and mortgage notes receivable that are not collateral are collectively referred to $300,000.as the “Guarantor Properties.” The loan will mature in July 2020 and has two one-year extension options, the second of which is at the lenders' discretion, for a July 2022 extended maturity date. At September 30, 2017, the outstanding borrowings of $490,000 had an interest rate of 2.74%.
See Financial Covenants and Restrictions
Financial Covenants and Restrictions
The agreements for the unsecured lines of credit, the Notes and unsecured term loans contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum unencumbered asset and interest ratios, maximumsenior secured indebtedness ratios, maximum total indebtedness ratios and limitations on cash flow distributions. The Company believes that it was in compliance with all financial covenants and restrictions at September 30, 2017.
The agreements for the Notes described above contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000filing of the Operating Partnership will constituteChapter 11 Cases constituted an event of default underthat resulted in certain monetary obligations becoming immediately due and payable with respect to the Notes.
Certain of the Company’s properties are owned by special purpose entities, created as a requirement under certain loan agreements that are included inpledged as collateral on non-recourse mortgage loans and the Company’s condensed consolidated financial statements. The sole business purpose ofsecured credit facility are subject to cash management agreements with 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,lenders, which restrict the cash flows from thesebalances associated with those properties after payments ofto only be used for debt service, capital items and operating expenses and reserves,expense obligations.
Loans in Default
As of June 30, 2021, 2 non-recourse loans that are available for distribution to the Company.
Date | Property | Interest Rate at Repayment Date | Scheduled Maturity Date | Principal Balance Repaid (1) | ||||||
January | The Plaza at Fayette | 5.67% | April 2017 | $ | 37,146 | |||||
January | The Shoppes at St. Clair Square | 5.67% | April 2017 | 18,827 | ||||||
February | Hamilton Corner | 5.67% | April 2017 | 14,227 | ||||||
March | Layton Hills Mall | 5.66% | April 2017 | 89,526 | ||||||
April | The Outlet Shoppes at Oklahoma City (2) | 5.73% | January 2022 | 53,386 | ||||||
April | The Outlet Shoppes at Oklahoma City - Phase II (2) | 3.53% | April 2019 | 5,545 | ||||||
April | The Outlet Shoppes at Oklahoma City - Phase III (2) | 3.53% | April 2019 | 2,704 | ||||||
September | Hanes Mall (3) | 6.99% | October 2018 | 144,325 | ||||||
September | The Outlet Shoppes at El Paso | 7.06% | December 2017 | 61,561 | ||||||
$ | 427,247 |
Date | Property | Interest Rate at Repayment Date | Scheduled Maturity Date | Balance of Non-recourse Debt | Gain on Extinguishment of Debt | |||||||||
January | Midland Mall | 6.10% | August 2016 | $ | 31,953 | $ | 3,760 | |||||||
June | Chesterfield Mall | 5.74% | September 2016 | 140,000 | 29,187 | |||||||||
August | Wausau Center | 5.85% | April 2021 | 17,689 | 6,851 | |||||||||
$ | 189,642 | $ | 39,798 |
2017 | $ | 134,159 | ||
2018 | 667,320 | |||
2019 | 329,846 | |||
2020 | 551,004 | |||
2021 | 498,168 | |||
Thereafter (1) | 2,067,125 | |||
4,247,622 | ||||
Unamortized premiums and discounts, net | (12,172 | ) | ||
Unamortized deferred financing costs | (19,272 | ) | ||
Total mortgage and other indebtedness, net | $ | 4,216,178 |
Property |
| Location |
| Interest Rate |
|
| Scheduled Maturity Date |
| Loan Amount |
| |
Greenbrier Mall |
| Chesapeake, VA |
| 5.41% |
|
| Dec-19 |
| $ | 61,647 |
|
EastGate Mall |
| Cincinnati, OH |
| 5.83% |
|
| Apr-21 |
|
| 30,281 |
|
As described in Note 2, the filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. The loans have an aggregate outstanding balance of $817,757 at June 30, 2021. On May 26, 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy. Subsequent to June 30, 2021, the Company entered into a forbearance agreement with the lender regarding the loan secured by Fayette Mall. See Note 15 for more information.
In conjunction with the deconsolidation of Asheville Mall and extend its maturity date.Park Plaza, the Company deconsolidated the loan securing each property, which represented $138,926 of previously consolidated debt. See Note 8 for additional information.
28
Scheduled Principal Payments
As of June 30, 2021, the scheduled principal amortization and balloon payments of the Company’s consolidated debt, excluding extensions available at the Company’s option, on all mortgage and other indebtedness, including the secured line of credit, are as follows:
2021 (1) |
| $ | 97,868 |
|
2022 |
|
| 408,410 |
|
2023 |
|
| 1,519,979 |
|
2024 |
|
| 343,409 |
|
2025 |
|
| 37,624 |
|
2026 |
|
| 763,533 |
|
Total (2) |
|
| 3,170,823 |
|
Principal balance of loans with maturity date prior to June 30, 2021 (3) |
|
| 348,894 |
|
Total mortgage and other indebtedness, net |
| $ | 3,519,717 |
|
(1) | Reflects scheduled principal amortization and balloon payments for the fiscal period July 1, 2021 through December 31, 2021. |
(2) | Includes $2,529,138 of liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of June 30, 2021, and as the expected maturity date is subject to the outcome of the Chapter 11 Cases, the original, legal maturity dates are reflected in this table. |
(3) | Represents the aggregate principal balance as of June 30, 2021 of the loans secured by EastGate Mall, Fayette Mall, Hamilton Crossing, Greenbrier Mall, Parkdale Mall & Crossing and The Outlet Shoppes at Laredo, which are in default. The Company is in discussions with the lender regarding the loans secured by these properties. The loan secured by Greenbrier Mall matured in December 2019 and had a balance of $61,647 as of June 30, 2021. The loan secured by Parkdale Mall & Crossing matured in March 2021 and had a balance of $71,278 as of June 30, 2021. The loan secured by EastGate Mall matured in April 2021 and had a balance of $30,281 as of June 30, 2021. The loan secured by Hamilton Crossing matured in April 2021 and had a balance of $8,039 as of June 30, 2021. The loan secured by Fayette Mall matured in May 2021 and had a balance of $138,187 as of June 30, 2021. Subsequent to June 30, 2021, the Company entered into a forbearance agreement with the lender regarding the loan secured by Fayette Mall (see Note 15). The loan secured by The Outlet Shoppes at Laredo matured in May 2021 and had a balance of $39,462 as of June 30, 2021. |
Of the $97,868 of scheduled principal payments for the remainder of 2021, $70,507 relates to the maturing principal balance of 2 operating Property loans. The loan secured by Alamance Crossing matured in July 2021 and is currently in default. The Company is in discussions with the lender regarding a loan extension.
The Company’s mortgage and other indebtedness had a weighted-average maturity of 4.72.6 years as of SeptemberJune 30, 20172021 and 4.43.0 years as of December 31, 2016.
Gain Recognized in OCI/L (Effective Portion) | Location of Losses Reclassified from AOCI into Earnings (Effective Portion) | Loss Recognized in Earnings (Effective Portion) | Location of Gain Recognized in Earnings (Ineffective Portion) | Gain Recognized in Earnings (Ineffective Portion) | ||||||||||||||||||||||||
Hedging Instrument | Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||
Interest rate contracts | $ | — | $ | 434 | Interest Expense | $ | — | $ | (443 | ) | Interest Expense | $ | — | $ | — |
Redeemable Noncontrolling Interests | The Company | Noncontrolling Interests | |||||||||||||
Unrealized Gains (Losses) - Hedging Agreements | Total | ||||||||||||||
Beginning balance, January 1, 2016 | $ | 433 | $ | 1,935 | $ | (2,802 | ) | $ | (434 | ) | |||||
OCI before reclassifications | 3 | 814 | 60 | 877 | |||||||||||
Amounts reclassified from AOCI (1) | (436 | ) | (2,749 | ) | 2,742 | (443 | ) | ||||||||
Net current year-to-date period OCI | (433 | ) | (1,935 | ) | 2,802 | 434 | |||||||||
Ending balance, September 30, 2016 | $ | — | $ | — | $ | — | $ | — |
Redeemable Common Units | Partners' Capital | ||||||||||
Unrealized Gains (Losses) - Hedging Agreements | Total | ||||||||||
Beginning balance, January 1, 2016 | $ | 434 | $ | (868 | ) | $ | (434 | ) | |||
OCI before reclassifications | 3 | 874 | 877 | ||||||||
Amounts reclassified from AOCI (1) | (437 | ) | (6 | ) | (443 | ) | |||||
Net current quarterly period OCI/L | (434 | ) | 868 | 434 | |||||||
Ending balance, September 30, 2016 | $ | — | $ | — | $ | — |
As of September 30, 2017 | As of December 31, 2016 | |||||||||||||
Maturity Date | Interest Rate | Balance | Interest Rate | Balance | ||||||||||
Mortgages: | ||||||||||||||
Columbia Place Outparcel | Feb 2022 | 5.00% | $ | 307 | 5.00% | $ | 321 | |||||||
Gulf Coast Town Center - Phase III (1) | Jan 2018 | 5.00% | 4,118 | —% | — | |||||||||
The Landing at Arbor Place Outparcel (2) | N/A | —% | — | —% | — | |||||||||
One Park Place | May 2022 | 5.00% | 1,044 | 5.00% | 1,194 | |||||||||
Village Square | Mar 2018 | 4.00% | 1,608 | 3.75% | 1,644 | |||||||||
Other (3) | Dec 2016 - Jan 2047 | 6.25% - 9.50% | 2,512 | 3.27% - 9.50% | 2,521 | |||||||||
9,589 | 5,680 | |||||||||||||
Other Notes Receivable: | ||||||||||||||
ERMC | Sep 2021 | 4.00% | 3,018 | 4.00% | 3,500 | |||||||||
Horizon Group (4) | N/A | —% | — | 7.00% | 300 | |||||||||
RED Development Inc. | Oct 2023 | 5.00% | 5,979 | 5.00% | 6,588 | |||||||||
Southwest Theaters | Apr 2026 | 5.00% | 693 | 5.00% | 735 | |||||||||
9,690 | 11,123 | |||||||||||||
$ | 19,279 | $ | 16,803 |
Note 910 – 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.
29
Information on the Company’s reportable segments is presented as follows:
Three Months Ended June 30, 2021 |
| Malls |
|
| All Other (1) |
|
| Total |
| |||
Revenues (2) |
| $ | 125,504 |
|
| $ | 11,057 |
|
| $ | 136,561 |
|
Property operating expenses (3) |
|
| (41,132 | ) |
|
| (2,385 | ) |
|
| (43,517 | ) |
Interest expense |
|
| (21,584 | ) |
|
| (715 | ) |
|
| (22,299 | ) |
Gain on sales of real estate assets |
|
| — |
|
|
| 107 |
|
|
| 107 |
|
Other expense |
|
| (64 | ) |
|
| (223 | ) |
|
| (287 | ) |
Segment profit |
| $ | 62,724 |
|
| $ | 7,841 |
|
|
| 70,565 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (47,499 | ) |
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (11,269 | ) |
Litigation settlement |
|
|
|
|
|
|
|
|
|
| (57 | ) |
Interest and other income |
|
|
|
|
|
|
|
|
|
| 752 |
|
Reorganization items |
|
|
|
|
|
|
|
|
|
| (17,073 | ) |
Income tax provision |
|
|
|
|
|
|
|
|
|
| (705 | ) |
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (4,275 | ) |
Net loss |
|
|
|
|
|
|
|
|
| $ | (9,561 | ) |
Capital expenditures (4) |
| $ | 10,308 |
|
| $ | 1,979 |
|
| $ | 12,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020 |
| Malls |
|
| All Other (1) |
|
| Total |
| |||
Revenues (2) |
| $ | 112,002 |
|
| $ | 12,209 |
|
| $ | 124,211 |
|
Property operating expenses (3) |
|
| (38,385 | ) |
|
| (2,400 | ) |
|
| (40,785 | ) |
Interest expense |
|
| (18,960 | ) |
|
| (33,671 | ) |
|
| (52,631 | ) |
Other expense |
|
| — |
|
|
| (242 | ) |
|
| (242 | ) |
Gain on sales of real estate assets |
|
| — |
|
|
| 2,623 |
|
|
| 2,623 |
|
Segment profit (loss) |
| $ | 54,657 |
|
| $ | (21,481 | ) |
|
| 33,176 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (52,663 | ) |
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (18,727 | ) |
Interest and other income |
|
|
|
|
|
|
|
|
|
| 891 |
|
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (13,274 | ) |
Income tax provision |
|
|
|
|
|
|
|
|
|
| (16,117 | ) |
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (6,079 | ) |
Net loss |
|
|
|
|
|
|
|
|
| $ | (72,793 | ) |
Capital expenditures (4) |
| $ | 9,754 |
|
| $ | 1,377 |
|
| $ | 11,131 |
|
30
Six Months Ended June 30, 2021 |
| Malls |
|
| All Other (1) |
|
| Total |
| |||
Revenues (2) |
| $ | 244,832 |
|
| $ | 24,913 |
|
| $ | 269,745 |
|
Property operating expenses (3) |
|
| (86,727 | ) |
|
| (5,924 | ) |
|
| (92,651 | ) |
Interest expense |
|
| (44,754 | ) |
|
| (1,675 | ) |
|
| (46,429 | ) |
Other expense |
|
| (64 | ) |
|
| (223 | ) |
|
| (287 | ) |
Loss on sales of real estate assets |
|
| — |
|
|
| (192 | ) |
|
| (192 | ) |
Segment profit |
| $ | 113,287 |
|
| $ | 16,899 |
|
|
| 130,186 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (95,611 | ) |
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (23,881 | ) |
Litigation settlement |
|
|
|
|
|
|
|
|
|
| 801 |
|
Interest and other income |
|
|
|
|
|
|
|
|
|
| 1,528 |
|
Reorganization items |
|
|
|
|
|
|
|
|
|
| (40,006 | ) |
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (57,182 | ) |
Gain on deconsolidation |
|
|
|
|
|
|
|
|
|
| 55,131 |
|
Income tax provision |
|
|
|
|
|
|
|
|
|
| (1,456 | ) |
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (7,351 | ) |
Net loss |
|
|
|
|
|
|
|
|
| $ | (37,841 | ) |
Capital expenditures (4) |
| $ | 13,799 |
|
| $ | 2,616 |
|
| $ | 16,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020 |
| Malls |
|
| All Other (1) |
|
| Total |
| |||
Revenues (2) |
| $ | 265,353 |
|
| $ | 26,432 |
|
| $ | 291,785 |
|
Property operating expenses (3) |
|
| (90,483 | ) |
|
| (5,667 | ) |
|
| (96,150 | ) |
Interest expense |
|
| (37,107 | ) |
|
| (62,516 | ) |
|
| (99,623 | ) |
Other expense |
|
| — |
|
|
| (400 | ) |
|
| (400 | ) |
Gain (loss) on sales of real estate assets |
|
| (25 | ) |
|
| 2,788 |
|
|
| 2,763 |
|
Segment profit (loss) |
| $ | 137,738 |
|
| $ | (39,363 | ) |
|
| 98,375 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (108,565 | ) |
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (36,563 | ) |
Interest and other income |
|
|
|
|
|
|
|
|
|
| 3,288 |
|
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (146,918 | ) |
Income tax provision |
|
|
|
|
|
|
|
|
|
| (16,643 | ) |
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (5,061 | ) |
Net loss |
|
|
|
|
|
|
|
|
| $ | (212,087 | ) |
Capital expenditures (4) |
| $ | 27,810 |
|
| $ | 3,653 |
|
| $ | 31,463 |
|
Total assets |
| Malls |
|
| All Other (1) |
|
| Total |
| |||
June 30, 2021 |
| $ | 3,546,596 |
|
| $ | 717,611 |
|
| $ | 4,264,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
| $ | 3,702,523 |
|
| $ | 741,217 |
|
| $ | 4,443,740 |
|
Three Months Ended September 30, 2017 | Malls | Associated Centers | Community Centers | All Other (1) | Total | |||||||||||||||
Revenues | $ | 205,020 | $ | 9,720 | $ | 4,023 | $ | 5,887 | $ | 224,650 | ||||||||||
Property operating expenses (2) | (59,602 | ) | (2,643 | ) | (843 | ) | (1,034 | ) | (64,122 | ) | ||||||||||
Interest expense | (28,922 | ) | (43 | ) | (89 | ) | (24,859 | ) | (53,913 | ) | ||||||||||
Other expense | — | — | — | (132 | ) | (132 | ) | |||||||||||||
Gain (loss) on sales of real estate assets | (1,994 | ) | — | — | 3,377 | 1,383 | ||||||||||||||
Segment profit (loss) | $ | 114,502 | $ | 7,034 | $ | 3,091 | $ | (16,761 | ) | 107,866 | ||||||||||
Depreciation and amortization expense | (71,732 | ) | ||||||||||||||||||
General and administrative expense | (13,568 | ) | ||||||||||||||||||
Interest and other income (loss) | (200 | ) | ||||||||||||||||||
Gain on extinguishment of debt | 6,452 | |||||||||||||||||||
Loss on impairment | (24,935 | ) | ||||||||||||||||||
Loss on investment | (354 | ) | ||||||||||||||||||
Income tax benefit | 1,064 | |||||||||||||||||||
Equity in earnings of unconsolidated affiliates | 4,706 | |||||||||||||||||||
Net income | $ | 9,299 | ||||||||||||||||||
Capital expenditures (3) | $ | 47,246 | $ | 594 | $ | 331 | $ | 110 | $ | 48,281 |
Three Months Ended September 30, 2016 | Malls | Associated Centers | Community Centers | All Other (1) | Total | |||||||||||||||
Revenues | $ | 228,918 | $ | 9,997 | $ | 4,776 | $ | 8,030 | $ | 251,721 | ||||||||||
Property operating expenses (2) | (68,189 | ) | (2,311 | ) | (1,149 | ) | 805 | (70,844 | ) | |||||||||||
Interest expense | (35,915 | ) | (1,424 | ) | (858 | ) | (16,095 | ) | (54,292 | ) | ||||||||||
Other expense | — | — | — | (5,576 | ) | (5,576 | ) | |||||||||||||
Gain on sales of real estate assets | 273 | — | — | 4,653 | 4,926 | |||||||||||||||
Segment profit (loss) | $ | 125,087 | $ | 6,262 | $ | 2,769 | $ | (8,183 | ) | 125,935 | ||||||||||
Depreciation and amortization expense | (71,794 | ) | ||||||||||||||||||
General and administrative expense | (13,222 | ) | ||||||||||||||||||
Interest and other income | 451 | |||||||||||||||||||
Gain on extinguishment of debt | (6 | ) | ||||||||||||||||||
Loss on impairment | (53,558 | ) | ||||||||||||||||||
Income tax benefit | 2,386 | |||||||||||||||||||
Equity in earnings of unconsolidated affiliates | 10,478 | |||||||||||||||||||
Net income | $ | 670 | ||||||||||||||||||
Capital expenditures (3) | $ | 64,085 | $ | 61 | $ | 1,452 | $ | 32,420 | $ | 98,018 |
Nine Months Ended September 30, 2017 | Malls | Associated Centers | Community Centers | All Other (1) | Total | |||||||||||||||
Revenues | $ | 632,830 | $ | 28,704 | $ | 12,459 | $ | 17,903 | $ | 691,896 | ||||||||||
Property operating expenses (2) | (182,926 | ) | (6,723 | ) | (2,394 | ) | (2,872 | ) | (194,915 | ) | ||||||||||
Interest expense | (93,481 | ) | (1,269 | ) | (247 | ) | (70,182 | ) | (165,179 | ) | ||||||||||
Other expense | — | — | — | (5,151 | ) | (5,151 | ) | |||||||||||||
Gain on sales of real estate assets | 75,434 | — | — | 11,470 | 86,904 | |||||||||||||||
Segment profit (loss) | $ | 431,857 | $ | 20,712 | $ | 9,818 | $ | (48,832 | ) | 413,555 | ||||||||||
Depreciation and amortization expense | (225,461 | ) | ||||||||||||||||||
General and administrative expense | (45,402 | ) | ||||||||||||||||||
Interest and other income | 1,235 | |||||||||||||||||||
Gain on extinguishment of debt | 30,927 | |||||||||||||||||||
Loss on impairment | (71,401 | ) | ||||||||||||||||||
Loss on investment | (6,197 | ) | ||||||||||||||||||
Income tax benefit | 4,784 | |||||||||||||||||||
Equity in earnings of unconsolidated affiliates | 16,404 | |||||||||||||||||||
Net income | $ | 118,444 | ||||||||||||||||||
Capital expenditures (3) | $ | 126,290 | $ | 1,678 | $ | 1,036 | $ | 2,874 | $ | 131,878 |
Nine Months Ended September 30, 2016 | Malls | Associated Centers | Community Centers | All Other (1) | Total | |||||||||||||||
Revenues | $ | 700,407 | $ | 30,096 | $ | 14,747 | $ | 24,514 | $ | 769,764 | ||||||||||
Property operating expenses (2) | (208,975 | ) | (7,010 | ) | (3,552 | ) | 6,805 | (212,732 | ) | |||||||||||
Interest expense | (105,797 | ) | (4,557 | ) | (321 | ) | (52,035 | ) | (162,710 | ) | ||||||||||
Other expense | — | — | — | (20,313 | ) | (20,313 | ) | |||||||||||||
Gain on sales of real estate assets | 489 | 478 | 3,239 | 10,297 | 14,503 | |||||||||||||||
Segment profit (loss) | $ | 386,124 | $ | 19,007 | $ | 14,113 | $ | (30,732 | ) | 388,512 | ||||||||||
Depreciation and amortization expense | (220,505 | ) | ||||||||||||||||||
General and administrative expense | (46,865 | ) | ||||||||||||||||||
Interest and other income | 1,062 | |||||||||||||||||||
Loss on impairment | (116,736 | ) | ||||||||||||||||||
Income tax benefit | 2,974 | |||||||||||||||||||
Equity in earnings of unconsolidated affiliates | 107,217 | |||||||||||||||||||
Net income | $ | 115,659 | ||||||||||||||||||
Capital expenditures (3) | $ | 125,406 | $ | 3,158 | $ | 2,420 | $ | 49,554 | $ | 180,538 |
Total Assets | Malls | Associated Centers | Community Centers | All Other (1) | Total | |||||||||||||||
September 30, 2017 | $ | 5,086,855 | $ | 243,840 | $ | 235,680 | $ | 177,381 | $ | 5,743,756 | ||||||||||
December 31, 2016 | $ | 5,383,937 | $ | 259,966 | $ | 215,917 | $ | 244,820 | $ | 6,104,640 | ||||||||||
(1) | |
The All Other category includes associated centers, community centers, mortgage and other notes receivable, office buildings, self-storage facilities, corporate-level debt and the Management |
(2) | Management, development and |
(3) | |
Property operating expenses include property operating, real estate taxes and maintenance and repairs. |
31
(4) | |
Includes additions to and acquisitions of real estate assets and investments in unconsolidated affiliates. Developments in progress are included in the All Other category. |
Note 11 – Earnings per Share and Earnings per Unit
Earnings per Share of the Company
Basic earnings per share (“EPS”) is computed by dividing net income (loss) 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.
Earnings per Unit of the Operating Partnership
Basic earnings per unit (“EPU”) is computed by dividingusing the two-class method. The two-class method is required when either (i) participating securities or (ii) multiple classes of common stock exists. The Operating Partnership’s special common units, and common units issued upon the conversion or redemption of special common units, meet the definition of participating securities as these units have the contractual right and obligation to share in the Operating Partnership’s net income (loss) and distributions. Under this approach net income (loss) attributable to common unitholders is reduced by the amount of distributions made (declared) to all common unitholders and by the amount of distributions that are required to be made (declared and undeclared) to special common unitholders. Distributed and undistributed earnings is subsequently divided by the weighted-average number of common and special common units outstanding for the period.period to compute basic EPU for each unit. Undistributed losses are allocated 100 percent to common units, other than common units issued upon the conversion or redemption of special common units. The special common units, and common units issued upon the conversion or redemption of special common units, only participate in undistributed losses in the event of a liquidation. Diluted EPU is computed by considering either the two-class method or the if-converted method, whichever results in more dilution. The if-converted method assumes the issuance of common units for all potential dilutive special common units outstanding.
32
The following table presents basic and diluted EPU for common and special common units for the three and nine month periodssix months ended SeptemberJune 30, 20172021 and 2016.2020.
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
|
| 2021 |
|
|
| 2020 |
|
|
| 2021 |
|
|
| 2020 |
|
Net Loss Attributable to Common Unitholders |
| $ | (9,112 | ) |
| $ | (83,529 | ) |
| $ | (36,573 | ) |
| $ | (233,839 | ) |
Distributions to Common Unitholders - Declared Only |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Distributions to Special Common Unitholders - Declared and Undeclared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units issued on conversion of SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
S-SCUs |
|
| — |
|
|
| (1,143 | ) |
|
| — |
|
|
| (2,286 | ) |
L-SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (433 | ) |
K-SCUs |
|
| — |
|
|
| (844 | ) |
|
| — |
|
|
| (1,687 | ) |
Total Undistributed Loss Available to Common and Special Common Unitholders |
| $ | (9,112 | ) |
| $ | (85,516 | ) |
| $ | (36,573 | ) |
| $ | (238,245 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributed Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units issued on conversion of SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
S-SCUs |
|
| — |
|
|
| 1,143 |
|
|
| — |
|
|
| 2,286 |
|
L-SCUs |
|
| — |
|
|
| 433 |
|
|
| — |
|
|
| 433 |
|
K-SCUs |
|
| — |
|
|
| 844 |
|
|
| — |
|
|
| 1,687 |
|
Common Units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed Loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units issued on conversion of SCUs |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
S-SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
L-SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
K-SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Common Units |
|
| (9,112 | ) |
|
| (85,513 | ) |
|
| (36,573 | ) |
|
| (238,243 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units issued on conversion of SCUs |
|
| 936 |
|
|
| 1,697 |
|
|
| 936 |
|
|
| 1,697 |
|
S-SCUs |
|
| 1,561 |
|
|
| 1,561 |
|
|
| 1,561 |
|
|
| 1,561 |
|
L-SCUs |
|
| 572 |
|
|
| 572 |
|
|
| 572 |
|
|
| 572 |
|
K-SCUs |
|
| 869 |
|
|
| 1,137 |
|
|
| 869 |
|
|
| 1,137 |
|
Common Units |
|
| 197,624 |
|
|
| 196,736 |
|
|
| 197,639 |
|
|
| 196,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPU: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units issued on conversion of SCUs |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
S-SCUs |
|
| — |
|
|
| 0.73 |
|
|
| — |
|
|
| 1.46 |
|
L-SCUs |
|
| — |
|
|
| 0.76 |
|
|
| — |
|
|
| 0.76 |
|
K-SCUs |
|
| — |
|
|
| 0.74 |
|
|
| — |
|
|
| 1.48 |
|
Common Units |
|
| (0.05 | ) |
|
| (0.43 | ) |
|
| (0.18 | ) |
|
| (1.21 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic EPU |
| $ | (0.05 | ) |
| $ | (0.41 | ) |
| $ | (0.18 | ) |
| $ | (1.16 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPU: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units issued on conversion of SCUs |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | - |
|
S-SCUs |
|
| — |
|
|
| 0.73 |
|
|
| — |
|
|
| 1.46 |
|
L-SCUs |
|
| — |
|
|
| 0.76 |
|
|
| — |
|
|
| 0.76 |
|
K-SCUs |
|
| — |
|
|
| 0.74 |
|
|
| — |
|
|
| 1.48 |
|
Common Units |
|
| (0.05 | ) |
|
| (0.43 | ) |
|
| (0.18 | ) |
|
| (1.21 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Diluted EPU |
| $ | (0.05 | ) |
| $ | (0.41 | ) |
| $ | (0.18 | ) |
| $ | (1.16 | ) |
For additional information regarding the participation rights and minimum distributions relating to the common and special common units, see Note 10. Shareholders’ Equity and Partners’ Capital and Note 11. Redeemable Interests and Noncontrolling Interests of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Pursuant to the terms of the Series L special common units of limited partnership interest, the Series L special common units began receiving distributions equal to those on the common units beginning on June 1, 2020. The undeclared distributions on the preferred units and special common units ceased to cumulate as of the Commencement Date as a result of the Chapter 11 Cases.
Note 12 – Contingencies
Securities Litigation
The Company and certain of its officers and directors were named as defendants in three putative securities class action lawsuits (collectively, the “Securities Class Action Litigation”), each filed in the United States District Court for the Eastern District of Tennessee, on behalf of all persons who purchased or otherwise acquired the Company’s securities during a specified period of time. Those cases were consolidated on July 17, 2019, under the caption In re CBL & Associates Properties, Inc. Securities Litigation, 1:19-cv-00149-JRG-CHS.
The complaints filed in the Securities Class Action Litigation allege violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements and omissions regarding the Company’s contingent liabilities, business, operations, and prospects during the periods of time specified above. The plaintiffs seek compensatory damages and attorneys’ fees and costs, among other relief, but have not specified the amount of damages sought. The outcome of these legal proceedings cannot be predicted with certainty. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 9, 2020.
Certain of the Company’s current and former directors and officers were named as defendants in nine shareholder derivative lawsuits (collectively, the “Derivative Litigation”). On June 4, 2019, a shareholder filed a putative derivative complaint captioned Robert Garfield v. Stephen D. Lebovitz et al., 1:19-cv-01038-LPS, in the United States District Court for the District of Delaware (the “Garfield Derivative Action”), purportedly on behalf of the Company against certain of its officers and directors. On June 24, 2019, September 5, 2019 and September 25, 2019, respectively, other shareholders filed three additional putative derivative complaints, each in the United States District Court for the District of Delaware, captioned as follows: Robert Cohen v. Stephen D. Lebovitz et al., 1:19-cv-01185-LPS (the “Cohen Derivative Action”); Travis Lore v. Stephen D. Lebovitz et al., 1:19-cv-01665-LPS (the “Lore Derivative Action”), and City of Gainesville Cons. Police Officers’ and Firefighters Retirement Plan v. Stephen D. Lebovitz et al., 1:19-cv-01800 (the “Gainesville Derivative Action”), each asserting substantially similar claims purportedly on behalf of the Company against similar defendants. The Court consolidated the Garfield Derivative Action and the Cohen Derivative Action on July 17, 2019, under the caption In re CBL & Associates Properties, Inc. Derivative Litigation, 1:19-cv-01038-LPS (the "Consolidated Derivative Action"). On July 25, 2019, the Court stayed proceedings in the Consolidated Derivative Action pending resolution of an eventual motion to dismiss in the Securities Class Action Litigation. On October 14, 2019, the parties to the Gainesville Derivative Action and the Lore Derivative Action filed a joint stipulation and proposed order confirming that each of those cases is subject to the consolidation order previously entered by the Court in the Consolidated Derivative Action and that further proceedings in those cases are stayed pending resolution of an eventual motion to dismiss in the Securities Class Action Litigation. On July 22, 2019, a shareholder filed a putative derivative complaint captioned Shebitz v. Lebovitz et al., 1:19-cv-00213, in the United States District Court for the Eastern District of Tennessee (the “Shebitz Derivative Action”); on January 10, 2020, a shareholder filed a putative derivative complaint captioned Chatman v. Lebovitz, et al., 2020-0011-JTL, in the Delaware Chancery Court (the “Chatman Derivative Action”); on February 12, 2020, a shareholder filed a putative derivative complaint captioned Kurup v. Lebovitz, et al., 2020-0070-JTL, in the Delaware Chancery Court (the “Kurup Derivative Action”); on February 26, 2020, a shareholder filed a putative derivative complaint captioned Kemmer v. Lebovitz, et al., 1:20-cv-00052, in the United States District Court for the Eastern District of Tennessee (the “Kemmer Derivative Action”); and on April 14, 2020, a shareholder filed a putative derivative complaint captioned Hebig v. Lebovitz, et al., 1:19-cv-00149-JRG-CHS, in the United States District Court for the Eastern District of Tennessee (the “Hebig Derivative Action”), each asserting substantially similar claims purportedly on behalf of the Company against similar defendants. The actions pending in Delaware Chancery Court have been consolidated into one case, and likewise, the actions pending in Delaware federal court have been consolidated into one case. The Tennessee actions have not been consolidated. On October 7, 2019, the Court stayed the Shebitz Derivative Action, pending resolution of an eventual motion to dismiss in the related Securities Class Action Litigation; the Company expects the other Derivative Actions to be stayed as well.
34
The complaints filed in the Derivative Litigation allege, among other things, breaches of fiduciary duties, unjust enrichment, waste of corporate assets, and violations of the federal securities laws. The factual allegations upon which these claims are based are similar to the factual allegations made in the Securities Class Action Litigation, described above. The complaints filed in the Derivative Litigation seek, among other things, unspecified damages and restitution for the Company from the individual defendants, the payment of costs and attorneys’ fees, and that the Company be directed to reform certain governance and internal procedures. The outcome of these legal proceedings cannot be predicted with certainty. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 9, 2020. On November 12, 2020, the Court in the various Delaware actions entered an order staying these matters in light of the Suggestion of Bankruptcy, as did the Court in the Tennessee actions on December 8, 2020.
The Company's insurance carriers have been placed on notice of these matters.
The Company is currently involved in certain other litigation that arises in the ordinary course of business, most of which is expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company.
Environmental Contingencies
The Company evaluates potential loss contingencies related to environmental matters using the same criteria
Guarantees
The Operating Partnership may guaranteeguaranty 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 Operating Partnership’sPartnership's investment in the joint venture. The Operating Partnership may receive a fee from the joint venture for providing the guaranty. Additionally, when the Operating Partnership issues a guaranty, the terms of the joint venture agreement typically provide that the Operating Partnership may receive indemnification from the joint venture partner or have the ability to increase its ownership interest. The guarantees expire upon repayment of the debt, unless noted otherwise.
The following table represents the Operating Partnership's guarantees of unconsolidated affiliates' debt as reflected in the accompanying condensed consolidated balance sheets as of SeptemberJune 30, 20172021 and December 31, 2016:2020:
|
| As of June 30, 2021 |
|
| Obligation recorded to reflect guaranty |
| ||||||||||||||||||||||
Unconsolidated Affiliate |
| Company's Ownership Interest |
|
| Outstanding Balance |
|
| Percentage Guaranteed by the Operating Partnership |
|
|
| Maximum Guaranteed Amount |
|
| Debt Maturity Date (1) |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||
West Melbourne I, LLC - Phase I |
| 50% |
|
| $ | 39,635 |
|
| 50% |
|
|
| $ | 19,818 |
|
| Feb-2025 | (2) |
| $ | 198 |
|
| $ | 201 |
| ||
West Melbourne I, LLC - Phase II |
| 50% |
|
|
| 14,175 |
|
| 50% |
|
|
|
| 7,088 |
|
| Feb-2025 | (2) |
|
| 71 |
|
|
| 72 |
| ||
Port Orange I, LLC |
| 50% |
|
|
| 52,448 |
|
| 50% |
|
|
|
| 26,224 |
|
| Feb-2025 | (2) |
|
| 262 |
|
|
| 266 |
| ||
Ambassador Infrastructure, LLC |
| 65% |
|
|
| 8,250 |
|
| 100% |
|
|
|
| 8,250 |
|
| Mar-2025 |
|
|
| 83 |
|
|
| 94 |
| ||
Shoppes at Eagle Point, LLC |
| 50% |
|
|
| 34,285 |
|
| 35% |
| (3) |
|
| 12,740 |
|
| Oct-2021 |
|
|
| 127 |
|
|
| 127 |
| ||
EastGate Storage, LLC |
| 50% |
|
|
| 6,490 |
|
| 50% |
| (4) |
|
| 3,245 |
|
| Dec-2022 |
|
|
| 32 |
|
|
| 33 |
| ||
Self Storage at Mid Rivers, LLC |
| 50% |
|
|
| 5,955 |
|
| 50% |
| (4) |
|
| 2,994 |
|
| Apr-2023 |
|
|
| 30 |
|
|
| 30 |
| ||
Parkdale Self Storage, LLC |
| 50% |
|
|
| 6,392 |
|
| 100% |
| (5) |
|
| 6,500 |
|
| Jul-2024 |
|
|
| 65 |
|
|
| 65 |
| ||
Hamilton Place Self Storage, LLC |
| 54% |
|
|
| 6,770 |
|
| 50% |
| (4) |
|
| 3,501 |
|
| Sep-2024 |
|
|
| 35 |
|
|
| 35 |
| ||
Atlanta Outlet JV, LLC |
| 50% |
|
|
| 4,536 |
|
| 100% |
|
|
|
| 4,536 |
|
| Nov-2023 |
|
|
| — |
|
|
| — |
| ||
Louisville Outlet Shoppes, LLC |
| 50% |
|
|
| 8,632 |
|
| 100% |
|
|
|
| 8,632 |
|
| Oct-2021 |
|
|
| — |
|
|
| — |
| ||
Total guaranty liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 903 |
|
| $ | 923 |
|
35
As of September 30, 2017 | Obligation recorded to reflect guaranty | ||||||||||||||||||||||
Unconsolidated Affiliate | Company's Ownership Interest | Outstanding Balance | Percentage Guaranteed by the Operating Partnership | Maximum Guaranteed Amount | Debt Maturity Date (1) | 9/30/2017 | 12/31/2016 | ||||||||||||||||
West Melbourne I, LLC - Phase I (2) | 50% | $ | 42,397 | 20% | $ | 8,479 | Feb-2018 | (3) | $ | 86 | $ | 86 | |||||||||||
West Melbourne I, LLC - Phase II (2) | 50% | 16,377 | 20% | 3,275 | Feb-2018 | (3) | 33 | 33 | |||||||||||||||
Port Orange I, LLC | 50% | 57,298 | 20% | 11,460 | Feb-2018 | (3) | 116 | 116 | |||||||||||||||
Ambassador Infrastructure, LLC | 65% | 11,035 | 100% | 11,035 | Aug-2020 | (4) | 177 | 177 | |||||||||||||||
Total guaranty liability | $ | 412 | $ | 412 |
(1) | |
Excludes any extension options. |
(2) | |
These loans have a one-year extension option at the joint venture’s election. |
(3) | |
The guaranty is for a fixed amount of $12,740 throughout the term of the loan, including any extensions. The loan has a |
(4) | |
Subject to the bankruptcy default being waived, the guaranty may be reduced to 25% once certain debt and |
(5) | The guaranty was increased to 100% as a result of the Chapter 11 Cases filed by the Company. |
As described in Note 2, the filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. As of June 30, 2021, there is a default under each of the following guaranteed loans as a result of the filing of the Chapter 11 Cases: EastGate Storage, LLC; Self Storage at Mid Rivers, LLC; Parkdale Self Storage, LLC; Hamilton Place Self Storage, LLC and Atlanta Outlet JV, LLC.
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 partythird-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 $14,000 as of September 30, 2017. 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 include an obligation forrecord a credit loss related to this guaranty because it determined thatfor the fairthree and six months ended June 30, 2021 and June 30, 2020.
For the three and six months ended June 30, 2021 and June 30, 2020, the Company evaluated each guaranty, listed in the table above, individually by evaluating the debt service ratio, cash flow forecasts, the performance of each loan and, where applicable, the collateral value in relation to the outstanding amount of the guarantyloan. The result of the analysis was not material asthat each loan is current, performing and, where applicable, the collateral value was greater than the outstanding amount of September 30, 2017 and December 31, 2016.
Note 13 – Share-Based Compensation
As of SeptemberJune 30, 2017, there was one share-based compensation plan under which2021, the Company has outstanding awards under the CBL & Associates Properties, Inc. 2012 Stock Incentive Plan ("the 2012(the “2012 Plan"), which was approved by the Company's shareholders in May 2012. The 2012 Plan permits the Company to issue stock options and common stock to selected officers, employees and non-employee directors of the Company up to a total of 10,400,000 shares. As the primary operating subsidiary of the Company, the Operating Partnership participates in and bears the compensation expense associated with the Company's share-based compensation plans.
Restricted Stock Awards
Share-based compensation expense related to the restricted stock awards was $812$246 and $886$361 for the three months ended SeptemberJune 30, 20172021 and 2016, respectively,2020, respectively; and $3,175$543 and $2,834$1,505 for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively.Share-based compensation cost capitalized as part of real estate assets was $94$2 and $83$5 for the three months ended SeptemberJune 30, 20172021 and 2016, respectively,2020, respectively; and, $308$6 and $274$12 for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively.
A summary of the status of the Company’s nonvested restricted stock awards as of SeptemberJune 30, 2017,2021, and changes during the ninesix months ended SeptemberJune 30, 2017,2021, is presented below:
|
| Shares |
|
| Weighted- Average Grant-Date Fair Value |
| ||
Nonvested at January 1, 2021 |
|
| 1,519,606 |
|
| $ | 2.15 |
|
Granted |
|
| — |
|
| $ | — |
|
Vested |
|
| (480,463 | ) |
| $ | 3.11 |
|
Forfeited |
|
| (15,844 | ) |
| $ | 2.51 |
|
Nonvested at June 30, 2021 |
|
| 1,023,299 |
|
| $ | 1.70 |
|
Shares | Weighted-Average Grant Date Fair Value | |||||
Nonvested at January 1, 2017 | 602,162 | $ | 15.41 | |||
Granted | 326,424 | $ | 10.75 | |||
Vested | (247,729 | ) | $ | 14.78 | ||
Forfeited | (6,870 | ) | $ | 13.04 | ||
Nonvested at September 30, 2017 | 673,987 | $ | 13.41 |
36
As of SeptemberJune 30, 2017,2021, there was $6,788$1,352 of total unrecognized compensation cost related to nonvested stock awards granted under the plans, which is expected to be recognized over a weighted-average period of 2.71.9 years.
Long-Term Incentive Program
A summary of the Company adopted aCompany’s long-term incentive program ("LTIP"(“LTIP”) is disclosed in Note 18 to the consolidated financial statements included in its Annual Report on Form 10-K for itsthe year ended December 31, 2020. Outstanding restricted stock, and related grant/vesting/forfeiture activity during 2021 for awards made to named executive officers which consists of performance stock unit ("PSU") awards and annual restricted stock awards, that may be issued under the 2012 Plan. The number of shares related to the PSU awards that each named executive officer may receive upon the conclusion of a three-year performance period is determined based on the Company's achievement of specified levels of long-term total stockholder return ("TSR") performance relative to the National Association of Real Estate Investment Trusts ("NAREIT") Retail Index, provided that at least a "Threshold" level must be attained for any shares to be earned.
Performance Stock Units
There were 0 PSUs granted in 2021. The Company1,103,537 outstanding PSUs at June 30, 2021 were granted the following PSUs in the first quarter of the respective years2019. Of that amount, 566,862 PSUs are classified as follows:
PSUs granted | Weighted-Average Grant Date Fair Value | |||||
2015 PSUs | 138,680 | $ | 15.52 | |||
2016 PSUs | 282,995 | $ | 4.98 | |||
2017 PSUs | 277,376 | $ | 6.86 |
Compensation cost is recognized on a tranche-by-tranche basis using the accelerated attribution method. The resulting expense, for awards classified as equity, is recorded regardless of whether any PSU awards are earned as long as the required service period is met.
Share-based compensation expense related to the PSUs was $386$94 and $258$(60) for the three months ended SeptemberJune 30, 20172021 and 2016, respectively. Share-based compensation expense related to the PSUs was $1,1152020, respectively; and $774$189 and $418 for the ninesix months ended SeptemberJune 30, 20172021 and 20162020, respectively. Unrecognized compensation costs related to the PSUs was $2,548$453 as of SeptemberJune 30, 2017.
2017 PSUs | 2016 PSUs | ||||||
Grant date | February 7, 2017 | February 10, 2016 | |||||
Fair value per share on valuation date (1) | $ | 6.86 | $ | 4.98 | |||
Risk-free interest rate (2) | 1.53 | % | 0.92 | % | |||
Expected share price volatility (3) | 32.85 | % | 30.95 | % |
Note 14 – Noncash Investing and Financing Activities
The Company’s noncash investing and financing activities were as follows:
|
| Six Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Additions to real estate assets accrued but not yet paid |
| $ | 8,332 |
|
| $ | 14,130 |
|
Deconsolidation upon loss of control (1): |
|
|
|
|
|
|
|
|
Decrease in real estate assets |
|
| (84,860 | ) |
|
| — |
|
Decrease in mortgage and other indebtedness |
|
| 134,354 |
|
|
| — |
|
Decrease in operating assets and liabilities |
|
| 5,808 |
|
|
| — |
|
Decrease in intangible lease and other assets |
|
| (171 | ) |
|
| — |
|
Conversion of Operating Partnership units to common stock |
|
| — |
|
|
| 21,051 |
|
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Accrued dividends and distributions payable | $ | 54,375 | $ | 54,313 | |||
Additions to real estate assets accrued but not yet paid | 12,204 | 16,495 | |||||
Capital contribution of note receivable to joint venture | — | 5,280 | |||||
Capital contribution from noncontrolling interest to joint venture | — | 155 | |||||
Write-off of notes receivable | — | 1,846 | |||||
Mortgage debt assumed by buyer of real estate assets | — | 38,237 | |||||
Deconsolidation upon assignment of interests in joint venture: (1) | |||||||
Decrease in real estate assets | (9,131 | ) | — | ||||
Decrease in mortgage and other indebtedness | 2,466 | — |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Decrease in operating assets and liabilities | 1,286 | — | |||||
Decrease in noncontrolling interest and joint venture interest | 2,232 | — | |||||
Transfer of real estate assets in settlement of mortgage debt obligation: (2) | |||||||
Decrease in real estate assets | (149,722 | ) | — | ||||
Decrease in mortgage and other indebtedness | 189,642 | — | |||||
Decrease in operating assets and liabilities | (122 | ) | — | ||||
Deconsolidation upon formation of joint venture: | |||||||
Decrease in real estate assets | — | (14,025 | ) | ||||
Increase in investment in unconsolidated affiliate | — | 14,030 | |||||
Decrease in accounts payable and accrued liabilities | — | (5 | ) |
(1) | |
additional information. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Current tax benefit | $ | 225 | $ | 927 | $ | 7,695 | $ | 1,194 | |||||||
Deferred tax benefit (provision) | 839 | 1,459 | (2,911 | ) | 1,780 | ||||||||||
Income tax benefit | $ | 1,064 | $ | 2,386 | $ | 4,784 | $ | 2,974 |
Note 1615 – Subsequent Events
In October 2017,July 2021, the unconsolidated 50/50 joint venture, ShoppesCompany reached an agreement with the lender to amend the loan secured by Springs at Eagle Point, LLC, closed on a construction loan forPort Orange, which extends the development of The Shoppes at Eagle Point, a community center located in Cookeville, TN. The Operating Partnership has guaranteed 100%term of the loan. The maximumnote to December 31, 2021, increases the principal amount of the construction loan is $36,400,to $44,400, or $19,314 at the Company’s share, and bearsprovides an interest at a variable rate of LIBOR plus 275 basis points.2.0%.
In July 2021, the Company used funds from its matured U.S. Treasury securities to purchase $149,985 in U.S. Treasury securities with maturities that range from September 2021 to October 2021.
In August 2021, the Company entered into a forbearance agreement with the lender regarding the loan secured by Fayette Mall. The forbearance agreement provides for a modified loan hascontingent upon the Debtors' emergence from bankruptcy and final approval from the lender.
On August 11, 2021, following the confirmation hearing, the Bankruptcy Court entered an initial maturity dateorder confirming the Plan. Pursuant to the Amended RSA, the Company is required to have the Plan become effective no later than November 1, 2021.
38
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””us” and “our” refer to the Company or the Company and the Operating Partnership collectively, as the text requires.
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. All statements other than statements of historical fact should be considered to be forward-looking statements. 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,” and variations of these words and 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.
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. Currently, a significant factor that could cause actual outcomes to differ materially from our forward-looking statements is the impact of the risks and uncertainties associated with the Chapter 11 process on our operations and ability to develop and execute our business plans, and to satisfy the conditions and milestones applicable under the third amended Chapter 11 plan of reorganization (with technical modifications) (the “Plan”) that was confirmed by the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) on August 11, 2021. Another significant factor that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the COVID-19 pandemic, and state and/or local regulatory responses to control it, on our financial condition, operating results and cash flows, our tenants and their customers, the real estate market in which we operate, the global economy and the financial markets. The extent to which the COVID-19 pandemic impacts us and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the direct and indirect economic effects of the pandemic and containment measures, and potential changes in consumer behavior, among others. In addition to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016,2020, such known risks and uncertainties, many of which may be influenced by the COVID-19 pandemic, include, without limitation:
• | general industry, economic and business conditions; |
• | the impact of the risks and uncertainties associated with the Chapter 11 process on our operations and ability to develop and execute our business plans, and to satisfy the conditions and milestones applicable under the Plan, for the duration of the Chapter 11 Cases; |
• | interest rate fluctuations; |
• | costs and availability of capital, including debt, and capital requirements; |
• | the ongoing suspension of trading, and potential delisting, of our common stock and depositary shares representing interests in our Series D Preferred Stock and Series E Preferred Stock, from the NYSE, which has resulted in our common stock and the depositary shares representing interests in our Series D Preferred Stock and Series E Preferred Stock currently trading on the OTC Markets, operated by the OTC Markets Group, Inc.; |
• | costs and availability of real estate; |
• | inability to consummate acquisition opportunities and other risks associated with acquisitions; |
• | competition from other companies and retail formats; |
• | changes in retail demand and rental rates in our markets; |
• | shifts in customer demands including the impact of online shopping; |
• | tenant bankruptcies or store closings; |
• | changes in vacancy rates at our Properties; |
• | changes in operating expenses; |
39
Table of capital and capital requirements;Contents
• | changes in applicable laws, rules and regulations; |
• | disposition of real property; |
• | uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events, such as the recent COVID-19 pandemic; |
• | cyber-attacks or acts of cyber-terrorism; |
• | the withdrawal that occurred during 2020 of the credit ratings of the Operating Partnership's senior unsecured long-term indebtedness; |
• | 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 refinancing requirements and business; and |
• | other risks referenced from time to time in filings with the SEC and those factors listed or incorporated by reference into this report. |
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 REIT that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers, office and officeother properties. Our properties are located in 26 states, but are primarily inSee Note 1 to the southeastern and midwestern United States.condensed consolidated financial statements for information on our property interests as of June 30, 2021. We have elected to be taxed as a REIT for federal income tax purposes.
On March 11, 2020, the World Health Organization classified COVID-19 as a pandemic. Due to the extraordinary governmental actions taken to contain COVID-19, we are unable to predict the full extent of the pandemic’s impact on our results of operations for 2021. As a result, we did not issue full-year 2021 guidance.
In response to COVID-19, we have implemented strict procedures and guidelines for our employees, tenants and property visitors based on CDC and other health agency recommendations. Our properties continue to update these policies and procedures, following any new mandates and regulations, as required. The safety and health of our business throughcustomers, employees and tenants remains a top priority.
Our financial and operating results for the second quarter reflect the ongoing impact of COVID-19. While all properties are open, many state and local markets continue to impose occupancy and other restrictions, as well as imposing new restrictions as the spread of COVID-19 variants increases. These additional restrictions may have the effect of restricting traffic and sales for our tenants and may put additional pressure on our tenants’ financial health. We have worked with our tenants to enhance customer reach despite the restrictions, including offering curbside, delivery and opening buy-online-pick-up-instore locations. We have experienced encouraging improvements in sales and traffic at our centers as vaccination rates increased and government restrictions were lessened, but uncertainty remains as variants of the virus cause further outbreaks. For the six months ended June 30, 2021, same-center sales increased more than 17% as compared with the six months ended June 30, 2019, which, if sustained, bodes well for future leasing efforts. Percentage rents and short-term rents increased significantly during the quarter as a result of the sales rebound. However, revenues for the quarter continue to be impacted by declines in occupancy and rental rates from tenants that filed for bankruptcy or are struggling financially. The pandemic accelerated a number of tenant bankruptcies, resulting in a heightened level of store closures and lost rent in 2020, the impact of which has carried forward into 2021.
The mandated property closures in 2020 resulted in nearly all our tenants closing for a period of time and/or shortening operating hours. As a result, we experienced an increased level of requests for rent deferrals and abatements, as well as defaults on rent obligations. While, in general, we believe that tenants have a clear contractual obligation to pay rent, we have been working with our tenants to address rent deferral and abatement requests. We have granted rent deferrals of $40.5 million since the COVID-19 pandemic began. We also granted rent abatements of approximately $4.7 million and $10.7 million during the three and six months ended June 30, 2021, respectively.
As discussed under Voluntary Reorganization under Chapter 11 below, the Debtors commenced the filing of the Chapter 11 Cases. The filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership. The Operating Partnership consolidatesPartnership’s subsidiaries, which may result in acceleration of the financial statementsoutstanding principal and other sums due. See Note 2 and Liquidity and Capital Resources for additional information.
40
Table of all entities in which it hasContents
We had a controlling financial interest or where it is the primary beneficiary of a VIE.
Malls (1) | Associated Centers | Community Centers | Office Buildings | Total | |||||||
Consolidated properties | 60 | 20 | 4 | 5 | (2) | 89 | |||||
Unconsolidated properties (3) | 8 | 3 | 5 | — | 16 | ||||||
Total | 68 | 23 | 9 | 5 | 105 |
• | Loss on impairment for the three and six months ended June 30, 2021 that is $13.3 million and $89.7 million lower, respectively; |
• | Gain on deconsolidation of $55.1 million for the six months ended June 30, 2021; |
• | Interest expense for the three and six months ended June 30, 2021 that is $30.3 million and $53.2 million lower, respectively; |
• | Reorganization items for the three and six months ended June 30, 2021 of $17.1 million and $40.0 million, respectively; |
• | Income tax provision for the three and six months ended June 30, 2021 that is $15.4 million and $15.2 million lower, respectively. |
Our focus is on continuing to maximize available cash flow for investing in our properties and debt reduction, our Board of Directors made the decision to reduce our common stock dividend in the fourth quarter of 2017 to an annualized rate of $0.80 per share from $1.06 per share. Based on our updated projections of taxable income, which have been impacted by dilution of properties sold in prior periods as well as the impact from the high level of tenant bankruptcies which occurred during the year, the common dividend is being re-set to a rate that will preserve an estimated $50 million of additional cash on an annual basis. We expect to use this enhanced liquidity to help in funding value-adding redevelopment activity and debt reduction.
Same-center NOI and FFO are non-GAAP measures. For a description of same-center NOI, a reconciliation from net income (loss) to same-center NOI, and an explanation of why we believe this is a useful performance measure, see
Non-GAAP Measure - Same-center Net Operating IncomeinVoluntary Reorganization under Chapter 11
Beginning on November 1, 2020 (the “Commencement Date”), CBL & Associates Properties, Inc. together with its majority owned subsidiary, CBL & Associates Limited Partnership, together with certain of its direct and indirect subsidiaries (collectively, the “Debtors”), commenced voluntary chapter 11 cases (the “Chapter 11 Cases”) by filing voluntary petitions for reorganization under chapter 11 of title 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) with the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Debtors are authorized to continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. Pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, the Debtors’ Chapter 11 Cases are being jointly administered for procedural purposes only under the caption In re CBL & Associates Properties, Inc., et al., Case No. 20-35226. Documents filed on the docket of and other information related to the Chapter 11 Cases are available free of charge online at https://dm.epiq11.com/case/cblproperties/dockets.
The filing of the Chapter 11 Cases constituted an event of default that results in the automatic acceleration of certain monetary obligations to be immediately due and payable with respect to the secured credit facility and the senior unsecured notes. On November 2, 2020, we filed an adversary proceeding in the Bankruptcy Court seeking among other things, a temporary restraining order (the “Order”) and for a preliminary injunction to enjoin, pending a determination of the parties’ rights, the administrative agent or any of its officers, agents, servants, attorneys and successors from taking any action to exercise any and all remedies under the terms of the secured credit facility or other agreements as a result of the events of default asserted by the administrative agent, or any other right or remedy that would otherwise accompany the occurrence of an event of default, including without limitation, any rights of acceleration under the terms of the secured credit facility, rights flowing from the notice of acceleration, rights exercised pursuant to the Notice of Exercise or any other rights or remedies properly exercisable solely upon an actual or determined event of default. On November 2, 2020, the Bankruptcy Court granted the Order, and the Bankruptcy Court took up the other pending claims during the adversarial proceeding, which has now been stayed pending the confirmation our plan, discussed below.
Following the Commencement Date, the Bankruptcy Court entered certain interim and final orders facilitating the Debtors’ operational transition into Chapter 11. These orders authorized the Debtors to, among other things, pay certain prepetition employee expenses and benefits, use their existing cash management system, maintain and administer
41
customer programs, pay certain critical service providers, honor insurance-related obligations, and pay certain prepetition taxes and related fees on a final basis.
After engaging in negotiations in a Bankruptcy Court-ordered mediation, on March 21, 2021 (the “Agreement Effective Date”), we entered into the First Amended and Restated Restructuring Support Agreement (the “Amended RSA”), with the Consenting Noteholders in excess of 69% (including joinders) of the aggregate principal amount of the Notes and certain lenders party to our secured credit facility who hold in the aggregate in excess of 96% (including joinders) of the aggregate outstanding principal amount of debt under the secured credit facility (the “Consenting Bank Lenders” and together with the Consenting Noteholders, the “Consenting Stakeholders”). The Amended RSA amends and restates the Original RSA and sets forth, subject to certain conditions, the commitments to and obligations of, on the one hand, the Company, and on the other hand, the Consenting Noteholders and Consenting Bank Lenders, in connection with the restructuring transactions (the “Restructuring Transactions”) set forth in the Amended RSA and the plan term sheet attached as Exhibit B to the Amended RSA (the “Plan Term Sheet”). The Amended RSA contemplates that the restructuring and recapitalization of the Debtors will occur through a joint plan of reorganization in the Chapter 11 Cases.
As required by the Amended RSA, (i) on April 15, 2021, we filed an amended Chapter 11 plan of reorganization and accompanying disclosure statement with the Bankruptcy Court; (ii) on May 18, 2021, we filed the second amended Chapter 11 plan of reorganization and accompanying disclosure statement, as further amended on May 19, 2021; and (iii) on May 25, 2021, the Company filed the Plan and accompanying disclosure statement (the “Disclosure Statement”), to implement the restructuring transactions. In addition, on May 26, 2021, the Bankruptcy Court entered an order that among other things, approved our Disclosure Statement and established dates and deadlines related to solicitation of, voting on, and confirmation of the Plan. We filed technical modifications to the Plan on August 9, 2021. The Amended RSA provides that the ongoing litigation between us and the lenders of our secured credit facility (the “Bank Lenders”) arising from the prepetition enforcement actions taken by the Bank Lenders is stayed and is to be dismissed upon the order confirming the Plan becoming a “Final Order” (as defined in the Plan).
On August 11, 2021, following the confirmation hearing, the Bankruptcy Court entered an order confirming the Plan. Pursuant to the Amended RSA, we are required to have the Plan become effective no later than November 1, 2021. We cannot predict the ultimate outcome of the Chapter 11 Cases at this time. For the duration of our Chapter 11 proceedings, our operations and ability to develop and execute our business plan is subject to the risks and uncertainties associated with the Chapter 11 process. As a result of these risks and uncertainties, the amount and composition of our assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 proceedings, and the description of our operations, properties and liquidity and capital resources included in this quarterly report may not accurately reflect our operations, properties and liquidity and capital resources following the Chapter 11 process.
Once effective, the Plan provides for the elimination of more than $1,681,900 of debt and preferred obligations, including an aggregate cash payment of $195,000 as noted below, as well as a significant reduction in interest expense. In exchange for their approximately $1,375,000 in principal amount of senior unsecured notes and $133,000 in principal amount of the secured credit facility, Consenting Noteholders, other noteholders, and certain holders of unsecured claims against the Company will receive, in the aggregate, $95,000 in cash, $555,000 of new senior secured notes, of which up to $100,000, upon election by the Consenting Noteholders, may be received in the form of new convertible secured notes and 89% in common equity of the newly reorganized company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders will also provide up to $50,000 of new money in exchange for additional convertible secured notes. The transactions outlined in the Plan will be implemented in the Chapter 11 Cases. The Plan provides that the remaining Bank Lenders, holding $983,700 in principal amount under the secured credit facility, will receive $100,000 in cash and a new $883,700 secured term loan. Existing common and preferred shareholders are expected to receive up to 11% of common equity in the newly reorganized company.
In particular, subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assume and assign or reject executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach subject, in the case of the rejection of unexpired leases of real property, to certain caps on damages. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate for such damages. Generally, the assumption or assumption and assignment of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance thereunder. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this quarterly report, including where applicable a quantification of our obligations under any such executory contract or unexpired lease with the Debtors is qualified by any overriding rights we have under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the assumption, assumption and assignment or rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto.
42
Given the acceleration of the secured credit facility, the senior unsecured notes and certain property-level debt, as well as the inherent risks, unknown results and inherent uncertainties associated with the bankruptcy process and the direct correlation between these matters and our ability to satisfy our financial obligations that may arise, we believe that there is substantial doubt that we will continue to operate as a going concern within one year after the date our condensed consolidated financial statements are issued. Our ability to continue as a going concern is contingent upon our ability to successfully implement the Plan. See
Results of Operations
Properties that were in operation for the entire year during 20162020 and the ninesix months ended SeptemberJune 30, 20172021 are referred to as the “Comparable Properties.” Since January 1, 2016,2020, we have opened one community center developmenttwo self-storage facilities, deconsolidated two properties and one outlet center development as follows:
Properties Opened
Property | Location | Date Opened | ||
Parkdale Mall – Self Storage (1) | Beaumont, TX | April 2020 | ||
Hamilton Place – Self Storage (1) | Chattanooga, TN | July 2020 |
(1) | ||||
The |
Deconsolidations
Property | Location | Date of Deconsolidation | ||
Asheville Mall (1) | Asheville, NC | January 2021 | ||
Park Plaza (1) | Little Rock, AR | March 2021 |
(1) | We deconsolidated the property due to a loss of control when the property was placed into receivership in connection with the foreclosure process. |
Dispositions
Property | Location | Sales Date | ||
Hickory Point Mall (1) | Forsyth, IL | August 2020 | ||
Burnsville Center (1) | Burnsville, MN | December 2020 |
(1) | Title to the property was transferred to the mortgage holder in satisfaction of the non-recourse debt secured by the property. |
Comparison of the Three Months EndedJune 30, 2021to the Three Months EndedJune 30, 2020
Revenues
|
| Total for the Three Months Ended June 30, |
|
|
|
|
|
| Comparable Properties |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| Change |
|
| Core |
|
| Non-core |
|
| Deconsolidation |
|
| Dispositions |
|
| Total Change |
| ||||||||
Rental revenues |
| $ | 131,316 |
|
| $ | 120,222 |
|
| $ | 11,094 |
|
| $ | 17,227 |
|
| $ | 476 |
|
| $ | (3,765 | ) |
| $ | (2,844 | ) |
| $ | 11,094 |
|
Management, development and leasing fees |
|
| 1,449 |
|
|
| 1,055 |
|
|
| 394 |
|
|
| 394 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 394 |
|
Other |
|
| 3,796 |
|
|
| 2,934 |
|
|
| 862 |
|
|
| 773 |
|
|
| 329 |
|
|
| (85 | ) |
|
| (155 | ) |
|
| 862 |
|
Total revenues |
| $ | 136,561 |
|
| $ | 124,211 |
|
| $ | 12,350 |
|
| $ | 18,394 |
|
| $ | 805 |
|
| $ | (3,850 | ) |
| $ | (2,999 | ) |
| $ | 12,350 |
|
Rental revenues from the Comparable Properties increased primarily due to prior year rent concessions to tenants that are in our operations on a consolidated basis and is referredbankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic. Percentage rent increased due to higher sales in the current period, as the "New Property." The transactionsCOVID-19 pandemic had a significant impact on sales and traffic in the prior-year period.
43
Operating Expenses
|
| Total for the Three Months Ended June 30, |
|
|
|
|
|
| Comparable Properties |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| Change |
|
| Core |
|
| Non-core |
|
| Deconsolidation |
|
| Dispositions |
|
| Total Change |
| ||||||||
Property operating |
| $ | (19,623 | ) |
| $ | (16,906 | ) |
| $ | (2,717 | ) |
| $ | (3,656 | ) |
| $ | (364 | ) |
| $ | 653 |
|
| $ | 650 |
|
| $ | (2,717 | ) |
Real estate taxes |
|
| (15,110 | ) |
|
| (17,837 | ) |
|
| 2,727 |
|
|
| 1,552 |
|
|
| (36 | ) |
|
| 434 |
|
|
| 777 |
|
|
| 2,727 |
|
Maintenance and repairs |
|
| (8,784 | ) |
|
| (6,042 | ) |
|
| (2,742 | ) |
|
| (3,031 | ) |
|
| (119 | ) |
|
| 254 |
|
|
| 154 |
|
|
| (2,742 | ) |
Property operating expenses |
|
| (43,517 | ) |
|
| (40,785 | ) |
|
| (2,732 | ) |
|
| (5,135 | ) |
|
| (519 | ) |
|
| 1,341 |
|
|
| 1,581 |
|
|
| (2,732 | ) |
Depreciation and amortization |
|
| (47,499 | ) |
|
| (52,663 | ) |
|
| 5,164 |
|
|
| 1,658 |
|
|
| 890 |
|
|
| 1,799 |
|
|
| 817 |
|
|
| 5,164 |
|
General and administrative |
|
| (11,269 | ) |
|
| (18,727 | ) |
|
| 7,458 |
|
|
| 7,458 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7,458 |
|
Loss on impairment |
|
| — |
|
|
| (13,274 | ) |
|
| 13,274 |
|
|
| — |
|
|
| — |
|
|
| 13,274 |
|
|
| — |
|
|
| 13,274 |
|
Litigation settlement |
|
| (57 | ) |
|
| — |
|
|
| (57 | ) |
|
| (57 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (57 | ) |
Other |
|
| (287 | ) |
|
| (242 | ) |
|
| (45 | ) |
|
| (45 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (45 | ) |
Total operating expenses |
| $ | (102,629 | ) |
| $ | (125,691 | ) |
| $ | 23,062 |
|
| $ | 3,879 |
|
| $ | 371 |
|
| $ | 16,414 |
|
| $ | 2,398 |
|
| $ | 23,062 |
|
Property operating expenses at the Comparable Properties increased primarily due to lessening restrictions that allowed for the reopening of properties related to the New PropertyCOVID-19 pandemic and the actions taken in the prior year period to reduce operating expenses to mitigate the impact of mandated property closures and the comparisoneffects of results of operations for the threeCOVID-19 pandemic, including a reduction-in-force and nine months ended September 30, 2017other operating expense initiatives.
The decrease in depreciation and amortization expense related to the resultsComparable Properties primarily relates to a lower basis in depreciable assets resulting from impairments recorded since the prior-year period.
General and administrative expenses decreased primarily due to prepetition professional and legal fees incurred in the prior-year period related to our restructuring efforts.
In the second quarter of operations for2020, we recognized $13.3 million of loss on impairment of real estate to write down the three and nine months ended September 30, 2016. book value of one mall. See Note 4 6to the condensed consolidated financial statements for informationmore information.
Other Income and Expenses
Interest expense decreased $30.3 million primarily due to not recognizing interest expense on 2017 acquisitionsthe senior unsecured notes and dispositions.
The $7.0income tax provision decreased $15.4 million decreaseas compared to the prior-year period due to a full valuation allowance of $16.8 million that was recorded on our deferred tax assets in the prior-year period.
For the three months ended June 30, 2021 we recorded $17.1 million of reorganization items, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees directly related to the Chapter 11 Cases.
Comparison of the Six Months EndedJune 30, 2021to the Six Months EndedJune 30, 2020
Revenues
|
| Total for the Six Months Ended June 30, |
|
|
|
|
|
| Comparable Properties |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| Change |
|
| Core |
|
| Non-core |
|
| Deconsolidation |
|
| Dispositions |
|
| Total Change |
| ||||||||
Rental revenues |
| $ | 259,491 |
|
| $ | 281,395 |
|
| $ | (21,904 | ) |
| $ | (7,985 | ) |
| $ | (247 | ) |
| $ | (6,949 | ) |
| $ | (6,723 | ) |
| $ | (21,904 | ) |
Management, development and leasing fees |
|
| 3,108 |
|
|
| 3,147 |
|
|
| (39 | ) |
|
| (39 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (39 | ) |
Other |
|
| 7,146 |
|
|
| 7,243 |
|
|
| (97 | ) |
|
| 199 |
|
|
| 194 |
|
|
| (175 | ) |
|
| (315 | ) |
|
| (97 | ) |
Total revenues |
| $ | 269,745 |
|
| $ | 291,785 |
|
| $ | (22,040 | ) |
| $ | (7,825 | ) |
| $ | (53 | ) |
| $ | (7,124 | ) |
| $ | (7,038 | ) |
| $ | (22,040 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues from the Comparable Properties declined primarily due to store closures and rent concessions to tenants that are in bankruptcy or are struggling financially as a result of the COVID-19 pandemic.
44
Operating Expenses
|
| Total for the Six Months Ended June 30, |
|
|
|
|
|
| Comparable Properties |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| Change |
|
| Core |
|
| Non-core |
|
| Deconsolidation |
|
| Dispositions |
|
| Total Change |
| ||||||||
Property operating |
| $ | (41,425 | ) |
| $ | (42,615 | ) |
| $ | 1,190 |
|
| $ | (1,316 | ) |
| $ | (413 | ) |
| $ | 1,290 |
|
| $ | 1,629 |
|
| $ | 1,190 |
|
Real estate taxes |
|
| (31,661 | ) |
|
| (36,285 | ) |
|
| 4,624 |
|
|
| 2,203 |
|
|
| 120 |
|
|
| 678 |
|
|
| 1,623 |
|
|
| 4,624 |
|
Maintenance and repairs |
|
| (19,565 | ) |
|
| (17,250 | ) |
|
| (2,315 | ) |
|
| (3,328 | ) |
|
| (146 | ) |
|
| 394 |
|
|
| 765 |
|
|
| (2,315 | ) |
Property operating expenses |
|
| (92,651 | ) |
|
| (96,150 | ) |
|
| 3,499 |
|
|
| (2,441 | ) |
|
| (439 | ) |
|
| 2,362 |
|
|
| 4,017 |
|
|
| 3,499 |
|
Depreciation and amortization |
|
| (95,611 | ) |
|
| (108,565 | ) |
|
| 12,954 |
|
|
| 5,282 |
|
|
| 2,173 |
|
|
| 3,188 |
|
|
| 2,311 |
|
|
| 12,954 |
|
General and administrative |
|
| (23,881 | ) |
|
| (36,563 | ) |
|
| 12,682 |
|
|
| 12,682 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 12,682 |
|
Loss on impairment |
|
| (57,182 | ) |
|
| (146,918 | ) |
|
| 89,736 |
|
|
| 49,070 |
|
|
| 831 |
|
|
| 13,273 |
|
|
| 26,562 |
|
|
| 89,736 |
|
Litigation settlement |
|
| 801 |
|
|
| — |
|
|
| 801 |
|
|
| 801 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 801 |
|
Other |
|
| (287 | ) |
|
| (400 | ) |
|
| 113 |
|
|
| 113 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 113 |
|
Total operating expenses |
| $ | (268,811 | ) |
| $ | (388,596 | ) |
| $ | 119,785 |
|
| $ | 65,507 |
|
| $ | 2,565 |
|
| $ | 18,823 |
|
| $ | 32,890 |
|
| $ | 119,785 |
|
Property operating expenses at the Comparable Properties wasincreased primarily because of increased operating hours due to a decrease of $6.1 millionlessening restrictions at our core properties and a $0.9 million decrease related to non-core properties and those in redevelopment. The decline in revenues at our core properties continues due to the challenging retail environment, including a decrease in base rents due to lower occupancy as a result of retailer bankruptcies, as well as lower tenant reimbursements in addition to straight-line rent write-offs due to lower rent from renewed leases.
The decrease in depreciation and amortization expense of $0.1 million primarily resulted from a decrease of $5.9 million related to dispositions, which was partially offset by increases of $4.8 million attributable to the Comparable Properties and $1.1 million related to the New Property. The $4.8 million increase related to the Comparable Properties includes an increase of $2.5 millionprimarily relates to a lower basis in depreciation expense related to capital expenditures for renovations, redevelopments and deferred maintenance as well as $1.0 million of tenant improvement and in-place lease write-offs. The remaining increase is primarily due to amortization of tenant relationshipdepreciable assets related to several anchor redevelopment projects.
General and administrative expenses increased $0.3 milliondecreased primarily due to an increase in payroll and related expenses, which was partially offset by a decrease in consultingprepetition professional and legal fees.
For the six months ended June 30, 2021, we recognized $57.2 million of 2017, we recognizedloss on impairment of real estate of $24.9 million which was primarily to write down the book value of a mall. See
Other Income and Expenses
Interest expense decreased $53.2 million primarily due to not recognizing interest expense on the three months ended September 30, 2017, we recognized a $0.4 million loss on investment relatedsenior unsecured notes and the secured credit facility subsequent to the dispositionfiling of our 25% interest in an unconsolidated joint venture, which closed in the third quarter of 2017. See
For the six months ended June 30, 2021, we received $1.0recorded $55.1 million in the prior-year period from financing feesof gain on deconsolidation related to the loans secured by two mallsAsheville Mall and two community centers. These decreases were partially offset by an increase in corporate sponsorship income.
The $0.7 million increase at the Comparable Properties was primarily driven by an increase in real estate taxes.
For the six months ended June 30, 2021, we recorded $40.0 million of reorganization items, which consists of professional fees, expense (which represent one-time expenses that are not part of our normal operations)legal fees, retention bonuses and U.S. Trustee fees directly related to the SEC investigation that occurred in 2016. This increase was partially offset by a $0.7 million decrease in interest income.
Non-GAAP Measure
Same-center Net Operating Income
NOI is a supplemental non-GAAP measure of the operating performance of our shopping centers and other properties. We define NOI as property operating revenues (rental revenues tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).
45
We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated properties.Properties. We believe that presenting NOI and same-center NOI (described below) based on our Operating Partnership’s pro rata share of both consolidated and unconsolidated propertiesProperties is useful since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the propertiesProperties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in the Operating Partnership. Our definition of NOI may be different than that used by other companies, and accordingly, our calculation of NOI may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to the operations of our shopping center properties,Properties, we believe that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on our results of operations. Our calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, and amortization of above and below market lease intangibles and write-offs of landlord inducement assets in order to enhance the comparability of results from one period to another.
We include a propertyProperty in our same-center pool when we have owned all or a portion of the propertyProperty since January 1 of the preceding calendar year and it has been in operation for both the entire preceding calendar year and current year-to-date period. New Properties are excluded from same-center NOI until they meet thisthese criteria. Properties excluded from the same-center pool that would otherwise meet thisthese criteria are properties which are being repositioned or properties where we are considering alternatives for repositioning and those in which we own a noncontrolling interest of 25% or less. Properties that we are currently repositioning are Cary Towne Center and Hickory Point Mall at September 30, 2017. We own a noncontrolling interest of 10% in Triangle Town Center at September 30, 2017.
Due to the exclusions noted above, same-center NOI should only be used as a supplemental measure of our performance and not as an alternative to GAAP operating income (loss) or net income (loss). A reconciliation of our same-center NOI to net incomeloss for the threethree- and nine monthsix-month periods ended SeptemberJune 30, 20172021 and 20162020 is as follows (in thousands):
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net loss |
| $ | (9,561 | ) |
| $ | (72,793 | ) |
| $ | (37,841 | ) |
| $ | (212,087 | ) |
Adjustments: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 60,397 |
|
|
| 65,895 |
|
|
| 121,458 |
|
|
| 134,384 |
|
Interest expense |
|
| 31,933 |
|
|
| 59,736 |
|
|
| 64,945 |
|
|
| 113,822 |
|
Abandoned projects expense |
|
| 287 |
|
|
| 242 |
|
|
| 287 |
|
|
| 400 |
|
(Gain) loss on sales of real estate assets |
|
| (107 | ) |
|
| (2,623 | ) |
|
| 192 |
|
|
| (2,763 | ) |
Gain on deconsolidation |
|
| — |
|
|
| — |
|
|
| (55,131 | ) |
|
| — |
|
Loss on impairment |
|
| — |
|
|
| 13,274 |
|
|
| 57,182 |
|
|
| 146,918 |
|
Litigation settlement |
|
| 57 |
|
|
| — |
|
|
| (801 | ) |
|
| — |
|
Reorganization items |
|
| 17,073 |
|
|
| — |
|
|
| 40,006 |
|
|
| — |
|
Income tax provision |
|
| 705 |
|
|
| 16,117 |
|
|
| 1,456 |
|
|
| 16,643 |
|
Lease termination fees |
|
| (167 | ) |
|
| (1,433 | ) |
|
| (1,278 | ) |
|
| (1,653 | ) |
Straight-line rent and above- and below-market lease amortization |
|
| 2,476 |
|
|
| (236 | ) |
|
| 5,320 |
|
|
| (2,031 | ) |
Net loss attributable to noncontrolling interests in other consolidated subsidiaries |
|
| 449 |
|
|
| 487 |
|
|
| 1,268 |
|
|
| 694 |
|
General and administrative expenses |
|
| 11,269 |
|
|
| 18,727 |
|
|
| 23,881 |
|
|
| 36,563 |
|
Management fees and non-property level revenues |
|
| (5,166 | ) |
|
| (1,142 | ) |
|
| (7,379 | ) |
|
| (5,320 | ) |
Operating Partnership's share of property NOI |
|
| 109,645 |
|
|
| 96,251 |
|
|
| 213,565 |
|
|
| 225,570 |
|
Non-comparable NOI |
|
| (2,779 | ) |
|
| (6,071 | ) |
|
| (6,674 | ) |
|
| (14,612 | ) |
Total same-center NOI |
| $ | 106,866 |
|
| $ | 90,180 |
|
| $ | 206,891 |
|
| $ | 210,958 |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 9,299 | $ | 670 | $ | 118,444 | $ | 115,659 | |||||||
Adjustments: (1) | |||||||||||||||
Depreciation and amortization | 79,195 | 80,313 | 247,203 | 242,910 | |||||||||||
Interest expense | 58,573 | 58,632 | 178,834 | 177,371 | |||||||||||
Abandoned projects expense | 132 | 11 | 5,151 | 44 | |||||||||||
Gain on sales of real estate assets | (1,610 | ) | (12,944 | ) | (60,454 | ) | (107,843 | ) | |||||||
Loss on investment | 354 | — | 6,197 | — | |||||||||||
Gain on extinguishment of debt | (6,452 | ) | 6 | (33,902 | ) | — | |||||||||
Loss on impairment | 24,935 | 53,558 | 71,401 | 116,736 | |||||||||||
Income tax benefit | (1,064 | ) | (2,386 | ) | (4,784 | ) | (2,974 | ) | |||||||
Lease termination fees | (879 | ) | (857 | ) | (1,990 | ) | (2,202 | ) | |||||||
Straight-line rent and above- and below-market lease amortization | (637 | ) | (464 | ) | (3,685 | ) | (4,006 | ) | |||||||
Net (income) loss attributable to noncontrolling interests in other consolidated subsidiaries | (415 | ) | (983 | ) | (25,266 | ) | 449 | ||||||||
General and administrative expenses | 13,568 | 13,222 | 45,402 | 46,865 | |||||||||||
Management fees and non-property level revenues | (2,762 | ) | (1,379 | ) | (10,312 | ) | (12,429 | ) | |||||||
Operating Partnership's share of property NOI | 172,237 | 187,399 | 532,239 | 570,580 | |||||||||||
Non-comparable NOI | (4,513 | ) | (15,169 | ) | (22,766 | ) | (52,998 | ) | |||||||
Total same-center NOI | $ | 167,724 | $ | 172,230 | $ | 509,473 | $ | 517,582 |
(1) | |
Adjustments are based on our Operating Partnership's pro rata ownership share, including our share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties. |
Same-center NOI decreased 2.6%increased 18.5% for the three months ended SeptemberJune 30, 20172021 as compared to the prior-year period. The $4.5$16.7 million decreaseincrease for the three month periodmonths ended SeptemberJune 30, 20172021 compared to the same period in 20162020 primarily consisted of a $4.2$23.5 million increase in revenues offset by a $6.8 million increase in operating expenses. Rental revenues increased $22.9 million during the quarter primarily due to prior year rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic, as well as a decrease in uncollectable revenues in the current period as compared to the prior year period. Percentage rent increased due to higher sales in the current period, as the COVID-19 pandemic had a significant impact on sales and traffic in the prior-year period.
46
Same-center NOI decreased 1.9% for the six months ended June 30, 2021 as compared to the prior-year period. The $4.0 million decrease for the six months ended June 30, 2021 compared to the same period in 2020 primarily consisted of a $0.6 million decrease in revenues and an increase of $0.4 million in operating expenses. The $0.4a $3.4 million increase in operating expenses on a same-center basis wasexpenses. Rental revenues decreased $0.7 million during the six months ended June 30, 2021, primarily due to an increaserent concessions to tenants that are in bankruptcy or are struggling financially as a result of $2.1the COVID-19 pandemic.
Our consolidated unencumbered properties generated approximately 35.5% of total consolidated NOI of $166.2 million in real estate taxes, which was partially offset by a decrease of $1.0 million in maintenance(which is at our share and repairs expense and $0.7 million in property operating expense.
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 three categories:
(1) | Stabilized Malls – Malls that have completed their initial lease-up and have been open for more than three complete calendar years. |
(2) | Non-stabilized Malls - Malls that are in their initial lease-up phase. After three complete calendar years of operation, they are reclassified on January 1 of the fourth calendar year to the stabilized mall category. The Outlet Shoppes at Laredo |
(3) | Excluded Malls - We exclude malls from our core portfolio if they |
• | Lender Malls - Malls for which we are working or intend to work with the lender on a restructure of the terms of the loan secured by the property or convey the secured property to the lender. |
We derive the majority of our total revenues from the mall properties. The sources of our total revenues by property type were as follows:
|
| As of June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Malls |
|
| 91.9 | % |
|
| 90.9 | % |
Other Properties |
|
| 8.1 | % |
|
| 9.1 | % |
Nine Months Ended September 30, | |||
2017 | 2016 | ||
Malls | 91.5% | 91.0% | |
Associated centers | 4.1% | 3.9% | |
Community centers | 1.8% | 1.9% | |
Mortgages, office buildings and other | 2.6% | 3.2% |
Mall Store Sales
Mall store sales include reporting mall tenants of 10,000 square feet or less for stabilized malls and exclude license agreements, which are retail contracts that are temporary or short-term in nature and generally last more than three months but less than twelve months. TheDue to temporary mall and store closures that occurred in 2020 because of the COVID-19 pandemic, the majority of CBL’s tenants did not report sales for the full reporting period. As a result, the following is a comparison of the change in our same-center sales per square foot for mall tenantsthe six months ended June 30, 2021 compared to the six months ended June 30, 2019:
% Change | |||
Stabilized mall same-center sales per square foot | 17.2% |
47
Twelve Months Ended September 30, | |||||
2017 | 2016 | % Change | |||
Stabilized mall same-center sales per square foot | $373 | $380 | (1.8)% |
Occupancy
Our portfolio occupancy is summarized in the following table
(1):
|
| As of June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total portfolio |
|
| 87.0 | % |
|
| 88.1 | % |
Malls: |
|
|
|
|
|
|
|
|
Total Mall portfolio |
|
| 85.2 | % |
|
| 86.6 | % |
Same-center Malls |
|
| 85.2 | % |
|
| 86.8 | % |
Stabilized Malls |
|
| 85.2 | % |
|
| 86.8 | % |
Other Properties: |
|
|
|
|
|
|
|
|
Associated centers |
|
| 91.3 | % |
|
| 90.5 | % |
Community centers |
|
| 93.5 | % |
|
| 95.2 | % |
As of September 30, | |||
2017 | 2016 | ||
Total portfolio | 93.1% | 93.5% | |
Total mall portfolio | 91.6% | 92.6% | |
Same-center malls | 91.8% | 93.0% | |
Stabilized malls | 91.7% | 92.5% | |
Non-stabilized malls (2) | 87.9% | 93.6% | |
Associated centers | 98.2% | 96.1% | |
Community centers | 98.2% | 97.5% |
(1) | |
As noted above, excluded properties are not included in occupancy metrics. Occupancy for malls represents percentage of mall store gross leasable area occupied under 20,000 square feet. Occupancy for other properties represents percentage of gross leasable area occupied. |
Bankruptcy-related store closures impacted 2021 occupancy was negatively impacted 190by approximately 379 basis points or 367,000-square-feet by tenant bankruptcy closures as of the third quarter of 2017 as compared to the prior-year period.
Leasing
The following is a summary of the total square feet of leases signed in the threethree- and nine monthsix-month periods ended SeptemberJune 30, 2017 as compared to the respective prior-year periods:2021 and 2020:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Operating portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New leases |
|
| 210,225 |
|
|
| 141,751 |
|
|
| 354,422 |
|
|
| 420,117 |
|
Renewal leases |
|
| 693,787 |
|
|
| 133,671 |
|
|
| 1,292,105 |
|
|
| 766,431 |
|
Development portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New leases |
|
| 56,759 |
|
|
| — |
|
|
| 60,059 |
|
|
| 7,929 |
|
Total leased |
|
| 960,771 |
|
|
| 275,422 |
|
|
| 1,706,586 |
|
|
| 1,194,477 |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Operating portfolio: | |||||||||||
New leases | 178,332 | 334,006 | 916,442 | 1,155,870 | |||||||
Renewal leases | 678,304 | 429,350 | 1,765,682 | 1,863,460 | |||||||
Development portfolio: | |||||||||||
New leases | 131,744 | 28,701 | 258,746 | 538,769 | |||||||
Total leased | 988,380 | 792,057 | 2,940,870 | 3,558,099 |
Average annual base rents per square foot are based on contractual rents in effect as of SeptemberJune 30, 20172021 and 2016,2020, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each property type
|
| June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Malls (1): |
|
|
|
|
|
|
|
|
Same-center Stabilized Malls |
| $ | 30.21 |
|
| $ | 32.24 |
|
Stabilized Malls |
|
| 30.21 |
|
|
| 32.24 |
|
Other Properties (2): |
|
| 15.42 |
|
|
| 15.72 |
|
Associated centers |
|
| 13.74 |
|
|
| 14.32 |
|
Community centers |
|
| 16.89 |
|
|
| 16.87 |
|
Office buildings |
|
| 19.26 |
|
|
| 19.16 |
|
As of September 30, | |||||||
2017 | 2016 | ||||||
Same-center stabilized malls | $ | 32.69 | $ | 32.46 | |||
Stabilized malls | 32.83 | 32.18 | |||||
Non-stabilized malls (2) | 26.25 | 26.48 | |||||
Associated centers | 13.85 | 13.91 | |||||
Community centers | 15.65 | 15.28 | |||||
Office buildings | 19.12 | 20.01 |
(1) | |
Excluded properties are not |
(2) | Average base rents for associated centers, community centers and office buildings include all leased space, regardless of size. |
Results from new and renewal leasing of comparable small shop space of less than 10,000 square feet during the threethree- and nine monthsix-month periods ended SeptemberJune 30, 20172021 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows:
48
Property Type |
| Square Feet |
|
| Prior Gross Rent PSF |
|
| New Initial Gross Rent PSF |
|
| % Change Initial |
|
| New Average Gross Rent PSF (1) |
|
| % Change Average |
| ||||||
Quarter: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Property Types (2) |
|
| 503,927 |
|
| $ | 37.85 |
|
| $ | 32.40 |
|
|
| (14.4 | )% |
| $ | 32.80 |
|
|
| (13.3 | )% |
Stabilized Malls |
|
| 440,701 |
|
|
| 40.72 |
|
|
| 34.40 |
|
|
| (15.5 | )% |
|
| 34.77 |
|
|
| (14.6 | )% |
New leases |
|
| 67,997 |
|
|
| 38.63 |
|
|
| 32.70 |
|
|
| (15.3 | )% |
|
| 34.60 |
|
|
| (10.4 | )% |
Renewal leases |
|
| 372,704 |
|
|
| 41.11 |
|
|
| 34.70 |
|
|
| (15.6 | )% |
|
| 34.80 |
|
|
| (15.3 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Property Types (2) |
|
| 1,113,692 |
|
| $ | 34.07 |
|
| $ | 27.88 |
|
|
| (18.2 | )% |
| $ | 28.35 |
|
|
| (16.8 | )% |
Stabilized Malls |
|
| 986,142 |
|
|
| 36.04 |
|
|
| 28.74 |
|
|
| (20.3 | )% |
|
| 29.18 |
|
|
| (19.1 | )% |
New leases |
|
| 135,501 |
|
|
| 35.27 |
|
|
| 27.69 |
|
|
| (21.5 | )% |
|
| 29.23 |
|
|
| (17.1 | )% |
Renewal leases |
|
| 850,641 |
|
|
| 36.17 |
|
|
| 28.91 |
|
|
| (20.1 | )% |
|
| 29.17 |
|
|
| (19.4 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Type | Square Feet | Prior Gross Rent PSF | New Initial Gross Rent PSF | % Change Initial | New Average Gross Rent PSF (1) | % Change Average | |||||||||||||||
Quarter: | |||||||||||||||||||||
All Property Types (2) | 529,055 | $ | 40.50 | $ | 34.46 | (14.9 | )% | $ | 35.00 | (13.6 | )% | ||||||||||
Stabilized malls | 493,779 | 41.92 | 35.66 | (14.9 | )% | 36.19 | (13.7 | )% | |||||||||||||
New leases | 60,159 | 51.65 | 49.79 | (3.6 | )% | 51.78 | 0.3 | % | |||||||||||||
Renewal leases | 433,620 | 40.58 | 33.70 | (17.0 | )% | 34.03 | (16.1 | )% | |||||||||||||
Year-to-Date: | |||||||||||||||||||||
All Property Types (2) | 1,590,088 | $ | 41.45 | $ | 38.96 | (6.0 | )% | $ | 39.81 | (4.0 | )% | ||||||||||
Stabilized malls | 1,485,284 | 42.55 | 39.95 | (6.1 | )% | 40.80 | (4.1 | )% | |||||||||||||
New leases | 306,343 | 42.78 | 45.27 | 5.8 | % | 47.23 | 10.4 | % | |||||||||||||
Renewal leases | 1,178,941 | 42.49 | 38.56 | (9.2 | )% | 39.13 | (7.9 | )% |
(1) | |
Average gross rent does not incorporate allowable future increases for recoverable common area expenses. |
(2) | |
Includes stabilized malls, associated centers, community centers and office buildings. |
New and renewal leasing activity of comparable small shop space of less than 10,000 square feet for the nine month period ended September 30, 2017 based on the lease commencement date is as follows:
|
| Number of Leases |
|
| Square Feet |
|
| Term (in years) |
|
| Initial Rent PSF |
|
| Average Rent PSF |
|
| Expiring Rent PSF |
|
| Initial Rent Spread |
|
| Average Rent Spread |
| ||||||||||||||||
Commencement 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New |
|
| 66 |
|
|
| 199,355 |
|
|
| 6.73 |
|
| $ | 28.69 |
|
| $ | 30.58 |
|
| $ | 31.67 |
|
| $ | (2.98 | ) |
|
| (9.4 | )% |
| $ | (1.09 | ) |
|
| (3.4 | )% |
Renewal |
|
| 350 |
|
|
| 1,167,087 |
|
|
| 2.15 |
|
|
| 26.23 |
|
|
| 26.40 |
|
|
| 32.03 |
|
|
| (5.80 | ) |
|
| (18.1 | )% |
|
| (5.63 | ) |
|
| (17.6 | )% |
Commencement 2021 Total |
|
| 416 |
|
|
| 1,366,442 |
|
|
| 2.88 |
|
|
| 26.59 |
|
|
| 27.01 |
|
|
| 31.98 |
|
|
| (5.39 | ) |
|
| (16.9 | )% |
|
| (4.97 | ) |
|
| (15.5 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commencement 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New |
|
| 4 |
|
|
| 7,138 |
|
|
| 7.08 |
|
|
| 39.20 |
|
|
| 40.95 |
|
|
| 29.56 |
|
|
| 9.64 |
|
|
| 32.6 | % |
|
| 11.39 |
|
|
| 38.5 | % |
Renewal |
|
| 81 |
|
|
| 231,942 |
|
|
| 2.69 |
|
|
| 37.95 |
|
|
| 38.27 |
|
|
| 41.88 |
|
|
| (3.93 | ) |
|
| (9.4 | )% |
|
| (3.61 | ) |
|
| (8.6 | )% |
Commencement 2022 Total |
|
| 85 |
|
|
| 239,080 |
|
|
| 2.90 |
|
|
| 37.99 |
|
|
| 38.35 |
|
|
| 41.52 |
|
|
| (3.53 | ) |
|
| (8.5 | )% |
|
| (3.17 | ) |
|
| (7.6 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 2021/2022 |
|
| 501 |
|
|
| 1,605,522 |
|
|
| 2.88 |
|
| $ | 28.28 |
|
| $ | 28.70 |
|
| $ | 33.40 |
|
| $ | (5.12 | ) |
|
| (15.3 | )% |
| $ | (4.70 | ) |
|
| (14.1 | )% |
Number of Leases | Square Feet | Term (in years) | Initial Rent PSF | Average Rent PSF | Expiring Rent PSF | Initial Rent Spread | Average Rent Spread | |||||||||||||||||||||||||||
Commencement 2017: | ||||||||||||||||||||||||||||||||||
New | 156 | 420,187 | 7.85 | $ | 44.56 | $ | 47.54 | $ | 40.30 | $ | 4.26 | 10.6 | % | $ | 7.24 | 18.0 | % | |||||||||||||||||
Renewal | 457 | 1,245,753 | 3.47 | 39.01 | 39.60 | 41.29 | (2.28 | ) | (5.5 | )% | (1.69 | ) | (4.1 | )% | ||||||||||||||||||||
Commencement 2017 Total | 613 | 1,665,940 | 4.58 | $ | 40.41 | $ | 41.61 | $ | 41.04 | $ | (0.63 | ) | (1.5 | )% | $ | 0.57 | 1.4 | % | ||||||||||||||||
Commencement 2018: | ||||||||||||||||||||||||||||||||||
New | 12 | 39,198 | 8.48 | $ | 53.17 | $ | 55.04 | $ | 48.05 | $ | 5.12 | 10.7 | % | $ | 6.99 | 14.5 | % | |||||||||||||||||
Renewal | 111 | 350,183 | 3.63 | 34.75 | 35.34 | 39.12 | (4.37 | ) | (11.2 | )% | (3.78 | ) | (9.7 | )% | ||||||||||||||||||||
Commencement 2018 Total | 123 | 389,381 | 4.10 | $ | 36.60 | $ | 37.32 | $ | 40.02 | $ | (3.42 | ) | (8.5 | )% | $ | (2.70 | ) | (6.7 | )% | |||||||||||||||
Total 2017/2018 | 736 | 2,055,321 | 4.50 | $ | 39.69 | $ | 40.79 | $ | 40.85 | $ | (1.16 | ) | (2.8 | )% | $ | (0.06 | ) | (0.1 | )% |
Liquidity and Capital Resources
As of SeptemberJune 30, 2017,2021, we had approximately $80.0$143.9 million outstanding on our three unsecured credit facilities leaving approximately $690.8available in unrestricted cash and $183.5 million in U.S. Treasury securities. Our total pro rata share of availability based ondebt at June 30, 2021 was $4,365.7 million. The $128.3 million in restricted cash at June 30, 2021 related to cash held in escrow accounts for insurance, real estate taxes, capital expenditures and tenant allowances as required by the terms of certain mortgage notes payable, as well as amounts related to properties that secure the credit facilities. facility and cash management agreements with lenders of certain property-level mortgage indebtedness, which are designated for debt service and operating expense obligations.
During the three and six months ended June 30, 2021, we have continued to reinvest in U.S. Treasury securities using the cash that was drawn on the secured line of credit to preserve liquidity at the beginning of the COVID-19 pandemic. We designated our U.S. Treasury securities as available-for-sale. As of June 30, 2021, our U.S. Treasury securities have maturities ranging from July 2021 through September 2021. Subsequent to June 30, 2021, we reinvested proceeds from matured U.S. Treasury securities into new U.S. Treasury securities. See Note 15 for more information.
In March 2021, we reached agreements with the third quarterlenders to modify the loans secured by Hammock Landing Phases I & II and The Pavilion at Port Orange. Each agreement provides an additional four-year term, with a one-year extension option, for a fully extended maturity date of 2017, we retired threeFebruary 2026. These loans with an aggregate principalhad a combined outstanding loan balance of $210.0 million. These loans were$106.3 million at June 30, 2021. Additionally, each such agreement provides forbearance related to the default triggered as a result of the Chapter 11 Cases. Also, in March 2021, we reached an agreement with the lender to modify the loan secured by two consolidated properties, Hanes Mall andAmbassador Infrastructure. The agreement provides an additional four-year term with a fixed interest rate of 3.0%. The extended loan, maturing in March 2025, has an outstanding balance of $8.3 million, as $1.1 million was paid down in conjunction with the modification. The agreement provides a waiver related to the default triggered as a result of the Chapter 11 Cases. On May 26, 2021, the subsidiary that owns The Outlet Shoppes at El Paso, and an unconsolidated property, Gulf Coast Town Center - Phase III. Our consolidated unencumbered properties generated approximately 56.9% of total consolidated NOILaredo filed for the nine months ended Septemberbankruptcy. Subsequent to June 30, 2017 (excluding dispositions and Excluded Malls).
49
The filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The Plan provides for a restructuring of the secured credit facility and the senior unsecured notes.
Our total share of consolidated, unconsolidated and other outstanding debt maturing during 2021, assuming all extension options are elected, is $520.6 million, and we are in discussions with the existing lenders to modify and extend or otherwise refinance the loans. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. See Note 8 and Note 9 for more information.
We derive athe majority of our revenues from leases with retail tenants, which have 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 cash on hand and our debt and equity sources and the availability under our credit facilities and proceeds from dispositionsinvestment in U.S. Treasury securities will, for the foreseeable future, provide adequate liquidity to meet our cash needs.needs assuming we continue to operate as a going concern within twelve months of the date our condensed consolidated financial statements are issued. In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, debt and equity offerings, joint venture investments issuances of noncontrolling interests in our Operating Partnership, and decreasing expenditures related to tenant construction allowances and other capital expenditures. We also generate revenues from sales of peripheral land at our properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.
Cash Flows - Operating, Investing and Financing Activities
There was $272.2 million of cash, cash equivalents and restricted cash as of June 30, 2021, an increase of $150.5 million from December 31, 2020. Of this amount, $143.9 million was unrestricted cash and cash equivalents as of June 30, 2021. Also, at June 30, 2021, we had $183.5 million in U.S. Treasuries with maturities through September 30, 2017, an increase of $12.4 million from December 31, 2016. 2021.
Our net cash flows are summarized as follows (in thousands):
|
| Six Months Ended June 30, |
|
|
|
|
| |||||
|
| 2021 |
|
| 2020 |
|
| Change |
| |||
Net cash provided by operating activities |
| $ | 130,497 |
|
| $ | 38,370 |
|
| $ | 92,127 |
|
Net cash provided by (used in) investing activities |
|
| 44,188 |
|
|
| (191,379 | ) |
|
| 235,567 |
|
Net cash provided by (used in) financing activities |
|
| (24,220 | ) |
|
| 244,079 |
|
|
| (268,299 | ) |
Net cash flows |
| $ | 150,465 |
|
| $ | 91,070 |
|
| $ | 59,395 |
|
Nine Months Ended September 30, | |||||||||||
2017 | 2016 | Change | |||||||||
Net cash provided by operating activities | $ | 336,950 | $ | 339,625 | $ | (2,675 | ) | ||||
Net cash used in investing activities | (34,151 | ) | (4,323 | ) | (29,828 | ) | |||||
Net cash used in financing activities | (290,399 | ) | (347,726 | ) | 57,327 | ||||||
Net cash flows | $ | 12,400 | $ | (12,424 | ) | $ | 24,824 |
Cash Provided by Operating Activities
Cash provided by operating activities decreased $2.7increased $92.1 million primarily due to not paying interest on the impactsecured credit facility and senior unsecured notes as a result of lower occupancy on revenues, partially offset by reductions in operating expenses, and the filing of the Chapter 11 Cases. Also, operating cash flows ofin the propertiesprior-year period were significantly impacted by rent deferrals and abatements that were disposed of in 2016.
Cash Used inProvided by (Used in) Investing Activities
During the six months ended June 30, 2020, net cash used in investing activities increased $29.8was primarily related to the purchase of U.S. Treasury securities for $153.2 million using a portion of the $280.0 million that we drew on our secured line of credit. Whereas, during the six months ended June 30, 2021, we had U.S. Treasury securities mature that we immediately reinvested in new U.S. Treasury securities. We also had a decrease in additions to real estate assets in the current-year period as compared to the prior-year period. In 2016, we reinvestedperiod as a result of programs put in both our consolidated and unconsolidated properties throughplace to reduce capital expenditures for developments and redevelopments, in addition to tenant improvements and ongoing deferred maintenance. This investment was mostly offsetpreserve liquidity.
Cash Provided by proceeds from(Used in) Financing Activities
During the disposition of consolidated and unconsolidated properties. In 2017, we continued to reinvest in our portfolio through developments and redevelopments, includingsix months ended June 30, 2020, the acquisition of Macy’s and Sears locations at several malls. The increase innet cash outflowsinflow is primarily due to the acquisition$280.0 million draw on our secured credit facility in order to increase liquidity and preserve financial flexibility in light of the Macy’s and Sears locations was partially offset by slightly higher proceeds from salesuncertainty surrounding the impact of real estate assets in 2017.
Debt of the Company
CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of our debt. CBL is a limited guarantor of the Notes, as described in
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):
Mortgage and other indebtedness, net, consisted of the following: |
| |||||||||||||||||||||||
June 30, 2021: |
| Consolidated |
|
| Noncontrolling Interests |
|
| Other Debt (1) |
|
| Unconsolidated Affiliates |
|
| Total |
|
| Weighted- Average Interest Rate (2) |
| ||||||
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse loans on operating Properties (3) |
| $ | 963,118 |
|
| $ | (29,744 | ) |
| $ | 138,926 |
|
| $ | 606,364 |
|
| $ | 1,678,664 |
|
|
| 4.74 | % |
Recourse loan on operating Property (4) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,250 |
|
|
| 8,250 |
|
|
| 3.00 | % |
Construction loan |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,478 |
|
|
| 3,478 |
|
|
| 5.05 | % |
Total fixed-rate debt |
|
| 963,118 |
|
|
| (29,744 | ) |
|
| 138,926 |
|
|
| 618,092 |
|
|
| 1,690,392 |
|
|
| 4.73 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse loans on operating Properties |
|
| 27,461 |
|
|
| — |
|
|
| — |
|
|
| 87,251 |
|
|
| 114,712 |
|
|
| 2.83 | % |
Construction loans |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 36,890 |
|
|
| 36,890 |
|
|
| 3.08 | % |
Total variable-rate debt |
|
| 27,461 |
|
|
| — |
|
|
| — |
|
|
| 124,141 |
|
|
| 151,602 |
|
|
| 2.89 | % |
Total fixed-rate and variable-rate debt |
|
| 990,579 |
|
|
| (29,744 | ) |
|
| 138,926 |
|
|
| 742,233 |
|
|
| 1,841,994 |
|
|
| 4.58 | % |
Unamortized deferred financing costs (5) |
|
| (2,987 | ) |
|
| 238 |
|
|
| — |
|
|
| (2,648 | ) |
|
| (5,397 | ) |
|
|
|
|
Total mortgage and other indebtedness, net |
| $ | 987,592 |
|
| $ | (29,506 | ) |
| $ | 138,926 |
|
| $ | 739,585 |
|
| $ | 1,836,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following: |
| |||||||||||||||||||||||
June 30, 2021: |
| Consolidated |
|
| Noncontrolling Interests |
|
| Other Debt (1) |
|
| Unconsolidated Affiliates |
|
| Total |
|
| Weighted- Average Interest Rate (2) |
| ||||||
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior unsecured notes due 2023 (6) |
| $ | 450,000 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 450,000 |
|
|
| 5.25 | % |
Senior unsecured notes due 2024 (6) |
|
| 300,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 300,000 |
|
|
| 4.60 | % |
Senior unsecured notes due 2026 (6) |
|
| 625,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 625,000 |
|
|
| 5.95 | % |
Total fixed-rate debt |
|
| 1,375,000 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,375,000 |
|
|
| 5.43 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse loan on operating Property (7) |
|
| 39,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 39,462 |
|
|
| 5.76 | % |
Secured line of credit (8) |
|
| 675,926 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 675,926 |
|
|
| 9.50 | % |
Secured term loan (8) |
|
| 438,750 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 438,750 |
|
|
| 9.50 | % |
Total variable-rate debt |
|
| 1,154,138 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,154,138 |
|
|
| 9.37 | % |
Total fixed-rate and variable-rate debt |
|
| 2,529,138 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,529,138 |
|
|
| 7.23 | % |
Unpaid accrued interest (9) |
|
| 58,370 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 58,370 |
|
|
|
|
|
Prepetition unsecured or under secured liabilities |
|
| 4,198 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,198 |
|
|
|
|
|
Total liabilities subject to compromise |
| $ | 2,591,706 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 2,591,706 |
|
|
|
|
|
51
Mortgage and other indebtedness, net, consisted of the following: |
| |||||||||||||||||||
December 31, 2020: |
| Consolidated |
|
| Noncontrolling Interests |
|
| Unconsolidated Affiliates |
|
| Total |
|
| Weighted- Average Interest Rate (2) |
| |||||
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse loans on operating Properties (3) |
| $ | 1,120,203 |
|
| $ | (30,177 | ) |
| $ | 612,458 |
|
| $ | 1,702,484 |
|
|
| 4.74 | % |
Recourse loan on operating Property (4) |
|
| — |
|
|
| — |
|
|
| 9,360 |
|
|
| 9,360 |
|
|
| 3.74 | % |
Construction loan |
|
| — |
|
|
| — |
|
|
| 3,406 |
|
|
| 3,406 |
|
|
| 5.05 | % |
Total fixed-rate debt |
|
| 1,120,203 |
|
|
| (30,177 | ) |
|
| 625,224 |
|
|
| 1,715,250 |
|
|
| 4.74 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse loans on operating Properties |
|
| 68,061 |
|
|
| — |
|
|
| 88,511 |
|
|
| 156,572 |
|
|
| 4.59 | % |
Construction loans |
|
| — |
|
|
| — |
|
|
| 33,222 |
|
|
| 33,222 |
|
|
| 3.11 | % |
Total variable-rate debt |
|
| 68,061 |
|
|
| — |
|
|
| 121,733 |
|
|
| 189,794 |
|
|
| 4.33 | % |
Total fixed-rate and variable-rate debt |
|
| 1,188,264 |
|
|
| (30,177 | ) |
|
| 746,957 |
|
|
| 1,905,044 |
|
|
| 4.70 | % |
Unamortized deferred financing costs |
|
| (3,433 | ) |
|
| 265 |
|
|
| (2,844 | ) |
|
| (6,012 | ) |
|
|
|
|
Total mortgage and other indebtedness, net |
| $ | 1,184,831 |
|
| $ | (29,912 | ) |
| $ | 744,113 |
|
| $ | 1,899,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following: |
| |||||||||||||||||||
December 31, 2020: |
| Consolidated |
|
| Noncontrolling Interests |
|
| Unconsolidated Affiliates |
|
| Total |
|
| Weighted- Average Interest Rate (2) |
| |||||
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior unsecured notes due 2023 (6) |
| $ | 450,000 |
|
| $ | — |
|
| $ | — |
|
| $ | 450,000 |
|
|
| 5.25 | % |
Senior unsecured notes due 2024 (6) |
|
| 300,000 |
|
|
| — |
|
|
| — |
|
|
| 300,000 |
|
|
| 4.60 | % |
Senior unsecured notes due 2026 (6) |
|
| 625,000 |
|
|
| — |
|
|
| — |
|
|
| 625,000 |
|
|
| 5.95 | % |
Total fixed-rate debt |
|
| 1,375,000 |
|
|
| — |
|
|
| — |
|
|
| 1,375,000 |
|
|
| 5.43 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured line of credit (8) |
|
| 675,926 |
|
|
| — |
|
|
| — |
|
|
| 675,926 |
|
|
| 9.50 | % |
Secured term loan (8) |
|
| 438,750 |
|
|
| — |
|
|
| — |
|
|
| 438,750 |
|
|
| 9.50 | % |
Total variable-rate debt |
|
| 1,114,676 |
|
|
| — |
|
|
| — |
|
|
| 1,114,676 |
|
|
| 9.50 | % |
Total fixed-rate and variable-rate debt |
|
| 2,489,676 |
|
|
| — |
|
|
| — |
|
|
| 2,489,676 |
|
|
| 7.25 | % |
Unpaid accrued interest (9) |
|
| 57,644 |
|
|
| — |
|
|
| — |
|
|
| 57,644 |
|
|
|
|
|
Prepetition unsecured or under secured liabilities |
|
| 4,170 |
|
|
| — |
|
|
| — |
|
|
| 4,170 |
|
|
|
|
|
Total liabilities subject to compromise |
| $ | 2,551,490 |
|
| $ | — |
|
| $ | — |
|
| $ | 2,551,490 |
|
|
|
|
|
September 30, 2017 | Consolidated | Noncontrolling Interests | Unconsolidated Affiliates | Total | Weighted- Average Interest Rate (1) | |||||||||||||
Fixed-rate debt: | ||||||||||||||||||
Non-recourse loans on operating properties (2) | $ | 1,807,519 | $ | (77,494 | ) | $ | 524,099 | $ | 2,254,124 | 5.06% | ||||||||
Recourse term loans on operating properties (3) | — | — | 11,035 | 11,035 | 3.74% | |||||||||||||
Senior unsecured notes due 2023 (4) | 446,868 | — | — | 446,868 | 5.25% | |||||||||||||
Senior unsecured notes due 2024 (5) | 299,944 | — | — | 299,944 | 4.60% |
September 30, 2017 | Consolidated | Noncontrolling Interests | Unconsolidated Affiliates | Total | Weighted- Average Interest Rate (1) | |||||||||||||
Senior unsecured notes due 2026 (6) | 615,669 | — | — | 615,669 | 5.95% | |||||||||||||
Total fixed-rate debt | 3,170,000 | (77,494 | ) | 535,134 | 3,627,640 | 5.19% | ||||||||||||
Variable-rate debt: | ||||||||||||||||||
Non-recourse term loan on operating property | 10,868 | (5,434 | ) | — | 5,434 | 3.04% | ||||||||||||
Recourse term loans on operating properties (7) | 89,612 | — | 58,692 | 148,304 | 3.62% | |||||||||||||
Unsecured lines of credit | 79,970 | — | — | 79,970 | 2.43% | |||||||||||||
Unsecured term loans | 885,000 | — | — | 885,000 | 2.69% | |||||||||||||
Total variable-rate debt | 1,065,450 | (5,434 | ) | 58,692 | 1,118,708 | 2.79% | ||||||||||||
Total fixed-rate and variable-rate debt | 4,235,450 | (82,928 | ) | 593,826 | 4,746,348 | 4.63% | ||||||||||||
Unamortized deferred financing costs | (19,272 | ) | 719 | (2,357 | ) | (20,910 | ) | |||||||||||
Total mortgage and other indebtedness, net | $ | 4,216,178 | $ | (82,209 | ) | $ | 591,469 | $ | 4,725,438 |
December 31, 2016 | Consolidated | Noncontrolling Interests | Unconsolidated Affiliates | Total | Weighted- Average Interest Rate (1) | |||||||||||||
Fixed-rate debt: | ||||||||||||||||||
Non-recourse loans on operating properties | $ | 2,453,628 | $ | (109,162 | ) | $ | 530,062 | $ | 2,874,528 | 5.29% | ||||||||
Senior unsecured notes due 2023 (4) | 446,552 | — | — | 446,552 | 5.25% | |||||||||||||
Senior unsecured notes due 2024 (5) | 299,939 | — | — | 299,939 | 4.60% | |||||||||||||
Senior unsecured notes due 2026 (6) | 394,260 | — | — | 394,260 | 5.95% | |||||||||||||
Total fixed-rate debt | 3,594,379 | (109,162 | ) | 530,062 | 4,015,279 | 5.30% | ||||||||||||
Variable-rate debt: | ||||||||||||||||||
Non-recourse term loans on operating properties | 19,055 | (7,504 | ) | 2,226 | 13,777 | 3.18% | ||||||||||||
Recourse term loans on operating properties | 24,428 | — | 71,037 | 95,465 | 2.80% | |||||||||||||
Construction loan (7) | 39,263 | — | — | 39,263 | 3.12% | |||||||||||||
Unsecured lines of credit | 6,024 | — | — | 6,024 | 1.82% | |||||||||||||
Unsecured term loans | 800,000 | — | — | 800,000 | 2.04% | |||||||||||||
Total variable-rate debt | 888,770 | (7,504 | ) | 73,263 | 954,529 | 2.18% | ||||||||||||
Total fixed-rate and variable-rate debt | 4,483,149 | (116,666 | ) | 603,325 | 4,969,808 | 4.70% | ||||||||||||
Unamortized deferred financing costs | (17,855 | ) | 945 | (2,806 | ) | (19,716 | ) | |||||||||||
Total mortgage and other indebtedness, net | $ | 4,465,294 | $ | (115,721 | ) | $ | 600,519 | $ | 4,950,092 |
(1) | During the six months ended June 30, 2021, we deconsolidated Asheville Mall and Park Plaza due to a loss of control when the properties were placed into receivership in connection with the foreclosure process. |
(2) | Weighted-average interest rate |
(3) | |
An unconsolidated affiliate has an interest rate swap on a notional amount outstanding of |
(4) | |
The unconsolidated affiliate |
(5) | Unamortized deferred financing costs amounting to $2,624 and $1,879 for our share of certain consolidated and unconsolidated property-level, non-recourse mortgage loans, respectively, may be required to be written off in the event that a waiver or restructuring of terms cannot be negotiated and the debt is either redeemed or otherwise extinguished. |
(6) | In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the senior unsecured notes subsequent to the filing of the Chapter 11 Cases. The outstanding amount of the senior unsecured notes is included in liabilities subject to compromise in the accompanying condensed consolidated |
(7) | |
On May 26, 2021, the |
subsidiary that owns The Outlet Shoppes at Laredo |
(8) | The administrative agent informed the Company that interest will accrue on all outstanding obligations at the post-default rate, which is equal to the rate that otherwise would be in |
(9) | As of June 30, 2021, represents interest accrued on the loan secured by The Outlet Shoppes at Laredo prior to May 26, 2021, and the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases. As of December 31, 2020, represents interest accrued on the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases. |
The weighted-average remaining term of our total share of consolidated, unconsolidated and unconsolidatedother debt was 4.92.6 years and 5.43.1 years at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. The weighted-average remaining term of our pro rata share of fixed-rate debt was 5.62.9 years and 3.83.4 years at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively.
52
As of SeptemberJune 30, 20172021 and December 31, 2016,2020, our pro rata share of consolidated and unconsolidated variable-rate debt represented 23.6%29.9% and 19.3%29.7%, respectively, of our total pro rata share of debt. As
See Note 8 to the condensed consolidated financial statements for information concerning activity related to unconsolidated affiliates.
Issuer and Guarantor Subsidiaries of Guaranteed Securities
In March 2020, the SEC issued Rule Release No. 33-10762, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities ("Release 33-10762”). Release 33-10762 simplifies the disclosure requirements related to certain registered securities under Rules 3-10 and 3-16 of SEC Regulation S-X, permitting registrants to provide certain alternative financial disclosures and non-financial disclosures in lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities if certain conditions are met. The amendments in Release 33-10762 are generally effective for filings on or after January 4, 2021, with early application permitted. We adopted the new disclosure requirements permitted under Release 33-10762 effective for the period as of and for the nine months ended September 30, 2017,2020.
The Operating Partnership’s senior secured credit facility is secured by 17 malls and 3 associated centers that are directly or indirectly owned by 36 wholly owned subsidiaries of the Operating Partnership (the “Guarantor Subsidiaries”). The Guarantor Subsidiaries own an additional four malls, two associated centers and four mortgage notes receivable that are not collateral for the secured credit facility. The Guarantor Subsidiaries also entered into agreements to guarantee the Operating Partnership’s obligations under the senior secured credit facility.
Based on the terms of the Notes, to the extent that any subsidiary of the Operating Partnership executes and delivers a guarantee to another debt facility, the Operating Partnership shall also cause the subsidiary to guarantee the Operating Partnership’s obligations under the Notes on a senior basis. In connection with entering the guarantee agreements related to the senior secured credit facility, the Guarantor Subsidiaries entered a guarantee agreement with the issuer of the Notes to satisfy the guaranty requirement.
The guarantees of the Guarantor Subsidiaries are joint and several and full and unconditional. The guarantees are unsecured and effectively subordinated to any existing and future secured debt that a Guarantor Subsidiary may have to the extent of the value of the assets securing such debt. Each Guarantor Property’s obligation will remain until the earlier of such time as (i) all guaranteed obligations have been paid in full in cash and each guaranteed obligation has been terminated or cancelled in accordance with its terms or (ii) any such Guarantor Subsidiary ceases to be a guarantor under the senior secured credit facility. The Guarantor Subsidiaries’ maximum guarantee related to the secured credit facility is $1,114.7 million as of June 30, 2021, and the maximum guarantee related to the Notes is $1,375.0 million as of June 30, 2021.
The following tables present summarized financial information for the Operating Partnership and the Guarantor Subsidiaries on a combined basis. The summarized financial information does not include the Operating Partnership’s investments in non-guarantor subsidiaries nor the earnings from non-guarantor subsidiaries. Intercompany transactions between the Operating Partnership and the Guarantor Subsidiaries have been eliminated. The summarized balance sheet information is as of June 30, 2021 and December 31, 2020 and the summarized statement of operations information is for the three and six-month periods ended June 30, 2021 and 2020 (amounts are presented in thousands).
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|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Net investment in real estate assets |
| $ | 1,361,257 |
|
| $ | 1,428,482 |
|
Total assets (1) |
|
| 1,687,492 |
|
|
| 1,673,179 |
|
Total liabilities (2) |
|
| 2,810,480 |
|
|
| 2,884,808 |
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total revenues (3) |
| $ | 54,598 |
|
| $ | 47,983 |
|
Total expenses (4) |
|
| (67,836 | ) |
|
| (37,194 | ) |
Net income (loss) |
|
| (13,001 | ) |
|
| 8,057 |
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total revenues (3) |
| $ | 109,370 |
|
| $ | 113,410 |
|
Total expenses (4) |
|
| (144,791 | ) |
|
| (81,054 | ) |
Net income |
|
| 7,805 |
|
|
| 26,892 |
|
(1) | Total assets include an intercompany note receivable with a non-guarantor subsidiary of $1,721 and $4,698 as of June 30, 2021 and December 31, 2020, respectively. |
(2) | Total liabilities include intercompany liabilities of $4,189 as of June 30, 2021. |
(3) | Total revenues include revenues derived from non-guarantor subsidiaries of $31 and $97 for the three months ended June 30, 2021 and 2020, respectively. Total revenues include revenues derived from non-guarantor subsidiaries of $55 and $97 for the six months ended June 30, 2021 and 2020, respectively. |
(4) | Total expenses include expenses incurred with non-guarantor subsidiaries of $8,813 and $9,422 for the three months ended June 30, 2021 and 2020, respectively. Total expenses include expenses incurred with non-guarantor subsidiaries of $17,144 and $20,312 for the six months ended June 30, 2021 and 2020, respectively. |
Financial Covenants and Restrictions
As discussed in Note 2 to the condensed consolidated financial statements, the filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts.
Equity
In 2019, we suspended all future dividends on our sharecommon stock and preferred stock, as well as distributions to all noncontrolling interest investors in our Operating Partnership. The dividend arrearage created by our board of consolidateddirectors’ decision to suspend the dividends that continue to accrue on our outstanding preferred stock currently makes us ineligible to use the abbreviated, and unconsolidated variable-rate debt represented 15.9%less costly, SEC Form S-3 registration statement to register our securities for sale. This means we will be required to use a registration statement on Form S-11 to register additional securities for sale with the SEC, which we expect to hinder our ability to act quickly in relation to, and raise our costs incurred in, future capital raising activities. This preferred dividend arrearage (and the Operating Partnership’s related arrearage in distributions to its preferred units of limited partnership underlying our outstanding preferred shares), under the terms of our total market capitalization (see
54
stock. We do not expect to pay any further dividends with respect to the Company’s outstanding common stock and preferred stock, or any distributions with respect to the Operating Partnership’s outstanding units of partnership interest, prior to the conclusion of our reorganization pursuant to the pending Chapter 11 Cases, which reorganization we also expect will extinguish all claims related to the accrued and unpaid preferred stock price from $11.50 at December 30, 2016dividends and the Operating Partnership unit SCU Distribution Shortfall discussed above. If we successfully complete such reorganization, in connection with future dividend distributions with respect to $8.39 at September 29, 2017.
See
Delisting of Common Stock and Depositary Shares in NoteDate | Property | Consolidated/ Unconsolidated Property | Stated Interest Rate | Maturity Date | Amount Extended (1) | ||||||
March | Statesboro Crossing (1) | Consolidated | LIBOR + 1.8% | June 2018 | $ | 10,930 | |||||
August | Ambassador Town Center - Infrastructure Improvements (2) | Unconsolidated | LIBOR + 2.0% | August 2020 | 11,035 |
Date | Property | Consolidated/ Unconsolidated Property | Interest Rate at Repayment Date | Scheduled Maturity Date | Principal Balance Repaid (1) | ||||||
January | The Plaza at Fayette | Consolidated | 5.67% | April 2017 | $ | 37,146 | |||||
January | The Shoppes at St. Clair Square | Consolidated | 5.67% | April 2017 | 18,827 | ||||||
February | Hamilton Corner | Consolidated | 5.67% | April 2017 | 14,227 | ||||||
March | Layton Hills Mall | Consolidated | 5.66% | April 2017 | 89,526 | ||||||
April | The Outlet Shoppes at Oklahoma City (2) | Consolidated | 5.73% | January 2022 | 53,386 | ||||||
April | The Outlet Shoppes at Oklahoma City - Phase II (2) | Consolidated | 3.53% | April 2019 | 5,545 | ||||||
April | The Outlet Shoppes at Oklahoma City - Phase III (2) | Consolidated | 3.53% | April 2019 | 2,704 | ||||||
July | Gulf Coast Town Center - Phase III (3) | Unconsolidated | 3.13% | July 2017 | 4,118 | ||||||
September | Hanes Mall (4) | Consolidated | 6.99% | October 2018 | 144,325 | ||||||
September | The Outlet Shoppes at El Paso | Consolidated | 7.06% | December 2017 | 61,561 | ||||||
$ | 431,365 |
Date | Property | Interest Rate at Repayment Date | Scheduled Maturity Date | Balance of Non-recourse Debt | Gain on Extinguishment of Debt | |||||||||
January | Midland Mall | 6.10% | August 2016 | $ | 31,953 | $ | 3,760 | |||||||
June | Chesterfield Mall | 5.74% | September 2016 | 140,000 | 29,187 | |||||||||
August | Wausau Center | 5.85% | April 2021 | 17,689 | 6,851 | |||||||||
$ | 189,642 | $ | 39,798 |
Sales Per Square Foot for the Twelve Months Ended (1) (2) | Occupancy (2) | % of Consolidated Unencumbered NOI for the Nine Months Ended 9/30/17 (3) | ||||||||||||||||
09/30/17 | 09/30/16 | 09/30/17 | 09/30/16 | |||||||||||||||
Unencumbered consolidated properties: | ||||||||||||||||||
Tier 1 Malls | $ | 402 | $ | 417 | 93.5 | % | 92.6 | % | 33.1 | % | ||||||||
Tier 2 Malls | 326 | 337 | 91.8 | % | 93.2 | % | 50.1 | % | ||||||||||
Tier 3 Malls | 261 | 267 | 87.2 | % | 86.9 | % | 5.7 | % | ||||||||||
Total Malls | $ | 345 | $ | 357 | 92.0 | % | 92.5 | % | 88.9 | % | ||||||||
Total Associated Centers | N/A | N/A | 97.9 | % | 96.3 | % | 6.7 | % | ||||||||||
Total Community Centers | N/A | N/A | 98.9 | % | 98.9 | % | 3.2 | % | ||||||||||
Total Office Buildings and Other | N/A | N/A | 94.2 | % | 95.3 | % | 1.2 | % | ||||||||||
Total Unencumbered Consolidated Portfolio | $ | 345 | $ | 357 | 93.5 | % | 93.6 | % | 100.0 | % |
Market Capitalization
Our total-market capitalization as of SeptemberJune 30, 2017. Actual future sales under this program, if any, will depend on a variety of factors including but not limited to market conditions, the trading price of CBL's common stock and our capital needs. We have no obligation to sell the remaining shares available under the ATM program.
|
| Shares Outstanding |
|
| Stock Price (1) |
| ||
Common stock and operating partnership units |
|
| 201,562 |
|
| $ | 0.12 |
|
7.375% Series D Cumulative Redeemable Preferred Stock |
|
| 1,815 |
|
|
| 250.00 |
|
6.625% Series E Cumulative Redeemable Preferred Stock |
|
| 690 |
|
|
| 250.00 |
|
Shares Outstanding | Stock Price (1) | Value | ||||||||
Common stock and operating partnership units | 199,316 | $ | 8.39 | $ | 1,672,261 | |||||
7.375% Series D Cumulative Redeemable Preferred Stock | 1,815 | 250.00 | 453,750 | |||||||
6.625% Series E Cumulative Redeemable Preferred Stock | 690 | 250.00 | 172,500 | |||||||
Total market equity | 2,298,511 | |||||||||
Company’s share of total debt | 4,746,348 | |||||||||
Total market capitalization | $ | 7,044,859 | ||||||||
Debt-to-total-market capitalization ratio | 67.4 | % |
(1) | |
Stock price for common stock and Operating Partnership units equals the closing price of CBL's common stock on |
Capital Expenditures
Deferred maintenance and capital expenditures are generally included in the determination of common area maintenance (“CAM”) expense that is 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 a portion is recovered from tenants over a 5 to 15-year period. We recover these costs through fixed amountsin accordance with annual increases or pro rata cost reimbursements based on the tenant’s occupied space.
The following table, which excludes expenditures for developments, redevelopments and expansions, summarizes these capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the three and nine month periodssix months ended SeptemberJune 30, 20172021 compared to the same periods in 20162020 (in thousands):
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Tenant allowances (1) |
| $ | 3,375 |
|
| $ | 1,360 |
|
| $ | 4,252 |
|
| $ | 8,578 |
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|
|
|
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Deferred maintenance: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parking area and parking area lighting |
|
| 57 |
|
|
| 15 |
|
|
| 57 |
|
|
| 270 |
|
Roof repairs and replacements |
|
| 308 |
|
|
| 1,748 |
|
|
| 308 |
|
|
| 1,899 |
|
Other capital expenditures |
|
| 1,782 |
|
|
| 645 |
|
|
| 2,241 |
|
|
| 3,841 |
|
Total deferred maintenance |
|
| 2,147 |
|
|
| 2,408 |
|
|
| 2,606 |
|
|
| 6,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized overhead |
|
| 209 |
|
|
| 100 |
|
|
| 467 |
|
|
| 731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized interest |
|
| 13 |
|
|
| 366 |
|
|
| 32 |
|
|
| 1,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures |
| $ | 5,744 |
|
| $ | 4,234 |
|
| $ | 7,357 |
|
| $ | 16,411 |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Tenant allowances (1) | $ | 9,658 | $ | 17,811 | $ | 29,774 | $ | 50,707 | |||||||
Renovations | 5,190 | 6,390 | 9,255 | 11,011 | |||||||||||
Deferred maintenance: | |||||||||||||||
Parking lot and parking lot lighting | 4,060 | 9,171 | 8,321 | 11,936 | |||||||||||
Roof repairs and replacements | 1,544 | 2,178 | 4,607 | 3,221 | |||||||||||
Other capital expenditures | 5,616 | 1,464 | 15,833 | 7,292 | |||||||||||
Total deferred maintenance | 11,220 | 12,813 | 28,761 | 22,449 | |||||||||||
Capitalized overhead | 1,370 | 1,103 | 5,661 | 4,051 | |||||||||||
Capitalized interest | 452 | 616 | 1,676 | 1,612 | |||||||||||
Total capital expenditures | $ | 27,890 | $ | 38,733 | $ | 75,127 | $ | 89,830 |
(1) | |
Tenant allowances primarily relate to new leases. Tenant allowances related to renewal leases were not material for the periods presented. |
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, and readily available cash on hand will provide the necessary funding for these expenditures.
Properties Opened During the NineSix Months Ended SeptemberJune 30, 2017
(Dollars in thousands)
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| CBL's Share of |
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Property |
| Location |
| CBL Ownership Interest |
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| Total Project Square Feet |
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| Total Cost (1) |
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| Cost to Date (2) |
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| 2021 Cost |
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| Opening Date |
| Initial Unleveraged Yield |
| ||||||
Outparcel Developments: |
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Hamilton Place - Aloft Hotel (3)(4) |
| Chattanooga, TN |
| 50% |
|
|
| 89,674 |
|
| $ | 12,000 |
|
| $ | 11,455 |
|
| $ | 2,628 |
|
| Jun-21 |
| 9.2% |
| ||
Pearland Town Center - HCA Offices |
| Pearland, TX |
| 100% |
|
|
| 48,416 |
|
|
| 14,186 |
|
|
| 12,237 |
|
|
| 4,815 |
|
| Jun-21 |
| 11.8% |
| ||
|
|
|
|
|
|
|
|
| 138,090 |
|
| $ | 26,186 |
|
| $ | 23,692 |
|
| $ | 7,443 |
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CBL's Share of | |||||||||||||||||||
Property | Location | CBL Ownership Interest | Total Project Square Feet | Total Cost (1) | Cost to Date (2) | Opening Date | Initial Unleveraged Yield | ||||||||||||
Outlet Center: | |||||||||||||||||||
The Outlet Shoppes at Laredo | Laredo, TX | 65% | 357,755 | $ | 69,936 | $ | 68,968 | April-17 | 9.6% | ||||||||||
Mall Expansions: | |||||||||||||||||||
Kirkwood Mall - Lucky 13 (Lucky's Pub) | Bismarck, ND | 100% | 6,500 | 3,200 | 3,109 | Sep-17 | 7.6% | ||||||||||||
Mayfaire Town Center - Phase I | Wilmington, NC | 100% | 67,766 | 19,073 | 15,112 | Feb-17 | 8.4% | ||||||||||||
74,266 | 22,273 | 18,221 | |||||||||||||||||
Mall Redevelopments: | |||||||||||||||||||
College Square - Partial Belk Redevelopment (Planet Fitness) (3) | Morristown, TN | 100% | 20,000 | 1,549 | 1,434 | Mar-17 | 9.9% | ||||||||||||
Dakota Square Mall - Partial Miracle Mart Redevelopment (T.J. Maxx) | Minot, ND | 100% | 20,755 | 1,929 | 1,584 | May-17 | 12.3% | ||||||||||||
Hickory Point Mall Redevelopment (T.J. Maxx/ Shops) | Forsyth, IL | 100% | 50,030 | 4,070 | 2,592 | Sep-17 | 8.9% | ||||||||||||
Pearland Town Center - Sports Authority Redevelopment (Dick's Sporting Goods) | Pearland, TX | 100% | 48,582 | 7,069 | 6,325 | April-17 | 12.2% | ||||||||||||
South County Center - DXL | St. Louis, MO | 100% | 6,792 | 1,266 | 1,137 | June-17 | 21.1% | ||||||||||||
Stroud Mall - Beauty Academy | Stroudsburg, PA | 100% | 10,494 | 2,167 | 1,932 | June-17 | 6.6% | ||||||||||||
Turtle Creek Mall - Ulta Beauty | Hattiesburg, MS | 100% | 20,782 | 3,050 | 1,763 | April-17 | 6.7% | ||||||||||||
York Galleria - Partial JCP Redevelopment (Gold's Gym/Shops) | York, PA | 100% | 40,832 | 5,370 | 3,849 | July-17 | 12.4% | ||||||||||||
York Galleria - Partial JCP Redevelopment (H&M/Shops) | York, PA | 100% | 42,672 | 5,582 | 4,377 | April-17 | 7.8% | ||||||||||||
260,939 | 32,052 | 24,993 | |||||||||||||||||
Associated Center Redevelopment: | |||||||||||||||||||
The Landing at Arbor Place - Ollie's | Atlanta (Douglasville), GA | 100% | 28,446 | 1,946 | 1,813 | Aug-17 | 8.6% | ||||||||||||
Total Properties Opened | 721,406 | $ | 126,207 | $ | 113,995 | ||||||||||||||
(1) Total Cost is presented net of reimbursements to be received. | |||||||||||||||||||
(2) Cost to Date does not reflect reimbursements until they are received. | |||||||||||||||||||
(3) This property was sold in May 2017. |
Properties Under Development at SeptemberJune 30, 2017
(Dollars in thousands)
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| CBL's Share of |
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| |||||||||
Property |
| Location |
| CBL Ownership Interest |
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| Total Project Square Feet |
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| Total Cost (1) |
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| Cost to Date (2) |
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| 2021 Cost |
|
| Expected Opening Date |
| Initial Unleveraged Yield |
| ||||||
Outparcel Developments: |
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|
Kirkwood Mall - Five Guys, Blaze Pizza, Thrifty White, Pancheros, Chick-fil-A |
| Bismarck, ND |
| 100% |
|
|
| 15,275 |
|
| $ | 7,176 |
|
| $ | 311 |
|
| $ | 107 |
|
| Q2 '22 |
| 8.9% |
| ||
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Redevelopments: |
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Cross Creek Sears Redevelopment - Longhorn's, Rooms To Go (5) |
| Fayetteville, NC |
| 100% |
|
|
| 13,494 |
|
|
| 5,252 |
|
|
| 4,009 |
|
|
| 2,785 |
|
| Q3 '21 |
| 5.3% |
| ||
Total Properties Under Development |
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|
|
|
|
|
|
| 28,769 |
|
| $ | 12,428 |
|
| $ | 4,320 |
|
| $ | 2,892 |
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|
|
(1) | Total Cost is presented net of reimbursements to be received. |
CBL's Share of | |||||||||||||||||||
Property | Location | CBL Ownership Interest | Total Project Square Feet | Total Cost (1) | Cost to Date (2) | Expected Opening Date | Initial Unleveraged Yield | ||||||||||||
Community Center: | |||||||||||||||||||
The Shoppes at Eagle Point (3) | Cookeville, TN | 50% | 233,489 | $ | 22,413 | $ | 6,963 | Fall-18 | 8.2% | ||||||||||
Mall Expansion: | |||||||||||||||||||
Parkdale Mall - Restaurant Addition | Beaumont, TX | 100% | 4,700 | 1,481 | 912 | Fall-17 | 9.2% | ||||||||||||
Mall Redevelopments: | |||||||||||||||||||
East Towne Mall - Flix Brewhouse | Madison, WI | 100% | 40,795 | 9,874 | 2,147 | Spring-18 | 8.5% | ||||||||||||
East Towne Mall - Lucky 13 | Madison, WI | 100% | 7,758 | 3,014 | 1,513 | Winter-17 | 6.5% | ||||||||||||
48,553 | 12,888 | 3,660 | |||||||||||||||||
Total Properties Under Development | 286,742 | $ | 36,782 | $ | 11,535 | ||||||||||||||
(1) Total Cost is presented net of reimbursements to be received. | |||||||||||||||||||
(2) Cost to Date does not reflect reimbursements until they are received. | |||||||||||||||||||
(3) We will fund 100% of the required equity contribution. The remainder of the project will be funded through a construction loan with a total borrowing capacity of $36,400, which closed subsequent to September 30, 2017. |
(2) | Cost to Date does not reflect reimbursements until they are received. |
(3) | Yield is based on expected yield upon stabilization. |
(4) | Total cost includes a construction loan of $8,400 (at our share), a non-cash allocated value for our land contribution of $2,200 and cash contributions of $1,400. |
(5) | The return reflected represents a pro forma incremental return as Total Cost excludes the cost related to the acquisition of the Sears (Cross Creek Mall) building. |
Off-Balance Sheet Arrangements
Unconsolidated Affiliates
We have ownership interests in 1731 unconsolidated affiliates as of SeptemberJune 30, 20172021 that are described in
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 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. |
• | We also have the ability to contribute land into a joint venture partnership with diverse uses, such as hotels, self-storage and multifamily. We typically partner with developers who have expertise in the diverse property types. |
56
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 or have the ability to increase our ownership interest.
See Note 12 to the condensed consolidated financial statements for information related to our guarantees of unconsolidated affiliates' debt as reflected in the accompanying condensed consolidated balance sheets as of SeptemberJune 30, 20172021 and December 31, 2016 (in thousands):
As of September 30, 2017 | Obligation recorded to reflect guaranty | ||||||||||||||||||||||
Unconsolidated Affiliate | Company's Ownership Interest | Outstanding Balance | Percentage Guaranteed by the Operating Partnership | Maximum Guaranteed Amount | Debt Maturity Date (1) | 9/30/2017 | 12/31/2016 | ||||||||||||||||
West Melbourne I, LLC - Phase I (2) | 50% | $ | 42,397 | 20% | $ | 8,479 | Feb-2018 | (3) | $ | 86 | $ | 86 | |||||||||||
West Melbourne I, LLC - Phase II (2) | 50% | 16,377 | 20% | 3,275 | Feb-2018 | (3) | 33 | 33 | |||||||||||||||
Port Orange I, LLC | 50% | 57,298 | 20% | 11,460 | Feb-2018 | (3) | 116 | 116 | |||||||||||||||
Ambassador Infrastructure, LLC | 65% | 11,035 | 100% | 11,035 | Aug-2020 | (4) | 177 | 177 | |||||||||||||||
Total guaranty liability | $ | 412 | $ | 412 |
Critical Accounting Policies
Our discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgment about the effect of matters that are inherently uncertain and that may change in subsequent periods. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our Annual Report on Form 10-K for the year ended December 31, 20162020 contains a discussion of our critical accounting policies and estimates in the Management's Discussion and Analysis of Financial Condition and Results
Recent Accounting Pronouncements
See
NoteNon-GAAP Measure
Funds from Operations
FFO is a widely used non-GAAP measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. NAREIT defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships, joint ventures and noncontrolling interests are calculated on the same basis. We define FFO as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. Our method of calculating FFO 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 or fallen with market conditions, we believe that FFO, which excludes historical cost depreciation and amortization, 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 allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as we believe that both are useful performance measures. We believe FFO allocable to Operating Partnership common unitholders 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 (loss) attributable to common shareholders.
57
In our reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders that is presented below, we make an adjustment to add back noncontrolling interest in income (loss) of our Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders. We then apply a percentage to FFO of the Operating Partnership common unitholders 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 held by noncontrolling interests during the period.
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 (loss) for purposes of evaluating our operating performance.
We believe that it is important to identify the impact of certain significant items on itsour FFO measures for a reader to have a complete understanding of the Company’sour results of operations. Therefore, the Company haswe have also presented adjusted FFO measures excluding these significant items from the applicable periods. Please refer to the reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders below for a description of these adjustments.
FFO of the Operating Partnership decreased 7.4%increased to $102.9$50.8 million for the three months ended SeptemberJune 30, 2017 as compared to $111.12021 from $(5.2) million for the prior-year period,period; and decreased 17.3%increased to $325.5$141.0 million for the ninesix months ended SeptemberJune 30, 2017 as compared to $393.72021 from $45.8 million for the prior-year period. Excluding the adjustments noted below, FFO of the Operating Partnership, as adjusted, decreased 14.1%increased to $79.5 million for the three months ended SeptemberJune 30, 2017 to $98.7 million compared to $114.92021 from $4.9 million for the same period in 2016,2020; and decreased 12.6%increased to $148.2 million for the ninesix months ended SeptemberJune 30, 2017 to $301.42021 from $56.5 million compared to $344.7 million forfrom the same period in 2016.2020. The decreaseincrease in FFO, as adjusted, was primarily driven by dilution from asset salesthe reduction in interest expense due to not recognizing post-petition interest expense on the senior unsecured notes and the secured credit facility subsequent to the filing of the Chapter 11 Cases, the cumulation of undeclared dividends ceasing to cumulate on the Series D Preferred Stock and the Series E Preferred Stock subsequent to the filing of the Chapter 11 Cases, a lower income tax provision in the current-year period, and costs incurred in the prior year and the current year-to-date period and $5.1 million of abandoned projects expense in the current year periods. FFO, as adjusted, for the current year periods was also impacted by a decline in revenues resulting from lower occupancy and tenant bankruptcies.
The reconciliation of net income (loss)loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows (in thousands, except per share data):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income (loss) attributable to common shareholders | $ | (2,258 | ) | $ | (10,164 | ) | $ | 50,807 | $ | 70,383 | |||||
Noncontrolling interest in income (loss) of Operating Partnership | (81 | ) | (1,372 | ) | 8,702 | 12,056 | |||||||||
Depreciation and amortization expense of: | |||||||||||||||
Consolidated properties | 71,732 | 71,794 | 225,461 | 220,505 | |||||||||||
Unconsolidated affiliates | 9,633 | 10,756 | 28,533 | 29,090 | |||||||||||
Non-real estate assets | (934 | ) | (838 | ) | (2,590 | ) | (2,397 | ) | |||||||
Noncontrolling interests' share of depreciation and amortization | (2,170 | ) | (2,237 | ) | (6,791 | ) | (6,685 | ) | |||||||
Loss on impairment, net of taxes | 24,935 | 51,812 | 70,185 | 114,990 | |||||||||||
(Gain) loss on depreciable property, net of taxes and noncontrolling interests' share | 1,995 | (8,685 | ) | (48,761 | ) | (44,206 | ) | ||||||||
FFO allocable to Operating Partnership common unitholders | 102,852 | 111,066 | 325,546 | 393,736 | |||||||||||
Litigation expenses (1) | 17 | 601 | 69 | 2,308 | |||||||||||
Nonrecurring professional fees expense (reimbursement) (1) | — | 662 | (919 | ) | 1,781 | ||||||||||
Loss on investment (2) | 354 | — | 6,197 | — | |||||||||||
Equity in (earnings) losses from disposals of unconsolidated affiliates (3) | — | 1,145 | — | (54,485 | ) | ||||||||||
Non-cash default interest expense (4) | 1,904 | 1,374 | 4,398 | 1,374 | |||||||||||
Gain on extinguishment of debt, net of noncontrolling interests' share (5) | (6,452 | ) | 6 | (33,902 | ) | — | |||||||||
FFO allocable to Operating Partnership common unitholders, as adjusted | $ | 98,675 | $ | 114,854 | $ | 301,389 | $ | 344,714 | |||||||
FFO per diluted share | $ | 0.52 | $ | 0.56 | $ | 1.63 | $ | 1.97 | |||||||
FFO, as adjusted, per diluted share | $ | 0.50 | $ | 0.57 | $ | 1.51 | $ | 1.72 | |||||||
Weighted-average common and potential dilutive common shares outstanding with Operating Partnership units fully converted | 199,321 | 200,004 | 199,325 | 199,992 | |||||||||||
(1) Litigation expense and nonrecurring professional fees expense are included in General and Administrative expense in the Consolidated Statements of Operations. Nonrecurring professional fees reimbursement is included in Interest and Other Income (Loss) in the Consolidated Statements of Operations. |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net loss attributable to common shareholders |
| $ | (8,882 | ) |
| $ | (81,452 | ) |
| $ | (35,645 | ) |
| $ | (215,348 | ) |
Noncontrolling interest in loss of Operating Partnership |
|
| (230 | ) |
|
| (2,077 | ) |
|
| (928 | ) |
|
| (18,491 | ) |
Depreciation and amortization expense of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated properties |
|
| 47,499 |
|
|
| 52,663 |
|
|
| 95,611 |
|
|
| 108,565 |
|
Unconsolidated affiliates |
|
| 13,456 |
|
|
| 14,020 |
|
|
| 26,986 |
|
|
| 27,530 |
|
Non-real estate assets |
|
| (492 | ) |
|
| (812 | ) |
|
| (1,032 | ) |
|
| (1,729 | ) |
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries |
|
| (558 | ) |
|
| (788 | ) |
|
| (1,139 | ) |
|
| (1,711 | ) |
Loss on impairment |
|
| — |
|
|
| 13,274 |
|
|
| 57,182 |
|
|
| 146,918 |
|
Loss on depreciable property |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
FFO allocable to Operating Partnership common unitholders |
|
| 50,793 |
|
|
| (5,172 | ) |
|
| 141,035 |
|
|
| 45,759 |
|
Litigation settlement (1) |
|
| 57 |
|
|
| — |
|
|
| (801 | ) |
|
| — |
|
Non-cash default interest expense (2) |
|
| 11,576 |
|
|
| 2,203 |
|
|
| 23,046 |
|
|
| 2,893 |
|
Gain on deconsolidation (3) |
|
| — |
|
|
| — |
|
|
| (55,131 | ) |
|
| — |
|
Reorganization items (4) |
|
| 17,073 |
|
|
| 7,857 |
|
|
| 40,006 |
|
|
| 7,857 |
|
FFO allocable to Operating Partnership common unitholders, as adjusted |
| $ | 79,499 |
|
| $ | 4,888 |
|
| $ | 148,155 |
|
| $ | 56,509 |
|
FFO per diluted share |
| $ | 0.25 |
|
| $ | (0.03 | ) |
| $ | 0.70 |
|
| $ | 0.23 |
|
FFO, as adjusted, per diluted share |
| $ | 0.39 |
|
| $ | 0.02 |
|
| $ | 0.73 |
|
| $ | 0.28 |
|
(1) | |||||||||||||||
For the three | |||||||||||||||
(2) | The three |
(3) | During the six months ended June 30, 2021, we deconsolidated Asheville Mall and | ||||||||||||||
(4) | Represents costs incurred subsequent to |
58
Table of diluted EPS to FFO per diluted share is as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Diluted EPS attributable to common shareholders | $ | (0.01 | ) | $ | (0.06 | ) | $ | 0.30 | $ | 0.41 | |||||
Eliminate amounts per share excluded from FFO: | |||||||||||||||
Depreciation and amortization expense, including amounts from consolidated properties, unconsolidated affiliates, non-real estate assets and excluding amounts allocated to noncontrolling interests | 0.40 | 0.40 | 1.23 | 1.21 | |||||||||||
Loss on impairment, net of taxes | 0.13 | 0.26 | 0.35 | 0.57 | |||||||||||
Gain on depreciable property, net of taxes and noncontrolling interests' share | — | (0.04 | ) | (0.25 | ) | (0.22 | ) | ||||||||
FFO per diluted share | $ | 0.52 | $ | 0.56 | $ | 1.63 | $ | 1.97 |
The reconciliation of diluted EPS to FFO per diluted share is as follows: |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Diluted EPS attributable to common shareholders |
| $ | (0.05 | ) |
| $ | (0.42 | ) |
| $ | (0.18 | ) |
| $ | (1.16 | ) |
Eliminate amounts per share excluded from FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense, including amounts from consolidated properties, unconsolidated affiliates, non-real estate assets and excluding amounts allocated to noncontrolling interests |
|
| 0.30 |
|
|
| 0.32 |
|
|
| 0.59 |
|
|
| 0.66 |
|
Loss on impairment |
|
| — |
|
|
| 0.07 |
|
|
| 0.29 |
|
|
| 0.73 |
|
FFO per diluted share |
| $ | 0.25 |
|
| $ | (0.03 | ) |
| $ | 0.70 |
|
| $ | 0.23 |
|
The reconciliations of FFO allocable to Operating Partnership common unitholders to FFO allocable to common shareholders, including and excluding the adjustments noted above, are as follows (in thousands):
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
FFO allocable to Operating Partnership common unitholders |
| $ | 50,793 |
|
| $ | (5,172 | ) |
| $ | 141,035 |
|
| $ | 45,759 |
|
Percentage allocable to common shareholders (1) |
|
| 97.46 | % |
|
| 95.17 | % |
|
| 97.46 | % |
|
| 92.09 | % |
FFO allocable to common shareholders |
| $ | 49,503 |
|
| $ | (4,922 | ) |
| $ | 137,453 |
|
| $ | 42,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO allocable to Operating Partnership common unitholders, as adjusted |
| $ | 79,499 |
|
| $ | 4,888 |
|
| $ | 148,155 |
|
| $ | 56,509 |
|
Percentage allocable to common shareholders (1) |
|
| 97.46 | % |
|
| 95.17 | % |
|
| 97.46 | % |
|
| 92.09 | % |
FFO allocable to common shareholders, as adjusted |
| $ | 77,480 |
|
| $ | 4,652 |
|
| $ | 144,392 |
|
| $ | 52,039 |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
FFO allocable to Operating Partnership common unitholders | $ | 102,852 | 111,066 | $ | 325,546 | 393,736 | |||||||||
Percentage allocable to common shareholders (1) | 85.84 | % | 85.39 | % | 85.82 | % | 85.38 | % | |||||||
FFO allocable to common shareholders | $ | 88,288 | $ | 94,839 | $ | 279,384 | $ | 336,172 | |||||||
FFO allocable to Operating Partnership common unitholders, as adjusted | $ | 98,675 | $ | 114,854 | $ | 301,389 | $ | 344,714 | |||||||
Percentage allocable to common shareholders (1) | 85.84 | % | 85.39 | % | 85.82 | % | 85.38 | % | |||||||
FFO allocable to common shareholders, as adjusted | $ | 84,703 | $ | 98,074 | $ | 258,652 | $ | 294,317 |
(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 |
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risk exposures, including interest 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 rates. Caution should be used in evaluating our overall market risk from the information presented below, as
Interest Rate Risk
Based on our proportionate share of consolidated and unconsolidated variable-rate debt at SeptemberJune 30, 2017,2021, and excluding the secured credit facility and the loan secured by The Outlet Shoppes at Laredo, which are included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase or decrease in interest rates on variable-rate debt would decreaseincrease or increasedecrease annual cash flows by approximately $5.6$1.0 million, respectively.
Based on our proportionate share of consolidated and $5.6 million, respectively,unconsolidated variable-rate debt at June 30, 2021, and including the secured credit facility and the loan secured by The Outlet Shoppes at Laredo, which are included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase or decrease in interest rates on variable-rate debt would increase or decrease annual interest expense, after the effect of capitalized interest,cash flows by approximately $5.5$6.5 million, and $5.5 million, respectively.
Based on our proportionate share of total consolidated, unconsolidated and unconsolidatedother debt at SeptemberJune 30, 2017,2021, and excluding the secured credit facility, senior unsecured notes and the loan secured by The Outlet Shoppes at Laredo, which are included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $56.1$13.7 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $109.2$14.5 million.
Based on our proportionate share of total consolidated, unconsolidated and other debt at June 30, 2021, and including the secured credit facility, senior unsecured notes and the loan secured by The Outlet Shoppes at Laredo, which are included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $26.5 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $26.4 million.
59
ITEM 4: Controls and Procedures
Disclosure Controls and Procedures
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
Material Weakness in Internal Control over Financial Reporting
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s and the Operating Partnership’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting at June 30, 2021 and December 31, 2020, management of the Company and the Operating Partnership determined that there was a control deficiency that constituted a material weakness, as described below.
As a result of turnover, the Company and the Operating Partnership did not maintain a sufficient complement of personnel commensurate with their accounting and financial reporting requirements in accordance with U.S. GAAP and SEC regulations.
The control deficiency described above created a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis and therefore we concluded that the deficiency represents a material weakness in the Company’s and the Operating Partnership’s internal control over financial reporting and that the Company and the Operating Partnership did not maintain effective internal control over financial reporting as of June 30, 2021 and December 31, 2020 based on criteria established in Internal Control-Integrated Framework issued by COSO.
Notwithstanding the identified material weakness, management believes that the condensed consolidated financial statements and related financial information included in this Form 10-Q fairly present, in all material respects, our balance sheets, statements of operations, comprehensive loss and cash flows as of and for the periods presented.
Remediation Plan
The Company and the Operating Partnership plan to remediate this material weakness by hiring additional personnel to enable them to meet their financial reporting requirements. The Company and the Operating Partnership may also utilize outside advisors to assist on a short-term basis.
Changes in Internal Control over Financial Reporting
There have beenwere no changes in the Company'sCompany’s or the Operating Partnership'sPartnership’s internal control over financial reporting during our most recent fiscal quarter ended June 30, 2021, 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
The information in certain litigation that arises in the ordinary course of business, most of whichthis Item 1 is expected to be coveredincorporated by liability insurance. Based on current expectations, such matters, both individuallyreference herein from Note 2 and in the aggregate, are not expected to have a material adverse effect on our liquidity, results of operations, business or financial condition.
ITEM 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risks that could materially affect our business, financial condition or results of operations that are discussed under the caption “Risk Factors” in Part I, Item1AItem 1A of our Annual Report on Form 10-K for the year endedDecember 31, 2016.2020. There have been no material changes to such
ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share (2) | Total Number of Shares Purchased as Part of a Publicly Announced Plan | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | ||||||||||||||
July 1–31, 2017 | 2,850 | $ | 8.38 | — | $ | — | ||||||||||||
August 1–31, 2017 | — | — | ||||||||||||||||
September 1–30, 2017 | — | — | — | — | ||||||||||||||
Total | 2,850 | $ | 8.38 | — | $ | — |
Limitations on Payment of Dividends
See information presented under the Operating Partnership elected to pay $0.1 million in cash to a holder of 7,084 common units of limited partnership interestheading Equity in the Operating Partnership uponLiquidity and Capital Resources section of Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in PART I of this report for a discussion of current limitations on the exercisepayment of dividends by the holder's conversion rights.
ITEM 3: Defaults Upon Senior Securities
Defaults on Indebtedness
See information presented in Note 8 and Note 9 in the financial statements included in PART I of this report for a discussion of certain defaults with respect to the Company’s senior unsecured notes and secured credit facility, including defaults related to the filing of the Chapter 11 Cases, and additional asserted defaults with respect to the Company’s secured credit facility.
Preferred Dividend and Special Common Unit Distribution Arrearages
Dividends on the Series D and the Series E preferred stock are cumulative and therefore continued to accrue, prior to the filing of the Chapter 11 Cases, at an annual rate of $18.4375 per share and $16.5625 per share, respectively. We expect our Chapter 11 reorganization to extinguish all claims related to the accrued and unpaid preferred stock dividends. As of June 30, 2021, the cumulative amount of unpaid dividends on the preferred stock totaled $48.6 million.
Distributions on the Series K and S special common units are cumulative and therefore continued to accrue, prior to the filing of the Chapter 11 Cases, at an annual rate of $2.96875 per unit and $2.92875 per unit, respectively. Distributions on the Series L special common units were cumulative through May 31, 2020, and accrued at an annual rate of $3.0288 per unit. Pursuant to the terms of the Series L special common units, on June 1, 2020 the Series L special common units began receiving distributions at the same rate and on the same terms as the common units of limited partnership interest in the Operating Partnership. As of June 30, 2021, the cumulative amount of unpaid distributions on the special common units totaled $9.4 million.
ITEM 4: Mine Safety Disclosures
Not applicable.
ITEM 5: Other Information
None.
ITEM 6: Exhibits
INDEX TO EXHIBITS
Exhibit Number | Description | |
101.INS | ||
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. (Filed herewith.) | ||
101.SCH | Inline XBRL Taxonomy Extension Schema | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*). (Filed herewith.) |
* | |
Commission File No. 1-12494 and |
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/ Farzana Khaleel | |
Farzana Khaleel | |
Executive Vice President - | |
Chief Financial Officer and Treasurer | |
(Authorized Officer and Principal Financial Officer) | |
CBL & ASSOCIATES LIMITED PARTNERSHIP | |
By: CBL HOLDINGS I, INC., its general partner | |
/s/ Farzana Khaleel | |
Farzana Khaleel | |
Executive Vice President - | |
Chief Financial Officer and Treasurer | |
(Authorized Officer and Principal Financial Officer) |
63