CBL & ASSOCIATES PROPERTIES INC - Quarter Report: 2020 September (Form 10-Q)

UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020

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

FOR THE TRANSITION PERIOD FROM ____________ TO _______________

COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)

COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)

CBL & ASSOCIATES PROPERTIES, INC.

CBL & ASSOCIATES LIMITED PARTNERSHIP

(Exact Name of registrant as specified in its charter)


Delaware (CBL & ASSOCIATES PROPERTIES, INC.)		62-1545718
Delaware (CBL & ASSOCIATES LIMITED PARTNERSHIP)		62-1542285
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN 37421-6000

(Address of principal executive office, including zip code)

423-855-0001

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


CBL & Associates Properties, Inc.	Yes	☒	No	☐
CBL & Associates Limited Partnership	Yes	☒	No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


CBL & Associates Properties, Inc.	Yes	☒	No	☐
CBL & Associates Limited Partnership	Yes	☒	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


CBL & Associates Properties, Inc.
Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

CBL & Associates Limited Partnership
Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

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

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


CBL & Associates Properties, Inc.	Yes	☐	No	☒
CBL & Associates Limited Partnership	Yes	☐	No	☒

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

CBL & Associates Properties, Inc.

Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	CBL	New York Stock Exchange
7.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value	CBLprD	New York Stock Exchange
6.625% Series E Cumulative Redeemable Preferred Stock, $0.01 par value	CBLprE	New York Stock Exchange

CBL & Associates Limited Partnership: None

As of November 11, 2020, there were 196,572,248 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.

EXPLANATORY NOTE

(Dollars in thousands, except share data)

This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2020 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we," "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.

As previously disclosed in the Current Report on Form 8-K filed on November 2, 2020 by CBL & Associates Properties, Inc. together with its majority owned subsidiary, CBL & Associates Limited Partnership, together with certain of its direct and indirect subsidiaries (collectively, the “Debtors”), commenced the filing of voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) beginning on November 1, 2020. The Debtors have filed a series of motions with the Bankruptcy Court that, as granted, enable the Debtors to maintain their operations in the ordinary course of business.

The filing of the Chapter 11 Cases came at the same time during which the Company’s management was working to complete the preparation of financial statements and related disclosures required to be included in its Form 10-Q. Accordingly, in consideration of the significant amount of time required of management to support matters related to the Chapter 11 Cases and the additional time required by management to make appropriate revisions to the financial statements and related disclosures included in the Form 10-Q to reflect the commencement of the Chapter 11 Cases, the Company was unable to timely file its Form 10-Q. The Company filed a “Notification of Late Filing” on Form 12b-25 on November 10, 2020 pursuant to Rule 12b-25 of the Securities Exchange Act of 1934 to delay the filing of this Form 10-Q.

The Company is a real estate investment trust ("REIT") whose stock is listed on the New York Stock Exchange (“NYSE”), and was traded on the NYSE prior to the NYSE’s announcement on November 2, 2020, that it had suspended trading in the Company’s stock due to “abnormally low” trading price levels and had determined to commence proceedings to delist the Company’s stock. As discussed further under “Listing Criteria” in Note 1 – Organization and Basis of Presentation herein, the Company intends to appeal this decision in accordance with NYSE rules, and in the meantime the Company’s stock is trading on the OTC Markets, operated by the OTC Markets Group, Inc. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At September 30, 2020, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned a 96.1% limited partner interest for a combined interest held by the Company of 97.1%.

As the sole general partner of the Operating Partnership, the Company's subsidiary, CBL Holdings I, Inc., has exclusive control of the Operating Partnership's activities. Management operates the Company and the Operating Partnership as one business. The management of the Company consists of the same individuals that manage the Operating Partnership. The Company's only material asset is its indirect ownership of partnership interests of the Operating Partnership. As a result, the Company conducts substantially all its business through the Operating Partnership as described in the preceding paragraph. The Company also issues public equity from time to time and guarantees certain debt of the Operating Partnership. The Operating Partnership holds all of the assets and indebtedness of the Company and, through affiliates, retains the ownership interests in the Company's joint ventures. Except for the net proceeds of offerings of equity by the Company, which are contributed to the Operating Partnership in exchange for partnership units on a one-for-one basis, the Operating Partnership generates all remaining capital required by the Company's business through its operations and its incurrence of indebtedness.

We believe that combining the two quarterly reports on Form 10-Q for the Company and the Operating Partnership provides the following benefits:

•

enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;

•

eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

•

creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the differences between the Company and the Operating Partnership, this report provides separate condensed consolidated financial statements for the Company and the Operating Partnership. Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the condensed consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to condensed consolidated financial statements is presented that includes separate discussions for the Company and the

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Operating Partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.

In order to highlight the differences between the Company and the Operating Partnership, this report includes the following sections that provide separate financial and other information for the Company and the Operating Partnership:

•

condensed consolidated financial statements;

•

certain accompanying notes to condensed consolidated financial statements, including Note 7 - Unconsolidated Affiliates and Noncontrolling Interests; Note 8 - Mortgage and Other Indebtedness, Net; and Note 11 - Earnings per Share and Earnings per Unit;

•

controls and procedures in Item 4 of Part I of this report;

•

information concerning unregistered sales of equity securities and use of proceeds in Item 2 of Part II of this report; and

•

certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4.

CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

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PART I	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

CBL & Associates Properties, Inc.
	Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	1

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019	2

	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019	3
	Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2020 and 2019	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019	6

CBL & Associates Limited Partnership
	Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	7

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019	8

	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019	9
	Condensed Consolidated Statements of Capital for the Three and Nine Months Ended September 30, 2020 and 2019	10

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019	12

CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
	Notes to Unaudited Condensed Consolidated Financial Statements	13

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	71
Item 4.	Controls and Procedures	71

PART II	OTHER INFORMATION	73

Item 1.	Legal Proceedings	73
Item1A.	Risk Factors	74
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	80
Item 3.	Defaults Upon Senior Securities	80
Item 4.	Mine Safety Disclosures	81
Item 5.	Other Information	81
Item 6.	Exhibits	82

	SIGNATURES	84

PART I – FINANCIAL INFORMATION

ITEM 1: Financial Statements

CBL & Associates Properties, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

ASSETS ⁽¹⁾	September 30, 2020			December 31, 2019
Real estate assets:
Land	$	717,048		$	730,218
Buildings and improvements		5,255,663			5,631,831
		5,972,711			6,362,049
Accumulated depreciation		(2,228,632	)		(2,349,404	)
		3,744,079			4,012,645
Developments in progress		31,822			49,351
Net investment in real estate assets		3,775,901			4,061,996
Cash and cash equivalents		106,807			32,816
Available-for-sale securities - at fair value (amortized cost of $151,762 in 2020)		151,795			—
Receivables:
Tenant		108,123			75,252
Other		6,121			10,792
Mortgage and other notes receivable		2,534			4,662
Investments in unconsolidated affiliates		291,040			307,354
Intangible lease assets and other assets		121,722			129,474
	$	4,564,043		$	4,622,346
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness, net	$	3,729,686		$	3,527,015
Accounts payable and accrued liabilities		221,946			231,306
Total liabilities ⁽¹⁾		3,951,632			3,758,321
Commitments and contingencies (Note 8 and Note 12)
Redeemable noncontrolling interests		193			2,160
Shareholders' equity:
Preferred Stock, $.01 par value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding		18			18
6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding		7			7
Common stock, $.01 par value, 350,000,000 shares authorized, 195,765,021 and 174,115,111 issued and outstanding in 2020 and 2019, respectively		1,958			1,741
Additional paid-in capital		1,984,607			1,965,897
Accumulated other comprehensive loss		33			—
Dividends in excess of cumulative earnings		(1,397,131	)		(1,161,351	)
Total shareholders' equity		589,492			806,312
Noncontrolling interests		22,726			55,553
Total equity		612,218			861,865
	$	4,564,043		$	4,622,346

(1)

As of September 30, 2020, includes $364,893 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $171,625 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 7.

The accompanying notes are an integral part of these condensed consolidated statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
REVENUES:
Rental revenues	$	124,081		$	180,616		$	405,476		$	556,989
Management, development and leasing fees		2,104			2,216			5,251			7,325
Other		3,712			4,419			10,955			14,344
Total revenues		129,897			187,251			421,682			578,658
OPERATING EXPENSES:
Property operating		(20,396	)		(27,344	)		(63,011	)		(82,856	)
Depreciation and amortization		(53,477	)		(64,168	)		(162,042	)		(198,438	)
Real estate taxes		(17,215	)		(18,699	)		(53,500	)		(57,766	)
Maintenance and repairs		(8,425	)		(10,253	)		(25,675	)		(34,327	)
General and administrative		(25,497	)		(12,467	)		(62,060	)		(48,901	)
Loss on impairment		(46	)		(135,688	)		(146,964	)		(202,121	)
Litigation settlement		2,480			22,688			2,480			(65,462	)
Other		—			(7	)		(400	)		(41	)
Total operating expenses		(122,576	)		(245,938	)		(511,172	)		(689,912	)
OTHER INCOME (EXPENSES):
Interest and other income		1,975			1,367			5,263			2,212
Interest expense		(61,137	)		(50,515	)		(160,760	)		(156,995	)
Gain on extinguishment of debt		15,407			—			15,407			71,722
Gain on investments/deconsolidation		—			11,174			—			11,174
Gain (loss) on sales of real estate assets		(55	)		8,056			2,708			13,811
Income tax provision		(546	)		(1,670	)		(17,189	)		(2,622	)
Equity in earnings (losses) of unconsolidated affiliates		(7,389	)		(1,759	)		(12,450	)		3,421
Total other expenses		(51,745	)		(33,347	)		(167,021	)		(57,277	)
Net loss		(44,424	)		(92,034	)		(256,511	)		(168,531	)
Net (income) loss attributable to noncontrolling interests in:
Operating Partnership		609			13,904			19,100			27,116
Other consolidated subsidiaries		937			(763	)		1,631			(631	)
Net loss attributable to the Company		(42,878	)		(78,893	)		(235,780	)		(142,046	)
Preferred dividends declared		—			(11,223	)		—			(33,669	)
Preferred dividends undeclared		(11,223	)		—			(33,669	)		—
Net loss attributable to common shareholders	$	(54,101	)	$	(90,116	)	$	(269,449	)	$	(175,715	)
Basic and diluted per share data attributable to common shareholders:
Net loss attributable to common shareholders	$	(0.28	)	$	(0.52	)	$	(1.43	)	$	(1.01	)
Weighted-average common and potential dilutive common shares outstanding		193,481			173,471			188,211			173,400

The accompanying notes are an integral part of these condensed consolidated statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands, except share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss	$	(44,424	)	$	(92,034	)	$	(256,511	)	$	(168,531	)

Other comprehensive income:
Unrealized gain on available-for-sale securities		75			—			33			—


Comprehensive loss		(44,349	)		(92,034	)		(256,478	)		(168,531	)
Comprehensive (income) loss attributable to noncontrolling interests in:
Operating Partnership		609			13,904			19,100			27,116
Other consolidated subsidiaries		937			(763	)		1,631			(631	)
Comprehensive loss attributable to the Company:	$	(42,803	)	$	(78,893	)	$	(235,747	)	$	(142,046	)

The accompanying notes are an integral part of these condensed consolidated statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)

				Equity
				Shareholders' Equity
	Redeemable Noncontrolling Interests			Preferred Stock		Common Stock			Additional Paid-in Capital			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, January 1, 2019	$	3,575		$	25	$	1,727		$	1,968,280		$	(1,005,895	)	$	964,137		$	68,028		$	1,032,165
Net loss		(453	)		—		—			—			(38,976	)		(38,976	)		(7,380	)		(46,356	)
Dividends declared - common stock ($0.075 per share)		—			—		—			—			(13,010	)		(13,010	)		—			(13,010	)
Dividends declared - preferred stock		—			—		—			—			(11,223	)		(11,223	)		—			(11,223	)
Issuance of 863,174 shares of common stock and restricted common stock		—			—		9			708			—			717			—			717
Cancellation of 57,656 shares of restricted common stock		—			—		(1	)		(133	)		—			(134	)		—			(134	)
Performance stock units		—			—		—			313			—			313			—			313
Amortization of deferred compensation		—			—		—			1,033			—			1,033			—			1,033
Adjustment for noncontrolling interests		1,038			—		—			(2,356	)		—			(2,356	)		1,318			(1,038	)
Distributions to noncontrolling interests		(1,143	)		—		—			—			—			—			(4,450	)		(4,450	)
Contributions from noncontrolling interests		—			—		—			—			—			—			455			455
Balance, March 31, 2019		3,017			25		1,735			1,967,845			(1,069,104	)		900,501			57,971			958,472
Net loss		(317	)		—		—			—			(24,177	)		(24,177	)		(5,194	)		(29,371	)
Dividends declared - preferred stock		—			—		—			—			(11,223	)		(11,223	)		—			(11,223	)
Issuances of 15,634 shares of common stock and restricted common stock		—			—		—			21			—			21			—			21
Cancellation of 5,717 shares of restricted common stock		—			—		—			(5	)		—			(5	)		—			(5	)
Performance stock units		—			—		—			312			—			312			—			312
Amortization of deferred compensation		—			—		—			587			—			587			—			587
Adjustment for noncontrolling interests		1,130			—		—			(2,211	)		—			(2,211	)		1,081			(1,130	)
Contributions from noncontrolling interests		—			—		—			—			—			—			4,148			4,148
Distributions to noncontrolling interests		(1,143	)		—		—			—			—			—			(3,225	)		(3,225	)
Balance, June 30, 2019		2,687			25		1,735			1,966,549			(1,104,504	)		863,805			54,781			918,586
Net loss		(811	)		—		—			—			(78,893	)		(78,893	)		(12,330	)		(91,223	)
Dividends declared - preferred stock		—			—		—			—			(11,223	)		(11,223	)		—			(11,223	)
Issuances of 1,681 shares of common stock and restricted common stock		—			—		—			2			—			2			—			2
Cancellation of 4,310 shares of restricted common stock		—			—		—			(4	)		—			(4	)		—			(4	)
Performance stock units		—			—		—			313			—			313			—			313
Amortization of deferred compensation		—			—		—			591			—			591			—			591
Adjustment for noncontrolling interests		1,131			—		—			(2,221	)		—			(2,221	)		1,089			(1,132	)
Distributions to noncontrolling interests		(1,143	)		—		—			—			—			—			(2,857	)		(2,857	)
Deconsolidation of investment		—			—		—			—			—			—			(4,270	)		(4,270	)
Balance, September 30, 2019	$	1,864		$	25	$	1,735		$	1,965,230		$	(1,194,620	)	$	772,370		$	36,413		$	808,783

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				Equity
				Shareholders' Equity
	Redeemable Noncontrolling Interests			Preferred Stock		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, January 1, 2020	$	2,160		$	25	$	1,741		$	1,965,897		$	—		$	(1,161,351	)	$	806,312		$	55,553		$	861,865
Net loss		(1,158	)		—		—			—			—			(122,673	)		(122,673	)		(15,463	)		(138,136	)
Other comprehensive income		—			—		—			—			22			—			22			—			22
Conversion of 16,333,947 Operating Partnership common units into shares of common stock		—			—		163			20,888			—			—			21,051			(21,051	)		—
Issuance of 1,633,345 shares of common stock and restricted common stock		—			—		17			520			—			—			537			—			537
Cancellation of 116,781 shares of restricted common stock		—			—		(1	)		(96	)		—			—			(97	)		—			(97	)
Amortization of deferred compensation		—			—		—			633			—			—			633			—			633
Performance stock units		—			—		—			390			—			—			390			—			390
Adjustment for noncontrolling interests		60			—		—			(10,341	)		—			—			(10,341	)		10,281			(60	)
Distributions to noncontrolling interests		—			—		—			—			—			—			—			(731	)		(731	)
Contributions from noncontrolling interests		—			—		—			—			—			—			—			668			668
Balance, March 31, 2020		1,062			25		1,920			1,977,891			22			(1,284,024	)		695,834			29,257			725,091
Net loss		(654	)		—		—			—			—			(70,229	)		(70,229	)		(1,910	)		(72,139	)
Other comprehensive loss		—			—		—			—			(64	)		—			(64	)		—			(64	)
Issuance of 5,891 shares of common stock and restricted common stock		—			—		—			2			—			—			2			—			2
Cancellation of 20,059 shares of restricted common stock		—			—		—			(14	)		—			—			(14	)		—			(14	)
Amortization of deferred compensation		—			—		—			384			—			—			384			—			384
Performance stock units		—			—		—			379			—			—			379			—			379
Adjustment for noncontrolling interests		117			—		—			3,812			—			—			3,812			(3,929	)		(117	)
Distributions to noncontrolling interests		—			—		—			—			—			—			—			(94	)		(94	)
Contributions from noncontrolling interests		—			—		—			—			—			—			—			25			25
Balance, June 30, 2020		525			25		1,920			1,982,454			(42	)		(1,354,253	)		630,104			23,349			653,453
Net loss		(422	)		—		—			—			—			(42,878	)		(42,878	)		(1,124	)		(44,002	)
Other comprehensive income		—			—		—			—			75			—			75			—			75
Conversion of 3,814,729 Operating Partnership common units into shares of common stock		—			—		38			(25	)		—			—			13			(13	)		—
Cancellation of 1,162 shares of restricted common stock		—			—		—			(1	)		—			—			(1	)		—			(1	)
Amortization of deferred compensation		—			—		—			375			—			—			375			—			375
Performance stock units		—			—		—			2,420			—			—			2,420			—			2,420
Adjustment for noncontrolling interests		90			—		—			(616	)		—			—			(616	)		525			(91	)
Distributions to noncontrolling interests		—			—		—			—			—			—			—			(11	)		(11	)
Balance, September 30, 2020	$	193		$	25	$	1,958		$	1,984,607		$	33		$	(1,397,131	)	$	589,492		$	22,726		$	612,218

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(256,511	)	$	(168,531	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		162,042			198,438
Net amortization of deferred financing costs, premiums on available-for-sale securities and debt premiums and discounts		7,228			6,328
Net amortization of intangible lease assets and liabilities		(719	)		(1,212	)
Gain on sales of real estate assets		(2,708	)		(13,811	)
Gain on insurance proceeds		(1,644	)		(421	)
Gain on investments/deconsolidation		—			(11,174	)
Write-off of development projects		400			41
Share-based compensation expense		5,090			3,838
Loss on impairment		146,964			202,121
Gain on extinguishment of debt		(15,407	)		(71,722	)
Equity in (earnings) losses of unconsolidated affiliates		12,450			(3,421	)
Distributions of earnings from unconsolidated affiliates		6,130			15,635
Change in estimate of uncollectable rental revenues		55,369			1,504
Change in deferred tax accounts		15,596			1,026
Changes in:
Tenant and other receivables		(83,805	)		(2,926	)
Other assets		(8,259	)		(5,541	)
Accounts payable and accrued liabilities		16,976			75,071
Net cash provided by operating activities		59,192			225,243
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets		(47,838	)		(90,436	)
Proceeds from sales of real estate assets		3,593			128,364
Purchase of available-for-sale securities		(153,193	)		—
Proceeds from disposal of investments		—			9,225
Proceeds from insurance		988			740
Payments received on mortgage and other notes receivable		898			1,853
Additional investments in and advances to unconsolidated affiliates		(11,170	)		(2,634	)
Distributions in excess of equity in earnings of unconsolidated affiliates		6,250			11,255
Changes in other assets		(1,032	)		(2,497	)
Net cash provided by (used in) investing activities		(201,504	)		55,870
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness		365,246			1,043,496
Principal payments on mortgage and other indebtedness		(139,829	)		(1,232,480	)
Additions to deferred financing costs		(705	)		(15,545	)
Proceeds from issuances of common stock		5			39
Contributions from noncontrolling interests		693			4,603
Payment of tax withholdings for restricted stock awards		(87	)		(132	)
Distributions to noncontrolling interests		(837	)		(15,722	)
Dividends paid to holders of preferred stock		—			(33,669	)
Dividends paid to common shareholders		—			(25,959	)
Net cash provided by (used in) financing activities		224,486			(275,369	)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		82,174			5,744
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		59,058			57,512
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	141,232		$	63,256
Reconciliation from consolidated statements of cash flows to consolidated balance sheets:
Cash and cash equivalents	$	106,807		$	34,565
Restricted cash ⁽¹⁾:
Restricted cash		10,198			180
Mortgage escrows		24,227			28,511
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	141,232		$	63,256

SUPPLEMENTAL INFORMATION
Cash paid for interest, net of amounts capitalized	$	108,617		$	136,117

(1)	Included in intangible lease assets and other assets in the condensed consolidated balance sheets.

The accompanying notes are an integral part of these condensed consolidated statements.

Table of Contents

CBL & Associates Limited Partnership

Condensed Consolidated Balance Sheets

(In thousands, except unit data)

(Unaudited)

ASSETS ⁽¹⁾	September 30, 2020			December 31, 2019
Real estate assets:
Land	$	717,048		$	730,218
Buildings and improvements		5,255,663			5,631,831
		5,972,711			6,362,049
Accumulated depreciation		(2,228,632	)		(2,349,404	)
		3,744,079			4,012,645
Developments in progress		31,822			49,351
Net investment in real estate assets		3,775,901			4,061,996
Cash and cash equivalents		106,799			32,813
Available-for-sale securities - at fair value (amortized cost of $151,762 in 2020)		151,795			—
Receivables:
Tenant		108,123			75,252
Other		6,072			10,744
Mortgage and other notes receivable		2,534			4,662
Investments in unconsolidated affiliates		291,570			307,885
Intangible lease assets and other assets		121,603			129,354
	$	4,564,397		$	4,622,706
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness, net	$	3,729,686		$	3,527,015
Accounts payable and accrued liabilities		222,016			231,377
Total liabilities ⁽¹⁾		3,951,702			3,758,392
Commitments and contingencies (Note 8 and Note 12)
Redeemable common units		193			2,160
Partners' capital:
Preferred units		565,212			565,212
Common units:
General partner		252			2,765
Limited partners		24,819			270,216
Accumulated other comprehensive loss		33			—
Total partners' capital		590,316			838,193
Noncontrolling interests		22,186			23,961
Total capital		612,502			862,154
	$	4,564,397		$	4,622,706

(1)

As of September 30, 2020, includes $364,893 of assets related to consolidated variable interest entities that can only be used to settle obligations of the consolidated variable interest entities and $171,625 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Operating Partnership. See Note 7.

The accompanying notes are an integral part of these condensed consolidated statements.

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CBL & Associates Limited Partnership

Condensed Consolidated Statements of Operations

(In thousands, except per unit data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
REVENUES:
Rental revenues	$	124,081		$	180,616		$	405,476		$	556,989
Management, development and leasing fees		2,104			2,216			5,251			7,325
Other		3,712			4,419			10,955			14,344
Total revenues		129,897			187,251			421,682			578,658
OPERATING EXPENSES:
Property operating		(20,396	)		(27,344	)		(63,011	)		(82,856	)
Depreciation and amortization		(53,477	)		(64,168	)		(162,042	)		(198,438	)
Real estate taxes		(17,215	)		(18,699	)		(53,500	)		(57,766	)
Maintenance and repairs		(8,425	)		(10,253	)		(25,675	)		(34,327	)
General and administrative		(25,497	)		(12,467	)		(62,060	)		(48,901	)
Loss on impairment		(46	)		(135,688	)		(146,964	)		(202,121	)
Litigation settlement		2,480			22,688			2,480			(65,462	)
Other		—			(7	)		(400	)		(41	)
Total operating expenses		(122,576	)		(245,938	)		(511,172	)		(689,912	)
OTHER INCOME (EXPENSES):
Interest and other income		1,975			1,367			5,263			2,212
Interest expense		(61,137	)		(50,515	)		(160,760	)		(156,995	)
Gain on extinguishment of debt		15,407			—			15,407			71,722
Gain on investment		—			11,174			—			11,174
Gain (loss) on sales of real estate assets		(55	)		8,056			2,708			13,811
Income tax provision		(546	)		(1,670	)		(17,189	)		(2,622	)
Equity in earnings (losses) of unconsolidated affiliates		(7,389	)		(1,759	)		(12,450	)		3,421
Total other expenses		(51,745	)		(33,347	)		(167,021	)		(57,277	)
Net loss		(44,424	)		(92,034	)		(256,511	)		(168,531	)
Net (income) loss attributable to noncontrolling interests		937			(763	)		1,631			(631	)
Net loss attributable to the Operating Partnership		(43,487	)		(92,797	)		(254,880	)		(169,162	)
Distributions to preferred unitholders declared		—			(11,223	)		—			(33,669	)
Distributions to preferred unitholders undeclared		(11,223	)		—			(33,669	)		—
Net loss attributable to common unitholders	$	(54,710	)	$	(104,020	)	$	(288,549	)	$	(202,831	)
Basic and diluted per unit data attributable to common unitholders:
Net loss attributable to common unitholders	$	(0.27	)	$	(0.52	)	$	(1.43	)	$	(1.01	)
Weighted-average common and potential dilutive common units outstanding		201,690			200,230			201,551			200,158

The accompanying notes are an integral part of these condensed consolidated statements.

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CBL & Associates Limited Partnership

Condensed Consolidated Statements of Comprehensive Loss

(In thousands, except per unit data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss	$	(44,424	)	$	(92,034	)	$	(256,511	)	$	(168,531	)

Other comprehensive income:
Unrealized gain on available-for-sale securities		75			—			33			—


Comprehensive loss		(44,349	)		(92,034	)		(256,478	)		(168,531	)
Comprehensive (income) loss attributable to noncontrolling interests		937			(763	)		1,631			(631	)
Comprehensive loss attributable to the Operating Partnership:	$	(43,412	)	$	(92,797	)	$	(254,847	)	$	(169,162	)

The accompanying notes are an integral part of these condensed consolidated statements.

Table of Contents

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Capital

(In thousands)

(Unaudited)

				Number of								Common Units
	Redeemable Common Units			Preferred Units		Common Units			Preferred Units			General Partner			Limited Partners			Total Partner's Capital			Noncontrolling Interests			Total Capital
Balance, January 1, 2019	$	3,575			25,050		199,415		$	565,212		$	4,628		$	450,507		$	1,020,347		$	12,111		$	1,032,458
Net loss		(453	)		—		—			11,223			(590	)		(56,914	)		(46,281	)		(75	)		(46,356	)
Issuances of common units		—			—		863			—			—			717			717			—			717
Distributions declared - common units		(1,143	)		—		—			—			(151	)		(15,897	)		(16,048	)		—			(16,048	)
Distributions declared - preferred units		—			—		—			(11,223	)		—			—			(11,223	)		—			(11,223	)
Cancellation of restricted common units		—			—		(58	)		—			—			(133	)		(133	)		—			(133	)
Performance stock units		—			—		—			—			3			309			312			—			312
Amortization of deferred compensation		—			—		—			—			11			1,022			1,033			—			1,033
Allocation of partners' capital		1,038			—		—			—			(34	)		(1,004	)		(1,038	)		—			(1,038	)
Distributions to noncontrolling interests		—			—		—			—			—			—			—			(1,412	)		(1,412	)
Contributions from noncontrolling interests		—			—		—			—			—			—			—			455			455
Balance, March 31, 2019		3,017			25,050		200,220			565,212			3,867			378,607			947,686			11,079			958,765
Net loss		(317	)		—		—			11,223			(414	)		(40,123	)		(29,314	)		(57	)		(29,371	)
Distributions declared - common units		(1,143	)		—		—			—			—			(1,239	)		(1,239	)		—			(1,239	)
Distributions declared - preferred units		—			—		—			(11,223	)		—			—			(11,223	)		—			(11,223	)
Issuances of common units		—			—		15			—			—			(17	)		(17	)		—			(17	)
Cancellation of restricted common units		—			—		(5	)		—			—			(6	)		(6	)		—			(6	)
Performance stock units		—			—		—			—			3			310			313			—			313
Amortization of deferred compensation		—			—		—			—			6			581			587			—			587
Allocation of partners' capital		1,130			—		—			—			(14	)		(1,116	)		(1,130	)		—			(1,130	)
Contributions from noncontrolling interests		—			—		—			—			—			—			—			4,148			4,148
Distributions to noncontrolling interests		—			—		—			—			—			—			—			(1,948	)		(1,948	)
Balance, June 30, 2019		2,687			25,050		200,230			565,212			3,448			336,997			905,657			13,222			918,879
Net loss		(811	)		—		—			11,223			(1,056	)		(102,153	)		(91,986	)		763			(91,223	)
Distributions declared - common units		(1,143	)		—		—			—			—			(1,314	)		(1,314	)		—			(1,314	)
Distributions declared - preferred units		—			—		—			(11,223	)		—			—			(11,223	)		—			(11,223	)
Issuances of common units		—			—		2			—			—			39			39			—			39
Cancellation of restricted common units		—			—		(4	)		—			—			(4	)		(4	)		—			(4	)
Performance stock units		—			—		—			—			4			309			313			—			313
Amortization of deferred compensation		—			—		—			—			6			585			591			—			591
Allocation of partners' capital		1,131			—		—			—			(14	)		(1,120	)		(1,134	)		—			(1,134	)
Distributions to noncontrolling interests		—			—		—			—			—			—			—			(1,581	)		(1,581	)
Deconsolidation of investment		—			—		—			—			—			—			—			(4,270	)		(4,270	)
Balance, September 30, 2019	$	1,864			25,050		200,228		$	565,212		$	2,388		$	233,339		$	800,939		$	8,134		$	809,073

Table of Contents

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Capital

(Continued)

(In thousands)

(Unaudited)

				Number of							Common Units
	Redeemable Common Units			Preferred Units		Common Units			Preferred Units		General Partner			Limited Partners			Accumulated Other Comprehensive Income			Total Partner's Capital			Noncontrolling Interests			Total Capital
Balance, January 1, 2020	$	2,160			25,050		200,189		$	565,212	$	2,765		$	270,216		$	—		$	838,193		$	23,961		$	862,154
Net loss		(1,158	)		—		—			—		(1,406	)		(136,523	)		—			(137,929	)		(207	)		(138,136	)
Other comprehensive income		—			—		—			—		—			—			22			22			—			22
Issuances of common units		—			—		1,633			—		—			536			—			536			—			536
Cancellation of restricted common units		—			—		(116	)		—		—			(97	)		—			(97	)		—			(97	)
Allocation of partners' capital		60			—		—			—		(1	)		(64	)		—			(65	)		—			(65	)
Amortization of deferred compensation		—			—		—			—		18			615			—			633			—			633
Adjustment to record redeemable interests at redemption value		—			—		—			—		(8	)		8			—			—			—			—
Distributions to noncontrolling interests		—			—		—			—		—			—			—			—			(731	)		(731	)
Contributions from noncontrolling interests		—			—		—			—		—			—			—			—			668			668
Performance stock units		—			—		—			—		4			386			—			390			—			390

Balance, March 31, 2020		1,062			25,050		201,706			565,212		1,372			135,077			22			701,683			23,691			725,374
Net loss		(654	)		—		—			—		(728	)		(70,924	)		—			(71,652	)		(487	)		(72,139	)
Other comprehensive loss		—			—		—			—		—			—			(64	)		(64	)		—			(64	)
Issuances of common units		—			—		6			—		—			2			—			2			—			2
Cancellation of restricted common units		—			—		(21	)		—		—			(14	)		—			(14	)		—			(14	)
Allocation of partners' capital		117			—		—			—		(1	)		(117	)		—			(118	)		—			(118	)
Amortization of deferred compensation		—			—		—			—		11			373			—			384			—			384
Adjustment to record redeemable interests at redemption value		—			—		—			—		—			—			—			—			—			—
Distributions to noncontrolling interests		—			—		—			—		—			—			—			—			(94	)		(94	)
Contributions from noncontrolling interests		—			—		—			—		—			—			—			—			25			25
Performance stock units		—			—		—			—		4			375			—			379			—			379

Balance, June 30, 2020		525			25,050		201,691			565,212		658			64,772			(42	)		630,600			23,135			653,735
Net loss		(422	)		—		—			—		(437	)		(42,628	)		—			(43,065	)		(937	)		(44,002	)
Other comprehensive income		—			—		—			—		—			—			75			75			—			75
Cancellation of restricted common units		—			—		(1	)		—		—			—			—			—			—			—
Allocation of partners' capital		90			—		—			—		(1	)		(91	)		—			(92	)		—			(92	)
Amortization of deferred compensation		—			—		—			—		8			371			—			379			—			379
Distributions to noncontrolling interests		—			—		—			—		—			—			—			—			(12	)		(12	)
Performance stock units		—			—		—			—		24			2,395			—			2,419			—			2,419

Balance, September 30, 2020	$	193			25,050		201,690		$	565,212	$	252		$	24,819		$	33		$	590,316		$	22,186		$	612,502

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(256,511	)	$	(168,531	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		162,042			198,438
Net amortization of deferred financing costs, premiums on available-for-sale securities and debt premiums and discounts		7,228			6,328
Net amortization of intangible lease assets and liabilities		(719	)		(1,212	)
Gain on sales of real estate assets		(2,708	)		(13,811	)
Gain on insurance proceeds		(1,644	)		(421	)
Gain on investments/deconsolidation		—			(11,174	)
Write-off of development projects		400			41
Share-based compensation expense		5,090			3,838
Loss on impairment		146,964			202,121
Gain on extinguishment of debt		(15,407	)		(71,722	)
Equity in (earnings) losses of unconsolidated affiliates		12,450			(3,421	)
Distributions of earnings from unconsolidated affiliates		6,130			15,636
Change in estimate of uncollectable rental revenues		55,369			1,504
Change in deferred tax accounts		15,596			1,026
Changes in:
Tenant and other receivables		(83,805	)		(2,926	)
Other assets		(8,259	)		(5,541	)
Accounts payable and accrued liabilities		16,972			75,067
Net cash provided by operating activities		59,188			225,240
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets		(47,838	)		(90,436	)
Proceeds from sales of real estate assets		3,593			128,364
Purchase of available-for-sale securities		(153,193	)		—
Proceeds from disposal of investment		—			9,225
Proceeds from insurance		988			740
Payments received on mortgage and other notes receivable		898			1,853
Additional investments in and advances to unconsolidated affiliates		(11,170	)		(2,634	)
Distributions in excess of equity in earnings of unconsolidated affiliates		6,250			11,255
Changes in other assets		(1,032	)		(2,497	)
Net cash provided by (used in) investing activities		(201,504	)		55,870
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness		365,246			1,043,496
Principal payments on mortgage and other indebtedness		(139,829	)		(1,232,480	)
Additions to deferred financing costs		(705	)		(15,545	)
Proceeds from issuances of common units		5			39
Contributions from noncontrolling interests		693			4,603
Payment of tax withholdings for restricted stock awards		(87	)		(132	)
Distributions to noncontrolling interests		(837	)		(8,369	)
Distributions to preferred unitholders		—			(33,669	)
Distributions to common unitholders		—			(33,312	)
Net cash provided by (used in) financing activities		224,486			(275,369	)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		82,170			5,741
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		59,054			57,512
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	141,224		$	63,253
Reconciliation from consolidated statements of cash flows to consolidated balance sheets:
Cash and cash equivalents	$	106,799		$	34,562
Restricted cash ⁽¹⁾:
Restricted cash		10,198			180
Mortgage escrows		24,227			28,511
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	141,224		$	63,253

SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	108,617		$	136,117

(1)	Included in intangible lease assets and other assets in the condensed consolidated balance sheets.

The accompanying notes are an integral part of these condensed consolidated statements.

CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except per share and per unit data)

Note 1 – Organization and Basis of Presentation

Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries.

CBL & Associates Properties, Inc. (“CBL”), a Delaware corporation, is a self-managed, self-administered, fully-integrated real estate investment trust (“REIT”) that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers and office properties. Its properties are located in 26 states, but are primarily in the southeastern and midwestern United States.

CBL conducts substantially all its business through CBL & Associates Limited Partnership (the “Operating Partnership”), which is a variable interest entity ("VIE"). The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a VIE.

As of September 30, 2020, the Operating Partnership owned interests in the following properties:

			All Other Properties
	Malls ⁽¹⁾		Associated Centers		Community Centers		Office Buildings and Other			Total
Consolidated Properties		52		20		1		4	⁽²⁾		77
Unconsolidated Properties⁽³⁾		10		3		5		4			22
Total		62		23		6		8			99

(1)	Category consists of regional malls, open-air centers and outlet centers (including one mixed-use center).

(2)	Includes CBL's two corporate office buildings.

(3)	The Operating Partnership accounts for these investments using the equity method because one or more of the other partners have substantive participating rights.

The Malls, All Other Properties ("Associated Centers, Community Centers, Office Buildings and Other") and the Construction Properties are collectively referred to as the “Properties” and individually as a “Property.”

CBL is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At September 30, 2020, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned a 96.1% limited partner interest for a combined interest held by CBL of 97.1%.

Historically, the noncontrolling interest in the Operating Partnership has been held by CBL & Associates, Inc., its shareholders and affiliates and certain senior officers of the Company (collectively "CBL's Predecessor"), all of which contributed their interests in certain real estate properties and joint ventures to the Operating Partnership in exchange for a limited partner interest when the Operating Partnership was formed in November 1993, and by various third parties. In March 2020, the Company issued 16,333,947 shares of the Company’s common stock to CBL’s Predecessor in exchange for a like number of common units of limited partnership interest in the Operating Partnership pursuant to exchange notices received from CBL’s Predecessor. Additionally, in July and August 2020, the Company issued 1,783,403 shares of the Company’s common stock to CBL’s Predecessor in exchange for a like number of common units of limited partnership interest in the Operating Partnership pursuant to exchange notices received from CBL’s Predecessor. At September 30, 2020, CBL’s Predecessor no longer owned any limited partner interest and third parties owned a 2.9% limited partner interest in the Operating Partnership. CBL's Predecessor owned 20.1 million shares of CBL’s common stock at September 30, 2020, for a total effective interest of 10.0% in the Operating Partnership.

The Operating Partnership conducts the Company’s property management and development activities through its wholly owned subsidiary, CBL & Associates Management, Inc. (the “Management Company”), to comply with certain requirements of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

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The accompanying condensed consolidated financial statements are unaudited; however, they have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. All intercompany transactions have been eliminated. The results for the interim period ended September 30, 2020 are not necessarily indicative of the results to be obtained for the full fiscal year.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K, as amended, for the year ended December 31, 2019.

COVID-19

The COVID-19 pandemic has had, and likely will continue to have, repercussions across local, national and global economies and financial markets. COVID-19 has impacted all states where the Company’s tenants operate their businesses or where the Company’s properties are located and measures taken to prevent or remediate COVID-19, including “shelter-in place” or “stay-at-home” orders or other quarantine mandates issued by local, state or federal authorities, have had an adverse effect on its business and the businesses of its tenants. The full extent of the adverse impact on, among other things, the Company’s results of operations, liquidity (including its ability to access capital markets), the possibility of future impairments of long-lived assets or its investments in unconsolidated joint ventures, its compliance with debt covenants, its ability to renew and re-lease its leased space, the outlook for the retail environment, potential bankruptcies or other store closings and its ability to develop, acquire, dispose or lease properties, is unknown and will depend on future developments, which are highly uncertain and cannot be predicted. The Company has experienced, and expects to continue to experience, a material adverse impact on its revenues, results of operations, and cash flows for the year ended December 31, 2020. The situation is rapidly changing and additional impacts to the business may arise that the Company is not aware of currently.

Delisting of Common Stock and Depositary Shares

On November 2, 2020, the NYSE announced that (i) it had suspended trading in the Company’s stock and (ii) it had determined to commence proceedings to delist the Company’s common stock, as well as the depositary shares each representing a 1/10th fractional share of the Company’s 7.375% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”) and the depositary shares each representing a 1/10th fractional share of the Company’s 6.625% Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”), due to such securities no longer being suitable for listing based on “abnormally low” trading price levels, pursuant to Section 802.01D of the NYSE Listed Company Manual. The Company intends to appeal this decision in accordance with NYSE rules. In the meantime, effective November 3, 2020, the Company’s common stock and the depositary shares representing fractional interests in its Series D Preferred Stock and Series E Preferred Stock began trading on the OTC Markets, operated by the OTC Markets Group, Inc., under the symbols “CBLAQ”, “CBLDQ” and “CBLEQ”, respectively. A delisting of the Company’s common stock from the NYSE could negatively impact it by, among other things, reducing the trading liquidity of, and the market price for, its common stock.

Liquidity and Going Concern Considerations

In accordance with the accounting guidance related to the presentation of financial statements, when preparing financial statements for each annual and interim reporting period, management evaluates whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In making its assessment, management considered the Company’s current financial condition and liquidity sources, as well as the status of the Chapter 11 Cases.

The Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default, as applicable, have occurred and continue to exist as of the date of this report by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility. As a result of these asserted defaults and events of default, the lenders under the secured credit facility declared all outstanding principal, accrued interest and letters of credit to be immediately due and payable. Subsequent to the lenders accelerating the outstanding balances under the secured credit facility, other events occurred that each constitute an event of default under the secured credit facility, including (i) the Operating Partnership failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020, (ii) the NYSE suspension of trading in the Company’s common stock and commencement of proceedings to delist the Company’s common stock and depositary shares representing fractional interests in each of its series of preferred stock and (iii) CBL and the Operating Partnership, together with certain of its direct and indirect subsidiaries (collectively, the “Debtors”) commenced the filing of voluntary petitions (the “Chapter 11 Cases”) under chapter 11 of title 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”). Additionally, the filing of the Chapter 11 Cases constituted an event of default that

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results in the automatic acceleration of all outstanding principal, accrued and unpaid interest, and letters of credit to be immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts.

Given the acceleration of the senior secured credit facility, the senior unsecured notes and certain property-level debt, as well as the inherent risks, unknown results and inherent uncertainties associated with the bankruptcy process and the direct correlation between these matters and our ability to satisfy our financial obligations that may arise, the Company believes that there is substantial doubt that it will continue to operate as a going concern within one year after the date these condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the condensed consolidated financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern.

Voluntary Reorganization under Chapter 11

As described in Note 8 – Mortgage and Other Indebtedness, Net, the Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default, as applicable, have occurred and continue to exist as of the date of this report by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility. As a result of these asserted defaults and events of default, the lenders under the secured credit facility declared all outstanding principal, accrued interest and letters of credit to be immediately due and payable.

On August 18, 2020, the Company entered into a Restructuring Support Agreement, as amended, (the “RSA”) with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders of beneficial owners (the “Consenting Noteholders”) representing in excess of 62%, including joining noteholders pursuant to joinder agreements, of the aggregate principal amount of the Notes. The terms of the RSA provide for a comprehensive restructuring of the Company’s capital structure to be implemented through a chapter 11 plan of reorganization (the “Plan”) to be filed in the Chapter 11 Cases. The Plan would eliminate the $1,375,000 principal amount of the Notes in exchange for the issuance of $500,000 of new first-priority senior secured notes due June 2028, approximately $50,000 of cash and approximately 90% of the new common equity of the Company to holders of the Notes. As a result, the Plan, if implemented, will result in the elimination of approximately $900,000 of debt, extension of the Company’s debt maturity schedule and a reduction in annual interest expense of more than $20,000. The Plan also contemplates eliminating the Company’s $626,250 obligation on its preferred stock in exchange for new common equity, warrants and up to $5,000 in cash, at the Company’s election.

On October 28, 2020, the Operating Partnership was notified by the administrative agent and lenders that they elected to exercise their rights pursuant to the terms of the secured credit facility to (i) require that rents payable by tenants at the properties that are collateral to the secured credit facility be paid directly to the administrative agent and (ii) exercise all voting rights and other ownership rights in respect of all the equity interests in the subsidiaries of the Operating Partnership that are guarantors of the secured credit facility.

Beginning on November 1, 2020 (the “Commencement Date”), the Debtors commenced the Chapter 11 Cases by filing voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to the Bankruptcy Code. The Debtors’ Chapter 11 Cases are being jointly administered for procedural purposes only under the caption In re CBL & Associates Properties, Inc., et al., Case No. 20-35226.

The filing of the Chapter 11 Cases constituted an event of default that results in the automatic acceleration of all outstanding principal, accrued and unpaid interest, and letters of credit to be immediately due and payable with respect to the secured credit facility and the senior unsecured notes. On November 2, 2020, the Company filed an adversary proceeding in the Bankruptcy Court seeking among other things, a temporary restraining order (the “Order”) and for a preliminary injunction to enjoin, pending a determination of the parties’ rights, the administrative agent or any of its officers, agents, servants, attorneys and successors from taking any action to exercise any and all remedies under the terms of the secured credit facility or other agreements as a result of the events of default asserted by the administrative agent, or any other right or remedy that would otherwise accompany the occurrence of an event of default, including without limitation, any rights of acceleration under the terms of the secured credit facility, rights flowing from the notice of acceleration, rights exercised pursuant to the Notice of Exercise or any other rights or remedies properly exercisable solely upon an actual or determined event of default. On November 2, 2020, the Bankruptcy Court granted the Order and the Company and the administrative agent are negotiating the terms of a standstill pending further determination by the Bankruptcy Court.

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Following the Commencement Date, the Bankruptcy Court entered certain interim and final orders facilitating the Debtors’ operational transition into Chapter 11. These orders authorized the Debtors to, among other things, pay certain prepetition employee expenses and benefits, use their existing cash management system, maintain and administer customer programs, pay certain critical service providers, honor insurance-related obligations, and pay certain prepetition taxes and related fees on a final basis.

The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts.

In particular, subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assume and assign or reject executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach subject, in the case of the rejection of unexpired leases of real property, to certain caps on damages. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate for such damages. Generally, the assumption or assumption and assignment of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance thereunder. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this quarterly report, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with the Debtors is qualified by any overriding rights the Company has under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the assumption, assumption and assignment, or rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto.

Note 2 – Summary of Significant Accounting Policies

Accounting Guidance Adopted

Description	Expected Adoption Date & Application Method	Financial Statement Effect and Other Information
Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments	January 1, 2020 - Modified Retrospective	The guidance replaces the current incurred loss impairment model, which reflects credit events, with a current expected credit loss model, which recognizes an allowance for credit losses based on an entity’s estimate of contractual cash flows not expected to be collected. The Company has determined that its available-for-sale debt securities, guarantees, mortgage and other notes receivable and receivables within the scope of ASC 606 fall under the scope of this standard. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements or disclosures.

ASU 2018-13, Fair Value Measurement	January 1, 2020 - Prospective	The guidance eliminates, adds and modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements or disclosures.

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ASU 2018-15, Customer's Accounting for Implementation Costs

Incurred in a Cloud Computing Arrangement That Is a Service Contract

January 1, 2020 -

Prospective

The guidance addresses diversity in practice in accounting for the costs of implementation activities in a cloud computing arrangement that is a service contract. Under the guidance, the Company is to follow Subtopic 350-40 on internal-use software to determine which implementation costs to capitalize and which to expense.

The guidance also requires an entity to expense capitalized implementation costs over the term of the hosting arrangement and include that expense in the same line item as the fees associated with the service element of the arrangement.

The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements or disclosures.

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Lease Modification Q&A	April 1, 2020 – Prospective		In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance related to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election. The Company has elected to apply the relief provided under the Lease Modification Q&A and will avail itself of the election to avoid performing a lease by lease analysis for the lease concessions that were (1) granted as relief due to the COVID-19 pandemic and (2) result in the cash flows remaining substantially the same or less than the original contract. The Lease Modification Q&A had a material impact on the Company’s consolidated financial statements as of and for the three and nine months ended September 30, 2020. However, its future impact to the Company is dependent upon the extent of lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering such concessions. The Lease Modification Q&A allows the Company to determine accounting policy elections at a disaggregated level, and the elections should be applied consistently by either the type of concession, underlying asset class or on another reasonable basis. As a result, the Company has made the following policy elections based on the type of concession agreed to with the respective tenant. Rent Deferrals The Company will account for rental deferrals using the receivables model as described within the Lease Modification Q&A. Under the receivables model, the Company will continue to recognize lease revenue in a manner that is unchanged from the original lease agreement and continue to recognize lease receivables and rental revenue during the deferral period. Rent Abatements The Company will account for rental abatements using the negative variable income model as described within the Lease Modification Q&A. Under the negative variable income model, the Company will recognize negative variable rent for the current period reduction of rental revenue associated with any lease concessions we provide.
			At September 30, 2020, the Company’s receivables include $22,127 related to receivables that have been deferred and are to be repaid over periods generally starting in late 2020 and extending for some portion of 2021. The Company granted abatements of $13,097 and $14,945 for the three and nine months ended September 30, 2020, respectively. The Company continues to assess rent relief requests from its tenants but is unable to predict the resolution or impact of these discussions. For agreements that are in currently under negotiation, the Company does not expect the impact to be material.

Accounting Guidance Not Yet Adopted
Description		Financial Statement Effect and Other Information
ASU 2020-04, Reference Rate Reform		On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. This ASU is effective as of March 12, 2020 through December 31, 2022. The Company has not adopted any of the optional expedients or exceptions as of September 30, 2020, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period as circumstances evolve.

Accounts Receivable

Receivables include amounts billed and currently due from tenants pursuant to lease agreements and receivables attributable to straight-line rents associated with those lease agreements. Individual leases where the collection of rents is in dispute are assessed for collectability based on management’s best estimate of collection considering the anticipated outcome of the dispute. Individual leases that are not in dispute are assessed for collectability and upon the determination that the collection of rents over the remaining lease term is not probable, accounts receivable are reduced as an adjustment to rental revenues. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further, management assesses whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical collection levels and current economic trends. An allowance for the uncollectible portion of the portfolio is recorded as an adjustment to rental revenues. Management’s estimate of the collectability of accounts receivable from tenants is based on the best information available to management at the time of evaluation.

The duration of the COVID-19 pandemic and our tenants’ ability to resume operations once governmental and legislative restrictions are lifted has caused uncertainty in the Company’s ongoing ability to collect rents when due. Considering the potential impact of these uncertainties, management’s collection assessment also took into consideration the type of retailer and current discussions with the tenants, as well as recent rent collection experience and tenant bankruptcies based on the best information available to management at the time of evaluation. For the three and nine months ended September 30, 2020, the Company recorded $13,771 and $54,463, respectively, associated with potentially uncollectible revenues, which includes to $2,581 and $5,137, respectively, for straight line receivables.

Carrying Value of Long-Lived Assets and Investment in Unconsolidated Affiliates

The Company evaluates its real estate assets and investment in unconsolidated affiliates for impairment indicators whenever events or changes in circumstances indicate that recoverability of its investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in

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circumstances. The prolonged outbreak of the COVID-19 pandemic resulted in sustained closure of the Company’s properties for a period of time, as well as the cessation of the operations of certain of its tenants, which has resulted and will likely continue to result in a reduction in the revenues and cash flows of many of its properties due to the adverse financial impacts on its tenants, as well as reductions in other sources of income generated by its properties. In addition to reduced revenues, the Company’s ability to obtain sufficient financing for such properties may be impaired as well as its ability to lease or re-lease properties as a result of worsening market and economic conditions resulting from the COVID-19 pandemic.

As of September 30, 2020, the Company’s evaluation of impairment of real estate assets considered its estimate of cash flow declines caused by the COVID-19 pandemic, but its other assumptions, including estimated hold period, were generally unchanged given the highly uncertain environment. The worsening of estimated future cash flows due to a change in the Company’s plans, policies, or views of market and economic conditions as it relates to one or more of its properties adversely impacted by the COVID-19 pandemic could result in the recognition of substantial impairment charges on its assets, which could adversely impact its financial results. For the nine months ended September 30, 2020, the Company recorded impairment charges of $146,964 related to three of its malls. As of September 30, 2020, five other properties had impairment indicators; however, based on the Company’s plans with respect to those properties and the economic environment as of September 30, 2020, no additional impairment charges were recorded.

As of September 30, 2020, the Company’s estimates of fair value for each investment are based on a number of assumptions that are subject to economic and market uncertainties including, but not limited to, demand for space, competition for tenants, changes in market rental rates, and operating costs. Future declines in the fair value of the Company’s investments in unconsolidated affiliates, including those resulting from the adverse impact of the COVID-19 pandemic on the real estate assets owned by the unconsolidated affiliates, could result in the recognition of substantial impairment charges on its investments in unconsolidated affiliates to the extent such declines are determined to be other-than-temporary. No impairments of investments in unconsolidated affiliates were recorded in the three and nine-month periods ended September 30, 2020 and 2019. As of September 30, 2020, there were indicators that the fair value of two investments in unconsolidated affiliates had declined below the Company’s carrying value of the investment; however, the decline was determined to not be other-than-temporary.

Note 3 – Revenues

Revenues

The following table presents the Company's revenues disaggregated by revenue source:

	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Rental revenues ⁽¹⁾	$	124,081	$	180,616	$	405,476	$	556,989
Revenues from contracts with customers (ASC 606):
Operating expense reimbursements ⁽²⁾		2,360		2,449		6,852		6,653
Management, development and leasing fees ⁽³⁾		2,104		2,216		5,251		7,325
Marketing revenues ⁽⁴⁾		495		1,056		1,589		3,148
		4,959		5,721		13,692		17,126

Other revenues		857		914		2,514		4,543
Total revenues ⁽⁵⁾	$	129,897	$	187,251	$	421,682	$	578,658

(1)

Revenues from leases that commenced subsequent to December 31, 2018 are accounted for in accordance with ASC 842, Leases, whereas all leases existing prior to that date are accounted for in accordance with ASC 840.

(2)

Includes $2,217 in the Malls segment and $143 in the All Other segment for the three months ended September 30, 2020, and includes $2,374 in the Malls segment and $75 in the All Other segment for the three months ended September 30, 2019. Includes $6,562 in the Malls segment and $290 in the All Other segment for the nine months ended September 30, 2020, and includes $6,458 in the Malls segment and $195 in the All Other segment for the nine months ended September 30, 2019.

(3)	Included in All Other segment.

(4)	Marketing revenues solely relate to the Malls segment for all periods presented.

(5)	Sales taxes are excluded from revenues.

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See Note 10 for information on the Company's segments.

Revenue from Contracts with Customers

Expected credit losses

During the three and nine months ended September 30, 2020, the Company individually evaluated tenant receivables within the scope of ASC 606, of which a significant portion are short term. These receivables are assessed for collectability based on management’s best estimate of collection considering balances outstanding, historical collection levels and current economic trends. The Company recognized bad debt (recovery) expense of $(356) and $906 related to this class of receivables that were deemed uncollectable for the three and nine months ended September 30, 2020, respectively.

Outstanding Performance Obligations

The Company has outstanding performance obligations related to certain noncancellable contracts with customers for which it will receive fixed operating expense reimbursements for providing certain maintenance and other services as described above. As of September 30, 2020, the Company expects to recognize these amounts as revenue over the following periods:

Performance obligation

Less than 5

years

5-20 years

Over 20

years

Total

Fixed operating expense reimbursements

26,881

53,984

48,398

129,263

The Company evaluates its performance obligations each period and makes adjustments to reflect any known additions or cancellations. Performance obligations related to variable consideration, which is based on sales, are constrained.

Note 4 – Leases

Lessor

The components of rental revenues are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Fixed lease payments	$	99,255	$	149,582	$	335,799	$	460,584
Variable lease payments		24,826		31,034		69,677		96,405
Total rental revenues	$	124,081	$	180,616	$	405,476	$	556,989

The undiscounted future fixed lease payments to be received under the Company's operating leases as of September 30, 2020, are as follows:

Years Ending December 31,	Operating Leases
2020 ⁽¹⁾	$	101,314
2021		387,447
2022		330,263
2023		277,859
2024		226,620
2025		171,312
Thereafter		418,785
Total undiscounted lease payments	$	1,913,600

(1)	Reflects rental payments for the fiscal period October 1, 2020 to December 31, 2020.

Lessee

The Company has eight ground leases and one office lease in which it is a lessee. The maturities of these leases range from 2021 to 2089 and generally provide for renewal options ranging from five to ten years. We included the renewal options in our lease terms for purposes of calculating our lease liability and ROU asset where we have plans to continue operating our assets under the current terms associated with each ground lease. The ground leases relate to properties where the Company owns the buildings and improvements, but leases the underlying land. The lease payments on the

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majority of the ground leases are fixed, but in the instances where they are variable they are either based on the CPI index or a percentage of sales. The one office lease is subleased as of September 30, 2020. As of September 30, 2020, these leases have a weighted-average remaining lease term of 43.2 years and a weighted-average discount rate of 8.1%.

The components of lease expense are presented below:

	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Lease expense:
Operating lease expense	$	113	$	10	$	352	$	435
Variable lease expense		82		247		198		277
Total lease expense	$	195	$	257	$	550	$	712

Note 5 – Fair Value Measurements

The Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosure, ("ASC 820") based on whether the inputs to valuation techniques are observable or unobservable. The fair value hierarchy contains three levels of inputs that may be used to measure fair value as follows:

Level 1 –	Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.
Level 2 –	Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.
Level 3 –	Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability. Market valuations must often be determined using discounted cash flow methodologies, pricing models or similar techniques based on the Company’s assumptions and best judgment.

The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions and risk of nonperformance.

Fair Value Measurements on a Recurring Basis

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short-term nature of these financial instruments. Based on the interest rates for similar financial instruments, the carrying value of mortgage and other notes receivable is a reasonable estimate of fair value. The estimated fair value of mortgage and other indebtedness was $2,756,633 and $2,970,246 at September 30, 2020 and December 31, 2019, respectively. The fair value was calculated using Level 2 inputs by discounting future cash flows for mortgage and other indebtedness using estimated market rates at which similar loans would be made currently.

During March 2020, the Company purchased U.S. Treasury securities that are scheduled to mature between April 2021 and June 2021. The Company has designated these securities as available-for-sale (“AFS”). The fair value of these securities was calculated based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The Company believes the market for U.S. Treasury securities is an actively traded market given the high level of daily trading volume. The following table sets forth information regarding the Company’s AFS securities that were measured at fair value for the nine months ended September 30, 2020:

AFS Security

Amortized

Cost

Allowance

for credit

losses ⁽¹⁾

Total unrealized gains/(losses)

Fair Value

U.S. Treasury securities

151,762

—

151,795

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(1)

U.S Treasury securities have a long history with no credit losses. Additionally, the Company notes that U.S Treasury securities are explicitly fully guaranteed by a sovereign entity that can print its own currency and that the sovereign entity’s currency is routinely held by central banks and other major financial institutions, is used in international commerce, and commonly viewed as a reserve currency, all of which qualitatively indicate that historical credit loss information should be minimally affected by current conditions and reasonable and supportable forecasts. Therefore, the Company did not record expected credit losses for its U.S Treasury securities for the three and nine months ended September 30, 2020.

The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), on January 1, 2020. Under ASC Topic 326-30, the Company elected to exclude applicable accrued interest from both the fair value and the amortized cost basis of the available-for-sale debt securities, and separately present the accrued interest receivable balance within the Other Receivables line item of the condensed consolidated balance sheets. The Company elected not to measure an allowance for credit losses on accrued interest receivable as an allowance on possible uncollectable accrued interest receivable is recorded in a timely manner.

Fair Value Measurements on a Nonrecurring Basis

The Company measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company considers both quantitative and qualitative factors in its impairment analysis of long-lived assets. Significant quantitative factors include historical and forecasted information for each property such as net operating income ("NOI"), occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition of the property and tenant mix. Due to the significant unobservable estimates and assumptions used in the valuation of long-lived assets that experience impairment, the Company classifies such long-lived assets under Level 3 in the fair value hierarchy. Level 3 inputs primarily consist of sales and market data, independent valuations and discounted cash flow models.

Long-lived Assets Measured at Fair Value in 2020

The following table sets forth information regarding the Company's assets that are measured at fair value on a nonrecurring basis and related impairment charges for the nine months ended September 30, 2020:

			Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Loss on Impairment
2020:
Long-lived assets	$	166,900	$	—	$	—	$	166,900	$	146,964

During the nine months ended September 30, 2020, the Company recognized impairments of real estate of $146,964 related to three malls and one vacant land parcel.

Impairment

Date

Property

Location

Segment

Classification

Loss on

Impairment

Fair

Value

March

Burnsville Center ⁽¹⁾

Burnsville, MN

Malls

26,562

47,300

March

Monroeville Mall ⁽²⁾

Pittsburgh, PA

Malls

107,082

67,000

June

Asheville Mall ⁽³⁾

Asheville, NC

Malls

13,274

52,600

July

Vacant land

Pittsburgh, PA

Malls

—

146,964

166,900

(1)

In accordance with the Company's quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $47,300. The mall had experienced a decline of NOI due to store closures and rent reductions. These factors resulted in a reduction of the expected hold period for this asset based on Management’s assessment that there was an increased likelihood that the loan secured by the mall may not be successfully restructured or refinanced. Management determined the fair value of Burnsville Center using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 14.5% and a discount rate of 15.5%.

(2)

In accordance with the Company's quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $67,000. The mall had experienced a decline of NOI due to store closures and rent reductions. Management determined the fair value of Monroeville Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 14.0% and a discount rate of 14.5%.

(3)

In accordance with the Company's quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $52,600. The mall had experienced a decline of NOI due to store closures and rent reductions. These factors resulted in a reduction of the expected hold period for this asset based on Management’s assessment that there was an increased likelihood that the loan secured by the mall may not be successfully restructured or refinanced. Management determined the fair value of Asheville Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 13.25% and a discount rate of 14.0%.

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Long-lived Assets Measured at Fair Value in 2019

The following table sets forth information regarding the Company's assets that were measured at fair value on a nonrecurring basis and related impairment charges for the nine months ended September 30, 2019:

			Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Loss on Impairment
2019:
Long-lived assets	$	160,740	$	—	$	—	$	160,740	$	202,121

During the nine months ended September 30, 2019, the Company recognized impairments of real estate of $202,121 related to five malls and one community center:

Impairment

Date

Property

Location

Segment

Classification

Loss on

Impairment

Fair

Value

March

Greenbrier Mall ⁽¹⁾

Chesapeake, VA

Malls

22,770

56,300

March/April

Honey Creek Mall ⁽²⁾

Terre Haute, IN

Malls

2,045

—

June

The Forum at Grandview ⁽³⁾

Madison, MS

All Other

8,582

—

June

EastGate Mall ⁽⁴⁾

Cincinnati, OH

Malls

33,265

25,100

September

Mid Rivers Mall ⁽⁵⁾

St. Peters, MO

Malls

83,621

53,340

September

Laurel Park Place ⁽⁶⁾

Livonia, MI

Malls

52,067

26,000

January/March

Other adjustments ⁽⁷⁾

Various

Malls

(229

)

—

202,121

160,740

(1)

In accordance with the Company's quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $56,300. The mall has experienced a decline in cash flows due to store closures and rent reductions. Additionally, one anchor was vacant as of the date of impairment. These factors resulted in a reduction of the expected hold period for this asset based on Management’s assessment that there was an increased likelihood that the loan secured by the mall may not be successfully restructured or refinanced. Management determined the fair value of Greenbrier Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 11.5% and a discount rate of 11.5%.

(2)	The Company adjusted the book value of the mall to the net sales price of $14,360 based on a signed contract with a third-party buyer, adjusted to reflect estimated disposition costs. The mall was sold in April 2019.

(3)	The Company adjusted the book value to the net sales price of $31,559 based on a signed contract with a third-party buyer, adjusted to reflect estimated disposition costs. The property was sold in July 2019.

(4)

In accordance with the Company's quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $25,100. The mall had experienced a decline in cash flows due to store closures and rent reductions. These factors resulted in a reduction of the expected hold period for this asset based on Management’s assessment that there was an increased likelihood that the loan secured by the mall may not be successfully restructured or refinanced. Management determined the fair value of EastGate Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 14.5% and a discount rate of 15.0%.

(5)

In accordance with the Company’s quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $53,340. The mall has experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Mid Rivers Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 12.5% and a discount rate of 13.25%.

(6)

In accordance with the Company’s quarterly impairment process, the Company wrote down the book value of the mall to its estimated fair value of $26,000. The mall has experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Laurel Park Place using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of ten years, with a sale at the end of the holding period, a capitalization rate of 13.5% and a discount rate of 14.0%.

(7)	Related to true-ups of estimated expenses to actual expenses for properties sold in prior periods.

Note 6 – Dispositions and Held for Sale

The Company evaluates its disposals utilizing the guidance in ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Based on its analysis, the Company determined that the dispositions described below do not meet the criteria for classification as discontinued operations and are not considered to be significant disposals based on its quantitative and qualitative evaluation. Thus, the results of operations of the properties described below, as well as any related gains or losses, are included in net loss for all periods presented, as applicable.

2020 Dispositions

The Company realized a gain of $2,708 related to the sale of three outparcels during the nine months ended September 30, 2020.

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The Company recognized a gain on extinguishment of debt for the property listed below, which represented the amount by which the outstanding debt balance exceeded the net book value of the property as of the transfer date. See Note 8 for more information.

Sale/Transfer

Date

Property

Property Type

Location

Balance of Non-recourse Debt

Gain on Extinguishment of Debt

August

Hickory Point Mall ⁽¹⁾

Malls

Forsyth, IL

27,446

15,407

(1)	The Company transferred title to the mall to the mortgage holder in satisfaction of the non-recourse debt secured by the property.

Note 7 – Unconsolidated Affiliates and Noncontrolling Interests

Unconsolidated Affiliates

Although the Company had majority ownership of certain joint ventures during 2020 and 2019, it evaluated the investments and concluded that the other partners or owners in these joint ventures had substantive participating rights, such as approvals of:

•

the pro forma for the development and construction of the project and any material deviations or modifications thereto;

•

the site plan and any material deviations or modifications thereto;

•

the conceptual design of the project and the initial plans and specifications for the project and any material deviations or modifications thereto;

•

any acquisition/construction loans or any permanent financings/refinancings;

•

the annual operating budgets and any material deviations or modifications thereto;

•

the initial leasing plan and leasing parameters and any material deviations or modifications thereto; and

•

any material acquisitions or dispositions with respect to the project.

As a result of the joint control over these joint ventures, the Company accounts for these investments using the equity method of accounting.

At September 30, 2020, the Company had investments in 29 entities, which are accounted for using the equity method of accounting. The Company's ownership interest in these unconsolidated affiliates ranges from 20% to 65%. Of these entities, 17 are owned in 50/50 joint ventures.

2020 Activity - Unconsolidated Affiliates

Atlanta Outlet JV, LLC

In February 2020, Atlanta Outlet JV, LLC, a 50/50 joint venture, closed on a new loan in the amount of $4,680, with an interest rate of LIBOR plus 2.5% and a maturity date of November 2023. Proceeds were used to retire the previous loan. The Operating Partnership and its joint venture partner have each guaranteed 100% of the loan. See Note 12 for more information.

BI Development II, LLC

In June 2020, the Company entered into a joint venture, BI Development II, LLC, to acquire, redevelop and operate the vacant Sears parcel at Northgate Mall in Chattanooga, TN. The Company has a 20% membership interest in the joint venture. The Company made no initial capital contribution and has no future funding obligations. The unconsolidated affiliate is a variable interest entity ("VIE").

CBL/T-C, LLC

As of September 30, 2020, the non-recourse loan that is secured by Oak Park Mall was in default. The loan, which matures in October 2025, had an outstanding balance of $262,971 at September 30, 2020. In October 2020, Oak Park Mall, LLC reached agreement with the lender to restructure the loan. See Note 15 – Subsequent Events for more information.

Impact of Chapter 11 Proceedings

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As described in Note 1 – Organization and Basis of Presentation, the filing of the Chapter 11 Cases subsequent to September 30, 2020 also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts. There are 17 of such loans related to unconsolidated affiliates that have an aggregate outstanding balance of $811,081 at September 30, 2020.

Condensed Combined Financial Statements - Unconsolidated Affiliates

Condensed combined financial statement information of the unconsolidated affiliates is as follows:

	September 30, 2020			December 31, 2019
ASSETS:
Investment in real estate assets	$	2,348,669		$	2,293,438
Accumulated depreciation		(846,097	)		(803,909	)
		1,502,572			1,489,529
Developments in progress		25,556			46,503
Net investment in real estate assets		1,528,128			1,536,032
Other assets		180,235			154,427
Total assets	$	1,708,363		$	1,690,459
LIABILITIES:
Mortgage and other indebtedness, net	$	1,435,891		$	1,417,644
Other liabilities		53,583			41,007
Total liabilities		1,489,474			1,458,651
OWNERS' EQUITY:
The Company		141,989			149,376
Other investors		76,900			82,432
Total owners' equity		218,889			231,808
Total liabilities and owners’ equity	$	1,708,363		$	1,690,459

	Three Months Ended September 30,
	2020			2019
Total revenues	$	46,953		$	52,867
Net income (loss) ⁽¹⁾	$	(10,671	)	$	81,300
(1) The Company's pro rata share of net loss is $(7,389) and $(1,759) for the three months ended September 30, 2020 and 2019, respectively.

	Nine Months Ended September 30,
	2020			2019
Total revenues	$	154,128		$	162,964
Net income (loss) ⁽¹⁾	$	(12,139	)	$	90,303

(1)	The Company's pro rata share of net income (loss) is $(12,450) and $3,421 for the nine months ended September 30, 2020 and 2019, respectively.

Noncontrolling Interests

Noncontrolling interests consist of the following:

	As of
	September 30, 2020		December 31, 2019
Noncontrolling interests:
Operating Partnership	$	540	$	31,592
Other consolidated subsidiaries		22,186		23,961
	$	22,726	$	55,553

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Accounts Receivable

See Note 2 – Summary of Significant Accounting Policies for the Company’s accounting policy related to accounts receivable, which is also applicable to the unconsolidated affiliates. The duration of the COVID-19 pandemic and the unconsolidated affiliates’ tenants’ ability to resume operations once governmental and legislative restrictions are lifted has caused uncertainty in the unconsolidated affiliates’ ongoing ability to collect rents when due. Considering the potential impact of these uncertainties, the unconsolidated affiliates’ collection assessment also took into consideration the type of retailer and current discussions with the tenants, as well as recent rent collection experience and tenant bankruptcies based on the best information available to management at the time of evaluation. For the three and nine months ended September 30, 2020, the unconsolidated affiliates recorded $5,517 and $19,052, respectively, associated with potentially uncollectible revenues, which includes $830 and $1,265, respectively, for straight-line rent receivables.

At September 30, 2020, the unconsolidated affiliates’ Receivables include $4,621 related to receivables that have been deferred and are to be repaid over periods generally starting in late 2020 and extending for some portion of 2021. The unconsolidated affiliates granted abatements of $4,231 and $5,421, respectively, for the three and nine months ended September 30, 2020. The unconsolidated affiliates continue to assess rent relief requests from their tenants but are unable to predict the resolution or impact of these discussions. For agreements that are currently under negotiation, the impact is not expected to be material.

Variable Interest Entities

In accordance with the guidance in ASU 2015-02, Amendments to the Consolidation Analysis, and ASU 2016-17, Interests Held Through Related Parties That Are under Common Control, the Operating Partnership and certain of its subsidiaries are deemed to have the characteristics of a VIE primarily because the limited partners of these entities do not collectively possess substantive kick-out or participating rights.

The Company consolidates the Operating Partnership, which is a VIE, for which the Company is the primary beneficiary. The Company, through the Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether the Company is the primary beneficiary of a VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Company's investment; the obligation or likelihood for the Company or other investors to provide financial support; and the similarity with and significance to the Company's business activities and the business activities of the other investors.

Consolidated VIEs

As of September 30, 2020, the Company had investments in 12 consolidated VIEs with ownership interests ranging from 50% to 92%.

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Unconsolidated VIEs

The table below lists the Company's unconsolidated VIEs as of September 30, 2020:

Unconsolidated VIEs:	Investment in Real Estate Joint Ventures and Partnerships		Maximum Risk of Loss
Ambassador Infrastructure, LLC ⁽¹⁾	$	—	$	9,360
BI Development, LLC		—		—
BI Development II, LLC		—		—
Bullseye, LLC		—		—
Continental 425 Fund LLC		7,051		7,051
EastGate Storage, LLC ⁽¹⁾		558		3,808
Hamilton Place Self Storage ⁽¹⁾		1,340		8,342
Parkdale Self Storage, LLC ⁽¹⁾		983		7,483
PHG-CBL Lexington, LLC		35		35
Self Storage at Mid Rivers, LLC ⁽¹⁾		565		3,559
Shoppes at Eagle Point, LLC ⁽¹⁾		17,053		29,793
Vision - CBL Hamilton Place, LLC		3,686		3,686
	$	31,271	$	73,117

(1)	The Operating Partnership has guaranteed all or a portion of the debt of each of these VIEs. See Note 12 for more information.

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Note 8 – Mortgage and Other Indebtedness, Net

Debt of the Company

CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of the Company's debt. CBL is a limited guarantor of the senior unsecured notes (the "Notes"), as described below, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates.

The Company also provides a similar limited guarantee of the Operating Partnership's obligations with respect to its secured credit facility and secured term loan as of September 30, 2020.

Debt of the Operating Partnership

Net mortgage and other indebtedness consisted of the following:

	September 30, 2020						December 31, 2019
	Amount			Weighted- Average Interest Rate ⁽¹⁾			Amount			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating Properties	$	1,193,997			5.17	%	$	1,330,561			5.27	%
Senior unsecured notes due 2023 ⁽²⁾		448,265			5.25	%		447,894			5.25	%
Senior unsecured notes due 2024 ⁽³⁾		299,966			4.60	%		299,960			4.60	%
Senior unsecured notes due 2026 ⁽⁴⁾		618,136			5.95	%		617,473			5.95	%
Total fixed-rate debt		2,560,364			5.31	%		2,695,888			5.35	%
Variable-rate debt:
Recourse loans on operating Properties		68,511			2.91	%		41,950			4.34	%
Construction loan		—			—			29,400			4.60	%
Secured line of credit ⁽⁵⁾		675,925			9.50	%		310,925			3.94	%
Secured term loan ⁽⁵⁾		438,750			9.50	%		465,000			3.94	%
Total variable-rate debt		1,183,186			9.12	%		847,275			3.98	%
Total fixed-rate and variable-rate debt		3,743,550			6.51	%		3,543,163			5.02	%
Unamortized deferred financing costs ⁽⁶⁾		(13,864	)					(16,148	)
Total mortgage and other indebtedness, net	$	3,729,686					$	3,527,015

(1)	Weighted-average interest rate includes the effect of debt premiums and discounts, but excludes amortization of deferred financing costs.

(2)	The balance is net of an unamortized discount of $1,736 and $2,106 as of September 30, 2020 and December 31, 2019, respectively.

(3)	The balance is net of an unamortized discount of $34 and $40 as of September 30, 2020 and December 31, 2019, respectively.

(4)	The balance is net of an unamortized discount of $6,864 and $7,527 as of September 30, 2020 and December 31, 2019, respectively.

(5)

The administrative agent informed the Company that interest will accrue on all outstanding obligations at the post-default rate, which is equal to the rate that otherwise would be in effect plus 5.0%. The post-default interest rate at September 30, 2020 was 9.50%. The variable interest rate at LIBOR based on original terms of senior secured facility is 2.41% as of September 30, 2020.

(6)

Includes $10,524 of unamortized deferred financing costs related to the secured term loan, senior unsecured notes and certain property-level, non-recourse mortgage loans that 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. Additionally, intangible lease assets and other assets includes $7,180 of unamortized deferred financing costs related to the secured line of credit that 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.

Non-recourse term loans, recourse term loans, the secured line of credit and the secured term loan include loans that are secured by Properties owned by the Company that have a net carrying value of $2,334,160 at September 30, 2020.

Senior Unsecured Notes

Description	Issued ⁽¹⁾	Amount		Interest Rate			Maturity Date ⁽²⁾
2023 Notes	November 2013	$	450,000		5.25	%	December 2023
2024 Notes	October 2014		300,000		4.60	%	October 2024
2026 Notes	December 2016 / September 2017		625,000		5.95	%	December 2026

(1)	Issued by the Operating Partnership. CBL is a limited guarantor of the Operating Partnership's obligations under the Notes as described above.

(2)

The Notes are redeemable at the Operating Partnership's election, in whole or in part from time to time, on not less than 30 days and not more than 60 days' notice to the holders of the Notes to be redeemed. The 2023 Notes, the 2024 Notes and the 2026 Notes may be redeemed prior to September 1, 2023, July 15, 2024, and September 15, 2026, respectively, for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date and a make-whole premium calculated in

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accordance with the indenture. On or after the respective dates noted above, the Notes are redeemable for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest. If redeemed prior to the respective dates noted above, each issuance of Notes is redeemable at the treasury rate plus 0.40%, 0.35% and 0.50% for the 2023 Notes, the 2024 Notes and the 2026 Notes, respectively.

The Company elected to not make the $11,813 interest payment due and payable on June 1, 2020, with respect to the Operating Partnership’s 5.25% senior unsecured notes due 2023 (the “2023 Notes”) (the “2023 Notes Interest Payment”). The Company also elected to not make the $18,594 interest payment due and payable on June 15, 2020, with respect to the Operating Partnership’s 5.95% senior unsecured notes due 2026 (the “2026 Notes”) (the “2026 Notes Interest Payment”). The Operating Partnership did not make either the 2023 Notes Interest Payment or the 2026 Notes Interest Payment by the last day of the respective 30-day grace periods provided for in the indenture governing the 2023 Notes and the 2026 Notes. The Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment during the applicable grace periods constituted an “event of default” with respect to each of the 2023 Notes and the 2026 Notes.

On August 5, 2020, the Operating Partnership made the 2023 Notes Interest Payment to the holders of the 2023 Notes and the 2026 Notes Interest Payment to the holders of the 2026 Notes. Accordingly, from and after such payment, the nonpayment of each of the 2023 Notes Interest Payment and the 2026 Notes Interest Payment no longer constitutes (i) an “event of default” under the indenture governing the 2023 Notes and the 2026 Notes that occurred and is continuing or (ii) to the extent provided in that certain forbearance agreement, dated as of July 22, 2020 (as amended, the “Bank Forbearance Agreement”) with the Agent for the Lenders under the secured credit facility, an “event of default” under the secured credit facility. See Financial Covenants and Restrictions below for more information.

As described in Note 15 – Subsequent Events, the Operating Partnership elected to not make the $6,900 interest payment due and payable on October 15, 2020, with respect to the 2024 Notes, and entered the 30-day grace period pursuant to the terms of the indenture governing the 2024 Notes. As described in Note 1 – Organization and Basis of Presentation, the filing of the Chapter 11 Cases subsequent to September 30, 2020 constituted an event of default under the indenture governing the Notes.

Senior Secured Credit Facility

The Company has a $1,185,000 senior secured credit facility, which includes a revolving line of credit with a borrowing capacity of $685,000 and a term loan with an outstanding balance of $438,750 at September 30, 2020. The facility matures in July 2023 and bore interest at a variable rate of LIBOR plus 2.25% through March 30, 2020. As further described in Note 1 – Organization and Basis of Presentation and in Financial Covenants and Restrictions below, the lenders have declared the outstanding obligations under the secured credit facility to be immediately due and payable. On August 6, 2020, the Operating Partnership received a notice of imposition of base rate and post-default rate letter from the administrative agent under the secured credit facility, which (i) informed the Operating Partnership that following an asserted event of default on March 19, 2020, all outstanding loans were converted to base rate loans at the expiration of the applicable interest periods and (ii) sought payment of $4,812 related thereto for April through June 2020 (the “Demand Interest”). The base rate is defined as the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the LIBOR Market Index Rate plus 1.0%, plus 1.25%. The base rate on September 30, 2020 was 4.50% based on the prime rate plus 1.25%. The administrative agent also informed the Operating Partnership that from and after August 6, 2020, interest will accrue on all outstanding obligations at the post-default rate, which is equal to the rate that otherwise would be in effect plus 5.0%. The post-default interest rate at the time of notification and at September 30, 2020 was 9.50%.

The Operating Partnership is required to pay an annual facility fee, to be paid quarterly, which ranges from 0.25% to 0.35%, based on the unused capacity of the line of credit. The terms of the facility also require the principal balance on the term loan to be reduced by $35,000 per year in quarterly installments. In March 2020, the Company drew $280,000 on its secured credit facility to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. At September 30, 2020, the secured line of credit had an outstanding balance of $675,925. As a result of the asserted defaults and events of default described under Financial Covenants and Restrictions below, the Operating Partnership cannot borrow any additional amounts under the secured line of credit.

The secured credit facility is secured by 17 malls and 3 associated centers that are owned by 36 wholly owned subsidiaries of the Operating Partnership (collectively the “Combined Guarantor Subsidiaries”). The Combined Guarantor Subsidiaries own an additional four malls, two associated centers and four mortgage notes receivable that are not collateral for the secured credit facility. The properties that are collateral for the secured credit facility and the properties and mortgage notes receivable that are not collateral are collectively referred to as the “Guarantor Properties.” The terms of the Notes provide that, to the extent that any subsidiary of the Operating Partnership executes and delivers a guarantee to another debt facility, the Operating Partnership shall also cause the subsidiary to guarantee the Operating Partnership’s obligations under the Notes on a senior basis. In January 2019, the Combined Guarantor Subsidiaries entered into a guarantee agreement with the issuer of the Notes to satisfy the guaranty requirement.

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See Financial Covenants and Restrictions below and Liquidity and Going Concern Considerations and Voluntary Reorganization under Chapter 11 in Note 1 – Organization and Basis of Presentation for information on the ongoing alleged defaults and events of defaults asserted by the administrative agent under the secured credit facility and the Company’s adversarial proceeding in response to the administrative agent and lenders asserting rights and remedies.

Financial Covenants and Restrictions

The agreements for the Notes and senior secured credit facility contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000 of the Operating Partnership will constitute an event of default under the Notes and the senior secured credit facility. Additionally, the senior secured credit facility contains a provision that any default on a payment of non-recourse indebtedness in excess of $150,000 is also a default of the senior secured credit facility.

On each of May 26, 2020, June 2, 2020, June 16, 2020, August 6, 2020 and August 19, 2020, the Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility, which asserted that certain defaults and events of default occurred and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility and resulting from the failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment prior to the expiration of the applicable grace periods. Additionally, as described above under Senior Secured Credit Facility, the Operating Partnership received notices of imposition of base rate and post-default rate from the administrative agent under the secured credit facility. On August 19, 2020, the Operating Partnership received from the administrative agent (i) a notice of default and reservation of rights letter, which asserted that each of the failure to pay the Demand Interest and the entry into the RSA constituted events of default under the terms of the secured credit facility and (ii) a notice of acceleration of obligations under the secured credit facility based on the events of default previously asserted by the administrative agent, pursuant to which, the administrative agent declared all outstanding principal, interest accruing at the base rate and the post-default rate, which as previously disclosed are rates being disputed by the Company, and letters of credit to be immediately due and payable. The administrative agent also terminated the revolving and swingline commitments and the obligation to issue letters of credit under the secured credit facility and instructed the Operating Partnership to deliver approximately $1,300 in cash to collateralize outstanding letters of credit. On August 25, 2020, The Operating Partnership received a notice of imposition of base rate letter from the administrative agent under the secured credit facility, which informed the Operating Partnership that following an asserted event of default, that all outstanding loans converted to base rate loans beginning July 1, 2019 and (ii) sought payment of approximately $11,973 related thereto for July 1, 2019 through March 30, 2020. Additionally, the Operating Partnership failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020.

As of the date of this report, the lenders under the secured credit facility have not commenced foreclosure proceedings, but they may seek to exercise one or more such remedies in the future. In addition, as a result of the events of default asserted by the administrative agent in such letters, the administrative agent may deny the Operating Partnership’s request for future LIBOR interest periods, which would result in an increase in annual interest expense of approximately $19,277 based on the base rate and $74,355 based on the post-default rate.

On October 16, 2020, the Company received an additional notice of default and reservation of rights letter from the Agent which asserted that certain defaults exist and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants in the Credit Agreement and resulting from the failure to make the $6,900 interest payment that was due and payable on October 15, 2020, to holders of the 2024 Notes and that such default will constitute an event of default under the Credit Agreement if such interest is not paid within the 30-day grace period. On October 28, 2020, the Operating Partnership was notified by the administrative agent and lenders that they elected to exercise their rights pursuant to the terms of the secured credit facility to (i) require that rents payable by tenants at the properties that are collateral to the secured credit facility be paid directly to the administrative agent and (ii) exercise all voting rights and other ownership rights in respect of all the equity interests in the subsidiaries of the Operating Partnership that are guarantors of the secured credit facility.

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Mortgages on Operating Properties

2020 Loan Repayments

Date

Property

Interest

Rate at

Repayment Date

Scheduled

Maturity Date

Principal

Balance

Repaid ⁽¹⁾

February

Parkway Place

6.50%

July 2020

33,186

February

Valley View Mall

6.50%

July 2020

51,360

84,546

(1)	The Company retired the loans with borrowings from its secured line of credit.

2020 Loan Modification

The maturity date for the fixed-rate loan secured by Jefferson Mall was extended from June 1, 2022 to June 1, 2026. The loan will be interest only through March 2021 when monthly payments of principal and interest will be made through the maturity date.

2020 Dispositions

The following is a summary of the Company’s 2020 disposition for which the fixed rate loan secured by the mall was extinguished:

Sale/Transfer

Date

Property

Property Type

Location

Balance of Non-recourse Debt

Gain on Extinguishment of Debt

August

Hickory Point Mall ⁽¹⁾

Malls

Forsyth, IL

27,446

15,407

(1)	The Company transferred title to the mall to the mortgage holder in satisfaction of the non-recourse debt secured by the property.

Loans in Default

As of September 30, 2020, five non-recourse loans that are each secured by one of the Company’s malls were in default. The Company has been in discussions with the lenders for each of these properties regarding a restructure of each respective loan. As of the date of this report, the lenders under each of these loans have not accelerated the outstanding amount due and payable on the loans or commenced foreclosure proceedings, but they may seek to exercise one or more of these remedies in the future. Management has previously impaired the mall that secures each loan due to a shortened expected hold period resulting from management’s assessment that there is an increased likelihood that the loan secured by each mall may not be successfully restructured or refinanced. The non-recourse loans that are in default at September 30, 2020 are as follows:

Property	Location	Interest Rate	Scheduled Maturity Date	Loan Amount
Greenbrier Mall	Chesapeake, VA	5.41%	Dec-19	$	61,647
Burnsville Center	Burnsville, MN	6.00%	Jul-20		64,233
EastGate Mall	Cincinnati, OH	5.83%	Apr-21		31,726
Park Plaza	Little Rock, AR	5.28%	Apr-21		77,064
Asheville Mall	Asheville, NC	5.80%	Sep-21		62,863

As described in Note 1 – Organization and Basis of Presentation, the filing of the Chapter 11 Cases subsequent to September 30, 2020 also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts. There are 15 of such loans that have an aggregate outstanding balance of $855,864 at September 30, 2020.

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Scheduled Principal Payments

As of September 30, 2020, the scheduled principal amortization and balloon payments of the Company’s consolidated debt, excluding extensions available at the Company’s option, on all mortgage and other indebtedness, including construction loans and the secured line of credit, are as follows:

2020 ⁽¹⁾	$	18,988
2021		559,094
2022		408,235
2023		1,493,534
2024		343,601
2025		38,472
Thereafter		764,380
		3,626,304
Net unamortized discounts and premium		(8,634	)
Unamortized deferred financing costs		(13,864	)
Principal balance of loans with a maturity date prior to September 30, 2020 ⁽²⁾		125,880
Total mortgage and other indebtedness, net	$	3,729,686

(1)	Reflects payments for the fiscal period October 1, 2020 through December 31, 2020.

(2)	Represents the aggregate principal balance as of September 30, 2020 of two non-recourse loans, secured by Greenbrier Mall and Burnsville Center, which were in default. The loan secured by Greenbrier Mall matured in December 2019. The loan secured by Burnsville Center matured in July 2020.

The Company’s mortgage and other indebtedness had a weighted-average maturity of 3.1 years as of September 30, 2020 and 3.7 years as of December 31, 2019.

Note 9 – Mortgage and Other Notes Receivable

The Company’s mortgage note receivable is collateralized by an assignment of 100% of the partnership interests that own the real estate assets. Other notes receivable include amounts due from tenants and unsecured notes received from third parties as whole or partial consideration for property or investments.

Mortgage and other notes receivable consist of the following:

			As of September 30, 2020			As of December 31, 2019
	Maturity Date		Interest Rate	Balance		Interest Rate	Balance
Mortgages	Dec 2016	⁽¹⁾	2.65%	$	1,100	4.28% - 9.50%	$	2,637
Other Notes Receivable	Sep 2021- Apr 2026		4.00% - 5.00%		1,434	4.00% - 5.00%		2,025
				$	2,534		$	4,662

(1)	Includes a $1,100 note with D'Iberville Promenade, LLC with a maturity date of December 2016, that is in default. This is secured by the joint venture partner’s interest in the joint venture.

Expected credit losses

As of September 30, 2020, the one mortgage note receivable is in default, but as noted above, the Company has a noncontrolling interest recorded related to the defaulting partner’s interest that serves as collateral on the note, and that amount is greater than the outstanding balance on the note. Based on this information, the Company did not record a credit loss for this class of receivables for the nine months ended September 30, 2020.

During the nine months ended September 30, 2020, the Company assessed each of its note receivables factoring in credit quality indicators such as collection experience and future expectations of performance to determine whether a credit loss should be recorded. Based on this information, the Company wrote off a $1,230 note receivable associated with amounts due from a government sponsored district at The Shoppes at St. Clair during the three months ended March 31, 2020. The Company did not record any other credit losses for this class of receivables for the nine months ended September 30, 2020.

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Note 10 – Segment Information

The Company measures performance and allocates resources according to property type, which is determined based on certain criteria such as type of tenants, capital requirements, economic risks, leasing terms, and short and long-term returns on capital. Rental income and tenant reimbursements from tenant leases provide the majority of revenues from all segments.

Information on the Company’s segments is presented as follows:

Three Months Ended September 30, 2020	Malls			All Other ⁽¹⁾			Total
Revenues ⁽²⁾	$	115,661		$	14,236		$	129,897
Property operating expenses ⁽³⁾		(43,628	)		(2,408	)		(46,036	)
Interest expense		(18,845	)		(42,292	)		(61,137	)
Loss on sales of real estate assets		—			(55	)		(55	)
Segment profit (loss)	$	53,188		$	(30,519	)		22,669
Depreciation and amortization								(53,477	)
General and administrative expense								(25,497	)
Litigation settlement								2,480
Interest and other income								1,975
Gain on extinguishment of debt								15,407
Loss on impairment								(46	)
Income tax provision								(546	)
Equity in losses of unconsolidated affiliates								(7,389	)
Net loss							$	(44,424	)
Capital expenditures ⁽⁴⁾	$	2,524		$	1,262		$	3,786



Three Months Ended September 30, 2019	Malls			All Other ⁽¹⁾			Total
Revenues ⁽²⁾	$	171,514		$	15,737		$	187,251
Property operating expenses ⁽³⁾		(53,384	)		(2,912	)		(56,296	)
Interest expense		(20,866	)		(29,649	)		(50,515	)
Other expense		—			(7	)		(7	)
Gain on sales of real estate assets		3,292			4,764			8,056
Segment profit (loss)	$	100,556		$	(12,067	)		88,489
Depreciation and amortization								(64,168	)
General and administrative expense								(12,467	)
Litigation settlement								22,688
Interest and other income								1,367
Loss on impairment								(135,688	)
Gain on investments/deconsolidation								11,174
Income tax provision								(1,670	)
Equity in losses of unconsolidated affiliates								(1,759	)
Net loss							$	(92,034	)
Capital expenditures ⁽⁴⁾	$	34,961		$	1,530		$	36,491

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Nine Months Ended September 30, 2020	Malls			All Other ⁽¹⁾			Total
Revenues ⁽²⁾	$	381,013		$	40,669		$	421,682
Property operating expenses ⁽³⁾		(134,111	)		(8,075	)		(142,186	)
Interest expense		(55,952	)		(104,808	)		(160,760	)
Other expense		—			(400	)		(400	)
Gain (loss) on sales of real estate assets		(25	)		2,733			2,708
Segment profit (loss)	$	190,925		$	(69,881	)		121,044
Depreciation and amortization								(162,042	)
General and administrative expense								(62,060	)
Litigation settlement								2,480
Interest and other income								5,263
Gain on extinguishment of debt								15,407
Loss on impairment								(146,964	)
Income tax provision								(17,189	)
Equity in losses of unconsolidated affiliates								(12,450	)
Net loss							$	(256,511	)
Capital expenditures ⁽⁴⁾	$	30,334		$	4,915		$	35,249


Nine Months Ended September 30, 2019	Malls			All Other ⁽¹⁾			Total
Revenues ⁽²⁾	$	526,354		$	52,304		$	578,658
Property operating expenses ⁽³⁾		(164,164	)		(10,785	)		(174,949	)
Interest expense		(65,612	)		(91,383	)		(156,995	)
Other expense		—			(41	)		(41	)
Gain on sales of real estate assets		5,770			8,041			13,811
Segment profit (loss)	$	302,348		$	(41,864	)		260,484
Depreciation and amortization								(198,438	)
General and administrative expense								(48,901	)
Litigation settlement								(65,462	)
Interest and other income								2,212
Gain on extinguishment of debt								71,722
Loss on impairment								(202,121	)
Gain on investments/deconsolidation								11,174
Income tax provision								(2,622	)
Equity in earnings of unconsolidated affiliates								3,421
Net loss							$	(168,531	)
Capital expenditures ⁽⁴⁾	$	94,545		$	3,058		$	97,603

Total Assets	Malls		All Other ⁽¹⁾		Total
September 30, 2020	$	3,926,908	$	637,135	$	4,564,043

December 31, 2019	$	4,180,515	$	441,831	$	4,622,346

(1)	The All Other category includes associated centers, community centers, mortgage and other notes receivable, office buildings, self-storage facilities, corporate-level debt and the Management Company.

(2)	Management, development and leasing fees are included in the All Other category. See Note 3 for information on the Company's revenues disaggregated by revenue source for each of the above segments.

(3)	Property operating expenses include property operating, real estate taxes and maintenance and repairs.

(4)	Includes additions to and acquisitions of real estate assets and investments in unconsolidated affiliates. Developments in progress are included in the All Other category.

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Note 11 – Earnings per Share and Earnings per Unit

Earnings per Share of the Company

Basic earnings per share (“EPS”) is computed by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS assumes the issuance of common stock for all potential dilutive common shares outstanding. The limited partners’ rights to convert their noncontrolling interests in the Operating Partnership into shares of common stock are not dilutive. There were no potential dilutive common shares and there were no anti-dilutive shares for the three and nine month periods ended September 30, 2020 and 2019.

Earnings per Unit of the Operating Partnership

Basic earnings per unit (“EPU”) is computed using the two-class method. The two-class method is required when either (i) participating securities or (ii) multiple classes of common stock exists. The Operating Partnership’s special common units, and common units issued upon the conversion or redemption of special common units, meet the definition of participating securities as these units have the contractual right and obligation to share in the Operating Partnership’s net income (loss) and distributions. Under this approach net income (loss) attributable to common unitholders is reduced by the amount of distributions made (declared) to all common unitholders and by the amount of distributions that are required to be made (declared and undeclared) to special common unitholders. Distributed and undistributed earnings is subsequently divided by the weighted-average number of common and special common units outstanding for the period to compute basic EPU for each unit. Undistributed losses are allocated 100 percent to common units, other than common units issued upon the conversion or redemption of special common units. The special common units, and common units issued upon the conversion or redemption of special common units, only participate in undistributed losses in the event of a liquidation. Diluted EPU is computed by considering either the two-class method or the if-converted method, whichever results in more dilution. The if-converted method assumes the issuance of common units for all potential dilutive special common units outstanding. Due to the loss position (negative earnings) of the Operating Partnership for the three and nine month periods ended September 30, 2020 and 2019 all special common units, and common units issued upon the conversion or redemption of special common units, are antidilutive. The calculation of diluted EPU through the if-converted method would reduce the loss per share (as a result of an increase number of shares in the denominator) for the common units. Therefore in a loss position diluted EPU is equal to basic EPU. There were no potential dilutive common units and there were no anti-dilutive units other than the special common units, and common units issued upon the conversion or redemption of special common units, outstanding for the three and nine month periods ended September 30, 2020 and 2019.

The following table presents basic and diluted EPU for common and special common units for the three-month and nine-month periods ended September 30, 2020 and 2019.

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	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per unit data)		2020			2019			2020			2019
Net Loss Attributable to Common Unitholders	$	(54,710	)	$	(104,020	)	$	(288,549	)	$	(202,831	)
Distributions to Common Unitholders - Declared Only		—			—			—			(14,638	)
Distributions to Special Common Unitholders - Declared and Undeclared
Common units issued on conversion of SCUs		—			—			—			(133	)
S-SCUs		(1,143	)		(1,143	)		(3,429	)		(3,429	)
L-SCUs		—			(433	)		(433	)		(1,299	)
K-SCUs		(844	)		(844	)		(2,531	)		(2,531	)
Total Undistributed Losses Available to Common and Special Common Unitholders	$	(56,697	)	$	(106,440	)	$	(294,942	)	$	(224,861	)

Distributed Earnings:
Common units issued on conversion of SCUs	$	—		$	—		$	—		$	133
S-SCUs		1,143			1,143			3,429			3,429
L-SCUs		—			433			433			1,299
K-SCUs		844			844			2,531			2,531
Common Units		—			—			—			14,639

Undistributed Losses:
Common units issued on conversion of SCUs	$	—		$	—		$	—		$	—
S-SCUs		—			—			—			—
L-SCUs		—			—			—			—
K-SCUs		—			—			—			—
Common Units		(56,697	)		(106,440	)		(294,942	)		(224,861	)

Weighted Average:
Common units issued on conversion of SCUs		1,696			1,770			1,697			1,770
S-SCUs		1,561			1,561			1,561			1,561
L-SCUs		572			572			572			572
K-SCUs		1,134			1,137			1,136			1,137
Common Units		196,728			195,190			196,585			195,119

Basic EPU:
Common units issued on conversion of SCUs	$	—		$	—		$	—		$	0.07
S-SCUs		0.73			0.73			2.20			2.20
L-SCUs		—			0.76			0.76			2.27
K-SCUs		0.74			0.74			2.23			2.23
Common Units		(0.29	)		(0.55	)		(1.50	)		(1.08	)

Total Basic EPU	$	(0.27	)	$	(0.52	)	$	(1.43	)	$	(1.01	)

Diluted EPU:
Common units issued on conversion of SCUs	$	—		$	—		$	—		$	0.07
S-SCUs		0.73			0.73			2.20			2.20
L-SCUs		—			0.76			0.76			2.27
K-SCUs		0.74			0.74			2.23			2.23
Common Units		(0.29	)		(0.55	)		(1.50	)		(1.08	)

Total Diluted EPU	$	(0.27	)	$	(0.52	)	$	(1.43	)	$	(1.01	)

For additional information regarding the participation rights and minimum distributions relating to the common and special common units, see Note 9. Shareholders’ Equity and Partners’ Capital and Note 10. Redeemable Interests and Noncontrolling Interests of the Company’s Annual Report on Form 10-K, as amended, for the year ended December 31,

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2019. Pursuant to the terms of the Series L special common units of limited partnership interest, the Series L special common units began receiving distributions equal to those on the common units beginning on June 1, 2020.

Note 12 – Contingencies

Litigation

As previously disclosed, in April 2019, the Company entered into a settlement agreement and release with respect to the class action lawsuit filed on March 16, 2016 in the United States District Court for the Middle District of Florida by Wave Lengths Hair Salons of Florida, Inc. d/b/a Salon Adrian. Pursuant to the settlement agreement the Company set aside a common fund with a monetary and non-monetary value of $90,000 to be disbursed to class members in accordance with an agreed-upon formula that was based upon aggregate damages of $60,000. The Court granted final approval to the proposed settlement on August 22, 2019. The class members were comprised of past and current tenants at certain of the Company's shopping centers that it owns or formerly owned during the class period, which extended from January 1, 2011 through the date of preliminary court approval. Class members who are past tenants and made valid claim pursuant to the Court's order received payment of their claims in cash. Class members who are current tenants began receiving monthly credits against rents and future charges during the three months ended June 30, 2020 and, under the terms of the settlement agreement, will continue for the following five years. Any amounts under the settlement allocated to tenants with outstanding amounts payable to the Company, including tenants which have declared bankruptcy or declare bankruptcy over the relevant period, will first be deducted from the amounts owed to the Company. All attorney’s fees and associated costs to class counsel (up to a maximum of $27,000), incentive award to the class representative (up to a maximum of $50), and class administration costs (which are expected to not exceed $100), have or will be funded by the common fund, which has been approved by the Court. Under the terms of the settlement agreement, the Company did not pay any dividends to holders of its common shares payable in the third and fourth quarters of 2019. The settlement agreement did not restrict the Company's ability to declare dividends payable in 2020 or in subsequent years. The Company recorded an accrued liability and corresponding litigation settlement expense of $88,150 in the three months ended March 31, 2019 related to the settlement agreement. During the year ended December 31, 2019, the Company reduced the accrued liability by an aggregate $26,396, a majority of which was related to past tenants that did not submit a claim pursuant to the terms of the settlement agreement with the remainder relating to tenants that either opted out of the lawsuit or waived their rights to their respective settlement amounts. Additionally, the Company reduced the accrued liability during the three months ended December 31, 2019 by $23,050 related to attorney and administrative fees that were paid pursuant to the settlement agreement. During the nine months ended September 30, 2020, the Company reduced the accrued liability by $17,922. Of this amount, $6,488 was related to monthly credits against rents and other charges for current tenants, $4,915 was paid to past tenants, $4,039 was paid to plaintiff’s counsel and the claims administrator, and $2,480 represents amounts the Company was released from pursuant to the terms of the settlement agreement. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 3, 2020. The Company received document requests in the third quarter of 2019, in the form of subpoenas, from the Securities and Exchange Commission and the Department of Justice regarding the Wave Lengths Hair Salons of Florida, Inc. litigation and other related matters. The Company continues to cooperate in these matters.

Securities Litigation

The Company and certain of its officers and directors were named as defendants in three putative securities class action lawsuits (collectively, the “Securities Class Action Litigation”), each filed in the United States District Court for the Eastern District of Tennessee, on behalf of all persons who purchased or otherwise acquired the Company’s securities during a specified period of time. Those cases were consolidated on July 17, 2019, under the caption In re CBL & Associates Properties, Inc. Securities Litigation, 1:19-cv-00149-JRG-CHS.

The complaints filed in the Securities Class Action Litigation allege violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements and omissions regarding the Company’s contingent liabilities, business, operations, and prospects during the periods of time specified above. The plaintiffs seek compensatory damages and attorneys’ fees and costs, among other relief, but have not specified the amount of damages sought. The outcome of these legal proceedings cannot be predicted with certainty. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 9, 2020.

Certain of the Company’s current and former directors and officers were named as defendants in nine shareholder derivative lawsuits (collectively, the “Derivative Litigation”). On June 4, 2019, a shareholder filed a putative derivative complaint captioned Robert Garfield v. Stephen D. Lebovitz et al., 1:19-cv-01038-LPS, in the United States District Court for the District of Delaware (the “Garfield Derivative Action”), purportedly on behalf of the Company against certain of its officers and directors. On June 24, 2019, September 5, 2019 and September 25, 2019, respectively, other shareholders filed three additional putative derivative complaints, each in the United States District Court for the District of Delaware, captioned as follows: Robert Cohen v. Stephen D. Lebovitz et al., 1:19-cv-01185-LPS (the “Cohen Derivative Action”); Travis Lore v. Stephen D. Lebovitz et al., 1:19-cv-01665-LPS (the “Lore Derivative Action”), and City of Gainesville Cons. Police Officers’

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and Firefighters Retirement Plan v. Stephen D. Lebovitz et al., 1:19-cv-01800 (the “Gainesville Derivative Action”), each asserting substantially similar claims purportedly on behalf of the Company against similar defendants. The Court consolidated the Garfield Derivative Action and the Cohen Derivative Action on July 17, 2019, under the caption In re CBL & Associates Properties, Inc. Derivative Litigation, 1:19-cv-01038-LPS (the "Consolidated Derivative Action"). On July 25, 2019, the Court stayed proceedings in the Consolidated Derivative Action pending resolution of an eventual motion to dismiss in the Securities Class Action Litigation. On October 14, 2019, the parties to the Gainesville Derivative Action and the Lore Derivative Action filed a joint stipulation and proposed order confirming that each of those cases is subject to the consolidation order previously entered by the Court in the Consolidated Derivative Action and that further proceedings in those cases are stayed pending resolution of an eventual motion to dismiss in the Securities Class Action Litigation. On July 22, 2019, a shareholder filed a putative derivative complaint captioned Shebitz v. Lebovitz et al., 1:19-cv-00213, in the United States District Court for the Eastern District of Tennessee (the “Shebitz Derivative Action”); on January 10, 2020, a shareholder filed a putative derivative complaint captioned Chatman v. Lebovitz, et al., 2020-0011-JTL, in the Delaware Chancery Court (the “Chatman Derivative Action”); on February 12, 2020, a shareholder filed a putative derivative complaint captioned Kurup v. Lebovitz, et al., 2020-0070-JTL, in the Delaware Chancery Court (the “Kurup Derivative Action”); on February 26, 2020, a shareholder filed a putative derivative complaint captioned Kemmer v. Lebovitz, et al., 1:20-cv-00052, in the United States District Court for the Eastern District of Tennessee (the “Kemmer Derivative Action”); and on April 14, 2020, a shareholder filed a putative derivative complaint captioned Hebig v. Lebovitz, et al., 1:19-cv-00149-JRG-CHS, in the United States District Court for the Eastern District of Tennessee (the “Hebig Derivative Action”), each asserting substantially similar claims purportedly on behalf of the Company against similar defendants. The actions pending in Delaware Chancery Court have been consolidated into one case, and likewise, the actions pending in Delaware federal court have been consolidated into one case. The Tennessee actions have not been consolidated. On October 7, 2019, the Court stayed the Shebitz Derivative Action, pending resolution of an eventual motion to dismiss in the related Securities Class Action Litigation; the Company expects the other Derivative Actions to be stayed as well.

The complaints filed in the Derivative Litigation allege, among other things, breaches of fiduciary duties, unjust enrichment, waste of corporate assets, and violations of the federal securities laws. The factual allegations upon which these claims are based are similar to the factual allegations made in the Securities Class Action Litigation, described above. The complaints filed in the Derivative Litigation seek, among other things, unspecified damages and restitution for the Company from the individual defendants, the payment of costs and attorneys’ fees, and that the Company be directed to reform certain governance and internal procedures. The outcome of these legal proceedings cannot be predicted with certainty. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 9, 2020.

The Company's insurance carriers have been placed on notice of these matters.

The Company is currently involved in certain other litigation that arises in the ordinary course of business, most of which is expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company.

Environmental Contingencies

The Company evaluates potential loss contingencies related to environmental matters using the same criteria described above related to litigation matters. Based on current information, an unfavorable outcome concerning such environmental matters, both individually and in the aggregate, is considered to be reasonably possible. However, the Company believes its maximum potential exposure to loss would not be material to its results of operations or financial condition. The Company has a master insurance policy that provides coverage through 2022 for certain environmental claims up to $10,000 per occurrence and up to $50,000 in the aggregate, subject to deductibles and certain exclusions. At certain locations, individual policies are in place.

Guarantees

The Operating Partnership may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on the Operating Partnership's investment in the joint venture. The Operating Partnership

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may receive a fee from the joint venture for providing the guaranty. Additionally, when the Operating Partnership issues a guaranty, the terms of the joint venture agreement typically provide that the Operating Partnership may receive indemnification from the joint venture partner or have the ability to increase its ownership interest. The guarantees expire upon repayment of the debt, unless noted otherwise.

The following table represents the Operating Partnership's guarantees of unconsolidated affiliates' debt as reflected in the accompanying condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019:

	As of September 30, 2020									Obligation recorded to reflect guaranty
Unconsolidated Affiliate	Company's Ownership Interest	Outstanding Balance		Percentage Guaranteed by the Operating Partnership		Maximum Guaranteed Amount		Debt Maturity Date ⁽¹⁾		September 30, 2020		December 31, 2019
West Melbourne I, LLC - Phase I	50%	$	40,372	50%		$	20,186	Feb-2021	⁽²⁾	$	202	$	199
West Melbourne I, LLC - Phase II	50%		14,513	50%			7,257	Feb-2021	⁽²⁾		73		78
Port Orange I, LLC	50%		53,513	50%			26,757	Feb-2021	⁽²⁾		268		270
Ambassador Infrastructure, LLC	65%		9,360	100%			9,360	Oct-2020	⁽³⁾		94		101
Shoppes at Eagle Point, LLC	50%		35,189	35%	⁽⁴⁾		12,740	Oct-2020	⁽⁵⁾		127		127
EastGate Storage, LLC	50%		6,485	50%	⁽⁶⁾		3,250	Dec-2022			33		33
Self Storage at Mid Rivers, LLC	50%		5,853	50%	⁽⁷⁾		2,994	Apr-2023			30		30
Parkdale Self Storage, LLC	50%		6,065	100%	⁽⁸⁾		6,500	Jul-2024			65		65
Hamilton Place Self Storage, LLC	54%		6,247	100%	⁽⁹⁾		7,002	Sep-2024			70		70
Atlanta Outlet JV, LLC	50%		4,632	100%			4,632	Nov-2023			—		—
Louisville Outlet Shoppes, LLC	50%		9,122	100%			9,122	Oct-2021			—		—
Total guaranty liability										$	962	$	973

(1)	Excludes any extension options.

(2)	These loans have two one-year extension options at the joint venture’s election.

(3)	In October 2020, the maturity date was extended to January 2021.

(4)	The guaranty is for a fixed amount of $12,740 throughout the term of the loan, including any extensions.

(5)	In October 2020, the loan was extended to October 2021 with one one-year extension option, at the joint venture's election, for an outside maturity date of October 2022.

(6)	The guaranty may be reduced to 25% once certain debt and operational metrics are met.

(7)	The guaranty may be reduced to 25% once certain debt and operational metrics are met.

(8)

Parkdale Self Storage, LLC, a 50/50 joint venture, closed on a construction loan with a total borrowing capacity of up to $6,500 for the development of a climate controlled self-storage facility adjacent to Parkdale Mall in Beaumont, TX. The Operating Partnership has a joint and several guaranty with its 50/50 partner. Therefore, the maximum guarantee is 100% of the loan.

(9)

Hamilton Place Self Storage, LLC, a 54/46 joint venture, closed on a construction loan with a total borrowing capacity of up to $7,002 for the development of a climate controlled self-storage facility adjacent to Hamilton Place in Chattanooga, TN. The Operating Partnership has guaranteed 100% of the construction loan, but it has a back-up guaranty with its joint venture partner for 50% of the construction loan. The guaranty may be reduced to 50% upon opening, and further reduced to 25% once certain debt and operations metrics are met.

As described in Note 1 – Organization and Basis of Presentation, the filing of the Chapter 11 Cases subsequent to September 30, 2020 also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts. There was a default under each of the guaranteed loans above as a result of the filing of the Chapter 11 Cases, except for Shoppes at Eagle Point, LLC, Self Storage at Mid Rivers, LLC and Louisville Outlet Shoppes, LLC.

The Company has guaranteed the lease performance of York Town Center, LP ("YTC"), an unconsolidated affiliate in which the Company owns a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. The Company has guaranteed YTC’s performance under this agreement up to a maximum of $22,000, which decreases by $800 annually until the guaranteed amount is reduced to $10,000. The maximum guaranteed obligation was $11,600 as of September 30, 2020. The Company entered into an agreement with its joint venture partner under which the joint venture partner has agreed to reimburse the Company 50% of any amounts it is obligated to fund under the guaranty. The Company did not include an obligation for this guaranty because it determined that the fair value of the guaranty was not material as of September 30, 2020 and December 31, 2019.

Expected credit losses

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During the three and nine months ended September 30, 2020, the Company evaluated each guarantee individually by looking at the debt service ratio, cash flow forecasts and the performance of each loan. The result of the analysis was that each loan is current and performing, and if applicable, none of the loans that are guaranteed by the Company are in violation of their debt covenants, each operating property has positive cash flows that are sufficient to cover debt service and forecasted cash flows for each operating property do not indicate that there is more than a remote probability that the Company will be required to perform under each guaranty. Historically, the Company has not had to perform on any of its guarantees of unconsolidated affiliates’ debt. Based on current and future conditions, the Company does not expect to have to perform, and therefore did not record a credit loss for the three and nine months ended September 30, 2020.

Performance Bonds

The Company has issued various bonds that it would have to satisfy in the event of non-performance. The total amount outstanding on these bonds was $851 and $13,660 at September 30, 2020 and December 31, 2019, respectively.

Note 13 – Share-Based Compensation

As of September 30, 2020, the Company has outstanding awards under the CBL & Associates Properties, Inc. 2012 Stock Incentive Plan (the “2012 Plan"), which was approved by the Company's shareholders in May 2012. The 2012 Plan permits the Company to issue stock options and common stock to selected officers, employees and non-employee directors of the Company up to a total of 10,400,000 shares. As the primary operating subsidiary of the Company, the Operating Partnership participates in and bears the compensation expense associated with the Company's share-based compensation plan.

Restricted Stock Awards

The Company may make restricted stock awards to independent directors, officers and its employees under the 2012 Plan. These awards are generally granted based on the performance of the Company and its employees. None of these awards have performance requirements other than a service condition of continued employment, unless otherwise provided. Compensation expense is recognized on a straight-line basis over the requisite service period.

Share-based compensation expense related to the restricted stock awards was $375 and $571 for the three months ended September 30, 2020 and 2019, respectively, and $1,880 and $2,830 for the nine months ended September 30, 2020 and 2019, respectively. Share-based compensation cost capitalized as part of real estate assets was $4 and $13 for the three months ended September 30, 2020 and 2019, respectively, and $16 and $54 for the nine months ended September 30, 2020 and 2019, respectively.

A summary of the status of the Company’s nonvested restricted stock awards as of September 30, 2020, and changes during the nine months ended September 30, 2020, is presented below:

	Shares			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2020		971,846		$	5.16
Granted		1,628,397		$	0.86
Vested		(1,052,161	)	$	2.86
Forfeited		(25,520	)	$	4.61
Nonvested at September 30, 2020		1,522,562		$	2.16

As of September 30, 2020, there was $2,330 of total unrecognized compensation cost related to nonvested stock awards granted under the plans, which is expected to be recognized over a weighted-average period of 2.3 years.

Long-Term Incentive Program

In 2015, the Company adopted a long-term incentive program ("LTIP") for its named executive officers, which consists of performance stock unit ("PSU") awards and annual restricted stock awards, that may be issued under the 2012 Plan. The number of shares related to the PSU awards that each named executive officer may receive upon the conclusion of a three-year performance period is determined based on the Company's achievement of specified levels of long-term total stockholder return ("TSR") performance relative to the National Association of Real Estate Investment Trusts ("NAREIT") Retail Index, provided that at least a "Threshold" level must be attained for any shares to be earned.

Beginning with the 2018 PSUs, two-thirds of the quantitative portion of the award over the performance period is based on the achievement of TSR relative to the NAREIT Retail Index while the remaining one-third is based on the achievement of absolute TSR metrics for the Company. Beginning with the 2018 PSU grant, to maintain compliance with a 200,000 share annual equity grant limit (the “Section 162(m) Grant Limit”) that was included in the 2012 Plan to satisfy the “qualified performance-based compensation” exception to the deduction limits for certain executive compensation under

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Section 162(m) of the Code, to the extent that a grant of PSUs could result in the issuance of a number of shares of common stock at the conclusion of the performance period that, when coupled with the number of shares of time-vesting restricted stock granted in the same year the PSUs were granted, would exceed such limit, any such excess will be converted to a cash bonus award with a value equivalent to the number of shares of common stock constituting such excess times the average of the high and low trading prices reported for CBL's common stock on the date such shares would otherwise have been issuable.

In conjunction with the February 2020 approval of the 2020 LTIP grants for the named executive officers, the 2012 Stock Incentive Plan was amended to remove the Section 162(m) Grant Limit, which no longer served its original purpose because the “qualified performance-based compensation” exception to the Section 162(m) deduction limits was repealed by the 2017 tax reform legislation. However, NYSE rules also include an annual equity grant limit which effectively limits the number of shares that can be subject to stock awards to any individual named executive officer, without additional shareholder approval, to one percent (1%) of the total number of outstanding shares of the Company’s Common Stock (the “NYSE Annual Grant Limit”). To maintain NYSE compliance following elimination of the Section 162(m) Grant Limit, the Company’s Compensation Committee revised PSU awards under the LTIP, beginning in 2020, to provide that if a grant of PSUs could result in the issuance of a number of shares to a named executive officer at the conclusion of the 3-year performance period that would exceed the NYSE Annual Grant Limit, when coupled with the number of shares subject to other stock awards (e.g., the time-vesting restricted stock component of the LTIP) issued in the same year that such PSUs were issued, any such excess will instead be converted to a cash bonus award, while remaining subject to vesting conditions as described below.

Any such portion of the value of the 2018 PSUs, the 2019 PSUs or the 2020 PSUs earned payable as a cash bonus will be subject to the same vesting provisions as the issuance of common stock pursuant to the PSUs. In addition, to the extent any cash is to be paid, the cash will be paid first relative to the vesting schedule, ahead of the issuance of shares of common stock with respect to the balance of PSUs earned.

In August 2020, in connection with the execution of the RSA that is described in Note 1 – Organization and Basis of Accounting, the 2020 PSUs were canceled.

Annual Restricted Stock Awards

Under the LTIP, annual restricted stock awards consist of shares of time-vested restricted stock awarded based on a qualitative evaluation of the performance of the Company and the named executive officer during the fiscal year. Annual restricted stock awards under the LTIP, which are included in the totals reflected in the preceding table, vest 20% on the date of grant with the remainder vesting in four equal annual installments.

Performance Stock Units

A summary of the status of the Company’s PSU activity as of September 30, 2020, and changes during the nine months ended September 30, 2020, is presented below:

	PSUs			Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2020		1,766,580		$	2.96
2020 PSUs granted ⁽¹⁾		3,408,083		$	0.84
2020 PSUs canceled		(3,408,083	)	$	0.84
Outstanding at September 30, 2020 ⁽²⁾		1,766,580		$	2.96

(1)	Includes 1,247,098 shares classified as a liability due to the potential cash component described above.

(2)	None of the PSUs outstanding at September 30, 2020 were vested.

Shares earned pursuant to the PSU awards vest 60% at the conclusion of the performance period while the remaining 40% of the PSU award vests 20% on each of the first two anniversaries thereafter.

Compensation cost is recognized on a tranche-by-tranche basis using the accelerated attribution method. The resulting expense, for awards classified as equity, is recorded regardless of whether any PSU awards are earned as long as the required service period is met.

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Share-based compensation expense related to the PSUs was $2,410 and $409 for the three months ended September 30, 2020 and 2019, respectively, and $2,828 and $1,278 for the nine months ended September 30, 2020 and 2019, respectively. Share-based compensation expense for the three and nine months ended September 30, 2020 includes $2,410 of previously unrecognized compensation cost related to the 2020 PSUs that was expensed when the 2020 PSUs were cancelled. Unrecognized compensation costs related to the PSUs was $907 as of September 30, 2020, which is expected to be recognized over a weighted-average period of 3.3 years.

The following table summarizes the assumptions used in the Monte Carlo simulation pricing model related to the PSUs:

	2020 PSUs			2019 PSUs			2018 PSUs
Grant date	February 10, 2020 ⁽¹⁾			February 11, 2019			February 12, 2018
Fair value per share on valuation date ⁽²⁾	$	0.84		$	4.74		$	4.76
Risk-free interest rate ⁽³⁾		1.39	%		2.54	%		2.36	%
Expected share price volatility ⁽⁴⁾		57.98	%		60.99	%		42.02	%

(1)	The 2020 PSU awards were cancelled during the three months ended September 30, 2020.

(2)

The value of the PSU awards is estimated on the date of grant using a Monte Carlo simulation model. The valuation consists of computing the fair value using CBL's simulated stock price as well as TSR over a three-year performance period. The award is modeled as a contingent claim in that the expected return on the underlying shares is risk-free and the rate of discounting the payoff of the award is also risk-free. The weighted-average fair value per share related to the 2020 PSUs classified as equity consists of 2,131,245 shares at a fair value of $0.88 (which relate to relative TSR) and 1,065,463 shares at fair value of $0.75 per share (which relate to absolute TSR). The weighted-average fair value per share related to the 2019 PSUs classified as equity consists of 357,800 shares at a fair value of $2.45 per share (which relate to relative TSR) and 178,875 shares at a fair value of $2.29 per share (which relate to absolute TSR).

(3)	The risk-free interest rate was based on the yield curve on zero-coupon U.S. Treasury securities in effect as of the valuation date, which is the respective grant date listed above.

(4)

The computation of expected volatility was based on a blend of the historical volatility of CBL's shares of common stock based on annualized daily total continuous returns over a five-year period for the 2020 PSUs and a three-year period for the 2019 and 2018 PSUs and implied volatility data based on the trailing month average of daily implied volatilities implied by stock call option contracts that were both closest to the terms shown and closest to the money.

Note 14 – Noncash Investing and Financing Activities

The Company’s noncash investing and financing activities were as follows:

	Nine Months Ended September 30,
	2020			2019
Additions to real estate assets accrued but not yet paid	$	6,183		$	23,148
Accrued dividends and distributions payable		—			2,420
Increase (decrease) in lease liabilities arising from obtaining right-of-use assets		(120	)		3,975
Deconsolidation upon contribution/assignment of interest in joint venture:
Decrease in real estate assets		—			(93,360	)
Increase in investment in unconsolidated affiliates		—			17,903
Decrease in mortgage and other indebtedness		—			73,283
Decrease in operating assets and liabilities		—			2,443
Decrease in intangible lease and other assets		—			(908	)
Decrease in noncontrolling interest and joint venture interest		—			4,271
Transfer of real estate assets in settlement of mortgage debt obligations:
Decrease in real estate assets		(11,834	)		(60,059	)
Decrease in mortgage and other indebtedness		25,956			124,111
Decrease in operating assets and liabilities		1,371			9,333
Decrease in intangible lease and other assets		(86	)		(1,663	)
Conversion of Operating Partnership units to common stock		21,065			—

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Note 15 – Subsequent Events

As discussions with the advisors to the consenting noteholders of the Notes and lenders under the Company’s secured credit facility continued, the Company elected to not make the $6,900 interest payment (the “2024 Notes Interest Payment”) due and payable on October 15, 2020, with respect to the Operating Partnership’s 4.60% senior unsecured notes due 2024 (the “2024 Notes”). Under the indenture governing the 2024 Notes, the Operating Partnership has a 30-day grace period to make the 2024 Notes Interest Payment before the nonpayment is considered an “event of default” with respect to the 2024 Notes. Any event of default under the 2024 Notes for nonpayment of the 2024 Notes Interest Payment would also be considered an event of default under the Operating Partnership’s senior secured credit facility which could lead to an acceleration of amounts due under the facility; however, as discussed in Note 8 – Mortgage and Other Indebtedness, Net, obligations under the secured credit facility have been accelerated based on the events of default previously asserted by the Administrative Agent under the secured credit facility, which the Company continues to dispute. Further, if the trustee for the 2024 Notes should exercise its right to accelerate the maturity of the full balance owed on the 2024 Notes as a result of such an “event of default,” that would also constitute an “event of default” under the 2023 Notes and the 2026 Notes, which could lead to the acceleration of all amounts due under those notes.

The maturity date of the loan secured by the Shoppes at Eagle Point, LLC that was scheduled to mature in October 2020 was extended to October 2021 with one one-year extension option, at the joint venture’s election, for an outside maturity date of October 2022.

As described in Note 7 – Unconsolidated Affiliates and Noncontrolling Interests, the loan secured by Oak Park Mall was in default at September 30, 2020. In October 2020, Oak Park Mall, LLC entered into a forbearance agreement with the lender. Pursuant to the terms of the forbearance agreement, all interest payments from June 2020 through November 2020 were deferred. The loan will be interest only through November 1, 2022; however, beginning on September 1, 2021 and continuing through November 1, 2022, the deferred interest is to be made in equal monthly installments in addition to the scheduled interest payments. Beginning December 1, 2022, Oak Park Mall, LLC is to begin making full monthly payments of principal and interest. Oak Park Mall, LLC executed a deed-in-lieu of foreclosure, along with other transfer documents, for the benefit of the lender, which were placed in escrow. In the event Oak Park Mall, LLC fails to make any of the required payments under the forbearance agreement, lender can exercise its rights to receive the deed-in-lieu and other transfer documents from escrow.

On November 2, 2020, NYSE announced that it has suspended trading in the Company’s stock due to “abnormally low” trading price levels and had determined to commence proceedings to delist the Company’s common stock and the depositary shares representing fractional interests in its Series D Preferred Stock and Series E Preferred Stock. For more information, see “Listing Criteria” in Note 1 – Organization and Basis of Presentation.

The maturity date of the loan secured by Ambassador Infrastructure, LLC that was scheduled to mature in October 2020 was extended to January 2021.

Chapter 11 Proceedings

As described further in Note 1 – Organization and Basis of Presentation, beginning on the Commencement Date, the Debtors commenced the Chapter 11 Cases by filing voluntary petitions for reorganization under Chapter 11 with the Bankruptcy Court.

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ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and accompanying notes that are included in this Form 10-Q. Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the condensed consolidated financial statements. In this discussion, the terms “we,” “us” and “our” refer to the Company or the Company and the Operating Partnership collectively, as the text requires.

Certain statements made in this section or elsewhere in this report may be deemed “forward-looking statements” within the meaning of the federal securities laws. All statements other than statements of historical fact should be considered to be forward-looking statements. In many cases, these forward-looking statements may be identified by the use of words such as “will,” “may,” “should,” “could,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “projects,” “goals,” “objectives,” “targets,” “predicts,” “plans,” “seeks,” and variations of these words and similar expressions. Any forward-looking statement speaks only as of the date on which it is made and is qualified in its entirety by reference to the factors discussed throughout this report.

Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance or results and we can give no assurance that these expectations will be attained. It is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of known and unknown risks and uncertainties. Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the potential adverse effect of the COVID-19 pandemic, and federal, state, and/or local regulatory guidelines to control it, on our financial condition, operating results and cash flows, our tenants and their customers, the real estate market in which we operate, the global economy and the financial markets. The extent to which the COVID-19 pandemic impacts us and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the direct and indirect economic effects of the pandemic and containment measures, and potential changes in consumer behavior, among others. In addition to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K, as amended, for the year ended December 31, 2019, and in Part II, Item 1A of this report, such known risks and uncertainties, many of which may be influenced by the COVID-19 pandemic, include, without limitation:

•

general industry, economic and business conditions;

•

the impact of the risks and uncertainties associated with the Chapter 11 process on our operations and ability to develop and execute the Company’s business plans, and to satisfy the conditions and milestones applicable under the Restructuring Support Agreement, for the duration of the Chapter 11 Cases;

•

interest rate fluctuations;

•

costs and availability of capital, including debt, and capital requirements;

•

suspension of trading or delisting of our common stock and/or depositary shares representing interests in our Series D Preferred Stock and Series E Preferred Stock, from the NYSE;

•

costs and availability of real estate;

•

inability to consummate acquisition opportunities and other risks associated with acquisitions;

•

competition from other companies and retail formats;

•

changes in retail demand and rental rates in our markets;

•

shifts in customer demands including the impact of online shopping;

•

tenant bankruptcies or store closings;

•

changes in vacancy rates at our properties;

•

changes in operating expenses;

•

changes in applicable laws, rules and regulations;

•

sales of real property;

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•

uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events, such as the recent COVID-19 pandemic;

•

cyber-attacks or acts of cyber-terrorism;

•

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

•

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

•

other risks referenced from time to time in filings with the SEC and those factors listed or incorporated by reference into this report.

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

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, open-air and mixed-use centers, outlet centers, associated centers, community centers, office and other properties. See Note 1 to the condensed consolidated financial statements for information on our property interests as of September 30, 2020. We have elected to be taxed as a REIT for federal income tax purposes.

On March 11, 2020, the World Health Organization classified COVID-19 as a pandemic. Due to the extraordinary governmental actions taken to contain COVID-19, we are unable to predict the full extent of the pandemic’s impact on our results of operations for the remainder of 2020. As a result, we previously withdrew our full-year 2020 same-center NOI and FFO per share, as adjusted, guidance and underlying assumptions and do not plan to reinstate full-year 2020 guidance.

In response to local and state mandated closures, our entire portfolio, except for a few properties, closed in March. Beginning in late April, government agencies began allowing the re-opening of properties with specified health and safety restrictions. By the close of the third quarter 2020, all of our mall properties were able to reopen. As local mandates were lifted and properties reopened, stores within the properties followed suit with the majority of stores reopening by the close of the third quarter. We have 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.

Our financial and operating results for the third quarter reflect the ongoing impact of the temporary closure of our portfolio for a significant period due to government mandates and operating restrictions. While all properties were able to reopen by the close of the third quarter, many state and local markets continue to impose occupancy and other restrictions. These additional restrictions may have the effect of restricting traffic and sales for our tenants and may put additional pressure on our tenants’ financial health. We have worked with our tenants to enhance customer reach despite the restrictions, including offering curbside, delivery and opening buy-online-pick-up-instore locations. Revenues for the quarter were impacted by a substantial increase in the estimate for uncollectible revenues related to rents due from tenants that recently filed for bankruptcy or are struggling financially. The pandemic accelerated a number of tenant bankruptcies, resulting in an expectation of additional store closures and lost rent through the remainder of the year. Store closures and rent loss from prior tenant bankruptcies, rent abatements granted and lower percentage rent related to lower retail sales also impacted revenues. We offset a portion of this decline through aggressive actions to reduce costs both at the property and corporate levels, including company-wide salary reductions, furloughs, reductions-in-force and other expense reduction initiatives. However, as properties reopened during the third quarter, certain expenses necessarily resumed.

The mandated closures resulted in nearly all of our tenants closing for a period of time and/or shortening operating hours. As a result, we have experienced an increased level of requests for rent deferrals and abatements, as well as defaults on rent obligations. While, in general, we believe that tenants have a clear contractual obligation to pay rent, we have been working with our tenants to address rent deferral and abatement requests. Based on completed or in process agreements with 25 of our top tenants, representing approximately 40% of total revenues for the second and third quarters of 2020, we anticipate collecting over 65% of related rent for the second quarter and over 81% for the third quarter, with the majority of the remainder expected to be deferred or abated. We remain in negotiations with tenants and are unable to predict the outcome of those discussions. As we finalize negotiations, rent collections as a percentage of billed cash-based rents have increased with certain past-due amounts being paid. As of the end of the third quarter, the April 2020 collection rate had improved from 27% to over 76% and May improved from 33% to 68%. We expect this trend to continue as we move later in the year and into 2021, and certain deferred rents begin coming due. As of early November 2020, we estimate that we will

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defer $25.3 million, at our share, of rents that were billed for April through September 2020. Substantially all of this amount is related to agreements that were executed as of September 30, 2020 with the remainder in active negotiation. Additionally, we granted rent abatements of approximately $13.1 million and $14.9 million for the three and nine months ended September 30, 2020, respectively. We continue to assess rent relief requests from our tenants but are unable to predict the resolution or impact of these discussions.

We implemented a full financial COVID-19 response to improve liquidity and reduce costs. These significant actions included drawing $280 million on our secured line of credit, eliminating all non-essential expenditures, implementing a company-wide furlough and salary reduction program, implementing a permanent reduction in force and delaying and suspending capital expenditures, including redevelopment investments. See the "Liquidity and Capital Resources" section for more information.

As discussed in “Note 1 – Organization and Basis of Presentation” and “Note 8 – Mortgage and Other Indebtedness, Net” to the condensed consolidated financial statements and in “Liquidity and Capital Resources” herein, we received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default have occurred and continue to exist as of the date of this report by reason of the our failure to comply with certain restrictive covenants in the secured credit facility. As a result of these asserted defaults and events of default, the lenders under the secured credit facility declared all outstanding principal, accrued interest and letters of credit to be immediately due and payable. As of the date of this report, the lenders under the secured credit facility have not commenced foreclosure proceedings, but they may seek to exercise one or more remedies in the future. Additionally, we failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020. We could remain in compliance with the debt yield covenant if we (i) added additional unencumbered assets to the collateral pool, subject to lender approval, which is not to be unreasonably withheld, (ii) paid down the amount of debt outstanding with projected available cash or (iii) negotiated a waiver of the covenant with the lenders. We currently do not intend to add additional unencumbered assets to the collateral pool or pay down the amount of debt outstanding. See Note 1 – Organization and Basis of Presentation and Liquidity and Capital Resources for additional information.

We had a net loss for the three and nine months ended September 30, 2020 of $44.4 million and $256.5 million respectively, compared to a net loss for the three and nine months ended September 30, 2019 of $92.0 million and $168.5 million, respectively. We recorded a net loss attributable to common shareholders for the three and nine months ended September 30, 2020 of $54.1 million and $269.4 million, respectively compared to a net loss for the three and nine months ended September 30, 2019 of $90.1 million and $175.7 million, respectively. In addition to the impact of the government mandated closures and the ongoing impact of the COVID-19 pandemic, significant items that affected the comparability between the three-month periods include $13.0 million of costs related to the Company’s restructuring efforts, $14.5 million of incremental interest expense related to the imposition of the base and post-default rates on the Company’s credit facility borrowings, a loss on impairment that is $135.6 million lower in 2020 than in 2019 and a litigation settlement credit that is $20.2 million lower in 2020 than in 2019. For the nine-month periods, in addition to the impact of the government mandated closures and ongoing impact of the COVID-19 pandemic, significant items that affected the comparability between the nine-month periods include a loss on impairment that is $55.2 million lower in 2020, litigation settlement expense in 2020 that is $67.9 million lower, gain on extinguishment of debt that is $56.3 million lower and $11.2 million less of gain on investments/deconsolidation than were recognized in the nine months ended September 30, 2019. We also deconsolidated three outlet centers in the third and fourth quarters of 2019.

Same-center NOI and FFO are non-GAAP measures. For a description of same-center NOI, a reconciliation from net income (loss) to same-center NOI, and an explanation of why we believe this is a useful performance measure, see Non-GAAP Measure - Same-center Net Operating Income in “Results of Operations.” For a description of FFO, a reconciliation from net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders, and an explanation of why we believe this is a useful performance measure, see "Non-GAAP Measure - Funds from Operations."

Voluntary Reorganization under Chapter 11

Beginning on November 1, 2020 (the “Commencement Date”), the Company and certain of its domestic subsidiaries (collectively with the Company, the “Debtors”), commenced voluntary chapter 11 cases (the “Chapter 11 Cases”) by filing voluntary petitions for reorganization under chapter 11 of title 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) with the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. Pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, the Debtors’ Chapter 11 Cases are being jointly administered for procedural purposes only under the caption In re CBL & Associates Properties, Inc., et al., Case No. 20-35226. Documents filed on the docket of and other information related to the Chapter 11 Cases are available free of charge online at https://dm.epiq11.com/case/cbj/dockets.

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We are currently operating our business as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. After we filed our Chapter 11 petitions, the Bankruptcy Court granted certain relief requested by the Debtors enabling us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to pay employee wages and benefits, to pay taxes and certain governmental fees and charges, to continue to operate our cash management system in the ordinary course, and to pay the prepetition claims of certain of our service providers. For goods and services provided following the Commencement Date, we intend to pay service providers in the ordinary course.

Subject to certain exceptions, under the Bankruptcy Code, the filing of the Chapter 11 Cases automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising prior to the Commencement Date. Accordingly, although the filing of the Chapter 11 Cases triggered defaults under the Debtors’ funded debt obligations, creditors are stayed from taking any actions against the Debtors as a result of such defaults, subject to certain limited exceptions permitted by the Bankruptcy Code. Absent an order of the Bankruptcy Court, substantially all of the Debtors’ prepetition liabilities are subject to settlement under the Bankruptcy Code.

For the duration of the Company’s Chapter 11 proceedings, the Company’s operations and ability to develop and execute its business plan are subject to the risks and uncertainties associated with the Chapter 11 process. As a result of these risks and uncertainties, the amount and composition of the Company’s assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 proceedings, and the description of the Company’s operations, properties and liquidity and capital resources included in this quarterly report may not accurately reflect its operations, properties and liquidity and capital resources following the Chapter 11 process.

In particular, subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assume and assign or reject executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach subject, in the case of the rejection of unexpired leases of real property, to certain caps on damages. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate for such damages. Generally, the assumption or assumption and assignment of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance thereunder. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this quarterly report, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with the Debtors is qualified by any overriding rights the Company has under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the assumption, assumption and assignment or rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto.

Given the impact of the COVID-19 pandemic on the retail and broader markets, the ongoing weakness of the credit markets, the Operating Partnership’s default of certain restrictive covenants, the acceleration of the senior secured credit facility and the filing of the Chapter 11 Cases, we believe that there is substantial doubt that we will continue to operate as a going concern within one year after the date our condensed consolidated financial statements for the quarter ended September 30, 2020 are issued. See “Note 1 – Organization and Basis of Presentation” to the condensed consolidated financial statements for additional information.

RESULTS OF OPERATIONS

Properties that were in operation for the entire year during 2019 and the nine months ended September 30, 2020 are referred to as the “Comparable Properties.” Since January 1, 2019, we have opened one self-storage facility, deconsolidated three outlet centers and disposed of eleven properties:

Properties Opened

Property		Location		Date Opened
Mid Rivers Mall – CubeSmart Self-storage ⁽¹⁾		St. Peters, MO		January 2019

(1)	This property is owned by a 50/50 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 condensed consolidated statements of operations.

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Deconsolidations

Property	Location	Date of Deconsolidation
The Outlet Shoppes at Atlanta ⁽¹⁾	Woodstock, GA	December 2019
The Outlet Shoppes at El Paso ⁽¹⁾	El Paso, TX	August 2019
The Outlet Shoppes of the Bluegrass ⁽¹⁾	Simpsonville, KY	November 2019

(1)

This 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 condensed consolidated statements of operations from the date of deconsolidation.

Dispositions

Property	Location	Sales Date
850 Greenbrier Circle	Chesapeake, VA	July 2019
Acadiana Mall	Lafayette, LA	January 2019
Barnes & Noble parcel	High Point, NC	July 2019
Cary Towne Center	Cary, NC	January 2019
Courtyard by Marriott at Pearland Town Center	Pearland, TX	June 2019
Dick’s Sporting Goods at Hanes Mall	Winston-Salem, NC	September 2019
The Forum at Grandview	Madison, MS	July 2019
Honey Creek Mall	Terre Haute, IN	April 2019
Kroger at Foothills Plaza	Maryville, TN	July 2019
The Shoppes at Hickory Point	Forsyth, IL	April 2019
Hickory Point Mall	Forsyth, IL	August 2020

Non-core properties are defined as Excluded Malls - see definition that follows under "Operational Review."

Comparison of the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019

Revenues

	Total for the Three Months Ended September 30,							Comparable Properties
	2020		2019		Change			Core			Non-core			Deconsolidation			Dispositions			Total Change
Rental revenues	$	124,081	$	180,616	$	(56,535	)	$	(42,009	)	$	(3,946	)	$	(9,387	)	$	(1,193	)	$	(56,535	)
Management, development and leasing fees		2,104		2,216		(112	)		(112	)		—			—			—			(112	)
Other		3,712		4,419		(707	)		(547	)		(25	)		(46	)		(89	)		(707	)
Total revenues	$	129,897	$	187,251	$	(57,354	)	$	(42,668	)	$	(3,971	)	$	(9,433	)	$	(1,282	)	$	(57,354	)

Rental revenues from the Comparable Properties declined due to (i) store closures and rent concessions that were in effect prior to the COVID-19 pandemic for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii) rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic, including $12.5 million of rent abatements on past due rents and $12.3 million in uncollectible revenues for past due rents. Percentage rent declined $1.1 million as a result of store closures and lower retail sales due to the impacts of the COVID-19 pandemic on traffic and sales.

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Operating Expenses

	Total for the Three Months Ended September 30,									Comparable Properties
	2020			2019			Change			Core			Non-core			Deconsolidation			Dispositions			Total Change
Property operating	$	(20,396	)	$	(27,344	)	$	(6,948	)	$	(4,009	)	$	(225	)	$	(2,437	)	$	(277	)	$	(6,948	)
Real estate taxes		(17,215	)		(18,699	)		(1,484	)		(859	)		(92	)		(377	)		(156	)		(1,484	)
Maintenance and repairs		(8,425	)		(10,253	)		(1,828	)		(1,182	)		(167	)		(386	)		(93	)		(1,828	)
Property operating expenses		(46,036	)		(56,296	)		(10,260	)		(6,050	)		(484	)		(3,200	)		(526	)		(10,260	)
Depreciation and amortization		(53,477	)		(64,168	)		(10,691	)		(6,026	)		(1,534	)		(2,918	)		(213	)		(10,691	)
General and administrative		(25,497	)		(12,467	)		13,030			13,134			(104	)		—			—			13,030
Loss on impairment		(46	)		(135,688	)		(135,642	)		(135,642	)		—			—			—			(135,642	)
Litigation settlement		2,480			22,688			20,208			20,208			—			—			—			20,208
Other		—			(7	)		(7	)		(7	)		—			—			—			(7	)
Total operating expenses	$	(122,576	)	$	(245,938	)	$	(123,362	)	$	(114,383	)	$	(2,122	)	$	(6,118	)	$	(739	)	$	(123,362	)

Property operating expenses at the Comparable Properties decreased primarily due to the implementation of comprehensive programs to reduce operating expenses to mitigate the impact of mandated property closures and the effects of the COVID-19 pandemic, including salary reductions, furloughs, a reduction-in-force and other operating expense initiatives.

The decrease in depreciation and amortization expense related to the Comparable Properties primarily relates to a lower basis in depreciable assets resulting from impairments recorded since the prior year period and a greater amount of tenant improvement write-offs in the prior year period related to tenants that closed as a result of bankruptcy.

General and administrative expenses increased primarily due to $13.0 million of costs related to the Company’s negotiations to restructure its corporate-level debt, which was partially offset by the implementation of comprehensive programs to reduce expenses, including salary reductions, furloughs, a reduction-in-force and other general and administrative expenses.

In the third quarter of 2019, we recognized $135.6 million of loss on impairment of real estate to write down the book value of two malls. See Note 5 to the condensed consolidated financial statements for more information.

Other Income and Expenses

Interest and other income increased $0.6 million compared to the prior-year period primarily due to interest income related to the U.S. Treasury securities that we invested in using a portion of the $280 million we drew on our secured line of credit in March 2020 to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. This was partially offset by a decrease in interest income due to several mortgage and other notes receivable being retired since the prior year period.

Interest expense increased $10.6 million due to an increase of $12.1 million primarily related to (i) a higher outstanding balance on the secured line of credit as a result of the $280 million we drew in March 2020 to increase liquidity and preserve financial flexibility and (ii) the accrual of additional interest on the secured credit facility at a higher interest rate imposed as a result of notices of default received from the administrative agent. Additionally, we accrued $2.5 million of default interest expense related to property-level nonrecourse loans that are in default. These increases were mostly offset by a $4.8 million decrease in property-level interest expense related to the deconsolidation of three encumbered properties since the prior-year period and the impact of the continued amortization of the secured term loan and non-recourse property-level loans.

During the three months ended September 30, 2019, we recognized $8.1 million of gain on sales of real estate assets primarily related to the sale of a community center, an office building and five outparcels.

Equity in losses of unconsolidated affiliates increased by $5.6 million during the three months ended September 30, 2020 compared to the prior-year period. The increase is primarily due to the additional amortization of our inside/outside

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basis difference related to the three properties that were deconsolidated since the end of the prior year period as well as lower earnings of our unconsolidated affiliates due to the mandated property closures and an increase in estimates of uncollectible rental revenues and abatements of rent.

Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019

Revenues

	Total for the Nine Months Ended September 30,							Comparable Properties
	2020		2019		Change			Core			Non-core			Deconsolidation			Dispositions			Total Change
Rental revenues	$	405,476	$	556,989	$	(151,513	)	$	(98,761	)	$	(11,585	)	$	(30,619	)	$	(10,548	)	$	(151,513	)
Management, development and leasing fees		5,251		7,325		(2,074	)		(2,074	)		—			—			—			(2,074	)
Other		10,955		14,344		(3,389	)		(2,504	)		(176	)		(348	)		(361	)		(3,389	)
Total revenues	$	421,682	$	578,658	$	(156,976	)	$	(103,339	)	$	(11,761	)	$	(30,967	)	$	(10,909	)	$	(156,976	)

Rental revenues from the Comparable Properties declined due to (i) store closures and rent concessions that were in effect prior to the COVID-19 pandemic for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii) rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic, including $14.1 million of rent abatements and $47.7 million in uncollectible revenues for past due rents. Percentage rent declined $2.9 million as a result of store closures and lower retail sales due to mandated property closures.

Operating Expenses

	Total for the Nine Months Ended September 30,									Comparable Properties
	2020			2019			Change			Core			Non-core			Deconsolidation			Dispositions			Total Change
Property operating	$	(63,011	)	$	(82,856	)	$	(19,845	)	$	(8,368	)	$	(1,378	)	$	(7,473	)	$	(2,626	)	$	(19,845	)
Real estate taxes		(53,500	)		(57,766	)		(4,266	)		(941	)		(93	)		(2,265	)		(967	)		(4,266	)
Maintenance and repairs		(25,675	)		(34,327	)		(8,652	)		(5,644	)		(987	)		(892	)		(1,129	)		(8,652	)
Property operating expenses		(142,186	)		(174,949	)		(32,763	)		(14,953	)		(2,458	)		(10,630	)		(4,722	)		(32,763	)
Depreciation and amortization		(162,042	)		(198,438	)		(36,396	)		(19,006	)		(4,958	)		(10,113	)		(2,319	)		(36,396	)
General and administrative		(62,060	)		(48,901	)		13,159			13,264			(105	)		—			—			13,159
Loss on impairment		(146,964	)		(202,121	)		(55,157	)		(29,023	)		(16,200	)		—			(9,934	)		(55,157	)
Litigation settlement		2,480			(65,462	)		(67,942	)		(67,942	)		—			—			—			(67,942	)
Other		(400	)		(41	)		359			359			—			—			—			359
Total operating expenses	$	(511,172	)	$	(689,912	)	$	(178,740	)	$	(117,301	)	$	(23,721	)	$	(20,743	)	$	(16,975	)	$	(178,740	)

Property operating expenses at the Comparable Properties decreased primarily due to the implementation of comprehensive programs to reduce operating expenses to mitigate the impact of the COVID-19 pandemic, including salary reductions, furloughs, reductions-in-force and other operating expense initiatives.

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The decrease in depreciation and amortization expense related to the Comparable Properties primarily relates to a lower basis in depreciable assets resulting from impairments recorded since the prior year period, as well as a higher amount of write-offs of tenant improvements and intangible lease assets related to store closings in the prior year period.

General and administrative expenses increased due to $13.0 million of costs related to the Company’s negotiations to restructure its corporate-level debt, partially offset by the implementation of comprehensive programs to reduce expenses, including salary reductions, furloughs and a reduction-in-force, as well higher legal expenses in the prior year period related to the litigation settlement and the new secured credit facility.

For the nine months ended September 30, 2020, we recognized $147.0 million of loss on impairment of real estate to write down the book value of three malls. For the nine months ended September 30, 2019, we recognized $202.1 million of loss on impairment of real estate to write down the book value of five malls and one community center. See Note 5 to the condensed consolidated financial statements for more information.

During the nine months ended September 30, 2019, we recognized $65.5 million of litigation settlement expense related to the settlement of a class action lawsuit. During the nine months ended September 30, 2020, we recognized a reduction of the litigation settlement expense of $2.5 million related to amounts we were released from pursuant to the terms of the settlement agreement. See Note 12 to the condensed consolidated financial statements for more information.

Other Income and Expenses

Interest and other income increased $3.0 million during the nine months ended September 30, 2020 compared to the prior-year period primarily due to additional interest income received related to the U.S. Treasury securities that we invested in using a portion of the $280 million we drew on our secured line of credit in March 2020 to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic.

Interest expense increased $3.8 million compared to the prior-year period. The increase was primarily from an increase of $12.4 million due to (i) a higher outstanding balance on the secured line of credit as a result of the $280 million we drew in March 2020 to increase liquidity and preserve financial flexibility and (ii) the accrual of additional interest on the secured credit facility at a higher interest rate imposed as a result of notices of default received from the administrative agent. Additionally, we accrued $5.4 million of default interest expense related to property-level nonrecourse loans that are in default. This increase was partially offset by a $15.7 million decrease in property-level interest expense from the deconsolidation of three encumbered properties since the prior-year period, the continued amortization of the corporate term loan and non-recourse property-level loans and the retirement of three property-level loans.

During the nine months ended September 30, 2020, we recorded a $15.4 million gain on extinguishment of debt related to one mall. We transferred Hickory Point Mall to the lender in satisfaction of the non-recourse debt secured by that property. During the nine months ended September 30, 2019, we recorded $71.7 million of gain on extinguishment of debt related to two malls. We transferred Acadiana Mall to the lender in satisfaction of the non-recourse debt secured by the property. We sold Cary Towne Center and used the net proceeds from the sale to satisfy a portion of the non-recourse loan that secured the property. The remaining principal balance was forgiven.

Equity in earnings of unconsolidated affiliates decreased by $15.9 million during the nine months ended September 30, 2020 compared to the prior-year period. The decrease was primarily due to an increase in the amortization of our inside/outside basis difference related to the three properties that were deconsolidated since the end of the prior year period as well as lower earnings of our unconsolidated affiliates due to the mandated property closures and an increase in estimates of uncollectible rental revenues and abatements of rent.

Non-GAAP Measure

Same-center Net Operating Income

NOI is a supplemental non-GAAP measure of the operating performance of our shopping centers and other properties. We define NOI as property operating revenues (rental revenues and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).

We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated properties. 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 of our business through our Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in 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.

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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, amortization of above and below market lease intangibles and write-offs of landlord inducement assets in order to enhance the comparability of results from one period to another.

We include a 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 and current year-to-date period. New properties are excluded from same-center NOI until they meet these criteria. Properties excluded from the same-center pool that would otherwise meet these criteria are properties which are being repositioned or properties where we are considering alternatives for repositioning and where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender. Asheville Mall, Burnsville Center, EastGate Mall, Greenbrier Mall and Park Plaza were classified as Lender Malls at September 30, 2020.

Due to the exclusions noted above, same-center NOI should only be used as a supplemental measure of our performance and not as an alternative to GAAP operating income (loss) or net income (loss). A reconciliation of our same-center NOI to net loss for the three- and nine-month periods ended September 30, 2020 and 2019 is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss	$	(44,424	)	$	(92,034	)	$	(256,511	)	$	(168,531	)
Adjustments: ⁽¹⁾
Depreciation and amortization		66,796			76,608			201,180			228,201
Interest expense		69,213			55,640			183,035			171,793
Abandoned projects expense		—			7			400			41
(Gain) loss on sales of real estate assets		55			(8,056	)		(2,708	)		(14,438	)
Gain on investment/deconsolidation		—			(11,174	)		—			(11,174	)
Gain on extinguishment of debt		(15,407	)		—			(15,407	)		(71,722	)
Loss on impairment		46			135,688			146,964			202,121
Litigation settlement		(2,480	)		(22,688	)		(2,480	)		65,462
Income tax provision		546			1,670			17,189			2,622
Lease termination fees		(1,722	)		(848	)		(3,375	)		(2,938	)
Straight-line rent and above- and below-market rent		2,662			(1,881	)		631			(4,334	)
Net (income) loss attributable to noncontrolling interests in other consolidated subsidiaries		937			(763	)		1,631			(631	)
General and administrative expenses		25,497			12,467			62,060			48,901
Management fees and non-property level revenues		(4,415	)		(2,293	)		(9,746	)		(9,077	)
Operating Partnership's share of property NOI		97,304			142,343			322,863			436,296
Non-comparable NOI		(5,909	)		(10,845	)		(19,120	)		(38,137	)
Total same-center NOI	$	91,395		$	131,498		$	303,743		$	398,159

(1)	Adjustments are based on our Operating Partnership's pro rata ownership share, including our share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties.

Same-center NOI decreased 30.5% for the three months ended September 30, 2020 as compared to the prior-year period. The $40.1 million decrease for the three months ended September 30, 2020 compared to the same period in 2019 primarily consisted of a $46.8 million decrease in revenues offset by a $6.9 million decline in operating expenses. Rental revenues declined $46.1 million during the quarter primarily related to (i) store closures and rent concessions that were in effect prior to the COVID-19 pandemic for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii) rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic, including $14.6 million of rent abatements on past due rents and $12.4 million in uncollectible revenues for past due rents.

Same-center NOI decreased 23.7% for the nine months ended September 30, 2020 as compared to the prior-year period. The $94.4 million decrease for the nine months ended September 30, 2020 compared to the same period in 2019 primarily consisted of a $112.4 million decrease in revenues offset by a $17.9 million decline in operating expenses. Rental revenues declined $110.1 million during the quarter primarily related to (i) store closures and rent concessions that were in effect prior to the COVID-19 pandemic for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii) rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the

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COVID-19 pandemic, including $16.9 million of rent abatements on past due rents and $52.4 million in uncollectible revenues for past due rents.

Operational Review

The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during the fourth quarter due to the holiday season, which generally results in higher percentage rents in the fourth quarter. Additionally, the malls earn most of their rents from short-term tenants during the holiday period. Thus, occupancy levels and revenue production are generally the highest in the fourth quarter of each year. Results of operations realized in any one quarter may not be indicative of the results likely to be experienced over the course of the fiscal year.

In response to local and state mandated closures due to the COVID-19 pandemic, our entire portfolio, except for a few properties, closed. All of our mall properties have re-opened and we have implemented strict procedures and guidelines for our employees, tenants and property visitors based on CDC and other health agency recommendations.

The mandated closures resulted in nearly all of our tenants closing for a period of time and/or shortening operating hours. As a result, we have experienced an increased level of requests for rent deferrals, and abatements, as well as defaults on rent obligations. While, in general, we believe that the tenants have a clear contractual obligation to pay rent, we have been working with our tenants to address rent deferral and abatement requests. Based on completed or in process agreements with 25 of our top tenants, representing approximately 40% of total revenues for the second and third quarters of 2020, we anticipate collecting over 65% of related rent for the second quarter and over 81% for the third quarter, with the majority of the remainder expected to be deferred or abated. We remain in negotiations with tenants and are unable to predict the outcome of those discussions. As we finalize negotiations, rent collections as a percentage of billed cash-based rents have increased with certain past-due amounts being paid. As of the end of the third quarter, the April 2020 collection rate had improved from 27% to over 76% and May improved from 33% to 68%. We expect this trend to continue as we move later in the year and into 2021, and certain deferred rents begin coming due. As of early November 2020, we estimate that we will defer $25.3 million, at our share, of rents that were billed for April through September 2020. Substantially all of this amount is related to agreements that were executed as of September 30, 2020 with the remainder in active negotiation. Additionally, we granted rent abatements of approximately $13.1 million and $14.9 million for the three and nine months ended September 30, 2020, respectively. We continue to assess rent relief requests from our tenants but are unable to predict the resolution or impact of these discussions.

Year-to-date, more than twelve national tenants have declared bankruptcy, including major tenants such as J.C. Penney, Ascena Retail Group, Stage Stores and GNC. As of September 30, 2020, J.C. Penney and Ascena Retail Group, Inc. represented $18.5 million in gross annual revenue and comprised 6.1 million square feet. The remaining ten tenants in bankruptcy represented approximately $22.3 million in gross annual revenue and comprised 1.1 million square feet. The majority of these have announced some store closures and some have liquidated, but several are expected to reorganize and continue to operate.

We classify our regional malls into three categories:

(1)

Stabilized Malls – Malls that have completed their initial lease-up and have been open for more than three complete calendar years.

(2)

Non-stabilized Malls - Malls that are in their initial lease-up phase. After three complete calendar years of operation, they are reclassified on January 1 of the fourth calendar year to the stabilized mall category. The Outlet Shoppes at Laredo was classified as a non-stabilized mall as of September 30, 2020 and 2019. The Outlet Shoppes at Laredo will be classified as a stabilized mall starting January 1, 2021.

(3)

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

Lender Malls - Malls for which we are working or intend to work with the lender on a restructure of the terms of the loan secured by the property or convey the secured property to the lender. Asheville Mall, Burnsville Center, EastGate Mall, Greenbrier Mall and Park Plaza were classified as Lender Malls as of September 30, 2020, and Greenbrier Mall, and Hickory Point Mall were classified as Lender Malls as of September 30, 2019. Lender Malls are excluded from our same-center pool as decisions made while in discussions with the lender may lead to metrics that do not provide relevant information related to the condition of these properties.

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Repositioning Malls - Malls that are currently being repositioned or where we have determined that the current format of the mall no longer represents the best use of the mall and we are in the process of evaluating alternative strategies for the mall. This may include major redevelopment or an alternative retail or non-retail format, or after evaluating alternative strategies for the mall, we may determine that the mall no longer meets our criteria for long-term investment. The steps taken to reposition these malls, such as signing tenants to short-term leases, which are not included in occupancy percentages, or leasing to regional or local tenants, which typically do not report sales, may lead to metrics which do not provide relevant information related to the condition of these malls. Therefore, traditional performance measures, such as occupancy percentages and leasing metrics, exclude Repositioning Malls. There were no malls classified as Repositioning Malls as of September 30, 2020 and September 30, 2019.

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

	Nine Months Ended September 30,
	2020			2019
Malls		90.4	%		91.6	%
Other Properties		9.6	%		8.4	%

Mall Store Sales

Mall store sales include reporting mall tenants of 10,000 square feet or less for stabilized malls and exclude license agreements, which are retail contracts that are temporary or short-term in nature and generally last more than three months but less than twelve months. Due to temporary mall and store closures that occurred, the majority of CBL’s tenants did not report sales for the full reporting period. As a result, CBL is not able to provide a complete measure of sales per square foot for the trailing twelve months ended September 30, 2020. Stabilized mall same-center sales per square foot for the twelve months ended September 30, 2019 were $386.

Occupancy

Our portfolio occupancy is summarized in the following table ⁽¹⁾:

	As of September 30,
	2020			2019
Total portfolio		86.8	%		90.5	%
Malls:
Total Mall portfolio		85.2	%		88.7	%
Same-center Malls		85.2	%		89.0	%
Stabilized Malls		85.4	%		88.8	%
Non-stabilized Malls ⁽²⁾		74.4	%		83.8	%
Other Properties:
Associated centers		89.1	%		96.3	%
Community centers		94.4	%		96.3	%

(1)	As noted above, excluded properties are not included in occupancy metrics. Occupancy for malls represents percentage of mall store gross leasable area occupied under 20,000 square feet. Occupancy for other properties represents percentage of gross leasable area occupied.

(2)	Represents occupancy for The Outlet Shoppes at Laredo.

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Leasing

Leasing activity for the quarter was muted as we continued our focus on negotiating with existing tenants. To-date we have completed or are finalizing negotiations with retailers representing the majority of our top tenants. These agreements generally include flexible terms primarily on second quarter and, in certain cases, third quarter rent to certain retailers that require assistance, while at the same time preserving current and future income.

The following is a summary of the total square feet of leases signed in the three- and nine-month periods ended September, 2020 and 2019:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating portfolio:
New leases		43,654		239,645		463,771		768,106
Renewal leases		553,848		472,636		1,276,343		1,626,014
Development portfolio:
New leases		—		1,175		7,929		205,614
Total leased		597,502		713,456		1,748,043		2,599,734

Average annual base rents per square foot are based on contractual rents in effect as of September 30, 2020 and 2019, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each property type:

	September 30,
	2020		2019
Malls ⁽¹⁾:
Same-center Stabilized Malls	$	30.42	$	31.94
Stabilized Malls		30.49		32.05
Non-stabilized Malls ⁽²⁾		24.89		24.12
Other Properties ⁽³⁾:		15.54		15.40
Associated centers		14.02		13.75
Community centers		16.78		16.99
Office buildings		19.14		18.87

(1)	Excluded properties are not included.

(2)	Represents average annual base rents for The Outlet Shoppes at Laredo.

(3)	Average base rents for associated centers, community centers and office buildings include all leased space, regardless of size.

Results from new and renewal leasing of comparable small shop space of less than 10,000 square feet during the nine-month period ended September 30, 2020 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows:

Property Type	Square Feet		Prior Gross Rent PSF		New Initial Gross Rent PSF		% Change Initial			New Average Gross Rent PSF⁽¹⁾		% Change Average
Quarter:
All Property Types ⁽²⁾		348,790	$	33.60	$	27.88		(17.0	)%	$	28.29		(15.8	)%
Stabilized Malls		297,079		34.81		29.06		(16.5	)%		29.47		(15.3	)%
New leases		16,919		44.07		39.86		(9.6	)%		41.53		(5.8	)%
Renewal leases		280,160		34.25		28.41		(17.1	)%		28.74		(16.1	)%

Year-to-Date:
All Property Types ⁽²⁾		886,441	$	30.24	$	26.59		(12.1	)%	$	27.03		(10.6	)%
Stabilized Malls		793,168		30.68		27.10		(11.7	)%		27.55		(10.2	)%
New leases		68,613		28.70		32.00		11.5	%		33.51		16.8	%
Renewal leases		724,555		30.87		26.64		(13.7	)%		26.99		(12.6	)%

(1)	Average gross rent does not incorporate allowable future increases for recoverable common area expenses.

(2)	Includes stabilized malls, associated centers, community centers and office buildings.

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New and renewal leasing activity of comparable small shop space of less than 10,000 square feet based on the lease commencement date is as follows:

	Number of Leases		Square Feet		Term (in years)		Initial Rent PSF		Average Rent PSF		Expiring Rent PSF		Initial Rent Spread					Average Rent Spread
Commencement 2020:
New		73		235,156		7.14	$	28.48	$	30.07	$	25.63	$	2.85		11.1	%	$	4.44		17.3	%
Renewal		355		1,156,701		2.58		25.33		26.24		30.37		(5.04	)	(16.6	)%		(4.13	)	(13.6	)%
Commencement 2020 Total		428		1,391,857		3.36		25.86		26.88		29.57		(3.71	)	(12.5	)%		(2.69	)	(9.1	)%


Commencement 2021:
New		8		23,594		9.22		36.82		38.89		32.09		4.73		14.7	%		6.80		21.2	%
Renewal		76		210,540		2.44		33.96		34.27		36.50		(2.54	)	(7.0	)%		(2.23	)	(6.1	)%
Commencement 2021 Total		84		234,134		3.09		34.25		34.73		36.06		(1.81	)	(5.0	)%		(1.33	)	(3.7	)%

Total 2020/2021		512		1,625,991		3.31	$	27.07	$	28.01	$	30.50	$	(3.43	)	(11.2	)%	$	(2.49	)	(8.2	)%

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2020, we had $258.6 million available in unrestricted cash and U.S. Treasury securities and we had $675.9 million outstanding on our secured credit facility. Our total pro rata share of debt at September 30, 2020 was $4.4 billion.

In February 2020, we utilized our secured credit facility to pay off two loans secured by Parkway Place and Valley View Mall totaling $84.5 million. Also, we closed on a new loan secured by The Outlet Shoppes at Atlanta – Phase II in the amount of $4.7 million, with an interest rate of LIBOR plus 2.5% and a maturity date of November 2023. Proceeds were used to retire the $4.4 million existing loan. In March 2020, we drew $280.0 million on our secured line of credit to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. We purchased $154.2 million, including accrued interest, of U.S. Treasury securities with a portion of the borrowings on our secured line of credit.

In response to the COVID-19 pandemic, we implemented comprehensive programs to halt all non-essential expenditures, to reduce operating and overhead expenses and to reduce, defer or suspend capital expenditures, including redevelopment investments. These programs include a temporary reduction of up to 50% to the compensation of our Chairman of the Board, our CEO and our President as well as independent director fees, a temporary reduction of up to 20% to the compensation of our other named executive officers, salary reductions to all staff, a broad-based furlough program, a permanent reduction in workforce and 2020 capital expenditure reductions or deferrals estimated in the range of $60.0 million to $80.0 million. While we have paused several major projects, we are pursuing capital lite solutions for backfilling our remaining available anchors, including joint venture partnerships, favorable lease structures and third-party arrangements – all of which benefit our portfolio while preserving capital. Additionally, we were able to achieve debt service payment deferrals for a portion of our secured loans. Securitized lenders in general have shown minimal flexibility in amending loan payments.

As discussed in “Note 15 – Subsequent Events” to the condensed consolidated financial statements, the Company elected to not make the $6.9 million interest payment due and payable on October 15, 2020, with respect to the Operating Partnership’s 4.60% senior unsecured notes due 2024 (the “2024 Notes”) (the “2024 Notes Interest Payment”). Under the indenture governing the 2024 Notes, the Operating Partnership has a 30-day grace period to make the 2024 Notes Interest Payment before the nonpayment is considered an “event of default” with respect to the 2024 Notes. Any event of default under the 2024 Notes for nonpayment of the 2024 Notes Interest Payment would also be considered an event of default under the Operating Partnership’s senior secured credit facility which could lead to an acceleration of amounts due under the facility; however, as discussed in Note 8 – Mortgage and Other Indebtedness, Net, obligations under the secured credit facility have been accelerated based on the events of default previously asserted by the administrative agent under the secured credit facility, which the Company continues to dispute. Further, if the trustee for the 2024 Notes should exercise its right to accelerate the maturity of the full balance owed on the 2024 Notes as a result of such an “event of default,” that would also constitute an “event of default” under the 2023 Notes and the 2026 Notes, which could lead to the acceleration of all amounts due under those notes.

See Liquidity and Going Concern Considerations in Note 1 – Organization and Basis of Presentation and Significant Bankruptcy Court Actions in Note 15 – Subsequent Events to the condensed consolidated financial statements and the section below titled Financial Covenants and Restrictions for information on the ongoing alleged defaults and events of defaults asserted by the administrative agent with respect to the secured credit facility and the Company’s adversarial

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proceeding in response to the notices from the administrative agent asserting rights and remedies and for information on the Company’s commencement of the Chapter 11 Cases.

We have addressed nearly all our major debt maturities for 2020 and are in discussions with existing lenders for certain 2021 secured loan maturities. We anticipate restructuring our unsecured debt maturities through the recent Chapter 11 bankruptcy filing. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts. See Note 7 – Unconsolidated Affiliates and Noncontrolling Interests and Note 8 – Mortgage and Other Indebtedness, Net for more information.

We derive the majority of our revenues from leases with retail tenants, which have historically been the primary source for funding short-term liquidity and capital needs such as operating expenses, debt service, tenant construction allowances, recurring capital expenditures, dividends and distributions. We believe that the combination of cash flows generated from our operations, combined with cash on hand and our investment in U.S. Treasury securities will, for the foreseeable future, provide adequate liquidity to meet our cash needs assuming we continue to operate as a going concern within twelve months of the date our condensed consolidated financial statements are issued. In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, joint venture investments and decreasing expenditures related to tenant construction allowances and other capital expenditures. We also generate revenues from sales of peripheral land at our properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.

Cash Flows - Operating, Investing and Financing Activities

There was $141.2 million of cash, cash equivalents and restricted cash as of September 30, 2020, an increase of $82.1 million from December 31, 2019. Of this amount, $116.6 million was unrestricted cash and cash equivalents as of September 30, 2020. Also, at September 30, 2020, we had $151.8 million in U.S. Treasuries that are scheduled to mature between April 2021 and June 2021.

Our net cash flows are summarized as follows (in thousands):

	Nine Months Ended September 30,
	2020			2019			Change
Net cash provided by operating activities	$	59,192		$	225,243		$	(166,051	)
Net cash provided by (used in) investing activities		(201,504	)		55,870			(257,374	)
Net cash provided by (used in) financing activities		224,486			(275,369	)		499,855
Net cash flows	$	82,174		$	5,744		$	76,430

Cash Provided by Operating Activities

Cash provided by operating activities decreased $166.0 million primarily due to a decline in cash payments of rental revenues from tenants due to the closure of most of our malls for a period of time in response to government mandates that began in March. Operating cash flows have also been impacted by rent deferrals and abatements that have been granted to tenants experiencing financial difficulties due to the COVID-19 pandemic. Rental revenues also decreased due to store closures and rent concessions for tenants with high occupancy cost levels, including tenants that closed in 2019 and 2020 due to bankruptcy prior to the COVID-19 pandemic, as well as a decline in rental revenues related to dispositions.

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Cash Provided by (Used in) Investing Activities

Net cash used in investing activities for 2020 was primarily related to the purchase of U.S. Treasury securities for $153.2 million using a portion of the $280.0 million that we drew on our secured line of credit. We also expended $47.8 million on additions to real estate assets, primarily related to redevelopment projects. Net cash provided by investing activities in the prior year period related to $128.4 million of proceeds from dispositions of properties, which was partially offset by $90.4 million of additions to real estate assets.

Cash Provided by (Used in) Financing Activities

The net cash inflow for 2020 is primarily due to the $280.0 million draw on our secured credit facility in order to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. Additionally, there were no common or preferred stock dividends paid for the nine months ended September 30, 2020, as compared to $26.0 million in dividends paid to holders of common stock and $33.7 million in dividends paid to holders of preferred stock during the nine months ended September 30, 2019.

Debt

Debt of the Company

CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of our debt. CBL is a limited guarantor of the Notes, as described in Note 8 to the condensed consolidated financial statements, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. We also provide a similar limited guarantee of the Operating Partnership's obligations with respect to our secured credit facility as of September 30, 2020.

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, because we believe this provides investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands):

September 30, 2020:	Consolidated			Noncontrolling Interests			Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating Properties ⁽²⁾	$	1,193,997		$	(30,275	)	$	616,446		$	1,780,168			4.79	%
Recourse loans on operating Properties ⁽³⁾		—			—			9,360			9,360			3.74	%
Senior unsecured notes due 2023 ⁽⁴⁾		448,265			—			—			448,265			5.25	%
Senior unsecured notes due 2024 ⁽⁵⁾		299,966			—			—			299,966			4.60	%
Senior unsecured notes due 2026 ⁽⁶⁾		618,136			—			—			618,136			5.95	%
Total fixed-rate debt		2,560,364			(30,275	)		625,806			3,155,895			5.06	%
Variable-rate debt:
Recourse loans on operating Properties		68,511			—			104,622			173,133			2.82	%
Construction loans		—			—			17,864			17,864			2.52	%
Secured line of credit ⁽⁷⁾		675,925			—			—			675,925			9.50	%
Secured term loan ⁽⁷⁾		438,750			—			—			438,750			9.50	%
Total variable-rate debt		1,183,186			—			122,486			1,305,672			8.52	%
Total fixed-rate and variable-rate debt		3,743,550			(30,275	)		748,292			4,461,567			6.07	%
Unamortized deferred financing costs		(13,864	)		288			(2,594	)		(16,170	)
Total mortgage and other indebtedness, net	$	3,729,686		$	(29,987	)	$	745,698		$	4,445,397

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December 31, 2019:	Consolidated			Noncontrolling Interests			Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating Properties ⁽²⁾	$	1,330,561		$	(30,658	)	$	623,193		$	1,923,096			4.88	%
Recourse loans on operating Properties ⁽³⁾		—			—			10,050			10,050			3.74	%
Senior unsecured notes due 2023 ⁽⁴⁾		447,894			—			—			447,894			5.25	%
Senior unsecured notes due 2024 ⁽⁵⁾		299,960			—			—			299,960			4.60	%
Senior unsecured notes due 2026 ⁽⁶⁾		617,473			—			—			617,473			5.95	%
Total fixed-rate debt		2,695,888			(30,658	)		633,243			3,298,473			5.10	%
Variable-rate debt:
Recourse loans on operating Properties		41,950			—			69,046			110,996			4.13	%
Construction loans		29,400			—			35,362			64,762			4.45	%
Secured line of credit		310,925			—			—			310,925			3.94	%
Secured term loan		465,000			—			—			465,000			3.94	%
Total variable-rate debt		847,275			—			104,408			951,683			4.00	%
Total fixed-rate and variable-rate debt		3,543,163			(30,658	)		737,651			4,250,156			4.86	%
Unamortized deferred financing costs		(16,148	)		318			(2,851	)		(18,681	)
Total mortgage and other indebtedness, net	$	3,527,015		$	(30,340	)	$	734,800		$	4,231,475

(1)	Weighted-average interest rate includes the effect of debt premiums and discounts but excludes amortization of deferred financing costs.

(2)	An unconsolidated affiliate has an interest rate swap on a notional amount outstanding of $42,982 as of September 30, 2020 and $43,623 as of December 31, 2019 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%.

(3)

The unconsolidated affiliate has an interest rate swap on a notional amount outstanding of $9,360 as of September 30, 2020 and $10,050 as of December 31, 2019 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%.

(4)	The balance is net of an unamortized discount of $1,736 and $2,106 as of September 30, 2020 and December 31, 2019, respectively.

(5)	The balance is net of an unamortized discount of $34 and $40 as of September 30, 2020 and December 31, 2019, respectively.

(6)	The balance is net of an unamortized discount of $6,864 and $7,527 as of September 30, 2020 and December 31, 2019, respectively.

(7)

The weighted-average remaining term of our total share of consolidated and unconsolidated debt was 3.3 years and 3.9 years at September 30, 2020 and December 31, 2019, respectively. The weighted-average remaining term of our pro rata share of fixed-rate debt was 3.5 and 4.1 years at September 30, 2020 and December 31, 2019, respectively.

As of September 30, 2020 and December 31, 2019, our pro rata share of consolidated and unconsolidated variable-rate debt represented 29.4% and 22.5%, respectively, of our total pro rata share of debt.

See Note 7 to the condensed consolidated financial statements for information concerning activity related to unconsolidated affiliates.

Credit Ratings

During the quarter ended June 30, 2020, Fitch Ratings, Moody’s Investors Service and S&P Global Ratings terminated their coverage of the Operating Partnership's unsecured long-term indebtedness.

Senior Unsecured Notes

The following presents the Company's compliance with key covenant ratios, as defined, of the Notes and the senior secured credit facility as of September 30, 2020:

Debt Covenant Compliance Ratios ⁽¹⁾	Required	Actual
Total debt to total assets	< 60%		56	%
Secured debt to total assets	< 40%		36	%
Total unencumbered assets to unsecured debt	> 150%		190	%
Consolidated income available for debt service to annual debt service charge	> 1.5x		1.8	x
Minimum debt yield on outstanding balance ⁽²⁾	> 10%		9.7	%

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(1)	The debt covenant compliance ratios for the secured line of credit, the secured term loan and the senior unsecured notes are defined and computed on the same basis.

(2) The minimum debt yield on outstanding balance debt covenant compliance ratio only applies to the secured credit facility. As of September 30, 2020, the lenders under the secured credit facility had declared all outstanding obligations to be immediately due and payable due to asserted defaults and events of default under the secured credit facility. Additionally, on November 1, 2020, we commenced the Chapter 11 Cases by filing voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code, which is an event of default under the secured credit facility.

Issuer and Guarantor Subsidiaries of Guaranteed Securities

In March 2020, the SEC issued Rule Release No. 33-10762, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities ("Release 33-10762”). Release 33-10762 simplifies the disclosure requirements related to certain registered securities under Rules 3-10 and 3-16 of SEC Regulation S-X, permitting registrants to provide certain alternative financial disclosures and non-financial disclosures in lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities if certain conditions are met. The amendments in Release 33-10762 are generally effective for filings on or after January 4, 2021, with early application permitted. We adopted the new disclosure requirements permitted under Release 33-10762 effective for the period as of and for the nine months ended September 30, 2020.

The Operating Partnership’s senior secured credit facility is secured by 17 malls and 3 associated centers that are directly or indirectly owned by 36 wholly owned subsidiaries of the Operating Partnership (the “Guarantor Subsidiaries”). The Guarantor Subsidiaries own an additional four malls, two associated centers and four mortgage notes receivable that are not collateral for the secured credit facility. The Guarantor Subsidiaries also entered into agreements to guarantee the Operating Partnership’s obligations under the senior secured credit facility.

Based on the terms of the Notes, to the extent that any subsidiary of the Operating Partnership executes and delivers a guarantee to another debt facility, the Operating Partnership shall also cause the subsidiary to guarantee the Operating Partnership’s obligations under the Notes on a senior basis. In connection with entering the guarantee agreements related to the senior secured credit facility, the Guarantor Subsidiaries entered a guarantee agreement with the issuer of the Notes to satisfy the guaranty requirement.

The guarantees of the Guarantor Subsidiaries are joint and several and full and unconditional. The guarantees are unsecured and effectively subordinated to any existing and future secured debt that a Guarantor Subsidiary may have to the extent of the value of the assets securing such debt. Each Guarantor Property’s obligation will remain until the earlier of such time as (i) all guaranteed obligations have been paid in full in cash and each guaranteed obligation has been terminated or cancelled in accordance with its terms or (ii) any such Guarantor Subsidiary ceases to be a guarantor under the senior secured credit facility. The Guarantor Subsidiaries’ maximum guarantee related to the secured credit facility is $1,114.7 million as of September 30, 2020, and the maximum guarantee related to the Notes is $1,375.0 million as of September 30, 2020.

The following tables present summarized financial information for the Operating Partnership and the Guarantor Subsidiaries on a combined basis. The summarized financial information does not include the Operating Partnership’s investments in non-guarantor subsidiaries nor the earnings from non-guarantor subsidiaries. Intercompany transactions between the Operating Partnership and the Guarantor Subsidiaries have been eliminated. The summarized balance sheet information is as of September 30, 2020 and December 31, 2019 and the summarized statement of operations information is for the nine months ended September 30, 2020 and the year ended December 31, 2019. Amounts are presented in thousands.

	September 30, 2020			December 31, 2019
Net investment in real estate assets	$	1,456,142		$	1,505,668
Total assets ⁽¹⁾		1,651,465			1,696,190
Total liabilities ⁽²⁾		2,846,991			2,503,005

	Nine Months Ended September 30, 2020			Year Ended December 31, 2019
Total revenues ⁽³⁾	$	167,917		$	292,540
Total expenses ⁽⁴⁾		288,842			476,202
Net loss		(119,132	)		(117,325	)

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(1)

Total assets include an intercompany note receivable with a non-guarantor subsidiary of $4,002 and $4,194 as of September 30, 2020 and December 31, 2019, respectively

(2)

Total liabilities include intercompany liabilities of $2,781 as of September 30, 2020

(3)

Total revenues include revenues derived from non-guarantor subsidiaries of $160 and $1,255 for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively.

(4)

Total expenses include expenses incurred with non-guarantor subsidiaries of $24,468 and $16,749 for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively.

Financial Covenants and Restrictions

As discussed in “Note 8 – Mortgage and Other Indebtedness, Net” to the condensed consolidated financial statements, we elected not to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment. The Operating Partnership did not make either the 2023 Notes Interest Payment or the 2026 Notes Interest Payment by the last day of the respective 30-day grace periods provided for in the indenture governing the 2023 Notes and the 2026 Notes. The Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment during the applicable grace periods constituted an “event of default” with respect to each of the 2023 Notes and the 2026 Notes.

On August 5, 2020, we made the 2023 Notes Interest Payment to the holders of the 2023 Notes and the 2026 Notes Interest Payment to the holders of the 2026 Notes. Accordingly, from and after such payment, the nonpayment of each of the 2023 Notes Interest Payment and the 2026 Notes Interest Payment no longer constitutes (i) an “event of default” under the indenture governing the 2023 Notes and the 2026 Notes that occurred and is continuing or (ii) to the extent provided in the Bank Forbearance Agreement, an “event of default” under the secured credit facility.

On each of May 26, 2020, June 2, 2020, June 16, 2020, August 6, 2020 and August 19, 2020, the Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility, which asserted that certain defaults and events of default occurred and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility and resulting from the failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment prior to the expiration of the applicable grace periods. On August 6, 2020, the Operating Partnership received a notice of imposition of base rate and post-default rate letter from the Agent, which (i) informed the Operating Partnership that following an asserted event of default on March 19, 2020, all outstanding loans were converted to base loans at the expiration of the applicable interest periods and (ii) sought payment of approximately $4.8 million related thereto for April through June 2020 (the “Demand Interest”). The base rate is defined as the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the LIBOR Market Index Rate plus 1.0%, plus 1.25%. The base rate on September 30, 2020 was 4.50% based on the prime rate plus 1.25%. The administrative agent also informed the Operating Partnership that from and after August 6, 2020, interest will accrue on all outstanding obligations at the post-default rate, which is equal to the rate that otherwise would be in effect plus 5.0%. The post-default interest rate at the time of notification and at September 30, 2020 was 9.50%. On August 19, 2020, the Operating Partnership received from the administrative agent (i) a notice of default and reservation of rights letter, which asserted that each of the failure to pay the Demand Interest and the entry into the RSA constituted events of default under the terms of the secured credit facility and (ii) a notice of acceleration of obligations under the secured credit facility based on the events of default previously asserted by the administrative agent, pursuant to which, the administrative agent declared all outstanding principal, interest accruing at the base rate and the post-default rate, which as previously disclosed are rates being disputed by the Company, and letters of credit to be immediately due and payable. The administrative agent also terminated the revolving and swingline commitments and the obligation to issue letters of credit under the secured credit facility and instructed the Operating Partnership to deliver approximately $1.3 million in cash to collateralize outstanding letters of credit.

On August 25, 2020, The Operating Partnership received a notice of imposition of base rate letter from the administrative agent under the secured credit facility, which informed the Operating Partnership that following an asserted event of default, that all outstanding loans converted to base rate loans beginning July 1, 2019 and (ii) sought payment of approximately $12.0 million related thereto for July 1, 2019 through March 30, 2020. Additionally, the Operating Partnership failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020.

As of the date of this report, the lenders under the secured credit facility have not commenced foreclosure proceedings, but they may seek to exercise such remedies in the future. In addition, as a result of the events of default asserted by the administrative agent in such letters, the administrative agent may deny the Operating Partnership’s request for future LIBOR interest periods, which would result in an increase in annual interest expense of approximately $19.3 million based on the base rate and $74.4 million based on the post-default rate.

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October 28, 2020, the Operating Partnership was notified by the administrative agent and lenders that they elected to exercise their rights pursuant to the terms of the secured credit facility to (i) require that rents payable by tenants at the properties that are collateral to the secured credit facility be paid directly to the administrative agent and (ii) exercise all voting rights and other ownership rights in respect of all the equity interests in the subsidiaries of the Operating Partnership that are guarantors of the secured credit facility.

Notwithstanding these actions by the administrative agent, the Company intends to continue to operate its business, retain legal ownership of the entities pledged under the collateral agreement and the pledge agreement and manage its properties. The Company contends that the actions taken by the administrative agent are unauthorized and unlawful and the Company continues to disagree with the assertions made by the administrative agent as to the basis for the notice of acceleration and the notice of exercise and, accordingly, the validity of the notice of acceleration and the notice of exercise. The Company is vigorously defending against the claims made by the administrative agent and the lenders. Among other things, the Company, in good faith, disputes that any breaches of the agreement to the secured credit facility or any events of default thereunder that were the subject of the prior notices have occurred and are continuing. On November 2, 2020, the Company filed an adversary proceeding in the Bankruptcy Court seeking among other things, a Temporary Restraining Order (the “Order”) and for a Preliminary Injunction to enjoin, pending a determination of the parties’ rights, the administrative agent or any of its officers, agents, servants, attorneys and successors from taking any action to exercise any and all remedies under the agreement to the secured credit facility or other agreements as a result of the events of default asserted by the administrative agent, or any other right or remedy that would otherwise accompany the occurrence of an event of default, including without limitation, any rights of acceleration under the agreement to the secured credit facility, rights flowing from the notice of acceleration, rights exercised pursuant to the notice of exercise or any other rights or remedies properly exercisable solely upon an actual or determined event of default. On the November 2, 2020, the Bankruptcy Court granted the Order and the Company and the administrative agent are negotiating the terms of a standstill pending further determination by the Bankruptcy Court. See Note 1 – Organization and Basis of Presentation to the condensed consolidated financial statements for additional information.

Unencumbered Consolidated Portfolio Statistics

(Dollars in thousands, except sales per square foot data)

	Sales Per Square Foot for the Twelve Months Ended ^{(1) (2)}				Occupancy ⁽²⁾						% of Consolidated Unencumbered NOI for the Nine Months Ended
	9/30/20	⁽³⁾	9/30/19		9/30/20			9/30/19			9/30/20			⁽⁴	⁾
Unencumbered consolidated Properties:
Tier 1 Malls			$	382		86.9	%		85.9	%		19.8	%	⁽⁵	⁾
Tier 2 Malls				338		82.0	%		85.7	%		33.7	%
Tier 3 Malls				279		80.0	%		87.0	%		23.3	%
Total Malls	N/A			309		81.9	%		86.3	%		76.8	%

Total Associated Centers	N/A		N/A			85.8	%		95.7	%		16.8	%

Total Community Centers	N/A		N/A			98.4	%		97.3	%		5.7	%

Total Office Buildings & Other	N/A		N/A			100.0	%		86.7	%		0.7	%

Total Unencumbered Consolidated Portfolio	N/A		$	309		83.5	%		88.9	%		100.0	%

(1)	Represents same-center sales per square foot for mall tenants 10,000 square feet or less for stabilized malls.

(2)	Operating metrics are included for unencumbered operating properties and do not include sales or occupancy of unencumbered parcels.

(3)	Due to temporary mall and store closures that occurred, the majority of CBL’s tenants did not report sales for the full reporting period. As a result, CBL is not able to provide a complete measure of sales per square foot for the quarter or trailing twelve months.

(4)	Our consolidated unencumbered properties generated approximately 40.1% of total consolidated NOI of $253,039,476 (which excludes NOI related to dispositions) for the nine months ended September 30, 2020.

(5)	NOI is derived from unencumbered portions of Tier One properties that are otherwise secured by a loan. The unencumbered portions include outparcels, anchors and former anchors that have been redeveloped.

Equity

In 2019, we suspended all future dividends on our common stock and preferred stock, as well as distributions to all noncontrolling interest investors in our Operating Partnership. The dividend arrearage created by our board of directors’ decision to suspend the dividends that continue to accrue on our outstanding preferred stock currently makes us ineligible to use the abbreviated, and less costly, SEC Form S-3 registration statement to register our securities for sale. This means

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we will be required to use a registration statement on Form S-1 to register additional securities for sale with the SEC, which we expect to hinder our ability to act quickly in relation to, and raise our costs incurred in, future capital raising activities. This preferred dividend arrearage (and the Operating Partnership’s related arrearage in distributions to its preferred units of limited partnership underlying our outstanding preferred shares) also will require that we not resume any payment of dividends on our common stock unless full cumulative dividends accrued with respect to our preferred stock (and such underlying preferred units) for all past quarters and the then-current quarter are first declared and paid in cash, or declared with a sum sufficient for the payment thereof having been set apart for such payment in cash. In addition, for so long as this distribution suspension results in the existence of a distribution shortfall (as described in the Partnership Agreement of the Operating Partnership) with respect to any of the S-SCUs, the L-SCUs or the K-SCUs (an “SCU Distribution Shortfall”), we (i) may not cause the Operating Partnership to resume distributions to holders of its outstanding common units of limited partnership until all holders of SCUs have received distributions sufficient to satisfy the SCU Distribution Shortfall for all prior quarters and the then-current quarter (which effectively also prevents the resumption of common stock dividends, since our common stock dividends are funded by distributions the Company receives on the underlying common units it holds in the Operating Partnership) and (ii) may not elect to settle any exchange requested by a holder of common units of the Operating Partnership in cash, and may only settle any such exchange through the issuance of shares of common stock or other units of the Operating Partnership ranking junior to any such units as to which a distribution shortfall exists. Our board of directors has prospectively approved that, to the extent any partners exercise any or all of their exchange rights while the existence of the SCU Distribution Shortfall requires an exchange to be settled through the issuance of shares of common stock or other units of the Operating Partnership, the consideration paid shall be in the form of shares of common stock. We will review taxable income on a regular basis and take measures, if necessary, to ensure that we meet the minimum distribution requirements to maintain our status as a REIT.

See Listing Criteria in Note 1 to the condensed consolidated financial statements for additional information regarding a notice we received from the NYSE regarding our non-compliance with the NYSE Listing Standards and our plans to address this non-compliance.

As a publicly traded company, and as a subsidiary of a publicly traded company, we previously have accessed capital through both the public equity and debt markets. We have a shelf registration statement on Form S-3 on file with the SEC that previously authorized us to publicly issue unspecified amounts of senior and/or subordinated debt securities, shares of preferred stock (or depositary shares representing fractional interests therein), shares of common stock, warrants or rights to purchase any of the foregoing securities, and units consisting of two or more of these classes or series of securities and limited guarantees of debt securities issued by the Operating Partnership. This shelf registration statement also authorized the Operating Partnership to publicly issue unsubordinated debt securities. This shelf registration statement was due to expire in July 2021. However, as a result of both (i) the fact that the Company no longer qualifies as a well-known seasoned issuer under SEC rules and (ii) our loss of eligibility to use Form S-3 to register offers and sales of securities as described above, we are unable to use this shelf registration statement.

Additionally, while we had previously suspended quarterly dividend payments on our common stock during 2019, a very small amount of monthly “cash option” investments in shares continued into May 2020, pursuant to the terms of the Company’s dividend reinvestment plan (“DRIP”). Due in part to impacts on the Company’s operations and staffing resulting from ongoing efforts to address the COVID-19 pandemic, we inadvertently failed to suspend the operation of these “cash option” investments during the months of March, April and May 2020, after we lost the ability to use the Form S-3 registration statement for the DRIP, effective with the filing of our Annual Report on Form 10-K in March, due to the dividend arrearage with respect to our preferred stock. We have now fully suspended the operation of our DRIP, including the cash option feature but, as a result of this oversight, we issued a total of 6,134 shares of common stock that were not registered under the Securities Act of 1933, as amended (the “Securities Act”) for aggregate consideration of $1,346.94 prior to such suspension. The purchasers of these shares, issued pursuant to our DRIP when we were not eligible to issue shares on Form S-3, could bring claims against us for rescission and other damages under federal or state securities laws.

Market Capitalization

Our total-market capitalization as of September 30, 2020 was as follows (in thousands, except stock prices):

	Shares Outstanding		Stock Price ⁽¹⁾
Common stock and operating partnership units		201,690	$	0.16
7.375% Series D Cumulative Redeemable Preferred Stock		1,815		250.00
6.625% Series E Cumulative Redeemable Preferred Stock		690		250.00

(1)	Stock price for common stock and Operating Partnership units equals the closing price of CBL's common stock on September 30, 2020. The stock prices for the preferred stock represent the liquidation preference of each respective series of preferred stock.

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Capital Expenditures

Deferred maintenance expenditures are generally included in the determination of CAM expense that is billed to tenants in accordance with their lease agreements. These expenditures are generally recovered over a 5 to 15-year period. Renovation expenditures are primarily for remodeling and upgrades of malls, of which a portion is recovered from tenants over a 5 to 15-year period. We recover these costs through fixed amounts with annual increases or pro rata cost reimbursements based on the tenant’s occupied space.

The following table, which excludes expenditures for developments, redevelopments and expansions, summarizes these capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the three and nine month periods ended September 30, 2020 compared to the same periods in 2019 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Tenant allowances⁽¹⁾	$	1,426	$	10,781	$	10,181	$	21,831

Deferred maintenance:
Parking area and parking area lighting		—		315		270		529
Roof repairs and replacements		230		2,083		2,234		4,757
Other capital expenditures		1,113		5,610		4,954		15,094
Total deferred maintenance		1,343		8,008		7,458		20,380

Capitalized overhead		245		423		980		1,795

Capitalized interest		438		787		1,530		1,969

Total capital expenditures	$	3,452	$	19,999	$	20,149	$	45,975

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

Annual capital expenditures budgets are prepared for each of our properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. As noted above, in response to the impact from COVID-19 we have deferred or suspended capital expenditures, including redevelopment expenditures, in the range of $60.0 million to $80.0 million. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, and readily available cash on hand will provide the necessary funding for these expenditures.

Developments, Expansions and Redevelopments

The following tables summarize our development, expansion and redevelopment projects as of September 30, 2020.

Properties Opened During the Nine Months Ended September 30, 2020

(Dollars in thousands)

					CBL's Share of
Property	Location	CBL Ownership Interest	Total Project Square Feet		Total Cost ⁽¹⁾		Cost to Date ⁽²⁾		2020 Cost		Opening Date	Initial Unleveraged Yield
Outparcel Development:
Fremaux Town Center - Old Navy	Slidell, LA	90%		12,467	$	1,918	$	1,553	$	100	May 2020		9.2	%
Hamilton Place - Self Storage ^{(3) (4)}	Chattanooga, TN	60%		68,875		5,824		4,419		3,300	July 2020		8.7	%
Parkdale Mall - Self Storage ^{(3) (4)}	Beaumont, TX	50%		69,341		4,435		3,543		1,039	April 2020		10.2	%
Total Properties Opened				150,683	$	12,177	$	9,515	$	4,439

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

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

(3)	Yield is based on expected yield upon stabilization.

(4)	Total cost includes an allocated value for the Company’s land contribution and amounts funded by construction loans.

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Redevelopments Completed During the Nine Months Ended September 30, 2020

(Dollars in thousands)

					CBL's Share of
Property	Location	CBL Ownership Interest	Total Project Square Feet		Total Cost ⁽¹⁾		Cost to Date ⁽²⁾		2020 Cost		Opening Date	Initial Unleveraged Yield
Mall Redevelopments:
Cherryvale Sears Redevelopment - Tilt	Rockford, IL	100%		114,118	$	3,508	$	3,281	$	378	June 2020		8.3	%
Coastal Grand Dick's Redevelopment - DSG/Golf Galaxy ⁽³⁾	Myrtle Beach, SC	50%		132,727	$	7,050	$	4,486	$	3,360	Sept 2020		11.6	%
Dakota Square Herbergers Redevelopment - Ross, T-Mobile, Retail Shops	Minot, ND	100%		30,096		6,410		4,537		188	Jan 2020		7.2	%
Hamilton Place Sears Redevelopment - Dicks Sporting Goods, Dave & Busters, Hotel, Cheesecake Factory ⁽⁴⁾	Chattanooga, TN	100%		195,166		38,715		29,923		4,067	March 2020		7.8	%
Mall del Norte Forever 21 Redevelopment - Main Event	Laredo, TX	100%		81,242		10,514		6,819		1,160	Sept 2019/Feb 2020		9.3	%
The Promenade @ D'Iberville Redevelopment - Five Below, Carter's	D'Iberville, MS	100%		14,007		2,832		2,457		446	Feb 2020/Apr 2020		11.4	%
Total Redevelopments Completed				567,356	$	69,029	$	51,503	$	9,599

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

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

(3)	Total cost includes amounts funded by a construction loan.

(4)	The return reflected represents a pro forma incremental return as Total Cost excludes the cost related to the acquisition of the Sears building in 2017.

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Properties Under Development at September 30, 2020

(Dollars in thousands)

					CBL's Share of
Property	Location	CBL Ownership Interest	Total Project Square Feet		Total Cost ⁽¹⁾		Cost to Date ⁽²⁾		2020 Cost		Expected Opening Date ⁽³⁾	Initial Unleveraged Yield
Outparcel Developments:
Hamilton Place Development - Aloft Hotel⁽⁴⁾⁽⁵⁾	Chattanooga, TN	50%		89,674	$	12,000	$	6,767	$	6,125	Q1 '21		9.2	%
Mayfaire Town Center - First Watch	Wilmington, NC	100%		6,300		2,267		1,491		1,125	Q4 '20		10.1	%
Pearland Town Center - HCA Offices	Pearland, TX	100%		48,416		14,186		4,700		3,843	Q1 '21		11.8	%

				144,390	$	28,453	$	12,958	$	11,093
Mall Redevelopments:
Westmoreland Mall JCP pad Redevelopment - Chipotle	Greensburg, PA	100%		2,300	$	1,017	$	1,125	$	881	Q4 '20		9.4	%

				2,300	$	1,017	$	1,125	$	881
Total Properties Under Development				146,690	$	29,470	$	14,083	$	11,974

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

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

(3)	As a result of government mandated construction halts due to the COVID-19 pandemic, opening dates may change from what is currently reflected.

(4)	Yield is based on expected yield once project stabilizes.

(5)	Total cost includes an allocated value for the Company’s land contribution and amounts funded by a construction loan.

Off-Balance Sheet Arrangements

Unconsolidated Affiliates

We have ownership interests in 29 unconsolidated affiliates as of September 30, 2020 that are described in Note 7 to the condensed consolidated financial statements. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the condensed consolidated balance sheets as investments in unconsolidated affiliates.

The following are circumstances when we may consider entering into a joint venture with a third party:

•

Third parties may approach us with opportunities in which they have obtained land and performed some pre-development activities, but they may not have sufficient access to the capital resources or the development and leasing expertise to bring the project to fruition. We enter into such arrangements when we determine such a project is viable and we can achieve a satisfactory return on our investment. We typically earn development fees from the joint venture and provide management and leasing services to the property for a fee once the property is placed in operation.

•

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

Guarantees

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

See Note 12 to the condensed consolidated statements for information related to our guarantees of unconsolidated affiliates' debt as of September 30, 2020 and December 31, 2019.

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CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgment about the effect of matters that are inherently uncertain and that may change in subsequent periods. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our Annual Report on Form 10-K, as amended, for the year ended December 31, 2019 contains a discussion of our critical accounting policies and estimates in the Management's Discussion and Analysis of Financial Condition and Results of Operations section. Uncertainty in the current economic environment due to the effects of the COVID-19 pandemic has and may continue to significantly impact management’s judgments regarding estimates and assumptions. In addition to the critical accounting policies and estimates discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K, as amended, we are adding the following due to significant changes in judgements related to the COVID-19 pandemic.

Revenue Recognition and Accounts Receivable

We review current economic considerations each reporting period, including the effects of tenant bankruptcies. Additionally, with the uncertainties regarding COVID-19, our assessment also took into consideration the type of tenant and current discussions with the tenants regarding matters such as billing disputes, lease negotiations and executed deferrals or abatements, as well as recent rent payment and credit history. Evaluating and estimating uncollectible lease payments and related receivables requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. For the three and nine months ended September 30, 2020, we reduced rental revenue by $13.7 million and $54.5 million, respectively, due to lease-related reserves and write-offs, which includes $2.6 million and $5.1 million, respectively, for straight-line rent receivables. Actual results could differ from these estimates and such differences could be material to our consolidated financial statements.

Lease Modifications

In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance related to lease concessions provided as a result of COVID-19. Under existing lease guidance, we would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election.

We have elected to apply the relief provided under the Lease Modification Q&A and will avail ourselves of the election to avoid performing a lease by lease analysis for the lease concessions that were (1) granted as relief due to the COVID-19 pandemic and (2) result in the cash flows remaining substantially the same or less than the original contract. The Lease Modification Q&A had a material impact on our consolidated financial statements as of and for the three and nine months ended September 30, 2020. However, its future impact to us is dependent upon the extent of lease concessions

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granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by us at the time of entering such concessions.

The Lease Modification Q&A allows us to determine accounting policy elections at a disaggregated level, and the elections should be applied consistently by either the type of concession, underlying asset class or on another reasonable basis. As a result, we have made the following policy elections based on the type of concession agreed to with the respective tenant.

Rent Deferrals

The Company will account for rental deferrals using the receivables model as described within the Lease Modification Q&A. Under the receivables model, the Company will continue to recognize lease revenue in a manner that is unchanged from the original lease agreement and continue to recognize lease receivables and rental revenue during deferral period.

Rent Abatements

The Company will account for rental abatements using the negative variable income model as described within the Lease Modification Q&A. Under the negative variable income model, the Company will recognize negative variable rent for the current period reduction of rental revenue associated with any lease concessions we provide.

At September 30, 2020, our receivables include $22.1 million related to receivables that have been deferred and are to be repaid over periods generally starting in late 2020 and extending for some portion of 2021. We granted abatements of $13.1 million and 14.9 million, respectively, for the three and nine months ended September 30, 2020. Additionally, we granted rent abatements of approximately $13.1 million and $14.9 million for the three and nine months ended September 30, 2020, respectively. We continue to assess rent relief requests from our tenants but are unable to predict the resolution or impact of these discussions. For agreements that are in currently under negotiation, we do not expect the impact to be material.

Recent Accounting Pronouncements

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

Impact of Inflation and Deflation

Deflation can result in a decline in general price levels, often caused by a decrease in the supply of money or credit. The predominant effects of deflation are high unemployment, credit contraction and weakened consumer demand. Restricted lending practices could impact our ability to obtain financings or refinancings for our properties and our tenants’ ability to obtain credit. Decreases in consumer demand can have a direct impact on our tenants and the rents we receive.

During inflationary periods, substantially all of our tenant leases contain provisions designed to mitigate the impact of inflation. These provisions include clauses enabling us to receive percentage rent based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. In addition, many of the leases are for terms of less than 10 years, which may provide us the opportunity to replace existing leases with new leases at higher base and/or percentage rent if rents of the existing leases are below the then existing market rate. Most of the leases require the tenants to pay a fixed amount, subject to annual increases, for their share of operating expenses, including CAM, real estate taxes, insurance and certain capital expenditures, which reduces our exposure to increases in costs and operating expenses resulting from inflation.

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Non-GAAP Measure

Funds from Operations

FFO is a widely used non-GAAP measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. NAREIT defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships, joint ventures and noncontrolling interests are calculated on the same basis. We define FFO as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

We believe that FFO provides an additional indicator of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of real estate assets have historically risen or fallen with market conditions, we believe that FFO, which excludes historical cost depreciation and amortization, enhances investors’ understanding of our operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of our properties and interest rates, but also by our capital structure.

We present both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as we believe that both are useful performance measures. We believe FFO allocable to Operating Partnership common unitholders is a useful performance measure since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in our Operating Partnership. We believe FFO allocable to common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to common shareholders.

In our reconciliation of net income (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 the Operating Partnership common unitholders to arrive at FFO allocable to common shareholders. The percentage is computed by taking the weighted-average number of common shares outstanding for the period and dividing it by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units held by noncontrolling interests during the period.

FFO does not represent cash flows from operations as defined by GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating our operating performance or to cash flow as a measure of liquidity.

The Company believes that it is important to identify the impact of certain significant items on its FFO measures for a reader to have a complete understanding of the Company’s results of operations. Therefore, the Company has also presented adjusted FFO measures excluding these significant items from the applicable periods. Please refer to the reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders below for a description of these adjustments.

FFO of the Operating Partnership declined to $11.4 million for the three months ended September 30, 2020 from $90.4 million for the prior-year period and declined to $57.2 million for the nine months ended September 30, 2020 from $203.0 million for the prior-year period. Excluding the adjustments noted below, FFO of the Operating Partnership, as adjusted, declined to $9.0 million for the three months ended September 30, 2020 from $67.8 million for the same period in 2019, and declined to $65.5 million for the nine months ended September 30, 2020 from $196.8 million for the same period in 2019. The decreases in FFO, as adjusted, for the three- and nine- month periods were primarily driven by lower property-level NOI, which includes the estimate for uncollectable rental revenues and rent abatements due to the mandated property closures a result of the COVID-19 pandemic. The reduction in rental revenues was partially offset by lower operating expenses from the program we put in place to eliminate all non-essential expenditures and the company-wide furlough and salary reduction program.

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The reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss attributable to common shareholders	$	(54,101	)	$	(90,116	)	$	(269,449	)	$	(175,715	)
Noncontrolling interest in income (loss) of Operating Partnership		(609	)		(13,904	)		(19,100	)		(27,116	)
Depreciation and amortization expense of:
Consolidated Properties		53,477			64,168			162,042			198,438
Unconsolidated affiliates		14,437			14,471			41,967			36,599
Non-real estate assets		(702	)		(920	)		(2,431	)		(2,719	)
Noncontrolling interests' share of depreciation and amortization		(1,118	)		(2,031	)		(2,829	)		(6,836	)
Loss on impairment		46			135,688			146,964			202,121
(Gain) loss on depreciable property		—			(16,914	)		25			(21,755	)
FFO allocable to Operating Partnership common unitholders		11,430			90,442			57,189			203,017
Debt restructuring expenses ⁽¹⁾		12,913			—			20,770			—
Litigation settlement, net of taxes ⁽²⁾		(2,480	)		(22,688	)		(2,480	)		64,979
Non-cash default interest expense ⁽³⁾		2,519			—			5,412			542
Gain on extinguishment of debt ⁽⁴⁾		(15,407	)		—			(15,407	)		(71,722	)
FFO allocable to Operating Partnership common unitholders, as adjusted	$	8,975		$	67,754		$	65,484		$	196,816

FFO per diluted share	$	0.06		$	0.45		$	0.28		$	1.01

FFO, as adjusted, per diluted share	$	0.04		$	0.34		$	0.32		$	0.98

(1)	Represents professional fees related to the Company's negotiations with the administrative agent and lenders under the secured credit facility and certain holders of the Company's senior unsecured notes regarding a restructure of such indebtedness.

(2)	Represents the accrued expense related to settlement of a class action lawsuit.

(3)

The three and nine months ended September 30, 2020 includes default interest expense related to Greenbrier Mall, Hickory Point Mall, Eastgate Mall, Asheville Mall, Burnsville Center and Park Plaza Mall. The nine months ended September 30, 2019 includes default interest expense related to Acadiana Mall and Cary Towne Center.

(4)

The three and nine months ended September 30, 2020 includes a gain on extinguishment on debt related to the non-recourse loan secured by Hickory Point Mall, which was conveyed to the lender. The nine months ended September 30, 2019 includes a gain on extinguishment of debt related to the non-recourse loan secured by Acadiana Mall, which was conveyed to the lender in the first quarter of 2019, and a gain on extinguishment of debt related to the non-recourse loan secured by Cary Towne Center, which was sold in the first quarter of 2019.

The reconciliation of diluted EPS to FFO per diluted share is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Diluted EPS attributable to common shareholders	$	(0.28	)	$	(0.52	)	$	(1.43	)	$	(1.01	)
Eliminate amounts per share excluded from FFO:
Depreciation and amortization expense, including amounts from consolidated Properties, unconsolidated affiliates, non-real estate assets and excluding amounts allocated to noncontrolling interests		0.34			0.38			0.99			1.13
Loss on impairment		—			0.68			0.72			1.00
Gain on depreciable property		—			(0.09	)		—			(0.11	)
FFO per diluted share	$	0.06		$	0.45		$	0.28		$	1.01

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The reconciliations of FFO allocable to Operating Partnership common unitholders to FFO allocable to common shareholders, including and excluding the adjustments noted above, are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
FFO of the Operating Partnership	$	11,430		$	90,442		$	57,189		$	203,017
Percentage allocable to common shareholders ⁽¹⁾		95.93	%		86.64	%		93.38	%		86.63	%
FFO allocable to common shareholders	$	10,965		$	78,359		$	53,403		$	175,874

FFO allocable to Operating Partnership common unitholders, as adjusted	$	8,975		$	67,754		$	65,484		$	196,816
Percentage allocable to common shareholders ⁽¹⁾		95.93	%		86.64	%		93.38	%		86.63	%
FFO allocable to common shareholders, as adjusted	$	8,610		$	58,702		$	61,149		$	170,502

(1)	Represents the weighted-average number of common shares outstanding for the period divided by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units outstanding during the period.

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risk exposures, including interest rate risk. The following discussion regarding our risk management activities includes forward-looking statements that involve risk and uncertainties. Estimates of future performance and economic conditions are reflected assuming certain changes in interest rates. Caution should be used in evaluating our overall market risk from the information presented below, as actual results may differ.

Interest Rate Risk

Based on our proportionate share of consolidated and unconsolidated variable-rate debt at September 30, 2020, a 0.5% increase or decrease in interest rates on variable-rate debt would decrease or increase annual cash flows by approximately $6.5 million and increase or decrease annual interest expense, after the effect of capitalized interest, by approximately $6.5 million.

Based on our proportionate share of total consolidated and unconsolidated debt at September 30, 2020, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $27.7 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $27.8 million.

ITEM 4: Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, an evaluation was performed under the supervision of our Chief Executive Officer and Chief Financial Officer and with the participation of our management, of the effectiveness of the design and operation of the Company's and the Operating Partnership's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. The Company's and the Operating Partnership's disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and to ensure that information we are required to disclose is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s and the Operating Partnership’s disclosure controls and procedures were not effective as a result of the material weakness described below.

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s and the Operating Partnership’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting at both June 30, 2020 and September 30, 2020, management of the Company and the Operating Partnership determined that there was a control deficiency that constituted a material weakness, as described below.

As a result of turnover, the Company and the Operating Partnership did not maintain a sufficient complement of personnel commensurate with their accounting and financial reporting requirements in accordance with U.S. GAAP and SEC regulations.

The control deficiency described above created a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis and therefore we concluded that the

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deficiency represents a material weakness in the Company’s and the Operating Partnership’s internal control over financial reporting and that the Company and the Operating Partnership did not maintain effective internal control over financial reporting as of June 30, 2020 and September 30, 2020 based on criteria established in Internal Control-Integrated Framework issued by COSO.

Notwithstanding the identified material weakness, management believes that the Condensed Consolidated Financial Statements and related financial information included in this Form 10-Q fairly present, in all material respects, our balance sheets, statements of operations, comprehensive loss and cash flows as of and for the periods presented.

Remediation Plan

The Company and the Operating Partnership plan to remediate this material weakness by hiring additional personnel to enable them to meet their financial reporting requirements. The Company and the Operating Partnership may also utilize outside advisors to assist on a short-term basis.

Changes in Internal Control over Financial Reporting

We have continued to address the effects of the COVID-19 pandemic on our control structure, including modifications to business modeling, forecasting and estimations, lease modifications, and accounts receivable collectability, as well as for the consequences of reductions in headcount and remote working arrangements. We are continually monitoring and assessing the COVID-19 pandemic’s effect on our internal control processes in order to minimize the impact to their design and operating effectiveness. There were no other changes in the Company’s or the Operating Partnership’s internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings

Litigation

As previously disclosed, in April 2019, the Company entered into a settlement agreement and release with respect to the class action lawsuit filed on March 16, 2016 in the United States District Court for the Middle District of Florida by Wave Lengths Hair Salons of Florida, Inc. d/b/a Salon Adrian. Pursuant to the settlement agreement the Company set aside a common fund with a monetary and non-monetary value of $90.0 million to be disbursed to class members in accordance with an agreed-upon formula that is based upon aggregate damages of $60.0 million. The Court granted final approval to the proposed settlement on August 22, 2019. The class members were comprised of past and current tenants at certain of the Company's shopping centers that it owns or formerly owned during the class period, which extended from January 1, 2011 through the date of preliminary court approval. Class members who are past tenants and made a valid claim pursuant to the Court's order received payment of their claims in cash. Class members who are current tenants began receiving monthly credits against rents and future charges during the three months ended June 30, 2020 and, under the terms of the settlement agreement, will continue for the following five years. Any amounts under the settlement allocated to tenants with outstanding amounts payable to the Company, including tenants which have declared bankruptcy or declare bankruptcy over the relevant period, will first be deducted from the amounts owed to the Company. All attorney’s fees and associated costs to class counsel (up to a maximum of $27.0 million), any incentive award to the class representative (up to a maximum of $50 thousand), and class administration costs (which are expected to not exceed $100 thousand), have or will be funded by the common fund, which has been approved by the Court. Under the terms of the settlement agreement, the Company did not pay any dividends to holders of its common shares payable in the third and fourth quarters of 2019. The settlement agreement does not restrict the Company's ability to declare dividends payable in 2020 or in subsequent years. The Company recorded an accrued liability and corresponding litigation settlement expense of $88.2 million in the three months ended March 31, 2019 related to the settlement agreement. During the year ended December 31, 2019, the Company reduced the accrued liability by an aggregate $26.4 million, a majority of which was related to past tenants that did not submit a claim pursuant to the terms of the settlement agreement with the remainder relating to tenants that either opted out of the lawsuit or waived their rights to their respective settlement amounts. Additionally, the Company reduced the accrued liability during the three months ended December 31, 2019 by $23.1 million related to attorney and administrative fees that were paid pursuant to the settlement agreement. During the nine months ended September 30, 2020, the Company reduced the accrued liability by $17.9 million. Of this amount, $6.5 million was related to monthly credits against rents and other charges for current tenants, $4.9 million was paid to past tenants, $4.0 million was paid to plaintiff’s counsel and $2.5 million represents amounts the Company was released from pursuant to the terms of the settlement agreement. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 3, 2020. The Company also received document requests in the third quarter of 2019, in the form of subpoenas, from the Securities and Exchange Commission and the Department of Justice regarding the Wave Lengths Hair Salons of Florida, Inc. litigation and other related matters. The Company is continuing to cooperate in these matters.

Securities Litigation

Certain of the Company’s current and former directors and officers have been named as defendants in nine shareholder derivative lawsuits (collectively, the “Derivative Litigation”). On June 4, 2019, a shareholder filed a putative derivative complaint captioned Robert Garfield v. Stephen D. Lebovitz et al., 1:19-cv-01038-LPS, in the United States District Court for the District of Delaware (the “Garfield Derivative Action”), purportedly on behalf of the Company against certain of its officers and directors. On June 24, 2019, September 5, 2019 and September 25, 2019, respectively, other shareholders filed three additional putative derivative complaints, each in the United States District Court for the District of Delaware, captioned as follows: Robert Cohen v. Stephen D. Lebovitz et al., 1:19-cv-01185-LPS (the “Cohen Derivative Action”); Travis Lore v. Stephen D. Lebovitz et al., 1:19-cv-01665-LPS (the “Lore Derivative Action”), and City of Gainesville Cons. Police Officers’ and Firefighters Retirement Plan v. Stephen D. Lebovitz et al., 1:19-cv-01800 (the “Gainesville Derivative Action”), each asserting substantially similar claims purportedly on behalf of the Company against similar

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defendants. The Court consolidated the Garfield Derivative Action and the Cohen Derivative Action on July 17, 2019, under the caption In re CBL & Associates Properties, Inc. Derivative Litigation, 1:19-cv-01038-LPS (the "Consolidated Derivative Action"). On July 25, 2019, the Court stayed proceedings in the Consolidated Derivative Action pending resolution of an eventual motion to dismiss in the Securities Class Action Litigation. On October 14, 2019, the parties to the Gainesville Derivative Action and the Lore Derivative Action filed a joint stipulation and proposed order confirming that each of those cases is subject to the consolidation order previously entered by the Court in the Consolidated Derivative Action and that further proceedings in those cases are stayed pending resolution of an eventual motion to dismiss in the Securities Class Action Litigation. On July 22, 2019, a shareholder filed a putative derivative complaint captioned Shebitz v. Lebovitz et al., 1:19-cv-00213, in the United States District Court for the Eastern District of Tennessee (the “Shebitz Derivative Action”); on January 10, 2020, a shareholder filed a putative derivative complaint captioned Chatman v. Lebovitz, et al., 2020-0011-JTL, in the Delaware Chancery Court (the “Chatman Derivative Action”); on February 12, 2020, a shareholder filed a putative derivative complaint captioned Kurup v. Lebovitz, et al., 2020-0070-JTL, in the Delaware Chancery Court (the “Kurup Derivative Action”); on February 26, 2020, a shareholder filed a putative derivative complaint captioned Kemmer v. Lebovitz, et al., 1:20-cv-00052, in the United States District Court for the Eastern District of Tennessee (the “Kemmer Derivative Action”); and on April 14, 2020, a shareholder filed a putative derivative complaint captioned Hebig v. Lebovitz, et al., 1:19-cv-00149-JRG-CHS, in the United States District Court for the Eastern District of Tennessee (the “Hebig Derivative Action”), each asserting substantially similar claims purportedly on behalf of the Company against similar defendants. The actions pending in Delaware Chancery Court have been consolidated into one case, and likewise, the actions pending in Delaware federal court have been consolidated into one case. The Tennessee actions have not been consolidated. On October 7, 2019, the Court stayed the Shebitz Derivative Action, pending resolution of an eventual motion to dismiss in the related Securities Class Action Litigation; the Company expects the other Derivative Actions to be stayed as well.

The Company's insurance carriers have been placed on notice of these matters.

Chapter 11 Bankruptcy Proceedings

See information presented under the heading “Voluntary Reorganization under Chapter 11” in Note 1 – Organization and Basis of Presentation for additional information concerning the Chapter 11 Cases that were commenced by the Company and certain of its subsidiaries on November 1, 2020.

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risks that could materially affect our business, financial condition or results of operations that are discussed under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K, as amended, for the year ended December 31, 2019. The risk factor set forth below updates, and should be read together with, such risk factors. Moreover, risk factors set forth in the Annual Report on Form 10-K, as amended, for the year ended December 31, 2019 could be heightened as a result of the impact of the COVID-19 pandemic.

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The RSA is subject to significant conditions and milestones that may be beyond our control and may be difficult for us to satisfy. If the RSA is terminated, our ability to confirm and consummate the Plan could be materially and adversely affected.

The RSA sets forth certain conditions we must satisfy, including the timely satisfaction of milestones in the Chapter 11 Cases, such as confirmation of the Plan and effectiveness of the Plan. Our ability to timely complete such milestones is subject to risks and uncertainties that may be beyond our control. The RSA gives the Consenting Noteholders the ability to terminate the RSA under certain circumstances, including the failure of certain conditions to be satisfied. Should a termination event occur, all obligations of the parties to the RSA will terminate. A termination of the RSA may result in the loss of support for the Plan, which could adversely affect our ability to confirm and consummate the Plan. If the Plan is not consummated, there can be no assurance that any new Plan would be as favorable to holders of claims as the current Plan and our chapter 11 proceedings could become protracted, which could significantly and detrimentally impact our relationships with vendors, suppliers, employees, and tenants.

We will be subject to the risks and uncertainties associated with chapter 11 proceedings.

As a consequence of our filing for relief under chapter 11 of the Bankruptcy Code, our operations and our ability to develop and execute our business plan, and our continuation as a going concern, will be subject to the risks and uncertainties associated with bankruptcy. These risks include the following:

•

our ability to prosecute, confirm and consummate the Plan or another plan of reorganization with respect to the chapter 11 proceedings;

•

the high costs of bankruptcy proceedings and related fees;

•

if required, our ability to obtain sufficient financing to allow us to emerge from bankruptcy and execute our business plan post-emergence;

•

our ability to maintain our relationships with our suppliers, service providers, tenants, employees and other third parties;

•

our ability to maintain contracts that are critical to our operations;

•

our ability to execute our business plan in the current depressed commodity price environment;

•

the ability to attract, motivate and retain key employees;

•

the ability of third parties to seek and obtain court approval to terminate contracts and other agreements with us;

•

the ability of third parties to seek and obtain court approval to convert the chapter 11 proceedings to chapter 7 proceedings; and

•

the actions and decisions of our creditors and other third parties who have interests in our chapter 11 proceedings that may be inconsistent with our plans.

These risks and uncertainties could affect our business and operations in various ways. For example, negative events associated with our chapter 11 proceedings could adversely affect our relationships with our suppliers, service providers, tenants, employees, and other third parties, which in turn could adversely affect our operations and financial condition. Also, we need the prior approval of the Bankruptcy Court for transactions outside the ordinary course of business, which may limit our ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties associated with our chapter 11 proceedings, we cannot accurately predict or quantify the ultimate impact of events that occur during our chapter 11 proceedings that may be inconsistent with our plans.

We may not be able to obtain confirmation of the Plan as outlined in the RSA.

There can be no assurance that the Plan as outlined in the RSA (or any other plan of reorganization) will be approved by the Bankruptcy Court, so we urge caution with respect to existing and future investments in our securities.

The success of any reorganization will depend on approval by the Bankruptcy Court and the willingness of existing debt and security holders to agree to the exchange or modification of their interests as outlined in the Plan, and there can be no guarantee of success with respect to the Plan or any other plan of reorganization. We might receive official objections to confirmation of the Plan from the various stakeholders in the chapter 11 proceedings. We cannot predict the impact that any objection might have on the Plan or on a Bankruptcy Court's decision to confirm the Plan. Any objection may cause us to devote significant resources in response which could materially and adversely affect our business, financial condition and results of operations.

If the Plan is not confirmed by the Bankruptcy Court, it is unclear whether we would be able to reorganize our business and what, if any, distributions holders of claims against us, including holders of our secured and unsecured debt and equity, would ultimately receive with respect to their claims. There can be no assurance as to whether we will

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successfully reorganize and emerge from chapter 11 or, if we do successfully reorganize, as to when we would emerge from chapter 11. If no plan of reorganization can be confirmed, or if the Bankruptcy Court otherwise finds that it would be in the best interest of holders of claims and interests, the chapter 11 cases may be converted to cases under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code.

Upon emergence from bankruptcy, our historical financial information may not be indicative of our future financial performance.

Our capital structure will be significantly altered under the Plan. Under fresh-start reporting rules that may apply to us upon the effective date of the Plan (or any alternative plan of reorganization), our assets and liabilities would be adjusted to fair values and our accumulated deficit would be restated to zero. Accordingly, if fresh-start reporting rules apply, our financial condition and results of operations following our emergence from chapter 11 would not be comparable to the financial condition and results of operations reflected in our historical financial statements. Further, a plan of reorganization could materially change the amounts and classifications reported in our consolidated historical financial statements, which do not give effect to any adjustments to the carrying value of assets or amounts of liabilities that might be necessary as a consequence of confirmation of a plan of reorganization.

The pursuit of the RSA has consumed, and the chapter 11 proceedings will continue to consume, a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition.

Although the Plan is designed to minimize the length of our chapter 11 proceedings, it is impossible to predict with certainty the amount of time that we may spend in bankruptcy or to assure parties in interest that the Plan will be confirmed. The chapter 11 proceedings will involve additional expense and our management will be required to spend a significant amount of time and effort focusing on the proceedings. This diversion of attention may materially adversely affect the conduct of our business, and, as a result, on our financial condition and results of operations, particularly if the chapter 11 proceedings are protracted.

During the pendency of the chapter 11 proceedings, our employees will face considerable distraction and uncertainty and we may experience increased levels of employee attrition. A loss of key personnel or material erosion of employee morale could have a material adverse effect on our ability to effectively, efficiently and safely conduct our business, and could impair our ability to execute our strategy and implement operational initiatives, thereby having a material adverse effect on our financial condition and results of operations.

We depend on the continued presence of key personnel for critical management decisions.

Retaining and understanding historical knowledge from our key personnel is critical to allowing the management team to more effectively progress our business plan. As part of the restructuring we anticipate our existing senior management team to remain in place, however there is a risk of loss of key personnel. Anytime personnel are replaced, there is a risk that there may be a loss of service, albeit temporary, that could result in an adverse effect on the business.

Upon our emergence from bankruptcy, the composition of our Board of Directors may change significantly.

Under the Plan, the composition of our Board of Directors may change significantly. Any new directors are likely to have different backgrounds, experiences and perspectives from those individuals who previously served on the Board and, thus, may have different views on the issues that will determine our future. As a result, our future strategy and plans may differ materially from those of the past.

Transfers of our equity, or issuances of equity before or in connection with our chapter 11 proceedings, may impair our ability to utilize the existing tax basis in our assets, our federal income tax net operating loss carryforwards and other tax attributes during the current year and in future years.

Under federal income tax law, a corporation is generally permitted to offset net taxable income in a given year with net operating losses carried forward from prior years, and its existing adjusted tax basis in its assets may be used to offset future gains or to generate annual cost recovery deductions. We had significant “net unrealized built-in loss” (NUBIL) (i.e., adjusted tax basis in excess of the fair market value of our assets) and net operating loss carryforwards that are not subject to any section 382 limitations.

Our ability to utilize our NUBIL, net operating loss carryforwards and other tax attributes to offset future taxable income is subject to certain requirements and restrictions. In order to qualify for taxation as a “real estate investment trust,” we must meet various requirements including a requirement to distribute 90% of our taxable income; and, to avoid paying

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corporate income tax, we must distribute 100% of our taxable income. If we do experience an "ownership change" during or in connection with the restructuring process, as defined in section 382 of the Internal Revenue Code, then our ability to use our NUBIL, net operating loss carryforwards and other tax attributes to offset future taxable income may be substantially limited, which could have a negative impact on our financial position and results of operations. Generally, there is an "ownership change" if one or more stockholders owning 5% or more of a corporation's common stock have aggregate increases in their ownership of such stock of more than 50 percentage points over a prescribed testing period. Under section 382 and section 383 of the Internal Revenue Code, absent an applicable exception, if a corporation undergoes an "ownership change", the amount of its NUBIL, net operating loss carryforwards and other tax attributes that may be utilized to offset future taxable income generally is subject to an annual limitation (though “recognized built-in losses” arising from our NUBIL will only be subject to limitation if they are recognized within 5 years of the “ownership change”).

Whether or not the NUBIL, net operating loss carryforwards and other tax attributes are subject to limitation under section 382, our NUBIL, net operating loss carryforwards and other tax attributes are expected to be further reduced by the amount of discharge of indebtedness arising in our Chapter 11 Cases under section 108 of the Internal Revenue Code.

We have received an order from the Bankruptcy Court approving potential restrictions on certain transfers of our stock to limit the risk of an "ownership change" prior to our emergence from restructuring in our chapter 11 proceedings. We anticipate that the implementation of our plan of reorganization will result in an "ownership change." If so, our NUBIL, net operating loss carryforwards and other tax attributes will become impaired, with the extent of such impairment dependent on the impact of special tax law rules under section 382(l)(6) of the Internal Revenue Code, applicable to an "ownership change" that occurs as part of a chapter 11 plan.

The current pandemic of the novel coronavirus, or COVID-19 has, and could continue to, materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as could any future outbreak of another highly infectious or contagious disease.

Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.

The COVID-19 pandemic has had, and may continue to have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified in additional countries, many - including the United States - have reacted by instituting quarantines, mandating business and school closures and restricting travel.

Certain states and cities, including where we own properties and where our corporate headquarters is located, have also reacted by instituting quarantines, restrictions on travel, “shelter-in-place” rules, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. The Company cannot predict if additional states and cities will implement similar restrictions or when any such new restrictions might be lifted. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including the retail industry in which the Company and our tenants operate.

A majority of our tenants implemented temporary closures and/or shortened the operating hours of their stores for a period of time and requested rent deferral or rent abatement during this pandemic or have failed to pay rent. In addition, state, local or industry-initiated efforts, such as tenant rent freezes, or governmental or court-imposed delays in the processing of landlord initiated commercial eviction and collection actions in various jurisdictions in light of the COVID-19 pandemic, may also affect our ability to collect rent or enforce remedies for the failure to pay rent. We believe our tenants do not have a contractual right to cease paying rent due to government-mandated closures and, subject to negotiated resolutions of rent deferral requests that we have entered into, and may continue to enter into with certain tenants, we intend to enforce our rights under our lease agreements. However, COVID-19 and the related governmental orders present fairly novel situations for which the ultimate legal outcome cannot be assured, and it is possible future governmental action could impact our rights under the lease agreements. The extent of tenant requests and actions, and the resulting impact to the Company’s results of operations and cash flows, is uncertain and cannot be predicted.

The COVID-19 pandemic, or a future pandemic, could also have further material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

•

complete or partial closures of, or other operational issues at, one or more of our properties beyond those that have already occurred resulting from government or tenant action;

•

the reduced economic activity severely impacts our tenants' businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations;

•

the reduced economic activity, as well as any lasting reduction in consumer activity at brick-and-mortar commercial establishments due to changed habits in response to the prolonged existence and threat of the

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COVID-19 pandemic, could result in a prolonged recession and could negatively impact consumer discretionary spending;

•

difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants' ability to fund their business operations and meet their obligations to us;

•

permitting, inspections and reviews by jurisdictional planning commissions and authorities is also likely to be delayed or postponed which could materially impact the timeline and budgets for completing redevelopments;

•

projects in our redevelopment pipeline may not be pursued or may be completed later or with higher costs than anticipated, potentially causing a loss that exceeds our investment in the project;

•

the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our credit facility, indentures and other recourse and non-recourse debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our revolving credit facility and pay dividends;

•

any additional impairments in value of our tangible assets and intangible lease assets that could be recorded as a result of weaker economic conditions;

•

a deterioration in our or our tenants' ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants' efficient operations could adversely affect our operations and those of our tenants;

•

the ability to renew leases or re-lease vacant spaces on favorable terms, or at all; and

•

the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption.

The extent to which the COVID-19 pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Additional closures by our tenants of their stores and early terminations by our tenants of their leases could further reduce our cash flows, which could impact our ability to resume paying dividends to our stockholders at any point in the future.

The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic. The COVID-19 pandemic presents material uncertainty and risk with respect to our financial condition, results of operations, cash flows and performance.

We have determined that there is substantial doubt about our ability to continue as a going concern.

The Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default, as applicable, have occurred and continue to exist as of the date of this report by reason of the Operating Partnership’s failure to comply with certain restrictive covenants under the secured credit facility. As a result of these asserted defaults and events of default, the lenders under the secured credit facility declared all outstanding principal, accrued interest and letters of credit to be immediately due and payable. Subsequent to the lenders accelerating the outstanding balances under the secured credit facility, other events occurred that each constitute an event of default under the secured credit facility, including (i) the Operating Partnership failed to meet the minimum debt yield covenant under the secured credit facility as of September 30, 2020, (ii) the NYSE suspension of trading in the Company’s common stock and commencement of proceedings to delist the Company’s common stock and depositary shares representing fractional interests in each of its series of preferred stock and (iii) the Debtors filed the Chapter 11 Cases. Additionally, the filing of the Chapter 11 Cases constituted an event of default that results in the automatic acceleration of all outstanding principal, accrued and unpaid interest, and letters of credit to be immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in automatic acceleration of the outstanding principal and accrued interest or may give the applicable lender the right to accelerate such amounts.

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condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the condensed consolidated financial statements do not reflect any adjustments related to the recoverability of assets and satisfaction of liabilities that might be necessary should the Company be unable to continue as a going concern.

We identified a material weakness in internal control over financial reporting. We may not remediate this material weakness on a timely basis or may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial reporting, which may result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations. As a result, stockholders could lose confidence in our financial and other public reporting, which would then be likely to negatively affect our business and the market price of our securities.

A material weakness in internal control over financial reporting was identified as of June 30, 2020 and September 30, 2020. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. See Part I, Item 4 above for further details. We are planning to remediate the material weakness by hiring additional personnel to enable the Company and the Operating Partnership to meet their financial reporting requirements, and we may utilize outside advisors to assist on a short-term basis. These remediation measures may be time consuming and costly, and might place significant demands on our financial, accounting and operational resources. In addition, there is no assurance that we will be successful in hiring the necessary personnel in a timely manner, or at all.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and is important in helping to prevent mistakes in our financial statements and financial fraud. Any failure to implement required new or improved controls, or difficulties encountered in our implementation to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identification of any additional material weaknesses that may exist, may adversely affect the accuracy and timing of our financial reporting, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, we may be unable to prevent fraud, investors may lose confidence in our financial reporting, and the price of our securities may decline as a result.

Any testing conducted by us, or any testing conducted by our independent registered public accounting firm, may reveal additional deficiencies in our internal control over financial reporting that are deemed to be new material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. In addition, our reporting obligations as a public company could place a significant strain on our management, operational and financial resources and systems for the foreseeable future and may cause us to fail to timely achieve and maintain the adequacy of its internal control over financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. Because of its inherent limitations, internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. There is no assurance that the measures we are currently undertaking or may take in the future will be sufficient to maintain effective internal controls or to avoid potential future deficiencies in internal control, including material weaknesses.

Our stock currently is subject to delisting from the NYSE due to “abnormally low” trading price levels under the NYSE’s continued listed standards. Trading in our stock was suspended on November 2, 2020 and the NYSE has determined to commence related delisting proceedings. The delisting of our stock from the NYSE could have materially adverse effects on our business, financial condition and results of operations.

On November 2, 2020, the NYSE announced that (i) it had suspended trading in the Company’s stock and (ii) it had determined to commence proceedings to delist the Company’s common stock, as well as the depositary shares each representing a 1/10th fractional share of the Company’s Series D Preferred Stock and the depositary shares each representing a 1/10th fractional share of the Company’s Series E Preferred Stock, due to such securities no longer being suitable for listing based on “abnormally low” trading price levels, pursuant to Section 802.01D of the NYSE Listed Company Manual. While the Company intends to appeal this decision in accordance with NYSE rules, there can be no assurance that an appeal will be successful. In the meantime, effective November 3, 2020, the Company’s common stock and the depositary shares representing fractional interests in its Series D Preferred Stock and Series E Preferred Stock began trading on the OTC Markets, operated by the OTC Markets Group, Inc., under the symbols “CBLAQ”, “CBLDQ” and

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“CBLEQ”, respectively. The over-the-counter markets are a more limited market than the NYSE and it is likely that there will be significantly less liquidity in the trading of our common and preferred stock.

The suspension of trading and potential delisting of our common stock could have material adverse effects on our business, financial condition and results of operations due to, among other things:

•

the reduced trading liquidity for our common and preferred stock as a result of trading on the over-the-counter markets rather than the NYSE as described above could further reduce the market price of such stock;

•

decreases in the number of institutional and other investors willing to hold or acquire our stock, coverage by securities analysts, market making activity and information available concerning trading prices and volume, as well as fewer broker-dealers willing to execute trades in our stock, thereby further restricting our ability to obtain equity financing;

•

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

•

reducing our ability to retain, attract and motivate our directors, officers and employees by means of equity compensation.

As a result of the cumulative, unpaid dividends on our preferred stock we are no longer eligible to register the offer and sale of securities on SEC Form S-3, which will impair our capital raising activities and could result in the Company being required to repurchase a limited number of shares sold under our DRIP.

We are no longer eligible to use SEC Form S-3 to register offers and sales of our securities under the Securities Act, as a result of the existing dividend arrearage on our preferred stock, which will continue to accumulate following our board of directors’ decision in December 2019 to suspend such dividends. Historically, we have relied on shelf registration statements on Form S-3 for our public capital raising transactions, and also to register the offer and sale of shares of common stock under our DRIP. Our inability to use Form S-3 may harm our ability to raise capital in the future, as we will be required to use a registration statement on Form S-1 to register securities with the SEC, which may be expected to hinder our ability to act quickly in raising capital to take advantage of market conditions and to increase our cost of raising capital. Further, we inadvertently failed to suspend small monthly “cash option” investments in common stock under our DRIP during the months of March, April and May 2020, and as a result of this oversight, we issued a total of 6,134 shares of common stock that were not registered under the Securities Act for aggregate consideration of $1,346.94. The purchasers of these shares, issued pursuant to our DRIP when we were not eligible to issue shares on Form S-3, could bring claims against us for rescission and other damages under federal or state securities laws

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds

Cash Option Investments Under DRIP Plan

While we had previously suspended quarterly dividend payments on our common stock during 2019, a very small amount of monthly “cash option” investments in shares continued pursuant to the terms of the Company’s DRIP. Due in part to impacts on the Company’s operations and staffing resulting from ongoing efforts to address the COVID-19 pandemic, we inadvertently failed to suspend the operation of these “cash option” investments during the months of March, April and May 2020, after we lost the ability to use the Form S-3 registration statement for the DRIP due to the existing dividend arrearage with respect to our preferred stock. We have now fully suspended the operation of our DRIP, including the cash option feature but, as a result of this oversight, we issued a total of 6,134 shares of common stock that were not registered under the Securities Act for aggregate consideration of $1,346.94 prior to such suspension. The purchasers of these shares, issued pursuant to our DRIP when we were not eligible to issue shares on Form S-3, could bring claims against us for rescission and other damages under federal or state securities laws.

Limitations on Payment of Dividends

See information presented under the heading “Equity” in the “Liquidity and Capital Resources” section of Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in PART I of this report for a discussion of current limitations on the payment of dividends by the Company.

ITEM 3: Defaults Upon Senior Securities

Defaults on Indebtedness

See information presented in Note 8 – Mortgage and Other Indebtedness, Net in the financial statements included in PART I of this report under the heading “Senior Unsecured Notes” for a discussion of certain defaults with respect to the Company’s senior unsecured notes and senior secured credit facility related to certain interest payments on the senior unsecured notes, and additional information presented under the heading “Financial Covenants and Restrictions” for a discussion of additional asserted defaults with respect to the Company’s senior secured credit facility.

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Preferred Dividend and Special Common Unit Distribution Arrearages

Dividends on the Series D and the Series E preferred stock are cumulative and therefore will continue to accrue at an annual rate of $18.4375 per share and $16.5625 per share, respectively. As of September 30, 2020, the cumulative amount of unpaid dividends on the preferred stock totaled $44.9 million.

Distributions on the Series K and S special common units are cumulative and therefore will continue to accrue at an annual rate of $2.96875 per unit, $3.0288 per unit and $2.92875 per unit, respectively. Distributions on the Series L special common units were cumulative through and accrued at an annual rate of $3.0288 per unit. Pursuant to the terms of the Series L special common units, on June 1, 2020 the Series L special common units began receiving distributions at the same rate and on the same terms as the common units of limited partnership interest in the Operating Partnership. As of September 30, 2020, the cumulative amount of unpaid distributions on the special common units totaled $8.8 million.

ITEM 4: Mine Safety Disclosures

Not applicable.

ITEM 5: Other Information

None.

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ITEM 6: Exhibits

INDEX TO EXHIBITS

Exhibit Number		Description
10.1		Forbearance Agreement, dated as of June 30, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors party thereto, CBL & Associates Properties, Inc., and each of the beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners of the 2023 Notes. Incorporated by reference to Current Report on Form 8-K, dated June 30, 2020 and filed on July 1, 2020.*
10.1.1		Amendment to Forbearance Agreement, dated as of July 15, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors party thereto, CBL & Associates Properties, Inc., and each of the beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners of the 2023 Notes. Incorporated by reference to Current Report on Form 8-K, dated July 15, 2020 and filed on July 16, 2020.*
10.1.2		Second Amendment to Forbearance Agreement, dated as of July 22, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors party thereto, CBL & Associates Properties, Inc., and each of the beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners of the 2023 Notes. Incorporated by reference to Current Report on Form 8-K, dated July 22, 2020 and filed on July 23, 2020.*
10.2		Forbearance Agreement, dated as of July 15, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors party thereto, CBL & Associates Properties, Inc., and each of the beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners of the 2026 Notes. Incorporated by reference to Current Report on Form 8-K, dated July 15, 2020 and filed on July 16, 2020.*
10.2.1		Amendment to Forbearance Agreement, dated as of July 22, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors party thereto, CBL & Associates Properties, Inc., and each of the beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners of the 2026 Notes. Incorporated by reference to Current Report on Form 8-K, dated July 22, 2020 and filed on July 23, 2020.*
10.3		Forbearance Agreement, dated as of June 30, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors and pledgors party thereto, CBL & Associates Properties, Inc. and Wells Fargo Bank, National Association, as administrative agent. Incorporated by reference to Current Report on Form 8-K, dated June 30, 2020 and filed on July 1, 2020.*
10.3.1		Amendment to Forbearance Agreement, dated as of July 15, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors and pledgors party thereto, CBL & Associates Properties, Inc. and Wells Fargo Bank, National Association, as administrative agent. Incorporated by reference to Current Report on Form 8-K, dated July 15, 2020 and filed on July 16, 2020.*
10.3.2		Second Amendment to Forbearance Agreement, dated as of July 22, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors and pledgors party thereto, CBL & Associates Properties, Inc. and Wells Fargo Bank, National Association, as administrative agent. Incorporated by reference to Current Report on Form 8-K, dated July 22, 2020 and filed on July 23, 2020.*
10.3.3		Third Amendment to Forbearance Agreement, dated as of July 29, 2020, by and among CBL & Associates Limited Partnership, each of the subsidiary guarantors and pledgors party thereto, CBL & Associates Properties, Inc. and Wells Fargo Bank, National Association, as administrative agent. Incorporated by reference to Current Report on Form 8-K, dated July 29, 2020 and filed on July 30, 2020.*
10.4.5		Summary Description of Director Compensation Arrangements for Scott D. Vogel. Incorporated by reference to Current Report on Form 8-K, dated October 7, 2020 and filed on October 8, 2020.
10.5		Restructuring Support Agreement, dated as of August 18, 2020 between the Operating Partnership, REIT, Subsidiary Guarantors and Consenting Holders. Incorporated by reference to Current Report on Form 8-K, dated August 18, 2020 and filed on August 19, 2020.
10.6		Form of Employment Agreement. Incorporated by reference to Current Report on Form 8-K, dated August 18, 2020 and filed on August 19, 2020.
10.7.1		Form of Retention Bonus Agreement. Incorporated by reference to Current Report on Form 8-K, dated August 18, 2020 and filed on August 19, 2020.

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10.7.2		Form of Amended and Restated Retention Bonus Agreement for the Chairman of the Board. Incorporated by reference to Current Report on Form 8-K, dated October 29, 2020 and filed on November 2, 2020.
10.7.3		Form of Amended and Restated Retention Bonus Agreement for the Company’s NEOs Other Than the Chairman of the Board. Incorporated by reference to Current Report on Form 8-K, dated October 29, 2020 and filed on November 2, 2020.
31.1		Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Properties, Inc.
31.2		Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Properties, Inc.
31.3		Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Limited Partnership
31.4		Certification pursuant to Securities Exchange Act Rule 13a-14(a) by the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Limited Partnership
32.1		Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Properties, Inc.
32.2		Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Properties, Inc.
32.3		Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Limited Partnership
32.4		Certification pursuant to Securities Exchange Act Rule 13a-14(b) by the Chief Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for CBL & Associates Limited Partnership
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. (Filed herewith.)
101.SCH		Inline XBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*). (Filed herewith.)

*	Commission File No. 1-12494 and 333-182515-01.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CBL & ASSOCIATES PROPERTIES, INC.

/s/ Farzana Khaleel

Farzana Khaleel

Executive Vice President -

Chief Financial Officer and Treasurer

(Authorized Officer and Principal Financial Officer)

CBL & ASSOCIATES LIMITED PARTNERSHIP

By: CBL HOLDINGS I, INC., its general partner

/s/ Farzana Khaleel

Farzana Khaleel

Executive Vice President -

Chief Financial Officer and Treasurer

(Authorized Officer and Principal Financial Officer)

Date: November 16, 2020