CBL & ASSOCIATES PROPERTIES INC (CBL) FY 2024 MD&A

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.

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. As of December 31, 2024, we own interests in 87 properties, consisting of 45 malls, 27 open-air centers, five outlet centers, five lifestyle centers and five other properties, including single-tenant and multi-tenant outparcels. As of December 31, 2024, our shopping centers are located in 21 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, 2024.

The following summarizes our net income (loss) and net income (loss) attributable to common shareholders (in thousands):

Significant items that affected comparability between the years include:

•
Items increasing net income for the year ended December 31, 2024 compared to the year ended December 31, 2023 include:

o
Depreciation and amortization was $49.9 million lower;

o
Gain on consolidation was $26.7 million higher;

o
Interest expense was $18.4 million lower;

o
Equity in earnings was $11.1 million higher;

o
Gain on sales of real estate assets was $11.6 million higher;

o
Real estate taxes were $7.4 million lower; and

o
Maintenance and repairs were $3.6 million lower.

•
Items decreasing net income for the year ended December 31, 2024 compared to the year ended December 31, 2023 include:

o
Gain on deconsolidation was $47.9 million lower;

o
Rental revenues were $20.1 million lower;

o
Gain on extinguishment of debt was $4.1 million lower; and

o
General and administrative expense was $3.2 million higher.

•
Items increasing net income for the year ended December 31, 2023 compared to the year ended December 31, 2022 include:

o
Depreciation and amortization was $65.8 million lower;

o
Interest expense was $44.4 million lower;

o
Gain on deconsolidation was $11.6 higher;

o
Interest and other income was $8.3 million higher; and

o
General and administrative expense was $3.1 million lower.

•
Items decreasing net income for the year ended December 31, 2023 compared to the year ended December 31, 2022 include:

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o
Rental revenues were $28.3 million lower;

o
Equity in earnings was $7.9 million lower; and

o
Gain on extinguishment of debt was $4.1 million lower.

Our focus is on continuing to execute our strategy to improve occupancy, drive rent growth and transform the offerings available at our properties to include a targeted 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 of reducing overall debt, extending our debt maturity schedule and lowering our overall cost of borrowings to limit maturity risk, as well as improving net cash flow and enhancing 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 improve occupancy, diversify our tenant mix and redevelop our properties will continue to contribute to stabilization of our portfolio and revenues in future years.

Results of Operations

Properties that were in operation for the entire year during both 2024 and 2023 are referred to as the “2024 Comparable Properties.” Since January 2023, we have opened, deconsolidated and disposed of the following properties:

Properties Opened

(1)
The property is owned by a joint venture that is accounted for using the equity method of accounting and is included in equity in earnings of unconsolidated affiliates in the accompanying consolidated statements of operations.

Deconsolidations

(1)
We deconsolidated the property due to a loss of control when the property was placed into receivership in connection with the foreclosure process.

(2)
The foreclosure process was completed in May 2024.

Dispositions

We consider properties undergoing major redevelopment or being considered for repositioning as non-core. As of December 31, 2024, Harford Mall was designated as non-core.

Comparison of the Results of Operations for the Years Ended December 31, 2024 and 2023

Revenues

(in thousands)

Rental revenues decreased due to lower minimum rents, percentage rents and tenant reimbursements. Minimum rents were lower due to tenant closures and tenants that converted to percentage in lieu of rent. The decline in percentage rents corresponds to the decline in tenant sales as compared to the prior-year period. Tenant reimbursements were lower

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due to the accrual of credits to tenants at certain properties related to reduced assessments and refunds received from successful appeals of real estate taxes at certain properties. Also, rental revenues decreased due to the sales of the Layton Hills properties during the third quarter of 2024, as well as the deconsolidation of Alamance Crossing East and WestGate Mall in February 2023 and September 2023, respectively. The dispositions and deconsolidations of properties accounted for $9.8 million of the decrease in rental revenues during 2024 as compared to the prior-year period.

Operating Expenses

(in thousands)

Total property operating expenses decreased primarily due to a state franchise tax rebate related to prior years, as well as lower real estate taxes and janitorial and security costs. Also, total property operating expenses decreased due to the sales of the Layton Hills properties during the third quarter of 2024, as well as the deconsolidation of Alamance Crossing East and WestGate Mall in February 2023 and September 2023, respectively. The dispositions and deconsolidations of properties accounted for $3.8 million of the decrease during 2024 as compared to the prior-year period.

Depreciation and amortization expense decreased primarily due to tenant improvement and intangible in-place lease assets recognized upon the adoption of fresh start accounting on November 1, 2021 becoming fully depreciated or amortized since the prior-year period. The dispositions and deconsolidations of properties accounted for $4.2 million of the decrease during 2024 as compared to the prior-year period.

General and administrative expenses increased primarily due to higher compensation expense related to annual compensation increases and higher share-based compensation expenses related to awards granted since the prior-year period.

Litigation settlement expense increased as compared to the prior-year period. The increase results from a revision to the estimate in the prior-year period related to amounts to be paid out under the terms of a class action settlement agreement that was executed in 2019.

Other Income and Expenses

Interest and other income increased $2.5 million during the year ended December 31, 2024 as compared to the prior-year period due to holding U.S. Treasury securities that carry higher interest rates in the current-year period and cash held in interest-bearing accounts.

Interest expense decreased $18.4 million during the year ended December 31, 2024 as compared to the prior-year period. The decrease was primarily due to $11.9 million less accretion of property-level debt discounts as certain discounts became fully accreted since the prior-year period. Also, the decrease in interest expense was impacted by the paydown of the secured term loan and the retirement of the loan secured by Brookfield Square Anchor Redevelopment.

During the year ended December 31, 2024, we made a partial paydown on the open-air centers and outparcels loan and recognized loss on extinguishment of debt related to a prepayment fee. For the year ended December 31, 2023, we recorded a $3.3 million gain on extinguishment of debt related to a reduction in the outstanding principal of the loan secured by The Outlet Shoppes at Laredo.

For the year ended December 31, 2024, we recognized a $26.7 million gain on consolidation related to the acquisition of our partner's 50% joint venture interests in CoolSprings Galleria, Oak Park Mall and West County Center.

For the year ended December 31, 2023, we recorded a $47.9 million gain on deconsolidation related to Alamance Crossing East and WestGate Mall. These properties were deconsolidated due to a loss of control when they were placed into receivership in connection with the foreclosure process.

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Equity in earnings of unconsolidated affiliates increased $11.1 million for the year ended December 31, 2024 as compared to the prior-year period. The increase primarily relates to distributions received in the current-year period as compared to contributions made in the prior-year period attributable to certain investments in unconsolidated affiliates where we recognize equity in earnings on a cash basis because our investment in such unconsolidated affiliates is negative.

During the year ended December 31, 2024, we recognized a $16.7 million gain on sales of real estate assets related to the sales of Layton Hills Mall, Layton Hills Convenience Center, Layton Hills Plaza, 10 outparcels, of which 9 outparcels were associated with the Layton Hills properties, two land parcels and an anchor parcel. During the year ended December 31, 2023, we recognized a $5.1 million gain on sales of real estate assets related to the sale of eight land parcels.

Comparison of the Results of Operations for the Years Ended December 31, 2023 and 2022

Revenues

(in thousands)

Rental revenues were lower primarily due to lower percentage rents and an unfavorable variance in the estimate for uncollectable revenues as compared to the prior year due to recoveries recognized in the prior year. Also, rental revenues decreased due to the deconsolidation of Alamance Crossing East and WestGate Mall in February 2023 and September 2023, respectively. The dispositions and deconsolidations of properties accounted for $9.5 million of the decrease in rental revenues during 2023 as compared to the prior-year period.

Operating Expenses

(in thousands)

Total property operating expenses decreased primarily due to lower real estate taxes, as well as lower utility, janitorial and security costs. The decrease was partially offset by the completion of previously delayed maintenance projects and the timing of certain third-party contracts. Also, total property operating expenses decreased due to the deconsolidation of Alamance Crossing East and WestGate Mall in February 2023 and September 2023, respectively. The dispositions and deconsolidations of properties accounted for $3.6 million of the decrease during 2023 as compared to the prior-year period.

Depreciation and amortization expense decreased primarily due to tenant improvement and intangible in-place lease assets recognized upon the adoption of fresh start accounting on November 1, 2021 becoming fully depreciated or amortized since the prior-year period. The dispositions and deconsolidations of properties accounted for $3.4 million of the decrease during 2023 as compared to the prior-year period.

General and administrative expenses decreased primarily due to professional fees associated with loan modifications and extensions, and fees incurred to obtain credit ratings on our secured term loan in the prior-year period. The decrease was partially offset by higher compensation and share-based compensation expenses as compared to the prior-year period.

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Litigation settlement expense decreased during the year ended December 31, 2023 as compared to the prior-year period. The decrease results from a revision to the estimate of amounts to be paid out under the terms of a class action settlement agreement that was executed in 2019.

Other Income and Expenses

Interest and other income increased $8.3 million during the year ended December 31, 2023 as compared to the prior-year period primarily due to holding U.S. Treasury securities that carry higher interest rates in the current-year period.

Interest expense decreased $44.4 million during the year ended December 31, 2023 as compared to the prior-year period. The decrease was primarily due to $87.0 million less accretion of property-level debt discounts as certain discounts became fully accreted since the prior-year period. The property-level debt discounts were recognized in conjunction with recording our property-level debt at fair value upon the adoption of fresh start accounting. Also, the decrease includes $17.3 million of interest expense in the prior-year period on the secured notes that were fully redeemed in 2022. The decrease in interest expense was partially offset by an increase of $38.4 million in the current period related to the open-air centers and outparcels loan that was entered into during the second quarter of 2022 and higher interest expense on the term loan due to increased variable rates. Additionally, default interest was $1.0 million during 2023, which represented an increase of $21.2 million as compared to the prior-year period due to a reversal in 2022 of previously recognized default interest expense when forbearance/waiver agreements were obtained.

For the year ended December 31, 2023, we recorded a $3.3 million gain on extinguishment of debt related to a reduction in the outstanding principal of the loan secured by The Outlet Shoppes at Laredo. For the year ended December 31, 2022, we recorded a $7.3 million gain on extinguishment of debt related to a reduction in the outstanding principal of the loan secured by The Outlet Shoppes at Gettysburg.

For the year ended December 31, 2023, we recorded a $47.9 million gain on deconsolidation related to Alamance Crossing East and WestGate Mall. These properties were deconsolidated due to a loss of control when they were placed into receivership in connection with the foreclosure process. For the year ended December 31, 2022, we recorded a $36.3 million gain on deconsolidation related to Greenbrier Mall that was deconsolidated due to a loss of control when the mall was placed into receivership in connection with the foreclosure process.

Equity in earnings of unconsolidated affiliates decreased $7.9 million for the year ended December 31, 2023 as compared to the prior-year period. The decrease primarily relates to an increase in contributions made by us during the current-year period and a decline in distributions as compared to the prior-year period attributable to certain investments in unconsolidated affiliates where we recognize equity in earnings on a cash basis because our investment in such unconsolidated affiliates is negative.

Non-GAAP Measure

Same-center Net Operating Income

NOI is a supplemental non-GAAP measure of the operating performance of our shopping centers and other properties. We define NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs). We also exclude the impact of lease termination fees and certain non-cash items such as straight-line rents and reimbursements, write-offs of landlord inducements and net amortization of acquired above and below market leases.

We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated properties. We believe that presenting NOI and same-center NOI (described below) based on our Operating Partnership’s pro rata share of both consolidated and unconsolidated properties is useful since we conduct substantially all our business through our Operating Partnership and, therefore, it reflects the performance of our 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 our properties 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, 2023 and the current year ended December 31, 2024. 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 undergoing major redevelopment or being considered for repositioning, or where we intend to renegotiate the

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terms of the debt secured by the related property or return the property to the lender. Alamance Crossing East and Harford Mall were classified as Excluded Properties as of December 31, 2024.

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 income for the years ended December 31, 2024 and 2023 is as follows (in thousands):

(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.

(2)
Due to the purchase of our joint venture partner's 50% interest in CoolSprings Galleria, Oak Park Mall and West County Center during December 2024, same-center NOI is reflected at 100% for those properties for all periods.

Same-center NOI increased 0.2% for the year ended December 31, 2024 as compared to the prior-year period. The $1.1 million increase for the year ended December 31, 2024 as compared to the prior-year period primarily consisted of a $5.9 million decrease in revenues offset by a $7.0 million decrease in operating expenses. Rental revenues were $5.9 million lower primarily due to lower minimum rents, tenant reimbursements and percentage rents. Property operating expenses decreased in the current-year period primarily due to lower real estate taxes, as well as janitorial and security costs. State franchise and real estate taxes were lower due to reduced assessments and refunds received from successful appeals at certain properties, which were partially offset by increased insurance rates.

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, our properties 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.

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We derive the majority of our revenues from our malls. The sources of our revenues by property type were as follows:

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 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):

Tenant Occupancy Costs

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

The following table summarizes tenant occupancy costs as a percentage of total inline and adjacent freestanding store sales for reporting tenants less than 10,000 square feet, excluding license agreements, for each of the past three years:

(1)
In certain cases, we own less than a 100% interest in the mall. The information in this table is based on 100% of the applicable amounts and has not been adjusted for our ownership share.

In-Line Store Occupancy

Our portfolio in-line store occupancy is summarized in the below table (Excluded Properties are not included in occupancy metrics). Occupancy for the malls, lifestyle centers and outlet centers represents percentage of in-line gross leasable area under 20,000 square feet occupied. Occupancy for open-air centers represents percentage of gross leasable area occupied.

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Leasing

The following is a summary of the total square feet of leases signed in the year ended December 31, 2024 as compared to the prior year:

Average annual base rents per square foot are computed based on contractual rents in effect as of December 31, 2024 and 2023, 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):

(1)
Excluded Properties are not included in base rent. Average base rents for open-air centers and other include all leased space, regardless of size.

Results from new and renewal leasing of comparable in-line space of less than 10,000 square feet during the year ended December 31, 2024 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, which were not material, are as follows:

(1)
Includes malls, lifestyle centers, outlet centers, open-air centers and other.

(2)
The change is primarily driven by malls.

New and renewal leasing activity of comparable in-line space of less than 10,000 square feet for the year ended December 31, 2024, based on commencement date inclusive of the impact of any rent concessions, are as follows:

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Liquidity and Capital Resources

As of December 31, 2024, we had $283.9 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, 2024 was $2,737.2 million. We had $76.7 million in restricted cash at December 31, 2024 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. We also had restricted cash of $36.2 million related to the properties that secure the term loan and the open-air centers and outparcels loan of which we may receive a portion via distributions semiannually and quarterly in accordance with the provisions of the term loan and the open-air centers and outparcels loan, respectively.

During the year ended December 31, 2024, we continued to reinvest the cash from maturing U.S. Treasury securities into new U.S. Treasury securities. We designated our U.S. Treasury securities as available-for-sale. In February 2024, we redeemed U.S. Treasury securities and used the proceeds to pay off the $15.2 million loan secured by Brookfield Square Anchor Redevelopment. As of December 31, 2024, our U.S. Treasury securities have maturities through December 2025. Subsequent to December 31, 2024, we redeemed U.S. Treasury securities. See Note 18 for additional information.

In December 2024, we acquired our joint venture partner’s 50% interests in CoolSprings Galleria, Oak Park Mall, and West County Center. The interests were acquired for a total cash consideration of $22.5 million, as well as an additional $2.5 million related to our partner's share of net working capital. Also, we assumed our partner's aggregate $266.7 million share in three non-recourse loans, secured individually by each of the assets. See Note 5 for more information. Subsequent to December 31, 2024, we acquired four operating Macy's stores for $6.2 million. See Note 18 for more information.

During the year ended December 31, 2024, we sold Layton Hills Mall, Layton Hills Convenience Center, Layton Hills Plaza, 12 outparcels, of which 9 outparcels were associated with the Layton Hills properties, two land parcels and two anchor parcels which generated approximately $85.0 million in gross proceeds at our share. Proceeds from the sales of the Layton Hills properties were used to reduce the outstanding principal balances of the secured term loan and the open-air centers and outparcels loan by $46.0 million and $18.3 million, respectively. In November 2024, the $3.1 million loan secured by the former Sears parcel at Northgate Mall was paid off using proceeds from the sale of that parcel. Subsequent to December 31, 2024, we sold Monroeville Mall and the Annex at Monroeville for $34.0 million. A portion of the proceeds from the sale were used to paydown the open-air centers and outparcels loan by $7.3 million. Also, subsequent to December 31, 2024, we sold Imperial Valley Mall for $38.1 million. Net proceeds from the sale were used to paydown the secured term loan principal balance. See Note 18 for more information on subsequent activity.

During 2024, we modified/extended six loans and paid off two loans using proceeds from new loans on each property. In May 2024, the WestGate Mall foreclosure process was completed. WestGate Mall had an outstanding loan balance of $28.7 million prior to completion of the foreclosure process. In August 2024, the loans secured by Coastal Grand Mall and Coastal Grand Crossing entered maturity default. We are in discussions with the lender regarding modifications/extensions of these loans. See Note 7 and Note 8 for more information on loan activity. Subsequent to December 31, 2024, the loan secured by The Pavilion at Port Orange was extended. See Note 18 for more information.

We paid common stock dividends of $0.40 per share in all four quarters of 2024. Subsequent to December 31, 2024, our board of directors declared a $0.40 per share regular quarterly dividend for the first quarter of 2025 and a special dividend of $0.80 per share of common stock. Both the regular quarterly dividend and the special dividend are payable in cash on March 31, 2025, to shareholders of record as of March 13, 2025. The special dividend was made to ensure that we meet the minimum requirement to maintain our status as a REIT. See Note 18 for more information.

As of December 31, 2024, our total share of consolidated, unconsolidated and other outstanding debt, excluding debt discounts and deferred financing costs, that matured during or prior to 2024, which remains outstanding at December 31, 2024, is $90.5 million, consisting of two property loans in maturity default and a property loan that is in receivership.

Unconsolidated Affiliates

We have ownership interests in 24 unconsolidated affiliates as of December 31, 2024. See Note 7 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:

•
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

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we determine such a project is viable and we can achieve a satisfactory return on our investment. We typically earn development fees from the joint venture and provide management and leasing services to the property for a fee once the property is placed in operation.

•
We determine that we may have the opportunity to capitalize on the value we have created in a property by selling an interest in the property to a third party. This provides us with an additional source of capital that can be used to develop or acquire additional real estate assets that we believe will provide greater potential for growth. When we retain an interest in an asset rather than selling a 100% interest, it is typically because this allows us to continue to manage the property, which provides us the ability to earn fees for management, leasing, development and financing services provided to the joint venture.

•
We also pursue opportunities to contribute available land at our properties into joint venture partnerships for development of primarily non-retail uses such as hotels, office, self-storage and multifamily. We typically partner with developers who have expertise in the non-retail property types.

Guarantees

We may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on our investment in the joint venture. We may receive a fee from the joint venture for providing the guaranty. Additionally, when we issue a guaranty, the terms of the joint venture agreement typically provide that we may receive indemnification from the joint venture partner or have the ability to increase our ownership interest.

See Note 14 to the consolidated financial statements for information related to our guarantees of unconsolidated affiliates' debt as of December 31, 2024 and 2023.

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Material Cash Requirements

The following table summarizes our material cash requirements as of December 31, 2024 (in thousands):

(1)
Represents principal (including balloon payments) and interest payments due under the terms of mortgage and other indebtedness, net, and includes $774,934 of variable-rate debt service related to the secured term loan, $214,168 of variable-rate debt service related to the open-air centers and outparcels loan and $34,041 of variable-rate debt service on the Outlet Shoppes at Laredo. The future interest payments on variable-rate loans are projected based on the interest rates that were in effect at December 31, 2024. The secured term loan matures in November 2025 and contains two one-year extension options, subject to certain conditions. See Note 8 to the consolidated financial statements for additional information regarding the terms of long-term debt.

(2)
Represents the outstanding loan balance for Alamance Crossing East which was deconsolidated due to a loss of control when the property was placed into receivership in connection with the foreclosure process.

(3)
Includes $56,854 of variable-rate debt service. Future contractual obligations have been projected using the same assumptions as used in (1) above.

(4)
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 2046 to 2089 and generally provide for renewal options.

(5)
Represents our share of the remaining balance to be incurred under construction contracts that had been entered into as of December 31, 2024, but were not complete. The contracts are primarily for redevelopment of our properties.

(6)
Represents agreements for maintenance, security, and janitorial services at our properties that expire in June 2026.

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. In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, joint venture investments, financing of currently unencumbered properties 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.

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Cash Flows - Operating, Investing and Financing Activities

There was $153.8 million of cash, cash equivalents and restricted cash as of December 31, 2024, an increase of $30.7 million from December 31, 2023. Of this amount, $40.8 million was unrestricted cash as of December 31, 2024. Also, at December 31, 2024, we had $243.1 million in U.S. Treasuries with maturities through December 2025. Our net cash flows are summarized as follows (in thousands):

Cash Provided by Operating Activities

Cash provided by operating activities increased primarily due to lower state franchise and real estate taxes related to reduced assessments, as well as refunds received from successful appeals, lower janitorial and security costs, increased interest income on our U.S. Treasury securities and lower interest expense during the current-year period as compared to the prior-year period. The increase was partially offset by lower minimum rents, tenant reimbursements and percentage rents, increased insurance rates and the disposition of the Layton Hills properties. Minimum rents were lower due to tenant closures and tenants that converted to percentage in lieu of rent. Tenant reimbursements were lower due to the accrual of credits to tenants at certain properties related to reduced assessments and refunds received from successful appeals of real estate taxes at certain properties. The decline in percentage rents corresponds to the decline in tenant sales for specific tenants as compared to the prior-year period, as well as increased percentage rent breakpoints for recently renewed leases.

Cash Provided by Investing Activities

Cash provided by investing activities increased primarily due to the sales of Layton Hills Mall, Layton Hills Convenience Center, Layton Hills Plaza and the 9 associated outparcels. Also, the increase was impacted by the addition of cash held in mortgage escrows assumed upon consolidating CoolSprings Galleria, Oak Park Mall and West County Center related to our acquisition of those assets in December 2024. The increase was partially offset due to a lower amount of net redemptions of U.S. Treasury securities during 2024 as compared to the prior-year period.

Cash Used in Financing Activities

Cash used in financing activities increased primarily due to an increase in principal payments using proceeds from sales of properties and repurchases of common stock during the current-year period as compared to the prior-year period. This increase was partially offset by a reduction in dividends paid due to the payment of a first quarter 2023 special dividend that was declared during the fourth quarter of 2022.

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Debt

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, substantially all of which is secured by real estate assets.

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 $2,737.2 million in outstanding debt at December 31, 2024, $2,710.6 million constituted non-recourse debt obligations and $26.6 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):

(1)
As of December 31, 2024, represents the outstanding loan balance for Alamance Crossing East. As of December 31, 2023, represents the outstanding loan balances for Alamance Crossing East and WestGate Mall. These properties were deconsolidated due to a loss of control when the properties were placed into receivership in connection with the foreclosure process.

(2)
Weighted-average interest rate excludes amortization of deferred financing costs.

(3)
The interest rate is a fixed 6.95% for half of the outstanding loan balance, with the other half of the loan bearing a variable interest rate based on the 30-day SOFR plus 4.10%. The Operating Partnership has an interest rate swap on a notional amount of $32,000 related to the variable portion of the loan to effectively fix the interest rate at 7.3975%.

(4)
In conjunction with the acquisition of the Company's partner's 50% joint venture interests in CoolSprings Galleria, Oak Park Mall and West County Center, the Company estimated the fair value of its mortgage notes with the assistance of a third-party valuation advisor. This resulted in recognizing a debt discount, which is accreted over the term of the respective debt using the effective interest method.

(5)
In conjunction with fresh start accounting, the Company estimated the fair value of its mortgage notes and recognized debt discounts upon emergence from bankruptcy on November 1, 2021. The debt discounts are accreted over the term of the respective debt using the effective interest method.

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The following table presents our pro rata share of consolidated and unconsolidated debt as of December 31, 2024, excluding unamortized deferred financing costs and debt discounts, that is scheduled to mature in 2025 based on the original maturity date (in thousands):

(1)
The loan has a one-year extension option for a fully extended maturity date of May 2026.

(2)
The loan has two one-year extension options, subject to certain conditions, for a fully extended maturity date of November 2027.

(3)
Subsequent to December 31, 2024, the loan was extended through February 2026.

(4)
The loan has a six-month extension option for a fully extended maturity date of May 2026.

Additionally, we have three loans, with an aggregate principal balance of $90.5 million at our share as of December 31, 2024, secured by Coastal Grand Mall, Coastal Grand Crossing and Alamance Crossing East that are past their maturity dates. We are in discussions with the lender regarding a modification/extension for the loans secured by Coastal Grand Mall and Coastal Grand Crossing. Alamance Crossing East has been placed into receivership in connection with the foreclosure process.

Subsequent to December 31, 2024, the outstanding balance on the secured term loan was reduced using proceeds from dispositions (see Note 18) and with a semiannual distribution of cash from the properties that secure the term loan pursuant to the terms of the loan agreement. After these payments, the outstanding balance of the secured term loan was $675.2 million.

The weighted-average remaining term of our total share of consolidated and unconsolidated debt, excluding debt discounts and deferred financing costs, was 2.4 years at both December 31, 2024 and December 31, 2023. The weighted-average remaining term of our pro rata share of fixed-rate debt, excluding debt discounts and deferred financing costs, was 3.0 years and 2.7 years at December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024, our pro rata share of consolidated and unconsolidated variable-rate debt, excluding debt discounts and deferred financing costs, represented 34.5% of our total pro rata share of debt, excluding debt discounts and deferred financing costs. As of December 31, 2023, our pro rata share of consolidated and unconsolidated variable-rate debt, excluding debt discounts and deferred financing costs, represented 40.4% of our total pro rata share of debt, excluding debt discounts and deferred financing costs.

See Note 7 and Note 8 to the consolidated financial statements for additional information concerning the amount and terms of our outstanding indebtedness as of December 31, 2024.

Equity

We paid common stock dividends of $0.40 per share in each quarter of 2024. 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 9 of this report. Our actual results of operations will be affected by a number of factors, including the revenues received from our properties, our operating expenses, interest expense, capital expenditures and the ability of the anchors and tenants at our properties to meet their obligations for payment of rents and tenant reimbursements. Subsequent to December 31, 2024, our board of directors declared a $0.40 per share regular quarterly dividend for the first quarter of 2025 and a special dividend of $0.80 per share of common stock. Both the regular quarterly

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dividend and the special dividend are payable in cash on March 31, 2025, to shareholders of record as of March 13, 2025. The special dividend was made to ensure that we meet the minimum requirement to maintain our status as a REIT. See Note 18.

In August 2023, our board of directors authorized the repurchase of up to $25.0 million of our outstanding common stock. In August 2024, the share repurchase program was extended. In September 2024, the share repurchase program was completed. In October 2024, we completed the repurchase of 500,000 shares of CBL common stock for $12.5 million, in a privately negotiated block trade from a single shareholder. The block repurchase was completed separately from our stock repurchase program. See Part II, Item 5 for additional information regarding our repurchases of common stock during 2024.

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 years ended December 31, 2024 and 2023, (in thousands):

(1)
Tenant allowances primarily relate to new leases. Tenant allowances related to renewal leases were not material for the periods presented.

Annual capital expenditures budgets are prepared for each of our properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, will provide the necessary funding for these expenditures.

Developments and Redevelopments

Developments Completed at December 31, 2024

(Dollars in thousands)

(1)
Total Cost is presented net of reimbursements to be received.

(2)
Cost to Date does not reflect reimbursements until they are received.

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Properties under Development at December 31, 2024

(Dollars in thousands)

(1)
Total Cost is presented net of reimbursements to be received.

(2)
Cost to Date does not reflect reimbursements until they are received.

We are continually pursuing new redevelopment opportunities and have projects in various stages of pre-development. Except for the projects presented above, we did not have any other material capital commitments as of December 31, 2024.

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 2 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.

Purchase Price Allocations for Acquired Assets

We evaluate all real estate acquisitions to determine if the transactions qualify as an acquisition of assets or of a business. For acquisitions that are accounted for as an acquisition of an asset, we record the acquired tangible and intangible assets and assumed liabilities based on each asset's and liability's relative fair value at the acquisition date to the total purchase price plus capitalized acquisition costs. Fair value is based on estimated cash flow projections that utilize available market information and discount and/or capitalization rates as appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquired assets and assumed liabilities for an acquired operating property generally include, but are not limited to: land, buildings, and identified tangible and intangible assets and liabilities associated with in-place leases, including tenant improvements, leasing costs, value of above-market and below-market leases, and value of acquired in-place leases.

The fair value of the above-market or below-market component of an acquired lease is based upon the present value (calculated using a market discount rate) of the difference between the contractual rents to be paid pursuant to the lease over its remaining term and management’s estimate of the rents that would be paid using fair market rental rates and rent escalations at the date of acquisition over the remaining term of the lease. An identifiable intangible asset or liability is recorded if there is an above-market or below-market lease at an acquired property. The amounts recorded for above-market leases are included in other assets on the balance sheets, and the amounts for below-market leases are included in other liabilities on the balance sheets. These amounts are amortized on a straight-line basis as an adjustment to rental income over the remaining term of the applicable leases.

The fair value of acquired in-place leases is derived based on our assessment of lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased. This fair value is based on a variety of considerations including, but not necessarily limited to: (i) the value associated with avoiding the cost of originating the acquired in-place leases; (ii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed lease-up period; and (iii) the value associated with lost rental

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revenue from existing leases during the assumed lease-up period. Factors considered in performing these analyses include an estimate of the carrying costs during the expected lease-up periods, such as real estate taxes, insurance, and other operating expenses, current market conditions, and costs to execute similar leases, such as leasing commissions, legal, and other related expenses. These amounts are amortized as an increase to depreciation and amortization expense over the remaining term of the applicable leases.

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, 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. We use significant judgement in assessing events or circumstances which might indicate impairment, including but not limited to, changes in our intent to hold a long-lived asset over its previously estimated useful life. Changes in our intent to hold a long-lived asset have a significant impact on the estimated undiscounted cash flows expected to result from the use and eventual disposition of a long-lived asset and whether a potential impairment loss shall be measured. 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 use and its eventual disposition. In the event that such undiscounted future cash flows do not exceed the carrying value, we adjust the carrying value of the long-lived asset to its estimated fair value and recognize an impairment loss. The estimated fair value is calculated based on the following information, in order of preference, depending upon availability: (Level 1) recently quoted market prices, (Level 2) market prices for comparable properties, or (Level 3) the present value of future cash flows, including estimated salvage value. Certain of our long-lived assets may be carried at more than an amount that could be realized in a current disposition transaction. We estimate future operating cash flows, the terminal capitalization rate and the discount rate, among other factors. As these assumptions are subject to economic and market uncertainties, they are difficult to predict and are subject to future events that may alter the assumptions used or management’s estimates of future possible outcomes. Therefore, the future cash flows estimated in our impairment analyses may not be achieved.

Investments in Unconsolidated Affiliates

On a periodic basis, we assess whether there are any indicators that the fair value of our investments in unconsolidated affiliates may be impaired. An investment is impaired only if our estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment. Our estimates of fair value for each investment are based on a number of assumptions such as future leasing expectations, operating forecasts, discount rates and capitalization rates, among others. These assumptions are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter our assumptions, the fair values estimated in the impairment analyses may not be realized.

Recent Accounting Pronouncements

See Note 2 to the consolidated financial statements for information on recently issued accounting pronouncements.

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Non-GAAP Measures

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. 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 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 our properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in our Operating Partnership.

In our reconciliation of net income 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 of our Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders.

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 income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders below for a description of these adjustments.

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The reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows (in thousands):

(1)
In conjunction with fresh start accounting upon emergence from bankruptcy, we recognized debt discounts equal to the difference between the outstanding balance of mortgage notes payable and the estimated fair value of such mortgage notes payable. The debt discounts are accreted as additional interest expense over the terms of the respective mortgage notes payable using the effective interest method.

(2)
Represents our share of the earnings (losses) before depreciation and amortization expense of unconsolidated affiliates where we are not recognizing equity in earnings (losses) because our investment in the unconsolidated affiliate is below zero.

(3)
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.

(4)
The years ended December 31, 2024 and 2023 include default interest on loans past their maturity dates.

(5)
For the year ended December 31, 2023, we deconsolidated Alamance Crossing East and WestGate Mall due to a loss of control when the properties were placed into receivership in connection with the foreclosure process.

(6)
For the year ended December 31, 2024, we recognized a $26.7 million gain on consolidation related to the acquisition of our partner's 50% joint venture interests in CoolSprings Galleria, Oak Park Mall and West County Center.

(7)
During the year ended December 31, 2024, we made a partial paydown on the open-air centers and outparcels loan and recognized loss on extinguishment of debt related to a prepayment fee. The year ended December 31, 2023 includes a gain on extinguishment of debt related to the loan secured by The Outlet Shoppes at Laredo.

The decrease in FFO, as adjusted, for the year ended December 31, 2024 was primarily driven by lower minimum rents, tenant reimbursements, percentage rents, increased insurance rates and increased general and administrative expenses. Minimum rents were lower due to tenant closures and tenants that converted to percentage in lieu of rent. Tenant reimbursements were lower due to the accrual of credits to tenants at certain properties related to reduced assessments and refunds received from successful appeals of real estate taxes at certain properties. The decline in percentage rents corresponds to the decline in tenant sales for certain tenants as compared to the prior-year period, as well as an increase in percentage rent breakpoints for certain recently renewed leases. The decrease was partially offset by lower state franchise and real estate taxes related to reduced assessments and refunds received from successful appeals, lower janitorial and security costs, lower net interest expense, the impact of positive overall new and renewal leasing spreads and increased interest income on our U.S. Treasury securities. The sale of the Layton Hills properties also contributed to the decrease in FFO, as adjusted.

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