UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 20202021
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 & ASSOCIATES PROPERTIES, INC.)
COMMISSION FILE NO. 333-182515-01 (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, $0.001 par value | CBL* | New York Stock Exchange* |
*On November 2, 2020, the NYSE announced that it had suspended trading in the Company’s stock and 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 have been trading on the OTC Markets, operated by the OTC Markets Group, Inc., under the trading symbol CBLAQ for the common stock, CBLDQ for depositary shares representing Series D Preferred Stock and CBLEQ for depositary shares representing Series E Preferred Stock. Effective November 2, 2021, the NYSE had withdrawn actions to delist the Company’s common stock and trading in the Company’s new common stock commenced under the symbol CBL. Trading of the Company’s old common stock and depositary shares representing its Series D Preferred Stock and Series E Preferred Stock on the OTC Markets was terminated as of the closing of trading on November 1, 2021.
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 every Interactive Data File required to be submitted 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 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. |
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Large accelerated filer | ☐ |
| Accelerated filer |
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Non-accelerated filer |
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| Smaller reporting company | ☒ |
Emerging growth company | ☐ |
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CBL & Associates Limited Partnership |
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Large accelerated filer | ☐ |
| Accelerated filer | ☐ |
Non-accelerated filer | ☒ |
| Smaller reporting company | ☐ |
Emerging growth company | ☐ |
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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 | ☒ |
Securities registered under Section 12(b) of the Act:
CBL & Associates Properties, Inc.
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CBL & Associates Limited Partnership: None
As of November 11, 2020,10, 2021, there were 196,572,24819,988,600 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01$0.001 per share, outstanding.
EXPLANATORY NOTE
(Dollars in thousands, except share data)
This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 20202021 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 Chapterchapter 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, enableenabled the Debtors to maintain their operations in the ordinary course of business.
The filing of In connection with the Chapter 11 Cases, cameon August 11, 2021, the Bankruptcy Court entered an order, Docket No.1397 (Confirmation Order), confirming the Debtors’ Third Amended Joint Chapter 11 Plan of CBL & Associates Properties, Inc. and its Affiliated Debtors (With Technical Modifications) (as modified at Docket No. 1521, the same time during which“Plan”). On November 1, 2021 (the “Effective Date”), the Company’s management was workingconditions to complete the preparation of financial statements and related disclosures required to be included in its Form 10-Q. Accordingly, in considerationeffectiveness of the significant amount of time required of management to support matters related toPlan were satisfied and the Debtors emerged from the Chapter 11 Cases and the additional time required by management to make appropriate revisions to the financial statements and related disclosures included in the Form 10-Q to reflect the commencement of the Chapter 11 Cases, the Company was unable to timely file its Form 10-Q. The Company filed a “Notification of Late Filing” on Form 12b-25 on November 10, 2020 pursuant to Rule 12b-25 of the Securities Exchange Act of 1934 to delay the filing of this Form 10-Q.Cases. See Note 2 for more information.
The Company is a real estate investment trust ("REIT") whose stock is listedwas traded on the New York Stock Exchange (“NYSE”), and was traded on the 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 “Listing Criteria”Delisting of Common Stock and Depositary Shares in Note 1 – Organization and Basis2 herein, on November 2, 2021, the newly issued common stock of Presentation herein, the Company intendscommenced trading on the NYSE under the symbol CBL. Prior to appeal this decision in accordance with NYSE rules, and in the meantimethat, the Company’s stock is tradingtraded 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. AtAs of September 30, 2020,2021, 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 a 96.1%97.1% limited partner interest for a combined interest held by the Company of 97.1%98.1%. As of the Effective Date, 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 a 98.9% limited partner interest for a combined interest held by the Company of 99.9%.
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 |
| • | 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
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PART I | 1 | |
Item 1. | 1 | |
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CBL & Associates Properties, Inc. | ||
| Condensed Consolidated Balance Sheets as of September 30, | 1 |
| 2 | |
| 3 | |
| 4 | |
| 6 | |
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CBL & Associates Limited Partnership | ||
| Condensed Consolidated Balance Sheets as of September 30, | 7 |
| 8 | |
| 9 | |
| 10 | |
| 12 | |
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CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership | ||
| Notes to Unaudited Condensed Consolidated Financial Statements | 13 |
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Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II |
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Item 1. |
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Item1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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PART I – FINANCIAL INFORMATION
ITEM 1: Financial Statements
CBL & Associates Properties, Inc.
(Debtors-In-Possession)
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
ASSETS (1) |
| September 30, 2020 |
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| December 31, 2019 |
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| September 30, 2021 |
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| December 31, 2020 |
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Real estate assets: |
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Land |
| $ | 717,048 |
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| $ | 730,218 |
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| $ | 643,331 |
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| $ | 695,711 |
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Buildings and improvements |
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| 5,255,663 |
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| 5,631,831 |
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| 4,867,017 |
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| 5,135,074 |
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| 5,972,711 |
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| 6,362,049 |
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| 5,510,348 |
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| 5,830,785 |
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Accumulated depreciation |
|
| (2,228,632 | ) |
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| (2,349,404 | ) |
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| (2,251,613 | ) |
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| (2,241,421 | ) |
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| 3,744,079 |
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| 4,012,645 |
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| 3,258,735 |
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| 3,589,364 |
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Developments in progress |
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| 31,822 |
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| 49,351 |
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| 15,065 |
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| 28,327 |
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Held for sale |
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| 6,239 |
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| — |
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Net investment in real estate assets |
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| 3,775,901 |
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| 4,061,996 |
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| 3,280,039 |
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| 3,617,691 |
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Cash and cash equivalents |
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| 106,807 |
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| 32,816 |
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| 267,982 |
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| 61,781 |
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Available-for-sale securities - at fair value (amortized cost of $151,762 in 2020) |
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| 151,795 |
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| — |
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Available-for-sale securities - at fair value (amortized cost of $99,991 and $233,053 as of September 30, 2021 and December 31, 2020, respectively) |
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| 99,998 |
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| 233,071 |
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Receivables: |
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Tenant |
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| 108,123 |
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| 75,252 |
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| 72,574 |
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| 103,655 |
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Other |
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| 6,121 |
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| 10,792 |
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| 4,050 |
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| 5,958 |
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Mortgage and other notes receivable |
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| 2,534 |
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| 4,662 |
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| 1,696 |
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| 2,337 |
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Investments in unconsolidated affiliates |
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| 291,040 |
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| 307,354 |
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| 249,313 |
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| 279,355 |
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Intangible lease assets and other assets |
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| 121,722 |
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| 129,474 |
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| 252,495 |
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| 139,892 |
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| $ | 4,564,043 |
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| $ | 4,622,346 |
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| $ | 4,228,147 |
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| $ | 4,443,740 |
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LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
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Mortgage and other indebtedness, net |
| $ | 3,729,686 |
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| $ | 3,527,015 |
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| $ | 1,019,084 |
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| $ | 1,184,831 |
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Accounts payable and accrued liabilities |
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| 221,946 |
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| 231,306 |
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| 203,069 |
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| 173,387 |
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Total liabilities (1) |
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| 3,951,632 |
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| 3,758,321 |
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Commitments and contingencies (Note 8 and Note 12) |
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Total liabilities not subject to compromise (1) |
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| 1,222,153 |
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| 1,358,218 |
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Liabilities subject to compromise |
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| 2,551,686 |
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| 2,551,490 |
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Commitments and contingencies (Note 9 and Note 12) |
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Redeemable noncontrolling interests |
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| 193 |
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| 2,160 |
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| (871 | ) |
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| (265 | ) |
Shareholders' equity: |
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Preferred Stock, $.01 par value, 15,000,000 shares authorized: |
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7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding |
|
| 18 |
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| 18 |
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| 18 |
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| 18 |
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6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding |
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| 7 |
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| 7 |
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| 7 |
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| 7 |
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Common stock, $.01 par value, 350,000,000 shares authorized, 195,765,021 and 174,115,111 issued and outstanding in 2020 and 2019, respectively |
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| 1,958 |
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| 1,741 |
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Common stock, $.01 par value, 350,000,000 shares authorized, 197,630,693 and 196,569,917 issued and outstanding in 2021 and 2020, respectively |
|
| 1,976 |
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| 1,966 |
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Additional paid-in capital |
|
| 1,984,607 |
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| 1,965,897 |
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| 1,986,911 |
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| 1,986,269 |
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Accumulated other comprehensive loss |
|
| 33 |
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| — |
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Accumulated other comprehensive income |
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| 7 |
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| 18 |
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Dividends in excess of cumulative earnings |
|
| (1,397,131 | ) |
|
| (1,161,351 | ) |
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| (1,533,800 | ) |
|
| (1,456,435 | ) |
Total shareholders' equity |
|
| 589,492 |
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| 806,312 |
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| 455,119 |
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| 531,843 |
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Noncontrolling interests |
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| 22,726 |
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| 55,553 |
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| 60 |
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| 2,454 |
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Total equity |
|
| 612,218 |
|
|
| 861,865 |
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| 455,179 |
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| 534,297 |
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| $ | 4,564,043 |
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| $ | 4,622,346 |
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| $ | 4,228,147 |
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| $ | 4,443,740 |
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(1) | As of September 30, |
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 September 30, |
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| Nine Months Ended September 30, |
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| Three Months Ended September 30, |
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| Nine Months Ended September 30, |
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| 2020 |
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| 2019 |
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| 2020 |
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| 2019 |
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| 2021 |
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| 2020 |
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| 2021 |
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| 2020 |
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REVENUES: |
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Rental revenues |
| $ | 124,081 |
|
| $ | 180,616 |
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| $ | 405,476 |
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| $ | 556,989 |
|
| $ | 145,539 |
|
| $ | 124,081 |
|
| $ | 405,030 |
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| $ | 405,476 |
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Management, development and leasing fees |
|
| 2,104 |
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| 2,216 |
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| 5,251 |
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| 7,325 |
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|
| 1,780 |
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|
| 2,104 |
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|
| 4,888 |
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|
| 5,251 |
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Other |
|
| 3,712 |
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|
| 4,419 |
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|
| 10,955 |
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|
| 14,344 |
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|
| 3,056 |
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|
| 3,712 |
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|
| 10,202 |
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|
| 10,955 |
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Total revenues |
|
| 129,897 |
|
|
| 187,251 |
|
|
| 421,682 |
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|
| 578,658 |
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|
| 150,375 |
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|
| 129,897 |
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|
| 420,120 |
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|
| 421,682 |
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OPERATING EXPENSES: |
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EXPENSES: |
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Property operating |
|
| (20,396 | ) |
|
| (27,344 | ) |
|
| (63,011 | ) |
|
| (82,856 | ) |
|
| (23,818 | ) |
|
| (20,396 | ) |
|
| (65,243 | ) |
|
| (63,011 | ) |
Depreciation and amortization |
|
| (53,477 | ) |
|
| (64,168 | ) |
|
| (162,042 | ) |
|
| (198,438 | ) |
|
| (46,479 | ) |
|
| (53,477 | ) |
|
| (142,090 | ) |
|
| (162,042 | ) |
Real estate taxes |
|
| (17,215 | ) |
|
| (18,699 | ) |
|
| (53,500 | ) |
|
| (57,766 | ) |
|
| (13,957 | ) |
|
| (17,215 | ) |
|
| (45,618 | ) |
|
| (53,500 | ) |
Maintenance and repairs |
|
| (8,425 | ) |
|
| (10,253 | ) |
|
| (25,675 | ) |
|
| (34,327 | ) |
|
| (9,482 | ) |
|
| (8,425 | ) |
|
| (29,047 | ) |
|
| (25,675 | ) |
General and administrative |
|
| (25,497 | ) |
|
| (12,467 | ) |
|
| (62,060 | ) |
|
| (48,901 | ) |
|
| (13,502 | ) |
|
| (25,497 | ) |
|
| (37,383 | ) |
|
| (62,060 | ) |
Loss on impairment |
|
| (46 | ) |
|
| (135,688 | ) |
|
| (146,964 | ) |
|
| (202,121 | ) |
|
| (63,160 | ) |
|
| (46 | ) |
|
| (120,342 | ) |
|
| (146,964 | ) |
Litigation settlement |
|
| 2,480 |
|
|
| 22,688 |
|
|
| 2,480 |
|
|
| (65,462 | ) |
|
| 89 |
|
|
| 2,480 |
|
|
| 890 |
|
|
| 2,480 |
|
Other |
|
| — |
|
|
| (7 | ) |
|
| (400 | ) |
|
| (41 | ) |
|
| (104 | ) |
|
| — |
|
|
| (391 | ) |
|
| (400 | ) |
Total operating expenses |
|
| (122,576 | ) |
|
| (245,938 | ) |
|
| (511,172 | ) |
|
| (689,912 | ) | ||||||||||||||||
Total expenses |
|
| (170,413 | ) |
|
| (122,576 | ) |
|
| (439,224 | ) |
|
| (511,172 | ) | ||||||||||||||||
OTHER INCOME (EXPENSES): |
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|
|
|
|
|
|
Interest and other income |
|
| 1,975 |
|
|
| 1,367 |
|
|
| 5,263 |
|
|
| 2,212 |
|
|
| 510 |
|
|
| 1,975 |
|
|
| 2,038 |
|
|
| 5,263 |
|
Interest expense |
|
| (61,137 | ) |
|
| (50,515 | ) |
|
| (160,760 | ) |
|
| (156,995 | ) | ||||||||||||||||
Interest expense (unrecognized contractual interest expense was $45,344 and $135,162 for the three and nine months ended September 30, 2021, respectively) |
|
| (19,039 | ) |
|
| (61,137 | ) |
|
| (65,468 | ) |
|
| (160,760 | ) | ||||||||||||||||
Gain on extinguishment of debt |
|
| 15,407 |
|
|
| — |
|
|
| 15,407 |
|
|
| 71,722 |
|
|
| — |
|
|
| 15,407 |
|
|
| — |
|
|
| 15,407 |
|
Gain on investments/deconsolidation |
|
| — |
|
|
| 11,174 |
|
|
| — |
|
|
| 11,174 |
| ||||||||||||||||
Gain on deconsolidation |
|
| — |
|
|
| — |
|
|
| 55,131 |
|
|
| — |
| ||||||||||||||||
Gain (loss) on sales of real estate assets |
|
| (55 | ) |
|
| 8,056 |
|
|
| 2,708 |
|
|
| 13,811 |
|
|
| 8,684 |
|
|
| (55 | ) |
|
| 8,492 |
|
|
| 2,708 |
|
Income tax provision |
|
| (546 | ) |
|
| (1,670 | ) |
|
| (17,189 | ) |
|
| (2,622 | ) | ||||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates |
|
| (7,389 | ) |
|
| (1,759 | ) |
|
| (12,450 | ) |
|
| 3,421 |
| ||||||||||||||||
Reorganization items |
|
| (12,008 | ) |
|
| — |
|
|
| (52,014 | ) |
|
| — |
| ||||||||||||||||
Income tax benefit (provision) |
|
| 1,234 |
|
|
| (546 | ) |
|
| (222 | ) |
|
| (17,189 | ) | ||||||||||||||||
Equity in losses of unconsolidated affiliates |
|
| (2,224 | ) |
|
| (7,389 | ) |
|
| (9,575 | ) |
|
| (12,450 | ) | ||||||||||||||||
Total other expenses |
|
| (51,745 | ) |
|
| (33,347 | ) |
|
| (167,021 | ) |
|
| (57,277 | ) |
|
| (22,843 | ) |
|
| (51,745 | ) |
|
| (61,618 | ) |
|
| (167,021 | ) |
Net loss |
|
| (44,424 | ) |
|
| (92,034 | ) |
|
| (256,511 | ) |
|
| (168,531 | ) |
|
| (42,881 | ) |
|
| (44,424 | ) |
|
| (80,722 | ) |
|
| (256,511 | ) |
Net (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Net loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Operating Partnership |
|
| 609 |
|
|
| 13,904 |
|
|
| 19,100 |
|
|
| 27,116 |
|
|
| 1,085 |
|
|
| 609 |
|
|
| 2,013 |
|
|
| 19,100 |
|
Other consolidated subsidiaries |
|
| 937 |
|
|
| (763 | ) |
|
| 1,631 |
|
|
| (631 | ) |
|
| 76 |
|
|
| 937 |
|
|
| 1,344 |
|
|
| 1,631 |
|
Net loss attributable to the Company |
|
| (42,878 | ) |
|
| (78,893 | ) |
|
| (235,780 | ) |
|
| (142,046 | ) |
|
| (41,720 | ) |
|
| (42,878 | ) |
|
| (77,365 | ) |
|
| (235,780 | ) |
Preferred dividends declared |
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (33,669 | ) | ||||||||||||||||
Preferred dividends undeclared |
|
| (11,223 | ) |
|
| — |
|
|
| (33,669 | ) |
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (33,669 | ) |
Net loss attributable to common shareholders |
| $ | (54,101 | ) |
| $ | (90,116 | ) |
| $ | (269,449 | ) |
| $ | (175,715 | ) |
| $ | (41,720 | ) |
| $ | (54,101 | ) |
| $ | (77,365 | ) |
| $ | (269,449 | ) |
Basic and diluted per share data attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common shareholders |
| $ | (0.28 | ) |
| $ | (0.52 | ) |
| $ | (1.43 | ) |
| $ | (1.01 | ) |
| $ | (0.21 | ) |
| $ | (0.28 | ) |
| $ | (0.39 | ) |
| $ | (1.43 | ) |
Weighted-average common and potential dilutive common shares outstanding |
|
| 193,481 |
|
|
| 173,471 |
|
|
| 188,211 |
|
|
| 173,400 |
|
|
| 196,454 |
|
|
| 193,481 |
|
|
| 196,474 |
|
|
| 188,211 |
|
The accompanying notes are an integral part of these condensed consolidated statements.
2
CBL & Associates Properties, Inc.
(Debtors-In-Possession)
Condensed Consolidated Statements of Comprehensive Loss
(In thousands, except share data)
(Unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Net loss |
| $ | (44,424 | ) |
| $ | (92,034 | ) |
| $ | (256,511 | ) |
| $ | (168,531 | ) |
| $ | (42,881 | ) |
| $ | (44,424 | ) |
| $ | (80,722 | ) |
| $ | (256,511 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Unrealized gain on available-for-sale securities |
|
| 75 |
|
|
| — |
|
|
| 33 |
|
|
| — |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Other comprehensive gain (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Unrealized gain (loss) on available-for-sale securities |
|
| 13 |
|
|
| 75 |
|
|
| (11 | ) |
|
| 33 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
| (44,349 | ) |
|
| (92,034 | ) |
|
| (256,478 | ) |
|
| (168,531 | ) |
|
| (42,868 | ) |
|
| (44,349 | ) |
|
| (80,733 | ) |
|
| (256,478 | ) |
Comprehensive (income) loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Comprehensive loss attributable to noncontrolling interests in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Operating Partnership |
|
| 609 |
|
|
| 13,904 |
|
|
| 19,100 |
|
|
| 27,116 |
|
|
| 1,085 |
|
|
| 609 |
|
|
| 2,013 |
|
|
| 19,100 |
|
Other consolidated subsidiaries |
|
| 937 |
|
|
| (763 | ) |
|
| 1,631 |
|
|
| (631 | ) |
|
| 76 |
|
|
| 937 |
|
|
| 1,344 |
|
|
| 1,631 |
|
Comprehensive loss attributable to the Company: |
| $ | (42,803 | ) |
| $ | (78,893 | ) |
| $ | (235,747 | ) |
| $ | (142,046 | ) |
| $ | (41,707 | ) |
| $ | (42,803 | ) |
| $ | (77,376 | ) |
| $ | (235,747 | ) |
The accompanying notes are an integral part of these condensed consolidated statements.
3
CBL & Associates Properties, Inc.
(Debtors-In-Possession)
Condensed Consolidated Statements of Equity
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
| Equity |
|
|
|
|
|
| Equity |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| Shareholders' 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 |
|
| 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, January 1, 2019 |
| $ | 3,575 |
|
| $ | 25 |
|
| $ | 1,727 |
|
| $ | 1,968,280 |
|
| $ | (1,005,895 | ) |
| $ | 964,137 |
|
| $ | 68,028 |
|
| $ | 1,032,165 |
| |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 |
| $ | 2,160 |
|
| $ | 25 |
|
| $ | 1,741 |
|
| $ | 1,965,897 |
|
| $ | — |
|
| $ | (1,161,351 | ) |
| $ | 806,312 |
|
| $ | 55,553 |
|
| $ | 861,865 |
| |||||||||||||||||||||||||||||||||
Net loss |
|
| (453 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (38,976 | ) |
|
| (38,976 | ) |
|
| (7,380 | ) |
|
| (46,356 | ) |
|
| (1,158 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (122,673 | ) |
|
| (122,673 | ) |
|
| (15,463 | ) |
|
| (138,136 | ) | |
Dividends declared - common stock ($0.075 per share) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (13,010 | ) |
|
| (13,010 | ) |
|
| — |
|
|
| (13,010 | ) | |||||||||||||||||||||||||||||||||||||
Dividends declared - preferred stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| (11,223 | ) |
|
| — |
|
|
| (11,223 | ) | |||||||||||||||||||||||||||||||||||||
Issuance of 863,174 shares of common stock and restricted common stock |
|
| — |
|
|
| — |
|
|
| 9 |
|
|
| 708 |
|
|
| — |
|
|
| 717 |
|
|
| — |
|
|
| 717 |
| |||||||||||||||||||||||||||||||||||||
Cancellation of 57,656 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (133 | ) |
|
| — |
|
|
| (134 | ) |
|
| — |
|
|
| (134 | ) | |||||||||||||||||||||||||||||||||||||
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 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 313 |
|
|
| — |
|
|
| 313 |
|
|
| — |
|
|
| 313 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| 379 |
| |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,033 |
|
|
| — |
|
|
| 1,033 |
|
|
| — |
|
|
| 1,033 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| 384 |
| |
Adjustment for noncontrolling interests |
|
| 1,038 |
|
|
| — |
|
|
| — |
|
|
| (2,356 | ) |
|
| — |
|
|
| (2,356 | ) |
|
| 1,318 |
|
|
| (1,038 | ) |
|
| 117 |
|
|
| — |
|
|
| — |
|
|
| 3,812 |
|
|
|
|
|
|
| — |
|
|
| 3,812 |
|
|
| (3,929 | ) |
|
| (117 | ) | |
Distributions to noncontrolling interests |
|
| (1,143 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,450 | ) |
|
| (4,450 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (94 | ) |
|
| (94 | ) | |
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 455 |
|
|
| 455 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
|
| 25 |
| |
Balance, March 31, 2019 |
|
| 3,017 |
|
|
| 25 |
|
|
| 1,735 |
|
|
| 1,967,845 |
|
|
| (1,069,104 | ) |
|
| 900,501 |
|
|
| 57,971 |
|
|
| 958,472 |
| |||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 |
|
| 525 |
|
|
| 25 |
|
|
| 1,920 |
|
|
| 1,982,454 |
|
|
| (42 | ) |
|
| (1,354,253 | ) |
|
| 630,104 |
|
|
| 23,349 |
|
|
| 653,453 |
| |||||||||||||||||||||||||||||||||
Net loss |
|
| (317 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (24,177 | ) |
|
| (24,177 | ) |
|
| (5,194 | ) |
|
| (29,371 | ) |
|
| (422 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (42,878 | ) |
|
| (42,878 | ) |
|
| (1,124 | ) |
|
| (44,002 | ) | |
Dividends declared - preferred stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| (11,223 | ) |
|
| — |
|
|
| (11,223 | ) | |||||||||||||||||||||||||||||||||||||
Issuances of 15,634 shares of common stock and restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 21 |
|
|
| — |
|
|
| 21 |
|
|
| — |
|
|
| 21 |
| |||||||||||||||||||||||||||||||||||||
Cancellation of 5,717 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (5 | ) |
|
| — |
|
|
| (5 | ) |
|
| — |
|
|
| (5 | ) | |||||||||||||||||||||||||||||||||||||
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 312 |
|
|
| — |
|
|
| 312 |
|
|
| — |
|
|
| 312 |
| |||||||||||||||||||||||||||||||||||||
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 587 |
|
|
| — |
|
|
| 587 |
|
|
| — |
|
|
| 587 |
| |||||||||||||||||||||||||||||||||||||
Adjustment for noncontrolling interests |
|
| 1,130 |
|
|
| — |
|
|
| — |
|
|
| (2,211 | ) |
|
| — |
|
|
| (2,211 | ) |
|
| 1,081 |
|
|
| (1,130 | ) | |||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,148 |
|
|
| 4,148 |
| |||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| (1,143 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,225 | ) |
|
| (3,225 | ) | |||||||||||||||||||||||||||||||||||||
Balance, June 30, 2019 |
|
| 2,687 |
|
|
| 25 |
|
|
| 1,735 |
|
|
| 1,966,549 |
|
|
| (1,104,504 | ) |
|
| 863,805 |
|
|
| 54,781 |
|
|
| 918,586 |
| |||||||||||||||||||||||||||||||||||||
Net loss |
|
| (811 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (78,893 | ) |
|
| (78,893 | ) |
|
| (12,330 | ) |
|
| (91,223 | ) | |||||||||||||||||||||||||||||||||||||
Dividends declared - preferred stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| (11,223 | ) |
|
| — |
|
|
| (11,223 | ) | |||||||||||||||||||||||||||||||||||||
Issuances of 1,681 shares of common stock and restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
| |||||||||||||||||||||||||||||||||||||
Cancellation of 4,310 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4 | ) |
|
| — |
|
|
| (4 | ) |
|
| — |
|
|
| (4 | ) | |||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 75 |
|
|
| — |
|
|
| 75 |
|
|
| — |
|
|
| 75 |
| |||||||||||||||||||||||||||||||||
Conversion of 3,814,729 Operating Partnership common units into shares of common stock |
|
| — |
|
|
| — |
|
|
| 38 |
|
|
| (25 | ) |
|
| — |
|
|
| — |
|
|
| 13 |
|
|
| (13 | ) |
|
| — |
| |||||||||||||||||||||||||||||||||
Cancellation of 1,162 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| (1 | ) | |||||||||||||||||||||||||||||||||
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 313 |
|
|
| — |
|
|
| 313 |
|
|
| — |
|
|
| 313 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,420 |
|
|
| — |
|
|
| — |
|
|
| 2,420 |
|
|
| — |
|
|
| 2,420 |
| |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 591 |
|
|
| — |
|
|
| 591 |
|
|
| — |
|
|
| 591 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 375 |
|
|
| — |
|
|
| — |
|
|
| 375 |
|
|
| — |
|
|
| 375 |
| |
Adjustment for noncontrolling interests |
|
| 1,131 |
|
|
| — |
|
|
| — |
|
|
| (2,221 | ) |
|
| — |
|
|
| (2,221 | ) |
|
| 1,089 |
|
|
| (1,132 | ) |
|
| 90 |
|
|
| — |
|
|
| — |
|
|
| (616 | ) |
|
| — |
|
|
| — |
|
|
| (616 | ) |
|
| 525 |
|
|
| (91 | ) | |
Distributions to noncontrolling interests |
|
| (1,143 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,857 | ) |
|
| (2,857 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11 | ) |
|
| (11 | ) | |
Deconsolidation of investment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,270 | ) |
|
| (4,270 | ) | |||||||||||||||||||||||||||||||||||||
Balance, September 30, 2019 |
| $ | 1,864 |
|
| $ | 25 |
|
| $ | 1,735 |
|
| $ | 1,965,230 |
|
| $ | (1,194,620 | ) |
| $ | 772,370 |
|
| $ | 36,413 |
|
| $ | 808,783 |
| |||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 |
| $ | 193 |
|
| $ | 25 |
|
| $ | 1,958 |
|
| $ | 1,984,607 |
|
| $ | 33 |
|
| $ | (1,397,131 | ) |
| $ | 589,492 |
|
| $ | 22,726 |
|
| $ | 612,218 |
|
4
CBL & Associates Properties, Inc.
(Debtors-In-Possession)
Condensed Consolidated Statements of Equity
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
| Equity |
|
|
|
|
|
| Equity |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
| Shareholders' 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 |
|
| 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, January 1, 2020 |
| $ | 2,160 |
|
| $ | 25 |
|
| $ | 1,741 |
|
| $ | 1,965,897 |
|
| $ | — |
|
| $ | (1,161,351 | ) |
| $ | 806,312 |
|
| $ | 55,553 |
|
| $ | 861,865 |
| ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 |
| $ | (265 | ) |
| $ | 25 |
|
| $ | 1,966 |
|
| $ | 1,986,269 |
|
| $ | 18 |
|
| $ | (1,456,435 | ) |
| $ | 531,843 |
|
| $ | 2,454 |
|
| $ | 534,297 |
| ||||||||||||||||||||||||||||||||||||
Net loss |
|
| (1,158 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (122,673 | ) |
|
| (122,673 | ) |
|
| (15,463 | ) |
|
| (138,136 | ) |
|
| (213 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (26,763 | ) |
|
| (26,763 | ) |
|
| (1,304 | ) |
|
| (28,067 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22 |
|
|
| — |
|
|
| 22 |
|
|
| — |
|
|
| 22 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| — |
|
|
| 3 |
|
|
| — |
|
|
| 3 |
|
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 | ) | ||||||||||||||||||||||||||||||||||||
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 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 256 |
|
|
| — |
|
|
| — |
|
|
| 256 |
|
|
| — |
|
|
| 256 |
|
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 94 |
|
|
| — |
|
|
| — |
|
|
| 94 |
|
|
| — |
|
|
| 94 |
|
Adjustment for noncontrolling interests |
|
| 60 |
|
|
| — |
|
|
| — |
|
|
| (10,341 | ) |
|
| — |
|
|
| — |
|
|
| (10,341 | ) |
|
| 10,281 |
|
|
| (60 | ) |
|
| 5 |
|
|
| — |
|
|
| — |
|
|
| (17 | ) |
|
| — |
|
|
| — |
|
|
| (17 | ) |
|
| 12 |
|
|
| (5 | ) |
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (731 | ) |
|
| (731 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (343 | ) |
|
| (343 | ) |
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 |
| ||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 |
|
| (543 | ) |
|
| 25 |
|
|
| 1,964 |
|
|
| 1,986,982 |
|
|
| (6 | ) |
|
| (1,492,080 | ) |
|
| 496,885 |
|
|
| 199 |
|
|
| 497,084 |
| ||||||||||||||||||||||||||||||||||||
Net loss |
|
| (654 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (70,229 | ) |
|
| (70,229 | ) |
|
| (1,910 | ) |
|
| (72,139 | ) |
|
| (330 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (41,720 | ) |
|
| (41,720 | ) |
|
| (831 | ) |
|
| (42,551 | ) |
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 | ) | ||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13 |
|
|
| — |
|
|
| 13 |
|
|
| — |
|
|
| 13 |
| ||||||||||||||||||||||||||||||||||||
Conversion of Operating Partnership common units into shares of common stock |
|
| — |
|
|
| — |
|
|
| 12 |
|
|
| 194 |
|
|
| — |
|
|
| — |
|
|
| 206 |
|
|
| (206 | ) |
|
| — |
| ||||||||||||||||||||||||||||||||||||
Cancellation of 7,737 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8 | ) |
|
| — |
|
|
| — |
|
|
| (8 | ) |
|
| — |
|
|
| (8 | ) | ||||||||||||||||||||||||||||||||||||
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 252 |
|
|
| — |
|
|
| — |
|
|
| 252 |
|
|
| — |
|
|
| 252 |
|
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 93 |
|
|
| — |
|
|
| — |
|
|
| 93 |
|
|
| — |
|
|
| 93 |
|
Adjustment for noncontrolling interests |
|
| 117 |
|
|
| — |
|
|
| — |
|
|
| 3,812 |
|
|
| — |
|
|
| — |
|
|
| 3,812 |
|
|
| (3,929 | ) |
|
| (117 | ) |
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| (602 | ) |
|
| — |
|
|
| — |
|
|
| (602 | ) |
|
| 600 |
|
|
| (2 | ) |
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (94 | ) |
|
| (94 | ) | ||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
|
| 25 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 298 |
|
|
| 298 |
|
Balance, June 30, 2020 |
|
| 525 |
|
|
| 25 |
|
|
| 1,920 |
|
|
| 1,982,454 |
|
|
| (42 | ) |
|
| (1,354,253 | ) |
|
| 630,104 |
|
|
| 23,349 |
|
|
| 653,453 |
| ||||||||||||||||||||||||||||||||||||
Net loss |
|
| (422 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (42,878 | ) |
|
| (42,878 | ) |
|
| (1,124 | ) |
|
| (44,002 | ) | ||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 75 |
|
|
| — |
|
|
| 75 |
|
|
| — |
|
|
| 75 |
| ||||||||||||||||||||||||||||||||||||
Conversion of 3,814,729 Operating Partnership common units into shares of common stock |
|
| — |
|
|
| — |
|
|
| 38 |
|
|
| (25 | ) |
|
| — |
|
|
| — |
|
|
| 13 |
|
|
| (13 | ) |
|
| — |
| ||||||||||||||||||||||||||||||||||||
Cancellation of 1,162 shares of restricted common stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| (1 | ) | ||||||||||||||||||||||||||||||||||||
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 375 |
|
|
| — |
|
|
| — |
|
|
| 375 |
|
|
| — |
|
|
| 375 |
| ||||||||||||||||||||||||||||||||||||
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,420 |
|
|
| — |
|
|
| — |
|
|
| 2,420 |
|
|
| — |
|
|
| 2,420 |
| ||||||||||||||||||||||||||||||||||||
Adjustment for noncontrolling interests |
|
| 90 |
|
|
| — |
|
|
| — |
|
|
| (616 | ) |
|
| — |
|
|
| — |
|
|
| (616 | ) |
|
| 525 |
|
|
| (91 | ) | ||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11 | ) |
|
| (11 | ) | ||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 |
| $ | 193 |
|
| $ | 25 |
|
| $ | 1,958 |
|
| $ | 1,984,607 |
|
| $ | 33 |
|
| $ | (1,397,131 | ) |
| $ | 589,492 |
|
| $ | 22,726 |
|
| $ | 612,218 |
| ||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 |
| $ | (871 | ) |
| $ | 25 |
|
| $ | 1,976 |
|
| $ | 1,986,911 |
|
| $ | 7 |
|
| $ | (1,533,800 | ) |
| $ | 455,119 |
|
| $ | 60 |
|
| $ | 455,179 |
|
The accompanying notes are an integral part of these condensed consolidated statements.
5
CBL & Associates Properties, Inc.
(Debtors-In-Possession)
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (256,511 | ) |
| $ | (168,531 | ) |
| $ | (80,722 | ) |
| $ | (256,511 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 162,042 |
|
|
| 198,438 |
|
|
| 142,090 |
|
|
| 162,042 |
|
Net amortization of deferred financing costs, premiums on available-for-sale securities and debt premiums and discounts |
|
| 7,228 |
|
|
| 6,328 |
|
|
| 1,771 |
|
|
| 7,228 |
|
Net amortization of intangible lease assets and liabilities |
|
| (719 | ) |
|
| (1,212 | ) |
|
| 573 |
|
|
| (719 | ) |
Gain on sales of real estate assets |
|
| (2,708 | ) |
|
| (13,811 | ) |
|
| (8,492 | ) |
|
| (2,708 | ) |
Gain on insurance proceeds |
|
| (1,644 | ) |
|
| (421 | ) |
|
| — |
|
|
| (1,644 | ) |
Gain on investments/deconsolidation |
|
| — |
|
|
| (11,174 | ) | ||||||||
Gain on deconsolidation |
|
| (55,131 | ) |
|
| — |
| ||||||||
Write-off of development projects |
|
| 400 |
|
|
| 41 |
|
|
| 391 |
|
|
| 400 |
|
Share-based compensation expense |
|
| 5,090 |
|
|
| 3,838 |
|
|
| 1,077 |
|
|
| 5,090 |
|
Loss on impairment |
|
| 146,964 |
|
|
| 202,121 |
|
|
| 120,342 |
|
|
| 146,964 |
|
Gain on extinguishment of debt |
|
| (15,407 | ) |
|
| (71,722 | ) |
|
| — |
|
|
| (15,407 | ) |
Equity in (earnings) losses of unconsolidated affiliates |
|
| 12,450 |
|
|
| (3,421 | ) | ||||||||
Equity in losses of unconsolidated affiliates |
|
| 9,575 |
|
|
| 12,450 |
| ||||||||
Distributions of earnings from unconsolidated affiliates |
|
| 6,130 |
|
|
| 15,635 |
|
|
| 14,482 |
|
|
| 6,130 |
|
Change in estimate of uncollectable rental revenues |
|
| 55,369 |
|
|
| 1,504 |
| ||||||||
Change in estimate of uncollectable revenues |
|
| 8,362 |
|
|
| 55,369 |
| ||||||||
Change in deferred tax accounts |
|
| 15,596 |
|
|
| 1,026 |
|
|
| — |
|
|
| 15,596 |
|
Changes in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant and other receivables |
|
| (83,805 | ) |
|
| (2,926 | ) |
|
| 21,127 |
|
|
| (83,805 | ) |
Other assets |
|
| (8,259 | ) |
|
| (5,541 | ) |
|
| (1,577 | ) |
|
| (8,259 | ) |
Accounts payable and accrued liabilities |
|
| 16,976 |
|
|
| 75,071 |
|
|
| 28,302 |
|
|
| 16,976 |
|
Net cash provided by operating activities |
|
| 59,192 |
|
|
| 225,243 |
|
|
| 202,170 |
|
|
| 59,192 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to real estate assets |
|
| (47,838 | ) |
|
| (90,436 | ) |
|
| (22,108 | ) |
|
| (47,838 | ) |
Proceeds from sales of real estate assets |
|
| 3,593 |
|
|
| 128,364 |
|
|
| 21,014 |
|
|
| 3,593 |
|
Purchase of available-for-sale securities |
|
| (153,193 | ) |
|
| — |
| ||||||||
Proceeds from disposal of investments |
|
| — |
|
|
| 9,225 |
| ||||||||
Purchases of available-for-sale securities |
|
| (553,810 | ) |
|
| (153,193 | ) | ||||||||
Redemptions of available-for-sale securities |
|
| 685,809 |
|
|
| — |
| ||||||||
Proceeds from insurance |
|
| 988 |
|
|
| 740 |
|
|
| 904 |
|
|
| 988 |
|
Payments received on mortgage and other notes receivable |
|
| 898 |
|
|
| 1,853 |
|
|
| 641 |
|
|
| 898 |
|
Additional investments in and advances to unconsolidated affiliates |
|
| (11,170 | ) |
|
| (2,634 | ) |
|
| 272 |
|
|
| (11,170 | ) |
Distributions in excess of equity in earnings of unconsolidated affiliates |
|
| 6,250 |
|
|
| 11,255 |
|
|
| 10,662 |
|
|
| 6,250 |
|
Changes in other assets |
|
| (1,032 | ) |
|
| (2,497 | ) |
|
| (4,204 | ) |
|
| (1,032 | ) |
Net cash provided by (used in) investing activities |
|
| (201,504 | ) |
|
| 55,870 |
|
|
| 139,180 |
|
|
| (201,504 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from mortgage and other indebtedness |
|
| 365,246 |
|
|
| 1,043,496 |
|
|
| — |
|
|
| 365,246 |
|
Principal payments on mortgage and other indebtedness |
|
| (139,829 | ) |
|
| (1,232,480 | ) |
|
| (31,609 | ) |
|
| (139,829 | ) |
Additions to deferred financing costs |
|
| (705 | ) |
|
| (15,545 | ) |
|
| (493 | ) |
|
| (705 | ) |
Proceeds from issuances of common stock |
|
| 5 |
|
|
| 39 |
|
|
| — |
|
|
| 5 |
|
Contributions from noncontrolling interests |
|
| 693 |
|
|
| 4,603 |
|
|
| 298 |
|
|
| 693 |
|
Payment of tax withholdings for restricted stock awards |
|
| (87 | ) |
|
| (132 | ) |
|
| (11 | ) |
|
| (87 | ) |
Distributions to noncontrolling interests |
|
| (837 | ) |
|
| (15,722 | ) |
|
| (353 | ) |
|
| (837 | ) |
Dividends paid to holders of preferred stock |
|
| — |
|
|
| (33,669 | ) | ||||||||
Dividends paid to common shareholders |
|
| — |
|
|
| (25,959 | ) | ||||||||
Net cash provided by (used in) financing activities |
|
| 224,486 |
|
|
| (275,369 | ) |
|
| (32,168 | ) |
|
| 224,486 |
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 82,174 |
|
|
| 5,744 |
|
|
| 309,182 |
|
|
| 82,174 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
|
| 59,058 |
|
|
| 57,512 |
|
|
| 121,722 |
|
|
| 59,058 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 141,232 |
|
| $ | 63,256 |
|
| $ | 430,904 |
|
| $ | 141,232 |
|
Reconciliation from consolidated statements of cash flows to consolidated balance sheets: |
|
|
|
|
|
|
|
| ||||||||
Reconciliation from condensed consolidated statements of cash flows to condensed consolidated balance sheets: |
|
|
|
|
|
|
|
| ||||||||
Cash and cash equivalents |
| $ | 106,807 |
|
| $ | 34,565 |
|
| $ | 267,982 |
|
| $ | 106,807 |
|
Restricted cash (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash |
|
| 10,198 |
|
|
| 180 |
|
|
| 127,565 |
|
|
| 10,198 |
|
Mortgage escrows |
|
| 24,227 |
|
|
| 28,511 |
|
|
| 35,279 |
|
|
| 24,227 |
|
Cash included in assets held for sale |
|
| 78 |
|
|
| — |
| ||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 141,232 |
|
| $ | 63,256 |
|
| $ | 430,904 |
|
| $ | 141,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of amounts capitalized |
| $ | 108,617 |
|
| $ | 136,117 |
|
| $ | 39,514 |
|
| $ | 108,617 |
|
|
|
|
|
|
|
|
|
| ||||||||
Cash paid for reorganization items |
| $ | 51,488 |
|
| $ | — |
|
(1) | Included in intangible lease assets and other assets in the condensed consolidated balance |
The accompanying notes are an integral part of these condensed consolidated statements.
6
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Balance Sheets
(In thousands, except unit data)
(Unaudited)
ASSETS (1) |
| September 30, 2020 |
|
| December 31, 2019 |
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||||
Real estate assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
| $ | 717,048 |
|
| $ | 730,218 |
|
| $ | 643,331 |
|
| $ | 695,711 |
|
Buildings and improvements |
|
| 5,255,663 |
|
|
| 5,631,831 |
|
|
| 4,867,017 |
|
|
| 5,135,074 |
|
|
|
| 5,972,711 |
|
|
| 6,362,049 |
|
|
| 5,510,348 |
|
|
| 5,830,785 |
|
Accumulated depreciation |
|
| (2,228,632 | ) |
|
| (2,349,404 | ) |
|
| (2,251,613 | ) |
|
| (2,241,421 | ) |
|
|
| 3,744,079 |
|
|
| 4,012,645 |
|
|
| 3,258,735 |
|
|
| 3,589,364 |
|
Developments in progress |
|
| 31,822 |
|
|
| 49,351 |
|
|
| 15,065 |
|
|
| 28,327 |
|
Held for sale |
|
| 6,239 |
|
|
| — |
| ||||||||
Net investment in real estate assets |
|
| 3,775,901 |
|
|
| 4,061,996 |
|
|
| 3,280,039 |
|
|
| 3,617,691 |
|
Cash and cash equivalents |
|
| 106,799 |
|
|
| 32,813 |
|
|
| 267,974 |
|
|
| 61,772 |
|
Available-for-sale securities - at fair value (amortized cost of $151,762 in 2020) |
|
| 151,795 |
|
|
| — |
| ||||||||
Available-for-sale securities - at fair value (amortized cost of $99,991 and $233,053 as of September 30, 2021 and December 31, 2020, respectively) |
|
| 99,998 |
|
|
| 233,071 |
| ||||||||
Receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant |
|
| 108,123 |
|
|
| 75,252 |
|
|
| 72,574 |
|
|
| 103,655 |
|
Other |
|
| 6,072 |
|
|
| 10,744 |
|
|
| 4,001 |
|
|
| 5,910 |
|
Mortgage and other notes receivable |
|
| 2,534 |
|
|
| 4,662 |
|
|
| 1,696 |
|
|
| 2,337 |
|
Investments in unconsolidated affiliates |
|
| 291,570 |
|
|
| 307,885 |
|
|
| 249,838 |
|
|
| 279,884 |
|
Intangible lease assets and other assets |
|
| 121,603 |
|
|
| 129,354 |
|
|
| 252,376 |
|
|
| 139,772 |
|
|
| $ | 4,564,397 |
|
| $ | 4,622,706 |
|
| $ | 4,228,496 |
|
| $ | 4,444,092 |
|
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage and other indebtedness, net |
| $ | 3,729,686 |
|
| $ | 3,527,015 |
|
| $ | 1,019,084 |
|
| $ | 1,184,831 |
|
Accounts payable and accrued liabilities |
|
| 222,016 |
|
|
| 231,377 |
|
|
| 203,138 |
|
|
| 173,458 |
|
Total liabilities (1) |
|
| 3,951,702 |
|
|
| 3,758,392 |
| ||||||||
Commitments and contingencies (Note 8 and Note 12) |
|
|
|
|
|
|
|
| ||||||||
Total liabilities not subject to compromise (1) |
|
| 1,222,222 |
|
|
| 1,358,289 |
| ||||||||
|
|
|
|
|
|
|
|
| ||||||||
Liabilities subject to compromise |
|
| 2,551,686 |
|
|
| 2,551,490 |
| ||||||||
|
|
|
|
|
|
|
|
| ||||||||
Commitments and contingencies (Note 9 and Note 12) |
|
|
|
|
|
|
|
| ||||||||
Redeemable common units |
|
| 193 |
|
|
| 2,160 |
|
|
| (871 | ) |
|
| (265 | ) |
Partners' capital: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred units |
|
| 565,212 |
|
|
| 565,212 |
|
|
| 565,212 |
|
|
| 565,212 |
|
Common units: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General partner |
|
| 252 |
|
|
| 2,765 |
|
|
| (1,121 | ) |
|
| (339 | ) |
Limited partners |
|
| 24,819 |
|
|
| 270,216 |
|
|
| (110,297 | ) |
|
| (33,371 | ) |
Accumulated other comprehensive loss |
|
| 33 |
|
|
| — |
| ||||||||
Accumulated other comprehensive income |
|
| 7 |
|
|
| 18 |
| ||||||||
Total partners' capital |
|
| 590,316 |
|
|
| 838,193 |
|
|
| 453,801 |
|
|
| 531,520 |
|
Noncontrolling interests |
|
| 22,186 |
|
|
| 23,961 |
|
|
| 1,658 |
|
|
| 3,058 |
|
Total capital |
|
| 612,502 |
|
|
| 862,154 |
|
|
| 455,459 |
|
|
| 534,578 |
|
|
| $ | 4,564,397 |
|
| $ | 4,622,706 |
|
| $ | 4,228,496 |
|
| $ | 4,444,092 |
|
(1) | As of September 30, |
The accompanying notes are an integral part of these condensed consolidated statements.
7
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Statements of Operations
(In thousands, except per unit data)
(Unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
| $ | 124,081 |
|
| $ | 180,616 |
|
| $ | 405,476 |
|
| $ | 556,989 |
|
| $ | 145,539 |
|
| $ | 124,081 |
|
| $ | 405,030 |
|
| $ | 405,476 |
|
Management, development and leasing fees |
|
| 2,104 |
|
|
| 2,216 |
|
|
| 5,251 |
|
|
| 7,325 |
|
|
| 1,780 |
|
|
| 2,104 |
|
|
| 4,888 |
|
|
| 5,251 |
|
Other |
|
| 3,712 |
|
|
| 4,419 |
|
|
| 10,955 |
|
|
| 14,344 |
|
|
| 3,056 |
|
|
| 3,712 |
|
|
| 10,202 |
|
|
| 10,955 |
|
Total revenues |
|
| 129,897 |
|
|
| 187,251 |
|
|
| 421,682 |
|
|
| 578,658 |
|
|
| 150,375 |
|
|
| 129,897 |
|
|
| 420,120 |
|
|
| 421,682 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Property operating |
|
| (20,396 | ) |
|
| (27,344 | ) |
|
| (63,011 | ) |
|
| (82,856 | ) |
|
| (23,818 | ) |
|
| (20,396 | ) |
|
| (65,243 | ) |
|
| (63,011 | ) |
Depreciation and amortization |
|
| (53,477 | ) |
|
| (64,168 | ) |
|
| (162,042 | ) |
|
| (198,438 | ) |
|
| (46,479 | ) |
|
| (53,477 | ) |
|
| (142,090 | ) |
|
| (162,042 | ) |
Real estate taxes |
|
| (17,215 | ) |
|
| (18,699 | ) |
|
| (53,500 | ) |
|
| (57,766 | ) |
|
| (13,957 | ) |
|
| (17,215 | ) |
|
| (45,618 | ) |
|
| (53,500 | ) |
Maintenance and repairs |
|
| (8,425 | ) |
|
| (10,253 | ) |
|
| (25,675 | ) |
|
| (34,327 | ) |
|
| (9,482 | ) |
|
| (8,425 | ) |
|
| (29,047 | ) |
|
| (25,675 | ) |
General and administrative |
|
| (25,497 | ) |
|
| (12,467 | ) |
|
| (62,060 | ) |
|
| (48,901 | ) |
|
| (13,502 | ) |
|
| (25,497 | ) |
|
| (37,383 | ) |
|
| (62,060 | ) |
Loss on impairment |
|
| (46 | ) |
|
| (135,688 | ) |
|
| (146,964 | ) |
|
| (202,121 | ) |
|
| (63,160 | ) |
|
| (46 | ) |
|
| (120,342 | ) |
|
| (146,964 | ) |
Litigation settlement |
|
| 2,480 |
|
|
| 22,688 |
|
|
| 2,480 |
|
|
| (65,462 | ) |
|
| 89 |
|
|
| 2,480 |
|
|
| 890 |
|
|
| 2,480 |
|
Other |
|
| — |
|
|
| (7 | ) |
|
| (400 | ) |
|
| (41 | ) |
|
| (104 | ) |
|
| — |
|
|
| (391 | ) |
|
| (400 | ) |
Total operating expenses |
|
| (122,576 | ) |
|
| (245,938 | ) |
|
| (511,172 | ) |
|
| (689,912 | ) | ||||||||||||||||
Total expenses |
|
| (170,413 | ) |
|
| (122,576 | ) |
|
| (439,224 | ) |
|
| (511,172 | ) | ||||||||||||||||
OTHER INCOME (EXPENSES): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
| 1,975 |
|
|
| 1,367 |
|
|
| 5,263 |
|
|
| 2,212 |
|
|
| 510 |
|
|
| 1,975 |
|
|
| 2,038 |
|
|
| 5,263 |
|
Interest expense |
|
| (61,137 | ) |
|
| (50,515 | ) |
|
| (160,760 | ) |
|
| (156,995 | ) | ||||||||||||||||
Interest expense (unrecognized contractual interest expense was $45,344 and $135,162 for the three and nine months ended September 30, 2021, respectively) |
|
| (19,039 | ) |
|
| (61,137 | ) |
|
| (65,468 | ) |
|
| (160,760 | ) | ||||||||||||||||
Gain on extinguishment of debt |
|
| 15,407 |
|
|
| — |
|
|
| 15,407 |
|
|
| 71,722 |
|
|
| — |
|
|
| 15,407 |
|
|
| — |
|
|
| 15,407 |
|
Gain on investment |
|
| — |
|
|
| 11,174 |
|
|
| — |
|
|
| 11,174 |
| ||||||||||||||||
Gain on deconsolidation |
|
| — |
|
|
| — |
|
|
| 55,131 |
|
|
| — |
| ||||||||||||||||
Gain (loss) on sales of real estate assets |
|
| (55 | ) |
|
| 8,056 |
|
|
| 2,708 |
|
|
| 13,811 |
|
|
| 8,684 |
|
|
| (55 | ) |
|
| 8,492 |
|
|
| 2,708 |
|
Income tax provision |
|
| (546 | ) |
|
| (1,670 | ) |
|
| (17,189 | ) |
|
| (2,622 | ) | ||||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates |
|
| (7,389 | ) |
|
| (1,759 | ) |
|
| (12,450 | ) |
|
| 3,421 |
| ||||||||||||||||
Reorganization items |
|
| (12,008 | ) |
|
| — |
|
|
| (52,014 | ) |
|
| — |
| ||||||||||||||||
Income tax benefit (provision) |
|
| 1,234 |
|
|
| (546 | ) |
|
| (222 | ) |
|
| (17,189 | ) | ||||||||||||||||
Equity in losses of unconsolidated affiliates |
|
| (2,224 | ) |
|
| (7,389 | ) |
|
| (9,575 | ) |
|
| (12,450 | ) | ||||||||||||||||
Total other expenses |
|
| (51,745 | ) |
|
| (33,347 | ) |
|
| (167,021 | ) |
|
| (57,277 | ) |
|
| (22,843 | ) |
|
| (51,745 | ) |
|
| (61,618 | ) |
|
| (167,021 | ) |
Net loss |
|
| (44,424 | ) |
|
| (92,034 | ) |
|
| (256,511 | ) |
|
| (168,531 | ) |
|
| (42,881 | ) |
|
| (44,424 | ) |
|
| (80,722 | ) |
|
| (256,511 | ) |
Net (income) loss attributable to noncontrolling interests |
|
| 937 |
|
|
| (763 | ) |
|
| 1,631 |
|
|
| (631 | ) | ||||||||||||||||
Net loss attributable to noncontrolling interests |
|
| 76 |
|
|
| 937 |
|
|
| 1,344 |
|
|
| 1,631 |
| ||||||||||||||||
Net loss attributable to the Operating Partnership |
|
| (43,487 | ) |
|
| (92,797 | ) |
|
| (254,880 | ) |
|
| (169,162 | ) |
|
| (42,805 | ) |
|
| (43,487 | ) |
|
| (79,378 | ) |
|
| (254,880 | ) |
Distributions to preferred unitholders declared |
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (33,669 | ) | ||||||||||||||||
Distributions to preferred unitholders undeclared |
|
| (11,223 | ) |
|
| — |
|
|
| (33,669 | ) |
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (33,669 | ) |
Net loss attributable to common unitholders |
| $ | (54,710 | ) |
| $ | (104,020 | ) |
| $ | (288,549 | ) |
| $ | (202,831 | ) |
| $ | (42,805 | ) |
| $ | (54,710 | ) |
| $ | (79,378 | ) |
| $ | (288,549 | ) |
Basic and diluted per unit data attributable to common unitholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common unitholders |
| $ | (0.27 | ) |
| $ | (0.52 | ) |
| $ | (1.43 | ) |
| $ | (1.01 | ) |
| $ | (0.21 | ) |
| $ | (0.27 | ) |
| $ | (0.39 | ) |
| $ | (1.43 | ) |
Weighted-average common and potential dilutive common units outstanding |
|
| 201,690 |
|
|
| 200,230 |
|
|
| 201,551 |
|
|
| 200,158 |
|
|
| 201,559 |
|
|
| 201,690 |
|
|
| 201,587 |
|
|
| 201,551 |
|
The accompanying notes are an integral part of these condensed consolidated statements.
8
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Statements of Comprehensive Loss
(In thousands, except per unit data)
(Unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Net loss |
| $ | (44,424 | ) |
| $ | (92,034 | ) |
| $ | (256,511 | ) |
| $ | (168,531 | ) |
| $ | (42,881 | ) |
| $ | (44,424 | ) |
| $ | (80,722 | ) |
| $ | (256,511 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Unrealized gain on available-for-sale securities |
|
| 75 |
|
|
| — |
|
|
| 33 |
|
|
| — |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Other comprehensive gain (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Unrealized gain (loss) on available-for-sale securities |
|
| 13 |
|
|
| 75 |
|
|
| (11 | ) |
|
| 33 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
| (44,349 | ) |
|
| (92,034 | ) |
|
| (256,478 | ) |
|
| (168,531 | ) |
|
| (42,868 | ) |
|
| (44,349 | ) |
|
| (80,733 | ) |
|
| (256,478 | ) |
Comprehensive (income) loss attributable to noncontrolling interests |
|
| 937 |
|
|
| (763 | ) |
|
| 1,631 |
|
|
| (631 | ) | ||||||||||||||||
Comprehensive loss attributable to noncontrolling interests |
|
| 76 |
|
|
| 937 |
|
|
| 1,344 |
|
|
| 1,631 |
| ||||||||||||||||
Comprehensive loss attributable to the Operating Partnership: |
| $ | (43,412 | ) |
| $ | (92,797 | ) |
| $ | (254,847 | ) |
| $ | (169,162 | ) |
| $ | (42,792 | ) |
| $ | (43,412 | ) |
| $ | (79,389 | ) |
| $ | (254,847 | ) |
The accompanying notes are an integral part of these condensed consolidated statements.
9
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Statements of Capital
(In thousands)
(Unaudited)
|
|
|
| Number of |
|
|
|
|
|
| Common Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number of |
|
|
|
|
|
| Common Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
|
| Redeemable Common Units |
|
| Preferred Units |
|
| Common Units |
|
| Preferred Units |
|
| General Partner |
|
| Limited Partners |
|
| Total Partner's Capital |
|
| Noncontrolling Interests |
|
| Total Capital |
| 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, January 1, 2019 |
| $ | 3,575 |
|
|
| 25,050 |
|
|
| 199,415 |
|
| $ | 565,212 |
|
| $ | 4,628 |
|
| $ | 450,507 |
|
| $ | 1,020,347 |
|
| $ | 12,111 |
|
| $ | 1,032,458 |
| |||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | $ | 2,160 |
|
|
| 25,050 |
|
|
| 200,189 |
|
| $ | 565,212 |
|
| $ | 2,765 |
|
| $ | 270,216 |
|
| $ | — |
|
| $ | 838,193 |
|
| $ | 23,961 |
|
| $ | 862,154 |
| ||||||||||||||||||||||||||||||||||||
Net loss |
|
| (453 | ) |
|
| — |
|
|
| — |
|
|
| 11,223 |
|
|
| (590 | ) |
|
| (56,914 | ) |
|
| (46,281 | ) |
|
| (75 | ) |
|
| (46,356 | ) |
| (1,158 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,406 | ) |
|
| (136,523 | ) |
|
| — |
|
|
| (137,929 | ) |
|
| (207 | ) |
|
| (138,136 | ) |
Other comprehensive income |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22 |
|
|
| 22 |
|
|
| — |
|
|
| 22 |
| ||||||||||||||||||||||||||||||||||||
Issuances of common units |
|
| — |
|
|
| — |
|
|
| 863 |
|
|
| — |
|
|
| — |
|
|
| 717 |
|
|
| 717 |
|
|
| — |
|
|
| 717 |
|
| — |
|
|
| — |
|
|
| 1,633 |
|
|
| — |
|
|
| — |
|
|
| 536 |
|
|
| — |
|
|
| 536 |
|
|
| — |
|
|
| 536 |
|
Distributions declared - common units |
|
| (1,143 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (151 | ) |
|
| (15,897 | ) |
|
| (16,048 | ) |
|
| — |
|
|
| (16,048 | ) | |||||||||||||||||||||||||||||||||||||||
Distributions declared - preferred units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (11,223 | ) | |||||||||||||||||||||||||||||||||||||||
Cancellation of restricted common units |
|
| — |
|
|
| — |
|
|
| (58 | ) |
|
| — |
|
|
| — |
|
|
| (133 | ) |
|
| (133 | ) |
|
| — |
|
|
| (133 | ) |
| — |
|
|
| — |
|
|
| (116 | ) |
|
| — |
|
|
| — |
|
|
| (97 | ) |
|
| — |
|
|
| (97 | ) |
|
| — |
|
|
| (97 | ) |
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| 309 |
|
|
| 312 |
|
|
| — |
|
|
| 312 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| 386 |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| 390 |
|
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11 |
|
|
| 1,022 |
|
|
| 1,033 |
|
|
| — |
|
|
| 1,033 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 18 |
|
|
| 615 |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| 633 |
|
Allocation of partners' capital |
|
| 1,038 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (34 | ) |
|
| (1,004 | ) |
|
| (1,038 | ) |
|
| — |
|
|
| (1,038 | ) |
| 60 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (64 | ) |
|
| — |
|
|
| (65 | ) |
|
| — |
|
|
| (65 | ) |
Adjustment to record redeemable interests at redemption value |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8 | ) |
|
| 8 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,412 | ) |
|
| (1,412 | ) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (731 | ) |
|
| (731 | ) |
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 455 |
|
|
| 455 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 668 |
|
|
| 668 |
|
Balance, March 31, 2019 |
|
| 3,017 |
|
|
| 25,050 |
|
|
| 200,220 |
|
|
| 565,212 |
|
|
| 3,867 |
|
|
| 378,607 |
|
|
| 947,686 |
|
|
| 11,079 |
|
|
| 958,765 |
| |||||||||||||||||||||||||||||||||||||||
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 |
|
| (317 | ) |
|
| — |
|
|
| — |
|
|
| 11,223 |
|
|
| (414 | ) |
|
| (40,123 | ) |
|
| (29,314 | ) |
|
| (57 | ) |
|
| (29,371 | ) |
| (654 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (728 | ) |
|
| (70,924 | ) |
|
| — |
|
|
| (71,652 | ) |
|
| (487 | ) |
|
| (72,139 | ) |
Distributions declared - common units |
|
| (1,143 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,239 | ) |
|
| (1,239 | ) |
|
| — |
|
|
| (1,239 | ) | |||||||||||||||||||||||||||||||||||||||
Distributions declared - preferred units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (11,223 | ) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (64 | ) |
|
| (64 | ) |
|
| — |
|
|
| (64 | ) | ||||||||||||||||||||||||||||||||||||
Issuances of common units |
|
| — |
|
|
| — |
|
|
| 15 |
|
|
| — |
|
|
| — |
|
|
| (17 | ) |
|
| (17 | ) |
|
| — |
|
|
| (17 | ) |
| — |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
Cancellation of restricted common units |
|
| — |
|
|
| — |
|
|
| (5 | ) |
|
| — |
|
|
| — |
|
|
| (6 | ) |
|
| (6 | ) |
|
| — |
|
|
| (6 | ) |
| — |
|
|
| — |
|
|
| (21 | ) |
|
| — |
|
|
| — |
|
|
| (14 | ) |
|
| — |
|
|
| (14 | ) |
|
| — |
|
|
| (14 | ) |
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| 310 |
|
|
| 313 |
|
|
| — |
|
|
| 313 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| 375 |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| 379 |
|
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| 581 |
|
|
| 587 |
|
|
| — |
|
|
| 587 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11 |
|
|
| 373 |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| 384 |
|
Allocation of partners' capital |
|
| 1,130 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (14 | ) |
|
| (1,116 | ) |
|
| (1,130 | ) |
|
| — |
|
|
| (1,130 | ) |
| 117 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (117 | ) |
|
| — |
|
|
| (118 | ) |
|
| — |
|
|
| (118 | ) |
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,148 |
|
|
| 4,148 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
|
| 25 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,948 | ) |
|
| (1,948 | ) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (94 | ) |
|
| (94 | ) |
Balance, June 30, 2019 |
|
| 2,687 |
|
|
| 25,050 |
|
|
| 200,230 |
|
|
| 565,212 |
|
|
| 3,448 |
|
|
| 336,997 |
|
|
| 905,657 |
|
|
| 13,222 |
|
|
| 918,879 |
| |||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 |
| 525 |
|
|
| 25,050 |
|
|
| 201,691 |
|
|
| 565,212 |
|
|
| 658 |
|
|
| 64,772 |
|
|
| (42 | ) |
|
| 630,600 |
|
|
| 23,135 |
|
|
| 653,735 |
| ||||||||||||||||||||||||||||||||||||
Net loss |
|
| (811 | ) |
|
| — |
|
|
| — |
|
|
| 11,223 |
|
|
| (1,056 | ) |
|
| (102,153 | ) |
|
| (91,986 | ) |
|
| 763 |
|
|
| (91,223 | ) |
| (422 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (437 | ) |
|
| (42,628 | ) |
|
| — |
|
|
| (43,065 | ) |
|
| (937 | ) |
|
| (44,002 | ) |
Distributions declared - common units |
|
| (1,143 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,314 | ) |
|
| (1,314 | ) |
|
| — |
|
|
| (1,314 | ) | |||||||||||||||||||||||||||||||||||||||
Distributions declared - preferred units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| — |
|
|
| (11,223 | ) |
|
| — |
|
|
| (11,223 | ) | |||||||||||||||||||||||||||||||||||||||
Issuances of common units |
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| 39 |
|
|
| 39 |
|
|
| — |
|
|
| 39 |
| |||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 75 |
|
|
| 75 |
|
|
| — |
|
|
| 75 |
| ||||||||||||||||||||||||||||||||||||
Cancellation of restricted common units |
|
| — |
|
|
| — |
|
|
| (4 | ) |
|
| — |
|
|
| — |
|
|
| (4 | ) |
|
| (4 | ) |
|
| — |
|
|
| (4 | ) |
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| 309 |
|
|
| 313 |
|
|
| — |
|
|
| 313 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 24 |
|
|
| 2,395 |
|
|
| — |
|
|
| 2,419 |
|
|
| — |
|
|
| 2,419 |
|
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| 585 |
|
|
| 591 |
|
|
| — |
|
|
| 591 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8 |
|
|
| 371 |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| 379 |
|
Allocation of partners' capital |
|
| 1,131 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (14 | ) |
|
| (1,120 | ) |
|
| (1,134 | ) |
|
| — |
|
|
| (1,134 | ) |
| 90 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (91 | ) |
|
| — |
|
|
| (92 | ) |
|
| — |
|
|
| (92 | ) |
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,581 | ) |
|
| (1,581 | ) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (12 | ) |
|
| (12 | ) |
Deconsolidation of investment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,270 | ) |
|
| (4,270 | ) | |||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2019 |
| $ | 1,864 |
|
|
| 25,050 |
|
|
| 200,228 |
|
| $ | 565,212 |
|
| $ | 2,388 |
|
| $ | 233,339 |
|
| $ | 800,939 |
|
| $ | 8,134 |
|
| $ | 809,073 |
| |||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | $ | 193 |
|
|
| 25,050 |
|
|
| 201,690 |
|
| $ | 565,212 |
|
| $ | 252 |
|
| $ | 24,819 |
|
| $ | 33 |
|
| $ | 590,316 |
|
| $ | 22,186 |
|
| $ | 612,502 |
|
10
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Statements of Capital
(Continued)
(In thousands)
(Unaudited)
|
|
|
|
|
| Number of |
|
|
|
|
|
| Common Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number of |
|
|
|
|
|
| Common Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
|
| Redeemable Common Units |
|
| Preferred Units |
|
| Common Units |
|
| Preferred Units |
|
| General Partner |
|
| Limited Partners |
|
| Accumulated Other Comprehensive Income |
|
| Total Partner's Capital |
|
| Noncontrolling Interests |
|
| Total Capital |
|
| 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, January 1, 2020 |
| $ | 2,160 |
|
|
| 25,050 |
|
|
| 200,189 |
|
| $ | 565,212 |
|
| $ | 2,765 |
|
| $ | 270,216 |
|
| $ | — |
|
| $ | 838,193 |
|
| $ | 23,961 |
|
| $ | 862,154 |
| ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 |
| $ | (265 | ) |
|
| 25,050 |
|
|
| 201,688 |
|
| $ | 565,212 |
|
| $ | (339 | ) |
| $ | (33,371 | ) |
| $ | 18 |
|
| $ | 531,520 |
|
| $ | 3,058 |
|
| $ | 534,578 |
| ||||||||||||||||||||||||||||||||||||||||
Net loss |
|
| (1,158 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,406 | ) |
|
| (136,523 | ) |
|
| — |
|
|
| (137,929 | ) |
|
| (207 | ) |
|
| (138,136 | ) |
|
| (213 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (277 | ) |
|
| (26,971 | ) |
|
| — |
|
|
| (27,248 | ) |
|
| (819 | ) |
|
| (28,067 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22 |
|
|
| 22 |
|
|
| — |
|
|
| 22 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| 3 |
|
|
| — |
|
|
| 3 |
|
Issuances of common units |
|
| — |
|
|
| — |
|
|
| 1,633 |
|
|
| — |
|
|
| — |
|
|
| 536 |
|
|
| — |
|
|
| 536 |
|
|
| — |
|
|
| 536 |
| ||||||||||||||||||||||||||||||||||||||||
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 |
|
| — |
|
|
| — |
|
|
| (116 | ) |
|
| — |
|
|
| — |
|
|
| (97 | ) |
|
| — |
|
|
| (97 | ) |
|
| — |
|
|
| (97 | ) |
|
| — |
|
|
| — |
|
|
| (14 | ) |
|
| — |
|
|
| — |
|
|
| (17 | ) |
|
| — |
|
|
| (17 | ) |
|
| — |
|
|
| (17 | ) |
Allocation of partners' capital |
|
| 60 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (64 | ) |
|
| — |
|
|
| (65 | ) |
|
| — |
|
|
| (65 | ) |
|
| 5 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (7 | ) |
|
| — |
|
|
| (7 | ) |
|
| — |
|
|
| (7 | ) |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 18 |
|
|
| 615 |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| 633 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| 254 |
|
|
| — |
|
|
| 257 |
|
|
| — |
|
|
| 257 |
|
Adjustment to record redeemable interests at redemption value |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8 | ) |
|
| 8 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (731 | ) |
|
| (731 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (343 | ) |
|
| (343 | ) |
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 668 |
|
|
| 668 |
| ||||||||||||||||||||||||||||||||||||||||
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| 386 |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| 390 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| 94 |
|
|
| — |
|
|
| 95 |
|
|
| — |
|
|
| 95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||||||||||||||||||||
Allocation of partners' capital |
|
| 117 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (117 | ) |
|
| — |
|
|
| (118 | ) |
|
| — |
|
|
| (118 | ) | ||||||||||||||||||||||||||||||||||||||||
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11 |
|
|
| 373 |
|
|
| — |
|
|
| 384 |
|
|
| — |
|
|
| 384 |
| ||||||||||||||||||||||||||||||||||||||||
Adjustment to record redeemable interests at redemption value |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (94 | ) |
|
| (94 | ) | ||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 25 |
|
|
| 25 |
| ||||||||||||||||||||||||||||||||||||||||
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4 |
|
|
| 375 |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| 379 |
| ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 |
|
| 525 |
|
|
| 25,050 |
|
|
| 201,691 |
|
|
| 565,212 |
|
|
| 658 |
|
|
| 64,772 |
|
|
| (42 | ) |
|
| 630,600 |
|
|
| 23,135 |
|
|
| 653,735 |
| ||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 |
|
| (543 | ) |
|
| 25,050 |
|
|
| 201,563 |
|
|
| 565,212 |
|
|
| (697 | ) |
|
| (68,582 | ) |
|
| (6 | ) |
|
| 495,927 |
|
|
| 1,436 |
|
|
| 497,363 |
| ||||||||||||||||||||||||||||||||||||||||
Net loss |
|
| (422 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (437 | ) |
|
| (42,628 | ) |
|
| — |
|
|
| (43,065 | ) |
|
| (937 | ) |
|
| (44,002 | ) |
|
| (330 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (434 | ) |
|
| (42,041 | ) |
|
| — |
|
|
| (42,475 | ) |
|
| (76 | ) |
|
| (42,551 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 75 |
|
|
| 75 |
|
|
| — |
|
|
| 75 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13 |
|
|
| 13 |
|
|
| — |
|
|
| 13 |
|
Cancellation of restricted common units |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8 | ) |
|
| — |
|
|
| — |
|
|
| (8 | ) |
|
| — |
|
|
| (8 | ) |
|
| — |
|
|
| (8 | ) |
Allocation of partners' capital |
|
| 90 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (91 | ) |
|
| — |
|
|
| (92 | ) |
|
| — |
|
|
| (92 | ) |
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (12 | ) |
|
| — |
|
|
| (12 | ) |
|
| — |
|
|
| (12 | ) |
Amortization of deferred compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8 |
|
|
| 371 |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| 379 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| 250 |
|
|
| — |
|
|
| 252 |
|
|
| — |
|
|
| 252 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (12 | ) |
|
| (12 | ) | ||||||||||||||||||||||||||||||||||||||||
Performance stock units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 24 |
|
|
| 2,395 |
|
|
| — |
|
|
| 2,419 |
|
|
| — |
|
|
| 2,419 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8 |
|
|
| 96 |
|
|
| — |
|
|
| 104 |
|
|
| — |
|
|
| 104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 |
| $ | 193 |
|
|
| 25,050 |
|
|
| 201,690 |
|
| $ | 565,212 |
|
| $ | 252 |
|
| $ | 24,819 |
|
| $ | 33 |
|
| $ | 590,316 |
|
| $ | 22,186 |
|
| $ | 612,502 |
| ||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 298 |
|
|
| 298 |
| ||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 |
| $ | (871 | ) |
|
| 25,050 |
|
|
| 201,555 |
|
| $ | 565,212 |
|
| $ | (1,121 | ) |
| $ | (110,297 | ) |
| $ | 7 |
|
| $ | 453,801 |
|
| $ | 1,658 |
|
| $ | 455,459 |
|
The accompanying notes are an integral part of these condensed consolidated statements.
11
CBL & Associates Limited Partnership
(Debtors-In-Possession)
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (256,511 | ) |
| $ | (168,531 | ) |
| $ | (80,722 | ) |
| $ | (256,511 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 162,042 |
|
|
| 198,438 |
|
|
| 142,090 |
|
|
| 162,042 |
|
Net amortization of deferred financing costs, premiums on available-for-sale securities and debt premiums and discounts |
|
| 7,228 |
|
|
| 6,328 |
|
|
| 1,771 |
|
|
| 7,228 |
|
Net amortization of intangible lease assets and liabilities |
|
| (719 | ) |
|
| (1,212 | ) |
|
| 573 |
|
|
| (719 | ) |
Gain on sales of real estate assets |
|
| (2,708 | ) |
|
| (13,811 | ) |
|
| (8,492 | ) |
|
| (2,708 | ) |
Gain on insurance proceeds |
|
| (1,644 | ) |
|
| (421 | ) |
|
| — |
|
|
| (1,644 | ) |
Gain on investments/deconsolidation |
|
| — |
|
|
| (11,174 | ) | ||||||||
Gain on deconsolidation |
|
| (55,131 | ) |
|
| — |
| ||||||||
Write-off of development projects |
|
| 400 |
|
|
| 41 |
|
|
| 391 |
|
|
| 400 |
|
Share-based compensation expense |
|
| 5,090 |
|
|
| 3,838 |
|
|
| 1,077 |
|
|
| 5,090 |
|
Loss on impairment |
|
| 146,964 |
|
|
| 202,121 |
|
|
| 120,342 |
|
|
| 146,964 |
|
Gain on extinguishment of debt |
|
| (15,407 | ) |
|
| (71,722 | ) |
|
| — |
|
|
| (15,407 | ) |
Equity in (earnings) losses of unconsolidated affiliates |
|
| 12,450 |
|
|
| (3,421 | ) | ||||||||
Equity in losses of unconsolidated affiliates |
|
| 9,575 |
|
|
| 12,450 |
| ||||||||
Distributions of earnings from unconsolidated affiliates |
|
| 6,130 |
|
|
| 15,636 |
|
|
| 14,482 |
|
|
| 6,130 |
|
Change in estimate of uncollectable rental revenues |
|
| 55,369 |
|
|
| 1,504 |
| ||||||||
Change in estimate of uncollectable revenues |
|
| 8,362 |
|
|
| 55,369 |
| ||||||||
Change in deferred tax accounts |
|
| 15,596 |
|
|
| 1,026 |
|
|
| — |
|
|
| 15,596 |
|
Changes in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant and other receivables |
|
| (83,805 | ) |
|
| (2,926 | ) |
|
| 21,127 |
|
|
| (83,805 | ) |
Other assets |
|
| (8,259 | ) |
|
| (5,541 | ) |
|
| (1,577 | ) |
|
| (8,259 | ) |
Accounts payable and accrued liabilities |
|
| 16,972 |
|
|
| 75,067 |
|
|
| 28,303 |
|
|
| 16,972 |
|
Net cash provided by operating activities |
|
| 59,188 |
|
|
| 225,240 |
|
|
| 202,171 |
|
|
| 59,188 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to real estate assets |
|
| (47,838 | ) |
|
| (90,436 | ) |
|
| (22,108 | ) |
|
| (47,838 | ) |
Proceeds from sales of real estate assets |
|
| 3,593 |
|
|
| 128,364 |
|
|
| 21,014 |
|
|
| 3,593 |
|
Purchase of available-for-sale securities |
|
| (153,193 | ) |
|
| — |
| ||||||||
Proceeds from disposal of investment |
|
| — |
|
|
| 9,225 |
| ||||||||
Purchases of available-for-sale securities |
|
| (553,810 | ) |
|
| (153,193 | ) | ||||||||
Redemptions of available-for-sale securities |
|
| 685,809 |
|
|
| — |
| ||||||||
Proceeds from insurance |
|
| 988 |
|
|
| 740 |
|
|
| 904 |
|
|
| 988 |
|
Payments received on mortgage and other notes receivable |
|
| 898 |
|
|
| 1,853 |
|
|
| 641 |
|
|
| 898 |
|
Additional investments in and advances to unconsolidated affiliates |
|
| (11,170 | ) |
|
| (2,634 | ) |
|
| 272 |
|
|
| (11,170 | ) |
Distributions in excess of equity in earnings of unconsolidated affiliates |
|
| 6,250 |
|
|
| 11,255 |
|
|
| 10,662 |
|
|
| 6,250 |
|
Changes in other assets |
|
| (1,032 | ) |
|
| (2,497 | ) |
|
| (4,204 | ) |
|
| (1,032 | ) |
Net cash provided by (used in) investing activities |
|
| (201,504 | ) |
|
| 55,870 |
|
|
| 139,180 |
|
|
| (201,504 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from mortgage and other indebtedness |
|
| 365,246 |
|
|
| 1,043,496 |
|
|
| — |
|
|
| 365,246 |
|
Principal payments on mortgage and other indebtedness |
|
| (139,829 | ) |
|
| (1,232,480 | ) |
|
| (31,609 | ) |
|
| (139,829 | ) |
Additions to deferred financing costs |
|
| (705 | ) |
|
| (15,545 | ) |
|
| (493 | ) |
|
| (705 | ) |
Proceeds from issuances of common units |
|
| 5 |
|
|
| 39 |
|
|
| — |
|
|
| 5 |
|
Contributions from noncontrolling interests |
|
| 693 |
|
|
| 4,603 |
|
|
| 298 |
|
|
| 693 |
|
Payment of tax withholdings for restricted stock awards |
|
| (87 | ) |
|
| (132 | ) |
|
| (11 | ) |
|
| (87 | ) |
Distributions to noncontrolling interests |
|
| (837 | ) |
|
| (8,369 | ) |
|
| (353 | ) |
|
| (837 | ) |
Distributions to preferred unitholders |
|
| — |
|
|
| (33,669 | ) | ||||||||
Distributions to common unitholders |
|
| — |
|
|
| (33,312 | ) | ||||||||
Net cash provided by (used in) financing activities |
|
| 224,486 |
|
|
| (275,369 | ) |
|
| (32,168 | ) |
|
| 224,486 |
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 82,170 |
|
|
| 5,741 |
|
|
| 309,183 |
|
|
| 82,170 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
|
| 59,054 |
|
|
| 57,512 |
|
|
| 121,713 |
|
|
| 59,054 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 141,224 |
|
| $ | 63,253 |
|
| $ | 430,896 |
|
| $ | 141,224 |
|
Reconciliation from consolidated statements of cash flows to consolidated balance sheets: |
|
|
|
|
|
|
|
| ||||||||
Reconciliation from condensed consolidated statements of cash flows to condensed consolidated balance sheets: |
|
|
|
|
|
|
|
| ||||||||
Cash and cash equivalents |
| $ | 106,799 |
|
| $ | 34,562 |
|
| $ | 267,974 |
|
| $ | 106,799 |
|
Restricted cash (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash |
|
| 10,198 |
|
|
| 180 |
|
|
| 127,565 |
|
|
| 10,198 |
|
Mortgage escrows |
|
| 24,227 |
|
|
| 28,511 |
|
|
| 35,279 |
|
|
| 24,227 |
|
Cash included in assets held for sale |
|
| 78 |
|
|
| — |
| ||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 141,224 |
|
| $ | 63,253 |
|
| $ | 430,896 |
|
| $ | 141,224 |
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of amounts capitalized |
| $ | 108,617 |
|
| $ | 136,117 |
|
| $ | 39,514 |
|
| $ | 108,617 |
|
Cash paid for reorganization items |
| $ | 51,488 |
|
| $ | — |
|
(1) | Included in intangible lease assets and other assets in the condensed consolidated balance sheets. |
The accompanying notes are an integral part of these condensed consolidated statements.
12
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 its business through CBL & Associates Limited Partnership (the “Operating Partnership”), which is a variable interest entity ("VIE"). The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a VIE.
As of September 30, 2020,2021, the Operating Partnership owned interests in the following properties:
|
|
|
|
|
| All Other Properties |
|
|
|
|
|
|
|
|
|
| All Other Properties |
|
|
|
|
| ||||||||||||||||||
|
| Malls (1) |
|
| Associated Centers |
|
| Community Centers |
|
| Office Buildings and Other |
|
| Total |
|
| Malls (1) |
|
| Associated Centers |
|
| Community Centers |
|
| Office Buildings and Other |
|
| Total |
| ||||||||||
Consolidated Properties |
|
| 52 |
|
|
| 20 |
|
|
| 1 |
|
|
| 4 |
| (2) |
| 77 |
|
|
| 49 |
|
|
| 20 |
|
|
| 1 |
|
|
| 4 |
|
|
| 74 |
|
Unconsolidated Properties (3) |
|
| 10 |
|
|
| 3 |
|
|
| 5 |
|
|
| 4 |
|
|
| 22 |
|
|
| 12 |
|
|
| 3 |
|
|
| 5 |
|
|
| 4 |
|
|
| 24 |
|
Total |
|
| 62 |
|
|
| 23 |
|
|
| 6 |
|
|
| 8 |
|
|
| 99 |
|
|
| 61 |
|
|
| 23 |
|
|
| 6 |
|
|
| 8 |
|
|
| 98 |
|
(1) | Category consists of regional malls, open-air centers and outlet centers (including one mixed-use center). |
(2) |
|
(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") and the Construction Properties are collectively referred to as the “Properties” and individually as a “Property.”
CBL is the 100% owner of 2 qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. AtAs of September 30, 2020,2021, 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 a 96.1%97.1% limited partner interest for a combined interest held by CBL of 97.1%98.1%. As of the Effective Date, 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 a 98.9% limited partner interest for a combined interest held by the Company of 99.9%.
Historically, thethe noncontrolling interest in the Operating Partnership has 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. In March 2020, the Company issued 16,333,947 shares of the Company’s common stock to CBL’s Predecessor in exchange for a like number of common units of limited partnership interest in the Operating Partnership pursuant to exchange notices received from CBL’s Predecessor. Additionally, in July and August 2020, the Company issued 1,783,403 shares of the Company’s common stock to CBL’s Predecessor in exchange for a like number of common units of limited partnership interest in the Operating Partnership pursuant to exchange notices received from CBL’s Predecessor.At September 30, 2020,2021, CBL’s Predecessor no longer owned any limited partner interest and third parties owned a 2.9%1.9% limited partner interest in the Operating Partnership. CBL's Predecessor owned 20.120.0 million shares of CBL’s common stock at September 30, 2020,2021, for a total effective interest of 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 of 1986, as amended (the “Internal Revenue Code”).Code.
13
Bankruptcy Accounting
The accompanying condensed consolidated financial statements are unaudited; however, theyincluded herein have been prepared as if the Company were a going concern and in accordance with accounting principles generally acceptedFinancial 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 were 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 United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). 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, 2020 are not necessarily indicative of the results to be obtained for the full fiscal year.
TheseCompany’s condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K, as amended, for the year ended December 31, 2019.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 are widely available, 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 forthroughout 2021. Further, there is a risk that both the year ended December 31, 2020.Company and its tenants could experience future adverse impacts in complying with governmental COVID-19 vaccine mandates applicable to their respective workforces. The situation is rapidly changingunpredictable and additional impacts to the business may arise that the Company is not aware of currently.
Delisting of Common Stock and Depositary Shares
On NovemberNote 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. The Company intends to appeal this decision in accordance with NYSE rules. In the meantime, effective November 3, 2020, the Company’s common stock and the depositary shares representing fractional interests in its Series D Preferred Stock and Series E Preferred Stock began trading on the OTC Markets, operated by the OTC Markets Group, Inc., under the symbols “CBLAQ”, “CBLDQ” and “CBLEQ”, respectively. A delisting of the Company’s common stock from the NYSE could negatively impact it by, among other things, reducing the trading liquidity of, and the market price for, its common stock.
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 Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default, as applicable, have occurred and continue to exist as of the date of this report by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility. As a result of these asserted defaults and events of default, the lenders under the secured credit facility declared all outstanding principal, accrued interest and letters of credit to be immediately due and payable. Subsequent to the lenders accelerating the outstanding balances under the secured credit facility, other events occurred that each constitute an event of default under the secured credit facility, including (i) the Operating Partnership failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020, (ii) the NYSE suspension of trading in the Company’s common stock and commencement of proceedings to delist the Company’s common stock and depositary shares representing fractional interests in each of its series of preferred stock and (iii) CBL and the Operating 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”). Additionally, the filing of the- Chapter 11 Cases constituted an event of default that
14
results in the automatic acceleration of all outstanding principal, accrued and unpaid interest, and letters of creditAbility 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 automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts.
Given the acceleration of the senior 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, the Company believes that there is substantial doubt that it will continue to operateContinue as a going concern within one year after the date these condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the condensed consolidated financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern.Going Concern
Voluntary Reorganization under Chapter 11
As described in Note 8 – Mortgage and Other Indebtedness, Net, the Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default, as applicable, have occurred and continue to exist as of the date of this report by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility. As a result of these asserted defaults and events of default, the lenders under the secured credit facility declared all outstanding principal, accrued interest and letters of credit to be immediately due and payable.
On August 18, 2020, the Company entered into a Restructuring Support Agreement, as amended, (the “RSA”“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 Notes. The terms$450,000 of senior unsecured notes issued by the RSA provide for a comprehensive restructuringOperating 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 Company’s capital structure to be implemented through a chapter 11 planOperating Partnership in October 2014 that bear interest at 4.60% and mature on October 15, 2024 (the “2024 Notes”) and the $625,000 of reorganizationsenior 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 “Plan”) to be filed in“2026 Notes” and, collectively with the Chapter 11 Cases. The Plan would eliminate2023 Notes and 2024 Notes, the $1,375,000 principal amount of the Notes in exchange for the issuance of $500,000 of new first-priority senior secured notes due June 2028, approximately $50,000 of cash and approximately 90% of the new common equity of the Company to holders of the Notes. As a result, the Plan, if implemented, will result in the elimination of approximately $900,000 of debt, extension of the Company’s debt maturity schedule and a reduction in annual interest expense of more than $20,000. The Plan also contemplates eliminating the Company’s $626,250 obligation on its preferred stock in exchange for new common equity, warrants and up to $5,000 in cash, at the Company’s election."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 Debtors commencedOperating Partnership, together with certain of its direct and indirect subsidiaries (collectively, the Chapter 11 Cases by filing“Debtors”), filed voluntary petitions for reorganization(the “Chapter 11 Cases”) under Chapterchapter 11 of title 11 (“Chapter 11”) of the BankruptcyUnited States Code with(the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Bankruptcy Court authorized the Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possessiondebtors-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.
14
In connection with the Chapter 11 Cases, on August 11, 2021, the Bankruptcy Court entered an order, Docket No.1397 (Confirmation Order), confirming the Debtors’ Third Amended Joint Chapter 11 Plan of CBL & Associates Properties, Inc. and its Affiliated Debtors (With Technical Modifications) (as modified at Docket No. 1521, the “Plan”).
On November 1, 2021 (the “Effective Date”), the conditions to effectiveness of the Plan were satisfied and the Debtors emerged from the Chapter 11 Cases. The Company filed a notice of the Effective Date of the Plan with the Bankruptcy Court on November 1, 2021.
Although the Company is no longer a debtor-in-possession, the Company was a debtor-in-possession through the three and nine months ended September 30, 2021. As such, the Company’s bankruptcy proceedings and related matters are discussed below.
The filing of the Chapter 11 Cases constituted an event of default that resultsresulted in the automatic acceleration of all outstanding principal, accrued and unpaid interest, and letters of creditcertain 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 CompanyBankruptcy Court took up the other pending claims during the adversary proceeding, which was stayed pending the confirmation of the Plan.
The filing of the Chapter 11 Cases 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 the administrative agent are negotiating the terms of a standstill pendingother sums due. See Note 8 and Note 9 for further determination by the Bankruptcy Court.discussion.
15
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.
On the Effective Date, 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 received, in the aggregate, $95,000 in cash, $455,000 of new senior secured notes, $100,000 of new convertible secured notes, based upon the election by certain Consenting Noteholders, and 89% in common equity of the newly reorganized company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders also provided $50,000 of new money in exchange for additional new convertible secured notes. Pursuant to the Plan the remaining lenders of the senior secured credit facility, holding $983,700 in principal amount, received $100,000 in cash and a new $883,700 secured term loan. Existing common and preferred shareholders each received 5.5% of common equity in the newly reorganized company. On the Effective Date, the Company had an aggregate 20,000,000 shares of new common stock issued and outstanding.
On the Effective Date, the Company reserved an additional (i) approximately 9,000,000 shares of new common stock for issuance upon the potential exercise of the new convertible notes and (ii) 3,222,222 shares of new common stock for issuance under an equity incentive plan.
On the Effective Date, all prior equity interests of the Company issued and outstanding immediately prior to the Effective Date, including (1) the REIT’s common stock, par value $0.01 per share and the REIT’s preferred stock and related depositary shares and (2) the Operating Partnership’s limited partnership common interests and the limited partnership preferred interests related to the REIT’s preferred stock, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect.
15
Exit Credit Agreement
On the Effective Date, CBL & Associates HoldCo I, LLC (“HoldCo I”), a wholly owned subsidiary of the Operating Partnership, entered into an amended and restated credit agreement (the “Exit Credit Agreement”), providing for an $883,700 senior secured term loan that matures November 1, 2025. Upon satisfaction of certain conditions, the maturity date will automatically extend to November 1, 2026 and upon further satisfaction of certain conditions the maturity date will automatically extend to November 1, 2027. Borrowings under the senior secured term loan may be LIBOR loans or base rate loans (each as defined in the Exit Credit Agreement). Borrowings that are LIBOR loans bear interest at a rate per annum equal to LIBOR (as defined in the Exit Credit Agreement) for the applicable interest period plus 275 basis points, subject to a LIBOR floor of 1.0%. Borrowings that are base rate Loans bear interest at a rate per annum equal to the base rate (as defined in the Exit Credit Agreement) plus 175 basis points.
The Exit Credit Agreement requires HoldCo I to comply with certain financial ratios in the aggregate for the collateral properties, including a covenant that it not permit the (i) interest coverage ratio (as defined in the Exit Credit Agreement) commencing with the fiscal quarter ending December 31, 2021, to be less than 1.50 to 1.00, (ii) minimum debt yield ratio (as defined in the Exit Credit Agreement) commencing with the fiscal quarter ending March 31, 2023 as of the last day of any fiscal quarter ending prior to the maturity date, to be less than eleven and a half percent (11.50%) and (iii) the occupancy rate (as defined in the Exit Credit Agreement) commencing with the fiscal quarter ending March 31, 2023, as of the last day of any fiscal quarter ending prior to the maturity date, to be less than seventy five percent (75%).
The Exit Credit Agreement is secured by first-priority liens on substantially all the personal and real property assets of HoldCo I and its direct and indirect subsidiaries, including without limitation, HoldCo I’s and the subsidiary guarantors’ ownership interests in the capital stock, membership interests or partnership interests in the subsidiary guarantors.
Secured Notes Indenture
On the Effective Date, CBL & Associates HoldCo II, LLC (“HoldCo II”), a wholly owned subsidiary of the Operating Partnership, entered into a secured notes indenture relating to the issuance of 10% senior secured notes due 2029 (the “Secured Notes”) in an aggregate principal amount of $455,000. The Secured Notes mature November 15, 2029 and bear interest at a rate of 10% per annum, payable semi-annually on November 15 and May 15, beginning May 15, 2022.
The Secured Notes are secured by first priority perfected liens on certain personal and real property assets owned as of the Effective Date by HoldCo II and certain secured notes subsidiary guarantors and certain assets of HoldCo II and each secured notes subsidiary guarantor acquired after the Effective Date.
Upon the occurrence of certain permitted asset sales or dispositions and certain collateral release trigger events, HoldCo II is required to make an offer to the holders of the Secured Notes to repurchase the Secured Notes (in the case of such asset sales) or redeem the Secured Notes (in the case of such trigger events) in an aggregate principal amount equal to a certain specified portion of the proceeds of such sale, financing transaction or other disposition. Additionally, HoldCo II may redeem the Secured Notes at its option, subject to satisfaction of customary conditions thereof, including payment of accrued and unpaid interest through the date of such optional redemption and any applicable premium. HoldCo II redeemed $60,000 aggregate principal amount of the Secured Notes pursuant to an optional redemption on November 8, 2021, which left an outstanding balance of $395,000.
The secured notes indenture contains customary affirmative covenants, including covenants regarding the maintenance of insurance and reporting requirements, and negative covenants, including covenants limiting the ability of Holdco II and certain of its subsidiaries to, among other things, incur debt, grant liens, enter into transactions with affiliates and sell or dispose of assets.
Exchangeable Notes Indenture
On the Effective Date, HoldCo II entered into a secured exchangeable notes indenture relating to the issuance of 7.0% exchangeable senior secured notes due 2028 (the “Exchangeable Notes”) in an aggregate principal amount of $150,000. The Exchangeable Notes mature November 15, 2028 and bear interest at a rate of 7.0% per annum, payable semi-annually on November 15 and May 15, beginning May 15, 2022.
The Exchangeable Notes are secured by first priority perfected liens on certain personal and real property assets owned as of the Effective Date by Holdco II and certain of its subsidiaries and certain assets of HoldCo II and each of its subsidiaries acquired after the Effective Date.
Upon the occurrence of certain permitted asset sales or dispositions and certain collateral release trigger events, HoldCo II is required to make an offer to the holders of the Exchangeable Notes to repurchase the Exchangeable Notes in an aggregate principal amount equal to a certain specified portion of the proceeds of such sale, financing transaction or other disposition. Additionally, on or after August 15, 2028, HoldCo II may elect to redeem the Exchangeable Notes, subject to satisfaction of customary conditions thereof, including payment of accrued and unpaid interest through the date of such optional redemption.
16
Subject to certain conditions, the Exchangeable Notes may be exchanged upon a holder’s request for (at HoldCo II’s option) cash, common stock or a combination thereof at any time from the Effective Date until the close of business on the second scheduled trading day immediately preceding the maturity date. The applicable rate of exchange shall be calculated, and is subject to customary anti-dilution adjustments, in accordance with the terms of the Exchangeable Notes Indenture.
In addition, HoldCo II may elect at its option to exchange all or any portion of the “exchange amount” in respect of the Exchangeable Notes for (at HoldCo II’s option) cash, common stock or a combination thereof in the event that the daily volume-weighted average price per share of the common stock is at least 160% of the exchange price then in effect on at least 20 of the 30 trading days immediately preceding the date HoldCo II gives notice of its intent to exercise such election, including the trading day immediately preceding the date such notice is given. The “exchange amount” shall include the present value of future interest payments to maturity on the Exchangeable Notes up to a maximum of 36-months.
The exchangeable notes indenture also contains a customary “make-whole fundamental change” grid providing for the increase in the exchange rate for exchanges of Exchangeable Notes in connection with a “make-whole fundamental change,” and a customary right of holders to put their Exchange Notes to HoldCo II at par upon a “fundamental change,” in each case as defined and subject to the provisions of the exchangeable notes indenture.
The exchangeable notes indenture contains customary affirmative covenants, including covenants regarding the maintenance of insurance and reporting requirements, and negative covenants, including covenants limiting the ability of HoldCo II and certain of its subsidiaries to, among other things, incur debt, grant liens, enter into transactions with affiliates and sell or dispose of assets.
As of the first date on which 0 Secured Notes remain outstanding and the debt yield based on Consolidated Modified Cash NOI (as defined in the exchangeable notes indenture) on a trailing four quarter basis attributable to certain specified properties exceeds 15%, certain exchangeable notes subsidiary guarantors will be released from their note guarantee obligations, certain collateral (other than certain specified properties) will be released from applicable liens, and certain covenants relating to limitations on indebtedness and asset sales, among other things, will be substantially modified in accordance with the exchangeable notes indenture.
2021 Equity Incentive Plan
Following the Effective Date, the board of directors of the Company adopted the CBL & Associates Properties, Inc. 2021 Equity Incentive Plan (the “EIP”). The EIP authorizes the grant of equity awards to eligible participants based on the new common stock, in the form of stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards. Awards under the EIP may be granted to officers, employees, directors, consultants and independent contractors of the reorganized company. Initially, 3,222,222 shares of new common stock are available under the EIP. The initial new common stock under the EIP is subject to an annual increase of a number of shares equal to 3% of the number of shares of new common stock issued and outstanding at the end of the relevant calendar year (beginning January 2023), or such lesser amount as the board of directors may determine. The Plan will be administered by the compensation committee of the board of directors, which will determine the participants who will be granted awards under the EIP and the terms and conditions of EIP awards.
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 automatic acceleration of the outstanding principal and accrued interest or may giveother sums due. See Note 8 and Note 9 for further discussion.
As a result of the applicable lenderCompany’s financial condition and the rightnear-term maturities of substantial indebtedness, substantial doubt existed as of September 30, 2021 that the Company would be able to accelerate such amounts.continue as a going concern.
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 ofOn August 11, 2021, the Bankruptcy Court entered an order confirming the Plan which became effective after the close of business on November 1, 2021. The Successor, defined below, will have approximately $1,315,000 of property-level debt and certain other conditions. Generally,related obligations maturing or callable within the rejectionnext 12 months of an executory contract the Effective Date, which represents approximately 25-35% of projected annual operating cash flows of the Successor.
17
The Successor intends to refinance and/or unexpired leaseextend the maturity date of such mortgage notes payable, however, in the instances where a refinancing and/or extension of maturity dates is treatedunsuccessful the Successor would convey such property to the lender to satisfy its debt obligation.
The Company has prepared its financial statements in conformity with accounting principles generally accepted in the United States of America applicable to a going concern. The financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should the Company be unable to continue as a prepetition breachgoing concern.
Delisting of Common Stock and Depositary Shares
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 executory contractsecurities 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 appealed this decision in accordance with NYSE rules. In the meantime, effective November 3, 2020, the Company’s common stock and the depositary shares representing fractional interests in its Series D Preferred Stock and Series E Preferred Stock began trading on the OTC Markets, operated by the OTC Markets Group, Inc., under the symbols CBLAQ, CBLDQ and CBLEQ, respectively. On November 2, 2021, the newly issued common stock of the reorganized company commenced trading on the NYSE under the symbol CBL.
Fresh-Start Reporting
Upon emergence from bankruptcy on the Effective Date, the Company expects to qualify for fresh-start reporting. In order to qualify for fresh-start reporting (i) the holders of existing voting shares of the Company prior to its emergence must receive less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan must be less than the post-petition liabilities and allowed claims. Under the principles of fresh-start reporting, a new reporting entity (the “Successor”) will be considered to have been created, and, as a result, the Successor will allocate the reorganization value of the Successor to its individual assets based on their estimated fair values. The process of estimating the fair value of the Successor’s assets, liabilities and equity upon emergence is currently ongoing and, therefore, such amounts have not yet been finalized.
Reorganization Items
Any expenses, gains and losses that are realized or unexpired leaseincurred as of or subsequent to November 1, 2020, the Commencement Date, and as a direct result of the Chapter 11 Cases, are recorded in the line item “Reorganization items” in the Company’s condensed consolidated statements of operations. For the three months ended September 30, 2021, the $12,008 of reorganization items consists of $11,051 in professional fees, $441 in compensation associated with reorganization efforts and $516 of U.S. Trustee fees. For the nine months ended September 30, 2021, the $52,014 of reorganization items consists of $48,760 in professional fees, $1,513 in compensation associated with reorganization efforts and $1,741 of U.S. Trustee fees.
Liabilities Subject to Compromise
As of September 30, 2021 and December 31, 2020, the Company reclassified $2,551,686 and $2,551,490, respectively, to the line item “Liabilities 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,compromise” in the case ofCompany’s condensed consolidated balance sheets. These liabilities are reported at the rejection of unexpired leases of real property,amounts expected to certain caps on damages. Counterparties to such rejected contracts or leases may assert unsecuredbe allowed as claims inby the Bankruptcy Court, againstalthough they may be settled for less. As of September 30, 2021, the applicable Debtor’s estate for such damages. Generally,liabilities subject to compromise consisted of $1,375,000 related to the assumption or assumption and assignmentsenior unsecured notes, $675,926 related to the secured line of an executory contract or unexpired lease requirescredit, $438,750 related to 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 Debtorssecured term loan, $57,644 in this quarterly report, including where applicable a quantificationunpaid accrued interest as of the Company’s obligationsCommencement Date and $4,366 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 senior unsecured notes and secured credit facility is in excess of recorded interest expense by $45,344 and $135,162 for the three and nine months ended September 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 nine months ended September 30, 2021 because the Company discontinued accruing interest on 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 such executory contractinterest payments on its senior unsecured notes or unexpired lease withits secured credit facility since the Chapter 11 Cases commenced on November 1, 2020.
18
Condensed combined financial statement information of 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 rejectionas follows:
Condensed Combined Financial Statements – Debtors (Debtors-In-Possession)
Condensed Combined Balance Sheets
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||
ASSETS: |
|
|
|
|
|
|
|
|
Investment in real estate assets |
| $ | 3,917,871 |
|
| $ | 4,056,257 |
|
Accumulated depreciation |
|
| (1,576,277 | ) |
|
| (1,544,800 | ) |
|
|
| 2,341,594 |
|
|
| 2,511,457 |
|
Held for sale |
|
| 6,239 |
|
|
| — |
|
Developments in progress |
|
| 14,450 |
|
|
| 27,853 |
|
Net investment in real estate assets |
|
| 2,362,283 |
|
|
| 2,539,310 |
|
Available-for-sale securities - at fair value (amortized cost of $99,991 and $233,053 as of September 30, 2021 and December 31, 2020, respectively) |
|
| 99,998 |
|
|
| 233,071 |
|
Cash and cash equivalents |
|
| 255,280 |
|
|
| 46,346 |
|
Restricted cash |
|
| 118,800 |
|
|
| 29,834 |
|
Intercompany due from non-debtor entities |
|
| 76,499 |
|
|
| 76,095 |
|
Intangible lease assets and other assets |
|
| 129,250 |
|
|
| 140,241 |
|
Total assets |
| $ | 3,042,110 |
|
| $ | 3,064,897 |
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY: |
|
|
|
|
|
|
|
|
Other liabilities |
| $ | 109,415 |
|
| $ | 102,910 |
|
Intercompany due to non-debtor entities |
|
| 6,205 |
|
|
| 5,062 |
|
Total liabilities not subject to compromise |
|
| 115,620 |
|
|
| 107,972 |
|
Liabilities subject to compromise |
|
| 2,551,686 |
|
|
| 2,551,490 |
|
Shareholders' equity and noncontrolling interests of the Debtors |
|
| 374,804 |
|
|
| 405,435 |
|
Total liabilities and equity |
| $ | 3,042,110 |
|
| $ | 3,064,897 |
|
Condensed Combined Statements of any executory contract or unexpired lease and the Debtors expressly preserve allOperations
|
| Three Months Ended September 30, 2021 |
|
| Nine Months Ended September 30, 2021 |
| ||
Total revenues |
| $ | 99,795 |
|
| $ | 277,877 |
|
Depreciation and amortization |
|
| (33,046 | ) |
|
| (101,175 | ) |
Loss on impairment |
|
| (25,169 | ) |
|
| (82,351 | ) |
Expenses |
|
| (45,720 | ) |
|
| (132,152 | ) |
Interest and other income |
|
| 1,258 |
|
|
| 4,507 |
|
Interest expense (unrecognized contractual interest expense was $45,344 and $135,162 for the three and nine months ended September 30, 2021, respectively) |
|
| (25 | ) |
|
| (1,062 | ) |
Reorganization items |
|
| (12,017 | ) |
|
| (52,014 | ) |
Gain on sales of real estate assets |
|
| 8,684 |
|
|
| 8,492 |
|
Income tax benefit (provision) |
|
| 1,234 |
|
|
| (222 | ) |
Net loss |
| $ | (5,006 | ) |
| $ | (78,100 | ) |
Condensed Combined Statements of their rights with respect thereto.Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES: |
| Nine Months Ended September 30, 2021 |
| |
Net loss |
| $ | (78,100 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
Loss on impairment |
|
| 82,351 |
|
Other assets and liabilities, net |
|
| 113,974 |
|
Net cash provided by operating activities |
|
| 118,225 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Purchases of available-for-sale securities |
|
| (553,810 | ) |
Redemptions of available-for-sale securities |
|
| 685,809 |
|
Changes in other assets |
|
| 207 |
|
Net cash provided by investing activities |
|
| 132,206 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Net distributions from non-Debtor subsidiaries |
|
| 47,480 |
|
Other financing activities |
|
| 67 |
|
Net cash provided by financing activities |
|
| 47,547 |
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
| 297,978 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
|
| 76,180 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 374,158 |
|
Reconciliation from condensed combined statement of cash flows to condensed combined balance sheet: |
|
|
|
|
Cash and cash equivalents |
| $ | 255,280 |
|
Restricted cash |
|
| 118,800 |
|
Cash included in assets held for sale |
|
| 78 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
| $ | 374,158 |
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION |
|
|
|
|
Cash paid for reorganization items |
| $ | 51,488 |
|
19
Note 23 – Summary of Significant Accounting Policies
Accounting Guidance Not Yet Adopted
Description |
| Expected Adoption Date & Application Method |
| Financial Statement Effect and Other Information | ||
Accounting Standards Update (“ASU”) |
|
| ||||
|
|
| ||||
16
|
|
|
17
|
|
| ||||||||
| ||||||||||
| ||||||||||
|
| |||||||||
|
|
| 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 September 30, | |||||||
|
Accounts Receivable
Receivables include amounts billed and currently due from tenants pursuant to lease agreements and receivables attributable to straight-line rents associated with those lease agreements. Individual leases where the collection of rents is in dispute are assessed for collectability based on management’s best estimate of collection considering the anticipated outcome of the dispute. Individual leases that are not in dispute are assessed for collectability and upon the determination that the collection of rents over the remaining lease term is not probable, accounts receivable are reduced as an adjustment to rental revenues. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further, management assesses whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical collection levels and current economic trends. An allowance for the uncollectibleuncollectable portion of the portfolio is recorded as an adjustment to rental revenues. Management’s estimate of the collectability of accounts receivable from tenants is based on the best information available to management at the time of evaluation.
The duration of the COVID-19 pandemic and ourits impact on the Company’s tenants’ ability to resume operations once governmental and legislative restrictions are liftedpay rents has caused uncertainty in the 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 current discussions with the tenants,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 andmonths ended September 30, 2021 there was a reversal of $6,593 related to uncollectable revenues, which includes $2,635 related to straight line rent receivables. For the three months ended September 30, 2020, revenues were reduced by $13,771 associated with uncollectable revenues, which includes the write-off of $2,581 for straight line rent receivables. For the nine months ended September 30, 2021 and 2020, the Company recorded $13,771revenues were reduced by $8,362 and $54,463, respectively, associated with potentially uncollectibleuncollectable revenues, which includes to $2,581the write-off of $1,666 and $5,137, respectively, for straight line receivablesrent 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 changes in circumstances indicate that recoverabilitythe carrying value of any of its long-lived assets or investment in the asset isunconsolidated affiliates may not reasonably assured.be recoverable. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in
18
circumstances. The prolonged outbreak of the COVID-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 will likely continue to result in a reduction in the revenues and cash flows of 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 worsening market and economic conditions resulting from the COVID-19 pandemic.
20
As of September 30, 2020,2021, 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 ninethree months ended September 30, 2020,2021, the Company recorded impairment charges of $146,964$63,160 related to 2 malls, a redeveloped anchor parcel, an associated center and a parcel of land. For the nine months ended September 30, 2021, the Company recorded impairment charges of $120,342 related to 5 malls, a redeveloped anchor parcel, an associated center and a parcel of land.For the nine months ended September 30, 2020, the Company recorded impairment charges of $146,964 related to 3 of its malls. As ofThe Company did 0t record impairment during the three months ended September 30, 2020, 5 other properties had impairment indicators; however, based on the Company’s plans with respect to those properties and the economic environment as of September 30, 2020, 0 additional impairment charges were recorded.2020.
As of September 30, 2020,2021, 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 nine-month periods ended September 30, 20202021 and 2019. As of September 30, 2020, there were indicators that the fair value of 2 investments in unconsolidated affiliates had declined below the Company’s carrying value of the investment; however, the decline was determined to not be other-than-temporary.
2020.
Note 34 – Revenues
Revenues
The following table presents the Company's revenues disaggregated by revenue source:
|
| Three Months Ended September 30, 2020 |
|
| Three Months Ended September 30, 2019 |
|
| Nine Months Ended September 30, 2020 |
|
| Nine Months Ended September 30, 2019 |
| ||||
Rental revenues (1) |
| $ | 124,081 |
|
| $ | 180,616 |
|
| $ | 405,476 |
|
| $ | 556,989 |
|
Revenues from contracts with customers (ASC 606): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense reimbursements (2) |
|
| 2,360 |
|
|
| 2,449 |
|
|
| 6,852 |
|
|
| 6,653 |
|
Management, development and leasing fees (3) |
|
| 2,104 |
|
|
| 2,216 |
|
|
| 5,251 |
|
|
| 7,325 |
|
Marketing revenues (4) |
|
| 495 |
|
|
| 1,056 |
|
|
| 1,589 |
|
|
| 3,148 |
|
|
|
| 4,959 |
|
|
| 5,721 |
|
|
| 13,692 |
|
|
| 17,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues |
|
| 857 |
|
|
| 914 |
|
|
| 2,514 |
|
|
| 4,543 |
|
Total revenues (5) |
| $ | 129,897 |
|
| $ | 187,251 |
|
| $ | 421,682 |
|
| $ | 578,658 |
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Rental revenues |
| $ | 145,539 |
|
| $ | 124,081 |
|
| $ | 405,030 |
|
| $ | 405,476 |
|
Revenues from contracts with customers (ASC 606): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense reimbursements (1) |
|
| 2,076 |
|
|
| 2,360 |
|
|
| 5,906 |
|
|
| 6,852 |
|
Management, development and leasing fees (2) |
|
| 1,780 |
|
|
| 2,104 |
|
|
| 4,888 |
|
|
| 5,251 |
|
Marketing revenues (3) |
|
| 530 |
|
|
| 495 |
|
|
| 1,351 |
|
|
| 1,589 |
|
|
|
| 4,386 |
|
|
| 4,959 |
|
|
| 12,145 |
|
|
| 13,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues |
|
| 450 |
|
|
| 857 |
|
|
| 2,945 |
|
|
| 2,514 |
|
Total revenues (4) |
| $ | 150,375 |
|
| $ | 129,897 |
|
| $ | 420,120 |
|
| $ | 421,682 |
|
(1) |
|
| Includes |
| Included in All Other segment. |
| Marketing revenues solely relate to the Malls segment for all periods presented. |
| Sales taxes are excluded from revenues. |
19
See Note 10 for information on the Company's segments.
RevenueRevenues from Contracts with Customers
Expected credit losses
During the three and nine months ended September 30, 2020, the Company individually evaluated tenant receivables within the scope of ASC 606, of which a significant portion are short term. These receivables are assessed for collectability based on management’s best estimate of collection considering balances outstanding, historical collection levels and current economic trends. The Company recognized bad debt (recovery) expense of $(356) and $906 related to this class of receivables that were deemed uncollectable for the three and nine months ended September 30, 2020, respectively.
Outstanding Performance Obligations
The Company has outstanding performance obligations related to certain noncancellable contracts with customers for which it will receive fixed operating expense reimbursements for providing certain maintenance and other services as described above. As of September 30, 2020,2021, the Company expects to recognize these amounts as revenue over the following periods:
Performance obligation |
| Less than 5 years |
|
| 5-20 years |
|
| Over 20 years |
|
| Total |
|
| Less than 5 years |
|
| 5-20 years |
|
| Over 20 years |
|
| Total |
| ||||||||
Fixed operating expense reimbursements |
| $ | 26,881 |
|
| $ | 53,984 |
|
| $ | 48,398 |
|
| $ | 129,263 |
|
| $ | 23,326 |
|
| $ | 45,135 |
|
| $ | 43,038 |
|
| $ | 111,499 |
|
The Company evaluates its performance obligations each period and makes adjustments to reflect any known additions or cancellations. Performance obligations related to variable consideration, which is based on sales, are constrained.
21
Note 45 – Leases
Lessor
The components of rental revenues are as follows:
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Fixed lease payments |
| $ | 99,255 |
|
| $ | 149,582 |
|
| $ | 335,799 |
|
| $ | 460,584 |
|
| $ | 101,819 |
|
| $ | 99,255 |
|
| $ | 242,589 |
|
| $ | 335,799 |
|
Variable lease payments |
|
| 24,826 |
|
|
| 31,034 |
|
|
| 69,677 |
|
|
| 96,405 |
|
|
| 43,720 |
|
|
| 24,826 |
|
|
| 162,441 |
|
|
| 69,677 |
|
Total rental revenues |
| $ | 124,081 |
|
| $ | 180,616 |
|
| $ | 405,476 |
|
| $ | 556,989 |
|
| $ | 145,539 |
|
| $ | 124,081 |
|
| $ | 405,030 |
|
| $ | 405,476 |
|
The undiscounted future fixed lease payments to be received under the Company's operating leases as of September 30, 2020,2021, are as follows:follows:
Years Ending December 31, |
| Operating Leases |
|
| Operating Leases |
| ||
2020 (1) |
| $ | 101,314 |
| ||||
2021 |
|
| 387,447 |
| ||||
2021 (1) |
| $ | 96,179 |
| ||||
2022 |
|
| 330,263 |
|
|
| 347,568 |
|
2023 |
|
| 277,859 |
|
|
| 294,590 |
|
2024 |
|
| 226,620 |
|
|
| 237,254 |
|
2025 |
|
| 171,312 |
|
|
| 183,046 |
|
2026 |
|
| 133,553 |
| ||||
Thereafter |
|
| 418,785 |
|
|
| 295,878 |
|
Total undiscounted lease payments |
| $ | 1,913,600 |
|
| $ | 1,588,068 |
|
(1) | Reflects rental payments for the fiscal period October 1, |
Lessee
The Company has 8 ground leases and 1 office lease in which it is a lessee. The maturities of these leases range from 2021 to 2089 and generally provide for renewal options ranging from five to ten years. We included the renewal options in our lease terms for purposes of calculating our lease liability and ROU asset where we have plans to continue operating our assets under the current terms associated with each ground lease. The ground leases relate to properties where the Company owns the buildings and improvements, but leases the underlying land. The lease payments on the
20
majority of the ground leases are fixed, but in the instances where they are variable they are either based on the CPI index or a percentage of sales. The one office lease is subleased as of September 30, 2020. As of September 30, 2020, these leases have a weighted-average remaining lease term of 43.2 years and a weighted-average discount rate of 8.1%.
The components of lease expense are presented below:
|
| Three Months Ended September 30, 2020 |
|
| Three Months Ended September 30, 2019 |
|
| Nine Months Ended September 30, 2020 |
|
| Nine Months Ended September 30, 2019 |
| ||||
Lease expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease expense |
| $ | 113 |
|
| $ | 10 |
|
| $ | 352 |
|
| $ | 435 |
|
Variable lease expense |
|
| 82 |
|
|
| 247 |
|
|
| 198 |
|
|
| 277 |
|
Total lease expense |
| $ | 195 |
|
| $ | 257 |
|
| $ | 550 |
|
| $ | 712 |
|
Note 56 – 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 inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions and risk of nonperformance.
Fair Value Measurements on a Recurring Basis
The carrying values of cash and cash equivalents, receivables, accounts payable (including those included in liabilities subject to compromise) 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 $2,756,633$941,801 and $2,970,246$1,091,745 at September 30, 20202021 and December 31, 2019,2020, respectively. The estimated fair value of the senior unsecured notes, the secured line of credit and the secured term loan included in liabilities subject to compromise was $2,042,994 and $1,606,959 at September 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.
22
During March 2020,the three and nine months ended September 30, 2021, the Company purchasedhas continued to reinvest in U.S. Treasury securities using the cash that are scheduledwas drawn on the secured line of credit to mature between April 2021 and June 2021.preserve liquidity at the beginning of the COVID-19 pandemic. The Company has designated thesethe U.S. Treasury securities purchased as available-for-sale (“AFS”). The fair value of these securities was calculated based on quoted market prices in active markets and are 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. The following table sets forth information regarding the Company’s AFS securities that were measured at fair value for the nine months ended September 30, 2020:2021:
AFS Security |
| Amortized Cost |
|
| Allowance for credit losses (1) |
|
| Total unrealized gains/(losses) |
|
| Fair Value |
|
| Amortized Cost (1) |
|
| Allowance for credit losses (2) |
|
| Total unrealized gain |
|
| Fair value as of September 30, 2021 |
| ||||||||
U.S. Treasury securities |
| $ | 151,762 |
|
| $ | — |
|
| $ | 33 |
|
| $ | 151,795 |
|
| $ | 99,991 |
|
| $ | — |
|
| $ | 7 |
|
| $ | 99,998 |
|
21
(1) | The U.S. Treasury securities have maturities through October 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 |
Subsequent to September 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 adopted ASU 2016-13, Measurementdesignated these securities as AFS. The fair value of Credit Lossesthese securities was calculated based on Financial Instruments (Topic 326), on Januaryquoted market prices in active markets and are included in the Level 1 2020. Under ASC Topic 326-30,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 elected to exclude applicable accrued interest from bothpurchased additional U.S Treasury securities. The U.S. Treasury securities purchased in December 2020 matured between January 2021 and March 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 fair value andfor the amortized cost basis of the available-for-sale debt securities, and separately present the accrued interest receivable balance within the Other Receivables line item of the condensed consolidated balance sheets. The Company elected not to measure an allowance for credit losses on accrued interest receivable as an allowance on possible uncollectable accrued interest receivable is recorded in a timely manner.year ended December 31, 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"), 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. See below for a description of the estimates and assumptions the Company used in its impairment analysis. See Note 3 for additional information describing the Company's impairment review process.
23
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 nine months ended September 30, 2021:
|
|
|
|
|
| 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 |
| $ | 99,390 |
|
| $ | — |
|
| $ | — |
|
| $ | 99,390 |
|
| $ | 120,342 |
|
During the nine months ended September 30, 2021, the Company recognized impairments of real estate of $120,342 related to 5 malls, a redeveloped anchor parcel, an associated center and 1 outparcel.
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 |
|
|
July |
| The Landing at Arbor Place - Outparcel (4) |
| Douglasville, GA |
| All Other |
|
| 1,682 |
|
|
| 590 |
|
|
September |
| Laurel Park Place (5) |
| Livonia, MI |
| Malls |
|
| 14,267 |
|
|
| 9,800 |
|
|
September |
| Parkdale Mall and Crossing (6) |
| Beaumont, TX |
| Malls/All Other |
|
| 47,211 |
|
|
| 50,500 |
|
|
|
|
|
|
|
|
|
| $ | 120,342 |
|
| $ | 99,390 |
|
|
(1) | 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 $10,700. The mall had experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Eastland Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of nine years, with a sale at the end of the holding period, a capitalization rate of 14.0% and a discount rate of 15.0%. |
(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 $12,400. The mall had experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Old Hickory Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of nine years, with a sale at the end of the holding period, a capitalization rate of 13.0% and a discount rate of 14.0%. |
(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 had experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Stroud Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of nine years, with a sale at the end of the holding period, a capitalization rate of 11.75% and a discount rate of 12.5%. |
(4) | In July 2021, the Company sold an outparcel at The Landing at Arbor Place. Sales proceeds amounted to $590, which resulted in a loss on sale. |
(5) | 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 $9,800. The mall had experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Laurel Park Place using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of nine years, with a sale at the end of the holding period, a capitalization rate of 11.5% and a discount rate of 13.0%. |
(6) | In accordance with the Company’s quarterly impairment process, the Company wrote down the book value of the mall, a redeveloped anchor parcel and an associated center adjacent to the mall to their aggregate estimated fair value of $50,500. 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 the mall and associated center (excluding the redeveloped anchor parcel) based on Management’s assessment that there was an increased likelihood that the loan secured by the mall and associated center may not be successfully restructured or refinanced. Management determined the fair value of Parkdale Mall, Parkdale Crossing and Parkdale Anchor 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 weighted-average capitalization rate of 12.3% and a weighted-average discount rate of 14.2%. |
During the nine months ended September 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.
24
Long-lived Assets Measured at Fair Value in 2020
The following table sets forth information regarding the Company's assets that arewere measured at fair value on a nonrecurring basis and related impairment charges for the nine months ended September 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 |
|
| $ | 146,964 |
|
During the nine months ended September 30, 2020, the Company recognized impairments of real estate of $146,964 related to three3 malls and one1 vacant land parcel.
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 |
|
|
July |
| Vacant land |
| Pittsburgh, PA |
| Malls |
|
| 46 |
|
|
| — |
|
|
|
|
|
|
|
|
|
| $ | 146,964 |
|
| $ | 166,900 |
|
|
(1) | 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 $47,300. The mall had experienced a decline |
(2) | In accordance with the |
(3) | In accordance with the |
22
Long-lived Assets Measured at Fair Value in 2019
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 nine months ended September 30, 2019:
|
|
|
|
|
| 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 |
| |||||
2019: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-lived assets |
| $ | 160,740 |
|
| $ | — |
|
| $ | — |
|
| $ | 160,740 |
|
| $ | 202,121 |
|
During the nine months ended September 30, 2019, the Company recognized impairments of real estate of $202,121 related to five malls and one community center:
Impairment Date |
| Property |
| Location |
| Segment Classification |
| Loss on Impairment |
|
| Fair Value |
|
| ||
March |
| Greenbrier Mall (1) |
| Chesapeake, VA |
| Malls |
| $ | 22,770 |
|
| $ | 56,300 |
|
|
March/April |
| Honey Creek Mall (2) |
| Terre Haute, IN |
| Malls |
|
| 2,045 |
|
|
| — |
|
|
June |
| The Forum at Grandview (3) |
| Madison, MS |
| All Other |
|
| 8,582 |
|
|
| — |
|
|
June |
| EastGate Mall (4) |
| Cincinnati, OH |
| Malls |
|
| 33,265 |
|
|
| 25,100 |
|
|
September |
| Mid Rivers Mall (5) |
| St. Peters, MO |
| Malls |
|
| 83,621 |
|
|
| 53,340 |
|
|
September |
| Laurel Park Place (6) |
| Livonia, MI |
| Malls |
|
| 52,067 |
|
|
| 26,000 |
|
|
January/March |
| Other adjustments (7) |
| Various |
| Malls |
|
| (229 | ) |
|
| — |
|
|
|
|
|
|
|
|
|
| $ | 202,121 |
|
| $ | 160,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 67 – Dispositions and Held for Sale
The Company evaluates its disposals utilizing the guidance in ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an EntityDispositions.
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 properties described below, as well as any related gains or losses, are included in net loss for all periods presented, as applicable.
2021 Dispositions
The Company realized a gain of $8,684 primarily related to the sale of 2 anchors and 3 outparcels during the three months ended September 30, 2021. The Company realized a gain of $8,492 primarily related to the sale of 3 anchors and 3 outparcels during the nine months ended September 30, 2021.
2020 Dispositions
The Company realized a gain of $2,708 related to the sale of 3outparcels during the nine months ended September 30, 2020.
2325
Held for Sale
2021 Held for Sale Analysis
In the third quarter of 2021, the Company determined that the Residences at Pearland Town Center met the criteria to be classified as a held for sale (“HFS”). The Company recognized a gainsale closed on extinguishmentOctober 1, 2021 and generated gross proceeds of debt for the property listed below, which represented the amount by which the outstanding debt balance exceeded the net book value of the property$8,750. The sale did not qualify as of the transfer date.discontinued operations. See Note 815 for more information.
Sale/Transfer Date |
| Property |
| Property Type |
| Location |
| Balance of Non-recourse Debt |
|
| Gain on Extinguishment of Debt |
| ||
August |
| Hickory Point Mall (1) |
| Malls |
| Forsyth, IL |
| $ | 27,446 |
|
| $ | 15,407 |
|
|
|
Note 78 – Unconsolidated Affiliates and Noncontrolling Interests
Unconsolidated Affiliates
Although the Company had majority ownership of certain joint ventures during 20202021 and 2019,2020, 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 September 30, 2020,2021, the Company had investments in 2931 entities, which are accounted for using the equity method of accounting. The Company's ownership interest in these unconsolidated affiliates ranges from 20% to 65%100%. Of these entities, 17 are owned in 50/50 joint ventures.
20202021 Activity - Unconsolidated Affiliates
Atlanta Outlet JV,Ambassador Infrastructure, LLC
In February 2020, Atlanta Outlet JV, LLC,The Company reached an agreement with the lender to modify the loan secured by Ambassador Infrastructure. The agreement provides an additional four-year term with a 50/50 joint venture, closed on a new loan in the amount of $4,680, with anfixed interest rate of LIBOR plus 2.5% and a maturity date of November 20233.0%. Proceeds were used to retire the previous loan. The Operating Partnership and its joint venture partner have each guaranteed 100% of the loan. See Note 12 for more information.
BI Development II, LLC
In June 2020, the Company entered into a joint venture, BI Development II, LLC, to acquire, redevelop and operate the vacant Sears parcel at Northgate Mall in Chattanooga, TN. The Company has a 20% membership interest in the joint venture. The Company made no initial capital contribution and has no future funding obligations. The unconsolidated affiliate is a variable interest entity ("VIE").
CBL/T-C, LLC
As of September 30, 2020, the non-recourseextended loan, that is secured by Oak Park Mall was in default. The loan, which maturesmaturing in OctoberMarch 2025, had an outstanding balance of $262,971$8,250 at September 30, 2020. 2021, as $1,110 was paid down in conjunction with the modification. Additionally, the agreement provides a waiver related to the default triggered as a result of the Chapter 11 Cases, which became effective when the Debtors emerged from bankruptcy on November 1, 2021.
Asheville Mall CMBS, LLC and Park Plaza Mall CMBS, LLC
During the nine months ended September 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.
In October 2020, Oak2021, the foreclosure of Park Mall,Plaza was completed.
Continental 425 Fund LLC
In July 2021, Continental 425 Fund LLC reached an agreement with the lender to restructureamend to the construction loan secured by Springs at Port Orange, which extends the term of the note to December 31, 2021, increases the principal amount of the loan to $44,400, or $19,314 at the Company’s share, and provides an interest rate of LIBOR plus 2.0%. Continental 425 Fund LLC distributed $4,349 to the Company for its share of the net proceeds from the increase in the principal amount of the loan.
26
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, which became effective when the Debtors emerged from bankruptcy on November 1, 2021. This loan had an outstanding balance of $51,998 at September 30, 2021.
Shoppes at Eagle Point, LLC
Subsequent to September 30, 2021, the loan secured by The Shoppes at Eagle Point was extended for one year with a new maturity date of October 2022. See Note 15 – Subsequent Events.
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 more information.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, which became effective when the Debtors emerged from bankruptcy on November 1, 2021. These loans had a combined outstanding loan balance of $53,360 at September 30, 2021.
Impact of Chapter 11 Proceedings
24
As described in Note 1 – Organization and Basis of Presentation2, the filing of the Chapter 11 Cases subsequent to September 30, 2020 also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries,unconsolidated affiliates, which may resulthave resulted in automatic acceleration of the outstanding principal and accrued interestcertain monetary obligations or may give the applicable lender the right to accelerate such amounts. There are 17 of such loans related toThe unconsolidated affiliates thatentered forbearance and waiver agreements with many of the lenders, which waived defaults due to bankruptcy upon the Plan becoming effective. The Company remains in negotiations with lenders regarding loan extensions and loan defaults of the unconsolidated affiliates where a forbearance and/or waiver agreement have not been reached, and those loans have an aggregate outstanding balance of $811,081$622,959 at September 30, 2020.2021.
Condensed Combined Financial Statements - Unconsolidated Affiliates
Condensed combined financial statement information of the unconsolidated affiliates is as follows:
|
| September 30, 2020 |
|
| December 31, 2019 |
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||||
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in real estate assets |
| $ | 2,348,669 |
|
| $ | 2,293,438 |
|
| $ | 2,463,912 |
|
| $ | 2,346,124 |
|
Accumulated depreciation |
|
| (846,097 | ) |
|
| (803,909 | ) |
|
| (925,138 | ) |
|
| (862,435 | ) |
|
|
| 1,502,572 |
|
|
| 1,489,529 |
|
|
| 1,538,774 |
|
|
| 1,483,689 |
|
Developments in progress |
|
| 25,556 |
|
|
| 46,503 |
|
|
| 10,375 |
|
|
| 28,138 |
|
Net investment in real estate assets |
|
| 1,528,128 |
|
|
| 1,536,032 |
|
|
| 1,549,149 |
|
|
| 1,511,827 |
|
Other assets |
|
| 180,235 |
|
|
| 154,427 |
|
|
| 193,924 |
|
|
| 174,966 |
|
Total assets |
| $ | 1,708,363 |
|
| $ | 1,690,459 |
|
| $ | 1,743,073 |
|
| $ | 1,686,793 |
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage and other indebtedness, net |
| $ | 1,435,891 |
|
| $ | 1,417,644 |
|
| $ | 1,575,873 |
|
| $ | 1,439,454 |
|
Other liabilities |
|
| 53,583 |
|
|
| 41,007 |
|
|
| 86,467 |
|
|
| 45,280 |
|
Total liabilities |
|
| 1,489,474 |
|
|
| 1,458,651 |
|
|
| 1,662,340 |
|
|
| 1,484,734 |
|
OWNERS' EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company |
|
| 141,989 |
|
|
| 149,376 |
|
|
| 103,214 |
|
|
| 132,350 |
|
Other investors |
|
| 76,900 |
|
|
| 82,432 |
|
|
| (22,481 | ) |
|
| 69,709 |
|
Total owners' equity |
|
| 218,889 |
|
|
| 231,808 |
|
|
| 80,733 |
|
|
| 202,059 |
|
Total liabilities and owners’ equity |
| $ | 1,708,363 |
|
| $ | 1,690,459 |
|
| $ | 1,743,073 |
|
| $ | 1,686,793 |
|
|
| Three Months Ended September 30, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
Total revenues |
| $ | 46,953 |
|
| $ | 52,867 |
|
Net income (loss) (1) |
| $ | (10,671 | ) |
| $ | 81,300 |
|
(1) The Company's pro rata share of net loss is $(7,389) and $(1,759) for the three months ended September 30, 2020 and 2019, respectively. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
Total revenues |
| $ | 154,128 |
|
| $ | 162,964 |
|
Net income (loss) (1) |
| $ | (12,139 | ) |
| $ | 90,303 |
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total revenues |
| $ | 65,482 |
|
| $ | 46,953 |
|
Net loss (1) |
| $ | (3,206 | ) |
| $ | (10,671 | ) |
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total revenues |
| $ | 181,985 |
|
| $ | 154,128 |
|
Net loss (1) |
| $ | (16,225 | ) |
| $ | (12,139 | ) |
(1) | The Company's pro rata share of net |
Noncontrolling Interests
Noncontrolling interests consist of the following:
|
| As of |
| |||||
|
| September 30, 2020 |
|
| December 31, 2019 |
| ||
Noncontrolling interests: |
|
|
|
|
|
|
|
|
Operating Partnership |
| $ | 540 |
|
| $ | 31,592 |
|
Other consolidated subsidiaries |
|
| 22,186 |
|
|
| 23,961 |
|
|
| $ | 22,726 |
|
| $ | 55,553 |
|
2527
Accounts Receivable
See Note 2 – Summary of Significant Accounting Policies for the Company’s accounting policy related to accounts receivable, which is also applicable to the unconsolidated affiliates. The duration of the COVID-19 pandemic and the unconsolidated affiliates’ tenants’ ability to resume operations once governmental and legislative restrictions are lifted has caused uncertainty in the unconsolidated affiliates’ ongoing ability to collect rents when due. Considering the potential impact of these uncertainties, the unconsolidated affiliates’ collection assessment also took into consideration the type of retailer and current discussions with the tenants, 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 and nine months ended September 30, 2020, the unconsolidated affiliates recorded $5,517 and $19,052, respectively, associated with potentially uncollectible revenues, which includes $830 and $1,265, respectively, for straight-line rent receivables.
At September 30, 2020, the unconsolidated affiliates’ Receivables include $4,621 related to receivables that have been deferred and are to be repaid over periods generally starting in late 2020 and extending for some portion of 2021. The unconsolidated affiliates granted abatements of $4,231 and $5,421, respectively, for the three and nine months ended September 30, 2020. The unconsolidated affiliates continue to assess rent relief requests from their tenants but are unable to predict the resolution or impact of these discussions. For agreements that are currently under negotiation, the impact is not expected to be material.
Variable Interest Entities
In accordance with the guidance in ASU 2015-02, Amendments to the Consolidation Analysis, and ASU 2016-17, Interests Held Through Related Parties That Are under Common Control, theThe 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 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 September 30, 2020,2021, the Company had investments in 12 consolidated VIEs with ownership interests ranging from 50% to 92%.
26
Unconsolidated VIEs
The table below lists the Company's unconsolidated VIEs as of September 30, 2020:2021:
Unconsolidated VIEs: |
| Investment in Real Estate Joint Ventures and Partnerships |
|
| Maximum Risk of Loss |
|
| Investment in Real Estate Joint Ventures and Partnerships |
|
| Maximum Risk of Loss |
| ||||
Ambassador Infrastructure, LLC (1) |
| $ | — |
|
| $ | 9,360 |
|
| $ | — |
|
| $ | 8,250 |
|
BI Development, LLC |
|
| — |
|
|
| — |
| ||||||||
BI Development II, LLC |
|
| — |
|
|
| — |
| ||||||||
Bullseye, LLC |
|
| — |
|
|
| — |
| ||||||||
Asheville Mall CMBS, LLC |
|
| — |
|
|
| — |
| ||||||||
Atlanta Outlet JV, LLC (1) |
|
| 23,437 |
|
|
| 27,941 |
| ||||||||
CBL-T/C, LLC |
|
| 60,283 |
|
|
| 60,283 |
| ||||||||
CBL-TRS Joint Venture, LLC |
|
| 18,619 |
|
|
| 18,619 |
| ||||||||
Continental 425 Fund LLC |
|
| 7,051 |
|
|
| 7,051 |
|
|
| 98 |
|
|
| 98 |
|
EastGate Storage, LLC (1) |
|
| 558 |
|
|
| 3,808 |
|
|
| 463 |
|
|
| 3,693 |
|
El Paso Outlet Center Holding, LLC |
|
| 7,888 |
|
|
| 7,888 |
| ||||||||
Fremaux Town Center JV, LLC |
|
| 5,747 |
|
|
| 5,747 |
| ||||||||
Hamilton Place Self Storage (1) |
|
| 1,340 |
|
|
| 8,342 |
|
|
| 892 |
|
|
| 4,393 |
|
Louisville Outlet Shoppes, LLC (1) |
|
| (11,364 | ) |
|
| 8,512 |
| ||||||||
Mall of South Carolina L.P. |
|
| (17,338 | ) |
|
| — |
| ||||||||
Mall of South Carolina Outparcel L.P. |
|
| (2,695 | ) |
|
| — |
| ||||||||
Park Plaza Mall CMBS, LLC |
|
| — |
|
|
| — |
| ||||||||
Parkdale Self Storage, LLC (1) |
|
| 983 |
|
|
| 7,483 |
|
|
| 500 |
|
|
| 7,000 |
|
PHG-CBL Lexington, LLC |
|
| 35 |
|
|
| 35 |
|
|
| 35 |
|
|
| 35 |
|
Self Storage at Mid Rivers, LLC (1) |
|
| 565 |
|
|
| 3,559 |
|
|
| 515 |
|
|
| 3,486 |
|
Shoppes at Eagle Point, LLC (1) |
|
| 17,053 |
|
|
| 29,793 |
|
|
| 18,195 |
|
|
| 30,935 |
|
Vision - CBL Hamilton Place, LLC |
|
| 3,686 |
|
|
| 3,686 |
|
|
| 3,750 |
|
|
| 3,750 |
|
|
| $ | 31,271 |
|
| $ | 73,117 |
|
| $ | 109,025 |
|
| $ | 190,630 |
|
(1) | The Operating Partnership has guaranteed all or a portion of the debt of each of these VIEs. See Note 12 for more information. |
27
Note 89 – Mortgage and Other Indebtedness, Net
Pre-Emergence 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 senior unsecured notes (the "Notes"), 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 secured credit facility and secured term loan as of September 30, 2020.2021.
28
Pre-Emergence Debt of the Operating Partnership
Net mortgageMortgage and other indebtedness, net, consisted of the following:
|
| September 30, 2020 |
|
| December 31, 2019 |
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||||
|
| Amount |
|
| Weighted- Average Interest Rate (1) |
|
| Amount |
|
| Weighted- Average Interest Rate (1) |
|
| Amount |
|
| Weighted- Average Interest Rate (1) |
|
| Amount |
|
| Weighted- Average Interest Rate (1) |
| ||||||||
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse loans on operating Properties |
| $ | 1,193,997 |
|
|
| 5.17 | % |
| $ | 1,330,561 |
|
|
| 5.27 | % |
| $ | 955,175 |
|
|
| 5.07 | % |
| $ | 1,120,203 |
|
|
| 5.12 | % |
Senior unsecured notes due 2023 (2) |
|
| 448,265 |
|
|
| 5.25 | % |
|
| 447,894 |
|
|
| 5.25 | % | ||||||||||||||||
Senior unsecured notes due 2024 (3) |
|
| 299,966 |
|
|
| 4.60 | % |
|
| 299,960 |
|
|
| 4.60 | % | ||||||||||||||||
Senior unsecured notes due 2026 (4) |
|
| 618,136 |
|
|
| 5.95 | % |
|
| 617,473 |
|
|
| 5.95 | % | ||||||||||||||||
Total fixed-rate debt |
|
| 2,560,364 |
|
|
| 5.31 | % |
|
| 2,695,888 |
|
|
| 5.35 | % |
|
| 955,175 |
|
|
| 5.07 | % |
|
| 1,120,203 |
|
|
| 5.12 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse loans on operating Properties |
|
| 68,511 |
|
|
| 2.91 | % |
|
| 41,950 |
|
|
| 4.34 | % |
|
| 67,111 |
|
|
| 3.19 | % |
|
| 68,061 |
|
|
| 4.69 | % |
Construction loan |
|
| — |
|
|
| — |
|
|
| 29,400 |
|
|
| 4.60 | % | ||||||||||||||||
Secured line of credit (5) |
|
| 675,925 |
|
|
| 9.50 | % |
|
| 310,925 |
|
|
| 3.94 | % | ||||||||||||||||
Secured term loan (5) |
|
| 438,750 |
|
|
| 9.50 | % |
|
| 465,000 |
|
|
| 3.94 | % | ||||||||||||||||
Total variable-rate debt |
|
| 1,183,186 |
|
|
| 9.12 | % |
|
| 847,275 |
|
|
| 3.98 | % |
|
| 67,111 |
|
|
| 3.19 | % |
|
| 68,061 |
|
|
| 4.69 | % |
Total fixed-rate and variable-rate debt |
|
| 3,743,550 |
|
|
| 6.51 | % |
|
| 3,543,163 |
|
|
| 5.02 | % |
|
| 1,022,286 |
|
|
| 4.95 | % |
|
| 1,188,264 |
|
|
| 5.10 | % |
Unamortized deferred financing costs (6) |
|
| (13,864 | ) |
|
|
|
|
|
| (16,148 | ) |
|
|
|
| ||||||||||||||||
Unamortized deferred financing costs (2) |
|
| (3,202 | ) |
|
|
|
|
|
| (3,433 | ) |
|
|
|
| ||||||||||||||||
Total mortgage and other indebtedness, net |
| $ | 3,729,686 |
|
|
|
|
|
| $ | 3,527,015 |
|
|
|
|
|
| $ | 1,019,084 |
|
|
|
|
|
| $ | 1,184,831 |
|
|
|
|
|
Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following:
|
| September 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 | % |
Total variable-rate debt |
|
| 1,114,676 |
|
|
| 9.50 | % |
|
| 1,114,676 |
|
|
| 9.50 | % |
Total fixed-rate and variable-rate debt |
|
| 2,489,676 |
|
|
| 7.25 | % |
|
| 2,489,676 |
|
|
| 7.25 | % |
Unpaid accrued interest (5) |
|
| 57,644 |
|
|
|
|
|
|
| 57,644 |
|
|
|
|
|
Prepetition unsecured or under secured liabilities |
|
| 4,366 |
|
|
|
|
|
|
| 4,170 |
|
|
|
|
|
Total liabilities subject to compromise |
| $ | 2,551,686 |
|
|
|
|
|
| $ | 2,551,490 |
|
|
|
|
|
(1) | Weighted-average interest rate |
(2) |
|
(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 September 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 |
|
|
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 $2,334,160$2,100,084 at September 30, 2020.2021.
Senior Unsecured Notes
Description |
| Issued (1) |
| Amount |
|
| Interest Rate |
|
| Maturity Date (2) | ||
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 |
|
|
|
|
2829
|
The Company elected to not make the $11,813 interest payment due and payable on June 1, 2020, with respect to the Operating Partnership’s 5.25% senior unsecured notes due 2023 (the “2023 Notes”) (the “2023 Notes Interest Payment”). The Company also elected to not make the $18,594 interest payment due and payable on June 15, 2020, with respect to the Operating Partnership’s 5.95% senior unsecured notes due 2026 (the “2026 Notes”) (the “2026 Notes Interest Payment”). The Operating Partnership did not make either the 2023 Notes Interest Payment or the 2026 Notes Interest Payment by the last day of the respective 30-day grace periods provided for in the indenture governing the 2023 Notes and the 2026 Notes. The Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment during the applicable grace periods constituted an “event of default” with respect to each of the 2023 Notes and the 2026 Notes.
On August 5, 2020, the Operating Partnership made the 2023 Notes Interest Payment to the holders of the 2023 Notes and the 2026 Notes Interest Payment to the holders of the 2026 Notes. Accordingly, from and after such payment, the nonpayment of each of the 2023 Notes Interest Payment and the 2026 Notes Interest Payment no longer constitutes (i) an “event of default” under the indenture governing the 2023 Notes and the 2026 Notes that occurred and is continuing or (ii) to the extent provided in that certain forbearance agreement, dated as of July 22, 2020 (as amended, the “Bank Forbearance Agreement”) with the Agent for the Lenders under the secured credit facility, an “event of default” under the secured credit facility. See Financial Covenants and Restrictions below for more information.
As described in Note 15 – Subsequent Events, the Operating Partnership elected to not make the $6,900 interest payment due and payable on October 15, 2020, with respect to the 2024 Notes, and entered the 30-day grace period pursuant to the terms of the indenture governing the 2024 Notes. As described in Note 1 – Organization and Basis of Presentation, the filing of the Chapter 11 Cases subsequent to September 30, 2020 constituted an event of default under the indenture governing the Notes.
Pre-Emergence Senior Secured Credit Facility
TheAs of September 30, 2021, the Company hashad a $1,185,000 senior secured credit facility, which includesincluded a revolving line of credit with adrawn to its maximum borrowing capacity of $685,000$675,926 and a term loan with an outstanding balance of $438,750 at September 30, 2020. The facility matures in July 2023 and bore interest at a variable rate of LIBOR plus 2.25% through March 30, 2020. $438,750. As further described in Note 1 – Organization and Basis of Presentation2 and in Pre-Emergence Financial Covenants and Restrictions below, the lenders have declaredfiling of the outstandingChapter 11 Cases constituted an event of default that resulted in certain monetary obligations underbecoming immediately due and payable with respect to the secured credit facility to be immediately due and payable. On August 6, 2020, the Operating Partnership received a notice of imposition of base rate and post-default rate letter from the administrative agent under the secured credit facility, which (i) informed the Operating Partnership that following an asserted event of default on March 19, 2020, all outstanding loans were converted to base rate loans at the expiration of the applicable interest periods and (ii) sought payment of $4,812 related thereto for April through June 2020 (the “Demand Interest”). The base rate is defined as the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the LIBOR Market Index Rate plus 1.0%, plus 1.25%. The base rate on September 30, 2020 was 4.50% based on the prime rate plus 1.25%. The administrative agent also informed the Operating Partnership that from and after August 6, 2020, 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 the time of notification and at September 30, 2020 was 9.50%.
The Operating Partnership is required to pay an annual facility fee, to be paid quarterly, which ranges from 0.25% to 0.35%, based on the unused capacity of the line of credit. The terms of the facility also require the principal balance on the term loan to be reduced by $35,000 per year in quarterly installments. In March 2020, the Company drew $280,000 on its secured credit facility to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. At September 30, 2020, the secured line of credit had an outstanding balance of $675,925. As a result of the asserted defaults and events of default described under Pre-Emergence Financial Covenants and Restrictions below, the Operating Partnership cannotcould not borrow any additional amounts under the secured line of credit.
TheAs of September 30, 2021, the secured credit facility iswas secured by 17 malls and 3 associated centers that are owned by 36 wholly owned subsidiaries of the Operating 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 secured credit facility. The properties that are collateral for the secured credit facility and the properties and mortgage notes receivable that are not collateral are collectively referred to as the “Guarantor Properties.” The terms of the Notes provideprovided that, 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 January 2019, the Combined Guarantor Subsidiaries entered into a guarantee agreement with the issuer of the Notes to satisfy the guaranty requirement.
29
See Financial Covenants and Restrictions below and Liquidity and Going Concern Considerations and Voluntary Reorganization under Chapter 11 in Note 1 – Organization and Basis of Presentation2 for information on the ongoing alleged defaults and events of defaults asserted byDebtors emergence from the administrative agent under the secured credit facilityChapter 11 Cases and the Company’s adversarial proceeding in response totransactions associated with the administrative agent and lenders asserting rights and remedies.Plan.
Pre-Emergence Financial Covenants and Restrictions
The agreements for the Notes and senior secured credit facility containcontained default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, anyAny default in the payment of any recourse indebtedness of the Operating Partnership greater than or equal to $50,000 of the Operating Partnership willwould constitute an event of default under the Notes and the senior secured credit facility. Additionally, the senior secured credit facility containscontained a provision that any default on a payment of non-recourse indebtedness in excess of $150,000 iswas also a default of the senior secured credit facility.
On eachThe filing of May 26, 2020, June 2, 2020, June 16, 2020, August 6, 2020 and August 19, 2020, the Operating Partnership received noticesChapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and reservation of rights letters from the administrative agent under the secured credit facility, which asserted that certain defaults and events of default occurred and continuepayable with respect to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility and resulting from the failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment prior to the expirationsenior unsecured notes. The filing of the applicable grace periods. Additionally, as described above under Senior Secured Credit Facility,Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership received notices of imposition of base rate and post-default rate from the administrative agent under the secured credit facility. On August 19, 2020, the Operating Partnership received from the administrative agent (i) a notice of default and reservation of rights letter,Partnership’s subsidiaries, which asserted that eachmay result in acceleration of the failure to payoutstanding principal and other sums due.
Certain of the Demand InterestCompany’s properties that are pledged as collateral on non-recourse mortgage loans and the entry into the RSA constituted events of default under the terms of the secured credit facility are subject to cash management agreements with the lenders, which restrict the cash balances associated with those properties to only be used for debt service, capital items and (ii) a notice of acceleration of obligationsoperating expense obligations.
See Liquidity and Going Concern Considerations and Voluntary Reorganization under the secured credit facility basedChapter 11 in Note 2 for information on the events of default previously asserted byDebtors emergence from the administrative agent, pursuant to which, the administrative agent declared all outstanding principal, interest accruing at the base rateChapter 11 Cases and the post-default rate, which as previously disclosed are rates being disputed bytransactions associated with the Company, and letters of credit to be immediately due and payable. The administrative agent also terminated the revolving and swingline commitments and the obligation to issue letters of credit under the secured credit facility and instructed the Operating Partnership to deliver approximately $1,300 in cash to collateralize outstanding letters of credit. On August 25, 2020, The Operating Partnership received a notice of imposition of base rate letter from the administrative agent under the secured credit facility, which informed the Operating Partnership that following an asserted event of default, that all outstanding loans converted to base rate loans beginning July 1, 2019 and (ii) sought payment of approximately $11,973 related thereto for July 1, 2019 through March 30, 2020. Additionally, the Operating Partnership failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020.
As of the date of this report, the lenders under the secured credit facility have not commenced foreclosure proceedings, but they may seek to exercise one or more such remedies in the future. In addition, as a result of the events of default asserted by the administrative agent in such letters, the administrative agent may deny the Operating Partnership’s request for future LIBOR interest periods, which would result in an increase in annual interest expense of approximately $19,277 based on the base rate and $74,355 based on the post-default rate.Plan.
On October 16, 2020, the Company received an additional notice of default and reservation of rights letter from the Agent which asserted that certain defaults exist and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants in the Credit Agreement and resulting from the failure to make the $6,900 interest payment that was due and payable on October 15, 2020, to holders of the 2024 Notes and that such default will constitute an event of default under the Credit Agreement if such interest is not paid within the 30-day grace period. 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.
30
Mortgages on Operating Properties
2020 Loan Repayments
Date |
| Property |
| Interest Rate at Repayment Date |
|
| Scheduled Maturity Date |
| Principal Balance Repaid (1) |
| ||
February |
| Parkway Place |
| 6.50% |
|
| July 2020 |
| $ | 33,186 |
| |
February |
| Valley View Mall |
| 6.50% |
|
| July 2020 |
|
| 51,360 |
| |
|
|
|
|
|
|
|
|
|
| $ | 84,546 |
|
|
|
2020 Loan Modification
The maturity date for the fixed-rate loan secured by Jefferson Mall was extended from June 1, 2022 to June 1, 2026. The loan will be interest only through March 2021 when monthly payments of principal and interest will be made through the maturity date.
2020 Dispositions
The following is a summary of the Company’s 2020 disposition for which the fixed rate loan secured by the mall was extinguished:
Sale/Transfer Date |
| Property |
| Property Type |
| Location |
| Balance of Non-recourse Debt |
|
| Gain on Extinguishment of Debt |
| ||
August |
| Hickory Point Mall (1) |
| Malls |
| Forsyth, IL |
| $ | 27,446 |
|
| $ | 15,407 |
|
|
|
Loans in Default
As of September 30, 2020, five2021, 2 non-recourse loans that are each secured by one of the Company’s malls were in default. The Company has been in discussions withdefault of the lenders for eachtwo non-recourse loans occurred prior to the filing of these properties regarding a restructure of each respective loan. the Chapter 11 Cases. As of the date of this report,September 2021, the lenders under each of these loans have not accelerated the outstanding amountamounts due and payable on the loans orloans. The foreclosure process has not yet commenced foreclosure proceedings, but they may seek to exercise one or morefor EastGate Mall. The Company is in discussions with the lender regarding a restructure of these remedies in the future. loan secured by Greenbrier Mall. Management has previously impaired the mall that secures each loan due to a shortened expected hold period resulting from management’s assessment that there is an increased likelihood that the loan secured by each mall may not be successfully restructured or refinanced. The non-recourse loans that are in default at September 30, 20202021 are as follows:
Property |
| Location |
| Interest Rate |
|
| Scheduled Maturity Date |
| Loan Amount |
|
| Location |
| Interest Rate |
|
| Scheduled Maturity Date |
| Loan Amount |
| ||
Greenbrier Mall |
| Chesapeake, VA |
| 5.41% |
|
| Dec-19 |
| $ | 61,647 |
|
| Chesapeake, VA |
| 5.41% |
|
| Dec-19 |
| $ | 61,647 |
|
Burnsville Center |
| Burnsville, MN |
| 6.00% |
|
| Jul-20 |
|
| 64,233 |
| |||||||||||
EastGate Mall |
| Cincinnati, OH |
| 5.83% |
|
| Apr-21 |
|
| 31,726 |
|
| Cincinnati, OH |
| 5.83% |
|
| Apr-21 |
|
| 30,117 |
|
Park Plaza |
| Little Rock, AR |
| 5.28% |
|
| Apr-21 |
|
| 77,064 |
| |||||||||||
Asheville Mall |
| Asheville, NC |
| 5.80% |
|
| Sep-21 |
|
| 62,863 |
|
As described in Note 1 – Organization and Basis of Presentation2, the filing of the Chapter 11 Cases subsequent to September 30, 2020 also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may resulthave resulted in the automatic acceleration of the outstanding principal and accrued interestcertain monetary obligations or may give the applicable lender the right to accelerate such amounts. There are 15The Company entered forbearance and waiver agreements with many of suchthe lenders, which waived defaults due to bankruptcy upon the Plan becoming effective. The Company remains in negotiations with lenders regarding loan extensions and loan defaults where a forbearance and/or waiver agreement have not been reached, and those loans that have an aggregate outstanding balance of $855,864$727,603 at September 30, 2020.2021.
31On May 26, 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy. In September 2021,
30
the Company reached an agreement with the lender to amend the loan secured by The Outlet Shoppes at Laredo and dismiss the bankruptcy case. The loan term was extended through June 2023 and contains a one-year extension option.
In conjunction with the deconsolidation of Asheville Mall and Park Plaza, the Company deconsolidated the loan securing each property, which represented $138,926 of previously consolidated debt. See Note 8 for additional information.
Pre-Emergence Scheduled Principal Payments
As of September 30, 2020,2021, 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 construction loans and the secured line of credit, are as follows:
2020 (1) |
| $ | 18,988 |
|
2021 |
|
| 559,094 |
|
2022 |
|
| 408,235 |
|
2023 |
|
| 1,493,534 |
|
2024 |
|
| 343,601 |
|
2025 |
|
| 38,472 |
|
Thereafter |
|
| 764,380 |
|
|
|
| 3,626,304 |
|
Net unamortized discounts and premium |
|
| (8,634 | ) |
Unamortized deferred financing costs |
|
| (13,864 | ) |
Principal balance of loans with a maturity date prior to September 30, 2020 (2) |
|
| 125,880 |
|
Total mortgage and other indebtedness, net |
| $ | 3,729,686 |
|
2021 (1) |
| $ | 41,365 |
|
2022 |
|
| 409,394 |
|
2023 |
|
| 1,566,756 |
|
2024 |
|
| 343,177 |
|
2025 |
|
| 37,960 |
|
2026 |
|
| 763,626 |
|
Total (2) |
|
| 3,162,278 |
|
Principal balance of loans with maturity date prior to September 30, 2021 (3) |
|
| 349,684 |
|
Total mortgage and other indebtedness, net |
| $ | 3,511,962 |
|
(1) | Reflects scheduled principal amortization and balloon payments for the fiscal period October 1, |
(2) | Includes $2,489,676 of liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of September 30, 2021, and as the expected maturity date was subject to the outcome of the Chapter 11 Cases, the original, legal maturity dates were reflected in this table. See Note 2 for more information on the Plan and the associated transactions related to the Exit Credit Agreement, the Secured Notes, the Exchangeable Notes and the Notes. |
(3) | Represents the aggregate principal balance as of September 30, |
Of the $41,365 of scheduled principal payments for the remainder of 2021, $27,461 relates to the maturing principal balance of 1 operating Property loan, which was placed into bankruptcy subsequent to September 30, 2021. See Note 15 for more information.
The Company’s mortgage and other indebtedness had a weighted-average maturity of 3.12.3 years as of September 30, 20202021 and 3.73.0 years as of December 31, 2019.
Note 9 – Mortgage and Other Notes Receivable
The Company’s mortgage note receivable is collateralized by an assignment of 100% of the partnership interests that own the real estate assets. Other notes receivable include amounts due from tenants and unsecured notes received from third parties as whole or partial consideration for property or investments.
Mortgage and other notes receivable consist of the following:
|
|
|
| As of September 30, 2020 |
|
| As of December 31, 2019 |
| ||||||||
|
| Maturity Date |
| Interest Rate |
|
| Balance |
|
| Interest Rate |
| Balance |
| |||
Mortgages |
| Dec 2016 | (1) | 2.65% |
|
| $ | 1,100 |
|
| 4.28% - 9.50% |
| $ | 2,637 |
| |
Other Notes Receivable |
| Sep 2021- Apr 2026 |
| 4.00% - 5.00% |
|
|
| 1,434 |
|
| 4.00% - 5.00% |
|
| 2,025 |
| |
|
|
|
|
|
|
|
| $ | 2,534 |
|
|
|
| $ | 4,662 |
|
|
|
Expected credit losses
As of September 30, 2020, the one mortgage note receivable is in default, but as noted above, the Company has a noncontrolling interest recorded related to the defaulting partner’s interest that serves as collateral on the note, and that amount is greater than the outstanding balance on the note. Based on this information, the Company did not record a credit loss for this class of receivables for the nine months ended September 30, 2020.
During the nine months ended September 30, 2020, the Company assessed each of its note receivables factoring in credit quality indicators such as collection experience and future expectations of performance to determine whether a credit loss should be recorded. Based on this information, the Company wrote off a $1,230 note receivable associated with amounts due from a government sponsored district at The Shoppes at St. Clair during the three months ended March 31, 2020. The Company did not record any other credit losses for this class of receivables for the nine months ended September 30, 2020.
32
Note 10 – 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.
31
Information on the Company’s segments is presented as follows:
Three Months Ended September 30, 2021 |
| Malls |
|
| All Other (1) |
|
| Total |
| |||||||||||||||
Revenues (2) |
| $ | 131,870 |
|
| $ | 18,505 |
|
| $ | 150,375 |
| ||||||||||||
Property operating expenses (3) |
|
| (40,466 | ) |
|
| (6,791 | ) |
|
| (47,257 | ) | ||||||||||||
Interest expense |
|
| (18,698 | ) |
|
| (341 | ) |
|
| (19,039 | ) | ||||||||||||
Gain on sales of real estate assets |
|
| 4,836 |
|
|
| 3,848 |
|
|
| 8,684 |
| ||||||||||||
Other expense |
|
| — |
|
|
| (104 | ) |
|
| (104 | ) | ||||||||||||
Segment profit |
| $ | 77,542 |
|
| $ | 15,117 |
|
|
| 92,659 |
| ||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (46,479 | ) | ||||||||||||
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (13,502 | ) | ||||||||||||
Litigation settlement |
|
|
|
|
|
|
|
|
|
| 89 |
| ||||||||||||
Interest and other income |
|
|
|
|
|
|
|
|
|
| 510 |
| ||||||||||||
Reorganization items |
|
|
|
|
|
|
|
|
|
| (12,008 | ) | ||||||||||||
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (63,160 | ) | ||||||||||||
Income tax benefit |
|
|
|
|
|
|
|
|
|
| 1,234 |
| ||||||||||||
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (2,224 | ) | ||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| $ | (42,881 | ) | ||||||||||||
Capital expenditures (4) |
| $ | 11,853 |
|
| $ | 380 |
|
| $ | 12,233 |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended September 30, 2020 |
| Malls |
|
| All Other (1) |
|
| Total |
|
| Malls |
|
| All Other (1) |
|
| Total |
| ||||||
Revenues (2) |
| $ | 115,661 |
|
| $ | 14,236 |
|
| $ | 129,897 |
|
| $ | 115,661 |
|
| $ | 14,236 |
|
| $ | 129,897 |
|
Property operating expenses (3) |
|
| (43,628 | ) |
|
| (2,408 | ) |
|
| (46,036 | ) |
|
| (43,628 | ) |
|
| (2,408 | ) |
|
| (46,036 | ) |
Interest expense |
|
| (18,845 | ) |
|
| (42,292 | ) |
|
| (61,137 | ) |
|
| (18,845 | ) |
|
| (42,292 | ) |
|
| (61,137 | ) |
Loss on sales of real estate assets |
|
| — |
|
|
| (55 | ) |
|
| (55 | ) |
|
| — |
|
|
| (55 | ) |
|
| (55 | ) |
Segment profit (loss) |
| $ | 53,188 |
|
| $ | (30,519 | ) |
|
| 22,669 |
|
| $ | 53,188 |
|
| $ | (30,519 | ) |
|
| 22,669 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (53,477 | ) |
|
|
|
|
|
|
|
|
|
| (53,477 | ) |
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (25,497 | ) |
|
|
|
|
|
|
|
|
|
| (25,497 | ) |
Litigation settlement |
|
|
|
|
|
|
|
|
|
| 2,480 |
|
|
|
|
|
|
|
|
|
|
| 2,480 |
|
Interest and other income |
|
|
|
|
|
|
|
|
|
| 1,975 |
|
|
|
|
|
|
|
|
|
|
| 1,975 |
|
Gain on extinguishment of debt |
|
|
|
|
|
|
|
|
|
| 15,407 |
|
|
|
|
|
|
|
|
|
|
| 15,407 |
|
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (46 | ) |
|
|
|
|
|
|
|
|
|
| (46 | ) |
Income tax provision |
|
|
|
|
|
|
|
|
|
| (546 | ) |
|
|
|
|
|
|
|
|
|
| (546 | ) |
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (7,389 | ) |
|
|
|
|
|
|
|
|
|
| (7,389 | ) |
Net loss |
|
|
|
|
|
|
|
|
| $ | (44,424 | ) |
|
|
|
|
|
|
|
|
| $ | (44,424 | ) |
Capital expenditures (4) |
| $ | 2,524 |
|
| $ | 1,262 |
|
| $ | 3,786 |
|
| $ | 2,524 |
|
| $ | 1,262 |
|
| $ | 3,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended September 30, 2019 |
| Malls |
|
| All Other (1) |
|
| Total |
| |||||||||||||||
Revenues (2) |
| $ | 171,514 |
|
| $ | 15,737 |
|
| $ | 187,251 |
| ||||||||||||
Property operating expenses (3) |
|
| (53,384 | ) |
|
| (2,912 | ) |
|
| (56,296 | ) | ||||||||||||
Interest expense |
|
| (20,866 | ) |
|
| (29,649 | ) |
|
| (50,515 | ) | ||||||||||||
Other expense |
|
| — |
|
|
| (7 | ) |
|
| (7 | ) | ||||||||||||
Gain on sales of real estate assets |
|
| 3,292 |
|
|
| 4,764 |
|
|
| 8,056 |
| ||||||||||||
Segment profit (loss) |
| $ | 100,556 |
|
| $ | (12,067 | ) |
|
| 88,489 |
| ||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (64,168 | ) | ||||||||||||
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (12,467 | ) | ||||||||||||
Litigation settlement |
|
|
|
|
|
|
|
|
|
| 22,688 |
| ||||||||||||
Interest and other income |
|
|
|
|
|
|
|
|
|
| 1,367 |
| ||||||||||||
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (135,688 | ) | ||||||||||||
Gain on investments/deconsolidation |
|
|
|
|
|
|
|
|
|
| 11,174 |
| ||||||||||||
Income tax provision |
|
|
|
|
|
|
|
|
|
| (1,670 | ) | ||||||||||||
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (1,759 | ) | ||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| $ | (92,034 | ) | ||||||||||||
Capital expenditures (4) |
| $ | 34,961 |
|
| $ | 1,530 |
|
| $ | 36,491 |
|
3332
Nine Months Ended September 30, 2021 |
| Malls |
|
| All Other (1) |
|
| Total |
| |||||||||||||||
Revenues (2) |
| $ | 377,478 |
|
| $ | 42,642 |
|
| $ | 420,120 |
| ||||||||||||
Property operating expenses (3) |
|
| (130,364 | ) |
|
| (9,544 | ) |
|
| (139,908 | ) | ||||||||||||
Interest expense |
|
| (63,441 | ) |
|
| (2,027 | ) |
|
| (65,468 | ) | ||||||||||||
Gain on sales of real estate assets |
|
| 4,836 |
|
|
| 3,656 |
|
|
| 8,492 |
| ||||||||||||
Other expense |
|
| (65 | ) |
|
| (326 | ) |
|
| (391 | ) | ||||||||||||
Segment profit |
| $ | 188,444 |
|
| $ | 34,401 |
|
|
| 222,845 |
| ||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (142,090 | ) | ||||||||||||
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (37,383 | ) | ||||||||||||
Litigation settlement |
|
|
|
|
|
|
|
|
|
| 890 |
| ||||||||||||
Interest and other income |
|
|
|
|
|
|
|
|
|
| 2,038 |
| ||||||||||||
Reorganization items |
|
|
|
|
|
|
|
|
|
| (52,014 | ) | ||||||||||||
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (120,342 | ) | ||||||||||||
Gain on deconsolidation |
|
|
|
|
|
|
|
|
|
| 55,131 |
| ||||||||||||
Income tax provision |
|
|
|
|
|
|
|
|
|
| (222 | ) | ||||||||||||
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (9,575 | ) | ||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| $ | (80,722 | ) | ||||||||||||
Capital expenditures (4) |
| $ | 24,056 |
|
| $ | 2,996 |
|
| $ | 27,052 |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Nine Months Ended September 30, 2020 |
| Malls |
|
| All Other (1) |
|
| Total |
|
| Malls |
|
| All Other (1) |
|
| Total |
| ||||||
Revenues (2) |
| $ | 381,013 |
|
| $ | 40,669 |
|
| $ | 421,682 |
|
| $ | 381,013 |
|
| $ | 40,669 |
|
| $ | 421,682 |
|
Property operating expenses (3) |
|
| (134,111 | ) |
|
| (8,075 | ) |
|
| (142,186 | ) |
|
| (134,111 | ) |
|
| (8,075 | ) |
|
| (142,186 | ) |
Interest expense |
|
| (55,952 | ) |
|
| (104,808 | ) |
|
| (160,760 | ) |
|
| (55,952 | ) |
|
| (104,808 | ) |
|
| (160,760 | ) |
Other expense |
|
| — |
|
|
| (400 | ) |
|
| (400 | ) |
|
| — |
|
|
| (400 | ) |
|
| (400 | ) |
Gain (loss) on sales of real estate assets |
|
| (25 | ) |
|
| 2,733 |
|
|
| 2,708 |
|
|
| (25 | ) |
|
| 2,733 |
|
|
| 2,708 |
|
Segment profit (loss) |
| $ | 190,925 |
|
| $ | (69,881 | ) |
|
| 121,044 |
|
| $ | 190,925 |
|
| $ | (69,881 | ) |
|
| 121,044 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (162,042 | ) |
|
|
|
|
|
|
|
|
|
| (162,042 | ) |
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (62,060 | ) |
|
|
|
|
|
|
|
|
|
| (62,060 | ) |
Litigation settlement |
|
|
|
|
|
|
|
|
|
| 2,480 |
|
|
|
|
|
|
|
|
|
|
| 2,480 |
|
Interest and other income |
|
|
|
|
|
|
|
|
|
| 5,263 |
|
|
|
|
|
|
|
|
|
|
| 5,263 |
|
Gain on extinguishment of debt |
|
|
|
|
|
|
|
|
|
| 15,407 |
| ||||||||||||
Gain on extingushment of debt |
|
|
|
|
|
|
|
|
|
| 15,407 |
| ||||||||||||
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (146,964 | ) |
|
|
|
|
|
|
|
|
|
| (146,964 | ) |
Income tax provision |
|
|
|
|
|
|
|
|
|
| (17,189 | ) |
|
|
|
|
|
|
|
|
|
| (17,189 | ) |
Equity in losses of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| (12,450 | ) |
|
|
|
|
|
|
|
|
|
| (12,450 | ) |
Net loss |
|
|
|
|
|
|
|
|
| $ | (256,511 | ) |
|
|
|
|
|
|
|
|
| $ | (256,511 | ) |
Capital expenditures (4) |
| $ | 30,334 |
|
| $ | 4,915 |
|
| $ | 35,249 |
|
| $ | 30,334 |
|
| $ | 4,915 |
|
| $ | 35,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Nine Months Ended September 30, 2019 |
| Malls |
|
| All Other (1) |
|
| Total |
| |||||||||||||||
Revenues (2) |
| $ | 526,354 |
|
| $ | 52,304 |
|
| $ | 578,658 |
| ||||||||||||
Property operating expenses (3) |
|
| (164,164 | ) |
|
| (10,785 | ) |
|
| (174,949 | ) | ||||||||||||
Interest expense |
|
| (65,612 | ) |
|
| (91,383 | ) |
|
| (156,995 | ) | ||||||||||||
Other expense |
|
| — |
|
|
| (41 | ) |
|
| (41 | ) | ||||||||||||
Gain on sales of real estate assets |
|
| 5,770 |
|
|
| 8,041 |
|
|
| 13,811 |
| ||||||||||||
Segment profit (loss) |
| $ | 302,348 |
|
| $ | (41,864 | ) |
|
| 260,484 |
| ||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
| (198,438 | ) | ||||||||||||
General and administrative expense |
|
|
|
|
|
|
|
|
|
| (48,901 | ) | ||||||||||||
Litigation settlement |
|
|
|
|
|
|
|
|
|
| (65,462 | ) | ||||||||||||
Interest and other income |
|
|
|
|
|
|
|
|
|
| 2,212 |
| ||||||||||||
Gain on extinguishment of debt |
|
|
|
|
|
|
|
|
|
| 71,722 |
| ||||||||||||
Loss on impairment |
|
|
|
|
|
|
|
|
|
| (202,121 | ) | ||||||||||||
Gain on investments/deconsolidation |
|
|
|
|
|
|
|
|
|
| 11,174 |
| ||||||||||||
Income tax provision |
|
|
|
|
|
|
|
|
|
| (2,622 | ) | ||||||||||||
Equity in earnings of unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
| 3,421 |
| ||||||||||||
Net loss |
|
|
|
|
|
|
|
|
| $ | (168,531 | ) | ||||||||||||
Capital expenditures (4) |
| $ | 94,545 |
|
| $ | 3,058 |
|
| $ | 97,603 |
|
Total Assets |
| Malls |
|
| All Other (1) |
|
| Total |
| |||
September 30, 2020 |
| $ | 3,926,908 |
|
| $ | 637,135 |
|
| $ | 4,564,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
| $ | 4,180,515 |
|
| $ | 441,831 |
|
| $ | 4,622,346 |
|
Total assets |
| Malls |
|
| All Other (1) |
|
| Total |
| |||
September 30, 2021 |
| $ | 3,350,405 |
|
| $ | 877,742 |
|
| $ | 4,228,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
| $ | 3,702,523 |
|
| $ | 741,217 |
|
| $ | 4,443,740 |
|
(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 Company. |
(2) | Management, development and leasing fees are included in the All Other category. See Note |
(3) | Property operating expenses include property operating, real estate taxes and maintenance and repairs. |
(4) |
33
Includes additions to and acquisitions of real estate assets and investments in unconsolidated affiliates. Developments in progress are included in the All Other category. |
34
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. There were 0 potential dilutive common shares and there were 0 anti-dilutive shares for the threethree- and ninenine- month periods ended September 30, 20202021 and 2019.2020.
Earnings per Unit of the Operating Partnership
Basic earnings per unit (“EPU”) is computed using 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 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. Due to the loss position (negative earnings) of the Operating Partnership for the three and nine month periodsmonths ended September 30, 20202021 and 20192020 all special common units, and common units issued upon the conversion or redemption of special common units, are antidilutive. The calculation of diluted EPU through the if-converted method would reduce the loss per share (as a result of an increaseincreased number of shares in the denominator) for the common units. Therefore, in a loss position diluted EPU is equal to basic EPU. There were 0 potential dilutive common units and there were 0 anti-dilutive units other than the special common units, and common units issued upon the conversion or redemption of special common units, outstanding for the threethree- and ninenine- month periods ended September 30, 20202021 and 2019.2020.
34
The following table presents basic and diluted EPU for common and special common units for the three-monththree and nine-month periodsnine months ended September 30, 20202021 and 2019.
35
Table of Contents2020.
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
(In thousands, except per unit data) |
|
| 2020 |
|
|
| 2019 |
|
|
| 2020 |
|
|
| 2019 |
| ||||||||||||||||
Net Loss Attributable to Common Unitholders |
| $ | (54,710 | ) |
| $ | (104,020 | ) |
| $ | (288,549 | ) |
| $ | (202,831 | ) | ||||||||||||||||
Distributions to Common Unitholders - Declared Only |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (14,638 | ) | ||||||||||||||||
Distributions to Special Common Unitholders - Declared and Undeclared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
|
| 2021 |
|
|
| 2020 |
|
|
| 2021 |
|
|
| 2020 |
| ||||||||||||||||
Net loss attributable to common unitholders |
| $ | (42,805 | ) |
| $ | (54,710 | ) |
| $ | (79,378 | ) |
| $ | (288,549 | ) | ||||||||||||||||
Distributions to common unitholders - declared only |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||
Distributions to special common unitholders - declared and undeclared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Common units issued on conversion of SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (133 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
S-SCUs |
|
| (1,143 | ) |
|
| (1,143 | ) |
|
| (3,429 | ) |
|
| (3,429 | ) |
|
| — |
|
|
| (1,143 | ) |
|
| — |
|
|
| (3,429 | ) |
L-SCUs |
|
| — |
|
|
| (433 | ) |
|
| (433 | ) |
|
| (1,299 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (433 | ) |
K-SCUs |
|
| (844 | ) |
|
| (844 | ) |
|
| (2,531 | ) |
|
| (2,531 | ) |
|
| — |
|
|
| (844 | ) |
|
| — |
|
|
| (2,531 | ) |
Total Undistributed Losses Available to Common and Special Common Unitholders |
| $ | (56,697 | ) |
| $ | (106,440 | ) |
| $ | (294,942 | ) |
| $ | (224,861 | ) | ||||||||||||||||
Total undistributed loss available to common and special common unitholders |
| $ | (42,805 | ) |
| $ | (56,697 | ) |
| $ | (79,378 | ) |
| $ | (294,942 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributed Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Distributed earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Common units issued on conversion of SCUs |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 133 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
S-SCUs |
|
| 1,143 |
|
|
| 1,143 |
|
|
| 3,429 |
|
|
| 3,429 |
|
|
| — |
|
|
| 1,143 |
|
|
| — |
|
|
| 3,429 |
|
L-SCUs |
|
| — |
|
|
| 433 |
|
|
| 433 |
|
|
| 1,299 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 433 |
|
K-SCUs |
|
| 844 |
|
|
| 844 |
|
|
| 2,531 |
|
|
| 2,531 |
|
|
| — |
|
|
| 844 |
|
|
| — |
|
|
| 2,531 |
|
Common Units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 14,639 |
| ||||||||||||||||
Common units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed Losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Undistributed loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Common units issued on conversion of SCUs |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
S-SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
L-SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
K-SCUs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Common Units |
|
| (56,697 | ) |
|
| (106,440 | ) |
|
| (294,942 | ) |
|
| (224,861 | ) | ||||||||||||||||
Common units |
|
| (42,805 | ) |
|
| (56,697 | ) |
|
| (79,378 | ) |
|
| (294,942 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Weighted average: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Common units issued on conversion of SCUs |
|
| 1,696 |
|
|
| 1,770 |
|
|
| 1,697 |
|
|
| 1,770 |
|
|
| 936 |
|
|
| 1,696 |
|
|
| 936 |
|
|
| 1,697 |
|
S-SCUs |
|
| 1,561 |
|
|
| 1,561 |
|
|
| 1,561 |
|
|
| 1,561 |
|
|
| 1,561 |
|
|
| 1,561 |
|
|
| 1,561 |
|
|
| 1,561 |
|
L-SCUs |
|
| 572 |
|
|
| 572 |
|
|
| 572 |
|
|
| 572 |
|
|
| 565 |
|
|
| 572 |
|
|
| 570 |
|
|
| 572 |
|
K-SCUs |
|
| 1,134 |
|
|
| 1,137 |
|
|
| 1,136 |
|
|
| 1,137 |
|
|
| 869 |
|
|
| 1,134 |
|
|
| 869 |
|
|
| 1,136 |
|
Common Units |
|
| 196,728 |
|
|
| 195,190 |
|
|
| 196,585 |
|
|
| 195,119 |
| ||||||||||||||||
Common units |
|
| 197,627 |
|
|
| 196,728 |
|
|
| 197,651 |
|
|
| 196,585 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPU: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units issued on conversion of SCUs |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 0.07 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
S-SCUs |
|
| 0.73 |
|
|
| 0.73 |
|
|
| 2.20 |
|
|
| 2.20 |
|
|
| — |
|
|
| 0.73 |
|
|
| — |
|
|
| 2.20 |
|
L-SCUs |
|
| — |
|
|
| 0.76 |
|
|
| 0.76 |
|
|
| 2.27 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.76 |
|
K-SCUs |
|
| 0.74 |
|
|
| 0.74 |
|
|
| 2.23 |
|
|
| 2.23 |
|
|
| — |
|
|
| 0.74 |
|
|
| — |
|
|
| 2.23 |
|
Common Units |
|
| (0.29 | ) |
|
| (0.55 | ) |
|
| (1.50 | ) |
|
| (1.08 | ) | ||||||||||||||||
Common units |
|
| (0.22 | ) |
|
| (0.29 | ) |
|
| (0.40 | ) |
|
| (1.50 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic EPU |
| $ | (0.27 | ) |
| $ | (0.52 | ) |
| $ | (1.43 | ) |
| $ | (1.01 | ) | ||||||||||||||||
Total basic EPU |
| $ | (0.21 | ) |
| $ | (0.27 | ) |
| $ | (0.39 | ) |
| $ | (1.43 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPU: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units issued on conversion of SCUs |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 0.07 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
S-SCUs |
|
| 0.73 |
|
|
| 0.73 |
|
|
| 2.20 |
|
|
| 2.20 |
|
|
| — |
|
|
| 0.73 |
|
|
| — |
|
|
| 2.20 |
|
L-SCUs |
|
| — |
|
|
| 0.76 |
|
|
| 0.76 |
|
|
| 2.27 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.76 |
|
K-SCUs |
|
| 0.74 |
|
|
| 0.74 |
|
|
| 2.23 |
|
|
| 2.23 |
|
|
| — |
|
|
| 0.74 |
|
|
| — |
|
|
| 2.23 |
|
Common Units |
|
| (0.29 | ) |
|
| (0.55 | ) |
|
| (1.50 | ) |
|
| (1.08 | ) | ||||||||||||||||
Common units |
|
| (0.22 | ) |
|
| (0.29 | ) |
|
| (0.40 | ) |
|
| (1.50 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Diluted EPU |
| $ | (0.27 | ) |
| $ | (0.52 | ) |
| $ | (1.43 | ) |
| $ | (1.01 | ) | ||||||||||||||||
Total diluted EPU |
| $ | (0.21 | ) |
| $ | (0.27 | ) |
| $ | (0.39 | ) |
| $ | (1.43 | ) |
For additional information regarding the participation rights and minimum distributions relating to the common and special common units, see Note 9.10. Shareholders’ Equity and Partners’ Capital and Note 10.11. Redeemable Interests and Noncontrolling Interests of the Company’s Annual Report on Form 10-K as amended, for the year ended December 31,
36
2019. 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.
35
Common Unit Activity
In September 2021, the Company issued 1,193,978 shares of common stock to a holder of 622,278 common units and 571,700 special common units of limited partnership interest in the Operating Partnership in connection with the exercise of the holders’ contractual exchange rights. This transaction resulted in the remaining Series L special common units being redeemed.
Note 12 – Contingencies
Litigation
As previously disclosed, in April 2019, the Company entered into a settlement agreement and release with respect to the class action lawsuit filed on March 16, 2016 in the United States District Court for the Middle District of Florida by Wave Lengths Hair Salons of Florida, Inc. d/b/a Salon Adrian. Pursuant to the settlement agreement the Company set aside a common fund with a monetary and non-monetary value of $90,000 to be disbursed to class members in accordance with an agreed-upon formula that was based upon aggregate damages of $60,000. The Court granted final approval to the proposed settlement on August 22, 2019. The class members were comprised of past and current tenants at certain of the Company's shopping centers that it owns or formerly owned during the class period, which extended from January 1, 2011 through the date of preliminary court approval. Class members who are past tenants and made valid claim pursuant to the Court's order received payment of their claims in cash. Class members who are current tenants began receiving monthly credits against rents and future charges during the three months ended June 30, 2020 and, under the terms of the settlement agreement, will continue for the following five years. Any amounts under the settlement allocated to tenants with outstanding amounts payable to the Company, including tenants which have declared bankruptcy or declare bankruptcy over the relevant period, will first be deducted from the amounts owed to the Company. All attorney’s fees and associated costs to class counsel (up to a maximum of $27,000), incentive award to the class representative (up to a maximum of $50), and class administration costs (which are expected to not exceed $100), have or will be funded by the common fund, which has been approved by the Court. Under the terms of the settlement agreement, the Company did not pay any dividends to holders of its common shares payable in the third and fourth quarters of 2019. The settlement agreement did not restrict the Company's ability to declare dividends payable in 2020 or in subsequent years. The Company recorded an accrued liability and corresponding litigation settlement expense of $88,150 in the three months ended March 31, 2019 related to the settlement agreement. During the year ended December 31, 2019, the Company reduced the accrued liability by an aggregate $26,396, a majority of which was related to past tenants that did not submit a claim pursuant to the terms of the settlement agreement with the remainder relating to tenants that either opted out of the lawsuit or waived their rights to their respective settlement amounts. Additionally, the Company reduced the accrued liability during the three months ended December 31, 2019 by $23,050 related to attorney and administrative fees that were paid pursuant to the settlement agreement. During the nine months ended September 30, 2020, the Company reduced the accrued liability by $17,922. Of this amount, $6,488 was related to monthly credits against rents and other charges for current tenants, $4,915 was paid to past tenants, $4,039 was paid to plaintiff’s counsel and the claims administrator, and $2,480 represents amounts the Company was released from pursuant to the terms of the settlement agreement. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 3, 2020. The Company received document requests in the third quarter of 2019, in the form of subpoenas, from the Securities and Exchange Commission and the Department of Justice regarding the Wave Lengths Hair Salons of Florida, Inc. litigation and other related matters. The Company continues to cooperate in these matters.
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.19-cv-00149-JRG-CHS, and a consolidated amended complaint was filed on November 5, 2019, seeking to represent a class of purchasers from July 29, 2014 through March 26, 2019.
The complaintsoperative complaint filed in the Securities Class Action Litigation allegealleges 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 defendants moved to dismiss all claims on December 20, 2019, and that motion remains pending. On November 2, 2021, the defendants filed a proposed supplemental motion to dismiss brief, arguing that the Company should be dismissed as a defendant in the case because the Plan and related confirmation order discharge any claims against the Company and enjoin the plaintiffs from taking any further action against the Company. The proposed supplemental motion to dismiss brief also argued that the operative complaint fails to state a viable claim against any individual defendant. 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“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“Cohen Derivative Action”); Travis Lore v. Stephen D. Lebovitz et al., 1:19-cv-01665-LPS (the “Lore“Lore Derivative Action”), and City of Gainesville Cons. Police Officers’
37
and Firefighters Retirement Plan v. Stephen D. Lebovitz et al., 1:19-cv-01800 (the “Gainesville“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"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“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“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“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“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 consolidated, but have been stayed.
36
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, 2020.2020, and 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. Pursuant to the Plan, all of the derivative claims have now been released by the Company and its bankruptcy estate. The Company intends to seek dismissal of the Derivative Litigation based upon those releases.
All stays resulting from the Suggestion of Bankruptcy expired on November 1, 2021 when the Plan became effective.
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 described above related to litigation matters. Based on current information, an unfavorable outcome concerning such environmental matters, both individually and in the aggregate, is considered to be reasonably possible. However, the Company believes its maximum potential exposure to loss would not be material to its results of operations or financial condition. The Company has a master insurance policy that provides coverage through 2022 for certain environmental claims up to $10,000 per occurrence and up to $50,000 in the aggregate, subject to deductibles and certain exclusions. At certain locations, individual policies are in place.
Guarantees
The Operating Partnership 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 the Operating Partnership's investment in the joint venture. The Operating Partnership
38
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.
37
The following table represents the Operating Partnership's guarantees of unconsolidated affiliates' debt as reflected in the accompanying condensed consolidated balance sheets as of September 30, 20202021 and December 31, 2019:2020:
|
| As of September 30, 2020 |
|
| Obligation recorded to reflect guaranty |
|
| As of September 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) |
|
| September 30, 2020 |
|
| December 31, 2019 |
|
| Company's Ownership Interest |
|
| Outstanding Balance |
|
| Percentage Guaranteed by the Operating Partnership |
|
|
| Maximum Guaranteed Amount |
|
| Debt Maturity Date (1) |
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||||||||||||
West Melbourne I, LLC - Phase I |
| 50% |
|
| $ | 40,372 |
|
| 50% |
|
|
| $ | 20,186 |
|
| Feb-2021 | (2) |
| $ | 202 |
|
| $ | 199 |
|
| 50% |
|
| $ | 39,326 |
|
| 50% |
|
|
| $ | 19,663 |
|
| Feb-2025 | (2) |
| $ | 197 |
|
| $ | 201 |
| ||||
West Melbourne I, LLC - Phase II |
| 50% |
|
|
| 14,513 |
|
| 50% |
|
|
|
| 7,257 |
|
| Feb-2021 | (2) |
|
| 73 |
|
|
| 78 |
|
| 50% |
|
|
| 14,034 |
|
| 50% |
|
|
|
| 7,017 |
|
| Feb-2025 | (2) |
|
| 70 |
|
|
| 72 |
| ||||
Port Orange I, LLC |
| 50% |
|
|
| 53,513 |
|
| 50% |
|
|
|
| 26,757 |
|
| Feb-2021 | (2) |
|
| 268 |
|
|
| 270 |
|
| 50% |
|
|
| 51,998 |
|
| 50% |
|
|
|
| 25,999 |
|
| Feb-2025 | (2) |
|
| 260 |
|
|
| 266 |
| ||||
Ambassador Infrastructure, LLC |
| 65% |
|
|
| 9,360 |
|
| 100% |
|
|
|
| 9,360 |
|
| Oct-2020 | (3) |
|
| 94 |
|
|
| 101 |
|
| 65% |
|
|
| 8,250 |
|
| 100% |
|
|
|
| 8,250 |
|
| Mar-2025 |
|
|
| 83 |
|
|
| 94 |
| ||||
Shoppes at Eagle Point, LLC |
| 50% |
|
|
| 35,189 |
|
| 35% |
| (4) |
|
| 12,740 |
|
| Oct-2020 | (5) |
|
| 127 |
|
|
| 127 |
|
| 50% |
|
|
| 34,135 |
|
| 35% |
| (3) |
|
| 12,740 |
|
| Oct-2021 |
|
|
| 127 |
|
|
| 127 |
| ||||
EastGate Storage, LLC |
| 50% |
|
|
| 6,485 |
|
| 50% |
| (6) |
|
| 3,250 |
|
| Dec-2022 |
|
|
| 33 |
|
|
| 33 |
|
| 50% |
|
|
| 6,460 |
|
| 50% |
| (4) |
|
| 3,230 |
|
| Dec-2022 |
|
|
| 32 |
|
|
| 33 |
| ||||
Self Storage at Mid Rivers, LLC |
| 50% |
|
|
| 5,853 |
|
| 50% |
| (7) |
|
| 2,994 |
|
| Apr-2023 |
|
|
| 30 |
|
|
| 30 |
|
| 50% |
|
|
| 5,941 |
|
| 50% |
| (4) |
|
| 2,971 |
|
| Apr-2023 |
|
|
| 30 |
|
|
| 30 |
| ||||
Parkdale Self Storage, LLC |
| 50% |
|
|
| 6,065 |
|
| 100% |
| (8) |
|
| 6,500 |
|
| Jul-2024 |
|
|
| 65 |
|
|
| 65 |
|
| 50% |
|
|
| 6,462 |
|
| 100% |
| (5) |
|
| 6,500 |
|
| Jul-2024 |
|
|
| 65 |
|
|
| 65 |
| ||||
Hamilton Place Self Storage, LLC |
| 54% |
|
|
| 6,247 |
|
| 100% |
| (9) |
|
| 7,002 |
|
| Sep-2024 |
|
|
| 70 |
|
|
| 70 |
|
| 54% |
|
|
| 6,863 |
|
| 50% |
| (4) |
|
| 3,501 |
|
| Sep-2024 |
|
|
| 35 |
|
|
| 35 |
| ||||
Atlanta Outlet JV, LLC |
| 50% |
|
|
| 4,632 |
|
| 100% |
|
|
|
| 4,632 |
|
| Nov-2023 |
|
|
| — |
|
|
| — |
|
| 50% |
|
|
| 4,504 |
|
| 100% |
|
|
|
| 4,504 |
|
| Nov-2023 |
|
|
| — |
|
|
| — |
| ||||
Louisville Outlet Shoppes, LLC |
| 50% |
|
|
| 9,122 |
|
| 100% |
|
|
|
| 9,122 |
|
| Oct-2021 |
|
|
| — |
|
|
| — |
|
| 50% |
|
|
| 8,512 |
|
| 100% |
|
|
|
| 8,512 |
|
| Oct-2021 |
|
|
| — |
|
|
| — |
| ||||
Total guaranty liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 962 |
|
| $ | 973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 899 |
|
| $ | 923 |
|
(1) | Excludes any extension options. |
(2) | These loans have |
(3) |
|
| The guaranty is for a fixed amount of $12,740 throughout the term of the loan, including any extensions. Subsequent to September 30, 2021, the joint venture exercised the one-year extension option on the loan for an extended maturity date of October 2022. See Note 15. |
|
|
|
|
|
|
|
|
|
|
As described in Note 1 – Organization and Basis of Presentation2, the filing of the Chapter 11 Cases subsequent to September 30, 2020 also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may resulthave resulted in automatic acceleration of the outstanding principal and accrued interestcertain monetary obligations or may give the applicable lender the right to accelerate such amounts. There wasAs of September 30, 2021, there is a default under each of the following guaranteed loans above as a result of the filing of the Chapter 11 Cases, except for Shoppes at Eagle Point, LLC,Cases: EastGate Storage, LLC; Self Storage at Mid Rivers, LLC; Parkdale Self Storage, LLC; Hamilton Place Self Storage, LLC and LouisvilleAtlanta Outlet Shoppes,JV, LLC. As of the Effective Date, the default related to each loan was waived.
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 maximum guaranteed obligation was $11,600 as of September 30, 2020. 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 that the fair value of the guaranty was not material as of September 30, 2020 and December 31, 2019.
Expected credit losses
39
Duringfor the three and nine months ended September 30, 2021 and September 30, 2020.
For the three and nine months ended September 30, 2021 and September 30, 2020, the Company evaluated each guaranteeguaranty, listed in the table above, individually by looking atevaluating the debt service ratio, cash flow forecasts, and the performance of each loan and, where applicable, the collateral value in relation to the outstanding amount of the loan. The result of the analysis was that each loan is current, and performing and, ifwhere applicable, nonethe collateral value was greater than the outstanding amount of the loans that are guaranteed by theloan. The Company are in violation of their debt covenants, each operating property has positive cash flows that are sufficient to cover debt service and forecasted cash flows for each operating property do not indicate that there is more than a remote probability that the Company will be required to perform under each guaranty. Historically, the Company has not had to perform on any of its guarantees of unconsolidated affiliates’ debt. Based on current and future conditions, the Company does not expect to have to perform, and therefore did not record a credit loss related to the guarantees listed in the table above for the three and nine months ended September 30, 2020.
Performance Bonds
The Company has issued various bonds that it would have to satisfy in the event of non-performance. The total amount outstanding on these bonds was $8512021 and $13,660 at September 30, 2020 and December 31, 2019, respectively.2020.
38
Note 13 – Share-Based Compensation
As of September 30, 2020,2021, the Company has outstanding awards under the CBL & Associates Properties, Inc. 2012 Stock Incentive Plan (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 plan. The compensation committee of the board of directors administers the 2012 Plan. As of the Effective Date and pursuant to the Plan, all nonvested restricted stock was deemed vested and the 2012 Plan was terminated. See Note 2 for more information regarding the EIP.
Pre-Emergence Restricted Stock Awards
The Company may make restricted stock awards to independent directors, officers and its employees under the 2012 Plan. These awards are generally granted based on the performance of the Company and its employees. None of these awards have performance requirements other than a service condition of continued employment, unless otherwise provided. Compensation expense is recognized on a straight-line basis over the requisite service period.
Share-based compensation expense related to the restricted stock awards was $375$241 and $571$375 for the three months ended September 30, 2021 and 2020, respectively; and 2019, respectively,$784 and $1,880 and $2,830 for the nine months ended September 30, 2021 and 2020, and 2019, respectively.Share-based compensation cost capitalized as part of real estate assets was $4$2 and $13 $4for the three months ended September 30, 2021 and 2020, respectively; and, 2019, respectively,$8 and $16 and $54 for the nine months ended September 30, 20202021 and 2019,2020, respectively.
A summary of the status of the Company’s nonvested restricted stock awards as of September 30, 2020,2021, and changes during the nine months ended September 30, 2020,2021, is presented below:
|
| Shares |
|
| Weighted- Average Grant-Date Fair Value |
|
| Shares |
|
| Weighted- Average Grant-Date Fair Value |
| ||||
Nonvested at January 1, 2020 |
|
| 971,846 |
|
| $ | 5.16 |
| ||||||||
Nonvested at January 1, 2021 |
|
| 1,519,606 |
|
| $ | 2.15 |
| ||||||||
Granted |
|
| 1,628,397 |
|
| $ | 0.86 |
|
|
| — |
|
| $ | — |
|
Vested |
|
| (1,052,161 | ) |
| $ | 2.86 |
|
|
| (480,463 | ) |
| $ | 3.11 |
|
Forfeited |
|
| (25,520 | ) |
| $ | 4.61 |
|
|
| (23,581 | ) |
| $ | 2.73 |
|
Nonvested at September 30, 2020 |
|
| 1,522,562 |
|
| $ | 2.16 |
| ||||||||
Nonvested at September 30, 2021 |
|
| 1,015,562 |
|
| $ | 1.69 |
|
As of September 30, 2020,2021, there was $2,330$1,083 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 2.31.7 years.
Pre-Emergence Long-Term Incentive Program
In 2015, the Company adopted a long-term incentive program ("LTIP") for its 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.
Beginning with the 2018 PSUs, two-thirds of the quantitative portion of the award over the performance period is based on the achievement of TSR relative to the NAREIT Retail Index while the remaining one-third is based on the achievement of absolute TSR metrics for the Company. Beginning with the 2018 PSU grant, to maintain compliance with a 200,000 share annual equity grant limit (the “Section 162(m) Grant Limit”) that was included in the 2012 Plan to satisfy the “qualified performance-based compensation” exception to the deduction limits for certain executive compensation under
40
Section 162(m) of the Code, to the extent that a grant of PSUs could result in the issuance of a number of shares of common stock at the conclusion of the performance period that, when coupled with the number of shares of time-vesting restricted stock granted in the same year the PSUs were granted, would exceed such limit, any such excess will be converted to a cash bonus award with a value equivalent to the number of shares of common stock constituting such excess times the average of the high and low trading prices reported for CBL's common stock on the date such shares would otherwise have been issuable.
In conjunction with the February 2020 approval of the 2020 LTIP grants for the named executive officers, the 2012 Stock Incentive Plan was amended to remove the Section 162(m) Grant Limit, which no longer served its original purpose because the “qualified performance-based compensation” exception to the Section 162(m) deduction limits was repealed by the 2017 tax reform legislation. However, NYSE rules also include an annual equity grant limit which effectively limits the number of shares that can be subject to stock awards to any individual named executive officer, without additional shareholder approval, to one percent (1%) of the total number of outstanding shares of the Company’s Common Stock (the “NYSE Annual Grant Limit”). To maintain NYSE compliance following elimination of the Section 162(m) Grant Limit, the Company’s Compensation Committee revised PSU awards under the LTIP, beginning in 2020, to provide that if a grant of PSUs could result in the issuance of a number of shares to a named executive officer at the conclusion of the 3-year performance period that would exceed the NYSE Annual Grant Limit, when coupled with the number of shares subject to other stock awards (e.g., the time-vesting restricted stock component of the LTIP) issued in the same year that such PSUs were issued, any such excess will instead be converted to a cash bonus award, while remaining subject to vesting conditions as described below.
Any such portion of the value of the 2018 PSUs, the 2019 PSUs or the 2020 PSUs earned payable as a cash bonus will be subject to the same vesting provisions as the issuance of common stock pursuant to the PSUs. In addition, to the extent any cash is to be paid, the cash will be paid first relative to the vesting schedule, ahead of the issuance of shares of common stock with respect to the balance of PSUs earned.
In August 2020, in connection with the execution of the RSA that is described in Note 1 – Organization and Basis of Accounting, the 2020 PSUs were canceled.
Annual Restricted Stock Awards
Under the LTIP, annual restricted stock awards consist of shares of time-vested restricted stock awarded based on a qualitative evaluation of the performance of the Company and the named executive officer during the fiscal year. Annual restricted stock awards under the LTIP, which are included in the totals reflected in the preceding table, vest 20% on the date of grant with the remainder vesting in 4 equal annual installments.
Performance Stock Units
A summary of the statusCompany’s long-term incentive program (“LTIP”) is disclosed in Note 18 to the consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. Outstanding restricted stock, and related grant/vesting/forfeiture activity during 2021 for awards made to named executive officers under the LTIP, is included in the information presented in the table above.
Pre-Emergence Performance Stock Units
There were 0 performance stock units (“PSUs”) granted in 2021. The 1,103,537 outstanding PSUs at September 30, 2021 were granted in the first quarter of 2019. Of that amount, 566,862 PSUs are classified as a liability due to the potential cash component, which is described in the summary of the Company’s PSU activity asLTIP program set forth in Note 18 to the consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. NaN of the PSUs outstanding at September 30, 2020,2021 were vested. As of the Effective Date and changes during the nine months ended September 30, 2020, is presented below:
|
| PSUs |
|
| Weighted-Average Grant Date Fair Value |
| ||
Outstanding at January 1, 2020 |
|
| 1,766,580 |
|
| $ | 2.96 |
|
2020 PSUs granted (1) |
|
| 3,408,083 |
|
| $ | 0.84 |
|
2020 PSUs canceled |
|
| (3,408,083 | ) |
| $ | 0.84 |
|
Outstanding at September 30, 2020 (2) |
|
| 1,766,580 |
|
| $ | 2.96 |
|
|
|
|
|
Shares earned pursuant to the PSU awards vest 60% at the conclusion of the performance period while the remaining 40% of the PSU award vests 20% on each of the first two anniversaries thereafter.Plan, all outstanding PSUs were deemed cancelled.
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.
41
Share-based compensation expense related to the PSUs was $2,410$94 and $409$2,410 for the three months ended September 30, 2021 and 2020, respectively; and 2019, respectively,$283 and $2,828 and $1,278 for the nine months ended September 30, 2021 and 2020, and 2019, respectively. Share-based compensation expense for the three and nine months ended September 30, 2020 includes $2,410 of previously unrecognized compensation cost related to the 2020 PSUs that was expensed when the 2020 PSUs were cancelled. Unrecognized compensation costs related to the PSUs was $907$264 as of September 30, 2020,2021, which is expected to be recognized over a weighted-average period of 3.31.5 years.
The following table summarizes the assumptions used in the Monte Carlo simulation pricing model related to the PSUs:39
|
| 2020 PSUs |
|
| 2019 PSUs |
|
| 2018 PSUs |
| |||
Grant date |
| February 10, 2020 (1) |
|
| February 11, 2019 |
|
| February 12, 2018 |
| |||
Fair value per share on valuation date (2) |
| $ | 0.84 |
|
| $ | 4.74 |
|
| $ | 4.76 |
|
Risk-free interest rate (3) |
|
| 1.39 | % |
|
| 2.54 | % |
|
| 2.36 | % |
Expected share price volatility (4) |
|
| 57.98 | % |
|
| 60.99 | % |
|
| 42.02 | % |
|
|
|
|
|
|
|
|
Note 14 – Noncash Investing and Financing Activities
The Company’s noncash investing and financing activities were as follows:
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Additions to real estate assets accrued but not yet paid |
| $ | 6,183 |
|
| $ | 23,148 | �� |
| $ | 11,527 |
|
| $ | 6,183 |
|
Accrued dividends and distributions payable |
|
| — |
|
|
| 2,420 |
| ||||||||
Increase (decrease) in lease liabilities arising from obtaining right-of-use assets |
|
| (120 | ) |
|
| 3,975 |
| ||||||||
Deconsolidation upon contribution/assignment of interest in joint venture: |
|
|
|
|
|
|
|
| ||||||||
Deconsolidation upon loss of control (1): |
|
|
|
|
|
|
|
| ||||||||
Decrease in real estate assets |
|
| — |
|
|
| (93,360 | ) |
|
| (84,860 | ) |
|
| — |
|
Increase in investment in unconsolidated affiliates |
|
| — |
|
|
| 17,903 |
| ||||||||
Decrease in mortgage and other indebtedness |
|
| — |
|
|
| 73,283 |
|
|
| 134,354 |
|
|
| — |
|
Decrease in operating assets and liabilities |
|
| — |
|
|
| 2,443 |
|
|
| 5,808 |
|
|
| — |
|
Decrease in intangible lease and other assets |
|
| — |
|
|
| (908 | ) |
|
| (171 | ) |
|
| — |
|
Decrease in noncontrolling interest and joint venture interest |
|
| — |
|
|
| 4,271 |
| ||||||||
Transfer of real estate assets in settlement of mortgage debt obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in real estate assets |
|
| (11,834 | ) |
|
| (60,059 | ) |
|
| — |
|
|
| (11,834 | ) |
Decrease in mortgage and other indebtedness |
|
| 25,956 |
|
|
| 124,111 |
|
|
| — |
|
|
| 25,956 |
|
Decrease in operating assets and liabilities |
|
| 1,371 |
|
|
| 9,333 |
|
|
| — |
|
|
| 1,371 |
|
Decrease in intangible lease and other assets |
|
| (86 | ) |
|
| (1,663 | ) |
|
| — |
|
|
| (86 | ) |
Conversion of Operating Partnership units to common stock |
|
| 21,065 |
|
|
| — |
|
|
| — |
|
|
| 21,065 |
|
42
(1) See Note 8 for additional information. Note 15 – Subsequent Events In October 2021, the In October 2021, the foreclosure of In November 2021, HoldCo II redeemed $60,000 aggregate principal amount of the Secured Notes pursuant to an optional redemption, which left an outstanding balance of $395,000. On November 2, 2021, the newly issued common stock of the Company commenced trading on the NYSE under In November 2021, the Company used funds from its matured U.S. Treasury securities to purchase $149,997 in U.S. Treasury securities with ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 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” 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, • general industry, economic and business conditions; • interest rate fluctuations; • costs and availability of capital, including debt, and capital requirements; • 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; • changes in applicable laws, rules and regulations; • • uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events, such as the recent COVID-19 • cyber-attacks or acts of cyber-terrorism; • 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. 41 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. 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 other properties. See Note 1 to the condensed consolidated financial statements for information on our property interests as of September 30, 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 In response to The mandated property closures in 2020 resulted in nearly all 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’s subsidiaries, which may result in acceleration of the outstanding principal and other sums due. See Note 8 and Note 9for additional information. We had a net loss for the three and nine months ended September 30, Table of ContentsAs discussions withIn October 2021, Brookfield Square Anchor S, LLC (the “Brookfield Debtor”) filed for bankruptcy. For avoidance of doubt, the advisors toPlan and the consenting noteholders of the Notes and lenders under the Company’s secured credit facility continued, the Company elected todisclosures related thereto in this quarterly report do not make the $6,900 interest payment (the “2024 Notes Interest Payment”) due and payable on October 15, 2020,apply with respect to the Operating Partnership’s 4.60% senior unsecured notes due 2024 (the “2024 Notes”). Under the indenture governing the 2024 Notes, the Operating Partnership hasBrookfield Debtor, which remains a 30-day grace period to make the 2024 Notes Interest Payment before the nonpayment is considered an “event of default” with respectdebtor-in-possession and was not subject to the 2024 Notes. Any event of default underPlan.2024 Notes for nonpaymentCompany completed the sale of the 2024 Notes Interest Payment would also be considered an eventResidences at Pearland Town Center for $8,750.default under the Operating Partnership’s senior secured credit facility which could lead to an acceleration of amounts due under the facility; however, as discussed in Note 8 – Mortgage and Other Indebtedness, Net, obligations under the secured credit facility have been accelerated based on the events of default previously asserted by the Administrative Agent under the secured credit facility, which the Company continues to dispute. Further, if the trustee for the 2024 Notes should exercise its right to accelerate the maturity of the full balance owed on the 2024 Notes as a result of such an “event of default,” that would also constitute an “event of default” under the 2023 Notes and the 2026 Notes, which could lead to the acceleration of all amounts due under those notes.Park Plaza was completed.The maturity date ofIn October 2021, the loan secured by theThe Shoppes at Eagle Point LLC that was scheduled to mature in October 2020was extended to October 2021for one year with 1 one-year extension option, at the joint venture’s election, for an outsidea new maturity date of October 2022.2022.As described in Note 7 – Unconsolidated Affiliates and Noncontrolling Interests,On November 1, 2021, the loan secured by Oak Park Mall was in default at September 30, 2020. In October 2020, Oak Park Mall, LLC entered into a forbearance agreement with the lender. Pursuantconditions to the termseffectiveness of the forbearance agreement, all interest payments from June 2020 through November 2020Plan were deferred. The loan will be interest only through November 1, 2022; however, beginning on September 1, 2021 and continuing through November 1, 2022, the deferred interest is to be made in equal monthly installments in addition to the scheduled interest payments. Beginning December 1, 2022, Oak Park Mall, LLC is to begin making full monthly payments of principal and interest. Oak Park Mall, LLC executed a deed-in-lieu of foreclosure, along with other transfer documents, for the benefit of the lender, which were placed in escrow. In the event Oak Park Mall, LLC fails to make any of the required payments under the forbearance agreement, lender can exercise its rights to receive the deed-in-lieu and other transfer documents from escrow.On November 2, 2020, NYSE announced that it has 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 common stocksatisfied and the depositary shares representing fractional interests in its Series D Preferred Stock and Series E Preferred Stock. For more information, see “Listing Criteria” in Note 1 – Organization and Basis of Presentation.The maturity date of the loan secured by Ambassador Infrastructure, LLC that was scheduled to mature in October 2020 was extended to January 2021.Chapter 11 ProceedingsAs described further in Note 1 – Organization and Basis of Presentation, beginning on the Commencement Date, the Debtors commencedemerged from the Chapter 11 Cases by filing voluntary petitions. See Note 2 for reorganizationmore information.Chapter 11the symbol CBL. See Note 2 for more information.the Bankruptcy Court.maturities through November 2021.4340one of the mosta significant factorsfactor that could cause actual outcomes to differ materially from our forward-looking statements is the potential adverse effect of the COVID-19 pandemic, and federal, state and/or local regulatory guidelinesresponses 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. Further, there is a risk that both the Company and its tenants could experience future adverse impacts in complying with governmental COVID-19 vaccine mandates applicable to their respective workforces. In addition to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K as amended, for the year ended December 31, 2019, and in Part II, Item 1A of this report,2020, such known risks and uncertainties, many of which may be influenced by the COVID-19 pandemic, include, without limitation:the impact of the risks and uncertainties associated with the Chapter 11 process on our operations and ability to develop and execute the Company’s business plans, and to satisfy the conditions and milestones applicable under the Restructuring Support Agreement, for the duration of the Chapter 11 Cases;•suspension of trading or delisting of our common stock and/or depositary shares representing interests in our Series D Preferred Stock and Series E Preferred Stock, from the NYSE;•salesdisposition of real property;44pandemic;pandemic and related governmental responses, such as the potential impacts of complying with any governmental vaccine mandates applicable to us or our tenants;changes in, or withdrawal of, the credit ratings of the Operating Partnership's senior unsecured long-term indebtedness;•EXECUTIVE OVERVIEWExecutive Overview2020.2021. We have elected to be taxed as a REIT for federal income tax purposes.the remainder of 2020.2021. As a result, we previously withdrew ourdid not issue full-year 2020 same-center NOI and FFO per share, as adjusted, guidance and underlying assumptions and do not plan to reinstate full-year 20202021 guidance.local and state mandated closures, our entire portfolio, except for a few properties, closed in March. Beginning in late April, government agencies began allowing the re-opening of properties with specified health and safety restrictions. By the close of the third quarter 2020, all of our mall properties were able to reopen. As local mandates were lifted and properties reopened, stores within the properties followed suit with the majority of stores reopening by the close of the third quarter. We haveCOVID-19, we 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 customers, employees and tenants remains a top priority.OurWhile our financial and operating results for the third quarter continue to reflect the ongoing impact of COVID-19, we saw 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 temporary closurevirus cause further outbreaks. For the nine months ended September 30, 2021, same-center sales increased more than 16% as compared with the nine months ended September 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 our portfolio for a significant period due to government mandatesthe sales rebound. Improvements in the leasing environment, including increasing tenant demand and operating restrictions. While all properties were able to reopen by the close oflower bankruptcy-related store closures, drove healthy occupancy growth as new leases signed year-to-date took occupancy. During the third quarter many state and local markets continue to imposeof 2021, we achieved our first quarter of year-over-year occupancy and other restrictions. These additional restrictions may havegrowth since the effectfirst quarter 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. Revenues for the quarter were impacted by a substantial increase in the estimate for uncollectible revenues related to rents due from tenants that recently filed for bankruptcy or are struggling financially. The pandemic accelerated a number of tenant bankruptcies, resulting in an expectation of additional store closures and lost rent through the remainder of the year. Store closures and rent loss2019. Lease spreads also improved from prior tenant bankruptcies, rent abatements granted and lower percentage rent related to lower retail sales also impacted revenues. We offset a portion of this decline through aggressive actions to reduce costs both at the property and corporate levels, including company-wide salary reductions, furloughs, reductions-in-force and other expense reduction initiatives. However, as properties reopened during the third quarter, certainquarters. Additionally, we have held expenses necessarily resumed.in check despite inflation pressures. of our tenants closing for a period of time and/or shortening operating hours. As a result, we have 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. Based on completed or in process agreements with 25 of our top tenants, representing approximately 40% of total revenues for the second and third quarters of 2020, we anticipate collecting over 65% of related rent for the second quarter and over 81% for the third quarter, with theThe majority of these requests were addressed in 2020 and new requests for deferrals or abatements have slowed as sales and traffic rebound. We have granted rent deferrals of $45.9 million since the remainder expected to be deferred or abated.COVID-19 pandemic began. We remain in negotiations with tenants and are unable to predict the outcome of those discussions. As we finalize negotiations, rent collections as a percentage of billed cash-based rents have increased with certain past-due amounts being paid. As of the end of the third quarter, the April 2020 collection rate had improved from 27% to over 76% and May improved from 33% to 68%. We expect this trend to continue as we move later in the year and into 2021, and certain deferred rents begin coming due. As of early November 2020, we estimate that we will45defer $25.3 million, at our share, of rents that were billed for April through September 2020. Substantially all of this amount is related to agreements that were executed as of September 30, 2020 with the remainder in active negotiation. Additionally, wealso granted rent abatements of approximately $13.1$2.7 million and $14.9$12.1 million during the three and nine months ended September 30, 2021, respectively.2020, respectively. We continue2021 of $42.9 million and $80.7 million, as compared to assess rent relief requests from our tenants but are unable to predict the resolution or impact of these discussions.
We implemented a full financial COVID-19 response to improve liquidity and reduce costs. These significant actions included drawing $280 million on our secured line of credit, eliminating all non-essential expenditures, implementing a company-wide furlough and salary reduction program, implementing a permanent reduction in force and delaying and suspending capital expenditures, including redevelopment investments. See the "Liquidity and Capital Resources" section for more information.
As discussed in “Note 1 – Organization and Basis of Presentation” and “Note 8 – Mortgage and Other Indebtedness, Net” to the condensed consolidated financial statements and in “Liquidity and Capital Resources” herein, we received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default have occurred and continue to exist as of the date of this report by reason of the our failure to comply with certain restrictive covenants in the secured credit facility. As a result of these asserted defaults and events of default, the lenders under the secured credit facility declared all outstanding principal, accrued interest and letters of credit to be immediately due and payable. As of the date of this report, the lenders under the secured credit facility have not commenced foreclosure proceedings, but they may seek to exercise one or more remedies in the future. Additionally, we failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020. We could remain in compliance with the debt yield covenant if we (i) added additional unencumbered assets to the collateral pool, subject to lender approval, which is not to be unreasonably withheld, (ii) paid down the amount of debt outstanding with projected available cash or (iii) negotiated a waiver of the covenant with the lenders. We currently do not intend to add additional unencumbered assets to the collateral pool or pay down the amount of debt outstanding. See Note 1 – Organization and Basis of Presentation and Liquidity and Capital Resources for additional information.
We had a net loss for the three and nine months ended September 30, 2020 of $44.4 million and $256.5 million, respectively, compared torespectively. We recorded a net loss attributable to common shareholders for the three and nine months ended September 30, 20192021 of $92.0$41.7 million and $168.5$77.4 million, respectively. We recordedas compared to a net loss attributable to common shareholders for the three and nine months ended September 30, 2020 of $54.1 million and $269.4 million, respectively compared to a net loss for the three and nine months ended September 30, 2019 of $90.1 million and $175.7 million, respectively. In addition to the impact of the government mandated closures and the ongoing impact of the COVID-19 pandemic, significant items that affected the comparability between the three-month periods include $13.0 million of costs related to the Company’s restructuring efforts, $14.5 million of incremental interest expense related to the imposition of the basethree and post-default rates on the Company’s credit facility borrowings, a loss on impairment that is $135.6 million lower in 2020 than in 2019 and a litigation settlement credit that is $20.2 million lower in 2020 than in 2019. For the nine-month periods include:
• | Loss on impairment for the three and nine months ended September 30, 2021 that is $63.1 million higher and $26.6 million lower, respectively; |
• | Gain on deconsolidation of $55.1 million for the nine months ended September 30, 2021; |
• | Interest expense for the three and nine months ended September 30, 2021 that is $42.1 million and $95.3 million lower, respectively; |
• | Gain on extinguishment of debt of $15.4 million for the three and nine months ended September 30, 2020; |
• | Reorganization items for the three and nine months ended September 30, 2021 of $12.0 million and $52.0 million, respectively; |
• | Gain on sales of real estate assets for the three and nine months ended September 30, 2021 that is $8.7 million and $5.8 million higher, respectively; |
• | Income tax benefit (provision) for the three and nine months ended September 30, 2021 that is $1.8 million and $17.0 million lower, respectively. |
42
Our focus is on continuing to execute our strategy to transform our properties into suburban town centers, primarily through the re-tenanting of former anchor locations as well as diversification of in-line tenancy. This operational strategy is also supported by our balance sheet strategy focused on reducing overall debt, extending our debt maturity schedule and lowering our overall cost of borrowings to limit maturity risk, improve net cash flow and enhance enterprise value. While the industry and our Company continue to face challenges, some of which may not be within our control, we believe that the strategies in additionplace to the impactredevelop our properties and diversify our tenant mix will contribute to stabilization of the government mandated closuresour portfolio and ongoing impact of the COVID-19 pandemic, significant items that affected the comparability between the nine-month periods include a loss on impairment that is $55.2 million lowerrevenues in 2020, litigation settlement expense in 2020 that is $67.9 million lower, gain on extinguishment of debt that is $56.3 million lower and $11.2 million less of gain on investments/deconsolidation than were recognized in the nine months ended September 30, 2019. We also deconsolidated three outlet centers in the third and fourth quarters of 2019.future years.
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 Income in “Results of Operations.”Operations. For a description of FFO, a reconciliation from net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders, and an explanation of why we believe this is a useful performance measure, see "Non-GAAP Measure - Funds from Operations."Operations.
Voluntary Reorganization under Chapter 11
On August 18, 2020, we 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 Company andOperating Partnership, together with certain of its domesticdirect and indirect subsidiaries (collectively, with the Company, the “Debtors”), commencedfiled voluntary chapter 11 casespetitions (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”) within the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Bankruptcy Court authorized the Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possessiondebtors-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’The 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
In connection with the Chapter 11 Cases, are available freeon August 11, 2021, the Bankruptcy Court entered an order, Docket No.1397 (Confirmation Order), confirming the Debtors’ Third Amended Joint Chapter 11 Plan of charge onlineCBL & Associates Properties, Inc. and its Affiliated Debtors (With Technical Modifications) (as modified at https://dm.epiq11.com/case/cbj/docketsDocket No. 1521, the “Plan”).
On November 1, 2021 (the “Effective Date”), the conditions to effectiveness of the Plan were satisfied and the Debtors emerged from the Chapter 11 Cases. We filed a notice of the Effective Date of the Plan with the Bankruptcy Court on November 1, 2021. See Note 2 for more information.
46
Table of ContentsLiquidity and Going Concern Considerations
We are currently operating our business as debtors-in-possession inIn accordance with the applicable provisionsaccounting guidance related to the presentation of the Bankruptcy Codefinancial statements, when preparing financial statements for each annual and orders of the Bankruptcy Court. After we filed our Chapter 11 petitions, the Bankruptcy Court granted certain relief requested by the Debtors enabling us to conduct our business activitiesinterim reporting period, management evaluates whether there are conditions or events that, when considered in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to pay employee wages and benefits, to pay taxes and certain governmental fees and charges, to continue to operateaggregate, raise substantial doubt about our cash management system in the ordinary course, and to pay the prepetition claims of certain of our service providers. For goods and services provided following the Commencement Date, we intend to pay service providers in the ordinary course.
Subject to certain exceptions, under the Bankruptcy Code, the filing of the Chapter 11 Cases automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising prior to the Commencement Date. Accordingly, although the filing of the Chapter 11 Cases triggered defaults under the Debtors’ funded debt obligations, creditors are stayed from taking any actions against the Debtors as a result of such defaults, subject to certain limited exceptions permitted by the Bankruptcy Code. Absent an order of the Bankruptcy Court, substantially all of the Debtors’ prepetition liabilities are subject to settlement under the Bankruptcy Code.
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.
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.
Given the impact of the COVID-19 pandemic on the retail and broader markets, the ongoing weakness of the credit markets, the Operating Partnership’s default of certain restrictive covenants, the acceleration of the senior secured credit facility and the filing of the Chapter 11 Cases, 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 consolidatedthat the financial statements are issued. In making its assessment, management considered our 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 9for further discussion.
As a result of our financial condition and the quarter endednear-term maturities of substantial indebtedness, substantial doubt existed as of September 30, 2020 are issued. See “2021 that we would be able to continue as a going concern.
43
On August 11, 2021, the Bankruptcy Court entered an order confirming the Plan which became effective after the close of business on November 1, – Organization2021. Under the principles of fresh-start reporting, a new reporting entity (the “Successor”) will have approximately $1.3 billion of property-level debt and Basisrelated obligations maturing or callable within the next 12 months of Presentationthe Effective Date, which represents approximately 25-35% of projected annual operating cash flows of the Successor.”
The Successor intends to refinance and/or extend the maturity date of such mortgage notes payable, however, in the instances where a refinancing and/or extension of maturity dates is unsuccessful the Successor would convey such property to the condensed consolidatedlender to satisfy its debt obligation.
We have prepared our financial statements for additional information.in conformity with accounting principles generally accepted in the United States of America applicable to a going concern. The financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should we be unable to continue as a going concern.
RESULTS OF OPERATIONSResults of Operations
Properties that were in operation for the entire year during 20192020 and the nine months ended September 30, 20202021 are referred to as the “Comparable Properties.” Since January 1, 2019,2020, we have opened onetwo self-storage facility,facilities, deconsolidated three outlet centerstwo properties and disposed of eleventwo properties:
Properties Opened
Property |
| Location |
| Date Opened |
|
|
|
|
|
Hamilton Place – Self Storage (1) | Chattanooga, TN | July 2020 |
(1) |
|
47
Deconsolidations
Property |
| Location |
| Date of Deconsolidation |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
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 Ended September 30, Revenues Total for the Three Months Ended September 30, Comparable Properties Three Months Ended September 30, Comparable Properties 2020 2019 Change Core Non-core Deconsolidation Dispositions Total Change 2021 2020 Change Core Non-core Deconsolidation Dispositions Rental revenues $ 124,081 $ 180,616 $ (56,535 ) $ (42,009 ) $ (3,946 ) $ (9,387 ) $ (1,193 ) $ (56,535 ) $ 145,539 $ 124,081 $ 21,458 $ 26,611 $ 2,148 $ (4,310 ) $ (2,991 ) Management, development and leasing fees 2,104 2,216 (112 ) (112 ) — — — (112 ) 1,780 2,104 (324 ) (324 ) — — — Other 3,712 4,419 (707 ) (547 ) (25 ) (46 ) (89 ) (707 ) 3,056 3,712 (656 ) (424 ) 113 (147 ) (198 ) Total revenues $ 129,897 $ 187,251 $ (57,354 ) $ (42,668 ) $ (3,971 ) $ (9,433 ) $ (1,282 ) $ (57,354 ) $ 150,375 $ 129,897 $ 20,478 $ 25,863 $ 2,261 $ (4,457 ) $ (3,189 ) Rental revenues from the Comparable Properties Operating Expenses Total for the Three Months Ended September 30, Comparable Properties Three Months Ended September 30, Comparable Properties 2020 2019 Change Core Non-core Deconsolidation Dispositions Total Change 2021 2020 Change Core Non-core Deconsolidation Dispositions Property operating $ (20,396 ) $ (27,344 ) $ (6,948 ) $ (4,009 ) $ (225 ) $ (2,437 ) $ (277 ) $ (6,948 ) $ (23,818 ) $ (20,396 ) $ (3,422 ) $ (4,958 ) $ (396 ) $ 920 $ 1,012 Real estate taxes (17,215 ) (18,699 ) (1,484 ) (859 ) (92 ) (377 ) (156 ) (1,484 ) (13,957 ) (17,215 ) 3,258 2,098 (26 ) 449 737 Maintenance and repairs (8,425 ) (10,253 ) (1,828 ) (1,182 ) (167 ) (386 ) (93 ) (1,828 ) (9,482 ) (8,425 ) (1,057 ) (1,485 ) (124 ) 267 285 Property operating expenses (46,036 ) (56,296 ) (10,260 ) (6,050 ) (484 ) (3,200 ) (526 ) (10,260 ) (47,257 ) (46,036 ) (1,221 ) (4,345 ) (546 ) 1,636 2,034 Depreciation and amortization (53,477 ) (64,168 ) (10,691 ) (6,026 ) (1,534 ) (2,918 ) (213 ) (10,691 ) (46,479 ) (53,477 ) 6,998 1,872 2,771 1,516 839 General and administrative (25,497 ) (12,467 ) 13,030 13,134 (104 ) — — 13,030 (13,502 ) (25,497 ) 11,995 11,995 — — — Loss on impairment (46 ) (135,688 ) (135,642 ) (135,642 ) — — — (135,642 ) (63,160 ) (46 ) (63,114 ) (25,123 ) (37,991 ) — — Litigation settlement 2,480 22,688 20,208 20,208 — — — 20,208 89 2,480 (2,391 ) (2,391 ) — — — Other — (7 ) (7 ) (7 ) — — — (7 ) (104 ) — (104 ) (104 ) — — — Total operating expenses $ (122,576 ) $ (245,938 ) $ (123,362 ) $ (114,383 ) $ (2,122 ) $ (6,118 ) $ (739 ) $ (123,362 ) $ (170,413 ) $ (122,576 ) $ (47,837 ) $ (18,096 ) $ (35,766 ) $ 3,152 $ 2,873 Property operating expenses at the Comparable Properties The decrease in depreciation and amortization expense related to the Comparable Properties primarily relates to a lower basis in depreciable assets resulting from impairments recorded since the General and administrative expenses In the third quarter of Other Income and Expenses Interest During the For the three months ended September 30, 2021 we recorded $12.0 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. Equity in losses of unconsolidated affiliates improved $5.2 million during the three months ended September 30, 2021 compared to the prior-year period. The improvement was primarily due to higher earnings of our unconsolidated affiliates and a reduction in uncollectable revenues in the current year-period as compared to the prior-year period due to the impacts of the mandated property closures during 2020 as a result of COVID-19. Gain on sales of real estate assets increased $8.7 million compared to the prior-year period. During the three months ended September 30, Comparison of the Nine Months EndedNon-core properties are defined as Excluded Malls - see definition that follows under "Operational Review."20202021 to the Three Months Ended September 30, 20192020declinedincreased primarily due to (i) store closures and rent concessions that werea significantly higher estimate of uncollectable revenues in effectthe prior year period due to the impacts of the COVID-19 pandemic, for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii)as well as prior year rent concessions to tenants that are in bankruptcy or that are struggling financially due to the impacts of the COVID-19 pandemic, including $12.5 million of rent abatements on past due rents and $12.3 million in uncollectible revenues for past due rents.pandemic. Percentage rent declined $1.1 million as a result of store closures and lower retail salesincreased due to higher sales in the impacts of the COVID-19 pandemic oncurrent period as sales and traffic have improved as vaccination rates increased and sales.government restrictions were lessened.4844decreasedincreased primarily due to lessening restrictions that allowed for the implementationreopening of comprehensive programsproperties related to the COVID-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 effects of the COVID-19 pandemic, including salary reductions, furloughs, a reduction-in-force and other operating expense initiatives.prior year period and a greater amount of tenant improvement write-offs in the prior year period related to tenants that closed as a result of bankruptcy.prior-year period.increaseddecreased primarily due to $13.0 million of costsprepetition professional and legal fees incurred in the prior-year period related to our restructuring efforts. Professional and legal fees, as well as other costs, incurred in the Company’s negotiationscurrent period related to restructure its corporate-level debt, which was partially offset byour restructuring efforts are recorded in Reorganization items in the implementationcondensed consolidated statement of comprehensive programs to reduce expenses, including salary reductions, furloughs, a reduction-in-force and other general and administrative expenses.operations.2019,2021, we recognized $135.6$63.2 million of loss on impairment of real estate to write down the book value of two malls.malls, a redeveloped anchor parcel, an associated center and an outparcel. See Note 56 to the condensed consolidated financial statements for more information.and other income increased $0.6expense decreased $42.1 million during the three months ended September 30, 2021 compared to the prior-year period primarily due to not recognizing interest income relatedexpense on the senior unsecured notes and the secured credit facility subsequent to the U.S. Treasury securities that we invested in using a portionfiling of the $280 million we drew on our secured line of credit in March 2020 to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. ThisChapter 11 Cases. The decrease was partially offset by a decrease in interest income due to several mortgage and other notes receivable being retired since the prior year period.Interest expense increased $10.6 million due to an increase of $12.1 million primarily related to (i) a higher outstanding balance on the secured line of credit as a result of the $280 million we drew in March 2020 to increase liquidity and preserve financial flexibility and (ii) the accrual of additional interest on the secured credit facility at a higher interest rate imposed as a result of notices of default received from the administrative agent. Additionally, we accrued $2.5 million of default interest expense related to property-level nonrecoursenon-recourse loans that are in default. These increases were mostly offset by a $4.8 million decrease in property-leveldefault, which may not be payable depending on the outcome of negotiations with the lenders. In accordance with ASC 852, which limits the recognition of interest expense relatedduring a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest was not accrued on the secured credit facility or the senior unsecured notes subsequent to the deconsolidation of three encumbered properties since the prior-year period and the impactfiling of the continued amortization ofChapter 11 Cases. See Note 2 for more information on our emergence from the secured term loan and non-recourse property-level loans.Chapter 11 Cases.ninethree months ended September 30, 2020, we recorded a $15.4 million gain on extinguishment of debt related to one mall. We transferred Hickory Point Mall, which we transferred to the lender in satisfaction of the non-recourse debt secured by that property.2019,2021, we recognized $8.1$8.7 million of gain on sales of real estate assets primarily related to the sale of a community center, an office buildingtwo anchors and fivethree outparcels.Equity in losses of unconsolidated affiliates increased by $5.6 million during the three months ended September 30, 2020 compared to the prior-year period. The increase is primarily due to the additional amortization of our inside/outside4945basis difference related to the three properties that were deconsolidated since the end of the prior year period as well as lower earnings of our unconsolidated affiliates due to the mandated property closures and an increase in estimates of uncollectible rental revenues and abatements of rent.20202021 to the Nine Months Ended September 30, 20192020
Revenues
|
| Total for the Nine Months Ended September 30, |
|
|
|
|
|
| Comparable Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30, |
|
|
|
|
|
| Comparable Properties |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| Change |
|
| Core |
|
| Non-core |
|
| Deconsolidation |
|
| Dispositions |
|
| Total Change |
|
| 2021 |
|
| 2020 |
|
| Change |
|
| Core |
|
| Non-core |
|
| Deconsolidation |
|
| Dispositions |
| |||||||||||||||
Rental revenues |
| $ | 405,476 |
|
| $ | 556,989 |
|
| $ | (151,513 | ) |
| $ | (98,761 | ) |
| $ | (11,585 | ) |
| $ | (30,619 | ) |
| $ | (10,548 | ) |
| $ | (151,513 | ) |
| $ | 405,030 |
|
| $ | 405,476 |
|
| $ | (446 | ) |
| $ | 19,277 |
|
| $ | 1,250 |
|
| $ | (11,260 | ) |
| $ | (9,713 | ) |
Management, development and leasing fees |
|
| 5,251 |
|
|
| 7,325 |
|
|
| (2,074 | ) |
|
| (2,074 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,074 | ) |
|
| 4,888 |
|
|
| 5,251 |
|
|
| (363 | ) |
|
| (363 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
Other |
|
| 10,955 |
|
|
| 14,344 |
|
|
| (3,389 | ) |
|
| (2,504 | ) |
|
| (176 | ) |
|
| (348 | ) |
|
| (361 | ) |
|
| (3,389 | ) |
|
| 10,202 |
|
|
| 10,955 |
|
|
| (753 | ) |
|
| (208 | ) |
|
| 290 |
|
|
| (322 | ) |
|
| (513 | ) |
Total revenues |
| $ | 421,682 |
|
| $ | 578,658 |
|
| $ | (156,976 | ) |
| $ | (103,339 | ) |
| $ | (11,761 | ) |
| $ | (30,967 | ) |
| $ | (10,909 | ) |
| $ | (156,976 | ) |
| $ | 420,120 |
|
| $ | 421,682 |
|
| $ | (1,562 | ) |
| $ | 18,706 |
|
| $ | 1,540 |
|
| $ | (11,582 | ) |
| $ | (10,226 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues from the Comparable Properties declinedincreased primarily due to (i) store closures and rent concessions that werea significantly higher estimate of uncollectable revenues in effectthe prior year period due to the impacts of the COVID-19 pandemic, for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii)as well as prior year rent concessions to tenants that are in bankruptcy or that are struggling financially due to the impacts of the COVID-19 pandemic, including $14.1 million of rent abatements and $47.7 million in uncollectible revenues for past due rents.pandemic. Percentage rent declined $2.9 million as a result of store closures and lower retail salesincreased due to mandated property closures.higher sales in the current period as sales and traffic have improved as vaccination rates increased and governmental restrictions were lessened.
Operating Expenses
|
| Total for the Nine Months Ended September 30, |
|
|
|
|
|
| Comparable Properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30, |
|
|
|
|
|
| Comparable Properties |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| Change |
|
| Core |
|
| Non-core |
|
| Deconsolidation |
|
| Dispositions |
|
| Total Change |
|
| 2021 |
|
| 2020 |
|
| Change |
|
| Core |
|
| Non-core |
|
| Deconsolidation |
|
| Dispositions |
| |||||||||||||||
Property operating |
| $ | (63,011 | ) |
| $ | (82,856 | ) |
| $ | (19,845 | ) |
| $ | (8,368 | ) |
| $ | (1,378 | ) |
| $ | (7,473 | ) |
| $ | (2,626 | ) |
| $ | (19,845 | ) |
| $ | (65,243 | ) |
| $ | (63,011 | ) |
| $ | (2,232 | ) |
| $ | (6,113 | ) |
| $ | (971 | ) |
| $ | 2,211 |
|
| $ | 2,641 |
|
Real estate taxes |
|
| (53,500 | ) |
|
| (57,766 | ) |
|
| (4,266 | ) |
|
| (941 | ) |
|
| (93 | ) |
|
| (2,265 | ) |
|
| (967 | ) |
|
| (4,266 | ) |
|
| (45,618 | ) |
|
| (53,500 | ) |
|
| 7,882 |
|
|
| 4,233 |
|
|
| 162 |
|
|
| 1,127 |
|
|
| 2,360 |
|
Maintenance and repairs |
|
| (25,675 | ) |
|
| (34,327 | ) |
|
| (8,652 | ) |
|
| (5,644 | ) |
|
| (987 | ) |
|
| (892 | ) |
|
| (1,129 | ) |
|
| (8,652 | ) |
|
| (29,047 | ) |
|
| (25,675 | ) |
|
| (3,372 | ) |
|
| (4,717 | ) |
|
| (367 | ) |
|
| 661 |
|
|
| 1,051 |
|
Property operating expenses |
|
| (142,186 | ) |
|
| (174,949 | ) |
|
| (32,763 | ) |
|
| (14,953 | ) |
|
| (2,458 | ) |
|
| (10,630 | ) |
|
| (4,722 | ) |
|
| (32,763 | ) |
|
| (139,908 | ) |
|
| (142,186 | ) |
|
| 2,278 |
|
|
| (6,597 | ) |
|
| (1,176 | ) |
|
| 3,999 |
|
|
| 6,052 |
|
Depreciation and amortization |
|
| (162,042 | ) |
|
| (198,438 | ) |
|
| (36,396 | ) |
|
| (19,006 | ) |
|
| (4,958 | ) |
|
| (10,113 | ) |
|
| (2,319 | ) |
|
| (36,396 | ) |
|
| (142,090 | ) |
|
| (162,042 | ) |
|
| 19,952 |
|
|
| 6,936 |
|
|
| 5,162 |
|
|
| 4,704 |
|
|
| 3,150 |
|
General and administrative |
|
| (62,060 | ) |
|
| (48,901 | ) |
|
| 13,159 |
|
|
| 13,264 |
|
|
| (105 | ) |
|
| — |
|
|
| — |
|
|
| 13,159 |
|
|
| (37,383 | ) |
|
| (62,060 | ) |
|
| 24,677 |
|
|
| 24,677 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Loss on impairment |
|
| (146,964 | ) |
|
| (202,121 | ) |
|
| (55,157 | ) |
|
| (29,023 | ) |
|
| (16,200 | ) |
|
| — |
|
|
| (9,934 | ) |
|
| (55,157 | ) |
|
| (120,342 | ) |
|
| (146,964 | ) |
|
| 26,622 |
|
|
| 23,947 |
|
|
| (37,160 | ) |
|
| 13,273 |
|
|
| 26,562 |
|
Litigation settlement |
|
| 2,480 |
|
|
| (65,462 | ) |
|
| (67,942 | ) |
|
| (67,942 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (67,942 | ) |
|
| 890 |
|
|
| 2,480 |
|
|
| (1,590 | ) |
|
| (1,590 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
Other |
|
| (400 | ) |
|
| (41 | ) |
|
| 359 |
|
|
| 359 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 359 |
|
|
| (391 | ) |
|
| (400 | ) |
|
| 9 |
|
|
| 74 |
|
|
| (65 | ) |
|
| — |
|
|
| — |
|
Total operating expenses |
| $ | (511,172 | ) |
| $ | (689,912 | ) |
| $ | (178,740 | ) |
| $ | (117,301 | ) |
| $ | (23,721 | ) |
| $ | (20,743 | ) |
| $ | (16,975 | ) |
| $ | (178,740 | ) |
| $ | (439,224 | ) |
| $ | (511,172 | ) |
| $ | 71,948 |
|
| $ | 47,447 |
|
| $ | (33,239 | ) |
| $ | 21,976 |
|
| $ | 35,764 |
|
Property operating expenses at the Comparable Properties decreasedincreased primarily due to lessening restrictions that allowed for the implementationreopening of comprehensive programsproperties related to the COVID-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 effects of the COVID-19 pandemic, including salary reductions, furloughs, reductions-in-forcea reduction-in-force and other operating expense initiatives.
50
The decrease in depreciation and amortization expense related to the Comparable Properties primarily relates to a lower basis in depreciable assets resulting from impairments recorded since the prior year period, as well as a higher amount of write-offs of tenant improvements and intangible lease assets related to store closings in the prior yearprior-year period.
General and administrative expenses increaseddecreased primarily due to $13.0 million of costs related to the Company’s negotiations to restructure its corporate-level debt, partially offset by the implementation of comprehensive programs to reduce expenses, including salary reductions, furloughsprepetition professional and a reduction-in-force, as well higher legal expensesfees incurred in the prior yearprior-year period related to our restructuring efforts. Professional and legal fees, as well as other costs, incurred in the litigation settlementcurrent period related to our restructuring efforts are recorded in Reorganization items in the condensed consolidated statement of operations.
For the nine months ended September 30, 2021, we recognized $120.3 million of loss on impairment of real estate, which was primarily related to five malls, a redeveloped anchor parcel, an associated center and the new secured credit facility.
an outparcel. For the nine months ended September 30, 2020, we recognized $147.0 million of loss on impairment of real estate to write down the book value of three malls. For the nine months ended September 30, 2019, we recognized $202.1 million of loss on impairment of real estate to write down the book value of five malls and one community center. See Note 56 to the condensed consolidated financial statements for more information.
During the nine months ended September 30, 2019, we recognized $65.5 million of litigation settlement expense related to the settlement of a class action lawsuit. During the nine months ended September 30, 2020, we recognized a reduction of the litigation settlement expense of $2.5 million related to amounts we were released from pursuant to the terms of the settlement agreement. See Note 12 to the condensed consolidated financial statements for more information.
Other Income and Expenses
Interest and other income increased $3.0expense decreased $95.3 million during the nine months ended September 30, 20202021 compared to the prior-year period primarily due to additionalnot recognizing interest income received related to the U.S. Treasury securities that we invested in using a portion of the $280 million we drew on our secured line of credit in March 2020 to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic.
Interest expense increased $3.8 million compared to the prior-year period. The increase was primarily from an increase of $12.4 million due to (i) a higher outstanding balance on the secured line of credit as a result of the $280 million we drew in March 2020 to increase liquiditysenior unsecured notes and preserve financial flexibility and (ii) the accrual of additional interest on the secured credit facility at a higher interest rate imposed as a resultsubsequent to the filing of notices of default received from the administrative agent. Additionally, we accrued $5.4 millionChapter 11 Cases. The decrease was partially offset by an increase of default interest expense related to property-level nonrecoursenon-recourse loans that are in default. This increase was partially offset by a $15.7 million decrease in property-leveldefault, which may not be payable depending on the outcome of negotiations with the lenders. 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 was not accrued on the secured credit facility or the senior unsecured notes subsequent to the filing of the Chapter 11 Cases. See Note 2 for more information on our emergence from the deconsolidation of three encumbered properties sinceChapter 11 Cases.
Interest and other income decreased $3.2 million during the nine months ended September 30, 2021 compared to the prior-year period primarily due to the continued amortizationpayoff of a note receivable and gains resulting from insurance settlements in the corporate term loan and non-recourse property-level loans and the retirementprior-year period.
46
Table of three property-level loans.Contents
During the nine months ended September 30, 2020, we recorded a $15.4 million gain on extinguishment of debt related to one mall. We transferred Hickory Point Mall, which we transferred to the lender in satisfaction of the non-recourse debt secured by that property. During
For the nine months ended September 30, 2019,2021, we recorded $71.7$55.1 million of gain on extinguishment of debtdeconsolidation related to two malls. We transferred AcadianaAsheville Mall and Park Plaza. See Note 8 for more information.
The income tax benefit (provision) decreased $17.0 million as compared to the lenderprior-year period due to a full valuation allowance of $16.8 million that was recorded on our deferred tax assets in satisfactionthe prior-year period.
For the nine months ended September 30, 2021, we recorded $52.0 million of reorganization items, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees directly related to the non-recourse debt secured by the property. We sold Cary Towne Center and used the net proceeds from the sale to satisfy a portion of the non-recourse loan that secured the property. The remaining principal balance was forgiven.Chapter 11 Cases.
Equity in earningslosses of unconsolidated affiliates decreased by $15.9improved $2.9 million during the nine months ended September 30, 20202021 compared to the prior-year period. The decreaseimprovement was primarily due to an increase in the amortization of our inside/outside basis difference related to the three properties that were deconsolidated since the end of the prior year period as well as lowerhigher earnings of our unconsolidated affiliates and a reduction in uncollectable revenues in the current year-period as compared to the prior-year period due to the impacts of the mandated property closures during 2020 as a result of COVID-19.
Gain on sales of real estate assets increased $5.8 million compared to the prior-year period. During the nine months ended September 30, 2021, we recognized $8.5 million of gain on sales of real estate assets primarily related to the sale of three anchors and an increase in estimatesthree outparcels. During the nine months ended September 30, 2020, we recognized $2.7 million of uncollectible rental revenues and abatementsgain on sales of rent.real estate assets primarily related to the sale of three outparcels.
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 and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).
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.
51
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, 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 propertiesProperties are excluded from same-center NOI until they meet these criteria. Properties excluded from the same-center pool that would otherwise meet these criteria are properties which are being repositioned or properties where we are considering alternatives for repositioning and where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender. Asheville Mall, Burnsville Center, EastGate Mall, Greenbrier Mall and Park Plaza were classifiedcategorized as Lender Malls, at September 30, 2020.as defined below under Operational Review.
47
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 loss for the three- and nine-month periods ended September 30, 20202021 and 20192020 is as follows (in thousands):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Net loss |
| $ | (44,424 | ) |
| $ | (92,034 | ) |
| $ | (256,511 | ) |
| $ | (168,531 | ) |
| $ | (42,881 | ) |
| $ | (44,424 | ) |
| $ | (80,722 | ) |
| $ | (256,511 | ) |
Adjustments: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 66,796 |
|
|
| 76,608 |
|
|
| 201,180 |
|
|
| 228,201 |
|
|
| 59,388 |
|
|
| 66,796 |
|
|
| 180,846 |
|
|
| 201,180 |
|
Interest expense |
|
| 69,213 |
|
|
| 55,640 |
|
|
| 183,035 |
|
|
| 171,793 |
|
|
| 29,023 |
|
|
| 69,213 |
|
|
| 93,968 |
|
|
| 183,035 |
|
Abandoned projects expense |
|
| — |
|
|
| 7 |
|
|
| 400 |
|
|
| 41 |
|
|
| 104 |
|
|
| — |
|
|
| 391 |
|
|
| 400 |
|
(Gain) loss on sales of real estate assets |
|
| 55 |
|
|
| (8,056 | ) |
|
| (2,708 | ) |
|
| (14,438 | ) |
|
| (8,684 | ) |
|
| 55 |
|
|
| (8,492 | ) |
|
| (2,708 | ) |
Gain on investment/deconsolidation |
|
| — |
|
|
| (11,174 | ) |
|
| — |
|
|
| (11,174 | ) | ||||||||||||||||
Gain on sales of real estate assets of unconsolidated affiliates |
|
| (70 | ) |
|
| — |
|
|
| (70 | ) |
|
| — |
| ||||||||||||||||
Gain on extinguishment of debt |
|
| (15,407 | ) |
|
| — |
|
|
| (15,407 | ) |
|
| (71,722 | ) |
|
| — |
|
|
| (15,407 | ) |
|
| — |
|
|
| (15,407 | ) |
Gain on deconsolidation |
|
| — |
|
|
| — |
|
|
| (55,131 | ) |
|
| — |
| ||||||||||||||||
Loss on impairment |
|
| 46 |
|
|
| 135,688 |
|
|
| 146,964 |
|
|
| 202,121 |
|
|
| 63,160 |
|
|
| 46 |
|
|
| 120,342 |
|
|
| 146,964 |
|
Litigation settlement |
|
| (2,480 | ) |
|
| (22,688 | ) |
|
| (2,480 | ) |
|
| 65,462 |
|
|
| (89 | ) |
|
| (2,480 | ) |
|
| (890 | ) |
|
| (2,480 | ) |
Income tax provision |
|
| 546 |
|
|
| 1,670 |
|
|
| 17,189 |
|
|
| 2,622 |
| ||||||||||||||||
Reorganization items |
|
| 12,008 |
|
|
| — |
|
|
| 52,014 |
|
|
| — |
| ||||||||||||||||
Income tax (benefit) provision |
|
| (1,234 | ) |
|
| 546 |
|
|
| 222 |
|
|
| 17,189 |
| ||||||||||||||||
Lease termination fees |
|
| (1,722 | ) |
|
| (848 | ) |
|
| (3,375 | ) |
|
| (2,938 | ) |
|
| (2,051 | ) |
|
| (1,722 | ) |
|
| (3,329 | ) |
|
| (3,375 | ) |
Straight-line rent and above- and below-market rent |
|
| 2,662 |
|
|
| (1,881 | ) |
|
| 631 |
|
|
| (4,334 | ) | ||||||||||||||||
Net (income) loss attributable to noncontrolling interests in other consolidated subsidiaries |
|
| 937 |
|
|
| (763 | ) |
|
| 1,631 |
|
|
| (631 | ) | ||||||||||||||||
Straight-line rent and above- and below-market lease amortization |
|
| (2,771 | ) |
|
| 2,662 |
|
|
| 961 |
|
|
| 631 |
| ||||||||||||||||
Net loss attributable to noncontrolling interests in other consolidated subsidiaries |
|
| 76 |
|
|
| 937 |
|
|
| 1,344 |
|
|
| 1,631 |
| ||||||||||||||||
General and administrative expenses |
|
| 25,497 |
|
|
| 12,467 |
|
|
| 62,060 |
|
|
| 48,901 |
|
|
| 13,502 |
|
|
| 25,497 |
|
|
| 37,383 |
|
|
| 62,060 |
|
Management fees and non-property level revenues |
|
| (4,415 | ) |
|
| (2,293 | ) |
|
| (9,746 | ) |
|
| (9,077 | ) |
|
| (1,344 | ) |
|
| (4,415 | ) |
|
| (7,135 | ) |
|
| (9,746 | ) |
Operating Partnership's share of property NOI |
|
| 97,304 |
|
|
| 142,343 |
|
|
| 322,863 |
|
|
| 436,296 |
|
|
| 118,137 |
|
|
| 97,304 |
|
|
| 331,702 |
|
|
| 322,863 |
|
Non-comparable NOI |
|
| (5,909 | ) |
|
| (10,845 | ) |
|
| (19,120 | ) |
|
| (38,137 | ) |
|
| (5,843 | ) |
|
| (8,517 | ) |
|
| (17,037 | ) |
|
| (28,088 | ) |
Total same-center NOI |
| $ | 91,395 |
|
| $ | 131,498 |
|
| $ | 303,743 |
|
| $ | 398,159 |
|
| $ | 112,294 |
|
| $ | 88,787 |
|
| $ | 314,665 |
|
| $ | 294,775 |
|
(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 30.5%increased 26.5% for the three months ended September 30, 20202021 as compared to the prior-year period. The $40.1$23.5 million decreaseincrease for the three months ended September 30, 20202021 compared to the same period in 20192020 primarily consisted of a $46.8$27.4 million decreaseincrease in revenues offset by a $6.9$3.9 million declineincrease in operating expenses. Rental revenues declined $46.1increased $26.8 million during the quarter primarily relateddue to (i) store closures and rent concessions that werea decrease in effect prioruncollectable revenues in the current period as compared to the COVID-19 pandemic for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii)prior year period, as well as prior year rent concessions to tenants that are in bankruptcy 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 sales and traffic have improved as vaccination rates increased and government restrictions were lessened and the COVID-19 pandemic including $14.6 million of rent abatementshad a significant impact on past due rentssales and $12.4 milliontraffic in uncollectible revenues for past due rents.
the prior-year period.
Same-center NOI decreased 23.7%increased 6.7% for the nine months ended September 30, 20202021 as compared to the prior-year period. The $94.4$19.9 million decreaseincrease for the nine months ended September 30, 20202021 compared to the same period in 20192020 primarily consisted of a $112.4$27.2 million decreaseincrease in revenues offset by a $17.9$7.3 million declineincrease in operating expenses. Rental revenues declined $110.1increased $26.3 million during the quarternine months ended September 30, 2021, primarily relateddue to (i) store closures and rent concessions that werea decrease in effect prioruncollectable revenues in the current period as compared to the COVID-19 pandemic for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii)prior year period, as well as prior year rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the
52
COVID-19 pandemic. Percentage rent increased due to higher sales in the current period as sales and traffic have improved as vaccination rates increased and government restrictions were lessened and the COVID-19 pandemic including $16.9had a significant impact on sales and traffic in the prior-year period.
Our consolidated unencumbered properties generated approximately 35.9% of total consolidated NOI of $253.2 million of rent abatements on past due rents(which is at our share and $52.4 million in uncollectible revenuesexcludes NOI related to dispositions or lender properties) for past due rents.the nine months ended September 30, 2021.
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.
In response to local and state mandated closures due to the COVID-19 pandemic, our entire portfolio, except for a few properties, closed. All48
The mandated closures resulted in nearly all of our tenants closing for a period of time and/or shortening operating hours. As a result, we have experienced an increased level of requests for rent deferrals, and abatements, as well as defaults on rent obligations. While, in general, we believe that the tenants have a clear contractual obligation to pay rent, we have been working with our tenants to address rent deferral and abatement requests. Based on completed or in process agreements with 25 of our top tenants, representing approximately 40% of total revenues for the second and third quarters of 2020, we anticipate collecting over 65% of related rent for the second quarter and over 81% for the third quarter, with the majority of the remainder expected to be deferred or abated. We remain in negotiations with tenants and are unable to predict the outcome of those discussions. As we finalize negotiations, rent collections as a percentage of billed cash-based rents have increased with certain past-due amounts being paid. As of the end of the third quarter, the April 2020 collection rate had improved from 27% to over 76% and May improved from 33% to 68%. We expect this trend to continue as we move later in the year and into 2021, and certain deferred rents begin coming due. As of early November 2020, we estimate that we will defer $25.3 million, at our share, of rents that were billed for April through September 2020. Substantially all of this amount is related to agreements that were executed as of September 30, 2020 with the remainder in active negotiation. Additionally, we granted rent abatements of approximately $13.1 million and $14.9 million for the three and nine months ended September 30, 2020, respectively. We continue to assess rent relief requests from our tenants but are unable to predict the resolution or impact of these discussions.
Year-to-date, more than twelve national tenants have declared bankruptcy, including major tenants such as J.C. Penney, Ascena Retail Group, Stage Stores and GNC. As of September 30, 2020, J.C. Penney and Ascena Retail Group, Inc. represented $18.5 million in gross annual revenue and comprised 6.1 million square feet. The remaining ten tenants in bankruptcy represented approximately $22.3 million in gross annual revenue and comprised 1.1 million square feet. The majority of these have announced some store closures and some have liquidated, but several are expected to reorganize and continue to operate.
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 was classified as a non-stabilized mall as of September 30, |
| (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. Asheville Mall, EastGate Mall, Greenbrier Mall, The Outlet Shoppes at Gettysburg, The Outlet Shoppes at Laredo, Park Plaza and Parkdale Mall were classified as Lender Malls as of September 30, 2021. Asheville Mall, Burnsville Center, EastGate Mall, Greenbrier Mall and Park Plaza were classified as Lender Malls as of September 30, |
53
|
|
We derive the majority of our total revenues from the mall properties. The sources of our total revenues by property type were as follows:
|
| Nine Months Ended September 30, |
|
| As of September 30, |
| ||||||||||
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Malls |
|
| 90.4 | % |
|
| 91.6 | % |
|
| 89.9 | % |
|
| 90.4 | % |
Other Properties |
|
| 9.6 | % |
|
| 8.4 | % |
|
| 10.1 | % |
|
| 9.6 | % |
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. Due 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, CBLthe following is not able to provide a complete measurecomparison of sales per square foot for the trailing twelve months ended September 30, 2020. Stabilized mallchange in our same-center sales per square foot for the twelvenine months ended September 30, 2019 were $386.2021 compared to the nine months ended September 30, 2019:
| % Change | ||
Stabilized mall same-center sales per square foot | 16.8% |
Occupancy
Our portfolio occupancy is summarized in the following table (1):
|
| As of September 30, |
|
| As of September 30, |
| ||||||||||
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Total portfolio |
|
| 86.8 | % |
|
| 90.5 | % |
|
| 88.4 | % |
|
| 86.6 | % |
Malls: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Mall portfolio |
|
| 85.2 | % |
|
| 88.7 | % |
|
| 86.3 | % |
|
| 85.0 | % |
Same-center Malls |
|
| 85.2 | % |
|
| 89.0 | % |
|
| 86.3 | % |
|
| 85.5 | % |
Stabilized Malls |
|
| 85.4 | % |
|
| 88.8 | % |
|
| 86.3 | % |
|
| 85.4 | % |
Non-stabilized Malls (2) |
|
| 74.4 | % |
|
| 83.8 | % | ||||||||
Other Properties: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Associated centers |
|
| 89.1 | % |
|
| 96.3 | % |
|
| 94.8 | % |
|
| 89.1 | % |
Community centers |
|
| 94.4 | % |
|
| 96.3 | % |
|
| 94.5 | % |
|
| 94.4 | % |
(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. |
|
|
5449
LeasingBankruptcy-related store closures impacted 2021 occupancy by approximately 193 basis points or 316,000 square feet.
Leasing activity for the quarter was muted as we continued our focus on negotiating with existing tenants. To-date we have completed or are finalizing negotiations with retailers representing the majority of our top tenants. These agreements generally include flexible terms primarily on second quarter and, in certain cases, third quarter rent to certain retailers that require assistance, while at the same time preserving current and future income.
The following is a summary of the total square feet of leases signed in the three- and nine-month periods ended September 202030, 2021 and 2019:2020:
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Operating portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New leases |
|
| 43,654 |
|
|
| 239,645 |
|
|
| 463,771 |
|
|
| 768,106 |
|
|
| 118,683 |
|
|
| 43,654 |
|
|
| 473,105 |
|
|
| 463,771 |
|
Renewal leases |
|
| 553,848 |
|
|
| 472,636 |
|
|
| 1,276,343 |
|
|
| 1,626,014 |
|
|
| 379,096 |
|
|
| 553,848 |
|
|
| 1,671,201 |
|
|
| 1,276,343 |
|
Development portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New leases |
|
| — |
|
|
| 1,175 |
|
|
| 7,929 |
|
|
| 205,614 |
|
|
| — |
|
|
| — |
|
|
| 60,059 |
|
|
| 7,929 |
|
Total leased |
|
| 597,502 |
|
|
| 713,456 |
|
|
| 1,748,043 |
|
|
| 2,599,734 |
|
|
| 497,779 |
|
|
| 597,502 |
|
|
| 2,204,365 |
|
|
| 1,748,043 |
|
Average annual base rents per square foot are based on contractual rents in effect as of September 30, 20202021 and 2019,2020, 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:
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
| ||||
Malls (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-center Stabilized Malls |
| $ | 30.42 |
|
| $ | 31.94 |
|
| $ | 29.87 |
|
| $ | 30.67 |
|
Stabilized Malls |
|
| 30.49 |
|
|
| 32.05 |
|
|
| 29.87 |
|
|
| 30.49 |
|
Non-stabilized Malls (2) |
|
| 24.89 |
|
|
| 24.12 |
| ||||||||
Other Properties (3): |
|
| 15.54 |
|
|
| 15.40 |
| ||||||||
Other Properties (2): |
|
| 15.24 |
|
|
| 15.54 |
| ||||||||
Associated centers |
|
| 14.02 |
|
|
| 13.75 |
|
|
| 13.48 |
|
|
| 14.02 |
|
Community centers |
|
| 16.78 |
|
|
| 16.99 |
|
|
| 16.85 |
|
|
| 16.78 |
|
Office buildings |
|
| 19.14 |
|
|
| 18.87 |
|
|
| 19.35 |
|
|
| 19.14 |
|
(1) | Excluded properties are not included. |
(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 three- and nine-month periodperiods ended September 30, 20202021 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:
Property Type |
| Square Feet |
|
| Prior Gross Rent PSF |
|
| New Initial Gross Rent PSF |
|
| % Change Initial |
|
| New Average Gross Rent PSF (1) |
|
| % Change Average |
|
| Square Feet |
|
| Prior Gross Rent PSF |
|
| New Initial Gross Rent PSF |
|
| % Change Initial |
|
| New Average Gross Rent PSF (1) |
|
| % Change Average |
| ||||||||||||
Quarter: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Quarter-to-Date: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
All Property Types (2) |
|
| 348,790 |
|
| $ | 33.60 |
|
| $ | 27.88 |
|
|
| (17.0 | )% |
| $ | 28.29 |
|
|
| (15.8 | )% |
|
| 246,631 |
|
| $ | 53.20 |
|
| $ | 46.95 |
|
|
| (11.8 | )% |
| $ | 47.46 |
|
|
| (10.8 | )% |
Stabilized Malls |
|
| 297,079 |
|
|
| 34.81 |
|
|
| 29.06 |
|
|
| (16.5 | )% |
|
| 29.47 |
|
|
| (15.3 | )% |
|
| 204,628 |
|
|
| 59.06 |
|
|
| 51.37 |
|
|
| (13.0 | )% |
|
| 51.86 |
|
|
| (12.2 | )% |
New leases |
|
| 16,919 |
|
|
| 44.07 |
|
|
| 39.86 |
|
|
| (9.6 | )% |
|
| 41.53 |
|
|
| (5.8 | )% |
|
| 42,156 |
|
|
| 52.80 |
|
|
| 38.24 |
|
|
| (27.6 | )% |
|
| 42.08 |
|
|
| (20.3 | )% |
Renewal leases |
|
| 280,160 |
|
|
| 34.25 |
|
|
| 28.41 |
|
|
| (17.1 | )% |
|
| 28.74 |
|
|
| (16.1 | )% |
|
| 162,472 |
|
|
| 60.69 |
|
|
| 54.78 |
|
|
| (9.7 | )% |
|
| 54.40 |
|
|
| (10.4 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Property Types (2) |
|
| 886,441 |
|
| $ | 30.24 |
|
| $ | 26.59 |
|
|
| (12.1 | )% |
| $ | 27.03 |
|
|
| (10.6 | )% |
|
| 1,360,323 |
|
| $ | 37.61 |
|
| $ | 31.34 |
|
|
| (16.7 | )% |
| $ | 31.81 |
|
|
| (15.4 | )% |
Stabilized Malls |
|
| 793,168 |
|
|
| 30.68 |
|
|
| 27.10 |
|
|
| (11.7 | )% |
|
| 27.55 |
|
|
| (10.2 | )% |
|
| 1,190,770 |
|
|
| 40.07 |
|
|
| 32.63 |
|
|
| (18.6 | )% |
|
| 33.07 |
|
|
| (17.5 | )% |
New leases |
|
| 68,613 |
|
|
| 28.70 |
|
|
| 32.00 |
|
|
| 11.5 | % |
|
| 33.51 |
|
|
| 16.8 | % |
|
| 177,657 |
|
|
| 39.56 |
|
|
| 30.19 |
|
|
| (23.7 | )% |
|
| 32.28 |
|
|
| (18.4 | )% |
Renewal leases |
|
| 724,555 |
|
|
| 30.87 |
|
|
| 26.64 |
|
|
| (13.7 | )% |
|
| 26.99 |
|
|
| (12.6 | )% |
|
| 1,013,113 |
|
|
| 40.16 |
|
|
| 33.06 |
|
|
| (17.7 | )% |
|
| 33.21 |
|
|
| (17.3 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
5550
New and renewal leasing activity of comparable small shop space of less than 10,000 square feet 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 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
New |
|
| 73 |
|
|
| 235,156 |
|
|
| 7.14 |
|
| $ | 28.48 |
|
| $ | 30.07 |
|
| $ | 25.63 |
|
| $ | 2.85 |
|
|
| 11.1 | % |
| $ | 4.44 |
|
|
| 17.3 | % | ||||||||||||||||||||||||||||||||||||||||
Renewal |
|
| 355 |
|
|
| 1,156,701 |
|
|
| 2.58 |
|
|
| 25.33 |
|
|
| 26.24 |
|
|
| 30.37 |
|
|
| (5.04 | ) |
|
| (16.6 | )% |
|
| (4.13 | ) |
|
| (13.6 | )% | ||||||||||||||||||||||||||||||||||||||||
Commencement 2020 Total |
|
| 428 |
|
|
| 1,391,857 |
|
|
| 3.36 |
|
|
| 25.86 |
|
|
| 26.88 |
|
|
| 29.57 |
|
|
| (3.71 | ) |
|
| (12.5 | )% |
|
| (2.69 | ) |
|
| (9.1 | )% | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number of Leases |
|
| Square Feet |
|
| Term (in years) |
|
| Initial Rent PSF |
|
| Average Rent PSF |
|
| Expiring Rent PSF |
|
| Initial Rent Spread |
|
| Average Rent Spread |
| ||||||||||||||||
Commencement 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New |
|
| 8 |
|
|
| 23,594 |
|
|
| 9.22 |
|
|
| 36.82 |
|
|
| 38.89 |
|
|
| 32.09 |
|
|
| 4.73 |
|
|
| 14.7 | % |
|
| 6.80 |
|
|
| 21.2 | % |
|
| 88 |
|
|
| 212,209 |
|
|
| 6.46 |
|
| $ | 32.48 |
|
| $ | 34.79 |
|
| $ | 38.16 |
|
| $ | (5.68 | ) |
|
| (14.9 | )% |
| $ | (3.37 | ) |
|
| (8.8 | )% |
Renewal |
|
| 76 |
|
|
| 210,540 |
|
|
| 2.44 |
|
|
| 33.96 |
|
|
| 34.27 |
|
|
| 36.50 |
|
|
| (2.54 | ) |
|
| (7.0 | )% |
|
| (2.23 | ) |
|
| (6.1 | )% |
|
| 386 |
|
|
| 1,235,429 |
|
|
| 2.16 |
|
|
| 27.47 |
|
|
| 27.66 |
|
|
| 33.47 |
|
|
| (6.00 | ) |
|
| (17.9 | )% |
|
| (5.81 | ) |
|
| (17.4 | )% |
Commencement 2021 Total |
|
| 84 |
|
|
| 234,134 |
|
|
| 3.09 |
|
|
| 34.25 |
|
|
| 34.73 |
|
|
| 36.06 |
|
|
| (1.81 | ) |
|
| (5.0 | )% |
|
| (1.33 | ) |
|
| (3.7 | )% |
|
| 474 |
|
|
| 1,447,638 |
|
|
| 2.96 |
|
|
| 28.21 |
|
|
| 28.70 |
|
|
| 34.16 |
|
|
| (5.95 | ) |
|
| (17.4 | )% |
|
| (5.46 | ) |
|
| (16.0 | )% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 2020/2021 |
|
| 512 |
|
|
| 1,625,991 |
|
|
| 3.31 |
|
| $ | 27.07 |
|
| $ | 28.01 |
|
| $ | 30.50 |
|
| $ | (3.43 | ) |
|
| (11.2 | )% |
| $ | (2.49 | ) |
|
| (8.2 | )% | ||||||||||||||||||||||||||||||||||||||||
Commencement 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
New |
|
| 12 |
|
|
| 32,149 |
|
|
| 7.86 |
|
|
| 33.32 |
|
|
| 35.35 |
|
|
| 26.03 |
|
|
| 7.29 |
|
|
| 28.0 | % |
|
| 9.32 |
|
|
| 35.8 | % | ||||||||||||||||||||||||||||||||||||||||
Renewal |
|
| 92 |
|
|
| 248,954 |
|
|
| 2.69 |
|
|
| 39.61 |
|
|
| 39.94 |
|
|
| 42.72 |
|
|
| (3.11 | ) |
|
| (7.3 | )% |
|
| (2.78 | ) |
|
| (6.5 | )% | ||||||||||||||||||||||||||||||||||||||||
Commencement 2022 Total |
|
| 104 |
|
|
| 281,103 |
|
|
| 3.29 |
|
|
| 38.89 |
|
|
| 39.42 |
|
|
| 40.82 |
|
|
| (1.93 | ) |
|
| (4.7 | )% |
|
| (1.40 | ) |
|
| (3.4 | )% | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Total 2021/2022 |
|
| 578 |
|
|
| 1,728,741 |
|
|
| 3.02 |
|
| $ | 29.94 |
|
| $ | 30.44 |
|
| $ | 35.24 |
|
| $ | (5.30 | ) |
|
| (15.0 | )% |
| $ | (4.80 | ) |
|
| (13.6 | )% |
Liquidity and Capital Resources
LIQUIDITY AND CAPITAL RESOURCES As previously discussed, on the Effective Date, the conditions to effectiveness of the Plan were satisfied and the Debtors emerged from the Chapter 11 Cases. The Plan provided for the elimination of more than $1.6 billion of debt and preferred obligations, including an aggregate cash payment of $195.0 million as noted below, as well as a significant reduction in interest expense. In exchange for their approximately $1.4 billion in principal amount of senior unsecured notes and $133.0 million in principal amount of the secured credit facility, Consenting Noteholders, other noteholders, and certain holders of unsecured claims against the Company received, in the aggregate, $95.0 million in cash, $455.0 million of new senior secured notes, $100.0 million of new convertible secured notes, based upon the election by certain Consenting Noteholders, and 89% in common equity of the newly reorganized company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders also provided $50.0 million of new money in exchange for additional new convertible secured notes. Pursuant to the Plan the remaining bank lenders, holding $983.7 million in principal amount under the secured credit facility, received $100.0 million in cash and a new $883.7 million secured term loan. Existing common and preferred shareholders each received 5.5% of common equity in the newly reorganized company. See Note 2 for more detailed information.
As of September 30, 2020,2021, we had $258.6$268.0 million available in unrestricted cash and $100.0 million in U.S. Treasury securities and we had $675.9 million outstanding on our secured credit facility.securities. Our total pro rata share of debt at September 30, 20202021 was $4.4 billion.$4,363.8 million. The $162.8 million in restricted cash at September 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 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 nine months ended September 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 September 30, 2021, our U.S. Treasury securities have maturities through October 2021. Subsequent to September 30, 2021, we reinvested proceeds from matured U.S. Treasury securities into new U.S. Treasury securities. See Note 15 for more information.
In February 2020,March 2021, we utilized our secured credit facilityreached agreements with the lenders to pay off twomodify the loans secured by Parkway PlaceHammock Landing Phases I & II and Valley View Mall totaling $84.5 million. Also,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 February 2026. These loans had a combined outstanding loan balance of $105.4 million at September 30, 2021. Additionally, each such agreement provided forbearance related to the default triggered as a result of the Chapter 11 Cases, which was waived upon the Effective Date.
In March 2021, we closed onreached an agreement with the lender to modify the loan secured by Ambassador Infrastructure. The agreement provides an additional four-year term with a newfixed 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, which was waived upon the Effective Date.
On May 26, 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy. In September 2021, the subsidiary that owns The Outlet Shoppes at Laredo reached an agreement with the lender to dismiss the bankruptcy case and amend the loan secured by The Outlet Shoppes at Atlanta – Phase II inLaredo. The loan term was extended through June 2023 and contains a one-year extension option.
Subsequent to September 30, 2021, the amount of $4.7 million,loan secured by The Shoppes at Eagle Point was extended for one year with an interest rate of LIBOR plus 2.5% and a new maturity date of November 2023. Proceeds were used to retire the $4.4 million existing loan. In March 2020, we drew $280.0 million on our secured line of credit to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. We purchased $154.2 million, including accrued interest, of U.S. Treasury securities with a portion of the borrowings on our secured line of credit.
In response to the COVID-19 pandemic, we implemented comprehensive programs to halt all non-essential expenditures, to reduce operating and overhead expenses and to reduce, defer or suspend capital expenditures, including redevelopment investments. These programs include a temporary reduction of up to 50% to the compensation of our Chairman of the Board, our CEO and our President as well as independent director fees, a temporary reduction of up to 20% to the compensation of our other named executive officers, salary reductions to all staff, a broad-based furlough program, a permanent reduction in workforce and 2020 capital expenditure reductions or deferrals estimated in the range of $60.0 million to $80.0 million. While we have paused several major projects, we are pursuing capital lite solutions for backfilling our remaining available anchors, including joint venture partnerships, favorable lease structures and third-party arrangements – all of which benefit our portfolio while preserving capital. Additionally, we were able to achieve debt service payment deferrals for a portion of our secured loans. Securitized lenders in general have shown minimal flexibility in amending loan payments.
See Liquidity and Going Concern Considerations in Note 1 – Organization and Basis of Presentation and Significant Bankruptcy Court Actions in Note 15 – Subsequent Events to the condensed consolidated financial statements and the section below titled Financial Covenants and Restrictions for information on the ongoing alleged defaults and events of defaults asserted by the administrative agent with respect to the secured credit facility and the Company’s adversarial.
5651
proceeding in response to the notices from the administrative agent asserting rights
Our total share of consolidated, unconsolidated and remediesother outstanding debt maturing during 2021, assuming all extension options are elected, is $481.6 million, and for information on the Company’s commencement of the Chapter 11 Cases.
We have addressed nearly all our major debt maturities for 2020 andwe are in discussions with the existing lenders for certain 2021 secured loan maturities. We anticipate restructuring our unsecured debt maturities throughto modify and extend or otherwise refinance the recent Chapter 11 bankruptcy filing.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 resulthave resulted in the automatic acceleration of the outstanding principal and accrued interestcertain monetary obligations or may give the applicable lender the right to accelerate such amounts. We entered forbearance and/or waiver agreements with many of our lenders, which were contingent upon the Plan becoming effective and our successful emergence from bankruptcy. With the Plan becoming effective on November 1, 2021, we expect the default and/or default interest on the loans where a forbearance and/or waiver agreement was reached to become effective. We remain in negotiations with lenders regarding loan extensions and loan defaults where a forbearance and/or waiver agreement have not been reached. See Note 7 – Unconsolidated Affiliates and Noncontrolling Interests and Note 8 – Mortgage and Other Indebtedness, NetNote 9 for more information.
We derive the 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 investment in U.S. Treasury securities will, for the foreseeable future, provide adequate liquidity to meet our cash 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, joint venture investments 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 $141.2$430.9 million of cash, cash equivalents and restricted cash as of September 30, 2020,2021, an increase of $82.1$309.1 million from December 31, 2019.2020. Of this amount, $116.6$268.1 million was unrestricted cash and cash equivalents as of September 30, 2020.2021. Also, at September 30, 2020,2021, we had $151.8$100.0 million in U.S. Treasuries that are scheduled to mature between April 2021 and Junewith maturities through October 2021.
Our net cash flows are summarized as follows (in thousands):
|
| Nine Months Ended September 30, |
|
|
|
|
|
| Nine Months Ended September 30, |
|
|
|
|
| ||||||||||
|
| 2020 |
|
| 2019 |
|
| Change |
|
| 2021 |
|
| 2020 |
|
| Change |
| ||||||
Net cash provided by operating activities |
| $ | 59,192 |
|
| $ | 225,243 |
|
| $ | (166,051 | ) |
| $ | 202,170 |
|
| $ | 59,192 |
|
| $ | 142,978 |
|
Net cash provided by (used in) investing activities |
|
| (201,504 | ) |
|
| 55,870 |
|
|
| (257,374 | ) |
|
| 139,180 |
|
|
| (201,504 | ) |
|
| 340,684 |
|
Net cash provided by (used in) financing activities |
|
| 224,486 |
|
|
| (275,369 | ) |
|
| 499,855 |
|
|
| (32,168 | ) |
|
| 224,486 |
|
|
| (256,654 | ) |
Net cash flows |
| $ | 82,174 |
|
| $ | 5,744 |
|
| $ | 76,430 |
|
| $ | 309,182 |
|
| $ | 82,174 |
|
| $ | 227,008 |
|
Cash Provided by Operating Activities
Cash provided by operating activities decreased $166.0increased $143.0 million primarily due to a decline in cash payments of rental revenues from tenants due to the closure of most of our malls for a period of time in response to government mandates that began in March. Operatingoperating cash flows have also beenin the prior-year period being significantly impacted by rent deferrals and abatements that have beenwe granted to tenants experiencing financial difficulties due to the COVID-19 pandemic. Rental revenues also decreasedAlso, operating cash flows improved due to store closuresnot paying interest on the secured credit facility and rent concessions for tenants with high occupancy cost levels, including tenants that closed in 2019 and 2020 due to bankruptcy prior to the COVID-19 pandemic, as wellsenior unsecured notes as a decline in rental revenues related to dispositions.
57
Tableresult of Contentsthe filing of the Chapter 11 Cases.
Cash Provided by (Used in) Investing Activities
NetDuring the nine months ended September 30, 2020, net cash used in investing activities for 2020 was 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. During the nine months ended September 30, 2021, we had U.S. Treasury securities mature that we immediately reinvested in new U.S. Treasury securities. Subsequent to September 30, 2021, we purchased additional U.S. Treasury securities with proceeds that matured on September 30, 2021 (see Note 15). We also expended $47.8 million onhad a decrease in additions to real estate assets primarily related to redevelopment projects. Net cash provided by investing activities in the prior yearcurrent-year period relatedas compared to $128.4 millionthe prior-year period as a result of proceeds from dispositions of properties, which was partially offset by $90.4 million of additionsprograms put in place to real estate assets.reduce capital expenditures and preserve liquidity.
Cash Provided by (Used in) Financing Activities
TheDuring the nine months ended September 30, 2020, the net cash inflow for 2020 is primarily due to the $280.0 million draw on our secured credit facility in order to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. Additionally, there were no common or preferred stock dividends paid forDuring the nine months ended September 30, 2020, as compared2021, cash used in financing activities primarily relates to $26.0 million in dividends paid to holdersprincipal payments on mortgages.
52
Debt
Pre-Emergence 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 Note 89 to the condensed consolidated financial statements, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. We also provide a similar limited guarantee of the Operating Partnership's obligations with respect to our secured credit facility as of September 30, 2020.2021. See Note 2 for more information on our post-emergence debt.
Pre-Emergence Debt of the Operating Partnership
The followingbelow 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):. See Note 2 for more information on our post-emergence debt.
September 30, 2020: |
| Consolidated |
|
| Noncontrolling Interests |
|
| Unconsolidated Affiliates |
|
| Total |
|
| Weighted- Average Interest Rate (1) |
| |||||||||||||||||||||||||||||
Mortgage and other indebtedness, net, consisted of the following: | Mortgage and other indebtedness, net, consisted of the following: |
| ||||||||||||||||||||||||||||||||||||||||||
September 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 (2) |
| $ | 1,193,997 |
|
| $ | (30,275 | ) |
| $ | 616,446 |
|
| $ | 1,780,168 |
|
|
| 4.79 | % | ||||||||||||||||||||||||
Recourse loans on operating Properties (3) |
|
| — |
|
|
| — |
|
|
| 9,360 |
|
|
| 9,360 |
|
|
| 3.74 | % | ||||||||||||||||||||||||
Senior unsecured notes due 2023 (4) |
|
| 448,265 |
|
|
| — |
|
|
| — |
|
|
| 448,265 |
|
|
| 5.25 | % | ||||||||||||||||||||||||
Senior unsecured notes due 2024 (5) |
|
| 299,966 |
|
|
| — |
|
|
| — |
|
|
| 299,966 |
|
|
| 4.60 | % | ||||||||||||||||||||||||
Senior unsecured notes due 2026 (6) |
|
| 618,136 |
|
|
| — |
|
|
| — |
|
|
| 618,136 |
|
|
| 5.95 | % | ||||||||||||||||||||||||
Non-recourse loans on operating Properties (3) |
| $ | 955,175 |
|
| $ | (29,563 | ) |
| $ | 138,926 |
|
| $ | 603,438 |
|
| $ | 1,667,976 |
|
|
| 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 |
|
| 2,560,364 |
|
|
| (30,275 | ) |
|
| 625,806 |
|
|
| 3,155,895 |
|
|
| 5.06 | % |
|
| 955,175 |
|
|
| (29,563 | ) |
|
| 138,926 |
|
|
| 615,166 |
|
|
| 1,679,704 |
|
|
| 4.73 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse loans on operating Properties |
|
| 68,511 |
|
|
| — |
|
|
| 104,622 |
|
|
| 173,133 |
|
|
| 2.82 | % |
|
| 67,111 |
|
|
| — |
|
|
| — |
|
|
| 86,552 |
|
|
| 153,663 |
|
|
| 2.95 | % |
Construction loans |
|
| — |
|
|
| — |
|
|
| 17,864 |
|
|
| 17,864 |
|
|
| 2.52 | % |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 40,785 |
|
|
| 40,785 |
|
|
| 2.64 | % |
Total variable-rate debt |
|
| 67,111 |
|
|
| — |
|
|
| — |
|
|
| 127,337 |
|
|
| 194,448 |
|
|
| 2.89 | % | ||||||||||||||||||||
Total fixed-rate and variable-rate debt |
|
| 1,022,286 |
|
|
| (29,563 | ) |
|
| 138,926 |
|
|
| 742,503 |
|
|
| 1,874,152 |
|
|
| 4.54 | % | ||||||||||||||||||||
Unamortized deferred financing costs (5) |
|
| (3,202 | ) |
|
| 225 |
|
|
| — |
|
|
| (2,404 | ) |
|
| (5,381 | ) |
|
|
|
| ||||||||||||||||||||
Total mortgage and other indebtedness, net |
| $ | 1,019,084 |
|
| $ | (29,338 | ) |
| $ | 138,926 |
|
| $ | 740,099 |
|
| $ | 1,868,771 |
|
|
|
|
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following: | Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following: |
| ||||||||||||||||||||||||||||||||||||||||||
September 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: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Secured line of credit (7) |
|
| 675,925 |
|
|
| — |
|
|
| — |
|
|
| 675,925 |
|
|
| 9.50 | % |
|
| 675,926 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 675,926 |
|
|
| 9.50 | % |
Secured term loan (7) |
|
| 438,750 |
|
|
| — |
|
|
| — |
|
|
| 438,750 |
|
|
| 9.50 | % |
|
| 438,750 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 438,750 |
|
|
| 9.50 | % |
Total variable-rate debt |
|
| 1,183,186 |
|
|
| — |
|
|
| 122,486 |
|
|
| 1,305,672 |
|
|
| 8.52 | % |
|
| 1,114,676 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,114,676 |
|
|
| 9.50 | % |
Total fixed-rate and variable-rate debt |
|
| 3,743,550 |
|
|
| (30,275 | ) |
|
| 748,292 |
|
|
| 4,461,567 |
|
|
| 6.07 | % |
|
| 2,489,676 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,489,676 |
|
|
| 7.25 | % |
Unamortized deferred financing costs |
|
| (13,864 | ) |
|
| 288 |
|
|
| (2,594 | ) |
|
| (16,170 | ) |
|
|
|
| ||||||||||||||||||||||||
Total mortgage and other indebtedness, net |
| $ | 3,729,686 |
|
| $ | (29,987 | ) |
| $ | 745,698 |
|
| $ | 4,445,397 |
|
|
|
|
| ||||||||||||||||||||||||
Unpaid accrued interest (8) |
|
| 57,644 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 57,644 |
|
|
|
|
| ||||||||||||||||||||
Prepetition unsecured or under secured liabilities |
|
| 4,366 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,366 |
|
|
|
|
| ||||||||||||||||||||
Total liabilities subject to compromise |
| $ | 2,551,686 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 2,551,686 |
|
|
|
|
|
5853
December 31, 2019: |
| Consolidated |
|
| Noncontrolling Interests |
|
| Unconsolidated Affiliates |
|
| Total |
|
| Weighted- Average Interest Rate (1) |
| |||||
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse loans on operating Properties (2) |
| $ | 1,330,561 |
|
| $ | (30,658 | ) |
| $ | 623,193 |
|
| $ | 1,923,096 |
|
|
| 4.88 | % |
Recourse loans on operating Properties (3) |
|
| — |
|
|
| — |
|
|
| 10,050 |
|
|
| 10,050 |
|
|
| 3.74 | % |
Senior unsecured notes due 2023 (4) |
|
| 447,894 |
|
|
| — |
|
|
| — |
|
|
| 447,894 |
|
|
| 5.25 | % |
Senior unsecured notes due 2024 (5) |
|
| 299,960 |
|
|
| — |
|
|
| — |
|
|
| 299,960 |
|
|
| 4.60 | % |
Senior unsecured notes due 2026 (6) |
|
| 617,473 |
|
|
| — |
|
|
| — |
|
|
| 617,473 |
|
|
| 5.95 | % |
Total fixed-rate debt |
|
| 2,695,888 |
|
|
| (30,658 | ) |
|
| 633,243 |
|
|
| 3,298,473 |
|
|
| 5.10 | % |
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse loans on operating Properties |
|
| 41,950 |
|
|
| — |
|
|
| 69,046 |
|
|
| 110,996 |
|
|
| 4.13 | % |
Construction loans |
|
| 29,400 |
|
|
| — |
|
|
| 35,362 |
|
|
| 64,762 |
|
|
| 4.45 | % |
Secured line of credit |
|
| 310,925 |
|
|
| — |
|
|
| — |
|
|
| 310,925 |
|
|
| 3.94 | % |
Secured term loan |
|
| 465,000 |
|
|
| — |
|
|
| — |
|
|
| 465,000 |
|
|
| 3.94 | % |
Total variable-rate debt |
|
| 847,275 |
|
|
| — |
|
|
| 104,408 |
|
|
| 951,683 |
|
|
| 4.00 | % |
Total fixed-rate and variable-rate debt |
|
| 3,543,163 |
|
|
| (30,658 | ) |
|
| 737,651 |
|
|
| 4,250,156 |
|
|
| 4.86 | % |
Unamortized deferred financing costs |
|
| (16,148 | ) |
|
| 318 |
|
|
| (2,851 | ) |
|
| (18,681 | ) |
|
|
|
|
Total mortgage and other indebtedness, net |
| $ | 3,527,015 |
|
| $ | (30,340 | ) |
| $ | 734,800 |
|
| $ | 4,231,475 |
|
|
|
|
|
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 (7) |
|
| 675,926 |
|
|
| — |
|
|
| — |
|
|
| 675,926 |
|
|
| 9.50 | % |
Secured term loan (7) |
|
| 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 (8) |
|
| 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 |
|
|
|
|
|
(1) | During the nine months ended September 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 |
| An unconsolidated affiliate has an interest rate swap on a notional amount outstanding of |
| The unconsolidated affiliate |
|
|
(5) |
|
(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 balance |
(7) | 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 September 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 |
(8) | As of September 30, 2021 and December 31, 2020, represents interest accrued on the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases. |
54
The weighted-average remaining term of our total share of consolidated, unconsolidated and unconsolidatedother debt was 3.32.4 years and 3.93.1 years at September 30, 20202021 and December 31, 2019,2020, respectively. The weighted-average remaining term of our pro rata share of fixed-rate debt was 3.52.7 years and 4.13.4 years at September 30, 20202021 and December 31, 2019,2020, respectively.
As of September 30, 20202021 and December 31, 2019,2020, our pro rata share of consolidated and unconsolidated variable-rate debt represented 29.4%30.0% and 22.5%29.7%, respectively, of our total pro rata share of debt.
See Note 78 to the condensed consolidated financial statements for information concerning activity related to unconsolidated affiliates.
Credit Ratings
During the quarter ended June 30, 2020, Fitch Ratings, Moody’s Investors Service and S&P Global Ratings terminated their coverage of the Operating Partnership's unsecured long-term indebtedness.
Senior Unsecured Notes
The following presents the Company's compliance with key covenant ratios, as defined, of the Notes and the senior secured credit facility as of September 30, 2020:
|
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| ||||
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| |||
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| |||
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| |||
|
|
|
| |||
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|
|
|
59
|
|
(2) The minimum debt yield on outstanding balance debt covenant compliance ratio only applies to the secured credit facility. As of September 30, 2020, the lenders under the secured credit facility had declared all outstanding obligations to be immediately due and payable due to asserted defaults and events of default under the secured credit facility. Additionally, on November 1, 2020, we commenced the Chapter 11 Cases by filing voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code, which is an event of default under the secured credit facility.
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, 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 September 30, 2020,2021, and the maximum guarantee related to the Notes is $1,375.0 million as of September 30, 2020.2021.
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 September 30, 20202021 and December 31, 20192020 and the summarized statement of operations information is for the nine monthsthree and nine-month periods ended September 30, 2021 and 2020 and the year ended December 31, 2019. Amounts(amounts are presented in thousands.thousands).
|
| September 30, 2020 |
|
| December 31, 2019 |
| ||
Net investment in real estate assets |
| $ | 1,456,142 |
|
| $ | 1,505,668 |
|
Total assets (1) |
|
| 1,651,465 |
|
|
| 1,696,190 |
|
Total liabilities (2) |
|
| 2,846,991 |
|
|
| 2,503,005 |
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30, 2020 |
|
| Year Ended December 31, 2019 |
| ||
Total revenues (3) |
| $ | 167,917 |
|
| $ | 292,540 |
|
Total expenses (4) |
|
| 288,842 |
|
|
| 476,202 |
|
Net loss |
|
| (119,132 | ) |
|
| (117,325 | ) |
6055
|
| September 30, 2021 |
|
| December 31, 2020 |
| ||
Net investment in real estate assets |
| $ | 1,345,245 |
|
| $ | 1,428,482 |
|
Total assets (1) |
|
| 1,744,921 |
|
|
| 1,673,179 |
|
Total liabilities (2) |
|
| 2,815,878 |
|
|
| 2,884,808 |
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total revenues (3) |
| $ | 62,040 |
|
| $ | 54,507 |
|
Total expenses (4) |
|
| (61,934 | ) |
|
| (207,788 | ) |
Net income (loss) |
|
| 352 |
|
|
| (146,024 | ) |
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Total revenues (3) |
| $ | 171,410 |
|
| $ | 167,917 |
|
Total expenses (4) |
|
| (206,725 | ) |
|
| (288,842 | ) |
Net income (loss) |
|
| 8,157 |
|
|
| (119,132 | ) |
| (1) | Total assets include an intercompany note receivable with a non-guarantor subsidiary of |
| (2) | Total liabilities include intercompany liabilities of $9,092 and $2,781 as of September 30, 2021 and 2020, respectively. |
| (3) | Total revenues include revenues derived from non-guarantor subsidiaries of |
| (4) | Total expenses include expenses incurred with non-guarantor subsidiaries of |
Pre-Emergence Financial Covenants and Restrictions
As discussed in “Note 8 – Mortgage and Other Indebtedness, Net” to the condensed consolidated financial statements, we elected not to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment. The Operating Partnership did not make either the 2023 Notes Interest Payment or the 2026 Notes Interest Payment by the last day of the respective 30-day grace periods provided for in the indenture governing the 2023 Notes and the 2026 Notes. The Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment during the applicable grace periods constituted an “event of default” with respect to each of the 2023 Notes and the 2026 Notes.
On August 5, 2020, we made the 2023 Notes Interest Payment to the holders of the 2023 Notes and the 2026 Notes Interest Payment to the holders of the 2026 Notes. Accordingly, from and after such payment, the nonpayment of each of the 2023 Notes Interest Payment and the 2026 Notes Interest Payment no longer constitutes (i) an “event of default” under the indenture governing the 2023 Notes and the 2026 Notes that occurred and is continuing or (ii) to the extent provided in the Bank Forbearance Agreement, an “event of default” under the secured credit facility.
On each of May 26, 2020, June 2, 2020, June 16, 2020, August 6, 2020 and August 19, 2020, the Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility, which asserted that certain defaults and events of default occurred and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility and resulting from the failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment prior to the expiration of the applicable grace periods. On August 6, 2020, the Operating Partnership received a notice of imposition of base rate and post-default rate letter from the Agent, which (i) informed the Operating Partnership that following an asserted event of default on March 19, 2020, all outstanding loans were converted to base loans at the expiration of the applicable interest periods and (ii) sought payment of approximately $4.8 million related thereto for April through June 2020 (the “Demand Interest”). The base rate is defined as the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the LIBOR Market Index Rate plus 1.0%, plus 1.25%. The base rate on September 30, 2020 was 4.50% based on the prime rate plus 1.25%. The administrative agent also informed the Operating Partnership that from and after August 6, 2020, 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 the time of notification and at September 30, 2020 was 9.50%. On August 19, 2020, the Operating Partnership received from the administrative agent (i) a notice of default and reservation of rights letter, which asserted that each of the failure to pay the Demand Interest and the entry into the RSA constituted events of default under the terms of the secured credit facility and (ii) a notice of acceleration of obligations under the secured credit facility based on the events of default previously asserted by the administrative agent, pursuant to which, the administrative agent declared all outstanding principal, interest accruing at the base rate and the post-default rate, which as previously disclosed are rates being disputed by the Company, and letters of credit to be immediately due and payable. The administrative agent also terminated the revolving and swingline commitments and the obligation to issue letters of credit under the secured credit facility and instructed the Operating Partnership to deliver approximately $1.3 million in cash to collateralize outstanding letters of credit.
On August 25, 2020, The Operating Partnership received a notice of imposition of base rate letter from the administrative agent under the secured credit facility, which informed the Operating Partnership that following an asserted event of default, that all outstanding loans converted to base rate loans beginning July 1, 2019 and (ii) sought payment of approximately $12.0 million related thereto for July 1, 2019 through March 30, 2020. Additionally, the Operating Partnership failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020.
As of the date of this report, the lenders under the secured credit facility have not commenced foreclosure proceedings, but they may seek to exercise such remedies in the future. In addition, as a result of the events of default asserted by the administrative agent in such letters, the administrative agent may deny the Operating Partnership’s request for future LIBOR interest periods, which would result in an increase in annual interest expense of approximately $19.3 million based on the base rate and $74.4 million based on the post-default rate.
On October 16, 2020, the Company received an additional notice of default and reservation of rights letter from the Agent which asserted that certain defaults exist and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants in the Credit Agreement and resulting from the failure to make the $6.9 million interest payment that was due and payable on October 15, 2020, to holders of the 2024 Notes and that such default will constitute an event of default under the Credit Agreement if such interest is not paid within the 30-day grace period. On
61
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.
Notwithstanding these actions by the administrative agent, the Company intends to continue to operate its business, retain legal ownership of the entities pledged under the collateral agreement and the pledge agreement and manage its properties. The Company contends that the actions taken by the administrative agent are unauthorized and unlawful and the Company continues to disagree with the assertions made by the administrative agent as to the basis for the notice of acceleration and the notice of exercise and, accordingly, the validity of the notice of acceleration and the notice of exercise. The Company is vigorously defending against the claims made by the administrative agent and the lenders. Among other things, the Company, in good faith, disputes that any breaches of the agreement to the secured credit facility or any events of default thereunder that were the subject of the prior notices have occurred and are continuing. 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 agreement to 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 agreement to 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 the November 2, 2020, the Bankruptcy Court granted the Order and the Company and the administrative agent are negotiating the terms of a standstill pending further determination by the Bankruptcy Court. See Note 1 – Organization and Basis of Presentation2 to the condensed consolidated financial statements, for additional information.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.
Unencumbered Consolidated Portfolio Statistics
(Dollars in thousands, except sales per square foot data)
|
| Sales Per Square Foot for the Twelve Months Ended (1) (2) |
|
| Occupancy (2) |
|
| % of Consolidated Unencumbered NOI for the Nine Months Ended |
|
|
|
| |||||||||
|
| 9/30/20 | (3) | 9/30/19 |
|
| 9/30/20 |
|
| 9/30/19 |
|
| 9/30/20 |
|
| (4 | ) | ||||
Unencumbered consolidated Properties: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Malls |
|
|
| $ | 382 |
|
|
| 86.9 | % |
|
| 85.9 | % |
|
| 19.8 | % |
| (5 | ) |
Tier 2 Malls |
|
|
|
| 338 |
|
|
| 82.0 | % |
|
| 85.7 | % |
|
| 33.7 | % |
|
|
|
Tier 3 Malls |
|
|
|
| 279 |
|
|
| 80.0 | % |
|
| 87.0 | % |
|
| 23.3 | % |
|
|
|
Total Malls |
| N/A |
|
| 309 |
|
|
| 81.9 | % |
|
| 86.3 | % |
|
| 76.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Associated Centers |
| N/A |
| N/A |
|
|
| 85.8 | % |
|
| 95.7 | % |
|
| 16.8 | % |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Community Centers |
| N/A |
| N/A |
|
|
| 98.4 | % |
|
| 97.3 | % |
|
| 5.7 | % |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Office Buildings & Other |
| N/A |
| N/A |
|
|
| 100.0 | % |
|
| 86.7 | % |
|
| 0.7 | % |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Unencumbered Consolidated Portfolio |
| N/A |
| $ | 309 |
|
|
| 83.5 | % |
|
| 88.9 | % |
|
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Emergence Equity
In 2019, we suspended all future dividends on our common 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 directors’ decision to suspend the dividends that continue to accrue on our outstanding preferred stock currently makes us ineligible to use the abbreviated, and less costly, SEC Form S-3 registration statement to register our securities for sale. This means
62
we will be required to use a registration statement on Form S-1S-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 preferred stock, also will require that we not resume any payment of dividends on our common stock unless full cumulative dividends accrued with respect to our preferred stock (and such underlying preferred units) for all past quarters and the then-current quarter are first declared and paid in cash, or declared with a sum sufficient for the payment thereof having been set apart for such payment in cash. In addition, for so long as this distribution suspension results in the existence of a distribution shortfall (as described in the Partnership Agreement of the Operating Partnership) with respect to any of the S-SCUs, the L-SCUs or the K-SCUs (an “SCU Distribution Shortfall”), the terms of the Operating Partnership Agreement state that we (i) may not cause the Operating Partnership to resume distributions to holders of its outstanding common units of limited partnership interest until all holders of SCUs have received distributions sufficient to satisfy the SCU Distribution Shortfall for all prior quarters and the then-current quarter (which effectively would also preventsprevent the resumption of common stock dividends, since our common stock dividends are funded by distributions the Company receives on the underlying common units it holds in the Operating Partnership) and (ii) may not elect to settle any exchange requested by a holder of common units of the Operating Partnership in cash, and may only settle any such exchange through the issuance of shares of common stock or other units of the Operating Partnership ranking junior to any such units as to which a distribution shortfall exists. Our board of directors has prospectively approved that, to the extent any partners exercise any or all of their exchange rights while the existence of the SCU Distribution Shortfall requires an exchange to be settled through the issuance of shares of common stock or other units of the Operating Partnership, the consideration paid shall be in the form of shares of common
56
stock. We did not 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 emergence from the Chapter 11 Cases, which extinguished all claims related to the accrued and unpaid preferred stock dividends and the Operating Partnership unit SCU Distribution Shortfall discussed above. In regard to future dividend distributions with respect to new equity securities issued pursuant to the Chapter 11 Cases, we will review taxable income on a regular basis and take measures, if necessary, to ensure that we meet the minimum distribution requirements to maintain our status as a REIT.
See Listing CriteriaDelisting of Common Stock and Depositary Shares in Note 12 to the condensed consolidated financial statements for additional information regarding the suspension of NYSE trading in our common stock and the depositary shares representing our Series D Preferred Stock and Series E Preferred Stock pursuant to a notice we received from the NYSE regarding our non-compliance with the NYSE Listing StandardsStandards. On the Effective Date, by operation of the Plan, all agreements, instruments, and our plansother documents evidencing, relating to address this non-compliance.
As a publicly traded company,or connected with any equity interests of the Company, including the REIT’s common stock, and as a subsidiary of a publicly traded company, we previously have accessed capital through both the public equity and debt markets. We have a shelf registration statement on Form S-3 on file with the SEC that previously authorized us to publicly issue unspecified amounts of senior and/or subordinated debt securities, shares ofREIT’s preferred stock (orand related depositary shares, representing fractional interests therein), sharesissued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect. On November 2, 2021, our newly issued common stock warrants or rights to purchase any of the foregoing securities, and units consisting of two or more of these classes or series of securities and limited guarantees of debt securities issued by the Operating Partnership. This shelf registration statement also authorized the Operating Partnership to publicly issue unsubordinated debt securities. This shelf registration statement was due to expire in July 2021. However, as a result of both (i) the fact that the Company no longer qualifies as a well-known seasoned issuer under SEC rules and (ii) our loss of eligibility to use Form S-3 to register offers and sales of securities as described above, we are unable to use this shelf registration statement.
Additionally, while we had previously suspended quarterly dividend payments on our common stock during 2019, a very small amount of monthly “cash option” investments in shares continued into May 2020, pursuant to the terms of the Company’s dividend reinvestment plan (“DRIP”). Due in part to impactscommenced trading on the Company’s operations and staffing resulting from ongoing efforts to address the COVID-19 pandemic, we inadvertently failed to suspend the operation of these “cash option” investments during the months of March, April and May 2020, after we lost the ability to use the Form S-3 registration statement for the DRIP, effective with the filing of our Annual Report on Form 10-K in March, due to the dividend arrearage with respect to our preferred stock. We have now fully suspended the operation of our DRIP, including the cash option feature but, as a result of this oversight, we issued a total of 6,134 shares of common stock that were not registeredNYSE under the Securities Act of 1933, as amended (the “Securities Act”) for aggregate consideration of $1,346.94 prior to such suspension. The purchasers of these shares, issued pursuant to our DRIP when we were not eligible to issue shares on Form S-3, could bring claims against us for rescission and other damages under federal or state securities laws.symbol CBL.
Market Capitalization
Our total-market capitalization as of September 30, 20202021 was as follows (in thousands, except stock prices):
|
| Shares Outstanding |
|
| Stock Price (1) |
|
| Shares Outstanding (1) |
|
| Stock Price (2) |
| ||||
Common stock and operating partnership units |
|
| 201,690 |
|
| $ | 0.16 |
| ||||||||
Common stock and Operating Partnership units |
|
| 201,555 |
|
| $ | 0.18 |
| ||||||||
7.375% Series D Cumulative Redeemable Preferred Stock |
|
| 1,815 |
|
|
| 250.00 |
|
|
| 1,815 |
|
|
| 250.00 |
|
6.625% Series E Cumulative Redeemable Preferred Stock |
|
| 690 |
|
|
| 250.00 |
|
|
| 690 |
|
|
| 250.00 |
|
(1) | As noted above, on the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company, including the REIT’s old common stock, and the REIT’s preferred stock and related depositary shares, issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect. On November 2, 2021, our newly issued common stock commenced trading on the NYSE under the symbol CBL. |
(2) | Stock price for common stock and Operating Partnership units equals the closing price of CBL's common stock on September 30, |
63
Capital Expenditures
Deferred maintenance and capital expenditures are generally included in the determination of CAMcommon area maintenance (“CAM”) expense that is billed to tenants in accordance with their lease agreements. These expenditures are generally 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 amounts 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 periodsmonths ended September 30, 20202021 compared to the same periods in 20192020 (in thousands):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Tenant allowances (1) |
| $ | 1,426 |
|
| $ | 10,781 |
|
| $ | 10,181 |
|
| $ | 21,831 |
|
| $ | 4,990 |
|
| $ | 1,426 |
|
| $ | 9,242 |
|
| $ | 10,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred maintenance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parking area and parking area lighting |
|
| — |
|
|
| 315 |
|
|
| 270 |
|
|
| 529 |
|
|
| 802 |
|
|
| — |
|
|
| 859 |
|
|
| 270 |
|
Roof repairs and replacements |
|
| 230 |
|
|
| 2,083 |
|
|
| 2,234 |
|
|
| 4,757 |
|
|
| 220 |
|
|
| 230 |
|
|
| 538 |
|
|
| 2,234 |
|
Other capital expenditures |
|
| 1,113 |
|
|
| 5,610 |
|
|
| 4,954 |
|
|
| 15,094 |
|
|
| 1,873 |
|
|
| 1,113 |
|
|
| 4,126 |
|
|
| 4,954 |
|
Total deferred maintenance |
|
| 1,343 |
|
|
| 8,008 |
|
|
| 7,458 |
|
|
| 20,380 |
|
|
| 2,895 |
|
|
| 1,343 |
|
|
| 5,523 |
|
|
| 7,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized overhead |
|
| 245 |
|
|
| 423 |
|
|
| 980 |
|
|
| 1,795 |
|
|
| 198 |
|
|
| 245 |
|
|
| 665 |
|
|
| 980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized interest |
|
| 438 |
|
|
| 787 |
|
|
| 1,530 |
|
|
| 1,969 |
|
|
| — |
|
|
| 438 |
|
|
| 32 |
|
|
| 1,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures |
| $ | 3,452 |
|
| $ | 19,999 |
|
| $ | 20,149 |
|
| $ | 45,975 |
|
| $ | 8,083 |
|
| $ | 3,452 |
|
| $ | 15,462 |
|
| $ | 20,149 |
|
(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. As noted above, in response to the impact from COVID-19 we have deferred or suspended capital expenditures, including redevelopment expenditures, in the range of $60.0 million to $80.0 million. 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.
57
Developments Expansions and Redevelopments
The following tables summarize our development, expansion and redevelopment projects as of September 30, 2020.
Properties Opened During the Nine Months EndedSeptember 30, 20202021
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
| CBL's Share of |
|
|
|
|
|
|
| |||||||||
Property |
| Location |
| CBL Ownership Interest |
|
| Total Project Square Feet |
|
| Total Cost (1) |
|
| Cost to Date (2) |
|
| 2021 Cost |
|
| Opening Date |
| Initial Unleveraged Yield |
| ||||||
Outparcel Developments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hamilton Place - Aloft Hotel (3)(4) |
| Chattanooga, TN |
| 50% |
|
|
| 89,674 |
|
| $ | 12,000 |
|
| $ | 11,960 |
|
| $ | 3,134 |
|
| Jun-21 |
| 9.2% |
| ||
Pearland Town Center - HCA Offices |
| Pearland, TX |
| 100% |
|
|
| 48,416 |
|
|
| 14,186 |
|
|
| 12,787 |
|
|
| 5,365 |
|
| Jun-21 |
| 11.8% |
| ||
|
|
|
|
|
|
|
|
| 138,090 |
|
| $ | 26,186 |
|
| $ | 24,747 |
|
| $ | 8,499 |
|
|
|
|
|
|
|
Properties Under Development at September 30, 2021
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
| CBL's Share of |
|
|
|
|
|
|
| |||||||||
Property |
| Location |
| CBL Ownership Interest |
|
| Total Project Square Feet |
|
| Total Cost (1) |
|
| Cost to Date (2) |
|
| 2020 Cost |
|
| Opening Date |
| Initial Unleveraged Yield |
| ||||||
Outparcel Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fremaux Town Center - Old Navy |
| Slidell, LA |
| 90% |
|
|
| 12,467 |
|
| $ | 1,918 |
|
| $ | 1,553 |
|
| $ | 100 |
|
| May 2020 |
|
| 9.2 | % | |
Hamilton Place - Self Storage (3) (4) |
| Chattanooga, TN |
| 60% |
|
|
| 68,875 |
|
|
| 5,824 |
|
|
| 4,419 |
|
|
| 3,300 |
|
| July 2020 |
|
| 8.7 | % | |
Parkdale Mall - Self Storage (3) (4) |
| Beaumont, TX |
| 50% |
|
|
| 69,341 |
|
|
| 4,435 |
|
|
| 3,543 |
|
|
| 1,039 |
|
| April 2020 |
|
| 10.2 | % | |
Total Properties Opened |
|
|
|
|
|
|
|
| 150,683 |
|
| $ | 12,177 |
|
| $ | 9,515 |
|
| $ | 4,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CBL's Share of |
|
|
|
|
|
|
| |||||||||
Property |
| Location |
| CBL Ownership Interest |
|
| Total Project Square Feet |
|
| Total Cost (1) |
|
| Cost to Date (2) |
|
| 2021 Cost |
|
| Expected Opening Date |
| Initial Unleveraged Yield |
| ||||||
Outparcel Developments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkwood Mall - Five Guys, Blaze Pizza, Thrifty White, Pancheros, Chick-fil-A |
| Bismarck, ND |
| 100% |
|
|
| 15,275 |
|
| $ | 7,176 |
|
| $ | 2,586 |
|
| $ | 2,383 |
|
| Q2 '22 |
| 8.9% |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redevelopments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross Creek Sears Redevelopment - Longhorn's, Rooms To Go (5) |
| Fayetteville, NC |
| 100% |
|
|
| 13,494 |
|
|
| 5,252 |
|
|
| 3,373 |
|
|
| 2,149 |
|
| Q4 '21 |
| 5.3% |
| ||
Total Properties Under Development |
|
|
|
|
|
|
|
| 28,769 |
|
| $ | 12,428 |
|
| $ | 5,959 |
|
| $ | 4,532 |
|
|
|
|
|
|
|
(1) | Total Cost is presented net of reimbursements to be received. |
(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 |
64
Redevelopments Completed During the Nine Months EndedSeptember 30, 2020
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
| CBL's Share of |
|
|
|
|
|
|
| |||||||||
Property |
| Location |
| CBL Ownership Interest |
|
| Total Project Square Feet |
|
| Total Cost (1) |
|
| Cost to Date (2) |
|
| 2020 Cost |
|
| Opening Date |
| Initial Unleveraged Yield |
| ||||||
Mall Redevelopments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cherryvale Sears Redevelopment - Tilt |
| Rockford, IL |
| 100% |
|
|
| 114,118 |
|
| $ | 3,508 |
|
| $ | 3,281 |
|
| $ | 378 |
|
| June 2020 |
|
| 8.3 | % | |
Coastal Grand Dick's Redevelopment - DSG/Golf Galaxy (3) |
| Myrtle Beach, SC |
| 50% |
|
|
| 132,727 |
|
| $ | 7,050 |
|
| $ | 4,486 |
|
| $ | 3,360 |
|
| Sept 2020 |
|
| 11.6 | % | |
Dakota Square Herbergers Redevelopment - Ross, T-Mobile, Retail Shops |
| Minot, ND |
| 100% |
|
|
| 30,096 |
|
|
| 6,410 |
|
|
| 4,537 |
|
|
| 188 |
|
| Jan 2020 |
|
| 7.2 | % | |
Hamilton Place Sears Redevelopment - Dicks Sporting Goods, Dave & Busters, Hotel, Cheesecake Factory (4) |
| Chattanooga, TN |
| 100% |
|
|
| 195,166 |
|
|
| 38,715 |
|
|
| 29,923 |
|
|
| 4,067 |
|
| March 2020 |
|
| 7.8 | % | |
Mall del Norte Forever 21 Redevelopment - Main Event |
| Laredo, TX |
| 100% |
|
|
| 81,242 |
|
|
| 10,514 |
|
|
| 6,819 |
|
|
| 1,160 |
|
| Sept 2019/Feb 2020 |
|
| 9.3 | % | |
The Promenade @ D'Iberville Redevelopment - Five Below, Carter's |
| D'Iberville, MS |
| 100% |
|
|
| 14,007 |
|
|
| 2,832 |
|
|
| 2,457 |
|
|
| 446 |
|
| Feb 2020/Apr 2020 |
|
| 11.4 | % | |
Total Redevelopments Completed |
|
|
|
|
|
|
|
| 567,356 |
|
| $ | 69,029 |
|
| $ | 51,503 |
|
| $ | 9,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| The return reflected represents a pro forma incremental return as Total Cost excludes the cost related to the acquisition of the Sears |
65
Properties Under Development atSeptember 30, 2020
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
| CBL's Share of |
|
|
|
|
|
|
| |||||||||
Property |
| Location |
| CBL Ownership Interest |
|
| Total Project Square Feet |
|
| Total Cost (1) |
|
| Cost to Date (2) |
|
| 2020 Cost |
|
| Expected Opening Date (3) |
| Initial Unleveraged Yield |
| ||||||
Outparcel Developments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hamilton Place Development - Aloft Hotel (4)(5) |
| Chattanooga, TN |
| 50% |
|
|
| 89,674 |
|
| $ | 12,000 |
|
| $ | 6,767 |
|
| $ | 6,125 |
|
| Q1 '21 |
|
| 9.2 | % | |
Mayfaire Town Center - First Watch |
| Wilmington, NC |
| 100% |
|
|
| 6,300 |
|
|
| 2,267 |
|
|
| 1,491 |
|
|
| 1,125 |
|
| Q4 '20 |
|
| 10.1 | % | |
Pearland Town Center - HCA Offices |
| Pearland, TX |
| 100% |
|
|
| 48,416 |
|
|
| 14,186 |
|
|
| 4,700 |
|
|
| 3,843 |
|
| Q1 '21 |
|
| 11.8 | % | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 144,390 |
|
| $ | 28,453 |
|
| $ | 12,958 |
|
| $ | 11,093 |
|
|
|
|
|
|
|
Mall Redevelopments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westmoreland Mall JCP pad Redevelopment - Chipotle |
| Greensburg, PA |
| 100% |
|
|
| 2,300 |
|
| $ | 1,017 |
|
| $ | 1,125 |
|
| $ | 881 |
|
| Q4 '20 |
|
| 9.4 | % | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,300 |
|
| $ | 1,017 |
|
| $ | 1,125 |
|
| $ | 881 |
|
|
|
|
|
|
|
Total Properties Under Development |
|
|
|
|
|
|
|
| 146,690 |
|
| $ | 29,470 |
|
| $ | 14,083 |
|
| $ | 11,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Balance Sheet Arrangements
Unconsolidated Affiliates
We have ownership interests in 2931 unconsolidated affiliates as of September 30, 20202021 that are described in Note 78 to the condensed consolidated financial statements. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the condensed consolidated balance sheets as investments in unconsolidated affiliates.
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. |
58
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 of September 30, 20202021 and December 31, 2019.2020.
66
CRITICAL ACCOUNTING POLICIESCritical 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 as amended, for the year ended December 31, 20192020 contains a discussion of our critical accounting policies and estimates in the Management's Discussion and Analysis of Financial Condition and Results of Operations section. Uncertainty in the current economic environment dueThere have been no material changes to the effects of the COVID-19 pandemic has and may continue to significantly impact management’s judgments regarding estimates and assumptions. In addition to the critical accountingthese policies and estimates discussedduring the nine months ended September 30, 2021. Our significant accounting policies are disclosed in Management’s Discussion and Analysis of Financial Condition and Results of OperationsNote 3 to the consolidated financial statements included in our Annual Report on Form 10-K as amended, we are adding the following due to significant changes in judgements related to the COVID-19 pandemic.
Revenue Recognition and Accounts Receivable
Receivables include amounts billed and currently due from tenants pursuant to lease agreements and receivables attributable to straight-line rents associated with those lease agreements. Individual leases where the collection of rents is in dispute are assessed for collectability based on management’s best estimate of collection considering the anticipated outcome of the dispute. Individual leases that are not in dispute are assessed for collectability and upon the determination that the collection of rents over the remaining lease term is not probable, accounts receivable are reduced as an adjustment to rental revenues. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further, management assesses whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical collection levels and current economic trends. An allowance for the uncollectible portion of the portfolio is recorded as an adjustment to rental revenues. Management’s estimate of the collectability of accounts receivable from tenants is based on the best information available to management at the time of evaluation.
We review current economic considerations each reporting period, including the effects of tenant bankruptcies. Additionally, with the uncertainties regarding COVID-19, our assessment also took into consideration the type of tenant and current discussions with the tenants regarding matters such as billing disputes, lease negotiations and executed deferrals or abatements, as well as recent rent payment and credit history. Evaluating and estimating uncollectible lease payments and related receivables requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. For the three and nine monthsyear ended September 30, 2020, we reduced rental revenue by $13.7 million and $54.5 million, respectively, due to lease-related reserves and write-offs, which includes $2.6 million and $5.1 million, respectively, for straight-line rent receivables. Actual results could differ from these estimates and such differences could be material to our consolidated financial statements.
Lease Modifications
In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance related to lease concessions provided as a result of COVID-19. Under existing lease guidance, we would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election.
We have elected to apply the relief provided under the Lease Modification Q&A and will avail ourselves of the election to avoid performing a lease by lease analysis for the lease concessions that were (1) granted as relief due to the COVID-19 pandemic and (2) result in the cash flows remaining substantially the same or less than the original contract. The Lease Modification Q&A had a material impact on our consolidated financial statements as of and for the three and nine months ended September 30,December 31, 2020. However, its future impact to us is dependent upon the extent of lease concessions
67
granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by us at the time of entering such concessions.
The Lease Modification Q&A allows us to determine accounting policy elections at a disaggregated level, and the elections should be applied consistently by either the type of concession, underlying asset class or on another reasonable basis. As a result, we have made the following policy elections based on the type of concession agreed to with the respective tenant.
Rent Deferrals
The Company will account for rental deferrals using the receivables model as described within the Lease Modification Q&A. Under the receivables model, the Company will continue to recognize lease revenue in a manner that is unchanged from the original lease agreement and continue to recognize lease receivables and rental revenue during deferral period.
Rent Abatements
The Company will account for rental abatements using the negative variable income model as described within the Lease Modification Q&A. Under the negative variable income model, the Company will recognize negative variable rent for the current period reduction of rental revenue associated with any lease concessions we provide.
At September 30, 2020, our receivables include $22.1 million related to receivables that have been deferred and are to be repaid over periods generally starting in late 2020 and extending for some portion of 2021. We granted abatements of $13.1 million and 14.9 million, respectively, for the three and nine months ended September 30, 2020. Additionally, we granted rent abatements of approximately $13.1 million and $14.9 million for the three and nine months ended September 30, 2020, respectively. We continue to assess rent relief requests from our tenants but are unable to predict the resolution or impact of these discussions.For agreements that are in currently under negotiation, we do not expect the impact to be material.
Recent Accounting Pronouncements
See Note 23 to the condensed consolidated financial statements for information on recently issued accounting pronouncements.
Impact of Inflation and Deflation
Deflation can result in a decline in general price levels, often caused by a decrease in the supply of money or credit. The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand. Restricted lending practices could impact our ability to obtain financings or refinancings for our properties and our tenants’ ability to obtain credit. Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.
During inflationary periods, substantially all of our tenant leases contain provisions designed to mitigate the impact of inflation. These provisions include clauses enabling us to receive percentage rent based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. In addition, many of the leases are for terms of less than 10 years, which may provide us the opportunity to replace existing leases with new leases at higher base and/or percentage rent if rents of the existing leases are below the then existing market rate. Most of the leases require the tenants to pay a fixed amount, subject to annual increases, for their share of operating expenses, including CAM, real estate taxes, insurance and certain capital expenditures, which reduces our exposure to increases in costs and operating expenses resulting from inflation.
68
Table of ContentsNon-GAAP Measure
Non-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 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)loss attributable to common shareholders.
59
In our reconciliation of net income (loss)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)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)loss for purposes of evaluating our operating performance or to cash flow as a measure of liquidity.
The Company believesWe 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)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 declinedincreased to $11.4$74.5 million for the three months ended September 30, 20202021 from $90.4$11.4 million for the prior-year periodperiod; and declinedincreased to $57.2$215.5 million for the nine months ended September 30, 20202021 from $203.0$57.2 million for the prior-year period. Excluding the adjustments noted below, FFO of the Operating Partnership, as adjusted, declinedincreased to $9.0$95.3 million for the three months ended September 30, 20202021 from $67.8$9.0 million for the same period in 2019,2020; and declinedincreased to $65.5$243.5 million for the nine months ended September 30, 20202021 from $196.8$65.5 million forfrom the same period in 2019.2020. The decreasesincrease in FFO, as adjusted, for the three- and nine- month periods werewas primarily driven by lower property-level NOI, which includes the estimate for uncollectable rental revenues and rent abatementsreduction in interest expense due to not recognizing post-petition interest expense on the mandated property closures a resultsenior unsecured notes and the secured credit facility subsequent to the filing of the COVID-19 pandemic. The reduction in rental revenues was partially offset by lower operating expenses fromChapter 11 Cases, the program we put in placecumulation of undeclared dividends ceasing to eliminate all non-essential expenditurescumulate on the Series D Preferred Stock and the company-wide furloughSeries E Preferred Stock subsequent to the filing of the Chapter 11 Cases, a lower income tax provision in the current-year period and salary reduction program.a decrease in uncollectable revenues in the current-year period as compared to the prior year period.
69
The reconciliation of net 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, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Net loss attributable to common shareholders |
| $ | (54,101 | ) |
| $ | (90,116 | ) |
| $ | (269,449 | ) |
| $ | (175,715 | ) |
| $ | (41,720 | ) |
| $ | (54,101 | ) |
| $ | (77,365 | ) |
| $ | (269,449 | ) |
Noncontrolling interest in income (loss) of Operating Partnership |
|
| (609 | ) |
|
| (13,904 | ) |
|
| (19,100 | ) |
|
| (27,116 | ) | ||||||||||||||||
Noncontrolling interest in loss of Operating Partnership |
|
| (1,085 | ) |
|
| (609 | ) |
|
| (2,013 | ) |
|
| (19,100 | ) | ||||||||||||||||
Depreciation and amortization expense of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Properties |
|
| 53,477 |
|
|
| 64,168 |
|
|
| 162,042 |
|
|
| 198,438 |
| ||||||||||||||||
Consolidated properties |
|
| 46,479 |
|
|
| 53,477 |
|
|
| 142,090 |
|
|
| 162,042 |
| ||||||||||||||||
Unconsolidated affiliates |
|
| 14,437 |
|
|
| 14,471 |
|
|
| 41,967 |
|
|
| 36,599 |
|
|
| 13,480 |
|
|
| 14,437 |
|
|
| 40,466 |
|
|
| 41,967 |
|
Non-real estate assets |
|
| (702 | ) |
|
| (920 | ) |
|
| (2,431 | ) |
|
| (2,719 | ) |
|
| (416 | ) |
|
| (702 | ) |
|
| (1,448 | ) |
|
| (2,431 | ) |
Noncontrolling interests' share of depreciation and amortization |
|
| (1,118 | ) |
|
| (2,031 | ) |
|
| (2,829 | ) |
|
| (6,836 | ) | ||||||||||||||||
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries |
|
| (571 | ) |
|
| (1,118 | ) |
|
| (1,710 | ) |
|
| (2,829 | ) | ||||||||||||||||
Loss on impairment |
|
| 46 |
|
|
| 135,688 |
|
|
| 146,964 |
|
|
| 202,121 |
|
|
| 63,160 |
|
|
| 46 |
|
|
| 120,342 |
|
|
| 146,964 |
|
(Gain) loss on depreciable property |
|
| — |
|
|
| (16,914 | ) |
|
| 25 |
|
|
| (21,755 | ) |
|
| (4,836 | ) |
|
| — |
|
|
| (4,836 | ) |
|
| 25 |
|
FFO allocable to Operating Partnership common unitholders |
|
| 11,430 |
|
|
| 90,442 |
|
|
| 57,189 |
|
|
| 203,017 |
|
|
| 74,491 |
|
|
| 11,430 |
|
|
| 215,526 |
|
|
| 57,189 |
|
Debt restructuring expenses (1) |
|
| 12,913 |
|
|
| — |
|
|
| 20,770 |
|
|
| — |
| ||||||||||||||||
Litigation settlement, net of taxes (2) |
|
| (2,480 | ) |
|
| (22,688 | ) |
|
| (2,480 | ) |
|
| 64,979 |
| ||||||||||||||||
Non-cash default interest expense (3) |
|
| 2,519 |
|
|
| — |
|
|
| 5,412 |
|
|
| 542 |
| ||||||||||||||||
Gain on extinguishment of debt (4) |
|
| (15,407 | ) |
|
| — |
|
|
| (15,407 | ) |
|
| (71,722 | ) | ||||||||||||||||
Litigation settlement (1) |
|
| (89 | ) |
|
| (2,480 | ) |
|
| (890 | ) |
|
| (2,480 | ) | ||||||||||||||||
Non-cash default interest expense (2) |
|
| 8,919 |
|
|
| 2,519 |
|
|
| 31,965 |
|
|
| 5,412 |
| ||||||||||||||||
Gain on deconsolidation (3) |
|
| — |
|
|
| — |
|
|
| (55,131 | ) |
|
| — |
| ||||||||||||||||
Reorganization items (4) |
|
| 12,008 |
|
|
| — |
|
|
| 52,014 |
|
|
| — |
| ||||||||||||||||
Prepetition charges (5) |
|
| — |
|
|
| 12,913 |
|
|
| — |
|
|
| 20,770 |
| ||||||||||||||||
Gain on extinguishment of debt (6) |
|
| — |
|
|
| (15,407 | ) |
|
| — |
|
|
| (15,407 | ) | ||||||||||||||||
FFO allocable to Operating Partnership common unitholders, as adjusted |
| $ | 8,975 |
|
| $ | 67,754 |
|
| $ | 65,484 |
|
| $ | 196,816 |
|
| $ | 95,329 |
|
| $ | 8,975 |
|
| $ | 243,484 |
|
| $ | 65,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
FFO per diluted share |
| $ | 0.06 |
|
| $ | 0.45 |
|
| $ | 0.28 |
|
| $ | 1.01 |
|
| $ | 0.37 |
|
| $ | 0.06 |
|
| $ | 1.07 |
|
| $ | 0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
FFO, as adjusted, per diluted share |
| $ | 0.04 |
|
| $ | 0.34 |
|
| $ | 0.32 |
|
| $ | 0.98 |
|
| $ | 0.47 |
|
| $ | 0.04 |
|
| $ | 1.21 |
|
| $ | 0.32 |
|
(1) |
|
|
|
| The three and nine months ended September 30, 2021 includes default interest expense related to loans secured by properties that were in default prior to the Company filing voluntary petitions under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas, as well as loans secured by properties that are in default due to the Company filing voluntary petitions under chapter 11 of title 11 of the United States Code. The three and nine months ended September 30, 2020 includes default interest expense related to Greenbrier Mall, Hickory Point Mall, |
60
(3) | During the nine months ended September 30, |
(4) | For the three and nine months ended September 30, 2021, reorganization items represent costs incurred subsequent to the Company filing voluntary petitions under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas associated with the Company’s reorganization efforts, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees. |
(5) | For the three and nine months ended September 30, 2020, represents professional fees related to the Company’s negotiations with the administrative agent and lenders under the secured credit facility and certain holders of the Company’s senior unsecured notes regarding a restructure of such indebtedness prior to the filing of voluntary petitions under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas beginning on November 1, 2020. |
(6) | The three and nine months ended September 30, 2020 includes a gain on extinguishment |
The reconciliation of |
The reconciliation of diluted EPS to FFO per diluted share is as follows:
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
Diluted EPS attributable to common shareholders |
| $ | (0.28 | ) |
| $ | (0.52 | ) |
| $ | (1.43 | ) |
| $ | (1.01 | ) |
| $ | (0.21 | ) |
| $ | (0.28 | ) |
| $ | (0.39 | ) |
| $ | (1.43 | ) |
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 |
|
| 0.34 |
|
|
| 0.38 |
|
|
| 0.99 |
|
|
| 1.13 |
| ||||||||||||||||
Depreciation and amortization expense, including amounts from consolidated properties, unconsolidated affiliates, non-real estate assets and excluding amounts allocated to noncontrolling interests |
|
| 0.29 |
|
|
| 0.34 |
|
|
| 0.89 |
|
|
| 0.99 |
| ||||||||||||||||
Loss on impairment |
|
| — |
|
|
| 0.68 |
|
|
| 0.72 |
|
|
| 1.00 |
|
|
| 0.31 |
|
|
| — |
|
|
| 0.59 |
|
|
| 0.72 |
|
Gain on depreciable property |
|
| — |
|
|
| (0.09 | ) |
|
| — |
|
|
| (0.11 | ) |
|
| (0.02 | ) |
|
| — |
|
|
| (0.02 | ) |
|
| — |
|
FFO per diluted share |
| $ | 0.06 |
|
| $ | 0.45 |
|
| $ | 0.28 |
|
| $ | 1.01 |
|
| $ | 0.37 |
|
| $ | 0.06 |
|
| $ | 1.07 |
|
| $ | 0.28 |
|
70
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 September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||
FFO of the Operating Partnership |
| $ | 11,430 |
|
| $ | 90,442 |
|
| $ | 57,189 |
|
| $ | 203,017 |
| ||||||||||||||||
FFO allocable to Operating Partnership common unitholders |
| $ | 74,491 |
|
| $ | 11,430 |
|
| $ | 215,526 |
|
| $ | 57,189 |
| ||||||||||||||||
Percentage allocable to common shareholders (1) |
|
| 95.93 | % |
|
| 86.64 | % |
|
| 93.38 | % |
|
| 86.63 | % |
|
| 97.47 | % |
|
| 95.93 | % |
|
| 97.46 | % |
|
| 93.38 | % |
FFO allocable to common shareholders |
| $ | 10,965 |
|
| $ | 78,359 |
|
| $ | 53,403 |
|
| $ | 175,874 |
|
| $ | 72,606 |
|
| $ | 10,965 |
|
| $ | 210,052 |
|
| $ | 53,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO allocable to Operating Partnership common unitholders, as adjusted |
| $ | 8,975 |
|
| $ | 67,754 |
|
| $ | 65,484 |
|
| $ | 196,816 |
|
| $ | 95,329 |
|
| $ | 8,975 |
|
| $ | 243,484 |
|
| $ | 65,484 |
|
Percentage allocable to common shareholders (1) |
|
| 95.93 | % |
|
| 86.64 | % |
|
| 93.38 | % |
|
| 86.63 | % |
|
| 97.47 | % |
|
| 95.93 | % |
|
| 97.46 | % |
|
| 93.38 | % |
FFO allocable to common shareholders, as adjusted |
| $ | 8,610 |
|
| $ | 58,702 |
|
| $ | 61,149 |
|
| $ | 170,502 |
|
| $ | 92,917 |
|
| $ | 8,610 |
|
| $ | 237,300 |
|
| $ | 61,149 |
|
(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 outstanding during the period. |
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 actual results may differ.
Interest Rate Risk
Based on our proportionate share of consolidated and unconsolidated variable-rate debt at September 30, 2020,2021, and excluding the secured credit facility, which is 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 cash flows by approximately $1.0 million, respectively.
Based on our proportionate share of consolidated and unconsolidated variable-rate debt at September 30, 2021, and including the secured credit facility, which is 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 cash flows by approximately $6.5 million, and increase or decrease annual interest expense, after the effect of capitalized interest, by approximately $6.5 million.respectively.
Based on our proportionate share of total consolidated, unconsolidated and unconsolidatedother debt at September 30, 2020,2021, and excluding the secured credit facility and the senior unsecured notes, 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 $27.7$12.6 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $27.8$13.4 million.
61
Based on our proportionate share of total consolidated, unconsolidated and other debt at September 30, 2021, and including the secured credit facility and the senior unsecured notes, 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 $28.5 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $27.5 million.
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 effectiveness of the design and operation of the Company's and the Operating Partnership's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. The Company's and the Operating Partnership's disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and to ensure that information we are required to disclose is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s and the Operating Partnership’s disclosure controls and procedures were not effective as a result of the material weakness described below.
62
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 both JuneSeptember 30, 20202021 and September 30,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
71
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 JuneSeptember 30, 20202021 and September 30,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 Statementscondensed 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 lossincome (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
We have continued to address the effects of the COVID-19 pandemic on our control structure, including modifications to business modeling, forecasting and estimations, lease modifications, and accounts receivable collectability, as well as for the consequences of reductions in headcount and remote working arrangements. We are continually monitoring and assessing the COVID-19 pandemic’s effect on our internal control processes in order to minimize the impact to their design and operating effectiveness. There were no other changes in the Company’s or the Operating Partnership’s internal control over financial reporting during our most recent fiscal quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
7263
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
Litigation
As previously disclosed, in April 2019, the Company entered into a settlement agreement and release with respect to the class action lawsuit filed on March 16, 2016 in the United States District Court for the Middle District of Florida by Wave Lengths Hair Salons of Florida, Inc. d/b/a Salon Adrian. Pursuant to the settlement agreement the Company set aside a common fund with a monetary and non-monetary value of $90.0 million to be disbursed to class members in accordance with an agreed-upon formula that is based upon aggregate damages of $60.0 million. The Court granted final approval to the proposed settlement on August 22, 2019. The class members were comprised of past and current tenants at certain of the Company's shopping centers that it owns or formerly owned during the class period, which extended from January 1, 2011 through the date of preliminary court approval. Class members who are past tenants and made a valid claim pursuant to the Court's order received payment of their claims in cash. Class members who are current tenants began receiving monthly credits against rents and future charges during the three months ended June 30, 2020 and, under the terms of the settlement agreement, will continue for the following five years. Any amounts under the settlement allocated to tenants with outstanding amounts payable to the Company, including tenants which have declared bankruptcy or declare bankruptcy over the relevant period, will first be deducted from the amounts owed to the Company. All attorney’s fees and associated costs to class counsel (up to a maximum of $27.0 million), any incentive award to the class representative (up to a maximum of $50 thousand), and class administration costs (which are expected to not exceed $100 thousand), have or will be funded by the common fund, which has been approved by the Court. Under the terms of the settlement agreement, the Company did not pay any dividends to holders of its common shares payable in the third and fourth quarters of 2019. The settlement agreement does not restrict the Company's ability to declare dividends payable in 2020 or in subsequent years. The Company recorded an accrued liability and corresponding litigation settlement expense of $88.2 million in the three months ended March 31, 2019 related to the settlement agreement. During the year ended December 31, 2019, the Company reduced the accrued liability by an aggregate $26.4 million, a majority of which was related to past tenants that did not submit a claim pursuant to the terms of the settlement agreement with the remainder relating to tenants that either opted out of the lawsuit or waived their rights to their respective settlement amounts. Additionally, the Company reduced the accrued liability during the three months ended December 31, 2019 by $23.1 million related to attorney and administrative fees that were paid pursuant to the settlement agreement. During the nine months ended September 30, 2020, the Company reduced the accrued liability by $17.9 million. Of this amount, $6.5 million was related to monthly credits against rents and other charges for current tenants, $4.9 million was paid to past tenants, $4.0 million was paid to plaintiff’s counsel and $2.5 million represents amounts the Company was released from pursuant to the terms of the settlement agreement. A notice of suggestion of bankruptcy was filed by the Companyinformation in this litigation on November 3, 2020. The Company also received document requests in the third quarter of 2019, in the form of subpoenas,Item 1 is incorporated by reference herein from the SecuritiesNote 2 and Exchange Commission and the Department of Justice regarding the Wave Lengths Hair Salons of Florida, Inc. litigation and other related matters. The Company is continuing to cooperate in these matters.
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 have been 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
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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 otherDerivative Actions to be stayed as well.
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.
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.
Chapter 11 Bankruptcy Proceedings
See information presented under the heading “Voluntary Reorganization under Chapter 11” in Note 1 – Organization and Basis of Presentation12 for additional information concerning the Chapter 11 Cases that were commenced by the Company and certain of its subsidiaries on November 1, 2020..
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, Item 1A of our Annual Report on Form 10-K as amended, for the year ended December 31, 2019. The risk factor set forth below updates, and should be read together with,2020. There have been no material changes to such risk factors. Moreover, risk factors set forth in the Annual Report on Form 10-K, as amended, for the year ended December 31, 2019 could be heightened as a result of the impact of the COVID-19 pandemic.
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The RSA is subject to significant conditions and milestones that may be beyond our control and may be difficult for us to satisfy. If the RSA is terminated, our ability to confirm and consummate the Plan could be materially and adversely affected.
The RSA sets forth certain conditions we must satisfy, including the timely satisfaction of milestones in the Chapter 11 Cases, such as confirmation of the Plan and effectiveness of the Plan. Our ability to timely complete such milestones is subject to risks and uncertainties that may be beyond our control. The RSA gives the Consenting Noteholders the ability to terminate the RSA under certain circumstances, including the failure of certain conditions to be satisfied. Should a termination event occur, all obligations of the parties to the RSA will terminate. A termination of the RSA may result in the loss of support for the Plan, which could adversely affect our ability to confirm and consummate the Plan. If the Plan is not consummated, there can be no assurance that any new Plan would be as favorable to holders of claims as the current Plan and our chapter 11 proceedings could become protracted, which could significantly and detrimentally impact our relationships with vendors, suppliers, employees, and tenants.
We will be subject to the risks and uncertainties associated with chapter 11 proceedings.
As a consequence of our filing for relief under chapter 11 of the Bankruptcy Code, our operations and our ability to develop and execute our business plan, and our continuation as a going concern, will be subject to the risks and uncertainties associated with bankruptcy. These risks include the following:
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These risks and uncertainties could affect our business and operations in various ways. For example, negative events associated with our chapter 11 proceedings could adversely affect our relationships with our suppliers, service providers, tenants, employees, and other third parties, which in turn could adversely affect our operations and financial condition. Also, we need the prior approval of the Bankruptcy Court for transactions outside the ordinary course of business, which may limit our ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties associated with our chapter 11 proceedings, we cannot accurately predict or quantify the ultimate impact of events that occur during our chapter 11 proceedings that may be inconsistent with our plans.
We may not be able to obtain confirmation of the Plan as outlined in the RSA.
There can be no assurance that the Plan as outlined in the RSA (or any other plan of reorganization) will be approved by the Bankruptcy Court, so we urge caution with respect to existing and future investments in our securities.
The success of any reorganization will depend on approval by the Bankruptcy Court and the willingness of existing debt and security holders to agree to the exchange or modification of their interests as outlined in the Plan, and there can be no guarantee of success with respect to the Plan or any other plan of reorganization. We might receive official objections to confirmation of the Plan from the various stakeholders in the chapter 11 proceedings. We cannot predict the impact that any objection might have on the Plan or on a Bankruptcy Court's decision to confirm the Plan. Any objection may cause us to devote significant resources in response which could materially and adversely affect our business, financial condition and results of operations.
If the Plan is not confirmed by the Bankruptcy Court, it is unclear whether we would be able to reorganize our business and what, if any, distributions holders of claims against us, including holders of our secured and unsecured debt and equity, would ultimately receive with respect to their claims. There can be no assurance as to whether we will
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successfully reorganize and emerge from chapter 11 or, if we do successfully reorganize, as to when we would emerge from chapter 11. If no plan of reorganization can be confirmed, or if the Bankruptcy Court otherwise finds that it would be in the best interest of holders of claims and interests, the chapter 11 cases may be converted to cases under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code.
Upon emergence from bankruptcy, our historical financial information may not be indicative of our future financial performance.
Our capital structure will be significantly altered under the Plan. Under fresh-start reporting rules that may apply to us upon the effective date of the Plan (or any alternative plan of reorganization), our assets and liabilities would be adjusted to fair values and our accumulated deficit would be restated to zero. Accordingly, if fresh-start reporting rules apply, our financial condition and results of operations following our emergence from chapter 11 would not be comparable to the financial condition and results of operations reflected in our historical financial statements. Further, a plan of reorganization could materially change the amounts and classifications reported in our consolidated historical financial statements, which do not give effect to any adjustments to the carrying value of assets or amounts of liabilities that might be necessary as a consequence of confirmation of a plan of reorganization.
The pursuit of the RSA has consumed, and the chapter 11 proceedings will continue to consume, a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition.
Although the Plan is designed to minimize the length of our chapter 11 proceedings, it is impossible to predict with certainty the amount of time that we may spend in bankruptcy or to assure parties in interest that the Plan will be confirmed. The chapter 11 proceedings will involve additional expense and our management will be required to spend a significant amount of time and effort focusing on the proceedings. This diversion of attention may materially adversely affect the conduct of our business, and, as a result, on our financial condition and results of operations, particularly if the chapter 11 proceedings are protracted.
During the pendency of the chapter 11 proceedings, our employees will face considerable distraction and uncertainty and we may experience increased levels of employee attrition. A loss of key personnel or material erosion of employee morale could have a material adverse effect on our ability to effectively, efficiently and safely conduct our business, and could impair our ability to execute our strategy and implement operational initiatives, thereby having a material adverse effect on our financial condition and results of operations.
We depend on the continued presence of key personnel for critical management decisions.
Retaining and understanding historical knowledge from our key personnel is critical to allowing the management team to more effectively progress our business plan. As part of the restructuringwe anticipate our existing senior management team to remain in place, however there is a risk of loss of key personnel. Anytime personnel are replaced, there is a risk that there may be a loss of service, albeit temporary, that could result in an adverse effect on the business.
Upon our emergence from bankruptcy, the composition of our Board of Directors may change significantly.
Under the Plan, the composition of our Board of Directors may change significantly. Any new directors are likely to have different backgrounds, experiences and perspectives from those individuals who previously served on the Board and, thus, may have different views on the issues that will determine our future. As a result, our future strategy and plans may differ materially from those of the past.
Transfers of our equity, or issuances of equity before or in connection with our chapter 11 proceedings, may impair our ability to utilize the existing tax basis in our assets, our federal income tax net operating loss carryforwards and other tax attributes during the current year and in future years.
Under federal income tax law, a corporation is generally permitted to offset net taxable income in a given year with net operating losses carried forward from prior years, and its existing adjusted tax basis in its assets may be used to offset future gains or to generate annual cost recovery deductions. We had significant “net unrealized built-in loss” (NUBIL) (i.e., adjusted tax basis in excess of the fair market value of our assets) and net operating loss carryforwards that are not subject to any section 382 limitations.
Our ability to utilize our NUBIL, net operating loss carryforwards and other tax attributes to offset future taxable income is subject to certain requirements and restrictions. In order to qualify for taxation as a “real estate investment trust,” we must meet various requirements including a requirement to distribute 90% of our taxable income; and, to avoid paying
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corporate income tax, we must distribute 100% of our taxable income. If we do experience an "ownership change" during or in connection with the restructuring process, as defined in section 382 of the Internal Revenue Code, then our ability to use our NUBIL, net operating loss carryforwards and other tax attributes to offset future taxable income may be substantially limited, which could have a negative impact on our financial position and results of operations. Generally, there is an "ownership change" if one or more stockholders owning 5% or more of a corporation's common stock have aggregate increases in their ownership of such stock of more than 50 percentage points over a prescribed testing period. Under section 382 and section 383 of the Internal Revenue Code, absent an applicable exception, if a corporation undergoes an "ownership change", the amount of its NUBIL, net operating loss carryforwards and other tax attributes that may be utilized to offset future taxable income generally is subject to an annual limitation (though “recognized built-in losses” arising from our NUBIL will only be subject to limitation if they are recognized within 5 years of the “ownership change”).
Whether or not the NUBIL, net operating loss carryforwards and other tax attributes are subject to limitation under section 382, our NUBIL, net operating loss carryforwards and other tax attributes are expected to be further reduced by the amount of discharge of indebtedness arising in our Chapter 11 Cases under section 108 of the Internal Revenue Code.
We have received an order from the Bankruptcy Court approving potential restrictions on certain transfers of our stock to limit the risk of an "ownership change" prior to our emergence from restructuring in our chapter 11 proceedings. We anticipate that the implementation of our plan of reorganization will result in an "ownership change." If so, our NUBIL, net operating loss carryforwards and other tax attributes will become impaired, with the extent of such impairment dependent on the impact of special tax law rules under section 382(l)(6) of the Internal Revenue Code, applicable to an "ownership change" that occurs as part of a chapter 11 plan.
The current pandemic of the novel coronavirus, or COVID-19 has, and could continue to, materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as could any future outbreak of another highly infectious or contagious disease.
Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.
The COVID-19 pandemic has had, and may continue to have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified in additional countries, many - including the United States - have reacted by instituting quarantines, mandating business and school closures and restricting travel.
Certain states and cities, including where we own properties and where our corporate headquarters is located, have also reacted by instituting quarantines, restrictions on travel, “shelter-in-place” rules, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. The Company cannot predict if additional states and cities will implement similar restrictions or when any such new restrictions might be lifted. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including the retail industry in which the Company and our tenants operate.
A majority of our tenants implemented temporary closures and/or shortened the operating hours of their stores for a period of time and requested rent deferral or rent abatement during this pandemic or have failed to pay rent. In addition, state, local or industry-initiated efforts, such as tenant rent freezes, or governmental or court-imposed delays in the processing of landlord initiated commercial eviction and collection actions in various jurisdictions in light of the COVID-19 pandemic, may also affect our ability to collect rent or enforce remedies for the failure to pay rent. We believe our tenants do not have a contractual right to cease paying rent due to government-mandated closures and, subject to negotiated resolutions of rent deferral requests that we have entered into, and may continue to enter into with certain tenants, we intend to enforce our rights under our lease agreements. However, COVID-19 and the related governmental orders present fairly novel situations for which the ultimate legal outcome cannot be assured, and it is possible future governmental action could impact our rights under the lease agreements. The extent of tenant requests and actions, and the resulting impact to the Company’s results of operations and cash flows, is uncertain and cannot be predicted.
The COVID-19 pandemic, or a future pandemic, could also have further material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:
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The extent to which the COVID-19 pandemic impacts our operations and those of 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 actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Additional closures by our tenants of their stores and early terminations by our tenants of their leases could further reduce our cash flows, which could impact our ability to resume paying dividends to our stockholders at any point in the future.
The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic. The COVID-19 pandemic presents material uncertainty and risk with respect to our financial condition, results of operations, cash flows and performance.
We have determined that there is substantial doubt about our ability to continue as a going concern.
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 Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default, as applicable, have occurred and continue to exist as of the date of this report by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility. As a result of these asserted defaults and events of default, the lenders under the secured credit facility declared all outstanding principal, accrued interest and letters of credit to be immediately due and payable. Subsequent to the lenders accelerating the outstanding balances under the secured credit facility, other events occurred that each constitute an event of default under the secured credit facility, including (i) the Operating Partnership failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020, (ii) the NYSE suspension of trading in the Company’s common stock and commencement of proceedings to delist the Company’s common stock and depositary shares representing fractional interests in each of its series of preferred stock and (iii) the Debtors filed the Chapter 11 Cases. Additionally,since the filing of the Chapter 11 Cases constituted an event of default that results in the automatic acceleration of all outstanding principal, accrued and unpaid interest, and letters of credit 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 automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts.
Given the acceleration of the senior 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, the Company believes that there is substantial doubt that it will continue to operate as a going concern within one year after the date theseAnnual Report.
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condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the condensed consolidated financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern.
We identified a material weakness in internal control over financial reporting. We may not remediate this material weakness on a timely basis or may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial reporting, which may result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations. As a result, stockholders could lose confidence in our financial and other public reporting, which would then be likely to negatively affect our business and the market price of our securities.
A material weakness in internal control over financial reporting was identified as of June 30, 2020 and September 30, 2020. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. See Part I, Item 4 above for further details. We are planning to remediate the material weakness by hiring additional personnel to enable the Company and the Operating Partnership to meet their financial reporting requirements, and we may utilize outside advisors to assist on a short-term basis. These remediation measures may be time consuming and costly, and might place significant demands on our financial, accounting and operational resources. In addition, there is no assurance that we will be successful in hiring the necessary personnel in a timely manner, or at all.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports and is important in helping to prevent mistakes in our financial statements and financial fraud. Any failure to implement required new or improved controls, or difficulties encountered in our implementation to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identification of any additional material weaknesses that may exist, may adversely affect the accuracy and timing of our financial reporting, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, we may be unable to prevent fraud, investors may lose confidence in our financial reporting, and the price of our securities may decline as a result.
Any testing conducted by us, or any testing conducted by our independent registered public accounting firm, may reveal additional deficiencies in our internal control over financial reporting that are deemed to be new material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. In addition, our reporting obligations as a public company could place a significant strain on our management, operational and financial resources and systems for the foreseeable future and may cause us to fail to timely achieve and maintain the adequacy of its internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Because of its inherent limitations, internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. There is no assurance that the measures we are currently undertaking or may take in the future will be sufficient to maintain effective internal controls or to avoid potential future deficiencies in internal control, including material weaknesses.
Our stock currently is subject to delisting from the NYSE due to “abnormally low” trading price levels under the NYSE’s continued listed standards. Trading in our stock was suspended on November 2, 2020 and the NYSE has determined to commence related delisting proceedings. The delisting of our stock from the NYSE could have materially adverse effects on our business, financial condition and results of operations.
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 Series D Preferred Stock and the depositary shares each representing a 1/10th fractional share of the Company’s 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. While the Company intends to appeal this decision in accordance with NYSE rules, there can be no assurance that an appeal will be successful. In the meantime, effective November 3, 2020, the Company’s common stock and the depositary shares representing fractional interests in its Series D Preferred Stock and Series E Preferred Stock began trading on the OTC Markets, operated by the OTC Markets Group, Inc., under the symbols “CBLAQ”, “CBLDQ” and
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“CBLEQ”, respectively. The over-the-counter markets are a more limited market than the NYSE and it is likely that there will be significantly less liquidity in the trading of our common and preferred stock.
The suspension of trading and potential delisting of our common stock could have material adverse effects on our business, financial condition and results of operations due to, among other things:
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As a result of the cumulative, unpaid dividends on our preferred stock we are no longer eligible to register the offer and sale of securities on SEC Form S-3, which will impair our capital raising activities and could result in the Company being required to repurchase a limited number of shares sold under our DRIP.
We are no longer eligible to use SEC Form S-3 to register offers and sales of our securities under the Securities Act, as a result of the existing dividend arrearage on our preferred stock, which will continue to accumulate following our board of directors’ decision in December 2019 to suspend such dividends. Historically, we have relied on shelf registration statements on Form S-3 for our public capital raising transactions, and also to register the offer and sale of shares of common stock under our DRIP. Our inability to use Form S-3 may harm our ability to raise capital in the future, as we will be required to use a registration statement on Form S-1 to register securities with the SEC, which may be expected to hinder our ability to act quickly in raising capital to take advantage of market conditions and to increase our cost of raising capital. Further, we inadvertently failed to suspend small monthly “cash option” investments in common stock under our DRIP during the months of March, April and May 2020, and as a result of this oversight, we issued a total of 6,134 shares of common stock that were not registered under the Securities Act for aggregate consideration of $1,346.94. The purchasers of these shares, issued pursuant to our DRIP when we were not eligible to issue shares on Form S-3, could bring claims against us for rescission and other damages under federal or state securities laws
ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds
Issuance and Cancellation of Shares
Cash Option Investments Under DRIP Plan
While we had previously suspended quarterly dividend payments on ourOn the Effective Date, (1) the REIT issued (i) 1,089,717 shares of new common stock during 2019, a very small amount of monthly “cash option” investments in shares continued pursuant to the terms of the Company’s DRIP. Due in part to impacts on the Company’s operations and staffing resulting from ongoing efforts to address the COVID-19 pandemic, we inadvertently failed to suspend the operation of these “cash option” investments during the months of March, April and May 2020, after we lost the ability to use the Form S-3 registration statement for the DRIP due to the(a) existing dividend arrearage with respect to our preferred stock. We have now fully suspended the operation of our DRIP, including the cash option feature but, as a result of this oversight, we issued a total of 6,134 sharesholders of common stock and (b) certain of the existing holders of LP common units that were not registeredelected to receive shares of new common stock in exchange for LP common units, (ii) 1,100,000 shares of new common stock to existing holders of preferred stock, (iii) 15,685,714 shares of new common stock to existing holders of the Notes and other general unsecured claims, and (iv) 2,114,286 shares of new common stock to existing holders of consenting crossholder claims and (2) the Operating Partnership cancelled all of its LP common units and issued 200,000 new common units of general partnership interests, 19,789,717 new common units of limited partnership interest to subsidiaries of the REIT and 10,283 new common units to certain of the existing holders of LP common units that have elected to remain limited partners in the Operating Partnership. On the Effective Date, the REIT has an aggregate of 20,000,000 shares of new common stock issued and outstanding (on a fully diluted basis after giving effect to any future election to exchange all new common units for new common stock).
On the Effective Date, the REIT reserved an additional (i) approximately 9,000,000 shares of new common stock for issuance upon the potential exercise of the new convertible notes and (ii) 3,222,222 shares of new common stock for issuance under the 2021 equity incentive plan.
The Company relied on Section 1145(a)(1) of the Bankruptcy Code as an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) for aggregate considerationthe issuance of $1,346.94 priorthe new senior secured notes, the new convertible notes, the new common units and new common stock issued to such suspension. The purchasersholders of these shares, issued pursuant to our DRIP when we were not eligible to issue shares on Form S-3, could bring claims against us for rescissionold common stock, preferred stock, LP common units, the Notes and other damages under federal or state securities laws.new convertible notes (upon any future exchange thereof).
Limitations on Payment of Dividends
See information presented under the heading “Equity”Equity in the “LiquidityLiquidity and Capital Resources”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 payment of dividends by the Company.
ITEM 3: Defaults Upon Senior Securities
Defaults on Indebtedness
See information presented in Note 8 – Mortgage and Other Indebtedness, NetNote 9 in the financial statements included in PART I of this report under the heading “Senior Unsecured Notes” for a discussion of certain defaults with respect to the Company’s pre-emergence senior unsecured notes and seniorpre-emergence secured credit facility, including defaults related to certain interest payments on the senior unsecured notes,filing of the Chapter 11 Cases, and additional information presented under the heading “Financial Covenants and Restrictions” for a discussion of additional asserted defaults with respect to the Company’s seniorpre-emergence secured credit facility.
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On the Effective Date, the conditions to effectiveness of the Plan were satisfied and the Debtors emerged from the Chapter 11 Cases. See Table of ContentsNote 2 for more information.
Preferred Dividend and Special Common Unit Distribution Arrearages
Dividends on the Series D and the Series E preferred stock are cumulative and therefore will continuecontinued 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. The Plan associated with our Chapter 11 reorganization extinguished all claims related to the accrued and unpaid preferred stock dividends. See Note 2 in the financial statements included in PART I of this report for more information. As of September 30, 2020,2021, the cumulative amount of unpaid dividends on the preferred stock totaled $44.9$48.6 million.
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Distributions on the Series K and S special common units are cumulative and therefore will continuecontinued to accrue, prior to the filing of the Chapter 11 Cases, at an annual rate of $2.96875 per unit, $3.0288 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. ��The Plan associated with our Chapter 11 reorganization extinguished all claims related to the accrued and unpaid special common units. See Note 2 in the financial statements included in PART I of this report for more information. As of September 30, 2020,2021, the cumulative amount of unpaid distributions on the special common units totaled $8.8$9.4 million.
ITEM 4: Mine Safety Disclosures
Not applicable.
ITEM 5: Other Information
None.
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ITEM 6: Exhibits
INDEX TO EXHIBITS
Exhibit Number |
| Description |
|
| |
|
| |
|
| |
3.2 | ||
10.1 | ||
10.2 | ||
|
| |
|
| |
|
| |
|
| |
|
| |
82
| ||
| ||
| ||
| ||
|
66
| ||
| ||
| ||
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 Document. (Filed herewith.) |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.) |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.) |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.) |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.) |
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*). (Filed herewith.) |
|
|
8367
SIGNATURES
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) |
Date: November 16, 202015, 2021
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