# CBL & ASSOCIATES PROPERTIES INC (CBL) FY 2021 MD&A Verbatim Item 7 Management's Discussion and Analysis from CBL & ASSOCIATES PROPERTIES INC's 10-K for fiscal year 2021. SEC filing source: https://www.sec.gov/Archives/edgar/data/910612/000156459022013053/cbl-10k_20211231.htm Accession: 0001564590-22-013053 Filing date: 2022-03-31 Report date: 2021-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/CBL/ All MD&A years: /company/CBL/mda/ Next year: /company/CBL/mda/fy2022/ (FY 2022) 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. 49 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. 50 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: [[GREPCENT_TABLE]] [["","\u25aa","Items increasing net loss in 2021 compared to 2020:"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","Reorganization items expense, net, related to our reorganization efforts were $400.6 million higher in 2021 compared to 2020;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","Interest expense was $67.2 million higher in 2021 than in 2020;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","Gain on extinguishment of debt of $32.5 million in 2020;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25aa","Items decreasing net loss in 2021 compared to 2020:"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","Gain on deconsolidation of $74.3 million in 2021;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","Loss on impairment was $66.6 million lower in 2021 than in 2020;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","General and administrative expenses were $25.0 million lower in 2021 than in 2020;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","Equity in losses of unconsolidated affiliates improved $4.8 million in 2021 compared to 2020;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","Income tax benefit was $4.8 million in 2021 compared to an income tax provision of $16.8 million in 2020; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u2022","Gain on sales of real estate assets was $7.5 million higher in 2021 than in 2020."]] [[/GREPCENT_TABLE]] 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 [[GREPCENT_TABLE]] [["Property","","Location","","Date Opened"],["Parkdale Mall \u2013 Self Storage (1)","","Beaumont, TX","","April 2020"],["Hamilton Place \u2013 Self Storage (1)","","Chattanooga, TN","","July 2020"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] 51 Deconsolidations [[GREPCENT_TABLE]] [["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"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","We deconsolidated the property due to a loss of control when the property was placed into receivership in connection with the foreclosure process."]] [[/GREPCENT_TABLE]] Dispositions [[GREPCENT_TABLE]] [["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"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Title to the property was transferred to the mortgage holder in satisfaction of the non-recourse debt secured by the property."]] [[/GREPCENT_TABLE]] Revenues (in thousands) [[GREPCENT_TABLE]] [["","","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"],["","","2021","","","","2021","","","2021","","","2020","","","Change","","","Core","","","Non-core","","","Deconsolidation","","","Dispositions"],["Rental revenues","","$","103,252","","","","$","450,922","","","$","554,174","","","$","554,064","","","$","110","","","$","26,907","","","$","1,449","","","$","(16,685",")","","$","(11,561",")"],["Management, development and leasing fees","","","1,500","","","","","5,642","","","","7,142","","","","6,800","","","","342","","","","342","","","","\u2014","","","","\u2014","","","","\u2014"],["Other","","","4,094","","","","","11,465","","","","15,559","","","","14,997","","","","562","","","","1,077","","","","567","","","","(495",")","","","(587",")"],["Total revenues","","$","108,846","","","","$","468,029","","","$","576,875","","","$","575,861","","","$","1,014","","","$","28,326","","","$","2,016","","","$","(17,180",")","","$","(12,148",")"]] [[/GREPCENT_TABLE]] Rental revenues from the Comparable Properties increased primarily due to a significantly higher estimate of uncollectable revenues in the prior year period resulting from the impacts of the COVID-19 pandemic, as well as prior year rent concessions to tenants in bankruptcy or that were struggling financially due to the impacts of the COVID-19 pandemic. Percentage rent increased due to higher sales in the current period as sales and traffic improved as vaccination rates increased and government restrictions were lessened. 52 Operating Expenses (in thousands) [[GREPCENT_TABLE]] [["","","Successor","","","","Predecessor","","","Non-GAAP Combined","","","Predecessor"],["","","For the Period November 1, 2021 through December 31,","","","","For the Period January 1, 2021 through October 31,","","","Year Ended December 31,","","","For the Year Ended December 31,","","","","","","","Comparable Properties"],["","","2021","","","","2021","","","2021","","","2020","","","Change","","","Core","","","Non-core","","","Deconsolidation","","","Dispositions"],["Property operating","","$","(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","","","","45","","","","1,788","","","","2,825"],["Maintenance and repairs","","","(7,581",")","","","","(32,487",")","","","(40,068",")","","","(34,132",")","","","(5,936",")","","","(7,586",")","","","(309",")","","","792","","","","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","","","","69","","","","294"],["Prepetition charges","","","\u2014","","","","","\u2014","","","","\u2014","","","","(23,883",")","","","23,883","","","","23,883","","","","\u2014","","","","\u2014","","","","\u2014"],["Loss on impairment","","","\u2014","","","","","(146,781",")","","","(146,781",")","","","(213,358",")","","","66,577","","","","66,577","","","","\u2014","","","","\u2014","","","","\u2014"],["Litigation settlement","","","118","","","","","932","","","","1,050","","","","7,855","","","","(6,805",")","","","(6,805",")","","","\u2014","","","","\u2014","","","","\u2014"],["Other","","","(3",")","","","","(745",")","","","(748",")","","","(953",")","","","205","","","","270","","","","(65",")","","","\u2014","","","","\u2014"],["Total operating expenses","","$","(91,001",")","","","$","(504,337",")","","$","(595,338",")","","$","(686,673",")","","$","91,335","","","$","61,658","","","$","5,804","","","$","12,896","","","$","10,977"]] [[/GREPCENT_TABLE]] 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. 53 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. 54 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): [[GREPCENT_TABLE]] [["","","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,"],["","","2021","","","","2021","","","2021","","","2020"],["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","","","3","","","","","745","","","","748","","","","952"],["(Gain) loss on sales of real estate assets","","","3","","","","","(12,187",")","","","(12,184",")","","","(4,696",")"],["Gain on sales of real estate assets of unconsolidated affiliates","","","\u2014","","","","","(70",")","","","(70",")","","","\u2014"],["Adjustment for unconsolidated affiliates with negative investment","","","(4,574",")","","","","\u2014","","","","(4,574",")","","","\u2014"],["Gain on extinguishment of debt","","","\u2014","","","","","\u2014","","","","\u2014","","","","(32,521",")"],["Gain on deconsolidation","","","(19,126",")","","","","(55,131",")","","","(74,257",")","","","\u2014"],["Loss on impairment, net of noncontrolling interests' share","","","\u2014","","","","","136,046","","","","136,046","","","","195,336"],["Litigation settlement","","","(118",")","","","","(932",")","","","(1,050",")","","","(7,855",")"],["Prepetition charges","","","\u2014","","","","","\u2014","","","","\u2014","","","","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"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] 55 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: [[GREPCENT_TABLE]] [["","","As of December 31,"],["","","2021","","","2020"],["Malls, Lifestyle Centers and Outlet Centers","","","87.8","%","","","90.4","%"],["All Other","","","12.2","%","","","9.6","%"]] [[/GREPCENT_TABLE]] 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): [[GREPCENT_TABLE]] [["","","Year Ended December 31,"],["","","2021","","","2019 (1)","","","% Change"],["Mall, Lifestyle Center and Outlet Center same-center sales per square foot","","$","454","","","$","393","","","15.5%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] In-Line Store Occupancy Our portfolio in-line store occupancy is summarized in the following table (Excluded Properties are not included in occupancy metrics): [[GREPCENT_TABLE]] [["","","As of December 31,"],["","","2021","","","2020"],["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%"]] [[/GREPCENT_TABLE]] 56 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: [[GREPCENT_TABLE]] [["","","Year Ended December 31,"],["","","2021","","","2020"],["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"]] [[/GREPCENT_TABLE]] 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): [[GREPCENT_TABLE]] [["","","December 31,"],["","","2021","","","2020"],["Total portfolio","","$","25.09","","","$","24.85"],["Malls, Lifestyle Centers and Outlet Centers:"],["Total same-center malls, lifestyle centers and outlet centers","","","29.63","","","","29.56"],["Total malls, lifestyle centers and outlet centers","","","29.63","","","","29.34"],["Total malls","","","30.16","","","","30.22"],["Total lifestyle centers","","","27.60","","","","26.11"],["Total outlet centers","","","27.34","","","","26.42"],["All Other:"],["Total open-air centers","","","15.05","","","","14.72"],["Total other","","","19.32","","","","19.28"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Excluded Properties are not included in base rent. Average base rents for open-air centers and other include all leased space, regardless of size."]] [[/GREPCENT_TABLE]] Results from new and renewal leasing of comparable in-line space of less than 10,000 square feet during the year ended December 31, 2021 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows: [[GREPCENT_TABLE]] [["Property Type","","Square Feet","","","Prior Gross Rent PSF","","","New Initial Gross Rent PSF","","","% Change Initial","","","New Average Gross Rent PSF (1)","","","% Change Average"],["All Property Types (2)","","","1,845,617","","","$","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",")%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Average gross rent does not incorporate allowable future increases for recoverable common area expenses."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Includes malls, lifestyle centers, outlet centers, open-air centers and other."]] [[/GREPCENT_TABLE]] 57 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: [[GREPCENT_TABLE]] [["","","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","","","95","","","","221,836","","","","6.15","","","$","32.61","","","$","35.00","","","$","38.18","","","$","(5.57",")","","","(14.6",")%","","$","(3.18",")","","","(8.3",")%"],["Renewal","","","407","","","","1,278,323","","","","2.19","","","","27.70","","","","28.11","","","","33.71","","","","(6.01",")","","","(17.8",")%","","","(5.60",")","","","(16.6",")%"],["Commencement 2021 Total","","","502","","","","1,500,159","","","","2.94","","","","28.43","","","","29.13","","","","34.37","","","","(5.94",")","","","(17.3",")%","","","(5.24",")","","","(15.2",")%"],["Commencement 2022:"],["New","","","28","","","","74,409","","","","7.77","","","","37.91","","","","40.40","","","","36.93","","","","0.98","","","","2.7","%","","","3.47","","","","9.4","%"],["Renewal","","","190","","","","546,727","","","","2.58","","","","35.60","","","","35.85","","","","36.52","","","","(0.92",")","","","(2.5",")%","","","(0.67",")","","","(1.8",")%"],["Commencement 2022 Total","","","218","","","","621,136","","","","3.25","","","","35.88","","","","36.39","","","","36.57","","","","(0.69",")","","","(1.9",")%","","","(0.18",")","","","(0.5",")%"],["Total 2021/2022","","","720","","","","2,121,295","","","","3.03","","","$","30.61","","","$","31.25","","","$","35.01","","","$","(4.40",")","","","(12.6",")%","","$","(3.76",")","","","(10.7",")%"]] [[/GREPCENT_TABLE]] 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. 58 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. 59 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: [[GREPCENT_TABLE]] [["","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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","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."]] [[/GREPCENT_TABLE]] 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. 60 Material Cash Requirements The following table summarizes our material cash requirements as of December 31, 2021 (in thousands): [[GREPCENT_TABLE]] [["","","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",")","","","\u2014"],["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","","","","377","","","","755","","","","768","","","","14,929"],["Purchase obligations: (4)"],["Construction contracts on consolidated Properties","","","2,350","","","","2,350","","","","\u2014","","","","\u2014","","","","\u2014"],["Our share of construction contracts on unconsolidated Properties","","","163","","","","163","","","","\u2014","","","","\u2014","","","","\u2014"],["Our share of total purchase obligations","","","2,513","","","","2,513","","","","\u2014","","","","\u2014","","","","\u2014"],["Other Contractual Obligations: (5)"],["Master Services Agreements","","","61,782","","","","35,304","","","","26,478","","","","\u2014","","","","\u2014"],["Total material cash requirements","","$","3,919,304","","","$","1,138,997","","","$","702,565","","","$","1,273,559","","","$","804,183"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Includes $227,573 of variable-rate debt service. Future contractual obligations have been projected using the same assumptions as used in (1) above."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(5)","Represents the remainder of an agreement for maintenance, security, and janitorial services at our Properties that expires in September 2023."]] [[/GREPCENT_TABLE]] 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. 61 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 $150.0 million in U.S. Treasuries that matured in February 2022, but were subsequently reinvested in additional U.S. Treasuries that mature in May 2022. Our net cash flows are summarized as follows (in thousands): [[GREPCENT_TABLE]] [["","","Successor","","","","Predecessor","","","Non-GAAP Combined","","","Predecessor"],["","","Period from November 1, through December 31,","","","","Period from January 1, through October 31,","","","Year Ended December 31,","","","Year Ended December 31,"],["","","2021","","","","2021","","","2021","","","2020","","","Change"],["Net cash provided by operating activities","","$","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"]] [[/GREPCENT_TABLE]] 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. 62 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 $1,594.4 million constituted recourse debt obligations. We believe the tables below provide investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands): [[GREPCENT_TABLE]] [["Successor"],["December 31, 2021:","","Consolidated","","","Noncontrolling Interests","","","Other Debt (1)","","","Unconsolidated Affiliates","","","Total","","","Weighted- Average Interest Rate (2)"],["Fixed-rate debt:"],["Non-recourse loans on operating Properties (3)","","$","916,927","","","$","(29,381",")","","$","92,072","","","$","600,598","","","$","1,580,216","","","","4.37","%"],["Senior secured notes - at carrying value (fair value of $395,395 as of December 31, 2021)","","","395,000","","","","\u2014","","","","\u2014","","","","\u2014","","","","395,000","","","","10.00","%"],["Exchangeable senior secured notes (4)","","","150,000","","","","\u2014","","","","\u2014","","","","\u2014","","","","150,000","","","","7.00","%"],["Recourse loan on operating Property (5)","","","\u2014","","","","\u2014","","","","\u2014","","","","11,724","","","","11,724","","","","3.61","%"],["Total fixed-rate debt","","","1,461,927","","","","(29,381",")","","","92,072","","","","612,322","","","","2,136,940","","","","5.84","%"],["Variable-rate debt:"],["Recourse loans on operating Properties","","","66,911","","","","\u2014","","","","\u2014","","","","90,691","","","","157,602","","","","2.97","%"],["Secured term loan","","","880,091","","","","\u2014","","","","\u2014","","","","\u2014","","","","880,091","","","","3.75","%"],["Total variable-rate debt","","","947,002","","","","\u2014","","","","\u2014","","","","90,691","","","","1,037,693","","","","3.63","%"],["Total fixed-rate and variable-rate debt","","","2,408,929","","","","(29,381",")","","","92,072","","","","703,013","","","","3,174,633","","","","5.12","%"],["Unamortized deferred financing costs (6)","","","(1,567",")","","","\u2014","","","","\u2014","","","","(1,971",")","","","(3,538",")"],["Debt discounts (7)","","","(199,153",")","","","13,519","","","","\u2014","","","","\u2014","","","","(185,634",")"],["Total mortgage and other indebtedness, net","","$","2,208,209","","","$","(15,862",")","","$","92,072","","","$","701,042","","","$","2,985,461"]] [[/GREPCENT_TABLE]] 63 [[GREPCENT_TABLE]] [["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)","","","\u2014","","","","\u2014","","","","9,360","","","","9,360","","","","3.74","%"],["Construction loan","","","\u2014","","","","\u2014","","","","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","","","","\u2014","","","","88,511","","","","156,572","","","","4.59","%"],["Construction loans","","","\u2014","","","","\u2014","","","","33,222","","","","33,222","","","","3.11","%"],["Total variable-rate debt","","","68,061","","","","\u2014","","","","121,733","","","","189,794","","","","4.33","%"],["Total fixed-rate and variable-rate debt","","","1,188,264","","","","(30,177",")","","","746,957","","","","1,905,044","","","","4.70","%"],["Unamortized deferred financing costs","","","(3,433",")","","","265","","","","(2,844",")","","","(6,012",")"],["Total mortgage and other indebtedness, net","","$","1,184,831","","","$","(29,912",")","","$","744,113","","","$","1,899,032"],["Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following:"],["Predecessor"],["December 31, 2020:","","Consolidated","","","Noncontrolling Interests","","","Unconsolidated Affiliates","","","Total","","","Weighted- Average Interest Rate (2)"],["Fixed-rate debt:"],["Senior unsecured notes due 2023 (8)","","$","450,000","","","$","\u2014","","","$","\u2014","","","$","450,000","","","","5.25","%"],["Senior unsecured notes due 2024 (8)","","","300,000","","","","\u2014","","","","\u2014","","","","300,000","","","","4.60","%"],["Senior unsecured notes due 2026 (8)","","","625,000","","","","\u2014","","","","\u2014","","","","625,000","","","","5.95","%"],["Total fixed-rate debt","","","1,375,000","","","","\u2014","","","","\u2014","","","","1,375,000","","","","5.43","%"],["Variable-rate debt:"],["Secured line of credit (9)","","","675,926","","","","\u2014","","","","\u2014","","","","675,926","","","","9.50","%"],["Secured term loan (9)","","","438,750","","","","\u2014","","","","\u2014","","","","438,750","","","","9.50","%"],["Total variable-rate debt","","","1,114,676","","","","\u2014","","","","\u2014","","","","1,114,676","","","","9.50","%"],["Total fixed-rate and variable-rate debt","","","2,489,676","","","","\u2014","","","","\u2014","","","","2,489,676","","","","7.25","%"],["Unpaid accrued interest (10)","","","57,644","","","","\u2014","","","","\u2014","","","","57,644"],["Prepetition unsecured or under secured liabilities","","","4,170","","","","\u2014","","","","\u2014","","","","4,170"],["Total liabilities subject to compromise","","$","2,551,490","","","$","\u2014","","","$","\u2014","","","$","2,551,490"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Weighted-average interest rate excludes the effect of debt premiums and discounts and the amortization of deferred financing costs."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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%."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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\u2019s 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\u2019s 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."]] [[/GREPCENT_TABLE]] 64 [[GREPCENT_TABLE]] [["(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\u2019s 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\u2019s reorganization. Additionally, unamortized deferred financing costs amounting to $6,965, previously included in intangible lease assets and other assets in the Predecessor Company\u2019s consolidated balance sheets, related to the secured line of credit were charged to reorganization items in the accompanying consolidated statement of operations of the Predecessor Company as part of the Predecessor Company\u2019s reorganization. The outstanding amount of the secured credit facility is included in liabilities subject to compromise in the accompanying consolidated balance sheets of the Predecessor Company as of December 31, 2020. On the Effective Date, an affiliate of the Company entered into the Exit Credit Agreement, which amended the pre-emergence secured credit facility. See Note 2 for additional information."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(10)","Represents interest accrued on the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases."]] [[/GREPCENT_TABLE]] The following table presents our pro rata share of consolidated and unconsolidated debt as of December 31, 2021, excluding unamortized deferred financing costs and debt discounts, that is scheduled to mature in 2022 based on the original maturity date (in thousands): [[GREPCENT_TABLE]] [["","","Balance"],["Consolidated Properties:"],["Arbor Place","","$","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","","","553","","(3)"],["","","","123,110"],["Total 2022 Maturities at pro rata share","","$","489,063"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","We remain in discussions with the lender regarding an extension."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Loan has a six-month extension option."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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%."]] [[/GREPCENT_TABLE]] 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. 65 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. 66 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): [[GREPCENT_TABLE]] [["","","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,"],["","","2021","","","","2021","","","2021","","","2020"],["Tenant allowances (1)","","$","1,013","","","","$","10,639","","","$","11,652","","","$","11,971"],["Deferred maintenance:"],["Parking area and parking area lighting","","","198","","","","","1,038","","","","1,236","","","","327"],["Roof replacements","","","1,066","","","","","1,103","","","","2,169","","","","2,373"],["Other capital expenditures","","","1,955","","","","","4,636","","","","6,591","","","","5,279"],["Total deferred maintenance","","","3,219","","","","","6,777","","","","9,996","","","","7,979"],["Capitalized overhead","","","148","","","","","726","","","","874","","","","1,108"],["Capitalized interest","","","221","","","","","133","","","","354","","","","1,954"],["Total capital expenditures","","$","4,601","","","","$","18,275","","","$","22,876","","","$","23,012"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Tenant allowances primarily relate to new leases. Tenant allowances related to renewal leases were not material for the periods presented."]] [[/GREPCENT_TABLE]] Annual capital expenditures budgets are prepared for each of our Properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, will provide the necessary funding for these expenditures. Developments and Redevelopments   Properties Opened During the Year Ended December 31, 2021 (Dollars in thousands) [[GREPCENT_TABLE]] [["","","","","","","","","","","","","CBL's Share of"],["Property","","Location","","CBL Ownership Interest","","","Total Project Square Feet","","","Total Cost (1)","","","Cost to Date (2)","","","2021 Cost","","","Opening Date","","Initial Unleveraged Yield"],["Outparcel Developments:"],["Hamilton Place - Aloft Hotel (3)(4)","","Chattanooga, TN","","50%","","","","89,674","","","$","12,000","","","$","11,972","","","$","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"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Total Cost is presented net of reimbursements to be received. Represents total cost incurred by the Predecessor Company and the Successor company."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","Yield is based on expected yield upon stabilization."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(4)","Total cost includes a construction loan of $8,400 (at the Company\u2019s share), a non-cash allocated value for the Company\u2019s land contribution of $2,200 and cash contributions of $1,400."]] [[/GREPCENT_TABLE]] 67 Redevelopments Completed During the Year Ended December 31, 2021 (Dollars in thousands) [[GREPCENT_TABLE]] [["","","","","","","","","","","","","CBL's Share of"],["Property","","Location","","CBL Ownership Interest","","","Total Project Square Feet","","","Total Cost (1)","","","Cost to Date (2)","","","2021 Cost","","","Opening Date","","Initial Unleveraged Yield"],["Redevelopments:"],["Cross Creek Sears Redevelopment - Longhorn's, Rooms To Go (3)","","Fayetteville, NC","","100%","","","","13,494","","","","2,777","","","","4,027","","","","2,803","","","Dec-21","","10.1%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Total Cost is presented net of reimbursements to be received. Represents total cost incurred by the Predecessor Company and the Successor Company."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Cost to Date does not reflect reimbursements until they are received. Represents total cost to date incurred by the Predecessor Company and the Successor Company."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","The return reflected represents a pro forma incremental return as Total Cost excludes the cost related to the acquisition of the Sears (Cross Creek Mall) building."]] [[/GREPCENT_TABLE]] Properties under Development at December 31, 2021 (Dollars in thousands) [[GREPCENT_TABLE]] [["","","","","","","","","","","","","CBL's Share of"],["Property","","Location","","CBL Ownership Interest","","","Total Project Square Feet","","","Total Cost (1)","","","Cost to Date (2)","","","2021 Cost","","","Expected Opening Date","","Initial Unleveraged Yield"],["Outparcel Developments:"],["Kirkwood Mall - Five Guys, Blaze Pizza, Thrifty White, Pancheros, Chick-fil-A","","Bismarck, ND","","100%","","","","15,275","","","$","7,976","","","$","4,311","","","$","4,107","","","Q2 '22","","8.9%"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Total Cost is presented net of reimbursements to be received. Represents total cost incurred by the Predecessor Company and the Successor Company."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] 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. 68 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. 69 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. 70 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. 71 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 $140.8 million in 2020. The increase in FFO, as adjusted, was primarily driven by the reduction in interest expense due to not recognizing post-petition interest expense on the Predecessor’s senior unsecured notes and the secured credit facility subsequent to the filing of the Chapter 11 Cases, undeclared dividends ceasing to accumulate on the Predecessor’s preferred stock subsequent to the filing of the Chapter 11 Cases, an income tax benefit in the current year and a decrease in uncollectable revenues in the current year as compared to the prior year. The reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows (in thousands): [[GREPCENT_TABLE]] [["","","Successor","","","","Predecessor","","","Non-GAAP Combined","","","Predecessor"],["","","Period from November 1, through December 31,","","","","Period from January 1, through October 31,","","","Year Ended December 31,","","","Year Ended December 31,"],["","","2021","","","","2021","","","2021","","","2020","","","2019"],["Net loss attributable to common shareholders","","$","(151,545",")","","","$","(470,627",")","","$","(622,172",")","","$","(332,494",")","","$","(153,669",")"],["Noncontrolling interest in loss of Operating Partnership","","","\u2014","","","","","(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","","","\u2014","","","","","136,046","","","","136,046","","","","195,336","","","","239,521"],["(Gain) loss on depreciable property, net of taxes","","","(20",")","","","","(7,890",")","","","(7,910",")","","","25","","","","(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","","","","","\u2014","","","","184,637","","","","\u2014","","","","\u2014"],["Adjustment for unconsolidated affiliates with negative investment","","","(4,574",")","","","","\u2014","","","","(4,574",")","","","\u2014","","","","\u2014"],["Senior secured notes fair value adjustment (2)","","","395","","","","","\u2014","","","","395","","","","\u2014","","","","\u2014"],["Prepetition charges (3)","","","\u2014","","","","","\u2014","","","","\u2014","","","","23,883","","","","\u2014"],["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",")","","","\u2014","","","","\u2014"],["Gain on extinguishment of debt (7)","","","\u2014","","","","","\u2014","","","","\u2014","","","","(32,521",")","","","(71,722",")"],["Reorganization items, net of noncontrolling interests' share (8)","","","1,403","","","","","452,378","","","","453,781","","","","35,977","","","","\u2014"],["FFO allocable to Operating Partnership common unitholders, as adjusted","","$","63,178","","","","$","286,649","","","$","349,827","","","$","140,755","","","$","271,495"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] 72 [[GREPCENT_TABLE]] [["(3)","For the Predecessor year ended December 31, 2020, represents professional fees related to the Company\u2019s negotiations with the administrative agent and lenders under the secured credit facility and certain holders of the Predecessor Company\u2019s 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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(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\u2019s 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\u2019s 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\u2019s 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\u2019s 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."]] [[/GREPCENT_TABLE]]