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CBL& Associates Properties (CBL)

Filed: 9 Mar 20, 5:08pm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019

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.)

Delaware (CBL & Associates Limited Partnership)

(State or Other Jurisdiction of Incorporation or Organization)

 

62-1545718

62-1542285

(I.R.S. Employer Identification No.)

 

 

 

2030 Hamilton Place Blvd., Suite 500

Chattanooga, TN

 

37421

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:    423.855.0001

Securities registered pursuant to Section 12(b) of the Act:

CBL & Associates Properties, Inc.:

 

Securities registered under Section 12(b) of the Act:

 

Title of each Class

 

Trading

Symbol(s)

 

Name of each exchange on

which registered

Common Stock, $0.01 par value

 

CBL

 

New York Stock Exchange

7.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value

 

CBLprD

 

New York Stock Exchange

6.625% Series E Cumulative Redeemable Preferred Stock, $0.01 par value

 

CBLprE

 

New York Stock Exchange

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

CBL & Associates Properties, Inc.

 

  Yes     

No  

CBL & Associates Limited Partnership

 

  Yes     

No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 

CBL & Associates Properties, Inc.

 

  Yes     

No  

CBL & Associates Limited Partnership

 

  Yes     

No  

 

 


 

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.

 

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller Reporting Company

 

Emerging growth company

 

 

 

 

 

 

 

 

 

 

 

 

CBL & Associates Limited Partnership

 

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller Reporting Company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

CBL & Associates Properties, Inc.

 

  Yes     

No 

CBL & Associates Limited Partnership

 

  Yes     

No 

 

The aggregate market value of the 169,176,047 shares of CBL & Associates Properties, Inc.'s common stock held by non-affiliates of the registrant as of June 30, 2019 was $ 175,943,089, based on the closing price of $1.04 per share on the New York Stock Exchange on June 28, 2019. (For this computation, the registrant has excluded the market value of all shares of its common stock reported as beneficially owned by executive officers and directors of the registrant; such exclusion shall not be deemed to constitute an admission that any such person is an “affiliate” of the registrant.)

As of February 28, 2020, 175,633,044 shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of CBL & Associates Properties, Inc.’s Proxy Statement for the 2020 Annual Meeting of Stockholders are incorporated by reference in Part III .

 

 


 

EXPLANATORY NOTE

This report combines the annual reports on Form 10-K for the year ended December 31, 2019 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.

The Company is a real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At December 31, 2019, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 86.0% limited partner interest for a combined interest held by the Company of 87.0%.

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 annual reports on Form 10-K 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 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 consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to 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:

 

consolidated financial statements;

 

certain accompanying notes to consolidated financial statements, including Note 2 - Summary of Significant Accounting Policies, Note 8 - Mortgage and Other Indebtedness, Net, Note 9 - Shareholders' Equity and Partners' Capital and Note 10 - Redeemable Interests and Noncontrolling Interests;

 

information concerning unregistered sales of equity securities and use of proceeds in Item 5 of Part II of this report;

 

selected financial data in Item 6 of Part II of this report;

 

controls and procedures in Item 9A 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.

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

Number

 

 

 

Cautionary Statement Regarding Forward-Looking Statements

1

 

 

 

PART I

 

 

 

 

1.

Business

2

1A.

Risk Factors

6

1B.

Unresolved Staff Comments

27

2.

Properties

27

3.

Legal Proceedings

43

4.

Mine Safety Disclosures

45

 

 

 

PART II

 

 

 

 

5.

Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

46

6.

Selected Financial Data

47

7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

50

7A.

Quantitative and Qualitative Disclosures About Market Risk

71

8.

Financial Statements and Supplementary Data

71

9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

72

9A.

Controls and Procedures

72

9B.

Other Information

77

 

 

 

PART III

 

 

 

 

10.

Directors, Executive Officers and Corporate Governance

78

11.

Executive Compensation

78

12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

78

13.

Certain Relationships and Related Transactions, and Director Independence

78

14.

Principal Accounting Fees and Services

 

 

 

 

PART IV

 

 

 

 

15.

Exhibits, Financial Statement Schedules

79

16.

Form 10-K Summary

79

Index to Exhibits

143

Signatures

147

 

 

 

 


 

Cautionary Statement Regarding Forward-Looking Statements  

Certain statements included or incorporated by reference in this Annual Report on Form 10-K 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. In addition to the risk factors discussed in Part I, Item 1A of this report, such known risks and uncertainties include, without limitation:

 

general industry, economic and business conditions;

 

interest rate fluctuations;

 

costs and availability of capital 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;

 

sales of real property;

 

cyber-attacks or acts of cyber-terrorism;

 

changes in the credit ratings of the Operating Partnership's senior unsecured long-term indebtedness;

 

the ability to obtain suitable equity and/or debt financing and the continued availability of financing, in the amounts and on the terms necessary to support our future refinancing requirements and business; and

 

other risks referenced from time to time in filings with the Securities and Exchange Commission (“SEC”) and those factors listed or incorporated by reference into this report.

This list of risks and uncertainties is only a summary and is not intended to be exhaustive.  We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

1


 

PART I

ITEM 1. BUSINESS  

Background

CBL & Associates Properties, Inc. (“CBL”) was organized on July 13, 1993, as a Delaware corporation, to acquire substantially all of the real estate properties owned by CBL & Associates, Inc., which was formed by Charles B. Lebovitz in 1978, and by certain of its related parties.  On November 3, 1993, CBL completed an initial public offering (the “Offering”). Simultaneously with the completion of the Offering, CBL & Associates, Inc., its shareholders and affiliates and certain senior officers of the Company (collectively, “CBL’s Predecessor”) transferred substantially all of their interests in its real estate properties to CBL & Associates Limited Partnership (the “Operating Partnership”) in exchange for common units of limited partner interest in the Operating Partnership. The interests in the Operating Partnership contain certain conversion rights that are more fully described in Note 9 to the consolidated financial statements. The terms “we,” “us” and “our” refer to the Company or the Company and the Operating Partnership collectively, as the context requires. 

The Company’s Business

We are a self-managed, self-administered, fully integrated REIT. We own, develop, acquire, lease, manage, and operate regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers, office and other properties. Our Properties are located in 26 states, but are primarily in the southeastern and midwestern United States. We have elected to be taxed as a REIT for federal income tax purposes.

We conduct substantially all of our business through CBL & Associates Limited Partnership (the "Operating Partnership"), which is a variable interest entity ("VIE"). We are the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. CBL Holdings I, Inc. is the sole general partner of the Operating Partnership. At December 31, 2019, CBL Holdings I, Inc. owned a 1.0% general partner interest and CBL Holdings II, Inc. owned an 86.0% limited partner interest in the Operating Partnership, for a combined interest held by us of 87.0%.

See Note 1 to the consolidated financial statements for information on our Properties as of December 31, 2019. As of December 31, 2019, we owned mortgages on four Properties, each of which is collateralized by either a first mortgage, a second mortgage or by assignment of 100% of the ownership interests in the underlying real estate and related improvements (the “Mortgages”). The Malls, All Other Properties ("Associated Centers, Community Centers, Office Buildings and Self-storage Facilities"), Properties under development ("Construction Properties") and Mortgages are collectively referred to as the “Properties” and individually as a “Property.”

We conduct our property management and development activities through CBL & Associates Management, Inc. (the “Management Company”) to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").  The Operating Partnership owns 100% of the Management Company’s outstanding preferred stock and common stock.

The Management Company manages all but 14 of the Properties. Governor’s Square and Governor’s Square Plaza in Clarksville, TN, Kentucky Oaks Mall in Paducah, KY, Fremaux Town Center in Slidell, LA, Ambassador Town Center in Lafayette, LA, EastGate Mall - Self-Storage in Cincinnati, OH, Mid Rivers – Self-Storage in St. Peters, MO, Hamilton Place – Self-Storage in Chattanooga, TN, Parkdale – Self-Storage in Beaumont, TX, The Outlet Shoppes at El Paso in El Paso, TX, The Outlet Shoppes at Atlanta in Woodstock, GA and The Outlet Shoppes of the Bluegrass in Simpsonville, KY are all owned by unconsolidated joint ventures and are managed by a property manager that is affiliated with the third-party partner, which receives a fee for its services. The third-party partner of each of these Properties controls the cash flow distributions, although our approval is required for certain major decisions.  The Outlet Shoppes at Gettysburg in Gettysburg, PA and The Outlet Shoppes at Laredo in Laredo, TX are owned by consolidated joint ventures and managed by a property manager that is affiliated with the third-party partner, which receives a fee for its services.

Rental revenues are primarily derived from leases with retail tenants and generally include fixed minimum rents, percentage rents based on tenants’ sales volumes and reimbursements from tenants for expenditures related to real estate taxes, insurance, common area maintenance ("CAM") and other recoverable operating expenses, as well as certain capital expenditures. We also generate revenues from management, leasing and development fees, sponsorships, sales of peripheral land at the Properties and from sales of operating real estate assets when it is determined that we can realize an appropriate value for the assets. Proceeds from such sales are generally used to retire related indebtedness or reduce outstanding balances on our credit facility. 

The following terms used in this Annual Report on Form 10-K will have the meanings described below:

 

GLA – refers to gross leasable area of space in square feet, including Anchors and Mall tenants.

 

Anchor – refers to a department store, other large retail store, non-retail space or theater greater than or equal to 50,000 square feet.

2


 

 

Junior Anchor - retail store, non-retail space or theater comprising more than 20,000 square feet and less than 50,000 square feet.

 

Freestanding – Property locations that are not attached to the primary complex of buildings that comprise the mall shopping center.

 

Outparcel – land used for freestanding developments, such as retail stores, banks and restaurants, which are generally on the periphery of the Properties.

 

2023 Notes - $450 million of senior unsecured notes issued by the Operating Partnership in November 2013 that bear interest at 5.25% and mature on December 1, 2023.

 

2024 Notes - $300 million of senior unsecured notes issued by the Operating Partnership in October 2014 that bear interest at 4.60% and mature on October 15, 2024.

 

2026 Notes - $625 million 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 (and, collectively with the 2023 Notes and 2024 Notes, the "Notes"). See Note 8 to the consolidated financial statements for additional information on the Notes.

Significant Markets and Tenants  

Top Five Markets

Our top five markets, based on percentage of total revenues, were as follows for the year ended December 31, 2019:

 

Market

 

Percentage of

Total Revenues

 

St. Louis, MO

 

 

6.8

%

Chattanooga, TN

 

 

5.2

%

Laredo, TX

 

 

4.2

%

Lexington, KY

 

 

4.1

%

Madison, WI

 

 

3.1

%

 

3


 

Top 25 Tenants

Our top 25 tenants based on percentage of total revenues were as follows for the year ended December 31, 2019:

 

 

 

Tenant

 

Number of

Stores

 

 

Square

Feet

 

 

Percentage

of Total

Revenues (1)

 

1

 

L Brands, Inc. (2)

 

 

128

 

 

 

763,091

 

 

 

4.25

%

2

 

Signet Jewelers Limited (3)

 

 

156

 

 

 

227,731

 

 

 

2.87

%

3

 

Foot Locker, Inc.

 

 

109

 

 

 

510,740

 

 

 

2.78

%

4

 

AE Outfitters Retail Company

 

 

66

 

 

 

414,111

 

 

 

2.18

%

5

 

Dick's Sporting Goods, Inc. (4)

 

 

25

 

 

 

1,396,850

 

 

 

1.68

%

6

 

Ascena Retail Group, Inc. (5)

 

 

114

 

 

 

544,193

 

 

 

1.52

%

7

 

H & M

 

 

45

 

 

 

956,736

 

 

 

1.50

%

8

 

Genesco, Inc. (6)

 

 

103

 

 

 

198,305

 

 

 

1.47

%

9

 

The Gap, Inc.

 

 

58

 

 

 

662,339

 

 

 

1.42

%

10

 

Luxottica Group, S.P.A. (7)

 

 

101

 

 

 

230,634

 

 

 

1.31

%

11

 

Finish Line, Inc.

 

 

43

 

 

 

224,603

 

 

 

1.21

%

12

 

Express Fashions

 

 

39

 

 

 

321,142

 

 

 

1.19

%

13

 

The Buckle, Inc.

 

 

43

 

 

 

223,308

 

 

 

1.12

%

14

 

Forever 21 Retail, Inc.

 

 

19

 

 

 

353,805

 

 

 

1.01

%

15

 

Abercrombie & Fitch, Co.

 

 

42

 

 

 

276,693

 

 

 

1.00

%

16

 

JC Penney Company, Inc. (8)

 

 

47

 

 

 

5,695,980

 

 

 

0.95

%

17

 

Cinemark

 

 

9

 

 

 

467,190

 

 

 

0.91

%

18

 

Barnes & Noble Inc.

 

 

17

 

 

 

521,273

 

 

 

0.89

%

19

 

Shoe Show, Inc.

 

 

40

 

 

 

501,248

 

 

 

0.87

%

20

 

Hot Topic, Inc.

 

 

99

 

 

 

229,918

 

 

 

0.87

%

21

 

The Children's Place Retail Stores, Inc.

 

 

41

 

 

 

181,032

 

 

 

0.76

%

22

 

Claire's Stores, Inc.

 

 

79

 

 

 

99,647

 

 

 

0.73

%

23

 

PSEB Group (9)

 

 

38

 

 

 

182,860

 

 

 

0.69

%

24

 

Ulta

 

 

26

 

 

 

268,697

 

 

 

0.69

%

25

 

Macy's Inc. (10)

 

 

31

 

 

 

4,536,623

 

 

 

0.66

%

 

 

 

 

 

1,518

 

 

 

19,988,749

 

 

 

34.53

%

 

(1)

Includes the Company's proportionate share of revenues from unconsolidated affiliates based on the Company's ownership percentage in the respective joint venture and any other applicable terms.

(2)

L Brands, Inc. operates Bath & Body Works, PINK, Victoria's Secret and White Barn Candle.

(3)

Signet Jewelers Limited operates Belden Jewelers, Jared Jewelers, JB Robinson, Kay Jewelers, LeRoy's Jewelers, Marks & Morgan, Osterman's Jewelers, Peoples, Piercing Pagoda, Rogers Jewelers, Shaw's Jewelers, Ultra Diamonds and Zales.

(4)

Dick's Sporting Goods, Inc. operates Dick's Sporting Goods, Field & Stream and Golf Galaxy.

(5)

Ascena Retail Group, Inc. operates Ann Taylor, Catherines, Justice, Lane Bryant, LOFT and Lou & Grey. Ascena closed all Dress Barn stores as of December 31, 2019.

(6)

Genesco Inc. operates Clubhouse, Hat Shack, Hat Zone, Johnston & Murphy, Journey's, Shi by Journey's and Underground by Journeys. Genesco sold all Lids, Lids Locker Room and Lids Sports Group stores in February 2019.

(7)

Luxottica Group, S.P.A. operates Lenscrafters, Pearle Vision and Sunglass Hut.

(8)

JC Penney Company, Inc. owns 29 of these stores.

(9)

PSEB Group operates Eddie Bauer and PacSun.

(10)

Macy's, Inc. owns 20 of these stores

Operating Strategy

Our objective is to achieve stabilization in same-center net operating income ("NOI") and reduce our overall cost of debt and equity by maximizing total earnings before income taxes, depreciation and amortization for real estate ("EBITDA re ") and cash flows through a variety of methods as further discussed below.

Same-center NOI is a non-GAAP measure. 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.”

4


 

Leasing, Management and Marketing  

Our objective is to maximize cash flows from our existing Properties through:

 

aggressive leasing that seeks to increase occupancy and facilitate an optimal merchandise mix,

 

originating and renewing leases at higher gross rents per square foot compared to the previous lease,

 

merchandising, marketing, sponsorship and promotional activities and

 

actively controlling operating costs.

Redevelopments  

Redevelopments represent situations where we capitalize on opportunities to increase the productivity of previously occupied space through aesthetic upgrades, retenanting and/or changing the use of the space. We may use all or only a portion of the prior-tenant square footage. Many times, redevelopments result from acquiring or regaining possession of Anchor space (such as former Sears and Bon-Ton stores) and subdividing it into multiple spaces.

Renovations

Renovations usually include remodeling and upgrading existing facades, uniform signage, new entrances and floor coverings, updating interior décor, resurfacing parking areas and improving the lighting of interiors and parking areas. Renovations can result in attracting new retailers, increased rental rates, sales and occupancy levels and maintaining the Property's market dominance.

Shadow Redevelopment Pipeline

We are continually pursuing redevelopment opportunities and have projects in various stages of pre-development. Our shadow pipeline consists of projects for Properties on which we have completed initial analysis and design but which have not commenced construction as of December 31, 2019.

See "Liquidity and Capital Resources" section for information on the projects completed during 2019 and under construction at December 31, 2019.

Acquisitions

We believe there is opportunity for growth through acquisitions of retail centers and anchor stores that complement our portfolio. We selectively acquire properties we believe can appreciate in value by increasing NOI through our development, leasing and management expertise. However, our primary focus at this time is on opportunities to acquire anchors at our Properties for future redevelopment uses.

Environmental Matters

A discussion of the current effects and potential impacts on our business and Properties of compliance with federal, state and local environmental regulations is presented in Item 1A of this Annual Report on Form 10-K under the subheading “Risks Related to Real Estate Investments.”

Competition

The Properties compete with various shopping facilities in attracting retailers to lease space. In addition, retailers at our Properties face competition from discount shopping centers, outlet centers, wholesale clubs, direct mail, television shopping networks, the internet and other retail shopping developments. The extent of the retail competition varies from market to market. We work aggressively to attract customers through marketing promotions and social media campaigns. Many of our retailers have adopted an omni-channel approach which leverages sales through both digital and traditional retailing channels.

5


 

Seasonality

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 rent income in the fourth quarter. Additionally, the Malls earn most of their “temporary” rents (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 our fiscal year.

Equity

Common Stock and Common Units

Our authorized common stock consists of 350,000,000 shares at $0.01 par value per share. We had 174,115,111 and 172,656,458 shares of common stock issued and outstanding as of December 31, 2019 and 2018, respectively. The Operating Partnership had 200,189,077 and 199,414,863 common units outstanding as of December 31, 2019 and 2018, respectively.

Preferred Stock

Our authorized preferred stock consists of 15,000,000 shares at $0.01 par value per share. See Note 9 to the consolidated financial statements for a description of our outstanding cumulative redeemable preferred stock.

Financial Information about Segments

See Note 12 to the consolidated financial statements for information about our reportable segments.

Employees

CBL does not have any employees other than its statutory officers.  Our Management Company had 493 full-time and 101 part-time employees as of December 31, 2019. None of our employees are represented by a union.

Corporate Offices

Our principal executive offices are located at CBL Center, 2030 Hamilton Place Boulevard, Suite 500, Chattanooga, Tennessee, 37421 and our telephone number is (423) 855-0001.

Available Information

There is additional information about us on our web site at cblproperties.com .. Electronic copies of our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments to those reports, are available free of charge by visiting the “invest” section of our web site. These reports are posted as soon as reasonably practical after they are electronically filed with, or furnished to, the SEC. The information on our web site is not, and should not be considered, a part of this Form 10-K. 

ITEM 1A. RISK FACTORS  

Set forth below are certain factors that may adversely affect our business, financial condition, results of operations and cash flows.  Any one or more of the following factors may cause our actual results for various financial reporting periods to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. See “Cautionary Statement Regarding Forward-Looking Statements” contained herein on page 1

RISKS RELATED TO REAL ESTATE INVESTMENTS

Real property investments are subject to various risks, many of which are beyond our control, which could cause declines in the operating revenues and/or the underlying value of one or more of our Properties.

A number of factors may decrease the income generated by a retail shopping center property, including: 

 

national, regional and local economic climates, which may be negatively impacted by loss of jobs, production slowdowns, adverse weather conditions, natural disasters, acts of violence, war or terrorism, declines in residential real estate activity and other factors which tend to reduce consumer spending on retail goods;

 

pandemic outbreaks, or the threat of pandemic outbreaks, which could cause customers of our tenants to avoid public places where large crowds are in attendance, such as shopping centers and related entertainment, hotel, office or restaurant properties operated by our tenants;

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adverse changes in levels of consumer spending, consumer confidence and seasonal spending (especially during the holiday season when many retailers generate a disproportionate amount of their annual profits);

 

local real estate conditions, such as an oversupply of, or reduction in demand for, retail space or retail goods, and the availability and creditworthiness of current and prospective tenants;

 

increased operating costs, such as increases in repairs and maintenance, real property taxes, utility rates and insurance premiums;

 

delays or cost increases associated with the opening of new properties or redevelopment and expansion of properties, due to higher than estimated construction costs, cost overruns, delays in receiving zoning, occupancy or other governmental approvals, lack of availability of materials and labor, weather conditions, and similar factors which may be outside our ability to control;

 

perceptions by retailers or shoppers of the safety, convenience and attractiveness of the shopping center; and

 

the convenience and quality of competing retail properties and other retailing options, such as the internet and the adverse impact of online sales.

In addition, other factors may adversely affect the value of our Properties without affecting their current revenues, including:

 

adverse changes in governmental regulations, such as local zoning and land use laws, environmental regulations or local tax structures that could inhibit our ability to proceed with development, expansion or renovation activities that otherwise would be beneficial to our Properties;

 

potential environmental or other legal liabilities that reduce the amount of funds available to us for investment in our Properties;

 

any inability to obtain sufficient financing (including construction financing, permanent debt, unsecured notes issuances, lines of credit and term loans), or the inability to obtain such financing on commercially favorable terms, to fund repayment of maturing loans, new developments, acquisitions, and property redevelopments, expansions and renovations which otherwise would benefit our Properties; and

 

an environment of rising interest rates, which could negatively impact both the value of commercial real estate such as retail shopping centers and the overall retail climate.

Illiquidity of real estate investments could significantly affect our ability to respond to adverse changes in the performance of our Properties and harm our financial condition.

Substantially all of our consolidated assets consist of investments in real properties. Because real estate investments are relatively illiquid, our ability to quickly sell one or more Properties in our portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand for space, that are beyond our control. We cannot predict whether we will be able to sell any Property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a Property. In addition, current economic and capital market conditions might make it more difficult for us to sell Properties or might adversely affect the price we receive for Properties that we do sell, as prospective buyers might experience increased costs of debt financing or other difficulties in obtaining debt financing.

Moreover, there are some limitations under federal income tax laws applicable to REITs that limit our ability to sell assets. In addition, because many of our Properties are mortgaged to secure our debts, we may not be able to obtain a release of a lien on a mortgaged Property without the payment of the associated debt and/or a substantial prepayment penalty, or transfer of debt to a buyer, which restricts our ability to dispose of a Property, even though the sale might otherwise be desirable. Furthermore, the number of prospective buyers interested in purchasing shopping centers is limited. Therefore, if we want to sell one or more of our Properties, we may not be able to dispose of it in the desired time period and may receive less consideration than we originally invested in the Property.

Before a Property can be sold, we may be required to make expenditures to correct defects or to make improvements. We cannot assure you that we will have funds available to correct those defects or to make those improvements, and if we cannot do so, we might not be able to sell the Property, or might be required to sell the Property on unfavorable terms. In acquiring a property, we might agree to provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as limitations on the amount of debt that can be placed or repaid on

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that property. These factors and any others that would impede our ability to respond to adverse changes in the performance of our Properties could adversely affect our financial condition and results of operations.

We may elect not to proceed with certain developments, redevelopments or expansion projects once they have been undertaken, resulting in charges that could have a material adverse effect on our results of operations for the period in which the charge is taken.

We intend to pursue developments, redevelopments and expansion activities as opportunities arise. In connection with any developments, redevelopments or expansion, we will incur various risks, including the risk that developments, redevelopments or expansion opportunities explored by us may be abandoned for various reasons including, but not limited to, credit disruptions that require the Company to conserve its cash until the capital markets stabilize or alternative credit or funding arrangements can be made. Developments, redevelopments or expansions also include the risk that construction costs of a project may exceed original estimates, possibly making the project unprofitable. Other risks include the risk that we may not be able to refinance construction loans which are generally with full recourse to us, the risk that occupancy rates and rents at a completed project will not meet projections and will be insufficient to make the project profitable, and the risk that we will not be able to obtain Anchor, mortgage lender and property partner approvals for certain expansion activities.

When we elect not to proceed with a development opportunity, the development costs ordinarily are charged against income for the then-current period. Any such charge could have a material adverse effect on our results of operations for the period in which the charge is taken.

Certain of our Properties are subject to ownership interests held by third parties, whose interests may conflict with ours and thereby constrain us from taking actions concerning these Properties which otherwise would be in the best interests of the Company and our stockholders.

We own partial interests in 13 malls, 7 associated centers, 6 community centers, 2 office buildings, a hotel development, a residential development and 4 self-storage facilities. We have interests in 5 malls, 1 associated center, 2 community centers and four self-storage facilities that are all owned by unconsolidated joint ventures and are managed by a property manager that is affiliated with the third-party partner, which receives a fee for its services. The third-party partner of each of these Properties controls the cash flow distributions, although our approval is required for certain major decisions. We have interests in two malls that are owned by consolidated joint ventures and managed by a property manager that is affiliated with the third-party partner, which receives a fee for its services.

Where we serve as managing general partner (or equivalent) of the entities that own our Properties, we may have certain fiduciary responsibilities to the other owners of those entities. In certain cases, the approval or consent of the other owners is required before we may sell, finance, expand or make other significant changes in the operations of such Properties. To the extent such approvals or consents are required, we may experience difficulty in, or may be prevented from, implementing our plans with respect to expansion, development, financing or other similar transactions with respect to such Properties.

With respect to those Properties for which we do not serve as managing general partner (or equivalent), we do not have day-to-day operational control or control over certain major decisions, including leasing and the timing and amount of distributions, which could result in decisions by the managing entity that do not fully reflect our interests. This includes decisions relating to the requirements that we must satisfy in order to maintain our status as a REIT for tax purposes. However, decisions relating to sales, expansion and disposition of all or substantially all of the assets and financings are subject to approval by the Operating Partnership.

Bankruptcy of joint venture partners could impose delays and costs on us with respect to the jointly owned retail Properties.

In addition to the possible effects on our joint ventures of a bankruptcy filing by us, the bankruptcy of one of the other investors in any of our jointly owned shopping centers could materially and adversely affect the relevant Property or Properties. Under the bankruptcy laws, we would be precluded from taking some actions affecting the estate of the other investor without prior approval of the bankruptcy court, which would, in most cases, entail prior notice to other parties and a hearing in the bankruptcy court. At a minimum, the requirement to obtain court approval may delay the actions we would or might want to take. If the relevant joint venture through which we have invested in a Property has incurred recourse obligations, the discharge in bankruptcy of one of the other investors might result in our ultimate liability for a greater portion of those obligations than we would otherwise bear. 

 

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We may be unable to lease space in our properties on favorable terms, or at all.

Our results of operations depend on our ability to continue to lease space in our properties, including vacant space and re-leasing space in properties where leases are expiring, optimizing our tenant mix, or leasing properties on economically favorable terms. Because we have leases expiring annually, we are continually focused on leasing our properties. Similarly, we are pursuing a strategy of replacing expiring short-term leases with long-term leases. For more information on lease expirations see Mall Lease Expirations and Other Property Type Lease Expirations .

There can be no assurance that our leases will be renewed or that vacant space will be re-let at rates equal to or above the current average net effective rental rates or that substantial rent abatements, tenant improvements, early termination rights or below market renewal options will not be offered to attract new tenants or retain existing tenants. If the rental rates decrease, if our existing tenants do not renew their leases or if we do not re-let a significant portion of our available space and space for which leases will expire, our financial condition and results of operations could be adversely affected.

We may incur significant costs related to compliance with environmental laws, which could have a material adverse effect on our results of operations, cash flows and the funds available to us to pay dividends.

Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal or remediation of petroleum, certain hazardous or toxic substances on, under or in such real estate. Such laws typically impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances. The costs of remediation or removal of such substances may be substantial. The presence of such substances, or the failure to promptly remove or remediate such substances, may adversely affect the owner's or operator's ability to lease or sell such real estate or to borrow using such real estate as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of such substances at the disposal or treatment facility, regardless of whether such facility is owned or operated by such person. Certain laws also impose requirements on conditions and activities that may affect the environment or the impact of the environment on human health. Failure to comply with such requirements could result in the imposition of monetary penalties (in addition to the costs to achieve compliance) and potential liabilities to third parties. Among other things, certain laws require abatement or removal of friable and certain non-friable asbestos-containing materials in the event of demolition or certain renovations or remodeling. Certain laws regarding asbestos-containing materials require building owners and lessees, among other things, to notify and train certain employees working in areas known or presumed to contain asbestos-containing materials. Certain laws also impose liability for release of asbestos-containing materials into the air and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with asbestos-containing materials. In connection with the ownership and operation of properties, we may be potentially liable for all or a portion of such costs or claims.

All of our Properties (but not properties for which we hold an option to purchase but do not yet own) have been subject to Phase I environmental assessments or updates of existing Phase I environmental assessments. Such assessments generally consisted of a visual inspection of the Properties, review of federal and state environmental databases and certain information regarding historic uses of the Property and adjacent areas and the preparation and issuance of written reports. Some of the Properties contain, or contained, underground storage tanks used for storing petroleum products or wastes typically associated with automobile service or other operations conducted at the Properties. Certain Properties contain, or contained, dry-cleaning establishments utilizing solvents. Where believed to be warranted, samplings of building materials or subsurface investigations were undertaken. At certain Properties, where warranted by the conditions, we have developed and implemented an operations and maintenance program that establishes operating procedures with respect to asbestos-containing materials. The cost associated with the development and implementation of such programs was not material. We have also obtained environmental insurance coverage at certain of our Properties.

We believe that our Properties are in compliance in all material respects with all federal, state and local ordinances and regulations regarding the handling, discharge and emission of hazardous or toxic substances. As of December 31, 2019, we have recorded in our consolidated financial statements a liability of $3.0 million related to potential future asbestos abatement activities at our Properties which are not expected to have a material impact on our financial condition or results of operations. We have not been notified by any governmental authority, and are not otherwise aware, of any material noncompliance, liability or claim relating to hazardous or toxic substances in connection with any of our present or former Properties. Therefore, we have not recorded any liability related to hazardous or toxic substances. Nevertheless, it is possible that the environmental assessments available to us do not reveal all potential environmental liabilities. It is also possible that subsequent investigations will identify material contamination, that adverse environmental conditions have arisen subsequent to the performance of the environmental assessments, or that there are material environmental liabilities of which management is unaware. Moreover, no assurances can be given that (i) future laws, ordinances or regulations will

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not impose any material environmental liability or (ii) the current environmental condition of the Properties has not been or will not be affected by tenants and occupants of the Properties, by the condition of properties in the vicinity of the Properties or by third parties unrelated to us, the Operating Partnership or the relevant Property's partnership.

Possible terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.

Future terrorist attacks in the United States, and other acts of violence, including terrorism or war, might result in declining consumer confidence and spending, which could harm the demand for goods and services offered by our tenants and the values of our Properties, and might adversely affect an investment in our securities. A decrease in retail demand could make it difficult for us to renew or re-lease our Properties at lease rates equal to or above historical rates and, to the extent our tenants are affected, could adversely affect their ability to continue to meet obligations under their existing leases. Terrorist activities also could directly affect the value of our Properties through damage, destruction or loss. Furthermore, terrorist acts might result in increased volatility in national and international financial markets, which could limit our access to capital or increase our cost of obtaining capital.

We face possible risks associated with climate change.

We cannot determine with certainty whether global warming or cooling is occurring and, if so, at what rate. To the extent climate change causes changes in weather patterns, our properties in certain markets and regions could experience increases in storm intensity and rising sea levels. Over time, these conditions could result in volatile or decreased demand for retail space at certain of our Properties or, in extreme cases, our inability to operate the Properties at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) insurance on favorable terms and increasing the cost of energy and snow removal at our Properties. Moreover, compliance with new laws or regulations related to climate change, including compliance with "green" building codes, may require us to make improvements to our existing Properties or increase taxes and fees assessed on us or our Properties. At this time, there can be no assurance that climate change will not have a material adverse effect on us.

RISKS RELATED TO OUR BUSINESS AND THE MARKET FOR OUR STOCK

The loss of one or more significant tenants, due to bankruptcies or as a result of consolidations in the retail industry, could adversely affect both the operating revenues and value of our Properties.

We could be adversely affected by the bankruptcy, early termination, sales performance, or closing of tenants and Anchors. Certain of our lease agreements include co-tenancy and/or sales-based kick-out provisions which allow a tenant to pay a reduced rent amount and, in certain instances, terminate the lease, if we fail to maintain certain occupancy levels or retain specified named Anchors, or if the tenant does not achieve certain specified sales targets. If occupancy or tenant sales do not meet or fall below certain thresholds, rents we are entitled to receive from our retail tenants could be reduced. The bankruptcy of a tenant could result in the termination of its lease, which would lower the amount of cash generated by that Property. Replacing tenants with better performing, emerging retailers may take longer than our historical experience of re-tenanting due to their lack of infrastructure and limited experience in opening stores as well as the significant competition for such emerging brands. In addition, if a department store operating as an Anchor at one of our Properties were to cease operating, we may experience difficulty and delay and incur significant expense in replacing the Anchor, re-tenanting, or otherwise re-merchandising the use of the Anchor space. This difficulty could be exacerbated if the Anchor space is owned by a third party and we are not able to acquire the space, if the third party’s plans to lease or redevelop the space do not align with our interests or the third party does not act in a timely manner to lease or redevelop the space. In addition, the Anchor’s closing may lead to reduced customer traffic and lower mall tenant sales. As a result, we may also experience difficulty or delay in leasing spaces in areas adjacent to the vacant Anchor space. The early termination or closing of tenants or Anchors for reasons other than bankruptcy could have a similar impact on the operations of our Properties, although in the case of early terminations we may benefit in the short-term from lease termination income.

Most recently, certain traditional department stores have experienced challenges including limited opportunities for new investment/openings, declining sales, and store closures. Department stores' market share is declining, and their ability to drive traffic has substantially decreased. Despite our Malls traditionally being driven by department store Anchors, in the event of a need for replacement, it has become necessary to consider non-department store Anchors. Certain of these non-department store Anchors may demand higher allowances than a standard mall tenant due to the nature of the services/products they provide.

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Clauses in leases with certain tenants in our properties frequently may include inducements, such as reduced rent and tenant allowance payments, which can reduce our rents and Funds From Operations (“FFO”) , and adversely impact our financial condition and results of operation.

The leases for a number of the tenants in our properties have co-tenancy clauses that allow those tenants to pay reduced rent until occupancy at the respective property regains certain thresholds and/or certain named co-tenants open stores at the respective property. Additionally, some tenants may have rent abatement clauses that delay rent commencement for a prolonged period of time after initial occupancy. The effect of these clauses reduces our rents and FFO while they are applicable. We expect to continue to offer co-tenancy and rent abatement clauses in the future to attract tenants to our properties. As a result, our financial condition and results of operations may be adversely impacted.

Additionally, the prevalence and volume of such leases is likely to increase at an unpredictable rate in light of the recent proliferation of bankruptcy filings and closures by retailers occupying “big box”, anchor or other traditionally large spaces which can have an adverse impact on our financial condition and results of operations.

We may not be able to raise capital through financing activities.

Many of our assets are encumbered by property-level indebtedness; therefore, we may be limited in our ability to raise additional capital through property level or other financings.  In addition, our ability to raise additional capital could be limited to refinancing existing secured mortgages before their maturity date which may result in yield maintenance or other prepayment penalties to the extent that the mortgage is not open for prepayment at par.

The market price of our common stock or other securities may fluctuate significantly.

The market price of our common stock or other securities may fluctuate significantly in response to many factors, including: 

 

actual or anticipated variations in our operating results, FFO, cash flows or liquidity;

 

changes in our earnings estimates or those of analysts;

 

changes in our dividend policy (including, without limitation, our current suspension of dividends on our outstanding common and preferred stock, as well as distributions to holders of outstanding units of limited partnership in the Operating Partnership);

 

impairment charges affecting the carrying value of one or more of our Properties or other assets;

 

publication of research reports about us, the retail industry or the real estate industry generally;

 

increases in market interest rates that lead purchasers of our securities to seek higher dividend or interest rate yields;

 

changes in market valuations of similar companies;

 

adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt in the near and medium term and our ability to refinance such debt and the terms thereof or our plans to incur additional debt in the future;

 

additions or departures of key management personnel;

 

actions by institutional security holders;

 

proposed or adopted regulatory or legislative changes or developments;

 

speculation in the press or investment community;

 

changes in our credit ratings;

 

the occurrence of any of the other risk factors included in, or incorporated by reference in, this report; and

 

general market and economic conditions.

Many of the factors listed above are beyond our control. Those factors may cause the market price of our common stock or other securities to decline significantly, regardless of our financial performance and condition and prospects. It is impossible to provide any assurance that the market price of our common stock or other securities will not fall in the future, and it may be difficult for holders to sell such securities at prices they find attractive, or at all.

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We are in a competitive business.

There are numerous shopping facilities that compete with our Properties in attracting retailers to lease space. Our ability to attract tenants to our Properties and lease space is important to our success, and difficulties in doing so can materially impact our Properties' performance. The existence of competing shopping centers could have a material adverse impact on our ability to develop or operate Properties, lease space to desirable Anchors and tenants, and on the level of rents that can be achieved. In addition, retailers at our Properties face continued competition from shopping through various means and channels, including via the internet, lifestyle centers, value and outlet centers, wholesale and discount shopping clubs, and television shopping networks. Competition of this type could adversely affect our revenues and cash available for distribution to shareholders.

As new technologies emerge, the relationship among customers, retailers, and shopping centers are evolving on a rapid basis and we may not be able to adapt to such new technologies and relationships on a timely basis. Our relative size may limit the capital and resources we are willing to allocate to invest in strategic technology to enhance the mall experience, which may make our Malls relatively less desirable to anchors, mall tenants, and consumers. Additionally, a small but increasing number of tenants utilize our Malls as showrooms or as part of an omni-channel strategy (allowing customers to shop seamlessly through various sales channels). As a result, customers may make purchases through other sales channels during or immediately after visiting our Malls, with such sales not being captured currently in our tenant sales figures or monetized in our minimum or overage rents.

We compete with other major real estate investors with significant capital for attractive investment opportunities. These competitors include other REITs, investment banking firms, and private and institutional investors, some of whom have greater financial resources or have different investment criteria than we do. In particular, there is competition to acquire, develop, or redevelop highly productive retail properties. This could become even more severe as competitors gain size and economies of scale as a result of merger and consolidation activity. This competition may impair our ability to acquire, develop, or redevelop suitable properties, and to attract key retailers, on favorable terms in the future.

Increased operating expenses, decreased occupancy rates and tenants converting to gross leases may not allow us to recover the majority of our CAM, real estate taxes and other operating expenses from our tenants, which could adversely affect our financial position, results of operations and funds available for future distributions.

Energy costs, repairs, maintenance and capital improvements to common areas of our Properties, janitorial services, administrative, property and liability insurance costs and security costs are typically allocable to our Properties' tenants. Our lease agreements typically provide that the tenant is liable for a portion of the CAM and other operating expenses. While historically our lease agreements provided for variable CAM provisions, the majority of our current leases require an equal periodic tenant reimbursement amount for our cost recoveries which serves to fix our tenants' CAM contributions to us. In these cases, a tenant will pay a fixed amount, or a set expense reimbursement amount, subject to annual increases, regardless of the actual amount of operating expenses. The tenant's payment remains the same regardless of whether operating expenses increase or decrease, causing us to be responsible for any excess amounts or to benefit from any declines. As a result, the CAM and tenant reimbursements that we receive may or may not allow us to recover a substantial portion of these operating costs.

There is also a trend of more tenants moving to gross leases, which provide that the tenant pays a single specified amount, with no additional payments for reimbursements of the tenant's portion of operating expenses. As a result, we are responsible for any increases in operating expenses, and benefit from any decreases in operating expenses.

Additionally, in the event that our Properties are not fully occupied, we would be required to pay the portion of any operating, redevelopment or renovation expenses allocable to the vacant space(s) that would otherwise typically be paid by the residing tenant(s).

Our Properties may be subject to impairment charges, which could impact our compliance with certain debt covenants and could otherwise adversely affect our financial results.

We monitor events or changes in circumstances that could indicate the carrying value of a long-lived asset may not be recoverable.  When indicators of potential impairment are present that suggest that the carrying amounts of a long-lived asset may not be recoverable, we assess the recoverability of the asset by determining whether the asset’s carrying value will be recovered through the estimated undiscounted future cash flows expected from our probability weighted use of the asset and its eventual disposition. In the event that such undiscounted future cash flows do not exceed the carrying value, we adjust the carrying value of the long-lived asset to its estimated fair value and recognize an impairment loss.  The estimated fair value is calculated based on the following information, in order of preference, depending upon availability: (Level 1) recently quoted market prices, (Level 2) market prices for comparable properties, or (Level 3) the present value of

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future cash flows, including estimated salvage value. Certain of our long-lived assets may be carried at more than an amount that could be realized in a current disposition transaction.  Projections of expected future operating cash flows require that we estimate future market rental income amounts subsequent to expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the Property, and the number of years the Property is held for investment, among other factors. As these assumptions are subject to economic and market uncertainties, they are difficult to predict and are subject to future events that may alter the assumptions used or management’s estimates of future possible outcomes. Therefore, the future cash flows estimated in our impairment analyses may not be achieved. Further, while the Company has not experienced any non-compliance with debt covenants as a result of the impairment analyses described above, it is possible that future reductions in the carrying value of our assets as a result of such analyses could impact our continued compliance with certain of our debt covenants that require us to maintain specified ratios of total debt to total assets, secured debt to total assets and unencumbered assets to unsecured debt. During 201 9 , we recorded a loss on impairment of real estate totaling $ 239.5 million, which primarily related to six malls and one community center . See Note 16 to the consolidated financial statements for further details.

Inflation or deflation may adversely affect our financial condition and results of operations.

Increased inflation could have a pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may cause operating expenses to rise and adversely affect tenant leases with stated rent increases, which could be lower than the increase in inflation at any given time. Inflation could also have an adverse effect on consumer spending which could impact our tenants' sales and, in turn, our percentage rents, where applicable.

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.

We have experienced cybersecurity attacks that, to date, have not had a material impact on our financial results, but it is not possible to predict the impact of future incidents that may involve security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology ("IT") networks and related systems, which could harm our business by disrupting our operations and compromising or corrupting confidential information, which could adversely impact our financial condition.

We rely on IT systems and network infrastructure, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes, including financial transactions and maintenance of records. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems and infrastructure are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants. Cyber-attacks targeting our infrastructure could result in a full or partial disruption of our operations, as well as those of our tenants. Certain of these resources are provided to us and/or maintained on our behalf by third-party service providers pursuant to agreements that specify to varying degrees certain security and service level standards. Although we and our service providers have implemented processes, procedures and controls to help mitigate these risks, there can be no assurance that these measures, as well as our increased awareness of the risk of cyber incidents, will be effective or that attempted or actual security incidents, breaches or system disruptions that could be damaging to us or others will not occur. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.

A security incident, breach or other significant disruption involving our IT networks and related systems could occur due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption or failure or error or poor product or vendor/developer selection (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions (including the failure to follow our security protocols), or lost connectivity to our networked resources. Such occurrences could disrupt the proper functioning of our networks and systems; result in disruption of business operations and loss of service to our tenants and customers; result in significantly decreased revenues; result in increased costs associated in obtaining and maintaining cybersecurity investigations and testing, as well as implementing protective measures and systems; result in

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increased insurance premiums and operating costs; result in misstated financial reports and/or missed reporting deadlines; result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space; require significant management attention and resources to remedy any damages that result; subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; subject us to regulatory investigations and actions; cause harm to our competitive position and business value; and damage our reputation among our tenants and investors generally. Moreover, cyber-attacks perpetrated against our Anchors and tenants, including unauthorized access to customers’ credit card data and other confidential information, could subject us to significant litigation, liability and costs, adversely impact our reputation, or diminish consumer confidence and consumer spending and negatively impact our business.

Certain agreements with prior owners of Properties that we have acquired may inhibit our ability to enter into future sale or refinancing transactions affecting such Properties, which otherwise would be in the best interests of the Company and our stockholders.

Certain Properties that we originally acquired from third parties had unrealized gain attributable to the difference between the fair market value of such Properties and the third parties' adjusted tax basis in the Properties immediately prior to their contribution of such Properties to the Operating Partnership pursuant to our acquisition. For this reason, a taxable sale by us of any of such Properties, or a significant reduction in the debt encumbering such Properties, could result in adverse tax consequences to the third parties who contributed these Properties in exchange for interests in the Operating Partnership. Under the terms of these transactions, we have generally agreed that we either will not sell or refinance such an acquired Property for a number of years in any transaction that would trigger adverse tax consequences for the parties from whom we acquired such Property, or else we will reimburse such parties for all or a portion of the additional taxes they are required to pay as a result of the transaction. Accordingly, these agreements may cause us not to engage in future sale or refinancing transactions affecting such Properties, which otherwise would be in the best interests of the Company and our stockholders, or may increase the costs to us of engaging in such transactions.

Declines in economic conditions, including increased volatility in the capital and credit markets, could adversely affect our business, results of operations and financial condition.

An economic recession can result in extreme volatility and disruption of our capital and credit markets. The resulting economic environment may be affected by dramatic declines in the stock and housing markets, increases in foreclosures, unemployment and costs of living, as well as limited access to credit. This economic situation can, and most often will, impact consumer spending levels, which can result in decreased revenues for our tenants and related decreases in the values of our Properties. A sustained economic downward trend could impact our tenants' ability to meet their lease obligations due to poor operating results, lack of liquidity, bankruptcy or other reasons. Our ability to lease space and negotiate rents at advantageous rates could also be affected in this type of economic environment. Additionally, access to capital and credit markets could be disrupted over an extended period, which may make it difficult to obtain the financing we may need for future growth and/or to meet our debt service obligations as they mature. Any of these events could harm our business, results of operations and financial condition.

Uninsured losses could adversely affect our financial condition, and in the future our insurance may not include coverage for acts of terrorism.

We carry a comprehensive blanket policy for general liability, property casualty (including fire, earthquake and flood) and rental loss covering all of the Properties, with specifications and insured limits customarily carried for similar properties. However, even insured losses could result in a serious disruption to our business and delay our receipt of revenue. Furthermore, there are some types of losses, including lease and other contract claims, as well as some types of environmental losses, that generally are not insured or are not economically insurable. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenues from the Property. If this happens, we, or the applicable Property's partnership, may still remain obligated under guarantees provided to the lender for any mortgage debt or other financial obligations related to the Property.

The general liability and property casualty insurance policies on our Properties currently include coverage for losses resulting from acts of terrorism, as defined by TRIPRA. While we believe that the Properties are adequately insured in accordance with industry standards, the cost of general liability and property casualty insurance policies that include coverage for acts of terrorism has risen significantly subsequent to September 11, 2001. The cost of coverage for acts of terrorism is currently mitigated by the Terrorism Risk Insurance Act (“TRIA”). In January 2015, Congress reinstated TRIA under the Terrorism Risk Insurance Program Reauthorization Act of 2015 ("TRIPRA") and extended the program through December 31, 2020. Under TRIPRA, the amount of terrorism-related insurance losses triggering the federal insurance threshold will be raised from $180 million in 2019 to $200 million in 2020. Additionally, the bill increases insurers'

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co-payments for losses exceeding their deductibles, in annual steps, from 19% in 2019 to 20% in 2020. Each of these changes may have the effect of increasing the cost to insure against acts of terrorism for property owners, such as the Company, notwithstanding the other provisions of TRIPRA.   In December 2019, Congress further extended TRIPRA through December 31, 2027. I f TRIPRA is not continued beyond 202 7 or is significantly modified, we may incur higher insurance costs and experience greater difficulty in obtaining insurance that covers terrorist-related damages. Our tenants may also have similar difficulties.

RISKS RELATED TO DEBT AND FINANCIAL MARKETS

A deterioration of the capital and credit markets could adversely affect our ability to access funds and the capital needed to refinance debt or obtain new debt.

We are significantly dependent upon external financing to fund the growth of our business and ensure that we meet our debt servicing requirements. Our access to financing depends on the willingness of lending institutions to grant credit to us and conditions in the capital markets in general. An economic recession may cause extreme volatility and disruption in the capital and credit markets. We rely upon our credit facility as a source of funding for numerous transactions. Our access to these funds is dependent upon the ability of each of the participants to the credit facility to meet their funding commitments. When markets are volatile, access to capital and credit markets could be disrupted over an extended period of time and many financial institutions may not have the available capital to meet their previous commitments. The failure of one or more significant participants to our credit facility to meet their funding commitments could have an adverse effect on our financial condition and results of operations. This may make it difficult to obtain the financing we may need for future growth and/or to meet our debt service obligations as they mature. Although we have successfully obtained debt for refinancings and retirement of our maturing debt, acquisitions and the construction of new developments and redevelopments in the past, we cannot make any assurances as to whether we will be able to obtain debt in the future, or that the financing options available to us will be on favorable or acceptable terms.

Our indebtedness is substantial and could impair our ability to obtain additional financing.

At December 31, 2019, our pro-rata share of consolidated and unconsolidated debt outstanding was approximately $4,231.5 million. Our total share of consolidated and unconsolidated debt maturing in 2020, 2021 and 2022 giving effect to all maturity extensions that are available at our election, was approximately $173.4 million, $500.9 million and $604.1 million, respectively. Additionally, we had $92.2 million of debt, at our share, which matured in 2019, related to two non-recourse loans that were in default. See Note 7 and Note 8 to the consolidated financial statements for more information. Our leverage could have important consequences. For example, it could:

 

result in the acceleration of a significant amount of debt for non-compliance with the terms of such debt or, if such debt contains cross-default or cross-acceleration provisions, other debt;

 

result in the loss of assets due to foreclosure or sale on unfavorable terms, which could create taxable income without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Internal Revenue Code;

 

materially impair our ability to borrow unused amounts under existing financing arrangements or to obtain additional financing or refinancing on favorable terms or at all;

 

require us to dedicate a substantial portion of our cash flow to paying principal and interest on our indebtedness, reducing the cash flow available to fund our business, to pay dividends, including those necessary to maintain our REIT qualification, or to use for other purposes;

 

increase our vulnerability to an economic downturn;

 

limit our ability to withstand competitive pressures; or

 

reduce our flexibility to respond to changing business and economic conditions.

If any of the foregoing occurs, our business, financial condition, liquidity, results of operations and prospects could be materially and adversely affected, and the trading price of our common stock or other securities could decline significantly.

Rising interest rates could both increase our borrowing costs, thereby adversely affecting our cash flows and the amounts available for distributions to our stockholders, and decrease our stock price, if investors seek higher yields through other investments.

An environment of rising interest rates could lead holders of our securities to seek higher yields through other investments, which could adversely affect the market price of our stock. As noted above, we currently have suspended all distributions on our outstanding common and preferred stock, as well as on outstanding Operating Partnership Units, which

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will magnify such adverse impacts. One of the factors that has likely influence d the price of our stock in public markets during prior periods when we were making such distributions is the annual distribution rate we pa id as compared with the yields on alternative investments. Further, n umerous other factors, such as governmental regulatory action and tax laws, could have a significant impact on the future market price of our stock. In addition, increases in market interest rates could result in increased borrowing costs for us, which could be expected to adversely affect our cash flow and the amounts available for distributions to our stockholders and the Operating Partnership’s unitholders .

As of December 31, 2019, our total share of consolidated and unconsolidated variable-rate debt was $951.7 million. Increases in interest rates will increase our cash interest payments on the variable-rate debt we have outstanding from time to time. If we do not have sufficient cash flow from operations, we might not be able to make all required payments of principal and interest on our debt, which could result in a default or have a material adverse effect on our financial condition and results of operations, and which might have further adverse effects on our cash flow and our ability to make distributions to shareholders. These significant debt payment obligations might also require us to use a significant portion of our cash flow from operations to make interest and principal payments on our debt rather than for other purposes such as working capital, capital expenditures or any resumption of distributions to holders of our equity securities.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined.

It is also important to note that our variable-rate debt uses LIBOR as a benchmark for establishing the rate. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to disappear entirely or to perform differently than in the past. The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our variable-rate debt.

In July 2017, the Financial Conduct Authority, the authority that regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR.  ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases in benchmark rates, or financing costs to borrowers. We have material contracts that are indexed to USD-LIBOR and we are monitoring this activity and evaluating the related risks.

Adverse changes in our credit ratings could negatively affect our borrowing costs and financing ability.

As of December 31, 2019, we had credit ratings of B2 from Moody's Investors Service ("Moody’s"), B from Standard & Poor's Rating Services ("S&P") and CCC+ from Fitch Ratings ("Fitch"), which are based on credit ratings for the Operating Partnership's unsecured long-term indebtedness. There can be no assurance that we will be able to maintain these ratings.

In January 2019, we replaced our unsecured credit facilities and unsecured term loans, which included certain interest rate provisions based on our credit ratings, with a new $1.185 billion secured facility with 16 banks, comprised of a $685 million secured line of credit and a $500 million secured term loan, which bear interest at a variable rate of LIBOR plus 225 basis points. The interest rate of the new facility is not dependent on our credit ratings. See Liquidity and Capital Resources section and Note 8 to the consolidated financial statements for additional information.

Our hedging arrangements might not be successful in limiting our risk exposure, and we might be required to incur expenses in connection with these arrangements or their termination that could harm our results of operations or financial condition.

From time to time, we use interest rate hedging arrangements to manage our exposure to interest rate volatility, but these arrangements might expose us to additional risks, such as requiring that we fund our contractual payment obligations under such arrangements in relatively large amounts or on short notice. Developing an effective interest rate risk strategy is complex, and no strategy can completely insulate us from risks associated with interest rate fluctuations. We cannot assure you that our hedging activities will have a positive impact on our results of operations or financial condition. We might be subject to additional costs, such as transaction fees or breakage costs, if we terminate these arrangements. In addition, although our interest rate risk management policy establishes minimum credit ratings for counterparties, this does not eliminate the risk that a counterparty might fail to honor its obligations.

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The covenants in our secured credit facilit y and in the Notes might adversely affect us.

Our secured credit facility, as well as the terms of the Notes, require us to satisfy certain affirmative and negative covenants and to meet numerous financial tests, and also contain certain default and cross-default provisions as described in more detail in Liquidity and Capital Resources .

The financial covenants under the secured credit facility and the Notes also require, among other things, that our debt to total assets, as defined in the indenture governing the Notes, be less than 60%, that our ratio of total unencumbered assets to unsecured indebtedness, as defined, be greater than 150%, and that our ratio of consolidated income available for debt service to annual debt service charges, as defined, be greater than 1.5. For the 2023 Notes and the 2024 Notes, the financial covenants require that our ratio of secured debt to total assets, as defined, be less than 45% (40% on and after January 1, 2020). The financial covenants require that our ratio of secured debt to total assets, as defined, be less than 40% for the 2026 Notes. Compliance with each of these ratios is dependent upon our financial performance.

If any future failure to comply with one or more of these covenants resulted in the loss of the secured credit facility or a default under the Notes and we were unable to obtain suitable replacement financing, such loss could have a material, adverse impact on our financial position and results of operations.

Pending litigation could distract our officers from attending to the Company’s business and could have a material adverse effect on our business, financial condition and results of operation.

The Company and certain of its officers and directors have been named as defendants in a consolidated putative securities class action lawsuit (“Securities Class Action Litigation”) and certain of its former and current directors have been named as defendants in eight shareholder derivative lawsuits (“Derivative Litigation”).

The complaint filed in the Securities Class Action Litigation alleges 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.  The plaintiffs seek compensatory damages and attorneys’ fees and costs, among other relief, but have not specified the amount of damages sought.  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.  See Item 3. Legal Proceedings for more information on both the Securities Class Action Litigation and Derivative Litigation.

We cannot assure you as to the outcome of these legal proceedings, including the amount of costs or other liabilities that will be incurred in connection with defending these claims or other claims that may arise in the future.  To the extent that we incur material costs in connection with defending or pursuing these claims, or become subject to liability as a result of an adverse judgment or settlement of these claims, our results of operations and liquidity position could be materially and adversely affected.  In addition, ongoing litigation may divert management’s attention and resources from the day-to-day operation of our business and cause reputational harm to us, either of which could have a material adverse effect on our business, financial condition and results of operations.

RISKS RELATED TO THE OPERATING PARTNERSHIP'S NOTES

CBL has no significant operations and no material assets other than its indirect investment in the Operating Partnership; therefore, the limited guarantee of the Notes does not provide material additional credit support.

The limited guarantee provides that the Notes are guaranteed by CBL for any losses suffered by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. However, CBL has no significant operations and no material assets other than its indirect investment in the Operating Partnership. Furthermore, the limited guarantee of the Notes is effectively subordinated to all existing and future liabilities and preferred equity of the Company's subsidiaries (including the Operating Partnership (except as to the Notes) and any entity the Company accounts for under the equity method of accounting) and any of the Company's secured debt, to the extent of the value of the assets securing any such indebtedness. Due to the narrow scope of the limited guarantee, the lack of significant operations or assets at CBL other than its indirect investment in the Operating Partnership and the structural subordination of the limited guarantee to the liabilities and any preferred equity of the Company's subsidiaries, the limited guarantee does not provide material additional credit support.

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Our substantial indebtedness could materially and adversely affect us and the ability of the Operating Partnership to meet its debt service obligations under the Notes.

Our level of indebtedness and the limitations imposed on us by our debt agreements could have significant adverse consequences to holders of the Notes, including the following:

 

our cash flow may be insufficient to meet our debt service obligations with respect to the Notes and our other indebtedness, which would enable the lenders and other debtholders to accelerate the maturity of their indebtedness, or be insufficient to fund other important business uses after meeting such obligations;

 

we may be unable to borrow additional funds as needed or on favorable terms;

 

we may be unable to refinance our indebtedness at maturity or earlier acceleration, if applicable, or the refinancing terms may be less favorable than the terms of our original indebtedness or otherwise be generally unfavorable;

 

because a significant portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense;

 

increases in interest rates could also materially increase our interest expense on future fixed rate debt;

 

we may be forced to dispose of one or more of our Properties, possibly on disadvantageous terms;

 

we may default on our other unsecured indebtedness;

 

we may default on our secured indebtedness and the lenders may foreclose on our Properties or our interests in the entities that own the Properties that secure such indebtedness and receive an assignment of rents and leases; and

 

we may violate restrictive covenants in our debt agreements, which would entitle the lenders and other debtholders to accelerate the maturity of their indebtedness.

If any one of these events were to occur, our business, financial condition, liquidity, results of operations and prospects, as well as the Operating Partnership's ability to satisfy its obligations with respect to the Notes, could be materially and adversely affected. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, a circumstance which could hinder the Company's ability to meet the REIT distribution requirements imposed by the Internal Revenue Code.

The structural subordination of the Notes may limit the Operating Partnership's ability to meet its debt service obligations under the Notes.

The Notes are the Operating Partnership's unsecured and unsubordinated indebtedness and rank equally with the Operating Partnership's existing and future unsecured and unsubordinated indebtedness, and are effectively junior to all liabilities and any preferred equity of the Operating Partnership's subsidiaries and to all of the Operating Partnership's indebtedness that is secured by the Operating Partnership's assets, to the extent of the value of the assets securing such indebtedness. While the indenture governing the Notes limits our ability to incur additional secured indebtedness in the future, it will not prohibit us from incurring such indebtedness if we are in compliance with certain financial ratios and other requirements at the time of its incurrence. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to us, the holders of any secured indebtedness will, subject to obtaining relief from the automatic stay under section 362 of the Bankruptcy Code, be entitled to proceed directly against the collateral that secures the secured indebtedness. Therefore, such collateral generally will not be available for satisfaction of any amounts owed under our unsecured indebtedness, including the Notes, until such secured indebtedness is satisfied in full.

The Notes also are effectively subordinated to all liabilities, whether secured or unsecured, and any preferred equity of the subsidiaries of the Operating Partnership. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to any such subsidiary, the Operating Partnership, as an equity owner of such subsidiary, and therefore holders of our debt, including the Notes, will be subject to the prior claims of such subsidiary's creditors, including trade creditors, and preferred equity holders. Furthermore, while the indenture governing the Notes limits the ability of our subsidiaries to incur additional unsecured indebtedness in the future, it does not prohibit our subsidiaries from incurring such indebtedness if such subsidiaries are in compliance with certain financial ratios and other requirements at the time of its incurrence.

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We may not be able to generate sufficient cash flow to meet our debt service obligations.

Our ability to meet our debt service obligations on, and to refinance, our indebtedness, including the Notes, and to fund our operations, working capital, acquisitions, capital expenditures and other important business uses, depends on our ability to generate sufficient cash flow in the future. To a certain extent, our cash flow is subject to general economic, industry, financial, competitive, operating, legislative, regulatory and other factors, many of which are beyond our control.

We cannot be certain that our business will generate sufficient cash flow from operations or that future sources of cash will be available to us in an amount sufficient to enable us to meet our debt service obligations on our indebtedness, including the Notes, or to fund our other important business uses. Additionally, if we incur additional indebtedness in connection with future acquisitions or development projects or for any other purpose, our debt service obligations could increase significantly and our ability to meet those obligations could depend, in large part, on the returns from such acquisitions or projects, as to which no assurance can be given.

We may need to refinance all or a portion of our indebtedness, including the Notes, at or prior to maturity. Our ability to refinance our indebtedness or obtain additional financing will depend on, among other things:

 

our financial condition, liquidity, results of operations and prospects and market conditions at the time; and

 

restrictions in the agreements governing our indebtedness.

As a result, we may not be able to refinance any of our indebtedness, including the Notes, on favorable terms, or at all.

If we do not generate sufficient cash flow from operations, and additional borrowings or refinancings are not available to us, we may be unable to meet all of our debt service obligations, including payments on the Notes. As a result, we would be forced to take other actions to meet those obligations, such as selling Properties, raising equity or delaying capital expenditures, any of which could have a material adverse effect on us. Furthermore, we cannot be certain that we will be able to effect any of these actions on favorable terms, or at all.

Despite our substantial outstanding indebtedness, we may still incur significantly more indebtedness in the future, which would exacerbate any or all of the risks described above.

We may be able to incur substantial additional indebtedness in the future. Although the agreements governing our revolving credit facility, term loans and certain other indebtedness do, and the indenture governing the Notes does, limit our ability to incur additional indebtedness, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, debt incurred in compliance with these restrictions could be substantial. To the extent that we incur substantial additional indebtedness in the future, the risks associated with our substantial leverage described above, including our inability to meet our debt service obligations, would be exacerbated.

Federal and state statutes allow courts, under specific circumstances, to void guarantees and require holders of indebtedness and lenders to return payments received from guarantors.

Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee, such as the limited guarantee provided by CBL or any future guarantee of the Notes issued by any subsidiary of the Operating Partnership, could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor, if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee (i) received less than reasonably equivalent value or fair consideration for the incurrence of the guarantee and (ii) one of the following was true with respect to the guarantor:

 

the guarantor was insolvent or rendered insolvent by reason of the incurrence of the guarantee;

 

the guarantor was engaged in a business or transaction for which the guarantor's remaining assets constituted unreasonably small capital; or

 

the guarantor intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature.

In addition, any claims in respect of a guarantee could be subordinated to all other debts of that guarantor under principles of "equitable subordination," which generally require that the claimant must have engaged in some type of inequitable conduct, the misconduct must have resulted in injury to the creditors of the debtor or conferred an unfair advantage on the claimant, and equitable subordination must not be inconsistent with other provisions of the U.S. Bankruptcy Code.

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The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:

 

the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;

 

the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they became absolute and mature; or

 

it could not pay its debts as they become due.

The court might also void such guarantee, without regard to the above factors, if it found that a guarantor entered into its guarantee with actual or deemed intent to hinder, delay, or defraud its creditors.

A court would likely find that a guarantor did not receive reasonably equivalent value or fair consideration for its guarantee unless it benefited directly or indirectly from the issuance or incurrence of such indebtedness. This risk may be increased if any subsidiary of the Operating Partnership guarantees the Notes in the future, as no additional consideration would be received at the time such guarantee is issued. If a court voided such guarantee, holders of the indebtedness and lenders would no longer have a claim against such guarantor or the benefit of the assets of such guarantor constituting collateral that purportedly secured such guarantee. In addition, the court might direct holders of the indebtedness and lenders to repay any amounts already received from a guarantor.

The indenture governing the Notes contains restrictive covenants that may restrict our ability to expand or fully pursue certain of our business strategies.

The indenture governing the Notes contains financial and operating covenants that, among other things, restrict our ability to take specific actions, even if we believe them to be in our best interest, including, subject to various exceptions, restrictions on our ability to:

 

consummate a merger, consolidation or sale of all or substantially all of our assets; and

 

incur secured and unsecured indebtedness.

In addition, our secured credit facility, secured term loan and certain other debt agreements require us to meet specified financial ratios and the indenture governing the Notes requires us to maintain at all times a specified ratio of unencumbered assets to unsecured debt. These covenants may restrict our ability to expand or fully pursue our business strategies. Our ability to comply with these and other provisions of the indenture governing the Notes, our revolving credit facility and certain other debt agreements may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events beyond our control.

The breach of any of these covenants could result in a default under our indebtedness, which could result in the acceleration of the maturity of such indebtedness. If any of our indebtedness is accelerated prior to maturity, we may not be able to repay such indebtedness or refinance such indebtedness on favorable terms, or at all.

There is no prior public market for the Notes, so if an active trading market does not develop or is not maintained for the Notes, holders of the Notes may not be able to resell them on favorable terms when desired, or at all.

Prior to the offering of each of the 2023 Notes, the 2024 Notes and the 2026 Notes, there was no public market for such Notes and we cannot be certain that an active trading market will ever develop for the Notes or, if one develops, will be maintained. Furthermore, we do not intend to apply for listing of the Notes on any securities exchange or for the inclusion of the Notes on any automated dealer quotation system. The underwriters informed us that they intend to make a market in the Notes. However, the underwriters may cease their market making at any time without notice to or the consent of existing holders of the Notes. The lack of a trading market could adversely affect a holder's ability to sell the Notes when desired, or at all, and the price at which a holder may be able to sell the Notes. The liquidity of the trading market, if any, and future trading prices of the Notes will depend on many factors, including, among other things, prevailing interest rates, our financial condition, liquidity, results of operations and prospects, the market for similar securities and the overall securities market, and may be adversely affected by unfavorable changes in these factors. It is possible that the market for the Notes will be subject to disruptions which may have a negative effect on the holders of the Notes, regardless of our financial condition, liquidity, results of operations or prospects.

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RISKS RELATED TO DIVIDENDS AND OUR COMMON STOCK

We have suspended paying dividends on our common stock and preferred stock and we cannot assure you of our ability to pay dividends in the future or the amount of any dividends.

Our board of directors has determined to suspend paying a dividend on our common stock and preferred stock, as well as distributions to the Operating Partnership’s outstanding common units, preferred units, Series S special common units (the “S-SCUs”), Series L special common units (the “L-SCUs”) and Series K special common units (the “K-SCUs”) (collectively, the “OP Units”).  Our board of directors currently expects to continue to review and determine the dividends on our common stock, preferred stock and OP Units on a quarterly basis, but we cannot provide you with any assurances that we will resume paying dividends on our common stock, preferred stock or OP Units. Our board of directors determines the amount and timing of any distributions. In making this determination, our board of directors considered a variety of relevant factors, including, without limitations, REIT minimum distribution requirements, the amount of cash available for distribution, restrictions under Delaware law, capital expenditures and reserve requirements and general operational requirements. We cannot assure you that we will be able to make distributions in the future. Any of the foregoing could adversely affect the market price of our publicly traded securities. If dividends on our outstanding preferred stock is in arrears for six or more quarterly periods, those preferred stockholders, voting as a single class, would be entitled to elect a total of two additional directors to our board of directors, which could have an adverse impact on our governance and on the interests of our stockholders other than the holders of our preferred stock if these additional directors focus primarily on pursuing strategies to benefit holders of our preferred stock.

The dividend arrearage created by our board of directors’ decision to suspend the dividends that continue to accrue on our outstanding preferred stock (and the Operating Partnership’s distributions to its preferred units of limited partnership underlying our outstanding preferred shares) 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”), we (i) may not cause the Operating Partnership to resume distributions to holders of its outstanding common units of limited partnership 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 also prevents 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 stock.

We may change the dividend policy for our common stock in the future.

Even if our board of directors should, in the future, determine based on the factors described in the preceding Risk Factor and in the paragraph below, that we are able to resume paying distributions on the outstanding equity securities of the Company and the Operating Partnership, depending upon our liquidity needs, we will still reserve the right to pay any or all of a dividend in a combination of cash and shares of common stock, to the extent permitted by any applicable revenue procedures of the Internal Revenue Service ("IRS"). In the event that we should pay a portion of any future dividends in shares of our common stock pursuant to such procedures, taxable U.S. stockholders would be required to pay tax on the entire amount of the dividend, including the portion paid in shares of common stock, in which case such stockholders may have to use cash from other sources to pay such tax. If a U.S. stockholder sells any common stock it receives as a dividend in order to pay its taxes, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold federal tax with respect to any future dividends, including any dividends that are paid in common stock. In addition, if a significant number of our stockholders sell shares of our common stock in order to pay taxes owed on any future dividends, such sales would put downward pressure on the market price of our common stock.

The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Directors and will depend on our earnings, taxable income, FFO, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness, secured credit facility and preferred stock, the annual distribution requirements under

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the REIT provisions of the Internal Revenue Code, Delaware law and such other factors as our Board of Directors deems relevant. Any dividends payable will be determined by our Board of Directors based upon the circumstances at the time of declaration. Any change in our dividend policy could have a material adverse effect on the market price of our common stock.

The recent declines in our common stock price, and the potential for our common stock to be delisted from the NYSE, could have materially adverse effects on our business.

The price of our common stock has declined significantly in recent periods. This reduction in stock price could have materially adverse effects on our business, including reducing our ability to use our common stock as compensation or to otherwise provide incentives to employees and by reducing our ability to generate capital through stock sales or otherwise use our stock as currency with third parties.

The average closing price of our common stock has been less than $1.00 over a consecutive 30 trading-day period, and as a result, our stock could be delisted from the NYSE. The threat of delisting and/or a delisting of our common stock could have adverse effects by, among other things:

 

reducing the liquidity and market price of our common stock;

 

reducing the number of investors willing to hold or acquire our common stock, thereby further restricting our ability to obtain equity financing;

 

causing an event of default or noncompliance under certain of our debt facilities and other agreements; and

 

reducing our ability to retain, attract and motivate our directors, officers and employees.

Since we conduct substantially all of our operations through our Operating Partnership, our ability to pay dividends on our common and preferred stock depends on the distributions we receive from our Operating Partnership.

Because we conduct substantially all of our operations through our Operating Partnership, our ability to service our debt obligations, as well as our ability to pay any future dividends on our common and preferred stock will depend almost entirely upon the earnings and cash flows of the Operating Partnership and the ability of the Operating Partnership to make distributions to us on our ownership interests in our Operating Partnership. Under the Delaware Revised Uniform Limited Partnership Act, the Operating Partnership is prohibited from making any distribution to us to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the Operating Partnership (other than some non-recourse liabilities and some liabilities to the partners) exceed the fair value of the assets of the Operating Partnership. Further, as described above, the currently existing dividend arrearage with respect to our outstanding shares of preferred stock (and the underlying preferred units of the Operating Partnership), as well as the Operating Partnership’s existing SCU Distribution Shortfall, effectively preclude the Operating Partnership from resuming any distributions to holders of its common units (including distributions with respect to common units held by the Company, which fund our common stock dividend) until such preferred dividend arrearage and SCU Distribution Shortfall have been satisfied through the cash payment of all accumulated amounts due to the holders of such securities.

Additionally, the terms of our secured credit facility provide generally that distributions the Operating Partnership makes to us and the other partners in the Operating Partnership (i) may not exceed the greater of the amount necessary to maintain our status as a REIT or 95% of FFO, so long as there is no event of default (as defined), (ii) in the event of a default, may be restricted to the minimum amount necessary to maintain our status as a REIT and (iii) in the event of default for nonpayment of amounts due under the facility, the Operating Partnership may be prohibited from making any distributions. This in turn may limit our ability to make some types of payments, including payment of dividends to our stockholders. Any inability to make cash distributions from the Operating Partnership could jeopardize our ability to pay any future dividends to our stockholders for one or more dividend periods which, in turn, could jeopardize our ability to maintain qualification as a REIT.

22


 

RISKS RELATED TO GEOGRAPHIC CONCENTRATIONS

Since our Properties are located principally in the southeastern and midwestern United States, our financial position, results of operations and funds available for distribution to shareholders are subject generally to economic conditions in these regions and, in particular, to adverse economic developments affecting the operating results of Properties in our five largest markets.  

Our Properties are located principally in the southeastern and midwestern United States. Our Properties located in the southeastern United States accounted for approximately 49.5% of our total revenues from all Properties for the year ended December 31, 2019 and currently include 27 malls, 12 associated centers, 6 community centers and 3 office buildings. Our Properties located in the midwestern United States accounted for approximately 25.5% of our total revenues from all Properties for the year ended December 31, 2019 and currently include 17 malls, 2 associated centers and 2 self-storage facilities. Further, the Properties located in our five largest metropolitan area markets - St. Louis, MO; Chattanooga, TN; Laredo, TX; Lexington, KY; and Madison, WI - accounted for approximately 6.8%, 5.2%, 4.2%, 4.1% and 3.1%, respectively, of our total revenues for the year ended December 31, 2019. No other market accounted for more than 3.0% of our total revenues for the year ended December 31, 2019.

Our results of operations and funds available for distribution to shareholders therefore will be impacted generally by economic conditions in the southeastern and midwestern United States, and particularly by the results experienced at Properties located in our five largest market areas. While we already have Properties located in six states across the southwestern, northeastern and western regions, we will continue to look for opportunities to geographically diversify our portfolio in order to minimize dependency on any particular region; however, the expansion of the portfolio through both acquisitions and developments is contingent on many factors including consumer demand, competition and economic conditions.

RISKS RELATED TO FEDERAL INCOME TAX LAWS

We conduct a portion of our business through taxable REIT subsidiaries, which are subject to certain tax risks.

We have established several taxable REIT subsidiaries including our Management Company. Despite our qualification as a REIT, our taxable REIT subsidiaries must pay income tax on their taxable income. In addition, we must comply with various tests to continue to qualify as a REIT for federal income tax purposes, and our income from and investments in our taxable REIT subsidiaries generally do not constitute permissible income and investments for these tests. While we will attempt to ensure that our dealings with our taxable REIT subsidiaries will not adversely affect our REIT qualification, we cannot provide assurance that we will successfully achieve that result. Furthermore, we may be subject to a 100% penalty tax, or our taxable REIT subsidiaries may be denied deductions, to the extent our dealings with our taxable REIT subsidiaries are not deemed to be arm's length in nature.

If we fail to qualify as a REIT in any taxable year, our funds available for distribution to stockholders will be reduced.

We intend to continue to operate so as to qualify as a REIT under the Internal Revenue Code. Although we believe that we are organized and operate in such a manner, no assurance can be given that we currently qualify and, in the future, will continue to qualify as a REIT. Such qualification involves the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial or administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify. In addition, no assurance can be given that legislation, new regulations, administrative interpretations or court decisions will not significantly change the tax laws with respect to qualification or its corresponding federal income tax consequences. Any such change could have a retroactive effect.

If in any taxable year we were to fail to qualify as a REIT, we would not be allowed a deduction for distributions to stockholders in computing our taxable income and we would be subject to federal income tax on our taxable income at regular corporate rates. Unless entitled to relief under certain statutory provisions, we also would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. As a result, the funds available for distribution to our stockholders would be reduced for each of the years involved. This would likely have a significant adverse effect on the value of our securities and our ability to raise additional capital. In addition, we would no longer be required to make distributions to our stockholders. We currently intend to operate in a manner designed to qualify as a REIT. However, it is possible that future economic, market, legal, tax or other considerations may cause our Board of Directors, with the consent of a majority of our stockholders, to revoke the REIT election.

23


 

Any issuance or transfer of our capital stock to any person in excess of the applicable limits on ownership necessary to maintain our status as a REIT would be deemed void ab initio, and those shares would automatically be transferred to a non-affiliated charitable trust.

To maintain our status as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of a taxable year. Our certificate of incorporation generally prohibits ownership of more than 6% of the outstanding shares of our capital stock by any single stockholder determined by vote, value or number of shares (other than Charles Lebovitz, Executive Chairman of our Board of Directors and our former Chief Executive Officer, David Jacobs, Richard Jacobs and their affiliates under the Internal Revenue Code's attribution rules). The affirmative vote of 66 2/3% of our outstanding voting stock is required to amend this provision.

Our Board of Directors may, subject to certain conditions, waive the applicable ownership limit upon receipt of a ruling from the IRS or an opinion of counsel to the effect that such ownership will not jeopardize our status as a REIT. Historically, our Board of Directors has granted such waivers to certain institutional investors based upon the receipt of such opinions from the Company’s tax counsel. In connection with the previously disclosed Standstill Agreement entered into effective November 1, 2019 between the Company, Exeter Capital Investors, L.P., Exeter Capital GP LLC, WEM Exeter LLC, and Michael L. Ashner (collectively, the “Exeter Group”), pursuant to which Michael L. Ashner and Carolyn B. Tiffany also were appointed to the Company’s Board of Directors, the Board (following receipt of an appropriate opinion of tax counsel) approved the granting to the Exeter Group of a similar waiver (the “Exeter Ownership Limitation Waiver”) to enable the Exeter Group to beneficially own up to 9.8% of the Company’s outstanding common stock, subject to the terms of the Exeter Ownership Limitation Waiver. Exeter Capital Investors, L.P. is a single purpose entity controlled by Michael Ashner to acquire common shares in CBL. Absent any such waiver, however, any issuance or transfer of our capital stock to any person in excess of the applicable ownership limit or any issuance or transfer of shares of such stock which would cause us to be beneficially owned by fewer than 100 persons, will be null and void and the intended transferee will acquire no rights to the stock. Instead, such issuance or transfer with respect to that number of shares that would be owned by the transferee in excess of the ownership limit provision would be deemed void ab initio and those shares would automatically be transferred to a trust for the exclusive benefit of a charitable beneficiary to be designated by us, with a trustee designated by us, but who would not be affiliated with us or with the prohibited owner. Any acquisition of our capital stock and continued holding or ownership of our capital stock constitutes, under our certificate of incorporation, a continuous representation of compliance with the applicable ownership limit.

In order to maintain our status as a REIT and avoid the imposition of certain additional taxes under the Internal Revenue Code, we must satisfy minimum requirements for distributions to shareholders, which may limit the amount of cash we might otherwise have been able to retain for use in growing our business.

To maintain our status as a REIT under the Internal Revenue Code, we generally will be required each year to distribute to our stockholders at least 90% of our taxable income after certain adjustments. However, to the extent that we do not distribute all of our net capital gains or distribute at least 90% but less than 100% of our REIT taxable income, as adjusted, we will be subject to tax on the undistributed amount at regular corporate tax rates, as the case may be. Also, our cash flows from operations may be insufficient to fund required distributions as a result of differences in timing between the actual receipt of income and the payment of expenses and the recognition of income and expenses for federal income tax purposes, or the effect of nondeductible expenditures, such as capital expenditures, payments of compensation for which Section 162(m) of the Code denies a deduction, interest expense deductions limited by Section 163(j) of the Code, the creation of reserves or required debt service or amortization payments. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which certain distributions paid by us during each calendar year are less than the sum of 85% of our ordinary income for such calendar year, 95% of our capital gain net income for the calendar year and any amount of such income that was not distributed in prior years. In the case of property acquisitions, including our initial formation, where individual Properties are contributed to our Operating Partnership for Operating Partnership units, we have assumed the tax basis and depreciation schedules of the entities contributing Properties. The relatively low tax basis of such contributed Properties may have the effect of increasing the cash amounts we are required to distribute as dividends, thereby potentially limiting the amount of cash we might otherwise have been able to retain for use in growing our business. This low tax basis may also have the effect of reducing or eliminating the portion of distributions made by us that are treated as a non-taxable return of capital.

Complying with REIT requirements might cause us to forego otherwise attractive opportunities.

In order to qualify as a REIT for U.S. federal income tax purposes, we must satisfy tests concerning, among other things, our sources of income, the nature of our assets, the amounts we distribute to our shareholders and the ownership of our stock. We may also be required to make distributions to our shareholders at disadvantageous times or when we do not

24


 

have funds readily available for distribution. Thus, compliance with REIT requirements may cause us to forego opportunities we would otherwise pursue. In addition, the REIT provisions of the Internal Revenue Code impose a 100% tax on income from “prohibited transactions.” “Prohibited transactions” generally include sales of assets that constitute inventory or other property held for sale in the ordinary course of business, other than foreclosure property. This 100% tax could impact our desire to sell assets and other investments at otherwise opportune times if we believe such sales could be considered “prohibited transactions.”

Holders of common units and special common units in the Operating Partnership may have income tax liability attributable to their ownership of such units in excess of cash distributions .

It is possible that income taxes payable on taxable income allocated to a holder of common units or special common units in the Operating Partnership will exceed the cash distributions attributable thereto. This may occur because funds received by the Operating Partnership may be taxable income to the Operating Partnership (and thus allocated to holders of Operating Partnership units), while the Operating Partnership may use such funds for nondeductible operating or capital expenses of the Operating Partnership. This also could occur as a result of the voluntary or involuntary sale or other disposition (including a foreclosure sale) of one or more Properties owned by the Operating Partnership or subsidiaries of the Operating Partnership, or the retirement of any of the Operating Partnership’s or its subsidiaries’ debt at a discount. Thus, there may be years in which the tax liability attributable to the allocation of taxable income to holders of the Operating Partnership’s common units or special common units exceeds the cash distributions from the Operating Partnership attributable to such units. This is particularly true at the present time, as the Operating Partnership currently has suspended all distributions on its common units and special common units until further notice. In such a case, holders of such units would be required to fund (from other sources of funds) any resulting income tax liability on such taxable income allocations in excess of distributions from the Operating Partnership to the holders of such units. Allocations of income or loss to holders of the Operating Partnership’s common units or special common units continue while such holder owns such Operating Partnership units. If a holder of units exercises its right to exchange its Operating Partnership common units or special common units to Company stock (or the cash equivalent thereof, at the Company’s election), gain or loss may be triggered to such exercising holder on such exchange transaction, but such holder will not be allocated taxable income or loss attributable to such units with respect to any time period after the closing of such exchange except as otherwise required under the applicable tax rules.

Partnership tax audit rules could have a material adverse effect on us.

The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships. Under the rules, among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner's distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto could be assessed and collected, at the partnership level. Absent available elections, it is possible that a partnership in which we directly or indirectly invest, could be required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we, as a direct or indirect partner of these partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though we may not otherwise have been required to pay additional taxes had we owned the assets of the partnership directly. The partnership tax audit rules apply to the Operating Partnership and its subsidiaries that are classified as partnerships for U.S. federal income tax purposes. The changes created by these rules are sweeping and, accordingly, there can be no assurance that these rules will not have a material adverse effect on us.

Recent legislation substantially modified the taxation of REITs and their shareholders, and the effects of such legislation and related regulatory action are uncertain.

As a result of all of the changes to U.S. federal tax laws implemented by the December 2017 Tax Cuts and Jobs Act (the “TCJA”), our taxable income and the amount of distributions to our stockholders required under the law to maintain our REIT status, and our relative tax advantage as a REIT, may significantly change. The long-term impact of the TCJA on the overall economy, government revenues, our tenants, CBL, and the rest of the real estate industry cannot be reliably predicted at this early stage of the new law’s implementation. The TCJA is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury Department and IRS, any of which could lessen or increase the impact of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. Furthermore, the TCJA may negatively impact certain of our tenants’ operating results, financial condition and future business plans. There can be no assurance that the TCJA will not negatively impact our operating results, financial condition and future business operations.

25


 

Future changes to tax laws may adversely affect us either directly through changes to the taxation of the Company, our subsidiaries or our stockholders or indirectly through changes which adversely affect our tenants. These changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets.  Not all states automatically conform to changes in the Internal Revenue Code. Some states use the legislative process to decide whether it is in their best interest to conform or not to various provisions of the Internal Revenue Code. This could increase the complexity of our efforts, increase compliance costs, and may subject us to additional taxes and audit risk.

RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

The ownership limit described above, as well as certain provisions in our amended and restated certificate of incorporation, amended and restated bylaws, and certain provisions of Delaware law, may hinder any attempt to acquire us.

There are certain provisions of Delaware law, our amended and restated certificate of incorporation, our Third Amended and Restated Bylaws (the "Bylaws"), and other agreements to which we are a party that may have the effect of delaying, deferring or preventing a third party from making an acquisition proposal for us. These provisions may also inhibit a change in control that some, or a majority, of our stockholders might believe to be in their best interest or that could give our stockholders the opportunity to realize a premium over the then-prevailing market prices for their shares. These provisions and agreements are summarized as follows:

 

The Ownership Limit – As described above, to maintain our status as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the last half of a taxable year. Our amended and restated certificate of incorporation generally prohibits ownership of more than 6% of the outstanding shares of our capital stock by any single stockholder determined by value (other than Charles Lebovitz, David Jacobs, Richard Jacobs and their affiliates under the Internal Revenue Code's attribution rules), subject to the ability of the Board of Directors to grant waivers in appropriate circumstances, such as the Exeter Ownership Limitation Waiver. In addition to preserving our status as a REIT, the ownership limit may have the effect of precluding an acquisition of control of us without the approval of our Board of Directors.

 

Supermajority Vote Required for Removal of Directors - Our governing documents provide that stockholders can remove directors with or without cause, but only by a vote of 75% of the outstanding voting stock. This provision makes it more difficult to change the composition of our Board of Directors and may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our Board of Directors rather than pursue non-negotiated takeover attempts.

 

Advance Notice Requirements for Stockholder Proposals – Our Bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures generally require advance written notice of any such proposals, containing prescribed information, to be given to our Secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the anniversary date of the prior year’s annual meeting. Alternatively, a stockholder (or group of stockholders) seeking to nominate candidates for election as directors pursuant to the proxy access provisions set forth in Section 2.8 of our Bylaws generally must provide advance written notice to our Secretary, containing information prescribed in the proxy access bylaw, not less than 120 days nor more than 150 days prior to the anniversary date of the prior year’s annual meeting.

 

Vote Required to Amend Bylaws – A vote of 66 2 / 3 % of our outstanding voting stock (in addition to any separate approval that may be required by the holders of any particular class of stock) is necessary for stockholders to amend our Bylaws.

 

Delaware Anti-Takeover Statute – We are a Delaware corporation and are subject to Section 203 of the Delaware General Corporation Law. In general, Section 203 prevents an “interested stockholder” (defined generally as a person owning 15% or more of a company's outstanding voting stock) from engaging in a “business combination” (as defined in Section 203) with us for three years following the date that person becomes an interested stockholder unless:

 

(a)

before that person became an interested holder, our Board of Directors approved the transaction in which the interested holder became an interested stockholder or approved the business combination;

 

(b)

upon completion of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owns 85% of our voting stock outstanding at the time the transaction commenced (excluding stock held by directors who are also officers and by employee stock plans that do

26


 

 

not provide employees with the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer); or

 

(c)

following the transaction in which that person became an interested stockholder, the business combination is approved by our Board of Directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least two-thirds of our outstanding voting stock not owned by the interested stockholder. Under Section 203, these restrictions also do not apply to certain business combinations proposed by an interested stockholder following the announcement or notification of certain extraordinary transactions involving us and a person who was not an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of our directors, if that extraordinary transaction is approved or not opposed by a majority of the directors who were directors before any person became an interested stockholder in the previous three years or who were recommended for election or elected to succeed such directors by a majority of directors then in office.

Certain ownership interests held by members of our senior management may tend to create conflicts of interest between such individuals and the interests of the Company and our Operating Partnership.  

 

Tax Consequences of the Sale or Refinancing of Certain Properties – Since certain of our Properties had unrealized gain attributable to the difference between the fair market value and adjusted tax basis in such Properties immediately prior to their contribution to the Operating Partnership, a taxable sale of any such Properties, or a significant reduction in the debt encumbering such Properties, could cause adverse tax consequences to the members of our senior management who owned interests in our predecessor entities. As a result, members of our senior management might not favor a sale of a Property or a significant reduction in debt even though such a sale or reduction could be beneficial to us and the Operating Partnership. Our Bylaws provide that any decision relating to the potential sale of any Property that would result in a disproportionately higher taxable income for members of our senior management than for us and our stockholders, or that would result in a significant reduction in such Property's debt, must be made by a majority of the independent directors of the Board of Directors. The Operating Partnership is required, in the case of such a sale, to distribute to its partners, at a minimum, all of the net cash proceeds from such sale up to an amount reasonably believed necessary to enable members of our senior management to pay any income tax liability arising from such sale.

 

Interests in Other Entities; Policies of the Board of Directors – Certain Property tenants are affiliated with members of our senior management. Our Bylaws provide that any contract or transaction between us or the Operating Partnership and one or more of our directors or officers, or between us or the Operating Partnership and any other entity in which one or more of our directors or officers are directors or officers or have a financial interest, must be approved by our disinterested directors or stockholders after the material facts of the relationship or interest of the contract or transaction are disclosed or are known to them. Our code of business conduct and ethics also contains provisions governing the approval of certain transactions involving the Company and employees (or immediate family members of employees, as defined therein) that are not subject to the provision of the Bylaws described above. Such transactions are also subject to the Company's related party transactions policy in the manner and to the extent detailed in the proxy statement filed with the SEC for the Company's 2019 annual meeting. Nevertheless, these affiliations could create conflicts between the interests of these members of senior management and the interests of the Company, our shareholders and the Operating Partnership in relation to any transactions between us and any of these entities.

ITEM 1B. UNRESOLVED STAFF COMMENTS  

None. 

ITEM 2. PROPERTIES

Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 for additional information pertaining to the Properties’ performance.

Malls

We owned a controlling interest in 53 Malls and non-controlling interests in 10 Malls as of December 31, 2019.  The Malls are primarily located in middle markets and generally have strong competitive positions because they are the only, or the dominant, regional mall in their respective trade areas. The Malls are generally anchored by two or more anchors or junior anchors and a wide variety of mall stores. Anchor and junior anchor tenants own or lease their stores and non-anchor stores lease their locations.

27


 

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 December 31, 2019 and 2018.

 

(3)

Excluded Malls - We exclude Malls from our core portfolio if they fall in the following categories, for which operational metrics are excluded:

 

a.

Lender Malls - Properties 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. Hickory Point Mall and Greenbrier Mall were classified as Lender Malls as of December 31, 2019. Acadiana Mall, Cary Towne Center and Triangle Town Center were classified as Lender Malls as of December 31, 2018. In January 2019, Acadiana Mall was returned to the lender and Cary Towne Center was sold. In July 2019, Triangle Town Center was returned to the lender. Lender Malls are excluded from our same-center pool as decisions made while in discussions with the lender may lead to metrics that do not provide relevant information related to the condition of these Properties or they may be under cash management agreements with the respective servicers.

 

b.

Repositioning Malls - Malls that are currently being repositioned or where we have determined that the current format of the Property no longer represents the best use of the Property and we are in the process of evaluating alternative strategies for the Property. This may include major redevelopment or an alternative retail or non-retail format, or after evaluating alternative strategies for the Property, we may determine that the Property no longer meets our criteria for long-term investment. The steps taken to reposition these Properties, such as signing tenants to short-term leases, which are not included in occupancy percentages, or leasing to regional or local tenants, which typically do not report sales, may lead to metrics which do not provide relevant information related to the condition of these Properties. Therefore, traditional performance measures, such as occupancy percentages and leasing metrics, exclude Repositioning Malls. Hickory Point Mall was classified as a Repositioning Mall as of December 31, 2018 until its reclassification as a Lender Mall in 2019.

We own the land underlying each Mall in fee simple interest, except for Brookfield Square, Cross Creek Mall, Dakota Square Mall, EastGate Mall, Meridian Mall, St. Clair Square, Stroud Mall and WestGate Mall. We lease all or a portion of the land at each of these Malls subject to long-term ground leases.

The following table sets forth certain information for each of the Malls as of December 31, 2019 (dollars in thousands except for sales per square foot amounts):

 

Mall / Location

 

Year of

Opening/

Acquisition

 

Our

Ownership

 

 

Total Center

SF (1)

 

 

Total

Mall Store

GLA (2)

 

 

Mall

Store

Sales per

Square

Foot (3)

 

 

Percentage

Mall

Store GLA

Leased (4)

 

 

Anchors & Junior

Anchors (5)

TIER 1

Sales ≥ $375 or more per

   square foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coastal Grand (6)

   Myrtle Beach, SC

 

2004

 

50%

 

 

 

1,037,498

 

 

 

341,799

 

 

$

400

 

 

 

95

%

 

Bed Bath & Beyond, Belk, Cinemark, Dick's Sporting Goods (7), Dillard's, H&M, JC Penney, Sears

CoolSprings Galleria (6)

   Nashville, TN

 

1991

 

50%

 

 

 

1,166,203

 

��

 

430,857

 

 

 

595

 

 

 

91

%

 

Belk Men's & Kid's, Belk Women's & Home, Dillard's, H&M, JC Penney, King's Dining & Entertainment, Macy's

Cross Creek Mall

   Fayetteville, NC

 

1975/2003

 

100%

 

 

 

764,239

 

 

 

60,054

 

 

 

507

 

 

 

96

%

 

Belk, Dave & Buster's (8), H&M, JC Penney, Macy's

Fayette Mall

   Lexington, KY

 

1971/2001

 

100%

 

 

 

1,158,534

 

 

 

460,257

 

 

 

579

 

 

 

95

%

 

Dick's Sporting Goods, Dillard's, H&M, JC Penney, Macy's

Friendly Center and The Shops at Friendly (6)

   Greensboro, NC

 

1957/ 2006/ 2007

 

50%

 

 

 

1,368,167

 

 

 

604,026

 

 

 

511

 

 

 

95

%

 

Barnes & Noble, BB&T, Belk, Belk Home Store, The Grande Cinemas, Harris Teeter, Macy's, O2 Fitness, REI, Sears, Whole Foods

28


 

Mall / Location

 

Year of

Opening/

Acquisition

 

Our

Ownership

 

 

Total Center

SF (1)

 

 

Total

Mall Store

GLA (2)

 

 

Mall

Store

Sales per

Square

Foot (3)

 

 

Percentage

Mall

Store GLA

Leased (4)

 

 

Anchors & Junior

Anchors (5)

Hamilton Place

   Chattanooga, TN

 

1987

 

90%

 

 

 

1,160,596

 

 

 

330,974

 

 

 

418

 

 

 

94

%

 

Barnes & Noble, Belk for Men, Kids & Home, Belk for Women, Dave & Buster's (9) Dillard's for Men, Kids & Home, Dillard's for Women, Dick's Sporting Goods (9), former Forever 21, H&M, JC Penney

Hanes Mall

   Winston-Salem, NC

 

1975/2001

 

100%

 

 

 

1,435,209

 

 

 

468,507

 

 

 

390

 

 

 

95

%

 

Belk, Dave & Buster's, Dillard's, Encore, H&M, JC Penney, Macy's, Novant Health (10)

Imperial Valley Mall

   El Centro, CA

 

2005

 

100%

 

 

 

762,695

 

 

 

214,055

 

 

 

404

 

 

 

90

%

 

Cinemark, Dillard's, JC Penney, Hobby Lobby (11), Macy's

Jefferson Mall

   Louisville, KY

 

1978/2001

 

100%

 

 

 

783,639

 

 

 

225,078

 

 

 

397

 

 

 

88

%

 

Dillard's, H&M, JC Penney, Round1 Bowling & Amusement, Ross Dress for Less, former Sears

Mall del Norte

   Laredo, TX

 

1977/2004

 

100%

 

 

 

1,219,236

 

 

 

408,243

 

 

 

444

 

 

 

94

%

 

Beall's, Cinemark, Dillard's, H&M, House of Hoops by Foot Locker, JC Penney, Macy's, Macy's Home Store, Main Event (12), Sears, TruFit Athletic Club

Northwoods Mall

   North Charleston, SC

 

1972/2001

 

100%

 

 

 

748,269

 

 

 

256,021

 

 

 

394

 

 

 

94

%

 

Belk, Books-A-Million, Burlington, Dillard's, JC Penney, Planet Fitness

Oak Park Mall (6)

   Overland Park, KS

 

1974/2005

 

50%

 

 

 

1,518,266

 

 

 

431,096

 

 

 

493

 

 

 

92

%

 

Barnes & Noble, Dillard's for Women, Dillard's for Men, Children & Home, Forever 21, H&M, JC Penney, Macy's, Nordstrom

Old Hickory Mall

   Jackson, TN

 

1967/2001

 

100%

 

 

 

547,099

 

 

 

170,004

 

 

 

376

 

 

 

78

%

 

Belk, JC Penney, Macy's, former Sears

The Outlet Shoppes at Atlanta (6)

   Woodstock, GA

 

2013

 

50%

 

 

 

404,906

 

 

 

380,099

 

 

 

450

 

 

 

90

%

 

Saks Fifth Ave OFF 5TH

The Outlet Shoppes at El Paso (6)

   El Paso, TX

 

2007/2012

 

50%

 

 

 

433,047

 

 

 

411,008

 

 

 

444

 

 

 

99

%

 

H&M

The Outlet Shoppes of the Bluegrass (6)

   Simpsonville, KY

 

2014

 

65%

 

 

 

428,072

 

 

 

381,372

 

 

 

435

 

 

 

97

%

 

H&M, Saks Fifth Ave OFF 5TH

Parkway Place

   Huntsville, AL

 

1957/1998

 

100%

 

 

 

647,804

 

 

 

278,626

 

 

 

401

 

 

 

89

%

 

Belk, Dillard's

Richland Mall

   Waco, TX

 

1980/2002

 

100%

 

 

 

693,450

 

 

 

191,872

 

 

 

392

 

 

 

95

%

 

Beall's, Dick's Sporting Goods, Dillard's for Men, Kids & Home, Dillard's for Women (13), JC Penney

Southpark Mall

   Colonial Heights, VA

 

1989/2003

 

100%

 

 

 

675,640

 

 

 

212,233

 

 

 

388

 

 

 

95

%

 

Dick's Sporting Goods, H&M, JC Penney, Macy's, Regal Cinemas, former Sears

St. Clair Square (14)

   Fairview Heights, IL

 

1974/1996

 

100%

 

 

 

1,067,611

 

 

 

290,356

 

 

 

388

 

 

 

95

%

 

Dillard's, JC Penney, Macy's, former Sears

Sunrise Mall

   Brownsville, TX

 

1979/2003

 

100%

 

 

 

799,397

 

 

 

234,640

 

 

 

439

 

 

 

92

%

 

former A'GACI, Beall's, Cinemark, Dick's Sporting Goods, Dillard's, JC Penney, former Sears

West County Center (6)

   Des Peres, MO

 

1969/2007

 

50%

 

 

 

1,196,804

 

 

 

382,853

 

 

 

584

 

 

 

89

%

 

Barnes & Noble, Dick's Sporting Goods, Forever 21, H&M, JC Penney, Macy's, Nordstrom

Total Tier 1 Malls

 

 

 

 

 

 

 

 

20,016,381

 

 

 

7,164,030

 

 

$

463

 

 

 

93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TIER 2

Sales ≥ $300 to < $375 per

   square foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29


 

Mall / Location

 

Year of

Opening/

Acquisition

 

Our

Ownership

 

 

Total Center

SF (1)

 

 

Total

Mall Store

GLA (2)

 

 

Mall

Store

Sales per

Square

Foot (3)

 

 

Percentage

Mall

Store GLA

Leased (4)

 

 

Anchors & Junior

Anchors (5)

Arbor Place

   Atlanta (Douglasville),

   GA

 

1999

 

100%

 

 

 

1,162,064

 

 

 

307,634

 

 

$

372

 

 

 

95

%

 

Bed Bath & Beyond, Belk, Dillard's, Forever 21, H&M, JC Penney, Macy's, Regal Cinemas, Sears

Asheville Mall

   Asheville, NC

 

1972/1998

 

100%

 

 

 

973,367

 

 

 

265,463

 

 

 

363

 

 

 

87

%

 

Barnes & Noble, Belk, Dillard's for Men, Children & Home, Dillard's for Women, H&M, JC Penney, former Sears

Dakota Square Mall

   Minot, ND

 

1980/2012

 

100%

 

 

 

757,509

 

 

 

201,701

 

 

 

310

 

 

 

93

%

 

AMC Theatres, Barnes & Noble, HomeGoods, JC Penney, Scheels, former Sears, Sleep Inn & Suites - Splashdown Dakota Super Slides, Target

East Towne Mall

   Madison, WI

 

1971/2001

 

100%

 

 

 

801,248

 

 

 

211,959

 

 

 

336

 

 

 

92

%

 

Barnes & Noble, former Boston Store, Dick's Sporting Goods, Flix Brewhouse, Gordman's, H&M, JC Penney, Sears

EastGate Mall (15)

   Cincinnati, OH

 

1980/2003

 

100%

 

 

 

837,550

 

 

 

256,836

 

 

 

327

 

 

 

81

%

 

Dillard's Clearance, JC Penney, Kohl's, former Sears

Frontier Mall

   Cheyenne, WY

 

1981

 

100%

 

 

 

520,276

 

 

 

200,156

 

 

 

314

 

 

 

94

%

 

AMC Theatres, Dillard's for Women, Dillard's for Men, Kids & Home, Jax Outdoor Gear, JC Penney

Governor's Square (6)

   Clarksville, TN

 

1986

 

47.5%

 

 

 

685,549

 

 

 

238,667

 

 

 

354

 

 

 

93

%

 

AMC Theatres, Belk, Dick's Sporting Goods, Dillard's, JC Penney, Ross Dress for Less, former Sears

Harford Mall

   Bel Air, MD

 

1973/2003

 

100%

 

 

 

503,774

 

 

 

179,598

 

 

 

352

 

 

 

89

%

 

Encore, Macy's, Sears

Kirkwood Mall

   Bismarck, ND

 

1970/2012

 

100%

 

 

 

815,445

 

 

 

211,581

 

 

 

303

 

 

 

95

%

 

H&M, former Herberger's (16), Keating Furniture, JC Penney, Scheels, Target

Layton Hills Mall

   Layton, UT

 

1980/2006

 

100%

 

 

 

482,116

 

 

 

212,670

 

 

 

366

 

 

 

97

%

 

Dick's Sporting Goods, Dillard's, JC Penney

Mayfaire Town Center

   Wilmington, NC

 

2004/2015

 

100%

 

 

 

650,766

 

 

 

331,385

 

 

 

354

 

 

 

90

%

 

Barnes & Noble, Belk, Flip N Fly, The Fresh Market, H&M, Michaels, Regal Cinemas

Northpark Mall

   Joplin, MO

 

1972/2004

 

100%

 

 

 

896,040

 

 

 

278,316

 

 

 

337

 

 

 

81

%

 

Dunham's Sports, H&M, JC Penney, Jo-Ann Fabrics & Crafts, Macy's Children's & Home, Macy's Women & Men's, Sears, T.J. Maxx, Tilt, Vintage Stock

The Outlet Shoppes at Laredo

   Laredo, TX

 

2017

 

65%

 

 

 

358,122

 

 

 

315,375

 

 

N/A

 

*

 

84

%

 

H&M, Nike Factory Store

Park Plaza

   Little Rock, AR

 

1988/2004

 

100%

 

 

 

543,033

 

 

 

209,888

 

 

 

314

 

 

 

98

%

 

Dillard's for Men & Children, Dillard's for Women & Home, Forever 21, H&M

Parkdale Mall

   Beaumont, TX

 

1972/2001

 

100%

 

 

 

1,151,375

 

 

 

327,092

 

 

 

353

 

 

 

80

%

 

Former Ashley HomeStore, Beall's, Dick's Sporting Goods, Dillard's, Forever 21, H&M, HomeGoods, JC Penney, former Macy's, Sears, 2nd & Charles, Tilt Studio

Pearland Town Center (17)

   Pearland, TX

 

2008

 

100%

 

 

 

711,787

 

 

 

354,200

 

 

 

356

 

 

 

91

%

 

Barnes & Noble, Dick's Sporting Goods, Dillard's, Macy's

Post Oak Mall

   College Station, TX

 

1982

 

100%

 

 

 

788,165

 

 

 

300,640

 

 

 

332

 

 

 

88

%

 

Beall's, Dillard's Men & Home, Dillard's Women & Children, Encore, Conn's HomePlus (18), JC Penney, Macy's

South County Center

   St. Louis, MO

 

1963/2007

 

100%

 

 

 

1,028,623

 

 

 

316,400

 

 

 

332

 

 

 

91

%

 

Dick's Sporting Goods, Dillard's, JC Penney, Macy's, Round1 Bowling & Amusement (19)

30


 

Mall / Location

 

Year of

Opening/

Acquisition

 

Our

Ownership

 

 

Total Center

SF (1)

 

 

Total

Mall Store

GLA (2)

 

 

Mall

Store

Sales per

Square

Foot (3)

 

 

Percentage

Mall

Store GLA

Leased (4)

 

 

Anchors & Junior

Anchors (5)

Southaven Towne Center

   Southaven, MS

 

2005

 

100%

 

 

 

607,523

 

 

 

184,427

 

 

 

331

 

 

 

76

%

 

Bed Bath & Beyond, Dillard's, Gordmans, JC Penney, Sportsman's Warehouse, Urban Air Adventure Park

Turtle Creek Mall

   Hattiesburg, MS

 

1994

 

100%

 

 

 

844,977

 

 

 

191,590

 

 

 

349

 

 

 

86

%

 

At Home, Belk, Dillard's, JC Penney, former Sears, Southwest Theaters, Stein Mart

Valley View Mall

   Roanoke, VA

 

1985/2003

 

100%

 

 

 

863,443

 

 

 

336,683

 

 

 

364

 

 

 

97

%

 

Barnes & Noble, Belk, JC Penney, Macy's, Macy's for Home & Children, former Sears

Volusia Mall

   Daytona Beach, FL

 

1974/2004

 

100%

 

 

 

1,060,279

 

 

 

253,503

 

 

 

332

 

 

 

91

%

 

Dillard's for Men & Home, Dillard's for Women, Dillard's for Juniors & Children, H&M, JC Penney, Macy's, former Sears

West Towne Mall

   Madison, WI

 

1970/2001

 

100%

 

 

 

829,715

 

 

 

281,764

 

 

 

357

 

 

 

93

%

 

Dave & Buster's, Dick's Sporting Goods, Forever 21, JC Penney, Total Wine & More, Von Maur (20), Urban Air Adventure Park

WestGate Mall (21)

   Spartanburg, SC

 

1975/1995

 

100%

 

 

 

950,777

 

 

 

241,018

 

 

 

346

 

 

 

82

%

 

Bed Bath & Beyond, Belk, Dick's Sporting Goods, Dillard's, H&M, JC Penney, Regal Cinemas, former Sears

Westmoreland Mall

   Greensburg, PA

 

1977/2002

 

100%

 

 

 

976,689

 

 

 

286,958

 

 

 

307

 

 

 

94

%

 

H&M, JC Penney,   Macy's, Macy's Home Store, Old Navy, former Sears, Stadium Casino (22)

York Galleria

   York, PA

 

1989/1999

 

100%

 

 

 

748,868

 

 

 

241,096

 

 

 

333

 

 

 

77

%

 

former Bon-Ton, Boscov's, Gold's Gym, H&M, Hollywood Casino (23), Marshalls

Total Tier 2 Malls

 

 

 

 

 

 

 

 

20,549,080

 

 

 

6,736,600

 

 

$

342

 

 

 

89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TIER 3

Sales < $300 per square foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alamance Crossing

   Burlington, NC

 

2007

 

100%

 

 

 

904,704

 

 

 

255,174

 

 

$

269

 

 

 

78

%

 

Barnes & Noble, Belk, BJ's Wholesale Club, Carousel Cinemas, Dick's Sporting Goods, Dillard's, Hobby Lobby, JC Penney, Kohl's

Brookfield Square (24)

   Brookfield, WI

 

1967/2001

 

100%

 

 

 

864,317

 

 

 

306,284

 

 

 

261

 

 

 

88

%

 

Barnes & Noble, former Boston Store, H&M, JC Penney, Marcus BistroPlex, Whirlyball

Burnsville Center

   Burnsville, MN

 

1977/1998

 

100%

 

 

 

1,045,053

 

 

 

389,248

 

 

 

276

 

 

 

82

%

 

Dick's Sporting Goods, Gordmans, H&M, JC Penney, Macy's, former Sears

CherryVale Mall

   Rockford, IL

 

1973/2001

 

100%

 

 

 

862,807

 

 

 

348,221

 

 

 

295

 

 

 

82

%

 

Barnes & Noble, Choice Home Center, JC Penney, Macy's, Tilt (25)

Eastland Mall

   Bloomington, IL

 

1967/2005

 

100%

 

 

 

732,647

 

 

 

247,505

 

 

 

282

 

 

 

81

%

 

former Bergner's, Kohl's, former Macy's, Planet Fitness, former Sears

Kentucky Oaks Mall (6)

   Paducah, KY

 

1982/2001

 

50%

 

 

 

717,203

 

 

 

238,307

 

 

 

257

 

 

 

77

%

 

Best Buy, Burlington, Dick's Sporting Goods, Dillard's, Dillard's Home Store, HomeGoods, JC Penney, Ross Dress for Less, Vertical Jump Park

Laurel Park Place

   Livonia, MI

 

1989/2005

 

100%

 

 

 

491,211

 

 

 

198,067

 

 

 

293

 

 

 

90

%

 

Dunham Sports, Von Maur

31


 

Mall / Location

 

Year of

Opening/

Acquisition

 

Our

Ownership

 

 

Total Center

SF (1)

 

 

Total

Mall Store

GLA (2)

 

 

Mall

Store

Sales per

Square

Foot (3)

 

 

Percentage

Mall

Store GLA

Leased (4)

 

 

Anchors & Junior

Anchors (5)

Meridian Mall (26)

   Lansing, MI

 

1969/1998

 

100%

 

 

 

944,172

 

 

 

291,533

 

 

 

288

 

 

 

90

%

 

Bed Bath & Beyond, Dick's Sporting Goods, H&M, High Caliber Karting, JC Penney, Launch Trampoline Park, Macy's, Planet Fitness, Schuler Books & Music, former Younkers

Mid Rivers Mall

   St. Peters, MO

 

1987/2007

 

100%

 

 

 

1,039,834

 

 

 

292,217

 

 

 

286

 

 

 

88

%

 

Dick's Sporting Goods, Dillard's, H&M, JC Penney, Macy's, Marcus Theatres, former Sears, V-Stock

Monroeville Mall

   Pittsburgh, PA

 

1969/2004

 

100%

 

 

 

985,069

 

 

 

446,572

 

 

 

282

 

 

 

84

%

 

Barnes & Noble, Cinemark, Dick's Sporting Goods, Forever 21, H&M, JC Penney, Macy's

Northgate Mall

   Chattanooga, TN

 

1972/2011

 

100%

 

 

 

660,786

 

 

 

181,153

 

 

 

296

 

 

 

85

%

 

Belk, Burlington, former JC Penney, former Sears

The Outlet Shoppes at Gettysburg

   Gettysburg, PA

 

2000/2012

 

50%

 

 

 

249,937

 

 

 

249,937

 

 

 

249

 

 

 

89

%

 

None

Stroud Mall (27)

   Stroudsburg, PA

 

1977/1998

 

100%

 

 

 

414,441

 

 

 

129,601

 

 

 

253

 

 

 

92

%

 

Cinemark, EFO Furniture Outlet (28), JC Penney, ShopRite

Total Tier 3 Malls

 

 

 

 

 

 

 

 

9,912,181

 

 

 

3,573,819

 

 

$

276

 

 

 

85

%

 

 

Total Mall Portfolio

 

 

 

 

 

 

 

 

50,477,642

 

 

 

17,474,449

 

 

$

386

 

 

 

90

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluded Malls (29)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lender Malls:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greenbrier Mall

   Chesapeake, VA

 

1981/2004

 

100%

 

 

 

897,036

 

 

 

269,795

 

 

N/A

 

 

N/A

 

 

Dillard's, Gameworks, H&M, JC Penney, Macy's, former Sears

Hickory Point Mall

   Forsyth, IL

 

1977/2005

 

100%

 

 

 

727,848

 

 

 

153,162

 

 

N/A

 

 

N/A

 

 

former Bergner's, Encore, Hobby Lobby, former JC Penney, Kohl's, Ross Dress for Less, former Sears, T.J. Maxx, Von Maur

Total Lender Malls

 

 

 

 

 

 

 

 

1,624,884

 

 

 

422,957

 

 

 

 

 

 

 

 

 

 

 

Total Excluded Malls

 

 

 

 

 

 

1,624,884

 

 

 

422,957

 

 

 

 

 

 

 

 

 

 

 

 

* Non-stabilized Mall - Mall Store Sales per Square Foot metrics are excluded from Mall Store Sales per Square Foot totals by tier and Mall portfolio totals. The Outlet Shoppes at Laredo is a non-stabilized Mall.

(1)

Total center square footage includes square footage of attached shops, immediately adjacent Anchor and Junior Anchor locations and leased immediately adjacent freestanding locations immediately adjacent to the center.

(2)

Excludes tenants 20,000 square feet and over.

(3)

Totals represent weighted averages.

(4)

Includes tenants under 20,000 square feet with leases in effect as of December 31, 2019.

(5)

Anchors and Junior Anchors listed are immediately adjacent to the Malls or are in freestanding locations immediately adjacent to the Malls.

(6)

This Property is owned in an unconsolidated joint venture.

(7)

Coastal Grand Mall - Dick’s Sporting Goods will relocate to a new building near Dillard’s, which will include the addition of Golf Galaxy. Flip N Fly will then open a 53,000-square-foot family entertainment venue in the former Dick’s Sporting Goods location. Construction on the new Dick’s Sporting Goods/Golf Galaxy store will begin in early 2020.

( 8 )

Cross Creek Mall – Redevelopment plans for this space include Dave & Buster’s, a to-be announced box user and restaurants. Construction is expected to start in 2020.

( 9 )

Hamilton Place - Redevelopment plans for the former Sears space include Dave & Buster's, Dick's Sporting Goods, a hotel and offices. Construction is ongoing and expected to open in spring 2020.

(10)

Hanes Mall – The former Sears was purchased in 2019 by Novant Health, which has indicated plans to redevelop this space for future medical office with the construction start and opening to be determined.

(11)

Imperial Valley Mall – Hobby Lobby is executed in the former Sears space, with the construction start and opening to be determined.

( 1 2 )

Mall del Norte – Main Event is scheduled to open in 2020 in a portion of the former Forever 21 space.

(1 3 )

Richland Mall – Dillard’s is expected to relocate into the former Sears space in 2020.

(1 4 )

St. Clair Square - We are the lessee under a ground lease for 20 acres.  Assuming the exercise of available renewal options, at our election, the ground lease expires January 31, 2073.  The rental amount is $41 per year. In addition to base rent, the landlord receives 0.25% of Dillard's sales in excess of $16,200.

(1 5 )

EastGate Mall - Ground rent for the Dillard's parcel that extends through January 2022 is $24 per year.

(16)

Kirkwood Mall – The former Herberger’s space will be partially demolished in 2020 for the addition of restaurants.

(1 7 )

Pearland Town Center is a mixed-use center which combines retail, office and residential components.  For segment reporting purposes, the retail portion of the center is classified in Malls and the office and residential portions are classified as All Other.

(1 8 )

Post Oak Mall – Redevelopment plans for the former Sears location include the addition of Conn’s HomePlus, which is expected to open in 2020.

32


 

(1 9 )

South County Center – Redevelopment plan s for the former Sears include the addition of Round1 Bowling & Entertainment . Construction schedule is yet to be determined.

( 20 )

West Towne Mall – Von Maur is expected to open in 2021 in the former Boston Store space.

( 2 1 )

WestGate Mall - We are the lessee under several ground leases for approximately 53% of the underlying land.  Assuming the exercise of renewal options available, at our election, the ground lease expires October 2044.  The rental amount is $130 per year.  In addition to base rent, the landlord receives 20% of the percentage rents collected.  We have a right of first refusal to purchase the fee interest.

( 2 2 )

Westmoreland Mall - Construction for a new Stadium Casino began in 2019 in the former Bon-Ton space with the opening scheduled for 2020.

( 2 3 )

York Galleria – Construction for a new Hollywood Casino began in 2019 in the former Sears space with the opening scheduled for 2020

( 2 4 )

Brookfield Square - The annual ground rent for 2019 was $208.

(2 5 )

CherryVale Mall – Tilt Studio is under construction in the former Sears space and is expected to open in 2020.

(2 6 )

Meridian Mall - We are the lessee under several ground leases in effect through March 2067, with extension options.  Fixed rent is $19 per year plus 3% to 4% of all rent.

(2 7 )

Stroud Mall - We are the lessee under a ground lease, which extends through July 2089.  The current rental amount is $70 per year, increasing by $10 every ten years through 2045.  An additional $100 is paid every ten years.

(2 8 )

Stroud Mall – Redevelopment plans for the former Sears includes EFO Furniture Outlet, which is expected to open in February 2020.

(2 9 )

Operational metrics are not reported for Excluded Malls.

Mall Stores  

The Malls have approximately 5,255 Mall stores. National and regional retail chains (excluding local franchises) lease approximately 79.1% of the occupied Mall store GLA. Although Mall stores occupy only 34.4% of the total Mall GLA (the remaining 65.6% is occupied by Anchors and Junior Anchors and a small percentage is vacant), the Malls received 82.8% of their total revenues from Mall stores for the year ended December 31, 2019.

Mall Lease Expirations  

The following table summarizes the scheduled lease expirations for mall stores as of December 31, 2019:

 

Year Ending

December 31,

 

Number of

Leases

Expiring

 

Annualized

Gross Rent (1)

 

 

GLA of

Expiring

Leases

 

 

Average

Annualized

Gross Rent

Per Square

Foot

 

 

Expiring

Leases as % of

Total

Annualized

Gross Rent (2)

 

 

Expiring

Leases as a %

of Total Leased

GLA  (3)

 

2020

 

830

 

$

80,631,000

 

 

 

2,459,000

 

 

$

32.79

 

 

 

13.7

%

 

 

16.4

%

2021

 

738

 

 

82,508,000

 

 

 

2,220,000

 

 

 

37.17

 

 

 

14.0

%

 

 

14.8

%

2022

 

629

 

 

84,221,000

 

 

 

2,118,000

 

 

 

39.76

 

 

 

14.3

%

 

 

14.1

%

2023

 

581

 

 

86,080,000

 

 

 

1,921,000

 

 

 

44.81

 

 

 

14.6

%

 

 

12.8

%

2024

 

597

 

 

75,956,000

 

 

 

2,006,000

 

 

 

37.86

 

 

 

12.9

%

 

 

13.4

%

2025

 

339

 

 

53,188,000

 

 

 

1,234,000

 

 

 

43.10

 

 

 

9.0

%

 

 

8.2

%

2026

 

281

 

 

47,103,000

 

 

 

1,054,000

 

 

 

44.69

 

 

 

8.0

%

 

 

7.0

%

2027

 

231

 

 

38,796,000

 

 

 

864,000

 

 

 

44.90

 

 

 

6.6

%

 

 

5.8

%

2028

 

158

 

 

25,467,000

 

 

 

643,000

 

 

 

39.61

 

 

 

4.3

%

 

 

4.3

%

2029

 

117

 

 

16,134,000

 

 

 

487,000

 

 

 

33.13

 

 

 

2.7

%

 

 

3.2

%

 

(1)

Total annualized gross rent, including recoverable common area expenses and real estate taxes, in effect at December 31, 2019 for expiring leases that were executed as of December 31, 2019.

(2)

Total annualized gross rent, including recoverable CAM expenses and real estate taxes, of expiring leases as a percentage of the total annualized gross rent of all leases that were executed as of December 31, 2019.

(3)

Total GLA of expiring leases as a percentage of the total GLA of all leases that were executed as of December 31, 2019.

See page 56 for a comparison between rents on leases that expired in the current reporting period compared to rents on new and renewal leases executed in 2019. For comparable spaces under 10,000-square-feet in the stabilized mall portfolio, we leased approximately 1.9 million square feet with stabilized mall leasing spreads averaging a decline of 8.6%, including a 9.1% increase in average gross rent per square foot for new leases compared with the prior rent and renewal spreads declining an average of 11.5%.

Mall Tenant Occupancy Costs

Occupancy cost is a tenant’s total cost of occupying its space, divided by its sales. Mall store sales represent total sales amounts received from reporting tenants with space of less than 10,000 square feet.

33


 

The following table summarizes tenant occupancy costs as a percentage of total Mall store sales, excluding license agreements, for each of the past three years:

 

 

 

Year Ended December 31, (1)

 

 

 

2019

 

 

2018

 

 

2017

 

Mall store sales (in millions)

 

$

4,386

 

 

$

4,498

 

 

$

4,713

 

Mall tenant occupancy costs

 

 

12.07

%

 

 

12.30

%

 

 

13.14

%

 

(1)

In certain cases, we own less than a 100% interest in the Malls. The information in this table is based on 100% of the applicable amounts and has not been adjusted for our ownership share.

 

Debt on Malls

Please see the table entitled “Mortgage Loans Outstanding at December 31, 2019” included herein for information regarding any liens or encumbrances related to our Malls. 

Other Property Types

Other property types include the following three categories:

 

(1)

Associated Centers - Retail properties that are adjacent to a regional mall complex and include one or more Anchors, or big box retailers along with smaller tenants. Anchor tenants typically include tenants such as T.J. Maxx, Michaels, Target and Kohl’s.  Associated Centers are located adjacent to one of our Mall properties and are managed by the staff at the Mall.

 

(2)

Community Centers - Designed to attract local and regional area customers and are typically anchored by a combination of supermarkets, or value-priced stores that attract shoppers to each center’s small shops. The tenants at our Community Centers typically offer necessities, value-oriented and convenience merchandise.

 

(3)

Office Buildings and Other

See Note 1 to the consolidated financial statements for additional information on the number of consolidated and unconsolidated Properties in each of the above categories related to our other property types. The following tables set forth certain information for each of our other property types at December 31, 2019:

 

Property / Location

 

Property

Type

 

Year of

Opening/ Most

Recent

Expansion

 

Company's

Ownership

 

 

Total

Center

SF (1)

 

 

Total

Leasable

GLA (2)

 

 

Percentage

GLA

Occupied (3)

 

 

Anchors &

Junior

Anchors

840 Greenbrier Circle

   Chesapeake, VA

 

Office

 

1983

 

100%

 

 

 

50,665

 

 

 

50,665

 

 

100%

 

 

None

Ambassador Town Center (4)

   Lafayette, LA

 

Community Center

 

2016

 

65%

 

 

 

419,296

 

 

 

265,328

 

 

98%

 

 

Costco (5), Dick's Sporting Goods, Marshalls, Nordstrom Rack

Annex at Monroeville

   Pittsburgh, PA

 

Associated Center

 

1986

 

100%

 

 

 

186,367

 

 

 

186,367

 

 

100%

 

 

former Burlington, Steel City Indoor Karting

CBL Center (6)

   Chattanooga, TN

 

Office

 

2001

 

92%

 

 

 

131,354

 

 

 

131,354

 

 

100%

 

 

None

CBL Center II (6)

   Chattanooga, TN

 

Office

 

2008

 

92%

 

 

 

74,941

 

 

 

74,941

 

 

97%

 

 

None

Coastal Grand Crossing (4)

   Myrtle Beach, SC

 

Associated Center

 

2005

 

50%

 

 

 

37,234

 

 

 

37,234

 

 

84%

 

 

PetSmart

CoolSprings Crossing

   Nashville, TN

 

Associated Center

 

1992

 

100%

 

 

 

366,471

 

 

 

78,830

 

 

83%

 

 

American Signature Furniture (5), Gabe's (7), Urban Air Adventure Park (7), Target (5), Electronic Express (7)

Courtyard at Hickory Hollow

   Nashville, TN

 

Associated Center

 

1979

 

100%

 

 

 

68,468

 

 

 

68,468

 

 

100%

 

 

AMC Theatres

Fremaux Town Center (4)

   Slidell, LA

 

Community Center

 

2014/2015

 

65%

 

 

 

616,339

 

 

 

488,339

 

 

95%

 

 

Best Buy, Dick's Sporting Goods, Dillard's (5), Kohl's, LA Fitness, Michaels, T.J. Maxx

Frontier Square

   Cheyenne, WY

 

Associated Center

 

1985

 

100%

 

 

 

186,552

 

 

 

16,527

 

 

100%

 

 

Ross Dress for Less (7), Target (5) , T.J. Maxx (7)

34


 

Property / Location

 

Property

Type

 

Year of

Opening/ Most

Recent

Expansion

 

Company's

Ownership

 

 

Total

Center

SF (1)

 

 

Total

Leasable

GLA (2)

 

 

Percentage

GLA

Occupied (3)

 

 

Anchors &

Junior

Anchors

Governor's Square Plaza (4)

   Clarksville, TN

 

Associated Center

 

1985/1988

 

50%

 

 

 

168,379

 

 

 

71,809

 

 

90%

 

 

Bed Bath & Beyond,

Jo-Ann Fabrics & Crafts, Target (5)

Gunbarrel Pointe

   Chattanooga, TN

 

Associated Center

 

2000

 

100%

 

 

 

273,913

 

 

 

147,913

 

 

100%

 

 

Earthfare, Kohl's,

Target (5)

Hamilton Corner

   Chattanooga, TN

 

Associated Center

 

1990/2005

 

90%

 

 

 

67,310

 

 

 

67,310

 

 

96%

 

 

None

Hamilton Crossing

   Chattanooga, TN

 

Associated Center

 

1987/2005

 

92%

 

 

 

192,074

 

 

 

98,961

 

 

100%

 

 

HomeGoods (7), Michaels (7), T.J. Maxx, former Toys R Us (5)

Hammock Landing (4)

   West Melbourne, FL

 

Community Center

 

2009/2015

 

50%

 

 

 

568,968

 

 

 

345,001

 

 

97%

 

 

Academy Sports + Outdoors, AMC Theatres, HomeGoods, Kohl's (5), Marshalls, Michaels, Ross Dress for Less, Target (5)

Harford Annex

   Bel Air, MD

 

Associated Center

 

1973/2003

 

100%

 

 

 

107,656

 

 

 

107,656

 

 

100%

 

 

Best Buy, Office Depot, PetSmart

The Landing at Arbor Place

   Atlanta (Douglasville), GA

 

Associated Center

 

1999

 

100%

 

 

 

162,960

 

 

 

113,719

 

 

80%

 

 

Ben's Furniture and Antiques, Ollie's Bargain Outlet, former Toys R Us (5)

Layton Hills

   Convenience Center

   Layton, UT

 

Associated Center

 

1980

 

100%

 

 

 

92,942

 

 

 

92,942

 

 

94%

 

 

Bed Bath & Beyond

Layton Hills Plaza

   Layton, UT

 

Associated Center

 

1989

 

100%

 

 

 

18,808

 

 

 

18,808

 

 

89%

 

 

None

Parkdale Crossing

   Beaumont, TX

 

Associated Center

 

2002

 

100%

 

 

 

88,064

 

 

 

88,064

 

 

90%

 

 

Barnes & Noble

The Pavilion at Port Orange (4)

   Port Orange, FL

 

Community Center

 

2010

 

50%

 

 

 

398,031

 

 

 

398,031

 

 

95%

 

 

Belk, HomeGoods, Marshalls, Michaels, Regal Cinemas

Pearland Office

    Pearland, TX

 

Office

 

2009

 

100%

 

 

 

66,915

 

 

 

66,915

 

 

100%

 

 

None

The Plaza at Fayette

   Lexington, KY

 

Associated Center

 

2006

 

100%

 

 

 

215,745

 

 

 

215,745

 

 

90%

 

 

Cinemark, Gordmans

The Promenade

   D'Iberville, MS

 

Community Center

 

2009/2014

 

85%

 

 

 

615,998

 

 

 

399,038

 

 

97%

 

 

Ashley Furniture HomeStore, Bed Bath & Beyond, Best Buy, Dick's Sporting Goods,

Kohl's (5), Marshalls, Michaels, Ross Dress for Less, Target (5)

The Shoppes at Eagle Point (4)

   Cookeville, TN

 

Community Center

 

2018

 

50%

 

 

 

230,316

 

 

 

230,316

 

 

95%

 

 

Academy Sports + Outdoors, Publix, Ross Dress for Less

The Shoppes at Hamilton Place

   Chattanooga, TN

 

Associated Center

 

2003

 

92%

 

 

 

132,009

 

 

 

132,009

 

 

100%

 

 

Bed Bath & Beyond, Marshalls, Ross Dress for Less

The Shoppes at St. Clair Square

   Fairview Heights, IL

 

Associated Center

 

2007

 

100%

 

 

 

84,383

 

 

 

84,383

 

 

100%

 

 

Barnes & Noble

Sunrise Commons

   Brownsville, TX

 

Associated Center

 

2001

 

100%

 

 

 

205,571

 

 

 

104,126

 

 

100%

 

 

former Kmart (7), Marshalls, Ross Dress for Less

The Terrace

   Chattanooga, TN

 

Associated Center

 

1997

 

92%

 

 

 

158,175

 

 

 

158,175

 

 

95%

 

 

Academy Sports + Outdoors, Party City

West Towne Crossing

   Madison, WI

 

Associated Center

 

1980

 

100%

 

 

 

460,875

 

 

 

168,978

 

 

100%

 

 

Barnes & Noble, Best Buy, Kohl's (5), Metcalf's Markets (5), Nordstrom Rack, Office Max (7), former Shopko (5), former Stein Mart (7)

WestGate Crossing

   Spartanburg, SC

 

Associated Center

 

1985/1999

 

100%

 

 

 

158,262

 

 

 

158,262

 

 

98%

 

 

Big Air Trampoline Park, Hamricks, Jo-Ann Fabrics & Crafts

35


 

Property / Location

 

Property

Type

 

Year of

Opening/ Most

Recent

Expansion

 

Company's

Ownership

 

 

Total

Center

SF (1)

 

 

Total

Leasable

GLA (2)

 

 

Percentage

GLA

Occupied (3)

 

 

Anchors &

Junior

Anchors

Westmoreland Crossing

   Greensburg, PA

 

Associated Center

 

2002

 

100%

 

 

 

281,293

 

 

 

281,293

 

 

95%

 

 

AMC Theatres, Dick's Sporting Goods, Levin Furniture, Michaels (7), T.J. Maxx (7)

York Town Center (4)

   York, PA

 

Associated Center

 

2007

 

50%

 

 

 

297,490

 

 

 

247,490

 

 

99%

 

 

Bed Bath & Beyond, Best Buy, Christmas Tree Shops, Dick's Sporting Goods (5), Ross Dress for Less, Staples

Total Other Property Types

 

 

 

 

 

 

 

 

7,183,824

 

 

 

5,194,997

 

 

95%

 

 

 

 

(1)

Total center square footage includes square footage of attached shops, attached and immediately adjacent Anchors and Junior Anchors and leased immediately adjacent freestanding locations.

(2)

All leasable square footage, including Anchors and Junior Anchors.

(3)

Includes all leased Anchors, Junior Anchors and tenants with leases in effect as of December 31, 2019.

(4)

This Property is owned in an unconsolidated joint venture.

(5)

Owned by the tenant.

(6)

We own a 92% interest in the CBL Center office buildings, with an aggregate square footage of approximately 205,000 square feet, where our corporate headquarters is located. As of December 31, 2019, we occupied 45.3% of the total square footage of the buildings. 

(7)

Owned by a third party.

Other Property Types Lease Expirations  

The following table summarizes the scheduled lease expirations for tenants in occupancy at Other Property Types as of December 31, 2019:

 

Year Ending

December 31,

 

Number of

Leases

Expiring

 

 

Annualized

Gross

Rent (1)

 

 

GLA of

Expiring

Leases

 

 

Average

Annualized

Gross Rent

Per Square

Foot

 

 

Expiring

Leases

as % of Total

Annualized

Gross

Rent (2)

 

 

Expiring

Leases as a

% of Total

Leased

GLA (3)

 

2020

 

 

94

 

 

$

11,611,000

 

 

 

646,000

 

 

$

17.97

 

 

 

14.4

%

 

 

15.0

%

2021

 

 

55

 

 

 

8,212,000

 

 

 

481,000

 

 

 

17.07

 

 

 

10.2

%

 

 

11.2

%

2022

 

 

51

 

 

 

10,164,000

 

 

 

657,000

 

 

 

15.47

 

 

 

12.6

%

 

 

15.3

%

2023

 

 

50

 

 

 

8,958,000

 

 

 

407,000

 

 

 

22.01

 

 

 

11.1

%

 

 

9.5

%

2024

 

 

59

 

 

 

11,016,000

 

 

 

550,000

 

 

 

20.03

 

 

 

13.7

%

 

 

12.8

%

2025

 

 

45

 

 

 

11,252,000

 

 

 

691,000

 

 

 

16.28

 

 

 

14.0

%

 

 

16.1

%

2026

 

 

41

 

 

 

7,435,000

 

 

 

314,000

 

 

 

23.68

 

 

 

9.2

%

 

 

7.3

%

2027

 

 

19

 

 

 

4,958,000

 

 

 

186,000

 

 

 

26.66

 

 

 

6.2

%

 

 

4.3

%

2028

 

 

22

 

 

 

3,618,000

 

 

 

221,000

 

 

 

16.37

 

 

 

4.5

%

 

 

5.1

%

2029

 

 

23

 

 

 

3,323,000

 

 

 

146,000

 

 

 

22.76

 

 

 

4.1

%

 

 

3.4

%

 

(1)

Total annualized gross rent, including recoverable common area expenses and real estate taxes, in effect at December 31, 2019 for expiring leases that were executed as of December 31, 2019.

(2)

Total annualized gross rent, including recoverable CAM expenses and real estate taxes, of expiring leases as a percentage of the total annualized gross rent of all leases that were executed as of December 31, 2019.

(3)

Total GLA of expiring leases as a percentage of the total GLA of all leases that were executed as of December 31, 2019.

Debt on Other Property Types  

Please see the table entitled “Mortgage Loans Outstanding at December 31, 2019” included herein for information regarding any liens or encumbrances related to our Other Property Types. 

Anchors and Junior Anchors

Anchors and Junior Anchors are an important factor in a Property’s successful performance. However, we believe that the number of traditional department store anchors will decline over time, providing us the opportunity to redevelop these spaces to attract new uses such as restaurants, entertainment, fitness centers, casinos, grocery stores and lifestyle retailers that engage consumers and encourage them to spend more time at our Properties. Anchors are generally a department store or, increasingly, other large format retailers, whose merchandise appeals to a broad range of shoppers and plays a significant role in generating customer traffic and creating a desirable location for the Property's tenants.

36


 

Anchors and Junior Anchors may own their stores and the land underneath, as well as the adjacent parking areas, or may enter into long-term leases with respect to their stores. Rental rates for Anchor tenants are significantly lower than the rents charged to non-anchor tenants. Total rental revenues from Anchors and Junior Anchors accounted for 1 7. 2 % of the total revenues from our Properties in 201 9 . Each Anchor and Junior Anchor that owns its store has entered into an operating and reciprocal easement agreement with us covering items such as operating covenants, reciprocal easements, property operations, initial construction and future expansion.

During 2019, the following Anchors and Junior Anchors were added to our Properties, as listed below:

 

Name

 

Property

 

Location

Burlington

 

Kentucky Oaks Mall

 

Paducah, KY

Dave & Buster's

 

Hanes Mall

 

Winston-Salem, NC

Dick's Sporting Goods

 

Richland Mall

 

Waco, TX

Dick’s Sporting Goods

 

Parkdale Mall

 

Beaumont, TX

Dunham Sports

 

Laurel Park Place

 

Livonia, MI

High Caliber Karts

 

Meridian Mall

 

Lansing, MI

H&M

 

Southpark Mall

 

Colonial Heights, VA

HomeGoods

 

Dakota Square

 

Minot, ND

HomeGoods

 

Kentucky Oaks Mall

 

Paducah, KY

HomeGoods

 

Parkdale Mall

 

Beaumont, TX

Jax Outdoor Gear

 

Frontier Mall

 

Cheyenne, WY

Launch Trampoline Park

 

Meridian Mall

 

Lansing, MI

Marcus Theaters

 

Brookfield Square

 

Brookfield, WI

O2 Fitness

 

Friendly Center

 

Greensboro, NC

Ross Dress for Less

 

Kentucky Oaks Mall

 

Paducah, KY

Shoprite

 

Stroud Mall

 

Stroudsburg, PA

TruFit

 

Mall del Norte

 

Laredo, TX

Urban Air Adventure Park

 

Southaven

 

Southaven, MS

Urban Air Adventure Park

 

West Towne Mall

 

Madison, WI

WhirlyBall

 

Brookfield Square

 

Brookfield, WI

37


 

As of December 31, 201 9 , the Properties had a total of 4 69 Anchors and Junior Anchors, including 39 vacant Anchor and Junior Anchor locations, and excluding Anchors and Junior Anchors at our Excluded Malls. The Anchors and Junior Anchors and the amount of GLA leased or owned by each as of December 31, 201 9 is as follows:

 

 

 

Number of Stores

 

 

Gross Leasable Area

 

 

 

 

 

 

 

 

 

 

 

Anchor Owned

 

 

 

 

 

 

 

 

 

 

Anchor Owned

 

 

 

 

 

Anchor/Junior Anchor

 

Leased

 

 

Owned

 

 

Ground

Leased

 

 

Total

 

 

Leased

 

 

Owned

 

 

Ground

Leased

 

 

Total

 

JC Penney (1)

 

 

17

 

 

 

25

 

 

 

4

 

 

 

46

 

 

 

1,818,743

 

 

 

3,163,088

 

 

 

586,030

 

 

 

5,567,861

 

Sears

 

 

2

 

 

 

5

 

 

 

2

 

 

 

9

 

 

 

302,254

 

 

 

624,281

 

 

 

265,129

 

 

 

1,191,664

 

Dillard's (1)

 

 

3

 

 

 

36

 

 

 

4

 

 

 

43

 

 

 

310,398

 

 

 

4,891,436

 

 

 

659,763

 

 

 

5,861,597

 

Macy's

 

 

10

 

 

 

17

 

 

 

3

 

 

 

30

 

 

 

1,075,483

 

 

 

2,662,030

 

 

 

658,388

 

 

 

4,395,901

 

Belk

 

 

5

 

 

 

13

 

 

 

4

 

 

 

22

 

 

 

430,017

 

 

 

1,807,861

 

 

 

397,480

 

 

 

2,635,358

 

Academy Sports + Outdoors

 

 

3

 

 

 

 

 

 

 

 

 

3

 

 

 

199,091

 

 

 

 

 

 

 

 

 

199,091

 

AMC Theatres

 

 

6

 

 

 

 

 

 

 

 

 

6

 

 

 

247,669

 

 

 

 

 

 

 

 

 

247,669

 

American Signature Furniture

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

61,620

 

 

 

 

 

 

61,620

 

Ashley HomeStore

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

20,000

 

 

 

 

 

 

 

 

 

20,000

 

At Home

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

124,700

 

 

 

 

 

 

124,700

 

Barnes & Noble

 

 

17

 

 

 

 

 

 

 

 

 

17

 

 

 

521,273

 

 

 

 

 

 

 

 

 

521,273

 

BB&T

 

 

 

 

 

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

60,000

 

 

 

60,000

 

Beall's

 

 

5

 

 

 

 

 

 

 

 

 

5

 

 

 

193,209

 

 

 

 

 

 

 

 

 

193,209

 

Bed Bath & Beyond Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Bed Bath & Beyond

 

 

10

 

 

 

 

 

 

 

 

 

10

 

 

 

281,868

 

 

 

 

 

 

 

 

 

281,868

 

  Christmas Tree Shops

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

33,992

 

 

 

 

 

 

 

 

 

33,992

 

Bed Bath & Beyond Inc.

   Subtotal

 

 

11

 

 

 

 

 

 

 

 

 

11

 

 

 

315,860

 

 

 

 

 

 

 

 

 

315,860

 

Ben's Furniture and Antiques

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

35,895

 

 

 

 

 

 

 

 

 

35,895

 

Best Buy

 

 

5

 

 

 

 

 

 

1

 

 

 

6

 

 

 

182,485

 

 

 

 

 

 

44,239

 

 

 

226,724

 

Big Air Trampoline Park

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

33,938

 

 

 

 

 

 

 

 

 

33,938

 

BJ's Wholesale Club

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

85,188

 

 

 

 

 

 

 

 

 

85,188

 

Books-A-Million, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Books-A-Million

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

20,642

 

 

 

 

 

 

 

 

 

20,642

 

  2nd & Charles

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

23,538

 

 

 

 

 

 

 

 

 

23,538

 

Books-A-Million, Inc. Subtotal

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

44,180

 

 

 

 

 

 

 

 

 

44,180

 

Boscov's (1)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

150,000

 

 

 

 

 

 

150,000

 

Burlington (2)

 

 

1

 

 

 

2

 

 

 

 

 

 

3

 

 

 

63,013

 

 

 

94,049

 

 

 

 

 

 

157,062

 

Carousel Cinemas

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

52,000

 

 

 

 

 

 

 

 

 

52,000

 

Choice Home Center

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

128,330

 

 

 

 

 

 

 

 

 

128,330

 

Cinemark

 

 

7

 

 

 

 

 

 

 

 

 

7

 

 

 

382,506

 

 

 

 

 

 

 

 

 

382,506

 

Costco

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

153,973

 

 

 

 

 

 

153,973

 

Dave & Buster's (2)

 

 

1

 

 

 

1

 

 

 

 

 

 

2

 

 

 

31,576

 

 

 

26,509

 

 

 

 

 

 

58,085

 

Dick's Sporting Goods

 

 

23

 

 

 

1

 

 

 

1

 

 

 

25

 

 

 

1,266,335

 

 

 

50,000

 

 

 

80,515

 

 

 

1,396,850

 

Dunham's Sports

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

125,551

 

 

 

 

 

 

 

 

 

125,551

 

Earth Fare

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

26,841

 

 

 

 

 

 

 

 

 

26,841

 

Electronic Express

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

44,460

 

 

 

 

 

 

44,460

 

Encore

 

 

3

 

 

 

 

 

 

 

 

 

3

 

 

 

76,096

 

 

 

 

 

 

 

 

 

76,096

 

Flip N Fly

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

27,972

 

 

 

 

 

 

 

 

 

27,972

 

Flix Brewhouse

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

39,150

 

 

 

 

 

 

 

 

 

39,150

 

The Fresh Market

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

21,442

 

 

 

 

 

 

 

 

 

21,442

 

Gabe's

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

29,596

 

 

 

 

 

 

29,596

 

Gold's Gym

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

30,664

 

 

 

 

 

 

 

 

 

30,664

 

Gordmans

 

 

4

 

 

 

 

 

 

 

 

 

4

 

 

 

216,339

 

 

 

 

 

 

 

 

 

216,339

 

The Grande Cinemas

 

 

 

 

 

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

60,400

 

 

 

60,400

 

H&M

 

 

31

 

 

 

 

 

 

 

 

 

31

 

 

 

687,151

 

 

 

 

 

 

 

 

 

687,151

 

Hamrick's

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

40,000

 

 

 

 

 

 

 

 

 

40,000

 

Harris Teeter

 

 

 

 

 

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

72,757

 

 

 

72,757

 

38


 

 

 

Number of Stores

 

 

Gross Leasable Area

 

 

 

 

 

 

 

 

 

 

 

Anchor Owned

 

 

 

 

 

 

 

 

 

 

Anchor Owned

 

 

 

 

 

Anchor/Junior Anchor

 

Leased

 

 

Owned

 

 

Ground

Leased

 

 

Total

 

 

Leased

 

 

Owned

 

 

Ground

Leased

 

 

Total

 

High Caliber Karting

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

75,077

 

 

 

 

 

 

 

 

 

75,077

 

Hobby Lobby

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

52,500

 

 

 

 

 

 

 

 

 

52,500

 

House of Hoops by Foot Locker

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

22,847

 

 

 

 

 

 

 

 

 

22,847

 

I. Keating Furniture

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

103,994

 

 

 

 

 

 

 

 

 

103,994

 

Jax Outdoor Gear (1)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

83,055

 

 

 

 

 

 

83,055

 

Jo-Ann Fabrics & Crafts

 

 

3

 

 

 

 

 

 

 

 

 

3

 

 

 

73,738

 

 

 

 

 

 

 

 

 

73,738

 

Kings Dining & Entertainment

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

22,678

 

 

 

 

 

 

 

 

 

22,678

 

Kohl's

 

 

4

 

 

 

4

 

 

 

 

 

 

8

 

 

 

320,105

 

 

 

312,731

 

 

 

 

 

 

632,836

 

LA Fitness

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

41,000

 

 

 

 

 

 

 

 

 

41,000

 

Launch Trampoline Park

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

31,989

 

 

 

 

 

 

 

 

 

31,989

 

Levin Furniture

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

55,314

 

 

 

 

 

 

 

 

 

55,314

 

LIVE Ventures, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  V-Stock

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

23,058

 

 

 

 

 

 

 

 

 

23,058

 

  Vintage Stock

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

46,108

 

 

 

 

 

 

 

 

 

46,108

 

LIVE Ventures, Inc. Subtotal

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

69,166

 

 

 

 

 

 

 

 

 

69,166

 

Marcus Theatres

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

56,000

 

 

 

 

 

 

 

 

 

56,000

 

Metcalfe's Market

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

67,365

 

 

 

 

 

 

67,365

 

Michaels (1)

 

 

5

 

 

 

1

 

 

 

1

 

 

 

7

 

 

 

109,372

 

 

 

23,645

 

 

 

25,000

 

 

 

158,017

 

Movie Tavern by Marcus

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

40,585

 

 

 

 

 

 

 

 

 

40,585

 

Nike Factory Store

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

22,479

 

 

 

 

 

 

 

 

 

22,479

 

Nordstrom

 

 

 

 

 

 

 

 

2

 

 

 

2

 

 

 

 

 

 

 

 

 

385,000

 

 

 

385,000

 

Nordstrom Rack

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

56,053

 

 

 

 

 

 

 

 

 

56,053

 

O2 Fitness

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

27,048

 

 

 

 

 

 

 

 

 

27,048

 

Office Depot

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

23,425

 

 

 

 

 

 

 

 

 

23,425

 

OfficeMax (1)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

24,606

 

 

 

 

 

 

24,606

 

Old Navy

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

20,257

 

 

 

 

 

 

 

 

 

20,257

 

Ollie's Bargain Outlet

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

28,446

 

 

 

 

 

 

 

 

 

28,446

 

Party City

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

20,841

 

 

 

 

 

 

 

 

 

20,841

 

PetSmart

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

46,248

 

 

 

 

 

 

 

 

 

46,248

 

Planet Fitness

 

 

3

 

 

 

 

 

 

 

 

 

3

 

 

 

63,509

 

 

 

 

 

 

 

 

 

63,509

 

Publix

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

45,600

 

 

 

 

 

 

 

 

 

45,600

 

Regal Cinemas

 

 

4

 

 

 

1

 

 

 

 

 

 

5

 

 

 

211,725

 

 

 

57,854

 

 

 

 

 

 

269,579

 

REI

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

24,427

 

 

 

 

 

 

 

 

 

24,427

 

Ross Dress for Less (1)(2)

 

 

8

 

 

 

2

 

 

 

 

 

 

10

 

 

 

218,607

 

 

 

71,034

 

 

 

 

 

 

289,641

 

Round1 Bowling & Amusement

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

50,000

 

 

 

 

 

 

 

 

 

50,000

 

Saks Fifth Avenue OFF 5TH

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

49,365

 

 

 

 

 

 

 

 

 

49,365

 

Scheel's

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

200,536

 

 

 

 

 

 

 

 

 

200,536

 

Schuler Books & Music

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

24,116

 

 

 

 

 

 

 

 

 

24,116

 

ShopRite

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

87,381

 

��

 

 

 

 

 

 

 

87,381

 

Sleep Inn & Suites

 

 

 

 

 

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

123,506

 

 

 

123,506

 

Southwest Theaters

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

29,830

 

 

 

 

 

 

 

 

 

29,830

 

Sportsman's Warehouse (1)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

48,171

 

 

 

 

 

 

48,171

 

Staples

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

20,388

 

 

 

 

 

 

 

 

 

20,388

 

Steel City Indoor Karting

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

64,135

 

 

 

 

 

 

 

 

 

64,135

 

Stein Mart

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

30,463

 

 

 

 

 

 

 

 

 

30,463

 

Target

 

 

 

 

 

8

 

 

 

 

 

 

8

 

 

 

 

 

 

948,730

 

 

 

 

 

 

948,730

 

Tilt

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

64,658

 

 

 

 

 

 

 

 

 

64,658

 

The TJX Companies, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  HomeGoods (1)

 

 

5

 

 

 

1

 

 

 

 

 

 

6

 

 

 

123,238

 

 

 

26,355

 

 

 

 

 

 

149,593

 

  Marshalls

 

 

7

 

 

 

 

 

 

 

 

 

7

 

 

 

207,050

 

 

 

 

 

 

 

 

 

207,050

 

  T.J. Maxx (1)

 

 

3

 

 

 

1

 

 

 

1

 

 

 

5

 

 

 

84,558

 

 

 

28,081

 

 

 

25,000

 

 

 

137,639

 

The TJX Companies, Inc. Subtotal

 

 

15

 

 

 

2

 

 

 

1

 

 

 

18

 

 

 

414,846

 

 

 

54,436

 

 

 

25,000

 

 

 

494,282

 

39


 

 

 

Number of Stores

 

 

Gross Leasable Area

 

 

 

 

 

 

 

 

 

 

 

Anchor Owned

 

 

 

 

 

 

 

 

 

 

Anchor Owned

 

 

 

 

 

Anchor/Junior Anchor

 

Leased

 

 

Owned

 

 

Ground

Leased

 

 

Total

 

 

Leased

 

 

Owned

 

 

Ground

Leased

 

 

Total

 

Total Wine and More (2)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

28,350

 

 

 

 

 

 

28,350

 

TruFit Athletic Club

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

45,179

 

 

 

 

 

 

 

 

 

45,179

 

Urban Air Adventure Park

 

 

2

 

 

 

1

 

 

 

 

 

 

3

 

 

 

82,498

 

 

 

30,404

 

 

 

 

 

 

112,902

 

Vertical Trampoline Park

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

24,972

 

 

 

 

 

 

 

 

 

24,972

 

Von Maur

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

150,000

 

 

 

 

 

 

150,000

 

WhirlyBall

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

43,440

 

 

 

 

 

 

 

 

 

43,440

 

Whole Foods (1)

 

 

 

 

 

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

34,320

 

 

 

34,320

 

XXI Forever / Forever 21

 

 

7

 

 

 

 

 

 

 

 

 

7

 

 

 

182,067

 

 

 

 

 

 

 

 

 

182,067

 

Vacant Anchor/Junior Anchor:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacant - former A'GACI

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

28,000

 

 

 

 

 

 

 

 

 

28,000

 

Vacant - former Ashley HomeStore

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

20,487

 

 

 

 

 

 

 

 

 

20,487

 

Vacant - former Belk (3)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

57,500

 

 

 

 

 

 

57,500

 

Vacant - former Bergner's

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

131,616

 

 

 

 

 

 

 

 

 

131,616

 

Vacant - former The Bon-Ton (1)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

131,915

 

 

 

 

 

 

131,915

 

Vacant - former Boston Store (1)

 

 

 

 

 

2

 

 

 

 

 

 

2

 

 

 

 

 

 

354,205

 

 

 

 

 

 

354,205

 

Vacant - former Burlington (4)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

77,967

 

 

 

 

 

 

 

 

 

77,967

 

Vacant - former Herberger's (5)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

92,500

 

 

 

 

 

 

 

 

 

92,500

 

Vacant - former JC Penney (1)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

173,124

 

 

 

 

 

 

173,124

 

Vacant - former Kmart (1)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

101,445

 

 

 

 

 

 

101,445

 

Vacant - former Macy's

 

 

1

 

 

 

1

 

 

 

 

 

 

2

 

 

 

69,974

 

 

 

121,231

 

 

 

 

 

 

191,205

 

Vacant - former Sears (2)(6)(7)(8)(9)(10)(11)

 

 

7

 

 

 

12

 

 

 

2

 

 

 

21

 

 

 

678,352

 

 

 

1,817,056

 

 

 

358,696

 

 

 

2,854,104

 

Vacant - former Shopko

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

97,773

 

 

 

 

 

 

97,773

 

Vacant - former Stein Mart (1)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

21,200

 

 

 

 

 

 

21,200

 

Vacant - former Toys "R" Us (1)

 

 

 

 

 

2

 

 

 

 

 

 

2

 

 

 

 

 

 

92,354

 

 

 

 

 

 

92,354

 

Vacant - former Younkers

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

93,597

 

 

 

 

 

 

 

 

 

93,597

 

Current Developments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dave & Buster's (8)(11)

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

 

56,524

 

 

 

 

 

 

 

 

 

56,524

 

Dick's Sporting Goods (8)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

46,054

 

 

 

 

 

 

 

 

 

46,054

 

Hollywood Casino (10)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

79,500

 

 

 

 

 

 

 

 

 

79,500

 

Stadium Casino (12)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

129,552

 

 

 

 

 

 

 

 

 

129,552

 

Main Event (13)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

61,844

 

 

 

 

 

 

 

 

 

61,844

 

Round1 Bowling & Entertainment (9)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

50,000

 

 

 

 

 

 

 

 

 

50,000

 

Tilt Studio (14)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

121,949

 

 

 

 

 

 

 

 

 

121,949

 

Von Maur (15)

 

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

85,000

 

 

 

 

 

 

85,000

 

EFO Furniture Outlet (16)

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

93,316

 

 

 

 

 

 

 

 

 

93,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Anchors/Junior Anchors

 

 

284

 

 

 

155

 

 

 

30

 

 

 

469

 

 

 

14,158,785

 

 

 

18,836,787

 

 

 

3,836,223

 

 

 

36,831,795

 

 

(1)

The following Anchors/Junior Anchors are owned by third parties: the former The Bon-Ton at York Galleria, Boscov’s at York Galleria, the former Boston Store at Brookfield Square, the former Boston Store at East Towne Mall, the former Boston Store at West Towne Mall, Dillard’s for Women at Richland Mall, HomeGoods at Hamilton Crossing, Jax Outdoor Gear at Frontier Mall, JC Penney at Frontier Mall, the former JC Penney at Northgate Mall, the former Kmart at Sunrise Commons, Michaels at Hamilton Crossing, Michaels at Westmoreland Crossing, OfficeMax at West Towne Crossing, Ross Dress for Less at Frontier Square, Sportsman’s Warehouse at Southaven Towne Center, the former Stein Mart at West Towne Crossing, T.J. Maxx at Frontier Square, T.J. Maxx at Westmoreland Crossing, the former Toys “R” Us at Hamilton Crossing, the former Toys “R” Us at The Landing at Arbor Place, Von Maur at West Towne Mall and Whole Foods at Friendly Center.

(2)

The following are owned by Seritage Growth Properties: Burlington at Kentucky Oaks Mall, Burlington at Northwoods Mall, Dave & Buster’s at West Towne Mall, Ross Dress for Less at Kentucky Oaks Mall, the former Sears at Asheville Mall, the former Sears at Burnsville Center, the former Sears at Imperial Valley Mall and Total Wine and More at West Towne Mall.

(3)

The upper floor of Belk for Men at Hamilton Place Mall was formerly subleased by Belk to Forever 21 and is now vacant.

(4)

A lease is out-for-signature with a new user that is expected to open in 2020.

( 5 )

The former Herberger’s at Kirkwood Mall will be partially demolished in 2020 for the addition of restaurants.

( 6 )

The former Sears at Richland Mall is owned by Dillard’s.

( 7 )

The former Sears at Hanes Mall is owned by Novant Health, Inc.

( 8 )

The former Sears at Hamilton Place is being redeveloped into a Dave & Buster’s and Dick's Sporting Goods. The remainder remains vacant.

( 9 )

The former Sears at South County Center is being redeveloped into a Round 1 Bowling & Entertainment.

( 10 )

Hollywood Casino has an executed lease for the lower level of the former Sears at York Galleria. The upper level remains vacant.

( 1 1 )

The former Sears at Cross Creek Mall will be demolished and replaced with Dave & Buster's and a to-be announced box user.

40


 

( 1 2 )

Stadium Casino has an executed lease to fill the former Bon-Ton space at Westmoreland Mall.

( 1 3 )

A portion of the Forever 21 at Mall del Norte is being redeveloped into Main Event. The remainder will still be Forever 21.

( 1 4 )

The former Sears at Cherryvale Mall is being redeveloped into Tilt Studio.

(1 5 )

Von Maur is opening in 2020 in the former Boston Store at West Towne Mall.

(1 6 )

EFO Furniture Outlet will open in the former Sears space at Stroud Mall in February 2020.

Mortgages Notes Receivable

We own four mortgages, each of which is collateralized by either a first mortgage, a second mortgage or by assignment of 100% of the ownership interests in the underlying real estate and related improvements. The mortgages are more fully described on Schedule IV in Part IV of this report.

Mortgage Loans Outstanding at December 31, 2019 (in thousands):

Property

 

Our

Ownership

Interest

 

 

Stated

Interest

Rate

 

 

Principal

Balance as

of

12/31/19 (1)

 

 

2020

Annual

Debt

Service (2)

 

 

Maturity

Date

 

Optional

Extended

Maturity

Date

 

 

Balloon

Payment

Due

on

Maturity (2)

 

 

Open to

Prepayment

Date (3)

 

Footnote

Consolidated Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Malls:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alamance Crossing - East

 

 

100

%

 

 

5.83

%

 

$

44,538

 

 

$

3,589

 

 

Jul-21

 

 

 

 

$

43,046

 

 

Open

 

 

 

Arbor Place

 

 

100

%

 

 

5.10

%

 

 

106,851

 

 

 

7,948

 

 

May-22

 

 

 

 

 

100,861

 

 

Open

 

 

 

Asheville Mall

 

 

100

%

 

 

5.80

%

 

 

63,949

 

 

 

5,917

 

 

Sep-21

 

 

 

 

 

60,190

 

 

Open

 

 

 

Burnsville Center

 

 

100

%

 

 

6.00

%

 

 

64,867

 

 

 

3,527

 

 

Jul-20

 

 

 

 

 

63,589

 

 

Open

 

 

 

Cross Creek Mall

 

 

100

%

 

 

4.54

%

 

 

111,294

 

 

 

9,376

 

 

Jan-22

 

 

 

 

 

102,260

 

 

Open

 

 

 

EastGate Mall

 

 

100

%

 

 

5.83

%

 

 

32,386

 

 

 

3,613

 

 

Apr-21

 

 

 

 

 

30,155

 

 

Open

 

 

 

Fayette Mall

 

 

100

%

 

 

5.42

%

 

 

146,857

 

 

 

13,527

 

 

May-21

 

 

 

 

 

139,177

 

 

Open

 

 

 

Greenbrier Mall

 

 

100

%

 

 

5.41

%

 

 

64,801

 

 

 

 

 

Dec-19

 

Dec-20

 

 

 

64,801

 

 

Open

 

(4)

 

Hamilton Place

 

 

90

%

 

 

4.36

%

 

 

100,456

 

 

 

6,400

 

 

Jun-26

 

 

 

 

 

85,535

 

 

Open

 

 

 

Hickory Point Mall

 

 

100

%

 

 

5.85

%

 

 

27,385

 

 

 

 

 

Dec-19

 

 

 

 

 

27,385

 

 

Open

 

(5)

 

Jefferson Mall

 

 

100

%

 

 

4.75

%

 

 

61,943

 

 

 

4,456

 

 

Jun-22

 

 

 

 

 

58,176

 

 

Open

 

 

 

Northwoods Mall

 

 

100

%

 

 

5.08

%

 

 

63,772

 

 

 

4,743

 

 

Apr-22

 

 

 

 

 

60,292

 

 

Open

 

 

 

The Outlet Shoppes at Gettysburg

 

 

50

%

 

 

4.80

%

 

 

37,140

 

 

 

2,422

 

 

Oct-25

 

 

 

 

 

32,927

 

 

Open

 

 

 

The Outlet Shoppes at Laredo

 

 

65

%

 

 

4.34

%

 

 

41,950

 

 

 

3,583

 

 

May-21

 

 

 

 

 

39,400

 

 

Open

 

(6)

(7)

Park Plaza

 

 

100

%

 

 

5.28

%

 

 

78,339

 

 

 

7,165

 

 

Apr-21

 

 

 

 

 

74,428

 

 

Open

 

 

 

Parkdale Mall & Crossing

 

 

100

%

 

 

5.85

%

 

 

75,826

 

 

 

7,241

 

 

Mar-21

 

 

 

 

 

72,447

 

 

Open

 

 

 

Parkway Place

 

 

100

%

 

 

6.50

%

 

 

33,290

 

 

 

1,878

 

 

Jul-20

 

 

 

 

 

32,661

 

 

Open

 

 

 

Southpark Mall

 

 

100

%

 

 

4.85

%

 

 

58,431

 

 

 

4,240

 

 

Jun-22

 

 

 

 

 

54,924

 

 

Open

 

 

 

Valley View Mall

 

 

100

%

 

 

6.50

%

 

 

51,514

 

 

 

2,907

 

 

Jul-20

 

 

 

 

 

50,544

 

 

Open

 

 

 

Volusia Mall

 

 

100

%

 

 

4.56

%

 

 

48,626

 

 

 

4,608

 

 

May-24

 

 

 

 

 

37,194

 

 

Open

 

 

 

WestGate Mall

 

 

100

%

 

 

4.99

%

 

 

32,773

 

 

 

2,803

 

 

Jul-22

 

 

 

 

 

29,670

 

 

Open

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,346,988

 

 

 

99,943

 

 

 

 

 

 

 

 

 

1,259,662

 

 

 

 

 

 

Other Properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CBL Center

 

 

92

%

 

 

5.00

%

 

 

17,001

 

 

 

1,651

 

 

Jun-22

 

 

 

 

 

14,949

 

 

Open

 

(8)

 

Hamilton Crossing & Expansion

 

 

92

%

 

 

5.99

%

 

 

8,522

 

 

 

819

 

 

Apr-21

 

 

 

 

 

8,122

 

 

Open

 

(9)