EDGAR 10-K Filing

Company CIK: 910612
Filing Year: 2022
Filename: 910612_10-K_2022_0001564590-22-013053.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
Unless stated otherwise or the context otherwise requires, references to the “Company,” “we,” “us” and “our” mean CBL & Associates Properties, Inc. and its subsidiaries.
Background
CBL & Associates Properties, Inc. (“CBL”) was organized on July 13, 1993, as a Delaware corporation, to acquire substantially all 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 “IPO”). Simultaneously with the completion of the IPO, 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. At December 31, 2021, CBL’s Predecessor no longer owned any limited partner interest and third parties owned a 0.1% limited partner interest in the Operating Partnership.
The interests in the Operating Partnership contain certain conversion rights that are more fully described in Note 11 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.
On January 22, 2022, following the extinguishment of all of its previously issued public debt in the Chapter 11 Cases (as defined below) and the termination of its prior SEC registration statements, the Operating Partnership filed a Form 15, which immediately suspended its reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Emergence from Bankruptcy
On August 18, 2020, the Company entered into a Restructuring Support Agreement, (the “Original RSA”) with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders of beneficial owners (the “Consenting Noteholders”) representing in excess of 62%, including joining noteholders pursuant to joinder agreements, of the aggregate principal amount of the $450.0 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 (the “2023 Notes”), the $300.0 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 (the “2024 Notes”) and the $625.0 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 (the “2026 Notes” and, collectively with the 2023 Notes and 2024 Notes, the "Notes").
Beginning on November 1, 2020, CBL and the Operating Partnership, together with certain of its direct and indirect subsidiaries (collectively, the “Debtors”), filed voluntary petitions (the “Chapter 11 Cases”) under chapter 11 of title 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Bankruptcy Court authorized the Debtors to continue to operate their businesses and manage their properties as debtors-in-possession pursuant to the Bankruptcy Code. The Chapter 11 Cases are being jointly administered for procedural purposes only under the caption In re CBL & Associates Properties, Inc., et al., Case No. 20-35226.
In connection with the Chapter 11 Cases, on August 11, 2021, the Bankruptcy Court entered an order, Docket No.1397 (Confirmation Order), confirming the Debtors’ Third Amended Joint Chapter 11 Plan of CBL & Associates Properties, Inc. and its Affiliated Debtors (With Technical Modifications) (as modified at Docket No. 1521, the “Plan”).
On November 1, 2021 (the “Effective Date”), the conditions to effectiveness of the Plan were satisfied and the Debtors emerged from the Chapter 11 Cases. The Company filed a notice of the Effective Date of the Plan with the Bankruptcy Court on November 1, 2021. Following the Effective Date, certain of the Debtor’s Chapter 11 Cases remain open to administer claims pursuant to the Plan.
The filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. Due to the Chapter 11 Cases, however, the creditors’ ability to exercise remedies against the Debtors under their respective credit agreements and debt instruments was stayed as of the date of the Chapter 11 petition and continuing throughout the administration of the Chapter 11 Cases through the Effective Date.
On the Effective Date, in exchange for their approximately $1,375.0 million in principal amount of senior unsecured notes and $133.0 million in principal amount of the secured credit facility, Consenting Noteholders, other noteholders, and certain holders of unsecured claims against the Company received, in the aggregate, $95.0 million in cash, $455.0 million of new senior secured notes, $100.0 million of new exchangeable secured notes, based upon the election by certain Consenting Noteholders, and 89% in common equity of the newly reorganized company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders also provided $50.0 million of new money in exchange for additional new exchangeable secured notes. Pursuant to the Plan the remaining lenders of the senior secured credit facility, holding $983.7 million in principal amount, received $100.0 million in cash and a new $883.7 million secured term loan. Existing common shareholders received 5.5% of common equity in the newly reorganized company and preferred shareholders also received 5.5% of common equity in the newly reorganized company. On the Effective Date, the Company had an aggregate 20,000,000 shares of new common stock issued and outstanding (on a fully diluted basis after giving effect to any future election to exchange all new limited partnership interests for new common stock). In November 2021, we redeemed $60.0 million in principal amount of the new senior secured notes.
On the Effective Date, all prior equity interests of the Company issued and outstanding immediately prior to the Effective Date, including (1) the CBL’s common stock, par value $0.01 per share and the CBL’s preferred stock and related depositary shares and (2) the Operating Partnership’s limited partnership common interests and special common interests and the limited partnership preferred interests related to the CBL’s preferred stock, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect. On November 2, 2021, the newly issued common stock of the reorganized company commenced trading on the NYSE under the symbol CBL.
Prior to December 31, 2021, we announced that our wholly owned subsidiary, CBL & Associates Holdco II, LLC (“HoldCo II”), exercised its optional exchange right with respect to all of the $150.0 million aggregate principal amount of the exchangeable notes. The exchange date was January 28, 2022, and settlement occurred on February 1, 2022. Per the terms of the indenture governing the exchangeable notes, HoldCo II elected to settle the exchange in shares of common stock, par value $0.001, of the Company, plus cash in lieu of fractional shares. As a result, on February 1, 2022, we issued 10,982,795 shares of common stock to holders of the exchangeable notes in satisfaction of principal, accrued interest and the makewhole payment, and all the exchangeable notes were cancelled in accordance with the terms of the indenture.
Although the Company is no longer a debtor-in-possession, the Company was a debtor-in-possession through the ten months ended October 31, 2021. To facilitate our discussion in this report, we refer to the post-emergence reorganized company as the “Successor” and the pre-emergence company as the “Predecessor.” See Note 2 and Note 3 to our consolidated financial statements for more information.
Liquidity and Loan Defaults
As of December 31, 2021, we had $1.4 billion of property-level debt and related obligations, including consolidated debt and unconsolidated debt, maturing or callable within the next twelve months from the issuance of the financial statements. Subsequent to year-end and through the date of issuance of the financial statements, we obtained certain waivers and/or refinanced and extended the maturity dates for $0.2 billion of mortgage debt obligations.
Accordingly, we still had $1.2 billion of property-level debt and related obligations maturing or callable within the next twelve months from the issuance of the financial statements, including $642 million reported within mortgage debt payable and $537 million related to unconsolidated affiliates, a portion of which is guaranteed by us, as disclosed in Note 16 to the consolidated financial statements. The properties serving as collateral for this property-level debt and related obligations represent approximately 10-20% of our projected annual operating cash flows. We currently do not have sufficient liquidity to meet these obligations as they become due, which raises substantial doubt about our ability to continue as a going concern.
Management intends to refinance and/or extend the maturity dates for such mortgage notes payable. In such instances where a refinancing and/or extension of maturity dates is unsuccessful we will repay certain of the mortgage notes based on the availability of liquidity and convey certain properties to the lender to satisfy the related debt obligations. As a result, we have concluded that management’s plans are probable of being achieved to alleviate substantial doubt about our ability to continue as a going concern.
We have prepared our financial statements in conformity with accounting principles generally accepted in the United States of America applicable to a going concern. The financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should we be unable to continue as a going concern.
COVID-19
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 and the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report on Form 10-K for the year ended December 31, 2021 for information on certain recent developments of the Company, including the impact of the COVID-19 pandemic
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, outlet centers, lifestyle centers, open-air centers and other properties. Our properties are located in 24 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 our business through 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, 2021, CBL Holdings I, Inc. owned a 1.0% general partner interest and CBL Holdings II, Inc. owned an 98.9% limited partner interest in the Operating Partnership, for a combined interest held by us of 99.9%.
See Note 1 to the consolidated financial statements for information on our Properties as of December 31, 2021. The Malls (“Malls, Lifestyle Centers and Outlet Centers”) and All Other Properties ("Open-Air Centers and Other") 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 stock.
The Management Company manages all but 11 of the Properties. Governor’s Square and Governor’s Square Plaza in Clarksville, TN, Hamilton Place Aloft Hotel, in Chattanooga, TN, Kentucky Oaks Mall in Paducah, KY, Fremaux Town Center in Slidell, LA, Ambassador Town Center in Lafayette, LA, 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. The Outlet Shoppes at Gettysburg in Gettysburg, PA and The Outlet Shoppes at Laredo in Laredo, TX are owned by consolidated joint ventures. All of these Properties 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.
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, reduce outstanding balances on our indebtedness and for general corporate purposes.
The following terms used in this Annual Report on Form 10-K will have the meanings described below:
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GLA - refers to gross leasable area of space in square feet, including Anchors and Mall tenants.
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Anchor - refers to a department store, other large retail store, non-retail space or theater greater than or equal to 50,000 square feet.
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Junior Anchor - retail store, non-retail space or theater comprising more than 20,000 square feet and less than 50,000 square feet.
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Inline - retail store or non-retail space comprising less than 20,000 square feet.
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Freestanding - Property locations that are not attached to the primary complex of buildings that comprise the mall shopping center.
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Outparcel - land used for freestanding developments, such as retail stores, banks and restaurants, which are generally on the periphery of the Properties.
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, 2021:
Market
Percentage of
Total Revenues
St. Louis, MO
7.2
%
Chattanooga, TN
6.0
%
Lexington, KY
4.5
%
Laredo, TX
4.0
%
Fayetteville, NC
3.4
%
Top 25 Tenants
Our top 25 tenants based on percentage of total revenues were as follows for the year ended December 31, 2021:
Tenant
Number of
Stores
Square
Feet
Percentage
of Total
Revenues (1)
Signet Jewelers Ltd. (2)
179,103
3.27
%
Victoria's Secret & Co. (3)
421,133
3.16
%
Foot Locker, Inc.
431,749
3.14
%
American Eagle Outfitters, Inc.
387,722
2.57
%
Dick's Sporting Goods, Inc. (4)
1,463,010
2.26
%
Bath & Body Works, Inc. (3)
243,046
2.17
%
Genesco Inc. (5)
166,644
1.73
%
Finish Line, Inc.
193,763
1.53
%
Luxottica Group S.P.A. (6)
201,724
1.42
%
H & M Hennes & Mauritz AB
846,954
1.34
%
The Buckle, Inc.
201,249
1.29
%
The Gap, Inc.
563,595
1.25
%
Cinemark Holdings, Inc.
467,190
1.20
%
Shoe Show, Inc.
418,172
1.11
%
Express Fashions
254,120
1.10
%
Barnes & Noble, Inc.
485,305
0.92
%
Hot Topic, Inc.
221,164
0.91
%
Abercrombie & Fitch, Co.
199,879
0.90
%
Claire's Stores, Inc.
91,363
0.90
%
Spencer Spirit Holdings, Inc.
106,363
0.75
%
The TJX Companies, Inc. (7)
520,475
0.74
%
Ulta Beauty, Inc.
237,961
0.72
%
Chick-fil-A, Inc.
53,552
0.70
%
Regal Entertainment Group
394,133
0.69
%
Focus Brands LLC (8)
46,723
0.69
%
1,232
8,796,092
36.46
%
(1)
Includes the Successor Company’s and Predecessor Company’s proportionate share of total revenues from consolidated and unconsolidated affiliates based on the ownership percentage in the respective joint venture and any other applicable terms.
(2)
Signet Jewelers Ltd. operates Kay Jewelers, Marks & Morgan, JB Robinson, Shaw’s Jewelers, Osterman’s Jewelers, LeRoy’s Jewelers, Jared Jewelers, Belden Jewelers, Ultra Diamonds, Rogers Jewelers, Zales, Peoples and Piercing Pagoda.
(3)
Formerly part of L Brands, LLC. Separated into individual legal entities effective August 2021.
(4)
Dick’s Sporting Goods, Inc. operates Dick’s Sporting Goods, Golf Galaxy and Field & Stream.
(5)
Genesco Inc. operates Journey’s, Underground by Journey’s, Shi by Journey’s, Johnston & Murphy, Hat Shack, Lids, Hat Zone and Clubhouse.
(6)
Luxottica Group S.P.A. operates Lenscrafters, Pearle Vision and Sunglass Hut.
(7)
The TJX Companies, Inc. operates T.J. Maxx, Marshalls, HomeGoods and Sierra Trading Post. In Europe, they operate T.K. Maxx and HomeSense. In Canada, they operate Winners, HomeSense and Marshalls.
(8)
Focus Brands operates certain Auntie Anne’s, Cinnabon, Moe’s Southwest Grill and Planet Smoothie locations.
Operating Strategy
Our primary objective is to maximize the long-term value of our company for all our stakeholders by reducing debt, lowering our cost of capital and stabilizing and growing net operating income (“NOI”), total earnings before income taxes, depreciation and amortization for real estate (“EBITDAre”) and cash flows through a variety of methods as further discussed below.
NOI and EBITDAre are non-GAAP measures. For a description of NOI, a reconciliation from net income (loss) to 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.”
Property Transformation Strategy
Since the formation of the CBL’s Predecessor in 1978, we have built our portfolio with a strategy of owning dominant properties in dynamic and growing markets. Our Properties play a vital role in the communities in which they are located. They serve as a center of commerce and large employment base. We are a valuable community member, partnering with local and regional organizations in civic engagements. Our Properties also generate significant property and sales taxes that support programs in our communities. While the shifts in retail and, more recently, the impact of COVID-19, have had an effect on our business, we believe that our strong locations and continued implementation of our redevelopment and portfolio transformation strategy, as outlined below, will allow CBL to create stability and future growth.
Our strategy of owning dominant properties in thriving markets has served the company well as CBL’s dominant locations generate significant demand from retail and non-retail users alike. This broad demand allows CBL to shift and evolve our portfolio as consumer preferences change. More recently, the rise of e-commerce and other changes have resulted in major shifts in the retail industry. Retailers, including many traditional department stores, have culled their store base either proactively or through bankruptcy, closing brick-and-mortar retail stores. Several large anchor retailers, such as Sears and Bon-Ton, have liquidated the majority or all of their stores. While there is near term income loss and vacancy that results from the closures, we also utilize the closures as an opportunity to transform our traditional enclosed malls into a portfolio of dominant centers that offer a diversity of tenants and uses to enhance the experience and shopping conveniences for visitors. We began this strategy with our first major anchor redevelopment in 2013 and have grown the program in more recent years. While this strategy will take time to effect, we have already been successful in delivering an increasing number of non-retail uses to our Properties such as hotels, residential facilities, medical facilities, offices and casinos. We remain prudent with capital allocation, utilizing several strategies such as land sales, ground leases, and joint ventures to mitigate the capital requirement while, at the same time, allowing us to effect transformational redevelopments.
In order to support the transformation and future growth of our assets, our leasing and redevelopment efforts are focused on matching the targeted tenancy to the unique demands and demographics of the local market. We aggressively lease our Properties in order to maximize cash flows, improve occupancy and facilitate an optimal merchandising mix that attracts today’s consumer, all with the end goal of enhancing the value of our assets. As leases mature, we seek to renew leases at higher gross rents as compared to the previous lease where possible. For underperforming tenants, rather than allow the lease to terminate, we may elect to renew leases at the same or lower gross rents generally for a shorter lease term of three years or less to limit downtime and revenue loss. This strategy allows us to maintain occupancy and revenue while providing our leasing team the time to identify a potential replacement. Additionally, this strategy provides the tenant with the opportunity to improve operations and sales, and eventually renew at a higher gross rent at the end of their lease term. Our new leasing efforts are focused on a broadening array of non-retail as well as successful retail uses including local, regional and national tenants. We have extensive existing relationships and continually canvas our markets as well as online sources for potential new relationships.
Redevelopments represent situations where we capitalize on opportunities to increase the productivity of previously occupied space through aesthetic upgrades, re-tenanting 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 re-leasing to a single user, subdividing it into multiple spaces or razing the building for new development. We also evaluate unused parking fields for non-retail densification projects, which may provide us with the opportunity to capitalize on the embedded equity value of our land. When evaluating a redevelopment project, we review the stand-alone cost and returns, terminal value, co-tenancy, as well as the impact that the project and new tenant(s) is expected to have on the rest of the property including the aesthetic impact and improvements to traffic and sales.
See Liquidity and Capital Resources section for information on the projects completed during 2021 and under construction at December 31, 2021.
Local Leasing and Advertising
We pursue opportunities to generate ancillary revenues and activate our Properties when space is available for shorter terms through temporary leases and license agreements, as well as advertising including sponsorships and promotional activities. These programs allow us to maximize revenues in our centers during downtime between permanent leases, as well as monetize other aspects of the property.
Management and Operations
We actively manage our Properties including a focus on controlling operating costs while maintaining a high-quality customer experience. Where possible, we utilize national or regional contracts with vendors and service providers to generate cost and service efficiencies.
Active Portfolio Management and Asset Recycling
We actively manage our asset base with the goal of enhancing the overall quality and value of our portfolio. We regularly review our portfolio to identify assets that no longer fit our strategy or where we believe it appropriate to redeploy resources into higher growth or higher return on investment opportunities. We also selectively acquire Properties we believe will provide resilient cash flows or that can appreciate in value by increasing NOI through our redevelopment, leasing and management expertise.
Balance Sheet Strategy
Our balance sheet strategy is focused on reducing overall debt, extending our debt maturity schedule and lowering our overall cost of borrowings in order to limit maturity risk, improve net cash flow and enhance enterprise value.
We also pursue opportunities to improve the terms of our secured property-level, mortgage loans including seeking lower interest rates and longer terms. We are exploring refinancing opportunities in the open lending market, as appropriate, in addition to working with our current lenders toward favorable modifications of existing loans.
Environmental, Social and Governance (ESG)/Green Building Practices
In 2021, CBL’s ESG Team was created to formalize our commitment to pursuing socially conscious operations. The core ESG Team is a dedicated task force that focuses on ESG factors including Sustainability, Social Governance and Corporate Governance as well as reporting to CBL’s Board, and publicly on our website and in public filings. The members that make up this committee represent the various departments within CBL, such as Management, Investor Relations, People & Culture, Public Relations and Operations Services. While the formation of the CBL ESG Team solidified CBL’s commitment, CBL has a long history of progressing ESG initiatives. In 2021, these included adopting an enterprise-level ESG policy, incorporating green leasing language in our new and renewal leasing, incorporating ESG goals into executive compensation, enhancing public ESG reporting and amending our Nominating/Corporate Governance Committee charter to include ESG oversight.
We are committed to reducing waste through the use of environmentally friendly materials, domestic products, and the implementation of green building practices in our new development projects, redevelopments and renovations. We have completed more than 62 energy efficiency projects across our portfolio that have resulted in more than 40.9 million kWh saved. We have active cardboard or plastic recycling programs at 39 centers across our portfolio and have building management systems at nearly every property. These programs are ongoing as we strive to find ways to enhance our commitment to being environmentally conscious.
In 2021, we launched CBL Community, a team-member-led committee dedicated to enhancing inclusion, equity, diversity and belonging throughout our organization, our Properties, and our communities. We also partnered with professional services firm, Hinton & Company, on our diversity, equity, inclusion and belonging (“DEIB”) initiatives. To date, our partnership with Hinton & Company has involved one-on-one interviews, focus groups and a company-wide inclusion survey. Hinton & Company is working with CBL Community and our executive team to develop and help implement a DEIB strategy and roadmap.
More information on our sustainability, DEIB, social responsibility and community involvement initiatives is available on dedicated web pages at cblproperties.com/about. The information on our web site is not, and should not be considered, a part of this Form 10-K.
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 and Our Business.”
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 and non-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.
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
Our authorized common stock consists of 200,000,000 shares at $0.001 par value per share. We had 20,774,716 shares of common stock issued and outstanding as of December 31, 2021. As noted above, all equity interests of the Company issued and outstanding immediately prior to the Effective Date were deemed cancelled, discharged and of no force or effect.
Preferred Stock
Our authorized preferred stock consists of 15,000,000 shares at $0.001 par value per share. No shares of preferred stock were issued and outstanding as of December 31, 2021.
Financial Information about Segments
See Note 13 to the consolidated financial statements for information about our reportable segments.
Human Capital
We believe our employees are critical to the success of our Company. We are committed to providing a work environment that attracts, develops, and retains high-performing team members and to promoting a culture that allows each team member to feel respected, included and empowered.
To further these goals, in 2021 we introduced CBL Community as the next step in both employee engagement and to further our DEIB commitments. This employee-facilitated group is focused on internal and external endeavors that underscore the importance and focus we place on people: the driving force behind CBL is the team. An important measure of success is the result of partnerships we create with others. As part of the Company’s array of employee-facilitated groups, CBL Community is pursuing internal and external endeavors to improve organizational impacts on diversity, equity, inclusion, and belonging through education, engagement initiatives, and the creation of opportunities and partnerships with underrepresented groups. To support our efforts, we engaged Hinton & Company to serve as our chief inclusion partner. As part of the organizational assessment, an inaugural inclusion survey netting an 85% response rate generated positive reflections on the organization and identified opportunities for improvement, which will be incorporated into an overall strategic roadmap for 2022 and beyond.
CBL has long maintained additional employee-led programs including CBL Cares, which partners with and supports local charitable organizations that contribute to the growth and development of the communities we serve, CBL FIT, which provides advocacy of wellness for the whole person at work and CBL Social, which provides engagement opportunities and interconnectivity through team-based events. In 2021, despite ongoing challenges to in-person volunteer opportunities, our team members volunteered 840 hours with non-profit organizations through our CBL Cares volunteer program. Through volunteer hours, corporate donations and CBL Cares funds, we provided more than $85,000 in financial support to organizations across our portfolio that work to meet the diverse needs of our communities. Lastly, through our annual United Way workplace campaign, our team contributed more than $108,000 to United Way and achieved 90% participation in our United Way campaign by our corporate office team.
As part of the company’s 2021 strategic initiative work sessions, we invited employees to actively engage in the evolution of the company’s culture. As a result, our quick wins included cultivating and formally endorsing workplace flexibility and identifying continuing learning and development interests, including a goal of improving internal recognition.
To attract, retain and develop our high-performing team members, we offer comprehensive employment benefits as well as training and educational programs. The company introduced additional progressive health insurance options for employees and their dependents in 2021, to further enable consumer-driven healthcare and improved well-being. CBL continued to provide our team with learning and development opportunities including the CBL U conference, leadership programs, and other ad hoc training programs on a variety of topics including career development and skills training; health, well-being, and safety; DEIB; cybersecurity; and more. In 2022, we are expanding these training efforts to include increasingly comprehensive training in diversity, equity, and inclusion as well as on-demand content including health and wellness. CBL will continue to mandate annual cyber-security training for all full-time employees. Additionally, we plan to roll-out new technology and tools for self-guided learning. As part of the benefits program, employees may further their formal education by way of a tuition reimbursement program.
CBL does not have any employees other than its statutory officers. Our Management Company had 400 full-time and 60 part-time employees as of December 31, 2021. Demographically, CBL employees at that point in time were 13% racially diverse and 64% female. We are proud that 4% of our workforce served in the military. Generationally, the population is represented across the Gen X (36%), Gen Y (35%), and Baby Boomer (26%) array with an emerging Gen Z (3%) and a contribution by Traditionalists (<1%). In 2021, an externally conducted compensation analysis reflected a statistically insignificant pay gap of 2.77% based on gender and 0.00% based on race. Despite the challenges the year brought, voluntary turnover remained statistically stable at 12% with nearly 20% of those who left doing so to retire, including two who had been with CBL since inception. While we support freedom of association, we enjoy direct relationships as 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 “Investor Relations” 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.

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ITEM 1A. RISK FACTORS
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. In addition, these risks could be heightened as a result of the evolving impact of, and governmental responses to, the COVID-19 pandemic.
RISK FACTOR SUMMARY
The following is a summary of the most significant risks relating to our business activities that we have identified. If any of these risks occur, our business, financial condition or results of operation, including our ability to generate cash and make distributions, could be materially adversely affected. For a more complete understanding of our material risk factors, this summary should be read in conjunction with the detailed description of our risk factors which follows this summary.
Risks Related to Our Emergence from Bankruptcy
•
We recently emerged from bankruptcy, which may adversely affect our business.
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Upon emergence from bankruptcy, the composition of our board of directors changed significantly. Additionally, our historical financial information may not be indicative of our future financial performance.
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Transfers or issuances of equity may impair our ability to utilize the existing tax basis in our assets, our federal income tax net operating loss carryforwards and other tax attributes.
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We have determined that there are conditions that raise substantial doubt about our ability to continue as a going concern.
Risks Related to Real Estate Investments and Our Business
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The evolving effects of the COVID-19 pandemic, and governmental responses thereto, have, and could continue to, materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as could any future outbreak of another highly infectious or contagious disease.
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Real property investments are subject to various risks, many of which are beyond our control, which could cause declines in the revenues and/or underlying value of one or more of our Properties. These include, among others:
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Adverse changes to national, regional and local economic conditions, including increased volatility in the capital and credit markets, as well as changes in consumer confidence and consumer spending patterns.
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Possible inability to lease space in our Properties on favorable terms, or at all.
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Potential loss of one or more significant tenants, due to bankruptcies or consolidations in the retail industry.
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Local real estate market conditions, and the illiquidity of real estate investments.
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Adverse changes that cause us not to proceed with certain developments, redevelopments or expansions.
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Increased operating costs, such as repairs and maintenance, real property taxes, utility rates and insurance.
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Adverse changes in governmental regulations and related costs, including potential significant costs related to compliance with environmental laws.
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Competition from other retail facilities, and from alternatives to traditional retail such as online shopping.
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Certain of our Properties are subject to ownership interests held by third parties, whose interests may conflict with ours.
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Bankruptcy of joint venture partners could impose delays and costs on us with respect to jointly owned retail Properties.
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We identified a material weakness in internal control over financial reporting, which we may not remediate on a timely basis, and we may identify additional material weaknesses, which may result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations.
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Possible terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.
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Social unrest and acts of vandalism or violence could adversely affect our business operations.
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Increased expenses, decreased occupancy rates, tenants converting to gross leases and requesting deferrals and rent abatements may not allow us to recover the majority of our CAM, real estate taxes and other operating expenses.
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Our Properties may be subject to impairment charges which could adversely affect our financial results.
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While cybersecurity attacks, to date, have not materially impacted our financial results, future cyber-attacks, cyber intrusions or other disruptions of our information technology networks could disrupt our operations, compromise confidential information and adversely impact our financial condition.
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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.
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Inflation may adversely affect our financial condition and results of operations.
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Uninsured losses could adversely affect us, and in the future our insurance may not cover acts of terrorism.
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We face possible risks associated with climate change.
Risks Related to Debt and Financial Markets
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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.
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Our indebtedness is substantial and could impair our ability to obtain additional financing.
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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.
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We may be adversely affected by the discontinuation of LIBOR.
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The agreements governing our debt contain various covenants that impose restrictions on us that may affect our ability to operate our business.
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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.
Risks Related to Dividends and Our Stock
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We cannot assure you of our ability to pay dividends or distributions in the future or the amount of any dividends or distributions.
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We currently are not eligible to register the offer and sale of securities on SEC Form S-3.
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Our ability to pay dividends on our common stock depends on the distributions we receive from our Operating Partnership, through which we conduct substantially all our business.
Risks Related to Geographic Concentrations
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Our Properties are located principally in the southeastern and midwestern United States, so our business is 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.
Risks Related to Federal Income Tax Laws
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We conduct a portion of our business through taxable REIT subsidiaries, which are subject to certain tax risks.
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Complying with REIT requirements might cause us to forego otherwise attractive opportunities, and failing to qualify as a REIT would reduce our funds available for distribution to stockholders.
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Transfers of our capital stock to any person in excess of the ownership limits necessary to maintain our status as a REIT would be deemed void ab initio, and those shares would automatically be transferred to the Company as trustee of a charitable trust.
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We must satisfy minimum distribution requirements to maintain our status as a REIT, which may limit the amount of cash available for use in growing our business.
Risks Related to Our Organizational Structure
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The ownership limit described above, as well as certain provisions in our Second Amended and Restated Certificate of Incorporation (our “Certificate of Incorporation”) and our Fourth Amended and Restated Bylaws (our “Bylaws”), may hinder any attempt to acquire us.
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Our Certificate of Incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities identified by our non-employee directors and their affiliates.
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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.
RISKS RELATED TO OUR EMERGENCE FROM BANKRUPTCY
We recently emerged from bankruptcy, which may adversely affect our business.
It is possible that our having filed for bankruptcy and our recent emergence from bankruptcy may adversely affect our business and relationships with tenants, suppliers, service providers, employees and other third parties. Due to uncertainties, many risks exist, including the risk that key suppliers or other third parties may terminate their relationships with us or require additional financial assurances or enhanced performance from us. Our ability to renew existing leases and compete for new tenants also may be adversely affected and our ability to attract, motivate and/or retain key employees may be adversely affected. The occurrence of one or more of these events could have a material and adverse effect on our operations, financial condition and reputation. We cannot provide assurance that having been subject to bankruptcy protection will not adversely affect our operations in the future.
Our historical financial information may not be indicative of our future financial performance.
Our capital structure was significantly altered by the Plan. Under fresh-start reporting rules, our assets and liabilities were adjusted to fair values and our accumulated deficit was restated to zero. Accordingly, under fresh-start reporting rules, our financial condition and results of operations following our emergence from chapter 11 will not be comparable to the financial condition and results of operations reflected in our historical financial statements.
Upon our emergence from bankruptcy, the composition of our board of directors changed significantly.
Pursuant to the Plan, the composition of our board of directors changed significantly. The board of directors now consists of the following eight members: Stephen D. Lebovitz, Charles B. Lebovitz, Marjorie L. Bowen, David J. Contis, David M. Fields, Robert G. Gifford, Jonathan M. Heller and Kaj Vazales. Jonathan Heller, Charles B. Lebovitz and Stephen D. Lebovitz are the only directors that served on the board of directors prior to emergence. As a result, our future strategy and plans may differ materially from those of the past.
Transfers of our equity, or issuances of equity, may impair our ability to utilize the existing tax basis in our assets, our federal income tax net operating loss carryforwards and other tax attributes during the current year and in future years.
Under certain provisions of the Internal Revenue Code (the “Code”), and similar state provisions, a corporation is generally permitted to offset net taxable income in a given year with net operating losses carried forward from prior years, and its existing adjusted tax basis in its assets may be used to offset future gains or to generate annual cost recovery deductions.
In order to qualify for taxation as a REIT, we must meet various requirements including a requirement to distribute 90% of our taxable income; and, to avoid paying corporate income tax, we must distribute 100% of our taxable income. Our ability to utilize future tax deductions, net operating loss carryforwards and other tax attributes to offset future taxable income is subject to certain requirements and restrictions. We experienced an “ownership change,” as defined in section 382 of the Internal Revenue Code, in connection with our emergence from the Chapter 11 Cases, that may substantially limit our ability to use future tax deductions, net operating loss carryforwards and other tax attributes to offset future taxable income, which could have a negative impact on our financial position and results of operations. Generally, there is an “ownership change” under section 382 of the Code if one or more stockholders owning 5% or more of a corporation’s common stock have aggregate increases in their ownership of such stock of more than 50 percentage points over a prescribed testing period. Under section 382 and section 383 of the Code, absent an applicable exception, if a corporation undergoes an “ownership change”, certain future tax deductions (through “recognized built-in losses” arising when a company has a “net unrealized built-in loss” (NUBIL) if they are recognized within five years of the “ownership change”), net operating loss carryforwards and other tax attributes that may be utilized to offset future taxable income generally are subject to an annual limitation.
We have a significant NUBIL in our assets, as well as net operating loss carryforwards and other tax attributes at the date of emergence from the Chapter 11 Cases that would be subject to limitation under section 382.
Whether or not future tax deductions, net operating loss carryforwards and other tax attributes are subject to limitation under section 382, net operating loss carryforwards and other tax attributes are expected to be further reduced by the amount of discharge of indebtedness arising in our Chapter 11 Cases under section 108 of the Internal Revenue Code.
We have determined that there are conditions that raise substantial doubt about our ability to continue as a going concern.
In accordance with the accounting guidance related to the presentation of financial statements, when preparing financial statements for each annual and interim reporting period, management evaluates whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In making its assessment, management considered the Company’s current financial condition and liquidity sources.
As of December 31, 2021, we had $1.4 billion of property-level debt and related obligations, including consolidated debt and unconsolidated debt, maturing or callable within the next twelve months from the issuance of the financial statements. Subsequent to year-end and through the date of issuance of the financial statements, we obtained certain waivers and/or refinanced and extended the maturity dates for $0.2 billion of mortgage debt obligations.
Accordingly, we still had $1.2 billion of property-level debt and related obligations maturing or callable within the next twelve months from the issuance of the financial statements, including $642 million reported within mortgage debt payable and $537 million related to unconsolidated affiliates, a portion of which is guaranteed by us, as disclosed in Note 16 to the consolidated financial statements. The properties serving as collateral for this property-level debt and related obligations represent approximately 10-20% of our projected annual operating cash flows. We currently do not have sufficient liquidity to meet these obligations as they become due, which raises substantial doubt about our ability to continue as a going concern.
Management intends to refinance and/or extend the maturity dates for such mortgage notes payable. In such instances where a refinancing and/or extension of maturity dates is unsuccessful we will repay certain of the mortgage notes based on the availability of liquidity and convey certain properties to the lender to satisfy the related debt obligations. As a result, we have concluded that management’s plans are probable of being achieved to alleviate substantial doubt about our ability to continue as a going concern.
RISKS RELATED TO REAL ESTATE INVESTMENTS AND OUR BUSINESS
The evolving effects of the COVID-19 pandemic, and governmental responses thereto, have, and could continue to, materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as could any future outbreak of another highly infectious or contagious disease.
The COVID-19 pandemic has had a material negative impact on economic and market conditions around the world, and, notwithstanding the fact that vaccines are being administered in the United States and elsewhere, the pandemic continues to adversely impact economic activity in retail real estate. The impact of the COVID-19 pandemic continues to evolve and governments and other authorities have imposed measures intended to control its spread, including restrictions on freedom of movement, group gatherings and business operations such as travel bans, border closings, business closures, quarantines, stay-at-home, shelter-in-place orders, density limitations and social distancing measures. Governments and other authorities are in varying stages of lifting or modifying some of these measures. However, governments and other authorities have already been forced to, and others may in the future, reinstitute these measures or impose new, more restrictive measures, if the risks, or the tenants’ and consumers’ perception of the risks, related to the COVID-19 pandemic worsen at any time. Although tenants and consumers have been adapting to the COVID-19 pandemic, with tenants adding services like curbside pickup, and while consumer risk-tolerance is evolving, such adaptations and evolution may take time, and there is no guarantee that retail will return to pre-pandemic levels even once the pandemic subsides.
Demand for retail space and the profitability of our Properties depends, in part, on the ability and willingness of tenants to enter into and perform obligations under leases. Although the harshest restrictions to prevent the spread of COVID-19 have generally been lifted or reduced, and vaccines are being administered in the United States and elsewhere, the willingness of customers to visit our Properties may be reduced and our tenants’ businesses adversely affected, based upon many factors, including local transmission rates, the emergence of new variants, the development, availability, distribution, effectiveness and acceptance of existing and new vaccines, and the effectiveness and availability of cures or treatments. Further, demand could remain reduced due to heightened sensitivity to risks associated with the transmission of COVID-19 or other associated diseases.
The continuing impact of the COVID-19 pandemic, or a future pandemic, on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our shareholders could depend on additional factors, including:
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the financial condition and viability of our tenants, and their ability or willingness to pay rent in full;
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state, local, federal and industry-initiated tenant relief efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent;
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the increased popularity and utilization of e-commerce;
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our ability to renew leases or re-lease available space in our Properties on favorable terms or at all, including as a result of a deterioration in the economic and market conditions in the markets in which we own Properties or due to restrictions intended to prevent the spread of COVID-19, including any additional government mandated closures of businesses that frustrate our leasing activities;
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a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, all of which have already been experienced and which may continue to affect our or our tenants’ ability to access capital necessary to fund our or their respective business operations or repay, refinance or renew maturing liabilities on a timely basis, on attractive terms, or at all and may adversely affect the valuation of financial assets and liabilities, any of which could affect our and our tenants’ ability to meet liquidity and capital expenditure requirements;
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a reduction in the cash flows generated by our Properties and the values of our Properties that could result in impairments or limit our ability to dispose of them at attractive prices or obtain debt financing secured by our Properties;
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the complete or partial closure of one or more of our tenants’ manufacturing facilities or distribution centers, temporary or long-term disruption in our tenants’ supply chains from local and international suppliers and/or delays in the delivery of our tenants’ inventory, any of which could reduce or eliminate our tenants’ sales, cause the temporary closure of our tenants’ businesses, and/or result in their bankruptcy or insolvency;
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a negative impact on consumer discretionary spending caused by high unemployment levels, reduced economic activity or a severe or prolonged recession;
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our and our tenants’ ability to manage our respective businesses to the extent our and their management or personnel (including on-site employees) are impacted in significant numbers by the COVID-19 pandemic or are otherwise not willing, available or allowed to conduct work, including any impact on our tenants’ ability to deliver timely information to us that is necessary for us to make effective decisions; and
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our and our tenants’ ability to ensure business continuity in the event our or our tenants’ continuity of operations plan is (i) not effective or improperly implemented or deployed or (ii) compromised due to increased cyber and remote access activity during the COVID-19 pandemic.
To the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described herein.
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:
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national, regional and local economic climates, which may be negatively impacted by loss of jobs, production slowdowns, inflation, adverse weather conditions, natural disasters, acts of violence, war, riots or terrorism, declines in residential real estate activity and other factors which tend to reduce consumer spending on retail goods;
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pandemic outbreaks, including COVID-19, 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);
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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;
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increased operating costs, such as increases in repairs and maintenance, real property taxes, utility rates and insurance premiums;
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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;
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perceptions by retailers or shoppers of the safety, convenience and attractiveness of the shopping center; and
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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:
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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;
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potential environmental or other legal liabilities that reduce the amount of funds available to us for investment in our Properties;
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any inability to obtain sufficient financing (including construction financing, permanent debt, secured and 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
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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 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 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 7 malls, 5 outlet centers, 1 lifestyle center, 13 open-air centers, 2 office buildings and a hotel. Of those interests, 2 malls, 5 outlet centers, 3 open-air centers and a hotel development 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 our bankruptcy filing, 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.
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, Lifestyle Center and Outlet Center 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 identified a material weakness in internal control over financial reporting. We may not remediate this material weakness on a timely basis or may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial reporting, which may result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations. As a result, stockholders could lose confidence in our financial and other public reporting, which would then be likely to negatively affect our business and the market price of our securities.
A material weakness in internal control over financial reporting has been identified. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. See Part II, Item 9A of this report for further details. During 2021 the Company took steps to remediate the material weakness described above, which included hiring additional personnel. The Company is in the process of integrating these personnel in order for its internal controls over financial reporting to operate effectively. The Company continues to explore hiring additional personnel. Also, in the short term, the Company utilized the assistance of external parties to assist with the added reporting requirements brought on by its filing of the Chapter 11 Cases and its subsequent emergence on November 1, 2021. These remediation measures have been, and could continue to be, time consuming and costly, and might place significant demands on our financial, accounting and operational resources.
Management developed and implemented the above remediation plan during 2021, however, as further described in Part II, Item 9A of this report, the Company has not yet fully remediated its material weakness. Until our remediation plan is implemented and operating effectively, management will continue to devote time and attention to these efforts. Management has concluded that, because of the material weakness, our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2021.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports and is important in helping to prevent mistakes in our financial statements and financial fraud. Any failure to implement required new or improved controls, or difficulties encountered in our implementation to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identification of any additional material weaknesses that may exist, may adversely affect the accuracy and timing of our financial reporting, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, we may be unable to prevent fraud, investors may lose confidence in our financial reporting, and the price of our securities may decline as a result.
Any testing conducted by us, or any testing conducted by our independent registered public accounting firm, may reveal additional deficiencies in our internal control over financial reporting that are deemed to be new material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. In addition, our reporting obligations as a public company could place a significant strain on our management, operational and financial resources and systems for the foreseeable future and may cause us to fail to timely achieve and maintain the adequacy of its internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Because of its inherent limitations, internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. There is no assurance that the measures we are currently undertaking or may take in the future will be sufficient to maintain effective internal controls or to avoid potential future deficiencies in internal control, including material weaknesses.
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 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, 2021, we have recorded in our consolidated financial statements a liability of $2.7 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 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 domestic or international 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.
Social unrest and acts of vandalism or violence could adversely affect our business operations.
Our business may be adversely affected by social, political, and economic instability, unrest, or disruption, including protests, demonstrations, strikes, riots, civil disturbance, disobedience, insurrection and looting in geographic regions where our Properties are located. Such events may result in property damage and destruction and in restrictions, curfews, or other governmental actions that could give rise to significant changes in economic conditions and cycles, which may adversely affect our financial condition and operations.
In 2020 and 2021, there have been demonstrations and protests, some of which involved violence, looting, arson and property destruction, in cities throughout the United States. While the majority of protests have been peaceful, looting, vandalism and fires have taken place in certain places, which led to the imposition of mandatory curfews and, in some locations, deployment of the National Guard. Governmental actions taken to protect people and property, including curfews and restrictions on business operations, may disrupt operations, harm perceptions of personal well-being and increase the need for additional expenditures on security resources. The effect and frequency of the demonstrations, protests or other factors is uncertain, and we cannot assure there will not be further political or in the future or that there will not be other events that could lead to further social, political and economic instability. If such events or disruptions persist for a prolonged period of time, our overall business and results of operations may be adversely affected.
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, when a department store operating as an Anchor at one of our Properties has ceased operating, in certain instances we have experienced difficulty and delay and incurred significant expense in replacing the Anchor, re-tenanting, or otherwise re-merchandising the use of the Anchor space. This difficulty can be, and in some instances has been, 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, and in some instances has, lead to reduced customer traffic and lower mall tenant sales. As a result, we may, and in some instances have, 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, Lifestyle Centers and Outlet Centers 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.
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 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, tenants converting to gross leases and requesting deferrals and rent abatements 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 responsible 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 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 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.
Breaches or other adverse cybersecurity incidents on our systems or those of our service providers or business partners could expose us to liability and lead to the loss or compromise of our information, including confidential information, sensitive information and intellectual property, and could result in a material adverse effect on our business and financial condition.
As a regular part of our business operations, 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. We rely on our own systems and also outsource some of our business requirements through service providers and other business partners pursuant to agreements. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by internal actors, 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 - and those of our providers/partners - 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.
We have experienced adverse security incidents. All incidents experienced to date have been minor in scope and impact, were resolved quickly, had no material impact on the Company’s reputation, financial performance, customer or vendor relationships, and posed no material risk of potential litigation or regulatory investigations or actions. We expect unauthorized parties to continue to attempt to gain access to our systems or information, and/or those of our business partners and service providers. Cyber-attacks targeting our infrastructure could result in a full or partial disruption of our operations, as well as those of our tenants.
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 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.
The compromise of our or our business partners’ or service providers’ technology systems resulting in the loss, disclosure, misappropriation of, or access to, our information or that of our tenants, employees or business partners or failure to comply with ever-evolving regulatory obligations or contractual obligations with respect to such information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disruption to our operations and damage to our reputation, any or all of which could adversely affect our business. The costs to remediate breaches and similar system compromises that do occur could be material. In addition, as cybercriminals become more sophisticated, the cost of proactive defensive measures continues to increase.
Although we and our service providers/business partners 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.
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 former directors have been named as defendants in a consolidated putative securities class action lawsuit (“Securities Class Action 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. See Item 3. Legal Proceedings for more information on the Securities Class Action 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.
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.
Inflation may adversely affect our financial condition and results of operations.
Inflation has become a growing concern. The 2021 annual rate of inflation in the U.S. is higher than at any point in recent years. Inflationary price increases could have an adverse effect on consumer spending, which could impact our tenants’ sales and, in turn, our tenants’ business operations. This could affect the amount of rent these tenants pay, including if their leases provide for percentage rent, and their ability to pay rent. Also, inflation could cause increases in operating expenses, which could increase occupancy costs for tenants and, to the extent that we are unable to recover operating expenses from tenants, could increase operating expenses for us. In addition, if the rate of inflation exceeds the scheduled rent increases included in our leases, then our net operating income and our profitability would decrease. Inflation could also result in increases in market interest rates, which could not only negatively impact consumer spending and tenant investment decisions, but would also increase the borrowing costs associated with our existing or any future variable rate debt, to the extent such rates are not effectively hedged or fixed, or any future debt that we incur. Inflation might also inhibit our ability to obtain new financing or refinancing.
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’ 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. If TRIPRA is not continued beyond 2027 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.
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 may 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 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, prior to the commencement of our current Chapter 11 Cases, 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, 2021, our pro-rata share of consolidated and unconsolidated debt outstanding, excluding debt discounts and deferred financing costs, was approximately $3,174.6 million. Our total share of consolidated and unconsolidated debt, excluding debt discounts and deferred financing costs, maturing in 2022, 2023 and 2024 giving effect to all maturity extensions, was approximately $479.7 million, $147.7 million and $209.7 million, respectively. Additionally, we had $408.1 million of debt, at our share, which matured prior to December 31, 2021. Of the $408.1 million of debt that matured prior to December 31, 2021, two loans totaling $92.1 million secure two properties that have been placed into receivership in connection with the foreclosure process and five loans totaling $316.0 million secure five properties for which we remain in discussion with the lenders regarding restructuring or foreclosure actions. Subsequent to December 31, 2021, one past due loan secured by Fayette Mall, totaling $135.1 million as of December 31, 2021, was extended through May 2023 and the $61.6 million loan secured by Greenbrier Mall was placed in receivership. See Note 9, Note 10 and Note 20 to the consolidated financial statements for additional information.
Our leverage and the limitations imposed on us by our financing arrangements and debt service obligations could have important consequences. For example, it could:
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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;
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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;
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materially impair our ability to borrow unused amounts under financing arrangements or to obtain additional financing or refinancing on favorable terms or at all;
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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;
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increase our vulnerability to an economic downturn;
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limit our ability to withstand competitive pressures; or
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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.
The filing of the Chapter 11 Cases constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. Any efforts to enforce such payment obligations due under our debt instruments are subject to the applicable provisions of the Bankruptcy Code. See Note 2 and Liquidity and Capital Resources for additional information.
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.
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. One of the factors that has likely influenced the price of our stock in public markets during prior periods when we were making distributions is the annual distribution rate we paid as compared with the yields on alternative investments. Further, numerous 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, 2021, our total share of consolidated and unconsolidated variable-rate debt, excluding debt discounts and deferred financing costs, was $1,037.7 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 the discontinuation of LIBOR.
In July 2017, the Financial Conduct Authority (FCA), 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 identified the Secured Overnight Financing Rate (SOFR) as its preferred alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. The FCA no longer publishes one-week and two-month U.S. dollar LIBOR rates and plans to cease publishing all other LIBOR tenors (overnight, one-month, three-month, six-month and 12-month) on June 30, 2023. It is not presently known whether SOFR or any other alternative reference rates will attain broad market acceptance as replacements of LIBOR. There remains uncertainty as how the financial services industry will address the discontinuance of LIBOR in financial instruments that are indexed to 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.
It is important to note that our variable-rate debt uses LIBOR as a benchmark for establishing the rate. These reforms and other pressures may cause LIBOR to disappear entirely. Alternative reference rates that replace LIBOR may not yield the same or similar economic results and the consequences cannot be entirely predicted but could include an increase in the cost of our variable-rate debt.
The agreements governing our debt contain various covenants that impose restrictions on us that may affect our ability to operate our business.
The filing of the Chapter 11 Cases constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. Any efforts to enforce such payment obligations due under our debt instruments are subject to the applicable provisions of the Bankruptcy Code.
Other agreements that we enter into governing our debt have or will contain covenants that impose restrictions on us. These restrictions on our ability to operate our business could harm our business by, among other things, limiting our ability to take advantage of corporate opportunities. Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions.
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, 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, 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, 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, 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 our debt service obligations. 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 the risks described above.
We may be able to incur substantial additional indebtedness in the future. Although the agreements governing our existing secured term loan, senior secured notes, exchangeable notes and certain other indebtedness do 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 of the secured term loan, the senior secured notes and the exchangeable senior secured notes provided by CBL or any future guarantee 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.
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. 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.
RISKS RELATED TO DIVIDENDS AND OUR STOCK
We currently are not eligible to register the offer and sale of securities on SEC Form S-3, which will impair our capital raising activities.
As a result of the Chapter 11 Cases and the existence of cumulative unpaid dividends on our preferred securities that were outstanding prior to the Chapter 11 Cases, we currently are not eligible to use SEC Form S-3 to register offers and sales of our securities under the Securities Act. Historically, we have relied on shelf registration statements on Form S-3 for our public capital raising transactions, and also to register the offer and sale of shares of common stock under our DRIP. Our inability to use Form S-3 may harm our ability to raise capital in the future, as we will be required to use a registration statement on Form S-11 to register securities with the SEC, which may be expected to hinder our ability to act quickly in raising capital to take advantage of market conditions and to increase our cost of raising capital.
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 a variety of relevant factors, described 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 any outstanding shares of our common stock, 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 then-current indebtedness, the annual distribution requirements under 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 future dividend policy could have a material adverse effect on the market price of our future outstanding common stock.
Since we conduct substantially all our operations through our Operating Partnership, our ability to pay dividends on our common stock depends on the distributions we receive from our Operating Partnership.
Because we conduct substantially all 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 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.
Additionally, the terms of our secured term loan provide a waterfall calculation for distributions of excess cash flow generated by the properties secured as collateral on the term loan. The waterfall calculation generally provides that the excess cash flow be used for additional payments of principal on the secured term loan before distributions may be made for other purposes. In the event of a default, no amounts may be distributed other than to repay the outstanding balance on the secured term loan. 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.
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 52.7% of our total pro-rata share of revenues from all Properties for the year ended December 31, 2021 and currently include 22 malls, 4 lifestyle centers, 2 outlet centers, 18 open-air centers, 3 office buildings and a hotel. Our Properties located in the midwestern United States accounted for approximately 23.0% of our total pro-rata share of revenues from all Properties for the year ended December 31, 2021 and currently include 16 malls and 2 open-air centers. Further, the Properties located in our five largest metropolitan area markets - St. Louis, MO; Chattanooga, TN; Lexington, KY; Laredo, TX; and Fayetteville, NC - accounted for approximately 7.2%, 6.0%, 4.5%, 4.0% and 3.4%, respectively, of our total pro-rata share of revenues for the year ended December 31, 2021. No other market accounted for more than 3.2% of our total pro-rata share of revenues for the year ended December 31, 2021.
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 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 CBL Holdings I, LLC, the general partner of the Operating Partnership, and 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 to revoke the REIT election.
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 the Company as trustee of a 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 9.9% of the outstanding shares of our capital stock by any single stockholder, either directly or constructively as determined through the application of applicable provisions of the Internal Revenue Code. The approval of our board of directors and the affirmative vote of the holders of a majority 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. 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 with the Company or its designated successor serving as trustee, for the exclusive benefit of a charitable beneficiary to be designated by us. 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 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 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.”
Partnership tax audit rules could have a material adverse effect on us.
Under the rules applicable to U.S. federal income tax audits of partnerships, 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. There can be no assurance that these rules will not have a material adverse effect on us.
RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE
The ownership limit described above, as well as certain provisions in our Certificate of Incorporation and Bylaws, may hinder any attempt to acquire us.
There are certain provisions of Delaware law (which we have opted out of having apply to the Company), our Certificate of Incorporation and our Bylaws 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 Certificate of Incorporation generally prohibits ownership of more than 9.9% of the outstanding shares of our capital stock by any single stockholder, either directly or constructively as determined through the application of applicable provisions of the Internal Revenue Code, subject to the ability of the board of directors to grant waivers in appropriate circumstances, and further subject to Existing Holder Limits that were established in connection with our emergence from the Chapter 11 Cases for two stockholder groups, Canyon Capital Advisors and certain of its affiliates (33.1%) and Oaktree Capital Group, LLC and certain of its affiliates (19.0%). 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.
•
Approval by a Majority of Our Outstanding Voting Stock Required for Removal of Directors - Our governing documents provide that stockholders can remove directors with or without cause, but only by the affirmative vote of holders of at least a majority 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 date on which we first mailed our proxy materials for the prior year’s annual meeting.
•
Vote Required to Amend Bylaws - Approval by the affirmative vote of the holders of a majority of the outstanding voting power of our outstanding capital stock entitled to vote in the election of directors (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.
•
Opt-Out From Delaware Anti-Takeover Statute - While we are a Delaware corporation, we have elected under the provisions of our current Certificate of Incorporation not to be governed by Section 203 of the Delaware General Corporation Law. In general, had we continued to be subject to Section 203 as we were prior to emerging from the Chapter 11 reorganization, Section 203 would prevent 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 (subject to certain exceptions specified in Section 203).
Our Certificate of Incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities identified by our non-employee directors and their affiliates.
Certain of our non-employee directors and their affiliates engage in the same or similar business activities or lines of business in which we operate and may make investments in properties or businesses that directly or indirectly compete with certain portions of our business. As set forth in our Certificate of Incorporation, such non-employee directors and their affiliates shall not have any duty, to the fullest extent permitted by law, to refrain from (x) engaging in the same or similar business activities or lines of business in which we operate or propose to operate, (y) making investments in any kind of property in which we make or may make investments or (z) otherwise competing with us or any of our affiliates. Our Certificate of Incorporation also provides that if our non-employee directors or their affiliates acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty to communicate or offer such corporate opportunity to us or our affiliates, unless such corporate opportunity is expressly offered to the non-employee director solely in his or her capacity as one of our directors (or officers, if applicable).
Therefore, a non-employee director of our company may pursue certain acquisition opportunities that may be complementary to our business and, as a result, such acquisition opportunities may not be available to us. In addition, in the event that any of our non-employee directors or his or her affiliates acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or officer of the Company, then to the fullest extent permitted by law such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us if such director or its affiliates pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations, or prospects if attractive corporate opportunities are allocated by such non-employee directors to themselves or their other affiliates instead of to us.
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.
Certain Property tenants are affiliated with members of our senior management. Our Fourth Amended and Restated Code of Business Conduct and Ethics provides that any contract or transaction between us or the Operating Partnership and one or more of our officers or employees (or their immediate family members, as defined therein), or between us or the Operating Partnership and any other entity in which any one or more of such persons serve as directors, officers, consultants or attorneys, must be approved by our Compliance Officer (currently our Chief Legal Officer) after the material facts concerning the matter and the relationship or interest therein of the officer or employee have been fully disclosed to the Compliance Officer. Such matters must be approved in a similar manner by the Nominating/Corporate Governance Committee of our board of directors instead of the Compliance Officer if they involve the Compliance Officer or members of his/her immediate family or involve amounts in excess of $120,000 and are subject to disclosure under applicable SEC rules. 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.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
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, Lifestyle Centers and Outlet Centers
We owned a controlling interest in 42 Malls, 4 Lifestyle Centers and 2 Outlet Centers as of December 31, 2021. We owned a non-controlling interest in 8 Malls, 1 Lifestyle Center and 3 Outlet Centers as of December 31, 2021. Our Malls, Lifestyle Centers and Outlet Centers are primarily located in growing and dynamic markets and generally have strong competitive positions because they are the only, or the dominant, regional property in their respective trade areas. The Malls, Lifestyle Centers and Outlet Centers are generally anchored by two or more anchors or junior anchors and a wide variety of smaller stores. Anchor and junior anchor tenants own or lease their stores and non-anchor stores lease their locations.
We own the land underlying each property 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 properties subject to long-term ground leases.
The following table summarizes certain information for our portfolio of Malls, Lifestyle Centers and Outlet Centers as of December 31, 2021 (dollars in thousands, except for sales per square foot amounts):
Number of
Properties
Total Center
Square Footage
Total
In-Line GLA
In-Line
Sales per Square Foot
Percentage
In-Line
GLA Leased
Malls
39,850,438
12,728,398
$
%
Lifestyle Centers
4,236,637
1,674,902
%
Outlet Centers
1,266,264
1,172,718
%
Total Malls, Lifestyle Centers and Outlet Centers
45,353,339
15,576,018
$
%
The following table sets forth certain information for each of the Malls, Lifestyle Centers and Outlet Centers as of December 31, 2021 (dollars in thousands, except for sales per square foot amounts):
Malls:
Property / Location
Year of
Opening/
Acquisition
Year of
Most
Recent
Expansion
Our
Ownership
Total Center
SF (1)
Total
In-Line GLA (2)
In-Line
Sales per
Square
Foot (3)
Percentage
In-Line GLA
Leased (4)
Anchors & Junior
Anchors (5)
Arbor Place
Atlanta (Douglasville), GA
N/A
100%
1,162,065
307,635
%
Former Bed Bath & Beyond, Belk, Dillard's, Forever 21, H&M, JC Penney, Macy's, Regal Cinemas, former Sears
Brookfield Square (6)
Brookfield, WI
1967/2001
100%
865,453
307,420
%
Barnes & Noble, former Boston Store, H&M, JC Penney, Movie Tavern by Marcus, Whirlyball
CherryVale Mall
Rockford, IL
1973/2001
100%
870,655
348,239
%
Barnes & Noble, Galleria Furniture and Mattress, JC Penney, Macy's, Tilt Studio
Coastal Grand (7)
Myrtle Beach, SC
50%
1,118,229
341,803
%
Bed Bath & Beyond, Belk, Cinemark, Dick's Sporting Goods (8), former Dick's Sporting Goods, Dillard's, H&M, JC Penney, former Sears
CoolSprings Galleria (7)
Nashville, TN
50%
1,166,461
431,115
%
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%
807,342
285,089
%
Belk, H&M, JC Penney, Macy's, Rooms to Go, former Sears (9)
Dakota Square Mall
Minot, ND
1980/2012
100%
730,245
201,680
%
AMC Theatres, Barnes & Noble, JC Penney, Scheels, future Scheels (10), Sleep Inn & Suites, Target
East Towne Mall
Madison, WI
1971/2001
100%
801,252
211,963
%
Barnes & Noble, former Boston Store, Dick's Sporting Goods, Flix Brewhouse, former Gordman's, H&M, JC Penney, former Sears
Eastland Mall
Bloomington, IL
1967/2005
N/A
100%
732,651
247,509
%
former Bergner's, Kohl's, former Macy's, Planet Fitness, former Sears
Fayette Mall
Lexington, KY
1971/2001
100%
1,158,582
460,305
%
Dick's Sporting Goods, Dillard's, H&M, JC Penney, Macy's
Frontier Mall
Cheyenne, WY
100%
523,709
203,589
%
Former AMC Theatres, Dillard's, former Dillard's, Jax Outdoor Gear, JC Penney
Governor's Square (7)
Clarksville, TN
47.5%
682,528
238,506
%
AMC Theatres, Belk, Dick's Sporting Goods, Dillard's, JC Penney, Ross Dress for Less, partial former Sears
Malls:
Property / Location
Year of
Opening/
Acquisition
Year of
Most
Recent
Expansion
Our
Ownership
Total Center
SF (1)
Total
In-Line GLA (2)
In-Line
Sales per
Square
Foot (3)
Percentage
In-Line GLA
Leased (4)
Anchors & Junior
Anchors (5)
Hamilton Place
Chattanooga, TN
90%
1,160,687
331,066
%
Barnes & Noble, Belk for Men, Kids & Home, Belk for Women, Dave & Buster's, Dick's Sporting Goods, Dillard's for Men, Kids & Home, Dillard's for Women, former Forever 21, H&M, JC Penney
Hanes Mall
Winston-Salem, NC
1975/2001
100%
1,435,164
468,462
%
Belk, Dave & Buster's, Dillard's, Encore, H&M, JC Penney, future Truliant Federal Credit Union (11), future Novant Health (12)
Harford Mall
Bel Air, MD
1973/2003
100%
503,778
179,602
%
Encore, Macy's, future grocer (13)
Imperial Valley Mall
El Centro, CA
N/A
100%
762,735
214,095
%
Cinemark, Dillard's, JC Penney, Macy's, former Sears
Jefferson Mall
Louisville, KY
1978/2001
100%
783,572
225,011
%
Dillard's, H&M, JC Penney, Round1 Bowling & Amusement, Ross Dress for Less, former Sears
Kentucky Oaks Mall (7)
Paducah, KY
1982/2001
50%
775,503
287,244
%
Best Buy, Burlington, Dick's Sporting Goods, Dillard's, Dillard's Home Store, HomeGoods, JC Penney, Ross Dress for Less, Vertical Jump Park
Kirkwood Mall
Bismarck, ND
1970/2012
100%
819,114
215,250
%
H&M, I. Keating Furniture, JC Penney, Scheels, Target
Laurel Park Place
Livonia, MI
1989/2005
100%
491,215
198,071
%
Dunham Sports, Von Maur
Layton Hills Mall
Layton, UT
1980/2006
100%
482,120
212,674
%
Dick's Sporting Goods, Dillard's, JC Penney
Mall del Norte
Laredo, TX
1977/2004
100%
1,218,924
407,931
%
Former Beall's, Cinemark, Dillard's, Foot Locker, H&M, JC Penney, Macy's, Macy's Home Store, Main Event, former Sears, TruFit Athletic Club
Meridian Mall (14)
Lansing, MI
1969/1998
100%
946,008
267,081
%
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%
1,035,802
286,685
%
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%
985,080
446,583
%
Barnes & Noble, Cinemark, Dick's Sporting Goods, Forever 21, H&M, JC Penney, Macy's
Northgate Mall
Chattanooga, TN
1972/2011
100%
660,791
181,158
%
Belk, Burlington, former JC Penney, former Sears
Northpark Mall
Joplin, MO
1972/2004
100%
896,044
278,320
%
Dunham's Sports, H&M, JC Penney, Jo-Ann Fabrics & Crafts, former Macy's Children's & Home, former Macy's Women & Men's, former Sears, T.J. Maxx, Tilt, Vintage Stock
Malls:
Property / Location
Year of
Opening/
Acquisition
Year of
Most
Recent
Expansion
Our
Ownership
Total Center
SF (1)
Total
In-Line GLA (2)
In-Line
Sales per
Square
Foot (3)
Percentage
In-Line GLA
Leased (4)
Anchors & Junior
Anchors (5)
Northwoods Mall
North Charleston, SC
1972/2001
100%
748,277
256,029
%
Belk, Books-A-Million, Burlington, Dillard's, JC Penney, Planet Fitness
Oak Park Mall (7)
Overland Park, KS
1974/2005
50%
1,518,447
431,277
%
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%
538,641
161,546
%
Belk, JC Penney, former Macy's, former Sears
Parkway Place
Huntsville, AL
1957/1998
100%
647,808
278,630
%
Belk, Dillard's
Post Oak Mall
College Station, TX
100%
788,189
300,664
%
Former Beall's, Conn's Home Plus, Dillard's Men & Home, Dillard's Women & Children, Encore, JC Penney, former Macy's, former Sears
Richland Mall
Waco, TX
1980/2002
100%
693,448
191,870
%
Dick's Sporting Goods, Dillard's for Men, Kids & Home, Dillard's for Women, former Dillard's for Women, JC Penney, Tilt Studio
South County Center
St. Louis, MO
1963/2007
100%
979,378
267,155
%
Dick's Sporting Goods, Dillard's, JC Penney, Macy's, former Sears
Southpark Mall
Colonial Heights, VA
1989/2003
100%
676,544
213,137
%
Dick's Sporting Goods, H&M, JC Penney, Macy's, Regal Cinemas, former Sears
St. Clair Square (15)
Fairview Heights, IL
1974/1996
100%
1,067,760
290,505
%
Dillard's, JC Penney, Macy's, former Sears
Stroud Mall (16)
Stroudsburg, PA
1977/1998
100%
414,441
136,114
%
Cinemark, EFO Furniture Outlet, JC Penney, ShopRite, Vision Church
Sunrise Mall
Brownsville, TX
1979/2003
100%
796,721
234,644
%
Former Beall's, Cinemark, Dick's Sporting Goods, Dillard's, JC Penney, future Main Event (17), TruFit, Wave Fashion
Turtle Creek Mall
Hattiesburg, MS
100%
844,980
191,593
%
At Home, Belk, Dillard's, JC Penney, former Sears, Southwest Theaters, former Stein Mart
Valley View Mall
Roanoke, VA
1985/2003
100%
863,447
336,687
%
Barnes & Noble, Belk, JC Penney, Macy's, Macy's for Home & Children, former Sears
Volusia Mall
Daytona Beach, FL
1974/2004
100%
1,060,261
253,485
%
Dillard's for Men & Home, Dillard's for Women, Dillard's for Juniors & Children, H&M, JC Penney, former Macy's, former Sears
West County Center (7)
Des Peres, MO
1969/2007
50%
1,198,562
384,612
%
Barnes & Noble, Dick's Sporting Goods, Forever 21, H&M, JC Penney, Macy's, Nordstrom
West Towne Mall
Madison, WI
1970/2001
100%
772,957
281,835
%
Dave & Buster's, Dick's Sporting Goods, Forever 21, Hobby Lobby, JC Penney, Total Wine & More, Urban Air Adventure Park, future Von Maur (18)
Malls:
Property / Location
Year of
Opening/
Acquisition
Year of
Most
Recent
Expansion
Our
Ownership
Total Center
SF (1)
Total
In-Line GLA (2)
In-Line
Sales per
Square
Foot (3)
Percentage
In-Line GLA
Leased (4)
Anchors & Junior
Anchors (5)
WestGate Mall (19)
Spartanburg, SC
1975/1995
100%
931,486
221,727
%
Bed Bath & Beyond, Belk, former Dick's Sporting Goods, Dillard's, H&M, JC Penney, former Regal Cinemas, former Sears
Westmoreland Mall
Greensburg, PA
1977/2002
100%
976,675
286,944
%
H&M, JC Penney, Live! Casino Pittsburgh, Macy's, Macy's Home Store, Old Navy, former Sears
York Galleria
York, PA
1989/1999
N/A
100%
756,707
225,858
%
Boscov's, Gold's Gym H&M, Hollywood Casino, Marshalls, Life Storage
Total Malls
39,850,438
12,728,398
$
%
Lifestyle Centers:
Property / Location
Year of
Opening/
Acquisition
Year of
Most
Recent
Expansion
Our
Ownership
Total Center
SF (1)
Total
In-Line GLA (2)
In-Line
Sales per
Square
Foot (3)
Percentage
In-Line GLA
Leased (4)
Anchors & Junior
Anchors (5)
Alamance Crossing
Burlington, NC
100%
891,912
242,382
$
%
Barnes & Noble, Belk, BJ's Wholesale Club, Carousel Cinemas, Dick's Sporting Goods, Dillard's, Hobby Lobby, JC Penney, Kohl's
Friendly Center and The Shops at Friendly (7)
Greensboro, NC
1957/ 2006/ 2007
50%
1,368,270
604,129
%
Barnes & Noble, Belk, Belk Home Store, Harris Teeter, Macy's, O2 Fitness, Regal Cinemas, REI, Sears, Truist, Whole Foods
Mayfaire Town Center
Wilmington, NC
2004/2015
100%
656,906
337,525
%
Barnes & Noble, Belk, Flip N Fly, The Fresh Market, H&M, Michaels, Regal Cinemas
Pearland Town Center (20)
Pearland, TX
N/A
100%
712,020
306,433
%
Barnes & Noble, Dick's Sporting Goods, Dillard's, Hospital Corporation of America, Macy's
Southaven Towne Center
Southaven, MS
100%
607,529
184,433
%
Bed Bath & Beyond, Dillard's, former Gordman's, JC Penney, Sportsman's Warehouse, Urban Air Adventure Park
Total Lifestyle Centers
4,236,637
1,674,902
$
%
Outlet Centers:
Property / Location
Year of
Opening/
Acquisition
Year of
Most
Recent
Expansion
Our
Ownership
Total Center
SF (1)
Total
In-Line GLA (2)
In-Line
Sales per
Square
Foot (3)
Percentage
In-Line GLA
Leased (4)
Anchors & Junior
Anchors (5)
The Outlet Shoppes at Atlanta (7)
Woodstock, GA
50%
405,146
380,339
%
Saks Fifth Ave OFF 5TH
The Outlet Shoppes at El Paso (7)
El Paso, TX
2007/2012
50%
433,046
411,007
%
H&M
The Outlet Shoppes of the Bluegrass (7)
Simpsonville, KY
65%
428,072
381,372
%
H&M, Restoration Hardware Outlet
Total Outlet Centers
1,266,264
1,172,718
$
%
Total Malls, Lifestyle Centers and Outlet Centers
45,353,339
15,576,018
$
%
Excluded Properties (21)
Malls:
Property / Location
Year of
Opening/
Acquisition
Year of
Most
Recent
Expansion
Our
Ownership
Total Center
SF (1)
Total
In-Line GLA (2)
In-Line
Sales per
Square
Foot (3)
Percentage
In-Line GLA
Leased (4)
Anchors & Junior
Anchors (5)
Asheville Mall
Asheville, NC
1972/1998
100%
973,371
265,467
N/A
N/A
Barnes & Noble, Belk, Dillard's for Men, Children & Home, Dillard's for Women, H&M, JC Penney, former Sears
EastGate Mall
Cincinnati, OH
1980/2003
100%
837,554
256,951
N/A
N/A
Dillard's Clearance, JC Penney, Kohl's, former Sears
Greenbrier Mall
Chesapeake, VA
1981/2004
100%
897,040
269,798
N/A
N/A
Dillard's, former Gameworks, H&M, JC Penney, Macy's, former Sears
Parkdale Mall
Beaumont, TX
1972/2001
100%
1,118,199
293,916
N/A
N/A
Former Ashley HomeStore, former Beall's, Dillard's, Forever 21, H&M, JC Penney, former Macy's, former Sears, 2nd & Charles, Tilt
Total Malls
3,826,164
1,086,132
Outlet Centers:
Property / Location
Year of
Opening/
Acquisition
Year of
Most
Recent
Expansion
Our
Ownership
Total Center
SF (1)
Total
In-Line GLA (2)
In-Line
Sales per
Square
Foot (3)
Percentage
In-Line GLA
Leased (4)
Anchors & Junior
Anchors (5)
The Outlet Shoppes at Gettysburg
Gettysburg, PA
2000/2012
N/A
50%
249,937
249,937
N/A
N/A
None
The Outlet Shoppes at Laredo
Laredo, TX
N/A
65%
359,213
316,466
N/A
N/A
H&M, Nike Factory Store
Total Outlet Centers
609,150
566,403
Total Excluded Properties
4,435,314
1,652,535
(1)
Total center square footage includes square footage of attached shops, immediately adjacent Anchor and Junior Anchor locations and leased freestanding locations of the property.
(2)
Excludes tenants 20,000 square feet and over.
(3)
Totals represent weighted averages for reporting tenants of 10,000 square feet or less.
(4)
Includes tenants under 20,000 square feet with leases in effect as of December 31, 2021.
(5)
Anchors and Junior Anchors listed are immediately adjacent to the Property or are in freestanding locations immediately adjacent to the Property.
(6)
Brookfield Square - The annual ground rent for 2021 was $91.
(7)
This Property is owned in an unconsolidated joint venture.
(8)
Coastal Grand - Dick’s Sporting Goods relocated to a new location in 2020.
(9)
Cross Creek Mall - The former Sears is under contract to be sold to Main Event.
(10)
Dakota Square Mall - Scheels purchased the former Sears. Construction is in process.
(11)
Hanes Mall - The former Macy’s was purchased by Truliant Federal Credit Union, which has plans to redevelop this space for future office and retail with the construction start and opening to be determined.
(12)
Hanes Mall - The former Sears was purchased by Novant Health, which has indicated plans to redevelop this space for future medical office with the construction start and opening to be determined.
(13)
Harford Mall - The former Sears sold and is under construction for a future grocer.
(14)
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.
(15)
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.
(16)
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.
(17)
Sunrise Mall - Main Event under construction in the former Sears space and is expected to open in 2022. TruFit opened in the former Sears space in 2021.
(18)
West Towne Mall - Von Maur is under construction and will open in 2022 in the former Boston Store space.
(19)
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.
(20)
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. In 2021, we sold The Residences at Pearland Town Center, which was the residential portion.
(21)
We exclude 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 (“Excluded Properties”). Operational metrics are not reported for Excluded Properties.
Inline and Adjacent Freestanding Stores
The Malls, Lifestyle Centers and Outlet Centers have approximately 4,731 inline and adjacent freestanding stores. National and regional retail chains (excluding local franchises) lease approximately 68.7% of the occupied inline and adjacent freestanding store GLA. Although inline and adjacent freestanding stores occupy only 34.5% of the total Mall, Lifestyle Center and Outlet Center GLA (the remaining 65.5% is occupied by Anchors and Junior Anchors and a small percentage is vacant), the Malls, Lifestyle Centers and Outlet Centers received 84.6% of their total revenues from inline and adjacent freestanding stores for the year ended December 31, 2021.
Mall, Lifestyle Center and Outlet Center Lease Expirations
The following table summarizes the scheduled lease expirations for inline and adjacent freestanding stores as of December 31, 2021:
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)
$
57,554,970
1,724,479
$
33.38
13.7
%
15.4
%
102,055,954
2,797,417
36.48
24.3
%
25.1
%
68,890,210
1,969,147
34.98
16.4
%
17.6
%
52,567,792
1,217,737
43.17
12.5
%
10.9
%
51,867,514
1,254,523
41.34
12.3
%
11.2
%
35,979,287
852,612
42.20
8.6
%
7.6
%
21,407,366
551,116
38.84
5.1
%
4.9
%
14,187,603
418,350
33.91
3.4
%
3.7
%
10,161,696
246,263
41.26
2.4
%
2.2
%
5,835,890
132,148
44.16
1.4
%
1.2
%
(1)
Total annualized gross rent, including recoverable common area expenses and real estate taxes, in effect at December 31, 2021 for expiring leases that were executed as of December 31, 2021. Based on 100% of the applicable amounts and has not been adjusted for our ownership share.
(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, 2021.
(3)
Total GLA of expiring leases as a percentage of the total GLA of all leases that were executed as of December 31, 2021.
See page 58 for a comparison between rents on leases that expired in the current reporting period compared to rents on new and renewal leases executed in 2021.
Tenant Occupancy Costs
Occupancy cost is a tenant’s total cost of occupying its space, divided by its sales. Inline and adjacent freestanding store sales represent total sales amounts received from reporting tenants with space of less than 10,000 square feet.
The following table summarizes tenant occupancy costs as a percentage of total inline and adjacent freestanding store sales for reporting tenants less than 10,000 square feet, excluding license agreements, for each of the past three years:
Year Ended December 31, (1)
In-line store sales (in millions)
$
3,802
N/A (2)
$
4,386
In-line tenant occupancy costs
10.65
%
N/A (2)
12.07
%
(1)
In certain cases, we own less than a 100% interest in the Mall, Lifestyle Center or Outlet Center. The information in this table is based on 100% of the applicable amounts and has not been adjusted for our ownership share.
(2)
Due to the temporary property and store closures that occurred, we do not believe occupancy cost to be an accurate measure for the year ended December 31, 2020.
Debt on Malls, Lifestyle Centers and Outlet Centers
Please see the table entitled “Mortgage Loans Outstanding at December 31, 2021” included herein for information regarding any liens or encumbrances related to our Malls, Lifestyle Centers and Outlet Centers.
Other Property Types
Other property types include the following three categories:
(1)
Open-Air Centers - Designed to attract local and regional area customers and are typically anchored by a combination of big box retailers, supermarkets or value-priced stores that attract shoppers to each center’s small shops. The tenants at our Open-Air Centers typically offer necessities, value-oriented and convenience merchandise.
(2)
Other - Office Buildings and Hotel.
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, 2021:
Open-Air Centers:
Property / Location
Year of
Opening/ Most
Recent
Expansion
Company's
Ownership
Total
Center
SF (1)
Total
Leasable
GLA (2)
Percentage
GLA
Occupied (3)
Anchors &
Junior
Anchors
Ambassador Town Center (4)
Lafayette, LA
65%
419,301
265,328
97%
Costco (5), Dick's Sporting Goods, Marshalls, Nordstrom Rack
Annex at Monroeville
Pittsburgh, PA
100%
185,517
185,517
100%
Dick's Sporting Goods, Steel City Indoor Karting
Coastal Grand Crossing (4)
Myrtle Beach, SC
50%
37,234
37,234
84%
PetSmart
CoolSprings Crossing
Nashville, TN
100%
366,451
78,810
90%
American Signature Furniture (5), Electronic Express (6), Gabe's (6), Target (5), Urban Air Adventure Park (6)
Courtyard at Hickory Hollow
Nashville, TN
100%
68,468
68,468
97%
AMC Theatres
Fremaux Town Center (4)
Slidell, LA
2014/2015
65%
616,339
488,339
85%
Best Buy, Dick's Sporting Goods, Dillard's (5), Kohl's, LA Fitness, Michaels, T.J. Maxx
Frontier Square
Cheyenne, WY
100%
186,552
16,527
100%
Ross Dress for Less (6), Target (5), T.J. Maxx (6)
Governor's Square Plaza (4)
Clarksville, TN
1985/1988
50%
168,373
71,803
100%
Bed Bath & Beyond, Jo-Ann Fabrics & Crafts, Target (5)
Gunbarrel Pointe
Chattanooga, TN
100%
273,913
147,913
100%
Kohl's, Target (5), Whole Foods
Hamilton Corner
Chattanooga, TN
1990/2005
90%
67,310
67,310
100%
None
Hamilton Crossing
Chattanooga, TN
1987/2005
92%
192,074
98,961
100%
Electronic Express (5), HomeGoods (6), Michaels (6), T.J. Maxx
Open-Air Centers:
Property / Location
Year of
Opening/ Most
Recent
Expansion
Company's
Ownership
Total
Center
SF (1)
Total
Leasable
GLA (2)
Percentage
GLA
Occupied (3)
Anchors &
Junior
Anchors
Hammock Landing (4)
West Melbourne, FL
2009/2015
50%
568,968
345,001
98%
Academy Sports + Outdoors, AMC Theatres, HomeGoods, Kohl's (5), Marshalls, Michaels, Ross Dress for Less, Target (5)
Harford Annex
Bel Air, MD
1973/2003
100%
107,656
107,656
100%
Best Buy, Office Depot, PetSmart
The Landing at Arbor Place
Atlanta (Douglasville), GA
100%
162,960
113,719
81%
Ben's Furniture and Antiques, Ollie's Bargain Outlet, One Life Fitness (5)
Layton Hills Convenience Center
Layton, UT
100%
92,942
92,942
91%
Bed Bath & Beyond
Layton Hills Plaza
Layton, UT
100%
18,836
18,836
100%
None
Parkdale Crossing
Beaumont, TX
100%
88,064
88,064
N/A
Barnes & Noble
The Pavilion at Port Orange (4)
Port Orange, FL
50%
398,030
398,030
92%
Belk, HomeGoods, Marshalls, Michaels, Regal Cinemas
The Plaza at Fayette
Lexington, KY
100%
215,745
215,745
87%
Cinemark, Sports Center
The Promenade
D'Iberville, MS
2009/2014
85%
621,448
404,488
100%
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
100%
230,239
230,239
98%
Academy Sports + Outdoors, Publix, Ross Dress for Less
The Shoppes at Hamilton Place
Chattanooga, TN
92%
132,009
132,009
95%
Bed Bath & Beyond, Marshalls, Ross Dress for Less
The Shoppes at St. Clair Square
Fairview Heights, IL
100%
84,383
84,383
95%
Barnes & Noble
Sunrise Commons
Brownsville, TX
100%
205,571
104,126
91%
former Kmart (6), Marshalls, Ross Dress for Less
The Terrace
Chattanooga, TN
92%
158,175
158,175
100%
Academy Sports + Outdoors, Party City
West Towne Crossing
Madison, WI
100%
460,875
168,978
98%
Barnes & Noble, Best Buy, Kohl's (5), Metcalf's Markets (5), Nordstrom Rack, Office Max (6), former Shopko (5), former Stein Mart (6)
WestGate Crossing
Spartanburg, SC
1985/1999
100%
158,262
158,262
98%
Big Air Trampoline Park, Hamricks, Jo-Ann Fabrics & Crafts
Westmoreland Crossing
Greensburg, PA
100%
278,995
278,995
97%
AMC Theatres, Dick's Sporting Goods, Levin Furniture, Michaels, T.J. Maxx
York Town Center (4)
York, PA
50%
297,490
247,490
97%
Bed Bath & Beyond, Best Buy, Christmas Tree Shops, Dick's Sporting Goods (5), Ross Dress for Less, Staples
Total Open-Air Centers
6,862,180
4,873,348
95%
Other:
Property / Location
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 Office
Chesapeake, VA
100%
50,665
50,665
100%
None
Aloft Hotel
Chattanooga, TN
50%
89,674
N/A
100%
None
CBL Center (7)
Chattanooga, TN
92%
130,736
131,354
77%
None
CBL Center II (7)
Chattanooga, TN
92%
74,863
74,941
100%
None
Pearland Office
Pearland, TX
100%
66,915
66,915
100%
None
Total Other
412,853
323,875
91%
Total Other Property Types
7,283,819
5,206,510
95%
(1)
Total center square footage includes square footage of attached shops, attached and immediately adjacent Anchors and Junior Anchors and leased 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, 2021.
(4)
This Property is owned in an unconsolidated joint venture.
(5)
Owned by the tenant.
(6)
Owned by a third party.
(7)
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, 2021, we occupied 45.3% of the total square footage of the buildings.
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, 2021:
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)
$
7,564,917
490,079
$
15.44
8.3
%
9.5
%
11,162,851
519,613
21.48
12.2
%
10.1
%
13,632,185
794,895
17.15
14.9
%
15.5
%
19,406,298
1,102,142
17.61
21.2
%
21.5
%
14,946,758
789,808
18.92
16.3
%
15.4
%
10,251,935
570,920
17.96
11.2
%
11.1
%
4,974,326
319,423
15.57
5.4
%
6.2
%
3,337,742
172,287
19.37
3.6
%
3.4
%
3,990,893
223,955
17.82
4.4
%
4.4
%
2,225,645
153,952
14.46
2.4
%
3.0
%
(1)
Total annualized gross rent, including recoverable common area expenses and real estate taxes, in effect at December 31, 2021 for expiring leases that were executed as of December 31, 2021. Based on 100% of the applicable amounts and has not been adjusted for our ownership share.
(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, 2021.
(3)
Total GLA of expiring leases as a percentage of the total GLA of all leases that were executed as of December 31, 2021.
Debt on Other Property Types
Please see the table entitled “Mortgage Loans Outstanding at December 31, 2021” 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, over the past several years the number of traditional department store anchors have declined, 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 tenants, including retailers whose merchandise appeals to a broad range of shoppers, and non-retail uses. Anchors play a significant role in generating customer traffic and creating a desirable location for the Property's tenants.
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 revenues from Anchors and Junior Anchors accounted for 15.4% of the total revenues from our Properties in 2021. 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 2021, the following Anchors and Junior Anchors were added to our Properties, as listed below:
Name
Property
Location
Galleria Furniture and Mattress
CherryVale Mall
Rockford, IL
Hobby Lobby (Owned by others)
West Towne Mall
Madison, WI
Hollywood Casino
York Galleria
York, PA
Hospital Corporation of America
Pearland Town Center
Beaumont, TX
Rooms To Go (Owned by others)
Cross Creek Mall
Fayetteville, NC
Sports Center
The Plaza at Fayette Mall
Lexington, KY
Tilt
Richland Mall
Waco, TX
TruFit (Owned by others)
Sunrise Mall
Brownsville, TX
Vision Church
Stroud Mall
Stroudsburg, PA
As of December 31, 2021, the Properties had a total of 442 Anchors and Junior Anchors, including 52 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, 2021 is as follows:
Number of Stores
Gross Leasable Area
Anchor/Junior Anchor
Leased
(Owned
by CBL)
Owned by Others
Ground
Leased
(Owned by CBL)
Total
Leased
(Owned
by
CBL)
Owned
by
Others
Ground
Leased
(Owned
by
CBL)
Total Gross Leased Area
JC Penney (1)
1,818,743
2,565,562
586,030
4,970,335
Dillard's
116,376
4,196,709
659,763
4,972,848
Macy's
905,442
1,943,839
658,388
3,507,669
Belk
430,017
1,651,861
397,480
2,479,358
Sears
-
-
-
-
147,766
147,766
Academy Sports + Outdoors
-
-
199,091
-
-
199,091
AMC Theatres
-
160,295
-
56,255
216,550
American Signature Furniture
-
-
-
61,620
-
61,620
Ashley HomeStore
-
-
20,000
-
-
20,000
At Home
-
-
-
124,700
-
124,700
Barnes & Noble
-
-
460,805
-
-
460,805
Bed Bath & Beyond Inc.:
Bed Bath & Beyond
-
-
219,940
-
-
219,940
Christmas Tree Shops
-
-
33,992
-
-
33,992
Bed Bath & Beyond Inc.
Subtotal
-
-
253,932
-
-
253,932
Ben's Furniture and Antiques
-
-
35,895
-
-
35,895
Best Buy
-
182,485
-
45,070
227,555
Big Air Trampoline Park
-
-
33,938
-
-
33,938
Number of Stores
Gross Leasable Area
Anchor/Junior Anchor
Leased
(Owned
by CBL)
Owned by Others
Ground
Leased
(Owned by CBL)
Total
Leased
(Owned
by
CBL)
Owned
by
Others
Ground
Leased
(Owned
by
CBL)
Total Gross Leased Area
BJ's Wholesale Club
-
-
85,188
-
-
85,188
Books-A-Million
-
-
20,642
-
-
20,642
Boscov's (1)
-
-
-
150,000
-
150,000
Burlington (2)
-
63,013
94,049
-
157,062
Carousel Cinemas
-
-
52,000
-
-
52,000
Cinemark
-
-
382,506
-
-
382,506
Conn's Home Plus (1)
-
-
-
38,312
-
38,312
Costco
-
-
-
153,973
-
153,973
Dave & Buster's (2)
-
61,316
26,509
-
87,825
Dick's Sporting Goods Inc.:
Dick's Sporting Goods
1,255,378
50,000
80,515
1,385,893
Dick's Warehouse
-
-
77,117
-
-
77,117
Dick's Sporting Goods Inc.
Subtotal
1,332,495
50,000
80,515
1,463,010
Dunham's Sports
-
-
125,551
-
-
125,551
EFO Furniture & Mattress Outlet
-
-
43,171
-
-
43,171
Electronic Express (1)
-
-
-
87,573
-
87,573
Encore
-
-
76,096
-
-
76,096
Flip N Fly
-
-
27,972
-
-
27,972
Flix Brewhouse
-
-
39,150
-
-
39,150
Foot Locker
-
-
22,847
-
-
22,847
Forever 21
-
-
133,142
-
-
133,142
The Fresh Market
-
-
21,442
-
-
21,442
Gabe's (1)
-
-
-
29,596
-
29,596
Galleria Furniture and Mattress
-
-
128,330
-
-
128,330
Gold's Gym
-
-
30,664
-
-
30,664
H&M
-
-
575,062
-
-
575,062
Hamrick's
-
-
40,000
-
-
40,000
Harris Teeter
-
-
-
-
72,757
72,757
High Caliber Karting
-
-
100,683
-
-
100,683
Hobby Lobby (2)
-
52,500
61,659
-
114,159
Hollywood Casino
-
-
79,500
-
-
79,500
Hospital Corporation of America
-
-
48,000
-
-
48,000
I. Keating Furniture
-
-
103,994
-
-
103,994
Jax Outdoor Gear (1)
-
-
-
83,055
-
83,055
Jo-Ann Fabrics & Crafts
-
-
73,738
-
-
73,738
Kings Dining & Entertainment
-
-
22,678
-
-
22,678
Kohl's
142,205
312,731
83,000
537,936
LA Fitness
-
-
41,000
-
-
41,000
Launch Trampoline Park
-
-
31,989
-
-
31,989
Levin Furniture
-
-
55,314
-
-
55,314
Live! Casino Pittsburgh
-
-
129,552
-
-
129,552
LIVE Ventures, Inc.:
V-Stock
-
-
23,058
-
-
23,058
Vintage Stock
-
-
46,108
-
-
46,108
LIVE Ventures, Inc. Subtotal
-
-
69,166
-
-
69,166
Main Event
-
-
61,844
-
-
61,844
Marcus Theatres
-
-
57,500
-
-
57,500
Metcalfe's Market (1)
-
-
-
67,365
-
67,365
Michaels (1)
-
132,595
23,645
-
156,240
Movie Tavern by Marcus
-
-
40,585
-
-
40,585
Nickels and Dimes, Inc.:
Tilt
-
-
22,484
-
-
22,484
Tilt Studio
-
-
163,949
-
-
163,949
Nickels and Dimes, Inc. Subtotal
-
-
186,433
-
-
186,433
Number of Stores
Gross Leasable Area
Anchor/Junior Anchor
Leased
(Owned
by CBL)
Owned by Others
Ground
Leased
(Owned by CBL)
Total
Leased
(Owned
by
CBL)
Owned
by
Others
Ground
Leased
(Owned
by
CBL)
Total Gross Leased Area
Nordstrom
-
-
-
-
385,000
385,000
Nordstrom Rack
-
-
56,053
-
-
56,053
O2 Fitness
-
-
27,048
-
-
27,048
Office Depot
-
-
23,425
-
-
23,425
OfficeMax (1)
-
-
-
24,606
-
24,606
Old Navy
-
-
20,257
-
-
20,257
Ollie's Bargain Outlet
-
-
28,446
-
-
28,446
One Life Fitness (1)
-
-
-
49,241
-
49,241
Party City
-
-
20,841
-
-
20,841
PetSmart
-
-
46,248
-
-
46,248
Planet Fitness
-
-
63,509
-
-
63,509
Publix
-
-
45,600
-
-
45,600
Regal Cinemas
188,365
57,854
60,400
306,619
REI
-
-
24,427
-
-
24,427
Restoration Hardware Outlet
-
-
24,558
-
-
24,558
Rooms To Go
-
-
-
45,000
-
45,000
Ross Dress for Less (1)(2)
-
215,747
70,981
-
286,728
Round1 Bowling & Amusement
-
-
50,000
-
-
50,000
Saks Fifth Avenue OFF 5TH
-
-
24,807
-
-
24,807
Scheel's
-
-
200,536
-
-
200,536
Schuler Books & Music
-
-
24,116
-
-
24,116
ShopRite
-
-
87,381
-
-
87,381
Sleep Inn & Suites
-
-
-
-
123,506
123,506
Southwest Theaters
-
-
29,830
-
-
29,830
Sports Center
-
-
60,000
-
-
60,000
Sportsman's Warehouse (1)
-
-
-
48,171
-
48,171
Staples
-
-
20,388
-
-
20,388
Steel City Indoor Karting
-
-
64,135
-
-
64,135
Target
-
-
-
948,730
-
948,730
The TJX Companies, Inc.:
HomeGoods (1)
-
97,277
26,355
-
123,632
Marshalls
-
-
207,050
-
-
207,050
T.J. Maxx (1)
-
109,031
28,081
-
137,112
The TJX Companies, Inc. Subtotal
-
413,358
54,436
-
467,794
Total Wine and More (2)
-
-
-
28,350
-
28,350
TruFit Athletic Club
-
45,179
43,145
-
88,324
Truist
-
-
-
-
60,000
60,000
Urban Air Adventure Park (1)
-
82,498
30,404
-
112,902
Vertical Trampoline Park
-
-
24,972
-
-
24,972
Vision Church
-
-
43,632
-
-
43,632
Von Maur
-
-
-
150,000
-
150,000
Wave Fashion
-
-
27,978
-
-
27,978
WhirlyBall
-
-
43,440
-
-
43,440
Whole Foods (1)
-
26,841
-
34,320
61,161
Vacant Anchor/Junior Anchor:
Vacant - former AMC Theaters (Carmike Cinema)
-
-
31,119
-
-
31,119
Vacant - former Bealls
-
-
111,209
-
-
111,209
Vacant - former Bed Bath & Beyond
-
-
62,160
-
-
62,160
Vacant - former Bergner's
-
-
131,616
-
-
131,616
Vacant - former Boston Store (1)
-
-
-
354,205
-
354,205
Vacant - former Dick's Sporting Goods
-
-
87,065
-
-
87,065
Vacant - former Dillard's (1)
-
-
-
159,142
-
159,142
Vacant - former Forever 21 (3)
-
-
-
57,500
-
57,500
Number of Stores
Gross Leasable Area
Anchor/Junior Anchor
Leased
(Owned
by CBL)
Owned by Others
Ground
Leased
(Owned by CBL)
Total
Leased
(Owned
by
CBL)
Owned
by
Others
Ground
Leased
(Owned
by
CBL)
Total Gross Leased Area
Vacant - former Gordman's
-
-
107,303
-
-
107,303
Vacant - former JC Penney (1)
-
-
-
173,124
-
173,124
Vacant - former Macy's (1)(4)
-
240,015
467,649
-
707,664
Vacant - former Regal Cinemas
-
-
23,360
-
-
23,360
Vacant - former Sears (1)(2)(5)(6)(7)
784,212
1,623,734
476,059
2,884,005
Vacant - former Shopko
-
-
-
97,773
-
97,773
Vacant - former Stein Mart (1)
-
30,463
21,200
-
51,663
Vacant - former Younkers
-
-
93,597
-
-
93,597
Current Developments:
Future grocer (8)
-
-
161,358
-
-
161,358
Hobby Lobby/ Mardel Christian (1)(9)
-
-
-
101,445
-
101,445
Life Storage (1)(10)
-
-
-
131,915
-
131,915
Main Event (1)(11)
-
-
64,103
-
64,103
Novant Health
-
-
-
174,643
-
174,643
Scheels
-
-
81,296
-
-
81,296
Truliant Federal Credit Union
-
-
-
150,447
-
150,447
Von Maur (1)(12)
-
-
-
82,377
-
82,377
Total Anchors/Junior Anchors
13,305,269
16,932,933
3,926,309
34,164,511
(1)
The following Anchors/Junior Anchors are owned by third parties: the former 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, Conn’s Home Plus at Post Oak Mall, the former Dillard’s for Women at Richland Mall, Electronic Express at Hamilton Crossing, Gabe’s at CoolSprings Crossing, 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, the former Macy’s at Hanes Mall, Metcalfe’s Market at West Towne Crossing, Michaels at Hamilton Crossing, Michaels at Westmoreland Crossing, OfficeMax at West Towne Crossing, One Life Fitness at The Landing at Arbor Place, Ross Dress for Less at Frontier Square, the former Sears at Arbor Place, the former Sears at Hanes Mall, the former Sears at Harford Mall, the former Sears at Northgate Mall, the former Sears at Post Oak Mall, the former Sears at Sunrise Mall, the former Sears at Volusia Mall, the former Sears at WestGate Mall, 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, Urban Air Adventure Park at CoolSprings Crossing 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, Hobby Lobby at West Towne Mall, Ross Dress for Less at Kentucky Oaks Mall, 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 leased by Belk to Forever 21 and is now vacant.
(4)
The former Macy’s space at Hanes Mall will be redeveloped for future medical office space (owned by others).
(5)
The former Sears space at Hanes Mall will be redeveloped for future office and retail space (owned by others).
(6)
The former Sears space at Dakota Square Mall was purchased by Scheels for expansion. Under construction and expected to open in 2022.
(7)
The former Sears space at Cross Creek Mall is under contract to be sold to Main Event.
(8)
The former Sears at Harford Mall was sold and is under construction for a future grocer.
(9)
The former Kmart space at Sunrise Common will be redeveloped into Hobby Lobby/Mardel Christian (owned by others).
(10)
The former Bon-Ton space at York Galleria will be redeveloped into Life Storage (owned by others).
(11)
A portion of the former Sears space at Sunrise Mall will be redeveloped into a Main Event (owned by others).
(12)
A portion of the former Boston Store at West Towne Mall is being redeveloped into a Von Maur (owned by others).
Mortgage Loans Outstanding at December 31, 2021 (in thousands):
Property
Our
Ownership
Interest
Stated
Interest
Rate
Principal
Balance as
of
12/31/21 (1)
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:
Arbor Place
%
5.10
%
$
101,771
$
3,078
May-22
-
$
100,861
Open
(4)
(5)
Brookfield Square Anchor Redevelopment
%
3.00
%
27,461
1,810
Dec-23
Dec-24
25,661
Open
Cross Creek Mall
%
4.54
%
102,264
1,947
Jan-22
-
101,500
Open
(6)
Fayette Mall
%
5.42
%
135,134
13,527
May-21
-
135,134
Open
(7)
Hamilton Place
%
4.36
%
96,244
6,400
Jun-26
-
85,535
Open
Jefferson Mall
%
4.75
%
58,654
4,494
Jun-26
-
50,464
Open
(4)
(5)
Northwoods Mall
%
5.08
%
60,709
1,449
Apr-22
-
60,292
Open
(4)
(5)
Southpark Mall
%
4.85
%
55,567
1,996
Jun-22
-
54,924
Open
(4)
(5)
Volusia Mall
%
4.56
%
43,641
4,608
May-24
-
37,207
Open
WestGate Mall
%
4.99
%
30,322
1,525
Jul-22
-
29,670
Open
711,767
40,834
681,248
Lifestyle Center
Alamance Crossing
%
5.83
%
42,522
3,589
Jul-21
-
42,522
Open
(4)
(5)
Lender:
Greenbrier Mall
%
5.41
%
61,647
3,082
Dec-19
-
61,647
Open
(8)
The Outlet Shoppes at Gettysburg
%
4.80
%
35,804
2,422
Oct-25
-
32,927
Open
(4)
(5)
The Outlet Shoppes at Laredo
%
3.35
%
39,450
2,649
Jun-23
Jun-24
37,650
Open
(9)
Parkdale Mall & Crossing
%
5.85
%
69,460
7,241
Mar-21
-
69,460
Open
(4)
(5)
206,361
15,394
201,684
Outparcel and other:
CBL Center
%
5.00
%
15,320
Jun-22
-
14,949
Open
(10)
Open-Air Center
Hamilton Crossing & Expansion
%
5.99
%
7,868
Apr-21
-
7,868
Open
(5)
Corporate Debt:
Exit Credit Agreement
%
3.75
%
880,091
77,500
Nov-25
Nov-26/Nov-27
710,830
Open
(11)
7.0% Exchangeable Senior Secured Notes
%
7.00
%
150,000
10,500
Nov-28
-
150,000
Open
(12)
10.0% Senior Secured Notes
%
10.00
%
395,000
39,500
Nov-29
-
395,000
Open
(13)
1,425,091
127,500
1,255,830
Total Consolidated Debt
$
2,408,929
$
188,886
$
2,204,101
Unconsolidated Debt
Malls:
Coastal Grand
%
4.09
%
$
102,754
$
6,958
Aug-24
-
$
95,249
Open
(14)
Coastal Grand - Dick's Sporting Goods
%
5.05
%
6,949
Nov-24
-
6,652
Open
CoolSprings Galleria
%
4.84
%
146,013
9,803
May-28
-
125,774
Open
Oak Park Mall
%
3.97
%
262,971
15,630
Oct-25
-
247,061
Open
West County Center
%
3.40
%
166,335
9,729
Dec-22
-
162,270
Open
685,022
42,571
637,006
Lifestyle Centers:
Friendly Shopping Center
%
3.48
%
88,147
5,375
Apr-23
-
85,203
Open
The Shops at Friendly Center
%
3.34
%
60,000
2,004
Apr-23
-
60,000
Open
148,147
7,379
145,203
Outlet Centers:
The Outlet Shoppes at Atlanta
%
4.90
%
68,375
5,095
Nov-23
-
65,036
Open
The Outlet Shoppes at Atlanta - Phase II
%
3.00
%
4,471
Nov-23
-
4,221
Open
The Outlet Shoppes at El Paso
%
5.10
%
71,362
4,888
Oct-28
-
61,342
Open
Property
Our
Ownership
Interest
Stated
Interest
Rate
Principal
Balance as
of
12/31/21 (1)
Annual
Debt
Service (2)
Maturity
Date
Optional
Extended
Maturity
Date
Balloon
Payment
Due
on
Maturity (2)
Open to
Prepayment
Date (3)
Footnote
The Outlet Shoppes of the Bluegrass
%
4.05
%
66,765
4,464
Dec-24
-
61,316
Open
(14)
The Outlet Shoppes of the Bluegrass - Phase II
%
3.63
%
8,097
Oct-22
Apr-23
7,597
Open
219,070
15,540
199,512
Open-Air Centers:
Ambassador Town Center
%
3.22
%
41,310
2,347
Jun-23
-
39,189
Open
(15)
Ambassador Town Center Infrastructure Improvements
%
3.74
%
8,250
1,204
Mar-25
-
3,235
Open
(9)
Fremaux Town Center
%
3.70
%
62,391
4,480
Jun-26
-
52,130
Open
Hammock Landing - Phase I
%
2.60
%
39,017
2,611
Feb-25
Feb-26
34,033
Open
Hammock Landing - Phase II
%
2.60
%
13,893
1,067
Feb-25
Feb-26
11,602
Open
The Pavilion at Port Orange
%
2.60
%
51,548
3,392
Feb-25
Feb-26
45,998
Open
The Shoppes at Eagle Point
%
2.85
%
33,884
1,971
Oct-22
-
32,885
Open
York Town Center
%
4.90
%
28,701
Feb-22
-
28,701
Open
(16)
York Town Center - Pier 1
%
2.85
%
1,106
Feb-22
-
1,102
Open
(16)
280,100
17,596
248,875
Outparcels and others:
Coastal Grand Outparcel
%
4.09
%
4,958
Aug-24
-
4,596
Open
(14)
Hamilton Place Aloft Hotel
%
2.55
%
16,800
Nov-24
-
15,871
Open
21,758
1,088
20,467
Lender:
Asheville Mall
%
5.80
%
62,121
-
Sep-21
-
62,121
Open
(17)
EastGate Mall
%
5.83
%
29,951
-
Apr-21
-
29,951
Open
(17)
92,072
-
92,072
Total Unconsolidated Debt
$
1,446,169
$
84,174
$
1,343,135
Total Consolidated and
Unconsolidated Debt
$
3,855,098
$
273,060
$
3,547,236
Company's Pro-Rata Share of
Total Debt
$
3,174,633
$
229,418
(18)
(1)
The amount listed includes 100% of the loan amount even though the Operating Partnership may have less than a 100% ownership interest in the Property.
(2)
Assumes extension option will be exercised, if applicable.
(3)
Prepayment premium is based on yield maintenance or defeasance.
(4)
On November 1, 2021, the Company emerged from bankruptcy. The loan remains in default due to the Company filing the Chapter 11 Cases, which constituted an event of default with respect to the loan.
(5)
We are in discussions with the lender regarding an extension.
(6)
Subsequent to December 31, 2021, the loan was extended to May 2022. We remain in discussions with the lender regarding an extension.
(7)
Subsequent to December 31, 2021, the loan was modified to reduce the fixed interest rate to 4.25% and extend the maturity date through May 2023, with three one-year extension options, subject to certain requirements.
(8)
The loan secured by this mall is in default as of December 31, 2021. Subsequent to December 31, 2021, we deconsolidated Greenbrier Mall as a result of losing control when the property was placed in receivership.
(9)
The Operating Partnership owns less than 100% of the Property but guarantees 100% of the debt.
(10)
CBL Center consists of our two corporate office buildings.
(11)
On November 1, 2021, HoldCo I entered into an amended and restated credit agreement providing for an $883.7 million senior secured term loan that matures November 1, 2025. Upon satisfaction of certain conditions, the maturity date will automatically extend to November 1, 2026 and upon further satisfaction of certain conditions the maturity date will automatically extend to November 1, 2027.
(12) On November 1, 2021, HoldCo II entered into a secured exchangeable notes indenture relating to the issuance of 7.0% exchangeable senior secured notes due 2028 in an aggregate principal amount of $150.0 million. The exchangeable notes mature on November 15, 2028 and bear interest at a rate of 7% per annum payable semi-annually on November 15 and May 15, beginning May 15, 2022. Subsequent to December 31, 2021, HoldCo II exercised its optional exchange right with respect to all of the $150.0 million aggregate principal amount of the exchangeable notes, and all of the exchangeable notes were cancelled. See Note 20 to the consolidated financial statements for more information.
(13)
On November 1, 2021, HoldCo II entered into a secured notes indenture relating to the issuance of 10% senior secured notes due 2029 (the “Secured Notes”) in an aggregate principal amount of $455,000. The Secured Notes mature November 15, 2029 and bear interest at a rate of 10% per annum payable semi-annually on November 15 and May 15, beginning May 15, 2022. On November 8, 2021, HoldCo II redeemed $60.0 million aggregate principal amount of the Secured Notes pursuant to an optional redemption. The Secured Notes had a fair value of $395,395 as of December 31, 2021.
(14)
We are in discussions with the lender regarding a forbearance of the default triggered by the Company filing the Chapter 11 Cases, which constituted an event of default with respect to the loan.
(15)
Ambassador Town Center - The unconsolidated affiliate has an interest rate swap on a notional amount of $41,310, amortizing to $38,866 over the term of the swap, to effectively fix the interest rate on the variable-rate loan. Therefore, this amount is currently reflected as having a fixed rate. The swap terminates in June 2023.
(16)
Subsequent to December 31, 2021, we entered into a $30.0 million non-recourse mortgage note payable, secured by York Town Center, that provides for a three-year term and a fixed interest rate of 4.75%. See Note 20 for additional information.
(17)
During the year ended December 31, 2021, we deconsolidated the property due to a loss of control when the property was placed into receivership in connection with the foreclosure process.
(18)
Represents the Company's pro rata share of debt, including our share of unconsolidated affiliates' debt and excluding noncontrolling interests' share of consolidated debt on shopping center properties.
The following is a reconciliation of consolidated debt to our pro rata share of total debt, including debt discounts and unamortized deferred financing costs (in thousands):
Total consolidated debt
$
2,408,929
Noncontrolling interests' share of consolidated debt
(29,381
)
Company's share of unconsolidated debt
703,013
Other debt
92,072
Unamortized deferred financing costs
(3,538
)
Debt discounts
(185,634
)
Company's pro rata share of total debt
$
2,985,461
As of December 31, 2021, all the real estate assets and working capital of our consolidated subsidiaries are secured as collateral on either property-level loans, the secured term loan, the secured notes or the exchangeable notes. See Note 9 and Note 10 to the consolidated financial statements for additional information regarding property-specific indebtedness.

---

ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
The information in this Item 3 is incorporated by reference herein from Note 16. Contingencies.

---

ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
On the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company, including (1) CBL’s old common stock, par value $0.01 per share (the “Old Common Stock”), and CBL’s old preferred stock and related depositary shares (the “Old Preferred Stock”) and (2) the Operating Partnership’s old limited partnership common interests (the “Old LP Common Interests”) and the old limited partnership preferred interests (the “Old LP Preferred Interests”) related to CBL’s Old Preferred Stock, in each case issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect.
On the Effective Date, (1) CBL issued (i) 1,089,717 shares of New Common Stock to (a) existing holders of the Old Common Stock and (b) certain of the existing holders of the Old LP Common Interests that elected to receive shares of New Common Stock in exchange for Old LP Common Interests, (ii) 1,100,000 shares of New Common Stock to existing holders of the Old Preferred Stock, (iii) 15,685,714 shares of New Common Stock to existing holders of the Old Senior Notes and other general unsecured claims, and (iv) 2,114,286 shares of New Common Stock to existing holders of consenting crossholder claims and (2) the Operating Partnership cancelled all of its Old LP Common Interests and issued 200,000 new common units of general partnership interests, 19,789,717 new common units of limited partnership interest (the “New LP Interests”) to subsidiaries of CBL and 10,283 New LP Interests to certain of the existing holders of Old LP Common Interests that have elected to remain limited partners in the Operating Partnership. On the Effective Date, CBL had an aggregate of 20,000,000 shares of New Common Stock issued and outstanding (on a fully diluted basis after giving effect to any future election to exchange all New LP Interests for New Common Stock). On November 2, 2021, the newly issued common stock of the reorganized company commenced trading on the NYSE under the symbol CBL. There were approximately 487 shareholders of record for our common stock as of March 25, 2022. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers and other financial institutions.
Prior to the Chapter 11 Cases, during 2019 our board of directors suspended all dividend payments on the Company’s then-outstanding equity securities and distributions with respect to the Operating Partnership’s then-outstanding equity securities. The decision to declare and pay dividends on any outstanding shares of our common stock, 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 then-current indebtedness, the annual distribution requirements under 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. For additional information, see discussion presented under the subheading “Dividends - CBL” in Note 11 of this report. Our actual results of operations will be affected by a number of factors, including the revenues received from the Properties, our operating expenses, interest expense, unanticipated capital expenditures and the ability of the Anchors and tenants at the Properties to meet their obligations for payment of rents and tenant reimbursements.
See Part III, Item 12 contained herein for information regarding securities authorized for issuance under equity compensation plans. There were no repurchases of common stock made by us during the three months ended December 31, 2021.

---

ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. [RESERVED]

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes that are included in this annual report. Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the consolidated financial statements.
Combined Results
Upon emergence from bankruptcy, we qualified for and adopted fresh start accounting in accordance with Accounting Standards Codification 852, which resulted in our becoming a new entity for financial reporting purposes. As a result, our financial results for the periods from January 1, 2021 through October 31, 2021, the year ended December 31, 2020 and the year ended December 31, 2019 are referred to as the “Predecessor” periods. Our financial results for the period from November 1, 2021 through December 31, 2021 are referred to as the “Successor” period. Our results of operations as reported in our consolidated financial statements for these periods are prepared in accordance with GAAP. See Note 3 for additional information.
Although GAAP requires that we report our results for the period from January 1, 2021 through October 31, 2021 and the period from November 1, 2021 through December 31, 2021 separately, management views the Company’s operating results for the year ended December 31, 2021 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison of our results to prior periods. We cannot adequately benchmark the operating results of the period from November 1, 2021 through December 31, 2021 against any of the previous periods reported in its consolidated financial statements without combining it with the period from January 1, 2021 through October 31, 2021. We believe that reviewing the results of the period from November 1, 2021 through December 31, 2021 in isolation would not be useful in identifying trends in or reaching conclusions regarding our overall operating performance. Management believes that the key performance metrics such as revenue, NOI and FFO for the Successor period when combined with the Predecessor period provide more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, in addition to presenting our results of operations as reported in our consolidated financial statements in accordance with GAAP, the tables and discussion below also present the combined results for the year ended December 31, 2021.
The combined results for the year ended December 31, 2021, which we refer to herein as the results for the "year ended December 31, 2021" represent the sum of the reported amounts for the Predecessor period from January 1, 2021 through October 31, 2021 and the Successor period from November 1, 2021 through December 31, 2021. These combined results are not considered to be prepared in accordance with GAAP and have not been prepared as pro forma results per applicable regulations. The combined operating results do not reflect the actual results we would have achieved absent our emergence from bankruptcy and may not be indicative of future results. Accordingly, the results for the years ended December 31, 2020 and 2019 may not be comparable, particularly for statement of operations line items significantly impacted by the reorganization transactions, the impact of fresh start accounting on depreciation and amortization, debt discount accretion and the impact of interest expense not being recognized while we were in Chapter 11 bankruptcy protection from the petition date of November 1, 2020 to October 31, 2021.
Executive Overview
We are a self-managed, self-administered, fully integrated REIT that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, outlet centers, lifestyle centers, open-air centers and other properties. We own interests in 94 properties, consisting of 50 malls, 29 open-air centers, five outlet centers, five lifestyle centers and five other properties, including single-tenant and multi-tenant outparcels. Our shopping centers are located in 24 states, and 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 our business through the Operating Partnership. The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a VIE. See Item 2 for a description of our Properties owned and under development as of December 31, 2021.
Voluntary Reorganization Under Chapter 11
Beginning on November 1, 2020, CBL and the Operating Partnership, together with the Debtors, filed the Chapter 11 Cases under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Bankruptcy Court authorized the Debtors to continue to operate their businesses and manage their properties as debtors-in-possession pursuant to the Bankruptcy Code. The filing of the Chapter 11 Cases constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in acceleration of the outstanding principal and other sums due. See Note 2 and Liquidity and Capital Resources for additional information.
In connection with the Chapter 11 Cases, on August 11, 2021, the Bankruptcy Court entered an order, Docket No.1397 (Confirmation Order), confirming the Debtors’ Plan.
On the Effective Date, the conditions to effectiveness of the Plan were satisfied and the Debtors emerged from the Chapter 11 Cases. The Company filed a notice of the Effective Date of the Plan with the Bankruptcy Court on November 1, 2021. Following the Effective Date, certain of the Debtors’ Chapter 11 Cases remain open to administer claims pursuant to the Plan.
On the Effective Date, in exchange for their approximately $1,375.0 million in principal amount of senior unsecured notes and $133.0 million in principal amount of the secured credit facility, Consenting Noteholders, other noteholders, and certain holders of unsecured claims against the Company received, in the aggregate, $95.0 million in cash, $455.0 million of new senior secured notes, $100.0 million of new exchangeable secured notes, based upon the election by certain Consenting Noteholders, and 89% in common equity of the newly reorganized company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders also provided $50.0 million of new money in exchange for additional new exchangeable secured notes. Pursuant to the Plan the remaining lenders of the senior secured credit facility, holding $983.7 million in principal amount, received $100.0 million in cash and a new $883.7 million secured term loan. Existing common and preferred shareholders each received 5.5% of common equity in the newly reorganized company. On the Effective Date, we had an aggregate 20,000,000 shares of new common stock and units issued and outstanding (on a fully diluted basis after giving effect to any future election to exchange all new limited partnership interests for new common stock). In November 2021, we redeemed $60.0 million in principal amount of the new senior secured notes, which is included in our Successor balance sheet as of the Effective Date.
On the Effective Date, all prior equity interests of the Company issued and outstanding immediately prior to the Effective Date, including (1) CBL’s common stock, par value $0.01 per share and CBL’s preferred stock and related depositary shares and (2) the Operating Partnership’s limited partnership common interests and the limited partnership preferred interests related to the CBL’s preferred stock, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect. On November 2, 2021, the newly issued common stock of the reorganized company commenced trading on the NYSE under the symbol CBL.
Although we are no longer a debtor-in-possession, we were a debtor-in-possession through the ten months ended October 31, 2021. See Note 2 and Note 3 to our consolidated financial statements for more information.
COVID-19
On March 11, 2020, the World Health Organization classified COVID-19 as a pandemic. In response to COVID-19, we implemented strict procedures and guidelines for our employees, tenants and property visitors based on CDC and other health agency recommendations. Our Properties continue to update these policies and procedures, following any new mandates and regulations, as required. The safety and health of our customers, employees and tenants remains a top priority.
While our financial and operating results for 2021 reflect the ongoing impact of COVID-19, we saw encouraging improvements in sales and traffic at our centers as vaccination rates increased and government restrictions lessened. However, uncertainty remains as variants of the virus pose the risk of further outbreaks. For the year ended December 31, 2021, sales increased nearly 16% as compared with the year ended December 31, 2019, which contributed to improving retailer health. Percentage rents and short-term rents increased significantly during the year as a result of the sales and traffic rebound. Improvements in the leasing environment, including increasing tenant demand and significantly lower bankruptcy-related store closures, drove healthy occupancy growth.
The mandated property closures in 2020 resulted in nearly all our tenants closing for a period of time and/or shortening operating hours. As a result, we experienced an increased level of requests for rent deferrals and abatements, as well as defaults on rent obligations. While, in general, we believe that tenants have a clear contractual obligation to pay rent, we worked with our tenants to address rent deferral and abatement requests. The majority of these requests were addressed in 2020 and new requests for deferrals or abatements have slowed as sales and traffic rebound. We have granted rent deferrals totaling approximately $46.4 million since the COVID-19 pandemic began and over 96% have subsequently been collected. We also granted rent abatements totaling approximately $14.5 million and $25.4 million during the years ended December 31, 2021 and 2020, respectively.
Financial Results
We had a net loss for the year ended December 31, 2021 of $639.1 million as compared to a net loss of $335.5 million in the prior-year period. In addition to the impact of the COVID-19 pandemic, significant items that affected the comparability between the year ended December 31, 2021 and the year ended December 31, 2020 include:
▪
Items increasing net loss in 2021 compared to 2020:
•
Reorganization items expense, net, related to our reorganization efforts were $400.6 million higher in 2021 compared to 2020;
•
Interest expense was $67.2 million higher in 2021 than in 2020;
•
Gain on extinguishment of debt of $32.5 million in 2020;
▪
Items decreasing net loss in 2021 compared to 2020:
•
Gain on deconsolidation of $74.3 million in 2021;
•
Loss on impairment was $66.6 million lower in 2021 than in 2020;
•
General and administrative expenses were $25.0 million lower in 2021 than in 2020;
•
Equity in losses of unconsolidated affiliates improved $4.8 million in 2021 compared to 2020;
•
Income tax benefit was $4.8 million in 2021 compared to an income tax provision of $16.8 million in 2020; and
•
Gain on sales of real estate assets was $7.5 million higher in 2021 than in 2020.
Our focus is on continuing to execute our strategy to transform our Properties into dominant centers that offer a mix of retail, service, dining, entertainment and other non-retail uses, primarily through the re-tenanting of former anchor locations as well as diversification of in-line tenancy. This operational strategy is also supported by our balance sheet strategy focused on reducing overall debt, extending our debt maturity schedule and lowering our overall cost of borrowings to limit maturity risk, improve net cash flow and enhance enterprise value. While the industry and our Company continue to face challenges, some of which may not be in our control, we believe that the strategies in place to redevelop our Properties and diversify our tenant mix will contribute to stabilization of our portfolio and revenues in future years.
Results of Operations
Comparison of the Year Ended December 31, 2021 to the Year Ended December 31, 2020
Properties that were in operation for the entire year during both 2021 and 2020 are referred to as the “2021 Comparable Properties.” Since January 1, 2020, we opened two self-storage facilities, deconsolidated two properties and disposed of seven properties:
Properties Opened
Property
Location
Date Opened
Parkdale Mall - Self Storage (1)
Beaumont, TX
April 2020
Hamilton Place - Self Storage (1)
Chattanooga, TN
July 2020
(1)
The property was owned by a joint venture that was accounted for using the equity method of accounting and is included in equity in earnings (losses) of unconsolidated affiliates in the accompanying consolidated statements of operations.
Deconsolidations
Property
Location
Date of Deconsolidation
Asheville Mall (1)
Asheville, NC
January 2021
Park Plaza (1)
Little Rock, AR
March 2021
EastGate Mall (1)
Cincinnati, OH
December 2021
(1)
We deconsolidated the property due to a loss of control when the property was placed into receivership in connection with the foreclosure process.
Dispositions
Property
Location
Sales Date
Hickory Point Mall (1)
Forsyth, IL
August 2020
Burnsville Center (1)
Burnsville, MN
December 2020
EastGate Mall Self Storage
Cincinnati, OH
November 2021
Hamilton Place Self Storage
Chattanooga, TN
November 2021
Mid Rivers Mall Self Storage
St. Peters, MO
November 2021
Parkdale Mall Self Storage
Beaumont, TX
November 2021
Springs at Port Orange
Port Orange, FL
December 2021
(1)
Title to the property was transferred to the mortgage holder in satisfaction of the non-recourse debt secured by the property.
Revenues
(in thousands)
Successor
Predecessor
Non-GAAP Combined
Predecessor
For the Period November 1, 2021 through December 31,
For the Period January 1, 2021 through October 31,
Year Ended
December 31,
For the Year
Ended December 31,
Comparable
Properties
Change
Core
Non-core
Deconsolidation
Dispositions
Rental revenues
$
103,252
$
450,922
$
554,174
$
554,064
$
$
26,907
$
1,449
$
(16,685
)
$
(11,561
)
Management, development and leasing fees
1,500
5,642
7,142
6,800
-
-
-
Other
4,094
11,465
15,559
14,997
1,077
(495
)
(587
)
Total revenues
$
108,846
$
468,029
$
576,875
$
575,861
$
1,014
$
28,326
$
2,016
$
(17,180
)
$
(12,148
)
Rental revenues from the Comparable Properties increased primarily due to a significantly higher estimate of uncollectable revenues in the prior year period resulting from the impacts of the COVID-19 pandemic, as well as prior year rent concessions to tenants in bankruptcy or that were struggling financially due to the impacts of the COVID-19 pandemic. Percentage rent increased due to higher sales in the current period as sales and traffic improved as vaccination rates increased and government restrictions were lessened.
Operating Expenses
(in thousands)
Successor
Predecessor
Non-GAAP Combined
Predecessor
For the Period November 1, 2021 through December 31,
For the Period January 1, 2021 through October 31,
Year Ended
December 31,
For the Year
Ended December 31,
Comparable
Properties
Change
Core
Non-core
Deconsolidation
Dispositions
Property operating
$
(15,258
)
$
(72,735
)
$
(87,993
)
$
(84,061
)
$
(3,932
)
$
(8,735
)
$
(1,278
)
$
2,960
$
3,121
Real estate taxes
(9,598
)
(50,787
)
(60,385
)
(69,686
)
9,301
4,643
1,788
2,825
Maintenance and repairs
(7,581
)
(32,487
)
(40,068
)
(34,132
)
(5,936
)
(7,586
)
(309
)
1,167
Property operating expenses
(32,437
)
(156,009
)
(188,446
)
(187,879
)
(567
)
(11,678
)
(1,542
)
5,540
7,113
Depreciation and amortization
(49,504
)
(158,574
)
(208,078
)
(215,030
)
6,952
(8,259
)
4,354
7,287
3,570
General and administrative
(9,175
)
(43,160
)
(52,335
)
(53,425
)
1,090
(2,330
)
3,057
Prepetition charges
-
-
-
(23,883
)
23,883
23,883
-
-
-
Loss on impairment
-
(146,781
)
(146,781
)
(213,358
)
66,577
66,577
-
-
-
Litigation settlement
1,050
7,855
(6,805
)
(6,805
)
-
-
-
Other
(3
)
(745
)
(748
)
(953
)
(65
)
-
-
Total operating expenses
$
(91,001
)
$
(504,337
)
$
(595,338
)
$
(686,673
)
$
91,335
$
61,658
$
5,804
$
12,896
$
10,977
Property operating expenses at the Comparable Properties increased primarily due to lessening restrictions related to the COVID-19 pandemic that allowed for the reopening of properties in late 2020 following closures related to the COVID-19 pandemic and the actions taken in the prior year period to reduce operating expenses to mitigate the impact of mandated property closures and the effects of the COVID-19 pandemic, including a reduction-in-force and other operating expense initiatives.
The increase in depreciation and amortization expense related to the Comparable Properties primarily relates to a new basis in depreciable assets and intangible in-place lease assets resulting from fresh start accounting, which was partially offset by a lower basis in depreciable assets resulting from impairments recorded since the prior-year period.
For the year ended December 31, 2020, we recorded $23.9 million of prepetition charges representing professional fees related to our negotiations with the administrative agent and lenders under the secured credit facility and certain holders of our senior unsecured notes regarding a restructure of such indebtedness prior to the filing of the Chapter 11 Cases beginning on November 1, 2020. Professional and legal fees, as well as other costs, incurred in the current period related to our restructuring efforts are recorded in Reorganization items in the consolidated statement of operations.
For the year ended December 31, 2021, we recognized $146.8 million of loss on impairment of real estate, which was primarily related to five malls, a redeveloped anchor parcel, an outlet center, an open-air center, an outparcel and vacant land. For the year ended December 31, 2020, we recognized $213.4 million of loss on impairment of real estate to write down the book value of six malls. See Note 17 to the consolidated financial statements for additional information.
For the years ended December 31, 2021 and 2020, we recognized a credit to litigation settlement expense of $1.1 million and $7.9 million, respectively, related to claim amounts that were released pursuant to the terms of a settlement agreement.
Other Income and Expenses
Interest and other income decreased $3.8 million during the year ended December 31, 2021 compared to the prior-year period primarily due to the payoff of a note receivable, interest received on U.S. Treasury securities and gains resulting from insurance settlements in the prior-year period.
Interest expense increased $67.2 million during the year ended December 31, 2021 compared to the prior-year period primarily due to the immediate recognition of debt discount accretion of $131.1 million on property-level debt that was past the maturity date and an increase in default interest expense related to property-level non-recourse loans that are in default, which may not be payable depending on the outcome of negotiations with the lenders. The increase was partially offset by a decrease of $108.1 million due to not recognizing interest expense on the senior unsecured notes and the secured credit facility subsequent to the filing of the Chapter 11 Cases. The property-level debt discounts were recognized in conjunction with valuing our property-level debt as a result of fresh start accounting. The increase was partially offset by not recognizing interest expense on the senior unsecured notes and the secured credit facility subsequent to the filing of the Chapter 11 Cases. See Note 2 for additional information on our emergence from the Chapter 11 Cases.
For the year ended December 31, 2020, we recorded a $32.5 million gain on extinguishment of debt related to two malls that were transferred to the lenders in satisfaction of the non-recourse debt secured by the properties.
For the year ended December 31, 2021, we recorded $74.3 million of gain on deconsolidation related to three malls. See Note 9 for more information.
For the year ended December 31, 2021, we recorded $436.6 million of reorganization items expense, net, which consists of adjustments to record the assets and liabilities of the Successor Company at fair value as of the Effective Date, transactions associated with the Plan, professional fees, legal fees, retention bonuses and U.S. Trustee fees directly related to the Chapter 11 Cases. For the year ended December 31, 2020, we recorded $36.0 million of reorganization items expense, which consists of professional fees directly related to the Chapter 11 Cases, as well as unamortized deferred financing costs and debt discounts expensed in accordance with ASC 852.
Equity in losses of unconsolidated affiliates improved $4.8 million during the year ended December 31, 2021 compared to the prior-year period. The improvement was primarily due to higher earnings of our unconsolidated affiliates and a reduction in uncollectable revenues in the current year-period as compared to the prior-year period due to the impacts of the mandated property closures during 2020 as a result of COVID-19.
The income tax benefit of $4.8 million in 2021 relates to the Management Company, which is a taxable REIT subsidiary, and consists of a current tax provision of $6.0 million and a deferred tax asset of $10.8 million. The deferred tax benefit reflects the removal of the full valuation allowance on the Company’s deferred tax assets based on management’s evaluation of positive and negative indicators and determination that the deferred tax assets would be realized. The income tax provision of $16.8 million in 2020 relates to the Management Company and consists of a current tax provision of $2.3 million and a deferred tax provision of $14.5 million, which reflected establishing a full valuation allowance on our deferred tax assets. The full valuation allowance was recorded due to management’s evaluation of positive and negative indicators and determination that the deferred tax assets would not be realized.
Gain on sales of real estate assets increased $7.5 million compared to the prior-year period. In 2021, we recognized $12.2 million of gain on sales of real estate assets primarily related to the sale of one center, four anchors and four outparcels. In 2020, we recognized $4.7 million of gain on sales of real estate assets primarily related to the sale of eight outparcels.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the year ended December 31, 2020 for a comparison of the year ended December 31, 2020 to the year ended December 31, 2019.
Non-GAAP Measure
Same-center Net Operating Income
NOI is a supplemental non-GAAP measure of the operating performance of our shopping centers and other Properties. We define NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs). We also exclude the impact of lease termination fees and certain non-cash items such as straight-line rents and reimbursements, write-offs of landlord inducements and net amortization of acquired above and below market leases.
We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated Properties. We believe that presenting NOI and same-center NOI (described below) based on our Operating Partnership’s pro rata share of both consolidated and unconsolidated Properties is useful since we conduct substantially all our business through our Operating Partnership and, therefore, it reflects the performance of the Properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in the Operating Partnership. Our definition of NOI may be different than that used by other companies, and accordingly, our calculation of NOI may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to the operations of our shopping center Properties, we believe that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on our results of operations. Our calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, and amortization of above and below market lease intangibles in order to enhance the comparability of results from one period to another.
We include a property in our same-center pool when we have owned all or a portion of the Property since January 1 of the preceding calendar year and it has been in operation for both the entire preceding calendar year ended December 31, 2020 and the current year ended December 31, 2021. New Properties are excluded from same-center NOI, until they meet these criteria. Properties excluded from the same-center pool, which would otherwise meet these criteria, are properties where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender. Asheville Mall, EastGate Mall, Greenbrier Mall, Parkdale Mall, The Outlet Shoppes at Gettysburg and The Outlet Shoppes at Laredo were classified as Excluded Properties as of December 31, 2021.
Due to the exclusions noted above, same-center NOI should only be used as a supplemental measure of our performance and not as an alternative to GAAP operating income (loss) or net income (loss). A reconciliation of our same-center NOI to net loss for the years ended December 31, 2021 and 2020 is as follows (in thousands):
Successor
Predecessor
Non-GAAP Combined
Predecessor
Period from November 1, through December 31,
Period from January 1, through October 31,
Year Ended December 31,
Year Ended December 31,
Net loss
$
(152,731
)
$
(486,413
)
$
(639,144
)
$
(335,529
)
Adjustments: (1)
Depreciation and amortization
58,729
201,799
260,528
268,126
Interest expense
205,449
104,139
309,588
231,309
Abandoned projects expense
(Gain) loss on sales of real estate assets
(12,187
)
(12,184
)
(4,696
)
Gain on sales of real estate assets of unconsolidated affiliates
-
(70
)
(70
)
-
Adjustment for unconsolidated affiliates with negative investment
(4,574
)
-
(4,574
)
-
Gain on extinguishment of debt
-
-
-
(32,521
)
Gain on deconsolidation
(19,126
)
(55,131
)
(74,257
)
-
Loss on impairment, net of noncontrolling interests' share
-
136,046
136,046
195,336
Litigation settlement
(118
)
(932
)
(1,050
)
(7,855
)
Prepetition charges
-
-
-
23,883
Reorganization items, net of noncontrolling interests' share
1,403
452,378
453,781
35,977
Income tax (benefit) provision
(5,885
)
1,078
(4,807
)
16,836
Lease termination fees
(3,597
)
(4,843
)
(8,440
)
(6,076
)
Straight-line rent and above- and below-market lease amortization
1,930
1,826
3,756
(115
)
Net loss attributable to noncontrolling interests in other consolidated subsidiaries
1,186
13,313
14,499
20,683
General and administrative expenses
9,175
43,160
52,335
53,425
Management fees and non-property level revenues
(2,801
)
(26,604
)
(29,405
)
(13,467
)
Operating Partnership's share of property NOI
89,046
368,304
457,350
446,268
Non-comparable NOI
(4,170
)
(19,069
)
(23,239
)
(37,814
)
Total same-center NOI
$
84,876
$
349,235
$
434,111
$
408,454
(1)
Adjustments are based on our Operating Partnership's pro rata ownership share, including our share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties.
Same-center NOI increased 6.3% for the year ended December 31, 2021 as compared to the prior-year period. The $25.8 million increase for the year ended December 31, 2021 compared to 2020 primarily consisted of a $39.0 million increase in revenues offset by a $13.2 million increase in operating expenses. Rental revenues increased $36.9 million during the year ended December 31, 2021, primarily due to a decrease in uncollectable revenues in the current year as compared to the prior year, as well as prior year rent concessions to tenants that were in bankruptcy or were struggling financially due to the impacts of the COVID-19 pandemic. Percentage rent increased due to higher sales in the current year as sales and traffic have improved as vaccination rates increased and government restrictions were lessened, as compared to the significant impact the COVID-19 pandemic had on sales and traffic in the prior-year.
Operational Review
The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during the fourth quarter due to the holiday season, which generally results in higher percentage rents in the fourth quarter. Additionally, Malls, Lifestyle Centers and Outlet Centers earn a large portion of their rents from short-term tenants during the holiday period. Thus, occupancy levels and revenue production are generally the highest in the fourth quarter of each year. Results of operations realized in any one quarter may not be indicative of the results likely to be experienced over the course of the fiscal year.
We derive the majority of our revenues from the Malls, Lifestyle Centers and Outlet Centers. The sources of our revenues by property type were as follows:
As of December 31,
Malls, Lifestyle Centers and Outlet Centers
87.8
%
90.4
%
All Other
12.2
%
9.6
%
Inline and Adjacent Freestanding Store Sales
Inline and adjacent freestanding store sales include reporting mall, lifestyle center and outlet center tenants of 10,000 square feet or less for Malls, Lifestyle Centers and Outlet Centers and exclude license agreements, which are retail leases that are temporary or short-term in nature and generally last more than three months but less than twelve months. The following is a comparison of our same-center sales per square foot for mall, lifestyle center and outlet center tenants of 10,000 square feet or less (Excluded Properties are not included in sales metrics):
Year Ended December 31,
2019 (1)
% Change
Mall, Lifestyle Center and Outlet Center same-center sales per square foot
$
$
15.5%
(1)
Due to the temporary property and store closures that occurred during 2020 related to COVID-19, the majority of our tenants did not report sales for the full reporting period. As a result, we are not able to provide a complete measure of sales per square foot for the year ended December 31, 2020, and instead have presented the 2019 amount for comparative purposes.
In-Line Store Occupancy
Our portfolio in-line store occupancy is summarized in the following table (Excluded Properties are not included in occupancy metrics):
As of December 31,
Total portfolio
89.3%
87.5%
Malls, Lifestyle Centers and Outlet Centers:
Total malls
87.2%
85.5%
Total lifestyle centers
86.7%
84.8%
Total outlet centers
93.6%
89.1%
Total same-center malls, lifestyle centers and outlet centers
87.6%
85.9%
Total malls, lifestyle centers and outlet centers
87.6%
85.8%
All Other:
Total open-air centers
94.8%
93.4%
Total other
90.5%
99.3%
Bankruptcy-related store closures impacted 2020 occupancy by approximately 106 basis points or 171,000 square feet.
Leasing
The following is a summary of the total square feet of leases signed in the year ended December 31, 2021 as compared to the prior year:
Year Ended December 31,
Operating portfolio:
New leases
721,436
542,500
Renewal leases
2,435,014
2,062,536
Development portfolio:
New leases
65,334
63,550
Total leased
3,221,784
2,668,586
Average annual base rents per square foot are computed based on contractual rents in effect as of December 31, 2021 and 2020, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each property type (1):
December 31,
Total portfolio
$
25.09
$
24.85
Malls, Lifestyle Centers and Outlet Centers:
Total same-center malls, lifestyle centers and outlet centers
29.63
29.56
Total malls, lifestyle centers and outlet centers
29.63
29.34
Total malls
30.16
30.22
Total lifestyle centers
27.60
26.11
Total outlet centers
27.34
26.42
All Other:
Total open-air centers
15.05
14.72
Total other
19.32
19.28
(1)
Excluded Properties are not included in base rent. Average base rents for open-air centers and other include all leased space, regardless of size.
Results from new and renewal leasing of comparable in-line space of less than 10,000 square feet during the year ended December 31, 2021 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows:
Property Type
Square
Feet
Prior Gross
Rent PSF
New Initial
Gross Rent
PSF
% Change
Initial
New Average
Gross Rent
PSF (1)
% Change
Average
All Property Types (2)
1,845,617
$
36.81
$
32.16
(12.6
)%
$
32.68
(11.2
)%
Malls, Lifestyle Centers & Outlet Centers
1,647,393
38.74
33.32
(14.0
)%
33.82
(12.7
)%
New leases
216,682
41.75
33.80
(19.0
)%
36.11
(13.5
)%
Renewal leases
1,430,711
38.28
33.25
(13.1
)%
33.47
(12.6
)%
(1)
Average gross rent does not incorporate allowable future increases for recoverable common area expenses.
(2)
Includes malls, lifestyle centers, outlet centers, open-air centers and other.
New and renewal leasing activity of comparable in-line space of less than 10,000 square feet for the year ended December 31, 2021, based on commencement date inclusive of the impact of any rent concessions, are as follows:
Number
of
Leases
Square
Feet
Term
(in
years)
Initial
Rent
PSF
Average
Rent
PSF
Expiring
Rent
PSF
Initial Rent
Spread
Average Rent
Spread
Commencement 2021:
New
221,836
6.15
$
32.61
$
35.00
$
38.18
$
(5.57
)
(14.6
)%
$
(3.18
)
(8.3
)%
Renewal
1,278,323
2.19
27.70
28.11
33.71
(6.01
)
(17.8
)%
(5.60
)
(16.6
)%
Commencement 2021 Total
1,500,159
2.94
28.43
29.13
34.37
(5.94
)
(17.3
)%
(5.24
)
(15.2
)%
Commencement 2022:
New
74,409
7.77
37.91
40.40
36.93
0.98
2.7
%
3.47
9.4
%
Renewal
546,727
2.58
35.60
35.85
36.52
(0.92
)
(2.5
)%
(0.67
)
(1.8
)%
Commencement 2022 Total
621,136
3.25
35.88
36.39
36.57
(0.69
)
(1.9
)%
(0.18
)
(0.5
)%
Total 2021/2022
2,121,295
3.03
$
30.61
$
31.25
$
35.01
$
(4.40
)
(12.6
)%
$
(3.76
)
(10.7
)%
Liquidity and Capital Resources
2021 Activity
As previously discussed, on the Effective Date, the conditions to effectiveness of the Plan were satisfied and the Debtors emerged from the Chapter 11 Cases. The Plan provided for the elimination of more than $1.6 billion of debt and preferred obligations, including an aggregate cash payment of $195.0 million as noted below, as well as a significant reduction in interest expense. In exchange for their approximately $1.4 billion in principal amount of senior unsecured notes and $133.0 million in principal amount of the secured credit facility, Consenting Noteholders, other noteholders, and certain holders of unsecured claims against the Company received, in the aggregate, $95.0 million in cash, $455.0 million of new senior secured notes, $100.0 million of new exchangeable secured notes, based upon the election by certain Consenting Noteholders, and 89% in common equity of the newly reorganized company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders also provided $50.0 million of new money in exchange for additional new exchangeable secured notes. Pursuant to the Plan the remaining bank lenders, holding $983.7 million in principal amount under the secured credit facility, received $100.0 million in cash and a new $883.7 million secured term loan. Existing common and preferred shareholders each received 5.5% of common equity in the newly reorganized company. See Note 2 for additional information. In November 2021, we redeemed $60.0 million in principal amount of the new senior secured notes.
As of December 31, 2021, we had $319.5 million available in unrestricted cash and U.S. Treasury securities. Our total pro rata share of debt, excluding unamortized deferred financing costs and debt discounts, at December 31, 2021 was $3,174.6 million. We had $66.6 million in restricted cash at December 31, 2021 related to cash held in escrow accounts for insurance, real estate taxes, capital expenditures and tenant allowances as required by the terms of certain mortgage notes payable, as well as amounts related to cash management agreements with lenders of certain property-level mortgage indebtedness, which are designated for debt service and operating expense obligations.
During 2021, we continued to reinvest in U.S. Treasury securities using the cash that was drawn on the Predecessor Company’s secured line of credit to preserve liquidity at the beginning of the COVID-19 pandemic. We designated our U.S. Treasury securities as available-for-sale. As of December 31, 2021, our U.S. Treasury securities have maturities through February 2022. Subsequent to December 31, 2021, we reinvested proceeds from matured U.S. Treasury securities into new U.S. Treasury securities. See Note 20 for additional information.
In March 2021, we reached agreements with the lenders to modify the loans secured by Hammock Landing Phases I & II and The Pavilion at Port Orange. Each agreement provides an additional four-year term, with a one-year extension option, for a fully extended maturity date of February 2026. The agreements provide for interest of LIBOR plus 2.5% in years one and two, LIBOR plus 2.75% in year three, LIBOR plus 3.0% in year four and LIBOR plus 3.25% in year five. These loans had a combined outstanding balance of $104.6 million at December 31, 2021. Additionally, each agreement provided forbearance related to the default triggered as a result of the Chapter 11 Cases, which was waived upon the Effective Date.
In March 2021, we reached an agreement with the lender to modify the loan secured by Ambassador Infrastructure. The agreement provides an additional four-year term with a fixed interest rate of 3.0%. The extended loan, maturing in March 2025, has an outstanding balance of $8.3 million, as $1.1 million was paid down in conjunction with the modification. The agreement provides a waiver related to the default triggered as a result of the Chapter 11 Cases, which was waived upon the Effective Date.
In May 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy. In September 2021, the subsidiary that owns The Outlet Shoppes at Laredo reached an agreement with the lender to dismiss the bankruptcy case and amend the loan secured by The Outlet Shoppes at Laredo. The loan term was extended through June 2023 and contains a one-year extension option.
In October 2021, the loan secured by The Shoppes at Eagle Point was extended to October 2022.
In October 2021, Brookfield Square Anchor S, LLC filed for bankruptcy. In December 2021, we reached an agreement with the lender to amend the loan secured by the redeveloped former Sears anchor at Brookfield Square in Brookfield, WI, and dismiss the bankruptcy case. The loan term was extended through December 2023 and contains a one-year extension option.
In December 2021, the loan secured by The Outlet Shoppes of the Bluegrass - Phase II was extended to October 2022 and contains a six-month extension option.
In December 2021, we sold EastGate Mall Self Storage, Hamilton Place Self Storage, Mid Rivers Mall Self Storage and Parkdale Mall Self Storage, which generated $42.0 million in gross proceeds. Proceeds were used to pay off the total outstanding debt secured by the properties of $25.9 million. Our share of the proceeds after paying off the outstanding debt amounted to $7.6 million.
In December 2021, we sold our interest in the Continental 425 Fund LLC joint venture. This joint venture owns the Springs at Port Orange, which is secured by a $44.4 million loan. We received $7.1 million in proceeds after factoring in our share of the outstanding debt.
Subsequent to December 31, 2021, the loan secured by Fayette Mall was modified to reduce the fixed interest rate to 4.25% and extend the maturity date through May 2023, with three one-year extension options, subject to certain requirements. Also, subsequent to December 31, 2021, the loan secured by Cross Creek Mall was extended to May 2022 and we remain in discussions with the lender. Additionally, subsequent to December 31, 2021, we entered into a forbearance agreement with the lender regarding the default triggered by the Chapter 11 Cases related to the loans secured by Fremaux Town Center and The Outlet Shoppes at Atlanta. Lastly, subsequent to December 31, 2021, we entered into a $30.0 million non-recourse mortgage note payable, secured by York Town Center, that provides for a three-year term and a fixed interest rate of 4.75%. See Note 20 for additional information for events subsequent to December 31, 2021.
Our total share of consolidated, unconsolidated and other outstanding debt, excluding debt discounts and deferred financing costs, maturing during 2022, assuming all extension options are elected, is $479.7 million, and our total share of consolidated, unconsolidated and other outstanding debt, excluding debt discounts and deferred financing costs, that matured prior to 2022, which remains outstanding at December 31, 2021, is $408.1 million. We are in discussions with the existing lenders to modify and extend or otherwise refinance the loans.
As of December 31, 2021, we had $1.4 billion of property-level debt and related obligations, including consolidated debt and unconsolidated debt, maturing or callable within the next twelve months from the issuance of the financial statements. Subsequent to year-end and through the date of issuance of the financial statements, we obtained certain waivers and/or refinanced and extended the maturity dates for $0.2 billion of mortgage debt obligations.
Accordingly, we still had $1.2 billion of property-level debt and related obligations maturing or callable within the next twelve months from the issuance of the financial statements, including $642 million reported within mortgage debt payable and $537 million related to unconsolidated affiliates, a portion of which is guaranteed by us, as disclosed in Note 16 to the consolidated financial statements. The properties serving as collateral for this property-level debt and related obligations represent approximately 10-20% of our projected annual operating cash flows. We currently do not have sufficient liquidity to meet these obligations as they become due, which raises substantial doubt about our ability to continue as a going concern.
Management intends to refinance and/or extend the maturity dates for such mortgage notes payable. In such instances where a refinancing and/or extension of maturity dates is unsuccessful we will repay certain of the mortgage notes based on the availability of liquidity and convey certain properties to the lender to satisfy the related debt obligations. As a result, we have concluded that management’s plans are probable of being achieved to alleviate substantial doubt about our ability to continue as a going concern.
We have prepared our financial statements in conformity with accounting principles generally accepted in the United States of America applicable to a going concern. The financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should we be unable to continue as a going concern.
Unconsolidated Affiliates
We have ownership interests in 26 unconsolidated affiliates as of December 31, 2021. See Note 9 to the consolidated financial statements for more information. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the accompanying consolidated balance sheets as investments in unconsolidated affiliates.
The following are circumstances when we may consider entering into a joint venture with a third party:
o
Third parties may approach us with opportunities in which they have obtained land and performed some pre-development activities, but they may not have sufficient access to the capital resources or the development and leasing expertise to bring the project to fruition. We enter into such arrangements when we determine such a project is viable and we can achieve a satisfactory return on our investment. We typically earn development fees from the joint venture and provide management and leasing services to the property for a fee once the property is placed in operation.
o
We determine that we may have the opportunity to capitalize on the value we have created in a property by selling an interest in the property to a third party. This provides us with an additional source of capital that can be used to develop or acquire additional real estate assets that we believe will provide greater potential for growth. When we retain an interest in an asset rather than selling a 100% interest, it is typically because this allows us to continue to manage the property, which provides us the ability to earn fees for management, leasing, development and financing services provided to the joint venture.
o
We also pursue opportunities to contribute available land at our Properties into joint venture partnerships for development of primarily non-retail uses such as hotels, office, self-storage and multifamily. We typically partner with developers who have expertise in the non-retail property types.
Guarantees
We may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on our investment in the joint venture. We may receive a fee from the joint venture for providing the guaranty. Additionally, when we issue a guaranty, the terms of the joint venture agreement typically provide that we may receive indemnification from the joint venture partner or have the ability to increase our ownership interest.
See Note 16 to the consolidated financial statements for information related to our guarantees of unconsolidated affiliates' debt as of December 31, 2021 and 2020.
Material Cash Requirements
The following table summarizes our material cash requirements as of December 31, 2021 (in thousands):
Payments Due By Period
Total
Less Than 1
Year
1-3
Years
3-5
Years
More Than 5
Years
Long-term debt:
Consolidated debt service (1)
$
2,985,156
$
847,129
$
389,984
$
1,063,543
$
684,500
Noncontrolling interests' share in other consolidated
subsidiaries
(34,380
)
(3,749
)
(3,702
)
(26,929
)
-
Our share of unconsolidated affiliates debt service (2)
887,404
257,423
289,050
236,177
104,754
Our share of total debt service obligations
3,838,180
1,100,803
675,332
1,272,791
789,254
Operating leases: (3)
Ground leases on consolidated Properties
16,829
14,929
Purchase obligations: (4)
Construction contracts on consolidated Properties
2,350
2,350
-
-
-
Our share of construction contracts on
unconsolidated Properties
-
-
-
Our share of total purchase obligations
2,513
2,513
-
-
-
Other Contractual Obligations: (5)
Master Services Agreements
61,782
35,304
26,478
-
-
Total material cash requirements
$
3,919,304
$
1,138,997
$
702,565
$
1,273,559
$
804,183
(1)
Represents principal and interest payments due under the terms of mortgage and other indebtedness, net, and includes $71,301 of variable-rate debt service on two operating Properties. The future interest payments are projected based on the interest rates that were in effect at December 31, 2021. See Note 10 to the consolidated financial statements for additional information regarding the terms of long-term debt. The total consolidated debt service includes seven loans, with an aggregate principal balance of $408,703 as of December 31, 2021, secured by Asheville Mall, Alamance Crossing, EastGate Mall, Fayette Mall, Greenbrier Mall, Hamilton Crossing and Expansion and Parkdale Mall and Crossing, respectively, that are past their maturity date. The Company is in discussion with the lenders regarding restructuring or foreclosure actions. Subsequent to December 31, 2021, the loan secured by Fayette Mall was modified to reduce the fixed interest rate to 4.25% and extend the maturity date through May 2023, with three one-year extension options, subject to certain requirements.
(2)
Includes $227,573 of variable-rate debt service. Future contractual obligations have been projected using the same assumptions as used in (1) above.
(3)
Obligations where we own the buildings and improvements, but lease the underlying land under long-term ground leases. The maturities of these leases range from 2044 to 2089 and generally provide for renewal options.
(4)
Represents the remaining balance to be incurred under construction contracts that had been entered into as of December 31, 2021, but were not complete. The contracts are primarily for redevelopment of Properties.
(5)
Represents the remainder of an agreement for maintenance, security, and janitorial services at our Properties that expires in September 2023.
Liquidity Sources
We derive the majority of our revenues from leases with retail tenants, which have historically been the primary source for funding short-term liquidity and capital needs such as operating expenses, debt service, tenant construction allowances, recurring capital expenditures, dividends and distributions. We believe that the combination of cash flows generated from our operations, combined with cash on hand and our investment in U.S. Treasury securities will, for the foreseeable future, provide adequate liquidity to meet our cash needs assuming we continue to operate as a going concern within twelve months of the date our consolidated financial statements are issued. In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, joint venture investments and decreasing expenditures related to tenant construction allowances and other capital expenditures. We also generate revenues from sales of peripheral land at our Properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.
Cash Flows - Operating, Investing and Financing Activities
There was $236.2 million of cash, cash equivalents and restricted cash as of December 31, 2021, an increase of $114.5 million from December 31, 2020. Of this amount, $169.6 million was unrestricted cash as of December 31, 2021. Also, at December 31, 2021, we had $150.0 million in U.S. Treasuries that matured in February 2022, but were subsequently reinvested in additional U.S. Treasuries that mature in May 2022. Our net cash flows are summarized as follows (in thousands):
Successor
Predecessor
Non-GAAP Combined
Predecessor
Period from November 1, through December 31,
Period from January 1, through October 31,
Year Ended
December 31,
Year Ended
December 31,
Change
Net cash provided by operating activities
$
57,049
$
107,059
$
164,108
$
133,365
$
30,743
Net cash provided by (used in) investing activities
(139,016
)
247,494
108,478
(280,397
)
388,875
Net cash provided by (used in) financing activities
(12,117
)
(145,993
)
(158,110
)
209,696
(367,806
)
Net cash flows
$
(94,084
)
$
208,560
$
114,476
$
62,664
$
51,812
Cash Provided by Operating Activities
During 2021, cash provided by operating activities increased primarily due to operating cash flows in the prior-year period being significantly impacted by rent deferrals and abatements that we granted to tenants experiencing financial difficulties due to the COVID-19 pandemic. Also, operating cash flows improved due to not paying interest on the secured credit facility and senior unsecured notes as a result of the filing of the Chapter 11 Cases.
Cash Provided by (Used in) Investing Activities
Net cash provided by investing activities for 2021 was primarily related to U.S. Treasury securities that matured prior to December 31, 2021. Net cash used in investing activities for 2020 was primarily related to the purchase of U.S. Treasury securities for $235.2 million using a significant portion of the $280.0 million we drew on our secured line of credit. We also expended $53.5 million on additions to real estate assets, primarily related to redevelopment projects.
Cash Provided by (Used in) Financing Activities
The net cash outflow for 2021 is primarily due to principal payments on mortgages and the $255.0 million we paid in connection with the Plan, which was partially offset by the $50.0 million we received by issuing new exchangeable notes. The net cash inflow for 2020 is primarily due to the $280.0 million draw on our secured credit facility in order to increase liquidity and preserve financial flexibility in light of the uncertainty that surrounded the COVID-19 pandemic.
Debt of the Company
CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all our debt.
CBL is a limited guarantor of the secured term loan, the senior secured notes and the exchangeable secured notes, as described in Note 10 to the consolidated financial statements, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates.
Debt of the Operating Partnership
The following tables summarize debt based on our pro rata ownership share, including our pro rata share of unconsolidated affiliates and excluding noncontrolling investors’ share of consolidated Properties. Prior to consideration of unamortized deferred financing costs or debt discounts, of our $3,174.6 million outstanding debt at December 31, 2021, $1,580.2 million constituted non-recourse debt obligations and $1,594.4 million constituted recourse debt obligations. We believe the tables below provide investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands):
Successor
December 31, 2021:
Consolidated
Noncontrolling
Interests
Other Debt (1)
Unconsolidated
Affiliates
Total
Weighted-
Average
Interest
Rate (2)
Fixed-rate debt:
Non-recourse loans on operating Properties (3)
$
916,927
$
(29,381
)
$
92,072
$
600,598
$
1,580,216
4.37
%
Senior secured notes - at carrying value (fair value of $395,395 as of December 31, 2021)
395,000
-
-
-
395,000
10.00
%
Exchangeable senior secured notes (4)
150,000
-
-
-
150,000
7.00
%
Recourse loan on operating Property (5)
-
-
-
11,724
11,724
3.61
%
Total fixed-rate debt
1,461,927
(29,381
)
92,072
612,322
2,136,940
5.84
%
Variable-rate debt:
Recourse loans on operating Properties
66,911
-
-
90,691
157,602
2.97
%
Secured term loan
880,091
-
-
-
880,091
3.75
%
Total variable-rate debt
947,002
-
-
90,691
1,037,693
3.63
%
Total fixed-rate and variable-rate debt
2,408,929
(29,381
)
92,072
703,013
3,174,633
5.12
%
Unamortized deferred financing costs (6)
(1,567
)
-
-
(1,971
)
(3,538
)
Debt discounts (7)
(199,153
)
13,519
-
-
(185,634
)
Total mortgage and other indebtedness, net
$
2,208,209
$
(15,862
)
$
92,072
$
701,042
$
2,985,461
Mortgage and other indebtedness, net, consisted of the following:
Predecessor
December 31, 2020:
Consolidated
Noncontrolling
Interests
Unconsolidated
Affiliates
Total
Weighted-
Average
Interest
Rate (2)
Fixed-rate debt:
Non-recourse loans on operating Properties (3)
$
1,120,203
$
(30,177
)
$
612,458
$
1,702,484
4.74
%
Recourse loan on operating Property (5)
-
-
9,360
9,360
3.74
%
Construction loan
-
-
3,406
3,406
5.05
%
Total fixed-rate debt
1,120,203
(30,177
)
625,224
1,715,250
4.74
%
Variable-rate debt:
Recourse loans on operating Properties
68,061
-
88,511
156,572
4.59
%
Construction loans
-
-
33,222
33,222
3.11
%
Total variable-rate debt
68,061
-
121,733
189,794
4.33
%
Total fixed-rate and variable-rate debt
1,188,264
(30,177
)
746,957
1,905,044
4.70
%
Unamortized deferred financing costs
(3,433
)
(2,844
)
(6,012
)
Total mortgage and other indebtedness, net
$
1,184,831
$
(29,912
)
$
744,113
$
1,899,032
Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following:
Predecessor
December 31, 2020:
Consolidated
Noncontrolling
Interests
Unconsolidated
Affiliates
Total
Weighted-
Average
Interest
Rate (2)
Fixed-rate debt:
Senior unsecured notes due 2023 (8)
$
450,000
$
-
$
-
$
450,000
5.25
%
Senior unsecured notes due 2024 (8)
300,000
-
-
300,000
4.60
%
Senior unsecured notes due 2026 (8)
625,000
-
-
625,000
5.95
%
Total fixed-rate debt
1,375,000
-
-
1,375,000
5.43
%
Variable-rate debt:
Secured line of credit (9)
675,926
-
-
675,926
9.50
%
Secured term loan (9)
438,750
-
-
438,750
9.50
%
Total variable-rate debt
1,114,676
-
-
1,114,676
9.50
%
Total fixed-rate and variable-rate debt
2,489,676
-
-
2,489,676
7.25
%
Unpaid accrued interest (10)
57,644
-
-
57,644
Prepetition unsecured or under secured liabilities
4,170
-
-
4,170
Total liabilities subject to compromise
$
2,551,490
$
-
$
-
$
2,551,490
(1)
During 2021, the Company deconsolidated EastGate Mall due to a loss of control when the property was placed into receivership in connection with the foreclosure process. During the period from January 1, 2021 through October 31, 2021, the Predecessor Company deconsolidated Asheville Mall due to a loss of control when the property was placed into receivership in connection with the foreclosure process.
(2)
Weighted-average interest rate excludes the effect of debt premiums and discounts and the amortization of deferred financing costs.
(3)
An unconsolidated affiliate has an interest rate swap on a notional amount outstanding of $41,310 as of December 31, 2021 and $42,654 as of December 31, 2020 related to a variable-rate loan on Ambassador Town Center to effectively fix the interest rate on this loan to a fixed-rate of 3.22%.
(4)
Subsequent to December 31, 2021, HoldCo II exercised its right to exchange all the $150.0 million aggregate principal amount of the Exchangeable Notes. See Note 20 for additional information.
(5)
The unconsolidated affiliate had an interest rate swap on a notional amount outstanding of $9,360 as of December 31, 2020 related to a variable-rate loan on Ambassador Town Center - Infrastructure Improvements to effectively fix the interest rate on this loan to a fixed-rate of 3.74%. In March 2021, the loan was modified and provides an additional four-year term with a fixed interest rate of 3.0%. In conjunction with the modification, we paid additional principal of $1,110.
(6)
Unamortized deferred financing costs of $629 for our share of unconsolidated property-level, non-recourse mortgage loans may be required to be written off in the event that a waiver or restructuring of terms cannot be negotiated and the debt is either redeemed or otherwise extinguished.
(7)
In conjunction with fresh start accounting, we estimated the fair value of our mortgage notes payable with the assistance of a third-party valuation advisor. This resulted in recognizing debt discounts on the Effective Date. The debt discounts are accreted over the term of the respective debt using the effective interest method. Debt discounts totaling $131,086 related to five consolidated mortgage notes payable that were past their maturity dates were fully accreted as additional interest expense during the period from November 1, 2021 through December 31, 2021. The remaining debt discounts at December 31, 2021 will be accreted over a weighted average period of 2.4 years.
(8)
In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest was not accrued on the senior unsecured notes subsequent to the filing of the Chapter 11 Cases. In accordance with ASC 852, unamortized deferred financing costs and debt discounts of $14,231, previously included in mortgage and other indebtedness, net, in the Predecessor Company’s consolidated balance sheets related to the senior unsecured notes were charged to reorganization items in the accompanying consolidated statement of operations of the Predecessor Company as part of the Predecessor Company’s reorganization. The outstanding amount of the senior unsecured notes is included in liabilities subject to compromise in the accompanying consolidated balance sheets of the Predecessor Company as of December 31, 2020. On the Effective Date, the senior unsecured notes were cancelled by operation of the Plan. See Note 2 for additional information.
(9)
The administrative agent informed the Company that interest will accrue on all outstanding obligations at the post-default rate, which is equal to the rate that otherwise would be in effect plus 5.0%. The post-default interest rate at December 31, 2020 was 9.50%. In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest was not accrued on the secured credit facility subsequent to the filing of the Chapter 11 Cases. In accordance with ASC 852, unamortized deferred financing costs of $4,098, previously included in mortgage and other indebtedness, net, in the Predecessor Company’s consolidated balance sheets, related to the secured term loan were charged to reorganization items in the accompanying consolidated statement of operations of the Predecessor Company as part of the Predecessor Company’s reorganization. Additionally, unamortized deferred financing costs amounting to $6,965, previously included in intangible lease assets and other assets in the Predecessor Company’s consolidated balance sheets, related to the secured line of credit were charged to reorganization items in the accompanying consolidated statement of operations of the Predecessor Company as part of the Predecessor Company’s reorganization. The outstanding amount of the secured credit facility is included in liabilities subject to compromise in the accompanying consolidated balance sheets of the Predecessor Company as of December 31, 2020. On the Effective Date, an affiliate of the Company entered into the Exit Credit Agreement, which amended the pre-emergence secured credit facility. See Note 2 for additional information.
(10)
Represents interest accrued on the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases.
The following table presents our pro rata share of consolidated and unconsolidated debt as of December 31, 2021, excluding unamortized deferred financing costs and debt discounts, that is scheduled to mature in 2022 based on the original maturity date (in thousands):
Balance
Consolidated Properties:
Arbor Place
$
101,771
(1)
CBL Center
15,320
Cross Creek Mall
102,264
(1)
Northwoods Mall
60,709
(1)
Southpark Mall
55,567
(1)
WestGate Mall
30,322
365,953
Unconsolidated Properties:
The Shoppes at Eagle Point
16,942
The Outlet Shoppes of the Bluegrass - Phase II
8,097
(2)
West County Center
83,168
York Town Center
14,350
(3)
York Town Center - Pier 1
(3)
123,110
Total 2022 Maturities at pro rata share
$
489,063
(1)
We remain in discussions with the lender regarding an extension.
(2)
Loan has a six-month extension option.
(3)
Subsequent to December 31, 2021, we entered into a $30.0 million non-recourse mortgage note payable, secured by York Town Center, that provides for a three-year term and a fixed interest rate of 4.75%.
Additionally, we have seven loans, with an aggregate principal balance of $408.7 million as of December 31, 2021, secured by Asheville Mall, Alamance Crossing, EastGate Mall, Fayette Mall, Greenbrier Mall, Hamilton Crossing and Expansion and Parkdale Mall and Crossing, respectively, that are past their maturity dates. The Company is in discussion with the lenders regarding restructuring or refinancing the loans secured by Alamance Crossing, Hamilton Crossing and Expansion and Parkdale Mall and Crossing and is in discussion with the lenders for the loans secured by Asheville Mall, EastGate Mall and Greenbrier Mall for foreclosure actions. Subsequent to December 31, 2021, the loan secured by Fayette Mall was modified to reduce the fixed interest rate to 4.25% and extend the maturity date through May 2023, with three one-year extension options, subject to certain requirements.
The weighted-average remaining term of the Successor Company’s total share of consolidated and unconsolidated debt, excluding debt discounts and deferred financing costs, was 3.3 years at December 31, 2021. The weighted-average remaining term of the Predecessor Company’s total share of consolidated and unconsolidated debt, excluding debt discounts and deferred financing costs, was 3.1 years at December 31, 2020. The weighted-average remaining term of the Successor Company’s pro rata share of fixed-rate debt, excluding debt discounts and deferred financing costs, was 3.2 years at December 31, 2021. The weighted-average remaining term of the Predecessor Company’s pro rata share of fixed-rate debt, excluding debt discounts and deferred financing costs, was 3.4 years at December 31, 2020.
As of December 31, 2021, the Successor Company’s pro rata share of consolidated and unconsolidated variable-rate debt, excluding debt discounts and deferred financing costs, represented 32.8% of its total pro rata share of debt, excluding debt discounts and deferred financing costs. As of December 31, 2020, the Predecessor Company’s pro rata share of consolidated and unconsolidated variable-rate debt, excluding debt discounts and deferred financing costs, represented 29.7% of its total pro rata share of debt, excluding debt discounts and deferred financing costs.
See Note 9 and Note 10 to the consolidated financial statements for additional information concerning the amount and terms of our outstanding indebtedness as of December 31, 2021.
Financial Covenants and Restrictions
As discussed in Note 10 to the consolidated financial statements, the filing of the Chapter 11 Cases constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts.
Equity
On the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company, including the old common stock, the old preferred stock, the old limited partnership common interests and the old limited partnership preferred interests related to CBL’s old preferred stock, in each case issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed cancelled, discharged and of no force or effect.
On the Effective Date, (1) CBL issued (i) 1,089,717 shares of new common stock to (a) existing holders of the old common stock and (b) certain of the existing holders of the old limited partnership common interests that elected to receive shares of new common stock in exchange for old limited partnership common interests, (ii) 1,100,000 shares of new common stock to existing holders of the old preferred stock, (iii) 15,685,714 shares of new common stock to existing holders of the Senior Notes and other general unsecured claims, and (iv) 2,114,286 shares of new common stock to existing holders of consenting crossholder claims and (2) the Operating Partnership cancelled all of its old limited partnership common interests and issued 200,000 new common units of general partnership interests, 19,789,717 new common units of limited partnership interest to subsidiaries of CBL and 10,283 new limited partnership interests to certain of the existing holders of old limited partnership common interests that have elected to remain limited partners in the Operating Partnership. On the Effective Date, CBL had an aggregate of 20,000,000 shares of new common stock issued and outstanding (on a fully diluted basis after giving effect to any future election to exchange all new limited partnership interests for new common stock). On November 2, 2021, the newly issued common stock of the reorganized company commenced trading on the NYSE under the symbol CBL.
The decision to declare and pay dividends on any outstanding shares of our common stock, 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 then-current indebtedness, the annual distribution requirements under 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. For additional information, see discussion presented under the subheading “Dividends” in Note 11 of this report. Our actual results of operations will be affected by a number of factors, including the revenues received from the Properties, our operating expenses, interest expense, unanticipated capital expenditures and the ability of the Anchors and tenants at the Properties to meet their obligations for payment of rents and tenant reimbursements.
As a publicly traded company, we previously accessed capital through both the public equity and debt markets. We had a shelf registration statement on Form S-3 on file with the SEC that expired in July 2021. Until we regain Form S-3 eligibility, we will be required to use a registration statement on Form S-11 to register securities with the SEC.
Capital Expenditures
The following table, which excludes expenditures for developments and expansions, summarizes capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the year ended December 31, 2021 compared to 2020 (in thousands):
Successor
Predecessor
Non-GAAP Combined
Predecessor
Period from November 1, through December 31,
Period from January 1, through October 31,
Year Ended December 31,
Year Ended December 31,
Tenant allowances (1)
$
1,013
$
10,639
$
11,652
$
11,971
Deferred maintenance:
Parking area and parking area lighting
1,038
1,236
Roof replacements
1,066
1,103
2,169
2,373
Other capital expenditures
1,955
4,636
6,591
5,279
Total deferred maintenance
3,219
6,777
9,996
7,979
Capitalized overhead
1,108
Capitalized interest
1,954
Total capital expenditures
$
4,601
$
18,275
$
22,876
$
23,012
(1)
Tenant allowances primarily relate to new leases. Tenant allowances related to renewal leases were not material for the periods presented.
Annual capital expenditures budgets are prepared for each of our Properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, will provide the necessary funding for these expenditures.
Developments and Redevelopments
Properties Opened During the Year Ended December 31, 2021
(Dollars in thousands)
CBL's Share of
Property
Location
CBL
Ownership
Interest
Total
Project
Square Feet
Total
Cost (1)
Cost to
Date (2)
Cost
Opening
Date
Initial
Unleveraged
Yield
Outparcel Developments:
Hamilton Place - Aloft Hotel (3)(4)
Chattanooga, TN
50%
89,674
$
12,000
$
11,972
$
3,146
Jun-21
9.2%
Pearland Town Center - HCA Offices
Pearland, TX
100%
48,416
14,186
12,789
5,367
Jun-21
11.8%
138,090
$
26,186
$
24,761
$
8,513
(1)
Total Cost is presented net of reimbursements to be received. Represents total cost incurred by the Predecessor Company and the Successor company.
(2)
Cost to Date does not reflect reimbursements until they are received. Represents total cost to date incurred by the Predecessor Company and the Successor Company.
(3)
Yield is based on expected yield upon stabilization.
(4)
Total cost includes a construction loan of $8,400 (at the Company’s share), a non-cash allocated value for the Company’s land contribution of $2,200 and cash contributions of $1,400.
Redevelopments Completed During the Year Ended December 31, 2021
(Dollars in thousands)
CBL's Share of
Property
Location
CBL
Ownership
Interest
Total
Project
Square Feet
Total
Cost (1)
Cost to
Date (2)
Cost
Opening
Date
Initial
Unleveraged
Yield
Redevelopments:
Cross Creek Sears Redevelopment - Longhorn's, Rooms To Go (3)
Fayetteville, NC
100%
13,494
2,777
4,027
2,803
Dec-21
10.1%
(1)
Total Cost is presented net of reimbursements to be received. Represents total cost incurred by the Predecessor Company and the Successor Company.
(2)
Cost to Date does not reflect reimbursements until they are received. Represents total cost to date incurred by the Predecessor Company and the Successor Company.
(3)
The return reflected represents a pro forma incremental return as Total Cost excludes the cost related to the acquisition of the Sears (Cross Creek Mall) building.
Properties under Development at December 31, 2021
(Dollars in thousands)
CBL's Share of
Property
Location
CBL
Ownership
Interest
Total
Project
Square Feet
Total
Cost (1)
Cost to
Date (2)
Cost
Expected
Opening
Date
Initial
Unleveraged
Yield
Outparcel Developments:
Kirkwood Mall - Five Guys, Blaze Pizza, Thrifty White, Pancheros, Chick-fil-A
Bismarck, ND
100%
15,275
$
7,976
$
4,311
$
4,107
Q2 '22
8.9%
(1)
Total Cost is presented net of reimbursements to be received. Represents total cost incurred by the Predecessor Company and the Successor Company.
(2)
Cost to Date does not reflect reimbursements until they are received. Represents total cost to date incurred by the Predecessor Company and the Successor Company.
We are continually pursuing new 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 project analysis and design, but which have not commenced construction as of December 31, 2021. Except for the projects presented above, we did not have any other material capital commitments as of December 31, 2021.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with GAAP. In preparing our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that are reasonably likely to occur could materially impact the financial statements. Management believes that the following critical accounting policies discussed in this section reflect its more significant estimates and assumptions used in preparation of the consolidated financial statements. We have reviewed these critical accounting estimates and related disclosures with the Audit Committee of our board of directors. See Note 4 of the consolidated financial statements, included in Item 8 of this Annual Report on Form 10-K for a discussion of our significant accounting policies.
Application of Fresh Start Accounting
As described in Note 3 to the consolidated financial statements, we applied Financial Accounting Standards Board (“FASB”) ASC 852 in preparing the consolidated financial statements. For periods subsequent to the filing of the Chapter 11 Cases and before emergence, ASC 852 requires distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business. Upon the effectiveness of the Plan and the emergence of the Debtors from the Chapter 11 Cases, the Company determined it qualified for fresh start accounting under ASC 852, which resulted in the Company becoming a new entity for financial reporting purposes on the Effective Date. We elected to apply fresh start accounting using a convenience date of October 31, 2021. We evaluated and concluded that the events on November 1, 2021 were not material to our financial reporting on both a quantitative and qualitative basis.
Enterprise Value
With the assistance of third-party valuation advisors, we determined the enterprise and corresponding equity value of the Successor using a calculation of the present value of future cash flows based on our financial projections. The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in our valuations, as well as the realization of certain other assumptions. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, we cannot assure you that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.
Real Estate Assets
In developing the fair value estimates for the portfolio of retail Properties, all three traditional approaches to valuation were considered including the income approach, the sales comparison (market) approach and the cost approach. These valuation approaches have long been recognized as acceptable in the appropriate circumstances and in valuations of this type. Accordingly, all applicable Properties were identified, investigated and examined by the valuation provider along with all intangible assets and liabilities associated with the Properties. Furthermore, the valuation provider estimated the fair values and remaining useful lives ("RUL") of the related intangible assets and liabilities at the property-level, as applicable. In most cases, the Properties included the following intangible assets/liabilities:
• Above/below-market leases
• In-place leases
• Avoided lease origination costs (leasing commissions, tenant improvements, etc.)
• Property-level debt
For the valuation of the tangible assets of each property, all pertinent information such as blueprints and drawings, property tax statements, prior appraisals and cost segregation reports were utilized. In terms of methodology, the Properties were valued via the income approach in order to estimate building values. Separate values for the underlying land and site improvements were developed via the cost approach. As part of the allocation process, the fair value of the following tangible components was estimated:
• Land
• Building(s)
• Site Improvements
Investment in Unconsolidated Affiliates
The fair value of our investment in unconsolidated affiliates for fresh start accounting was determined by valuing the underlying real estate assets associated with each unconsolidated joint venture in the same manner as all real estate assets, described above. We then calculated the net asset or liability value of each joint venture by applying the net working capital balance to the fair value of the real estate assets and the amount outstanding under any associated mortgage notes. The percentage of ownership interest in each joint venture was applied to the net asset or liability value which resulted in the fair value of each unconsolidated affiliate. See Note 4 for further information related to the equity method of accounting.
Right-of-Use Assets and Lease Liabilities
The fair value of lease liabilities was measured as the present value of the remaining lease payments, as if the lease were a new lease as of the Effective Date. We used our incremental borrowing rate (“IBR”) as the discount rate in determining the present value of the remaining lease payments, which was determined by a third-party valuation advisor using a fundamental credit rating analysis and an implied market yield analysis based on the newly issued Secured Notes. Based upon the corresponding lease term, the IBR was approximately 12%.
Mortgage Notes Payable
The fair value of the mortgage notes payable was estimated by a third-party valuation advisor based on an analysis of the Company’s collateral coverage, financial metrics and interest rate for each mortgage note payable relative to market rates. If there is a reasonable expectation that the debtor will be able to meet the financial obligations of the mortgage note payable, or the mortgage note payable is a recourse loan, then the value of the mortgage note is equal to the present value of the future mortgage note payments discounted at a rate of return commensurate with the risk associated with the mortgage note payments. If the debtor is unable, or if there is uncertainty if the debtor will be able, to meet the financial obligations of the mortgage note, then the value of the mortgage note payable is equal to the expected proceeds to be received through a liquidation of the underlying property at fair value.
Revenue Recognition and Accounts Receivable
Receivables include amounts billed and currently due from tenants pursuant to lease agreements and receivables attributable to straight-line rents associated with those lease agreements. Individual leases where the collection of rents is in dispute are assessed for collectability based on management’s best estimate of collection considering the anticipated outcome of the dispute. Individual leases that are not in dispute are assessed for collectability and upon the determination that the collection of rents over the remaining lease term is not probable, accounts receivable are reduced as an adjustment to rental revenues. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further, management assesses whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical collection levels and current economic trends. An allowance for the uncollectable portion of the portfolio is recorded as an adjustment to rental revenues.
We review current economic considerations each reporting period, including the effects of tenant bankruptcies. Additionally, with the uncertainties regarding COVID-19, our assessment also takes into consideration the type of tenant and current discussions with the tenants regarding matters such as billing disputes, lease negotiations and executed deferrals or abatements, as well as recent rent payment and credit history. Evaluating and estimating uncollectable lease payments and related receivables requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation.
Carrying Value of Long-Lived Assets
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 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. We estimate future operating cash flows, the terminal capitalization rate and the discount rate, 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.
Investments in Unconsolidated Affiliates
On a periodic basis, we assess whether there are any indicators that the fair value of our investments in unconsolidated affiliates may be impaired. An investment is impaired only if our estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment. Our estimates of fair value for each investment are based on a number of assumptions such as future leasing expectations, operating forecasts, discount rates and capitalization rates, among others. These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the fair values estimated in the impairment analyses may not be realized.
Recent Accounting Pronouncements
See Note 4 to the consolidated financial statements for information on recently issued accounting pronouncements.
Non-GAAP Measure
Funds from Operations
FFO is a widely used non-GAAP measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
We believe that FFO provides an additional indicator of the operating performance of our Properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of real estate assets have historically risen or fallen with market conditions, we believe that FFO enhances investors’ understanding of our operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of our Properties and interest rates, but also by our capital structure.
We present both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as we believe that both are useful performance measures. We believe FFO allocable to Operating Partnership common unitholders is a useful performance measure since we conduct substantially all our business through our Operating Partnership and, therefore, it reflects the performance of the Properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in our Operating Partnership. We believe FFO allocable to common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to common shareholders.
In our reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders that is presented below, we make an adjustment to add back noncontrolling interest in income (loss) of our Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders. We then apply a percentage to FFO of our Operating Partnership common unitholders to arrive at FFO allocable to common shareholders. The percentage is computed by taking the weighted-average number of common shares outstanding for the period and dividing it by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units held by noncontrolling interests during the period.
FFO does not represent cash flows from operations as defined by GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating our operating performance or to cash flow as a measure of liquidity.
We believe that it is important to identify the impact of certain significant items on our FFO measures for a reader to have a complete understanding of our results of operations. Therefore, we have also presented adjusted FFO measures excluding these significant items from the applicable periods. Please refer to the reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders below for a description of these adjustments.
FFO allocable to Operating Partnership common unitholders decreased to a loss of $237.7 million for the year ended December 31, 2021 compared to $108.2 million for the prior year. After making the adjustments noted below, FFO of the Operating Partnership, as adjusted, increased for the year ending December 31, 2021 to $349.8 million compared to $140.8 million in 2020. The increase in FFO, as adjusted, was primarily driven by the reduction in interest expense due to not recognizing post-petition interest expense on the Predecessor’s senior unsecured notes and the secured credit facility subsequent to the filing of the Chapter 11 Cases, undeclared dividends ceasing to accumulate on the Predecessor’s preferred stock subsequent to the filing of the Chapter 11 Cases, an income tax benefit in the current year and a decrease in uncollectable revenues in the current year as compared to the prior year.
The reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows (in thousands):
Successor
Predecessor
Non-GAAP Combined
Predecessor
Period from November 1, through December 31,
Period from January 1, through October 31,
Year Ended December 31,
Year Ended December 31,
Net loss attributable to common shareholders
$
(151,545
)
$
(470,627
)
$
(622,172
)
$
(332,494
)
$
(153,669
)
Noncontrolling interest in loss of Operating Partnership
-
(2,473
)
(2,473
)
(19,762
)
(23,683
)
Depreciation and amortization expense of:
Consolidated Properties
49,504
158,574
208,078
215,030
257,746
Unconsolidated affiliates
9,847
45,126
54,973
56,734
49,434
Non-real estate assets
(132
)
(1,593
)
(1,725
)
(3,056
)
(3,650
)
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries
(622
)
(1,901
)
(2,523
)
(3,638
)
(8,191
)
Loss on impairment, net of noncontrolling interests' share
-
136,046
136,046
195,336
239,521
(Gain) loss on depreciable property, net of taxes
(20
)
(7,890
)
(7,910
)
(77,250
)
FFO allocable to Operating Partnership common unitholders
(92,968
)
(144,738
)
(237,706
)
108,175
280,258
Debt discount accretion, net of noncontrolling interests' share (1)
184,637
-
184,637
-
-
Adjustment for unconsolidated affiliates with negative investment
(4,574
)
-
(4,574
)
-
-
Senior secured notes fair value adjustment (2)
-
-
-
Prepetition charges (3)
-
-
-
23,883
-
Litigation settlement, net of taxes (4)
(118
)
(932
)
(1,050
)
(7,855
)
61,271
Non-cash default interest expense (5)
(6,471
)
35,072
28,601
13,096
1,688
Gain on deconsolidation (6)
(19,126
)
(55,131
)
(74,257
)
-
-
Gain on extinguishment of debt (7)
-
-
-
(32,521
)
(71,722
)
Reorganization items, net of noncontrolling interests' share (8)
1,403
452,378
453,781
35,977
-
FFO allocable to Operating Partnership common
unitholders, as adjusted
$
63,178
$
286,649
$
349,827
$
140,755
$
271,495
(1)
In conjunction with fresh start accounting, we estimated the fair value of our mortgage notes with the assistance of a third-party valuation advisor. This resulted in recognizing a debt discount on the Effective Date. The debt discount is accreted over the term of the respective debt using the effective interest method.
(2)
As of December 31, 2021, represents the fair value adjustment recorded on our Secured Notes. We elected the fair value option in conjunction with the issuance of the Secured Notes.
(3)
For the Predecessor year ended December 31, 2020, represents professional fees related to the Company’s negotiations with the administrative agent and lenders under the secured credit facility and certain holders of the Predecessor Company’s senior unsecured notes regarding a restructure of such indebtedness prior to the filing of voluntary petitions under Chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas beginning on November 1, 2020.
(4)
For the Predecessor period from January 1, 2021 through October 31, 2021 and the year ended December 31, 2020, represents a credit to litigation settlement expense related to claim amounts that were released pursuant to the terms of the settlement agreement related to the settlement of a class action lawsuit. For the year ended December 31, 2019, represents expense associated with the settlement of the class action lawsuit.
(5)
The Successor period from November 1, 2021 through December 31, 2021 includes the reversal of default interest expense. The Predecessor period from January 1, 2021 through October 31, 2021 includes default interest expense related to loans secured by properties that were in default prior to the Company filing the Chapter 11 Cases, as well as loans secured by properties that remain in default due to the Company filing the Chapter 11 Cases. The Predecessor year ended December 31, 2020 includes default interest expense related to loans secured by properties that were in default prior to the Company filing the Chapter 11 Cases, as well as loans secured by properties that were in default due to the Company filing the Chapter 11 Cases. The year ended December 31, 2019 includes non-cash default interest expense related to four malls.
(6)
During the Successor period from November 1, 2021 through December 31, 2021, the Successor Company deconsolidated EastGate Mall due to a loss of control when the property was placed into receivership in connection with the foreclosure process. For the Predecessor period from January 1, 2021 through October 31, 2021, the Predecessor Company deconsolidated Asheville Mall and Park Plaza due to a loss of control when the properties were placed into receivership in connection with the foreclosure process.
(7)
The Predecessor year ended December 31, 2020 includes a gain on extinguishment of debt related to the non-recourse loans secured by Burnsville Center and Hickory Point Mall, which were conveyed to the lender. The Predecessor year ended December 31, 2019 includes a gain on extinguishment of debt related to the non-recourse loan secured by Acadiana Mall, which was conveyed to the lender.
(8)
For the Successor period from November 1, 2021 through December 31, 2021, reorganization items represent costs incurred subsequent to the Company filing the Chapter 11 Cases associated with the Company’s reorganization efforts. For the Predecessor period from January 1, 2021 through October 31, 2021 reorganization items represent adjustments related to the fair value of the Successor Company, adjustments related to the write off of the Predecessor Company’s debt and the issuance of new debt of the Successor Company, as well as costs incurred subsequent to the Company filing the Chapter 11 Cases associated with the Company’s reorganization efforts, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees. For the Predecessor year ended December 31, 2020, reorganization items represent costs incurred subsequent to the Company filing the Chapter 11 Cases associated with the Company’s reorganization efforts, which consists of professional fees, legal fees, retention bonuses, U.S. Trustee fees and unamortized deferred financing costs and debt discounts expensed in accordance with ASC 852.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risk exposures, including interest rate risk. The following discussion regarding our risk management activities includes forward-looking statements that involve risk and uncertainties. Estimates of future performance and economic conditions are reflected assuming certain changes in interest rates. Caution should be used in evaluating our overall market risk from the information presented below, as actual results may differ.
Interest Rate Risk
Based on our proportionate share of consolidated and unconsolidated variable-rate debt at December 31, 2021, a 0.5% increase or decrease in interest rates on variable rate debt would increase or decrease annual cash flows by approximately $5.1 million.
Based on our proportionate share of total consolidated and unconsolidated debt at December 31, 2021, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $4.5 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $4.4 million.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Index to Financial Statements and Schedules contained in Item 15 on page 78.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Controls and Procedures with Respect to the Company
Conclusion Regarding Effectiveness of Disclosure Controls and Procedures
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, to ensure that the information required to be disclosed by the Company in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and is accumulated and communicated to our management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as a result of the material weakness described below.
Management's Report on Internal Control over Financial Reporting
Material Weakness in Internal Control over Financial Reporting
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting, management of the Company determined that there was a control deficiency that constituted a material weakness, as described below.
As a result of turnover, the Company did not maintain a sufficient complement of personnel commensurate with their accounting and financial reporting requirements in accordance with U.S. GAAP and SEC regulations.
The control deficiency described above created a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis and therefore we concluded that the deficiency represents a material weakness in the Company’s internal control over financial reporting and that the Company did not maintain effective internal control over financial reporting based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (the “2013 Framework”).
Notwithstanding the identified material weakness, management believes that the Consolidated Financial Statements and related financial information included in this Form 10-K fairly present, in all material respects, the Company’s balance sheets, statements of operations, comprehensive loss and cash flows as of and for the periods presented.
Remediation Plan
During 2021, the Company took steps to remediate the material weakness described above, which included hiring additional personnel. The Company is in the process of integrating these personnel in order for its internal controls over financial reporting to operate effectively. The Company continues to explore hiring additional personnel. Also, in the short term, the Company utilized the assistance of external parties to assist with the added reporting requirements brought on by its filing of the Chapter 11 Cases and its subsequent emergence on November 1, 2021.
Until our remediation plan is implemented and operating effectively, management will continue to devote time and attention to these efforts. Management has concluded that, because of the material weakness, our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2021.
Report of Management on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Management recognizes that there are inherent limitations in the effectiveness of internal control over financial reporting, including the potential for human error or the circumvention or overriding of internal controls. Accordingly, even effective internal control over financial reporting cannot provide absolute assurance with respect to financial statement preparation. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. In addition, any projection of the evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the polices or procedures may deteriorate.
Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in the 2013 Framework and concluded that, as of December 31, 2021 and 2020, the Successor Company and the Predecessor Company, respectively, did not maintain effective internal control over financial reporting for the reasons described above.
Changes in Internal Control over Financial Reporting
During the fourth quarter of 2021, upon our emergence from the Chapter 11 Cases, we established controls over the application of fresh start accounting. Except for such application of fresh start accounting, and the ongoing implementation of management’s remediation plan for the material weakness discussed above, there were no changes that occurred during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated herein by reference to the sections entitled “ELECTION OF DIRECTORS-General,” “ELECTION OF DIRECTORS-Impact of Our Voluntary Reorganization Under Chapter 11,” “ELECTION OF DIRECTORS-Director Nominees," "ELECTION OF DIRECTORS-Additional Executive Officers,” “CORPORATE GOVERNANCE MATTERS-Code of Business Conduct and Ethics,” “CORPORATE GOVERNANCE MATTERS-Board of Directors’ Meetings and Committees - The Audit Committee,” and “Delinquent Section 16(a) Reports” in our definitive proxy statement filed with the SEC with respect to our Annual Meeting of Stockholders to be held on May 26, 2022.
Our board of directors has determined that each of Marjorie L. Bowen, David J. Contis and Robert G. Gifford, each, an independent director and member of the audit committee, qualifies as an “audit committee financial expert” as such term is defined by the rules of the Commission.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to the sections entitled “DIRECTOR COMPENSATION,” “EXECUTIVE COMPENSATION,” “REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS” and “Compensation Committee Interlocks and Insider Participation” in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 26, 2022.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Incorporated herein by reference to the sections entitled “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” and “Equity Compensation Plan Information as of December 31, 2021”, in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 26, 2022.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Incorporated herein by reference to the sections entitled “CORPORATE GOVERNANCE MATTERS-Director Independence” and “CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS”, in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 26, 2022.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Incorporated herein by reference to the section entitled “Independent Registered Public Accountants’ Fees and Services” under “RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS” in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 26, 2022.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(1)
Consolidated Financial Statements
Page
Number
CBL & Associates Properties, Inc.
Report of Independent Registered Public Accounting Firm
PCAOB ID: 34
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Equity for the Years Ended December 31, 2021, 2020 and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
CBL & Associates Properties, Inc.
Notes to Consolidated Financial Statements
(2)
Consolidated Financial Statement Schedules
Schedule III Real Estate and Accumulated Depreciation
Schedule IV Mortgage Loans on Real Estate
Financial statement schedules not listed herein are either not required or are not present in amounts sufficient to require submission of the schedule or the information required to be included therein is included in our consolidated financial statements in Item 15 or are reported elsewhere.
(3)
Exhibits
The Exhibit Index preceding the Signature pages to this report is incorporated by reference into this Item 15(a)(3).