CBL & ASSOCIATES PROPERTIES INC - Quarter Report: 2021 June (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 JUNE 30, 2021

☐	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)

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

Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	CBLAQ	*
7.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value (represented by depositary shares each representing a 1/10^th fractional share)	CBLDQ	*
6.625% Series E Cumulative Redeemable Preferred Stock, $0.01 par value (represented by depositary shares each representing a 1/10^th fractional share)	CBLEQ	*

*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 1/10^th 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 1/10^th 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. Since November 3, 2020, the Company’s common stock and such depositary shares are currently trading on the OTC Markets, operated by the OTC Markets Group, Inc., under the respective trading symbols listed in the preceding table.

CBL & Associates Limited Partnership: None

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

CBL & Associates Properties, Inc.: None

CBL & Associates Limited Partnership: None

Indicate by check mark 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	☐

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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 ☒

As of August 10, 2021, there were 196,443,846 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.

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EXPLANATORY NOTE

(Dollars in thousands, except share data)

This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2021 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 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) 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 Company is a real estate investment trust ("REIT") whose stock was traded on the New York Stock Exchange (“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 Delisting of Common Stock and Depositary Shares in Note 2 herein, the Company has appealed 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 June 30, 2021, 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 96.5% limited partner interest for a combined interest held by the Company of 97.5%.

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 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 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.

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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 8 - Unconsolidated Affiliates and Noncontrolling Interests; Note 9 - 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.

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CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

(Debtors-In-Possession)

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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 June 30, 2021 and December 31, 2020	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020	2
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020	3
	Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020	5

CBL & Associates Limited Partnership
	Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020	6
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020	7
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020	8
	Condensed Consolidated Statements of Capital for the Three and Six Months Ended June 30, 2021 and 2020	9
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020	11

CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
	Notes to Unaudited Condensed Consolidated Financial Statements	12

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	60

PART II	OTHER INFORMATION	61

Item 1.	Legal Proceedings	61
Item1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	62

	SIGNATURES	63

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PART I – FINANCIAL INFORMATION

ITEM 1: Financial Statements

CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

ASSETS ⁽¹⁾	June 30, 2021			December 31, 2020
Real estate assets:
Land	$	662,045		$	695,711
Buildings and improvements		4,978,546			5,135,074
		5,640,591			5,830,785
Accumulated depreciation		(2,270,736	)		(2,241,421	)
		3,369,855			3,589,364
Developments in progress		15,150			28,327
Net investment in real estate assets		3,385,005			3,617,691
Cash and cash equivalents		143,874			61,781
Available-for-sale securities - at fair value (amortized cost of $183,496 and $233,053 as of June 30, 2021 and December 31, 2020, respectively)		183,490			233,071
Receivables:
Tenant		68,514			103,655
Other		2,727			5,958
Mortgage and other notes receivable		1,912			2,337
Investments in unconsolidated affiliates		261,082			279,355
Intangible lease assets and other assets		217,603			139,892
	$	4,264,207		$	4,443,740
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness, net	$	987,592		$	1,184,831
Accounts payable and accrued liabilities		188,368			173,387
Total liabilities not subject to compromise ⁽¹⁾		1,175,960			1,358,218

Liabilities subject to compromise		2,591,706			2,551,490

Commitments and contingencies (Note 9 and Note 12)
Redeemable noncontrolling interests		(543	)		(265	)
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, 196,444,452 and 196,569,917 issued and outstanding in 2021 and 2020, respectively		1,964			1,966
Additional paid-in capital		1,986,982			1,986,269
Accumulated other comprehensive income (loss)		(6	)		18
Dividends in excess of cumulative earnings		(1,492,080	)		(1,456,435	)
Total shareholders' equity		496,885			531,843
Noncontrolling interests		199			2,454
Total equity		497,084			534,297
	$	4,264,207		$	4,443,740

(1)

As of June 30, 2021, includes $263,404 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $134,578 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 8.

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

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
REVENUES:
Rental revenues	$	131,316		$	120,222		$	259,491		$	281,395
Management, development and leasing fees		1,449			1,055			3,108			3,147
Other		3,796			2,934			7,146			7,243
Total revenues		136,561			124,211			269,745			291,785
EXPENSES:
Property operating		(19,623	)		(16,906	)		(41,425	)		(42,615	)
Depreciation and amortization		(47,499	)		(52,663	)		(95,611	)		(108,565	)
Real estate taxes		(15,110	)		(17,837	)		(31,661	)		(36,285	)
Maintenance and repairs		(8,784	)		(6,042	)		(19,565	)		(17,250	)
General and administrative		(11,269	)		(18,727	)		(23,881	)		(36,563	)
Loss on impairment		—			(13,274	)		(57,182	)		(146,918	)
Litigation settlement		(57	)		—			801			—
Other		(287	)		(242	)		(287	)		(400	)
Total expenses		(102,629	)		(125,691	)		(268,811	)		(388,596	)
OTHER INCOME (EXPENSES):
Interest and other income		752			891			1,528			3,288
Interest expense (unrecognized contractual interest expense was $45,279 and $90,043 for the three and six months ended June 30, 2021, respectively)		(22,299	)		(52,631	)		(46,429	)		(99,623	)
Gain on deconsolidation		—			—			55,131			—
Gain (loss) on sales of real estate assets		107			2,623			(192	)		2,763
Reorganization items		(17,073	)		—			(40,006	)		—
Income tax provision		(705	)		(16,117	)		(1,456	)		(16,643	)
Equity in losses of unconsolidated affiliates		(4,275	)		(6,079	)		(7,351	)		(5,061	)
Total other expenses		(43,493	)		(71,313	)		(38,775	)		(115,276	)
Net loss		(9,561	)		(72,793	)		(37,841	)		(212,087	)
Net loss attributable to noncontrolling interests in:
Operating Partnership		230			2,077			928			18,491
Other consolidated subsidiaries		449			487			1,268			694
Net loss attributable to the Company		(8,882	)		(70,229	)		(35,645	)		(192,902	)
Preferred dividends undeclared		—			(11,223	)		—			(22,446	)
Net loss attributable to common shareholders	$	(8,882	)	$	(81,452	)	$	(35,645	)	$	(215,348	)
Basic and diluted per share data attributable to common shareholders:
Net loss attributable to common shareholders	$	(0.05	)	$	(0.42	)	$	(0.18	)	$	(1.16	)
Weighted-average common and potential dilutive common shares outstanding		196,458			191,962			196,484			185,547

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

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Condensed Consolidated Statements of Comprehensive Loss

(In thousands, except share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(9,561	)	$	(72,793	)	$	(37,841	)	$	(212,087	)

Other comprehensive loss:
Unrealized loss on available-for-sale securities		(27	)		(64	)		(24	)		(42	)

Comprehensive loss		(9,588	)		(72,857	)		(37,865	)		(212,129	)
Comprehensive loss attributable to noncontrolling interests in:
Operating Partnership		230			2,080			928			18,494
Other consolidated subsidiaries		449			487			1,268			694
Comprehensive loss attributable to the Company:	$	(8,909	)	$	(70,290	)	$	(35,669	)	$	(192,941	)

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

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

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			Accumulated Other Comprehensive Income (Loss)			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, December 31, 2019	$	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	)
Performance stock units		—			—		—			379			—			—			379			—			379
Amortization of deferred compensation		—			—		—			384			—			—			384			—			384
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

				Equity
				Shareholders' Equity
	Redeemable Noncontrolling Interests			Preferred Stock		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, December 31, 2020	$	(265	)	$	25	$	1,966		$	1,986,269		$	18		$	(1,456,435	)	$	531,843		$	2,454		$	534,297
Net loss		(213	)		—		—			—			—			(26,763	)		(26,763	)		(1,304	)		(28,067	)
Other comprehensive income		—			—		—			—			3			—			3			—			3
Cancellation of 111,139 shares of restricted common stock		—			—		(1	)		—			—			—			(1	)		—			(1	)
Amortization of deferred compensation		—			—		—			304			—			—			304			—			304
Performance stock units		—			—		—			93			—			—			93			—			93
Distributions to noncontrolling interests		—			—		—			—			—			—			—			(11	)		(11	)
Balance, March 31, 2021		(478	)		25		1,965			1,986,666			21			(1,483,198	)		505,479			1,139			506,618
Net loss		(70	)		—		—			—			—			(8,882	)		(8,882	)		(609	)		(9,491	)
Other comprehensive loss		—			—		—			—			(27	)		—			(27	)		—			(27	)
Cancellation of 14,326 shares of restricted common stock		—			—		(1	)		(17	)		—			—			(18	)		—			(18	)
Amortization of deferred compensation		—			—		—			256			—			—			256			—			256
Performance stock units		—			—		—			94			—			—			94			—			94
Adjustment for noncontrolling interests		5			—		—			(17	)		—			—			(17	)		12			(5	)
Distributions to noncontrolling interests		—			—		—			—			—			—			—			(343	)		(343	)
Balance, June 30, 2021	$	(543	)	$	25	$	1,964		$	1,986,982		$	(6	)	$	(1,492,080	)	$	496,885		$	199		$	497,084

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

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(37,841	)	$	(212,087	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		95,611			108,565
Net amortization of deferred financing costs, premiums on available-for-sale securities and debt premiums and discounts		1,496			4,595
Net amortization of intangible lease assets and liabilities		385			(753	)
(Gain) loss on sales of real estate assets		192			(2,763	)
Gain on insurance proceeds		—			(511	)
Gain on deconsolidation		(55,131	)		—
Write-off of development projects		287			400
Share-based compensation expense		739			2,293
Loss on impairment		57,182			146,918
Equity in losses of unconsolidated affiliates		7,351			5,061
Distributions of earnings from unconsolidated affiliates		6,676			3,797
Change in estimate of uncollectable revenues		15,525			41,955
Change in deferred tax accounts		—			15,596
Changes in:
Tenant and other receivables		19,352			(87,298	)
Other assets		(2,111	)		753
Accounts payable and accrued liabilities		20,784			11,849
Net cash provided by operating activities		130,497			38,370
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets		(13,836	)		(36,413	)
Proceeds from sales of real estate assets		5,612			3,579
Purchases of available-for-sale securities		(319,887	)		(153,193	)
Redemptions of available-for-sale securities		368,380			—
Proceeds from insurance		—			600
Payments received on mortgage and other notes receivable		425			703
Additional investments in and advances to unconsolidated affiliates		124			(10,990	)
Distributions in excess of equity in earnings of unconsolidated affiliates		4,790			5,255
Changes in other assets		(1,420	)		(920	)
Net cash provided by (used in) investing activities		44,188			(191,379	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness		—			365,000
Principal payments on mortgage and other indebtedness		(23,854	)		(120,467	)
Additions to deferred financing costs		(1	)		(240	)
Proceeds from issuances of common stock		—			5
Contributions from noncontrolling interests		—			693
Payment of tax withholdings for restricted stock awards		(11	)		(87	)
Distributions to noncontrolling interests		(354	)		(825	)
Net cash provided by (used in) financing activities		(24,220	)		244,079
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		150,465			91,070
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		121,722			59,058
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	272,187		$	150,128
Reconciliation from condensed consolidated statements of cash flows to condensed consolidated balance sheets:
Cash and cash equivalents	$	143,874		$	123,388
Restricted cash ⁽¹⁾:
Restricted cash		100,626			249
Mortgage escrows		27,687			26,491
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	272,187		$	150,128

SUPPLEMENTAL INFORMATION
Cash paid for interest, net of amounts capitalized	$	26,755		$	51,703
Cash paid for reorganization items	$	35,602		$	—

(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.

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CBL & Associates Limited Partnership

(Debtors-In-Possession)

Condensed Consolidated Balance Sheets

(In thousands, except unit data)

(Unaudited)

ASSETS ⁽¹⁾	June 30, 2021			December 31, 2020
Real estate assets:
Land	$	662,045		$	695,711
Buildings and improvements		4,978,546			5,135,074
		5,640,591			5,830,785
Accumulated depreciation		(2,270,736	)		(2,241,421	)
		3,369,855			3,589,364
Developments in progress		15,150			28,327
Net investment in real estate assets		3,385,005			3,617,691
Cash and cash equivalents		143,866			61,772
Available-for-sale securities - at fair value (amortized cost of $183,496 and $233,053 as of June 30, 2021 and December 31, 2020, respectively)		183,490			233,071
Receivables:
Tenant		68,514			103,655
Other		2,679			5,910
Mortgage and other notes receivable		1,912			2,337
Investments in unconsolidated affiliates		261,609			279,884
Intangible lease assets and other assets		217,482			139,772
	$	4,264,557		$	4,444,092
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness, net	$	987,592		$	1,184,831
Accounts payable and accrued liabilities		188,439			173,458
Total liabilities not subject to compromise ⁽¹⁾		1,176,031			1,358,289

Liabilities subject to compromise		2,591,706			2,551,490

Commitments and contingencies (Note 9 and Note 12)
Redeemable common units		(543	)		(265	)
Partners' capital:
Preferred units		565,212			565,212
Common units:
General partner		(697	)		(339	)
Limited partners		(68,582	)		(33,371	)
Accumulated other comprehensive income (loss)		(6	)		18
Total partners' capital		495,927			531,520
Noncontrolling interests		1,436			3,058
Total capital		497,363			534,578
	$	4,264,557		$	4,444,092

(1)

As of June 30, 2021, includes $263,404 of assets related to consolidated variable interest entities that can only be used to settle obligations of the consolidated variable interest entities and $134,578 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Operating Partnership. See Note 8.

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

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CBL & Associates Limited Partnership

(Debtors-In-Possession)

Condensed Consolidated Statements of Operations

(In thousands, except per unit data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
REVENUES:
Rental revenues	$	131,316		$	120,222		$	259,491		$	281,395
Management, development and leasing fees		1,449			1,055			3,108			3,147
Other		3,796			2,934			7,146			7,243
Total revenues		136,561			124,211			269,745			291,785
EXPENSES:
Property operating		(19,623	)		(16,906	)		(41,425	)		(42,615	)
Depreciation and amortization		(47,499	)		(52,663	)		(95,611	)		(108,565	)
Real estate taxes		(15,110	)		(17,837	)		(31,661	)		(36,285	)
Maintenance and repairs		(8,784	)		(6,042	)		(19,565	)		(17,250	)
General and administrative		(11,269	)		(18,727	)		(23,881	)		(36,563	)
Loss on impairment		—			(13,274	)		(57,182	)		(146,918	)
Litigation settlement		(57	)		—			801			—
Other		(287	)		(242	)		(287	)		(400	)
Total expenses		(102,629	)		(125,691	)		(268,811	)		(388,596	)
OTHER INCOME (EXPENSES):
Interest and other income		752			891			1,528			3,288
Interest expense (unrecognized contractual interest expense was $45,279 and $90,043 for the three and six months ended June 30, 2021, respectively)		(22,299	)		(52,631	)		(46,429	)		(99,623	)
Gain on deconsolidation		—			—			55,131			—
Gain (loss) on sales of real estate assets		107			2,623			(192	)		2,763
Reorganization items		(17,073	)		—			(40,006	)		—
Income tax provision		(705	)		(16,117	)		(1,456	)		(16,643	)
Equity in losses of unconsolidated affiliates		(4,275	)		(6,079	)		(7,351	)		(5,061	)
Total other expenses		(43,493	)		(71,313	)		(38,775	)		(115,276	)
Net loss		(9,561	)		(72,793	)		(37,841	)		(212,087	)
Net loss attributable to noncontrolling interests		449			487			1,268			694
Net loss attributable to the Operating Partnership		(9,112	)		(72,306	)		(36,573	)		(211,393	)
Distributions to preferred unitholders undeclared		—			(11,223	)		—			(22,446	)
Net loss attributable to common unitholders	$	(9,112	)	$	(83,529	)	$	(36,573	)	$	(233,839	)
Basic and diluted per unit data attributable to common unitholders:
Net loss attributable to common unitholders	$	(0.05	)	$	(0.41	)	$	(0.18	)	$	(1.16	)
Weighted-average common and potential dilutive common units outstanding		201,576			201,702			201,601			201,480

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

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CBL & Associates Limited Partnership

(Debtors-In-Possession)

Condensed Consolidated Statements of Comprehensive Loss

(In thousands, except per unit data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(9,561	)	$	(72,793	)	$	(37,841	)	$	(212,087	)

Other comprehensive loss:
Unrealized loss on available-for-sale securities		(27	)		(64	)		(24	)		(42	)

Comprehensive loss		(9,588	)		(72,857	)		(37,865	)		(212,129	)
Comprehensive loss attributable to noncontrolling interests		449			487			1,268			694
Comprehensive loss attributable to the Operating Partnership:	$	(9,139	)	$	(72,370	)	$	(36,597	)	$	(211,435	)

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

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CBL & Associates Limited Partnership

(Debtors-In-Possession)

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			Accumulated Other Comprehensive Income (Loss)			Total Partner's Capital			Noncontrolling Interests			Total Capital
Balance, December 31, 2019	$	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	)
Performance stock units		—			—		—			—		4			386			—			390			—			390
Amortization of deferred compensation		—			—		—			—		18			615			—			633			—			633
Allocation of partners' capital		60			—		—			—		(1	)		(64	)		—			(65	)		—			(65	)
Adjustment to record redeemable interests at redemption value		—			—		—			—		(8	)		8			—			—			—			—
Distributions to noncontrolling interests		—			—		—			—		—			—			—			—			(731	)		(731	)
Contributions from noncontrolling interests		—			—		—			—		—			—			—			—			668			668
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	)
Performance stock units		—			—		—			—		4			375			—			379			—			379
Amortization of deferred compensation		—			—		—			—		11			373			—			384			—			384
Allocation of partners' capital		117			—		—			—		(1	)		(117	)		—			(118	)		—			(118	)
Contributions from noncontrolling interests		—			—		—			—		—			—			—			—			25			25
Distributions to noncontrolling interests		—			—		—			—		—			—			—			—			(94	)		(94	)
Balance, June 30, 2020	$	525			25,050		201,691		$	565,212	$	658		$	64,772		$	(42	)	$	630,600		$	23,135		$	653,735

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CBL & Associates Limited Partnership

(Debtors-In-Possession)

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			Accumulated Other Comprehensive Income (Loss)			Total Partner's Capital			Noncontrolling Interests			Total Capital
Balance, December 31, 2020	$	(265	)		25,050		201,688		$	565,212	$	(339	)	$	(33,371	)	$	18		$	531,520		$	3,058		$	534,578
Net loss		(213	)		—		—			—		(277	)		(26,971	)		—			(27,248	)		(819	)		(28,067	)
Other comprehensive income		—			—		—			—		—			—			3			3			—			3
Cancellation of restricted common units		—			—		(111	)		—		—			(1	)		—			(1	)		—			(1	)
Amortization of deferred compensation		—			—		—			—		3			300			—			303			—			303
Distributions to noncontrolling interests		—			—		—			—		—			—			—			—			(11	)		(11	)
Performance stock units		—			—		—			—		4			87			—			91			—			91
Balance, March 31, 2021		(478	)		25,050		201,577			565,212		(609	)		(59,956	)		21			504,668			2,228			506,896
Net loss		(70	)		—		—			—		(92	)		(8,950	)		—			(9,042	)		(449	)		(9,491	)
Other comprehensive loss		—			—		—			—		—			—			(27	)		(27	)		—			(27	)
Cancellation of restricted common units		—			—		(14	)		—		—			(17	)		—			(17	)		—			(17	)
Allocation of partners' capital		5			—		—			—		—			(7	)		—			(7	)		—			(7	)
Amortization of deferred compensation		—			—		—			—		3			254			—			257			—			257
Distributions to noncontrolling interests		—			—		—			—		—			—			—			—			(343	)		(343	)
Performance stock units		—			—		—			—		1			94			—			95			—			95
Balance, June 30, 2021	$	(543	)		25,050		201,563		$	565,212	$	(697	)	$	(68,582	)	$	(6	)	$	495,927		$	1,436		$	497,363

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

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CBL & Associates Limited Partnership

(Debtors-In-Possession)

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(37,841	)	$	(212,087	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		95,611			108,565
Net amortization of deferred financing costs, premiums on available-for-sale securities and debt premiums and discounts		1,496			4,595
Net amortization of intangible lease assets and liabilities		385			(753	)
(Gain) loss on sales of real estate assets		192			(2,763	)
Gain on insurance proceeds		—			(511	)
Gain on deconsolidation		(55,131	)		—
Write-off of development projects		287			400
Share-based compensation expense		739			2,293
Loss on impairment		57,182			146,918
Equity in losses of unconsolidated affiliates		7,351			5,061
Distributions of earnings from unconsolidated affiliates		6,676			3,797
Change in estimate of uncollectable revenues		15,525			41,955
Change in deferred tax accounts		—			15,596
Changes in:
Tenant and other receivables		19,352			(87,298	)
Other assets		(2,111	)		753
Accounts payable and accrued liabilities		20,785			11,845
Net cash provided by operating activities		130,498			38,366
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets		(13,836	)		(36,413	)
Proceeds from sales of real estate assets		5,612			3,579
Purchases of available-for-sale securities		(319,887	)		(153,193	)
Redemptions of available-for-sale securities		368,380			—
Proceeds from insurance		—			600
Payments received on mortgage and other notes receivable		425			703
Additional investments in and advances to unconsolidated affiliates		124			(10,990	)
Distributions in excess of equity in earnings of unconsolidated affiliates		4,790			5,255
Changes in other assets		(1,420	)		(920	)
Net cash provided by (used in) investing activities		44,188			(191,379	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness		—			365,000
Principal payments on mortgage and other indebtedness		(23,854	)		(120,467	)
Additions to deferred financing costs		(1	)		(240	)
Proceeds from issuances of common units		—			5
Contributions from noncontrolling interests		—			693
Payment of tax withholdings for restricted stock awards		(11	)		(87	)
Distributions to noncontrolling interests		(354	)		(825	)
Net cash provided by (used in) financing activities		(24,220	)		244,079
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		150,466			91,066
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		121,713			59,054
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	272,179		$	150,120
Reconciliation from condensed consolidated statements of cash flows to condensed consolidated balance sheets:
Cash and cash equivalents	$	143,866		$	123,380
Restricted cash ⁽¹⁾:
Restricted cash		100,626			249
Mortgage escrows		27,687			26,491
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	272,179		$	150,120


SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	26,755		$	51,703
Cash paid for reorganization items	$	35,602		$	—

(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.

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CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

(Debtors-In-Possession)

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 24 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 June 30, 2021, 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 ⁽²⁾		49		20		1		4		74
Unconsolidated Properties⁽³⁾		12		3		5		4		24
Total		61		23		6		8		98

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

(2)	CBL's two corporate office buildings are included within the Office Buildings and Other category.

(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 and All Other Properties ("Associated Centers, Community Centers, Office Buildings and Other") 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 June 30, 2021, 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 96.5% limited partner interest for a combined interest held by CBL of 97.5%.

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. At June 30, 2021, CBL’s Predecessor no longer owned any limited partner interest and third parties owned a 2.5% limited partner interest in the Operating Partnership. CBL's Predecessor owned 20.0 million shares of CBL’s common stock at June 30, 2021, for a total effective interest of 10.0% in the Operating Partnership.

As used herein, the term "Company" includes CBL & Associates Properties, Inc. and its subsidiaries, including CBL & Associates Limited Partnership and its subsidiaries, unless the context indicates otherwise. The term "Operating Partnership" refers to CBL & Associates Limited Partnership and its subsidiaries.

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.

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Bankruptcy Accounting

The condensed consolidated financial statements included herein have been prepared as if the Company were a going concern and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852 – Reorganizations (“ASC 852”). See Note 2 for additional details regarding the bankruptcy. As a result, the Company has segregated prepetition unsecured or under secured liabilities and obligations whose treatment and satisfaction are dependent on the outcome of the Chapter 11 proceedings and have classified these items as “Liabilities subject to compromise” on the Company’s condensed consolidated balance sheets. In addition, the Company has classified all expenses that were incurred as a result of the Chapter 11 proceedings since filing as “Reorganization items” in the Company’s condensed consolidated statements of operations. In addition to expenses, reorganization items can include realized gains or losses.

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. While the majority of the most restrictive mandates have been lifted, state and local governments and other authorities are in varying stages of lifting or modifying some of the measures used to mitigate or control the spread of the virus. Even though vaccines have started to be administered, the COVID-19 pandemic could worsen at any time, which could cause new or more restrictive measures to be implemented to prevent the spread of the virus. In fact, certain markets have implemented new restrictions as a result of break-through cases and the increased spread of variants of COVID-19, including the Delta variant. Tenants and customers have gradually adapted to current conditions with services such as curbside pickup and increased consumer risk-tolerance, but there is no guarantee that retail will return to levels seen prior to the pandemic. The Company has experienced, and expects to continue to experience, a material adverse impact on its revenues, results of operations, and cash flows throughout 2021. The situation is unpredictable and additional impacts to the business may arise that the Company is not aware of currently.

Note 2 - Chapter 11 Cases and Ability to Continue as a Going Concern

Voluntary Reorganization under Chapter 11

On August 18, 2020, the Company entered into a Restructuring Support Agreement, (the “Original RSA”) with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders of beneficial owners (the “Consenting Noteholders”) representing in excess of 62%, including joining noteholders pursuant to joinder agreements, of the aggregate principal amount of the $450,000 of senior unsecured notes issued by the Operating Partnership in November 2013 that bear interest at 5.25% and mature on December 1, 2023 (the “2023 Notes”), the $300,000 of senior unsecured notes issued by the Operating Partnership in October 2014 that bear interest at 4.60% and mature on October 15, 2024 (the “2024 Notes”) and the $625,000 of senior unsecured notes issued by the Operating Partnership in December 2016 and September 2017 that bear interest at 5.95% and mature on December 15, 2026 (the “2026 Notes” and, collectively with the 2023 Notes and 2024 Notes, the "Notes").

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”), CBL and the Operating Partnership, together with certain of its direct and indirect subsidiaries (collectively, the “Debtors”), filed voluntary petitions (the “Chapter 11 Cases”) under chapter 11 of title 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The 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.

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The filing of the Chapter 11 Cases constituted an event of default that results in the automatic acceleration of certain monetary obligations 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 Bankruptcy Court took up the other pending claims during the adversarial proceeding, which has now been stayed pending the confirmation of the Company’s plan, discussed below.

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.

After engaging in negotiations in a Bankruptcy Court-ordered mediation, on March 21, 2021 (the “Agreement Effective Date”), the Company entered into the First Amended and Restated Restructuring Support Agreement (the “Amended RSA”), with the Consenting Noteholders in excess of 69% (including joinders) of the aggregate principal amount of the Notes and certain lenders party to the Company’s secured credit facility who hold in the aggregate in excess of 96% (including joinders) of the aggregate outstanding principal amount of debt under the secured credit facility (the “Consenting Bank Lenders” and together with the Consenting Noteholders, the “Consenting Stakeholders”). The Amended RSA amends and restates the Original RSA and sets forth, subject to certain conditions, the commitments to and obligations of, on the one hand, the Company, and on the other hand, the Consenting Noteholders and Consenting Bank Lenders, in connection with the restructuring transactions (the “Restructuring Transactions”) set forth in the Amended RSA and the plan term sheet attached as Exhibit B to the Amended RSA (the “Plan Term Sheet”). The Amended RSA contemplates that the restructuring and recapitalization of the Debtors will occur through a joint plan of reorganization in the Chapter 11 Cases.

As required by the Amended RSA, (i) on April 15, 2021, the Company filed an amended Chapter 11 plan of reorganization and accompanying disclosure statement with the Bankruptcy Court; (ii) on May 18, 2021, the Company filed the second amended Chapter 11 plan of reorganization and accompanying disclosure statement, as further amended on May 19, 2021; and (iii) on May 25, 2021, the Company filed the third amended Chapter 11 plan of reorganization and, on August 9, 2021, filed technical modifications thereto (the “Plan”) and accompanying disclosure statement (the “Disclosure Statement”), to implement the restructuring transactions. In addition, on May 26, 2021, the Bankruptcy Court entered an order that among other things, approved the Company’s Disclosure Statement and established dates and deadlines related to solicitation of, voting on, and confirmation of the Plan. The Amended RSA provides that the ongoing litigation between the Company and the lenders of the Company’s secured credit facility (the “Bank Lenders”) arising from the prepetition enforcement actions taken by the Bank Lenders is stayed and is to be dismissed upon the order confirming the Plan becoming a “Final Order” (as defined in the Plan).

On August 11, 2021, following the confirmation hearing, the Bankruptcy Court entered an order confirming the Plan. Pursuant to the Amended RSA, the Company is required to have the Plan become effective no later than November 1, 2021. The Company cannot predict the ultimate outcome of its Chapter 11 Cases at this time. 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.

Once effective, the Plan provides for the elimination of more than $1,681,900 of debt and preferred obligations, including an aggregate cash payment of $195,000 as noted below, as well as a significant reduction in interest expense. In exchange for their approximately $1,375,000 in principal amount of senior unsecured notes and $133,000 in principal amount of the secured credit facility, Consenting Noteholders, other noteholders, and certain holders of unsecured claims against the Company will receive, in the aggregate, $95,000 in cash, $555,000 of new senior secured notes, of which up to $100,000, upon election by the Consenting Noteholders, may be received in the form of new convertible secured notes and 89% in common equity of the newly reorganized company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders will also provide up to $50,000 of new money in exchange for additional convertible secured notes. The transactions outlined in the Plan will be implemented in the Chapter 11 Cases. The Plan provides that the remaining Bank

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Lenders, holding $983,700 in principal amount under the secured credit facility, will receive $100,000 in cash and a new $883,700 secured term loan. Existing common and preferred shareholders are expected to receive up to 11% of common equity in the newly reorganized company.

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.

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 filing of the Chapter 11 Cases by the Debtors constituted an event of default that results in the automatic acceleration of certain monetary obligations 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 acceleration of the outstanding principal and other sums due. See Note 8 and Note 9 for further discussion.

Given the acceleration of the 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 the Company’s ability to satisfy its 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 Company’s ability to continue as a going concern is contingent upon its ability to successfully implement the Plan. 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.

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 has appealed this decision in accordance with NYSE rules, and the appeal is still in process. 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.

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Reorganization Items

Any expenses, gains and losses that are realized or incurred as of or subsequent to November 1, 2020, the Commencement Date, and as a direct result of the Chapter 11 Cases, are recorded in the line item “Reorganization items” in the Company’s condensed consolidated statements of operations. For the three months ended June 30, 2021, the $17,073 of reorganization items consists of $15,480 in professional fees, $1,072 in compensation associated with reorganization efforts and $521 of U.S. Trustee fees. For the six months ended June 30, 2021, the $40,006 of reorganization items consists of $37,709 in professional fees, $1,072 in compensation associated with reorganization efforts and $1,225 of U.S. Trustee fees.

Liabilities Subject to Compromise

As of June 30, 2021 and December 31, 2020, the Company has reclassified $2,591,706 and $2,551,490, respectively, to the line item “Liabilities subject to compromise” in the Company’s condensed consolidated balance sheets. These liabilities are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less. As of June 30, 2021, the liabilities subject to compromise consisted of $1,375,000 related to the senior unsecured notes, $675,926 related to the secured line of credit, $438,750 related to the secured term loan, $57,644 in unpaid accrued interest as of the Commencement Date, $39,462 related to the loan secured by The Outlet Shoppes at Laredo, $726 of unpaid accrued interest related to the loan secured by The Outlet Shoppes at Laredo as of May 26, 2021 and $4,198 of prepetition unsecured or under secured liabilities. As of December 31, 2020, the liabilities subject to compromise consisted of $1,375,000 related to the senior unsecured notes, $675,926 related to the secured line of credit, $438,750 related to the secured term loan, $57,644 in unpaid accrued interest as of the Commencement Date and $4,170 of prepetition unsecured or under secured liabilities.

The contractual interest expense on the loan secured by The Outlet Shoppes at Laredo, the senior unsecured notes and secured credit facility is in excess of recorded interest expense by $45,279 and $90,043 for the three and six months ended June 30, 2021, respectively. This excess contractual interest expense is not included as interest expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2021 because the Company discontinued accruing interest on the loan secured by The Outlet Shoppes at Laredo as of May 26, 2021, and the senior unsecured notes and the secured credit facility subsequent to the Commencement Date in accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims. The Company has not made any interest payments on its senior unsecured notes or its secured credit facility since the Chapter 11 Cases commenced on November 1, 2020 and did not make any interest payments on the loan secured by The Outlet Shoppes at Laredo subsequent to its petition date on May 26, 2021.

Condensed combined financial statement information of the Debtors is as follows:

Condensed Combined Financial Statements – Debtors (Debtors-In-Possession)

Condensed Combined Balance Sheets

	June 30, 2021			December 31, 2020
ASSETS:
Investment in real estate assets	$	4,000,429		$	4,056,257
Accumulated depreciation		(1,557,473	)		(1,544,800	)
		2,442,956			2,511,457
Developments in progress		14,215			27,853
Net investment in real estate assets		2,457,171			2,539,310
Available-for-sale securities - at fair value (amortized cost of $183,496 and $233,053 as of June 30, 2021 and December 31, 2020, respectively)		183,490			233,071
Cash and cash equivalents		131,713			46,346
Restricted cash		88,810			29,834
Intercompany due from non-debtor entities		76,365			76,095
Intangible lease assets and other assets		126,035			140,241
Total assets	$	3,063,584		$	3,064,897
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY:
Other liabilities	$	113,173		$	102,910
Intercompany due to non-debtor entities		5,771			5,062
Total liabilities not subject to compromise		118,944			107,972
Liabilities subject to compromise		2,591,706			2,551,490
Shareholders' equity and noncontrolling interests of the Debtors		352,934			405,435
Total liabilities and equity	$	3,063,584		$	3,064,897

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Condensed Combined Statements of Operations

	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
Total revenues	$	90,191		$	178,664
Depreciation and amortization		(34,228	)		(68,382	)
Loss on impairment		—			(57,182	)
Expenses		(41,448	)		(86,839	)
Interest and other income		1,568			3,356
Interest expense (unrecognized contractual interest expense was $45,279 and $90,043 for the three and six months ended June 30, 2021, respectively)		(395	)		(1,027	)
Reorganization items		(17,073	)		(40,006	)
Gain (loss) on sales of real estate assets		107			(192	)
Income tax provision		(705	)		(1,456	)
Net loss	$	(1,983	)	$	(73,064	)

Condensed Combined Statements of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:	Six Months Ended June 30, 2021
Net loss	$	(73,064	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on impairment		57,182
Other assets and liabilities, net		96,277
Net cash provided by operating activities		80,395
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities		(319,887	)
Redemptions of available-for-sale securities		368,380
Changes in other assets		(5,437	)
Net cash provided by investing activities		43,056
CASH FLOWS FROM FINANCING ACTIVITIES:
Net distributions from non-Debtor subsidiaries		20,845
Other financing activities		47
Net cash provided by financing activities		20,892
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		144,343
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		76,180
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	220,523
Reconciliation from condensed combined statement of cash flows to condensed combined balance sheet:
Cash and cash equivalents	$	131,713
Restricted cash		88,810
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	220,523

SUPPLEMENTAL INFORMATION
Cash paid for reorganization items	$	35,602

Note 3 – Summary of Significant Accounting Policies

Accounting Guidance Not Yet Adopted

Description

Expected

Adoption Date &

Application

Method

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 June 30, 2021, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period to determine the impact on its condensed consolidated financial statements.

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Accounts Receivable

Receivables include amounts billed and currently due from tenants pursuant to lease agreements and receivables attributable to straight-line rents associated with those lease agreements. Individual leases where the collection of rents is in dispute are assessed for collectability based on management’s best estimate of collection considering the anticipated outcome of the dispute. Individual leases that are not in dispute are assessed for collectability and upon the determination that the collection of rents over the remaining lease term is not probable, accounts receivable are reduced as an adjustment to rental revenues. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further, management assesses whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical collection levels and current economic trends. An allowance for the uncollectable portion of the portfolio is recorded as an adjustment to rental revenues. 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 its impact on the Company’s tenants’ ability to pay rents 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, billing disputes, lease negotiation status and executed deferral or abatement agreements, 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 months ended June 30, 2021 and 2020, revenues were reduced by $6,704 and $36,912, respectively, associated with uncollectable revenues, which includes the write-off of $2,623 and $1,088, respectively, for straight line rent receivables. For the six months ended June 30, 2021 and 2020, revenues were reduced by $15,525 and $40,692, respectively, associated with uncollectable revenues, which includes the write-off of $4,302 and $2,557, respectively, for straight line rent 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 the carrying value of any of its long-lived assets or investment in unconsolidated affiliates may not be recoverable. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. The prolonged outbreak of the COVID-19 pandemic resulted in sustained closure of the Company’s properties for a period of time during 2020, 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 market and economic conditions resulting from the COVID-19 pandemic.

As of June 30, 2021, 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 three months ended June 30, 2021, the Company did not record any impairment charges. For the six months ended June 30, 2021, the Company recorded impairment charges of $57,182 related to three malls. For the three months ended June 30, 2020, the Company recorded an impairment charge of $13,274 related to one mall. For the six months ended June 30, 2020, the Company recorded impairment charges of $146,918 related to three malls.

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As of June 30, 2021, 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 six-month periods ended June 30, 2021 and 2020.

Note 4 – Revenues

Revenues

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Rental revenues	$	131,316	$	120,222	$	259,491	$	281,395
Revenues from contracts with customers (ASC 606):
Operating expense reimbursements ⁽¹⁾		1,674		2,103		3,830		4,492
Management, development and leasing fees ⁽²⁾		1,449		1,055		3,108		3,147
Marketing revenues ⁽³⁾		520		351		821		1,094
		3,643		3,509		7,759		8,733

Other revenues		1,602		480		2,495		1,657
Total revenues ⁽⁴⁾	$	136,561	$	124,211	$	269,745	$	291,785

(1)

Includes $1,582 in the Malls segment and $92 in the All Other segment for the three months ended June 30, 2021, and includes $2,024 in the Malls segment and $79 in the All Other segment for the three months ended June 30, 2020. Includes $3,651 in the Malls segment and $179 in the All Other segment for the six months ended June 30, 2021, and includes $4,345 in the Malls segment and $147 in the All Other segment for the six months ended June 30, 2020.

(2)	Included in All Other segment.

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

(4)	Sales taxes are excluded from revenues.

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

Revenues from Contracts with Customers

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 June 30, 2021, 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

23,568

46,093

48,128

117,789

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 5 – Leases

The components of rental revenues are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Fixed lease payments	$	69,543	$	99,150	$	140,770	$	236,544
Variable lease payments		61,773		21,072		118,721		44,851
Total rental revenues	$	131,316	$	120,222	$	259,491	$	281,395

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The undiscounted future fixed lease payments to be received under the Company's operating leases as of June 30, 2021, are as follows:

Years Ending December 31,	Operating Leases
2021 ⁽¹⁾	$	181,159
2022		322,208
2023		270,898
2024		217,637
2025		167,910
2026		120,955
Thereafter		272,145
Total undiscounted lease payments	$	1,552,912

(1)	Reflects rental payments for the fiscal period July 1, 2021 to December 31, 2021.

Note 6 – 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 $941,440 and $1,091,745 at June 30, 2021 and December 31, 2020, respectively. The estimated fair value of liabilities subject to compromise was $1,890,020 and $1,606,959 at June 30, 2021 and December 31, 2020, 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.

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During the three and six months ended June 30, 2021, the Company has continued to reinvest in U.S. Treasury securities using the cash that was drawn on the secured line of credit to preserve liquidity at the beginning of the COVID-19 pandemic. The Company designated the U.S. Treasury securities purchased as available-for-sale (“AFS”). The following table sets forth information regarding the Company’s AFS securities that were measured at fair value for the six months ended June 30, 2021:

AFS Security

Amortized

Cost ⁽¹⁾

Allowance

for credit

losses ⁽²⁾

Total unrealized loss

Fair value as of June 30, 2021

U.S. Treasury securities

183,496

—

)

183,490

(1)	The U.S. Treasury securities have maturities ranging from July 2021 through September 2021.

(2)

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 six months ended June 30, 2021.

Subsequent to June 30, 2021, the Company reinvested proceeds from matured U.S. Treasury securities into additional U.S. Treasury securities. See Note 15 for more information.

During March 2020, the Company purchased U.S. Treasury securities that were scheduled to mature between April 2021 and June 2021. The Company designated these securities as 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. In December 2020, the Company purchased additional U.S Treasury securities. The U.S. Treasury securities purchased in December 2020 matured between January 2021 and March 2021, and the Company subsequently reinvested in additional U.S. Treasury securities. The Company also designated these as AFS. The following table sets forth information regarding the Company’s AFS securities that were measured at fair value for the year ended December 31, 2020:

AFS Security

Amortized

Cost

Allowance

for credit

losses ⁽¹⁾

Total unrealized gain

Fair value as of December 31, 2020

U.S. Treasury securities

233,053

—

233,071

(1)

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’s evaluation of the recoverability of long-lived assets involves the comparison of undiscounted future cash flows expected to be generated by each property over the Company’s expected remaining holding period to the respective carrying amount. The determination of whether the carrying value is recoverable also requires management to make estimates related to probability weighted scenarios impacting undiscounted cash flow models. 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 NOI, occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition of the Property and tenant mix. The quantitative and qualitative factors impact the selection of the terminal capitalization rate which is used in both an undiscounted and discounted cash flow model and the discount rate used in a discounted cash flow model. 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. See below for a description of the estimates and assumptions the Company used in its impairment analysis. See Note 3 for additional information describing the Company's impairment review process.

Long-lived Assets Measured at Fair Value in 2021

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 six months ended June 30, 2021:

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			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
2021:
Long-lived assets	$	38,500	$	—	$	—	$	38,500	$	57,182

During the six months ended June 30, 2021, the Company recognized impairments of real estate of $57,182 related to three malls.

Impairment Date	Property	Location	Segment Classification	Loss on Impairment		Fair Value
March	Eastland Mall ⁽¹⁾	Bloomington, IL	Malls	$	13,243	$	10,700
March	Old Hickory Mall ⁽²⁾	Jackson, TN	Malls		20,149		12,400
March	Stroud Mall ⁽³⁾	Stroudsburg, PA	Malls		23,790		15,400
				$	57,182	$	38,500

(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 $10,700. The mall had experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Eastland Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of nine years, with a sale at the end of the holding period, a capitalization rate of 14.0% and a discount rate of 15.0%.

(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 $12,400. The mall had experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Old Hickory Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of nine years, with a sale at the end of the holding period, a capitalization rate of 13.0% and a discount rate of 14.0%.

(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 $15,400. The mall had experienced a decline in cash flows due to store closures and rent reductions. Management determined the fair value of Stroud Mall using a discounted cash flow methodology. The discounted cash flow used assumptions including a holding period of nine years, with a sale at the end of the holding period, a capitalization rate of 11.75% and a discount rate of 12.5%.

During the six months ended June 30, 2021, the Company adjusted the combined negative equity in Asheville Mall and Park Plaza to zero upon deconsolidation, which represents the estimated fair values of the Company’s investments in these properties. See Note 8 for additional information.

Long-lived Assets Measured at Fair Value in 2020

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 six months ended June 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	$	146,918

During the six months ended June 30, 2020, the Company recognized impairments of real estate of $146,918 related to three malls:

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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
				$	146,918	$	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 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 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 in cash flows 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 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 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%.

Note 7 – Dispositions and Held for Sale

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 $2,623 related to the sale of two outparcels during the three months ended June 30, 2020; and, realized a gain of $2,763 related to the sale of three outparcels during the six months ended June 30, 2020.

Note 8 – Unconsolidated Affiliates and Noncontrolling Interests

Unconsolidated Affiliates

Although the Company had majority ownership of certain joint ventures during 2021 and 2020, 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 June 30, 2021, the Company had investments in 31 entities, which are accounted for using the equity method of accounting. The Company's ownership interest in these unconsolidated affiliates ranges from 20% to 100%. Of these entities, 17 are owned in 50/50 joint ventures.

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2021 Activity - Unconsolidated Affiliates

Ambassador Infrastructure, LLC

The Company reached an agreement with the lender to modify the loan secured by Ambassador Infrastructure. The agreement provides an additional four-year term with a fixed interest rate of 3.0%. The extended loan, maturing in March 2025, had an outstanding balance of $8,250 at June 30, 2021, as $1,110 was paid down in conjunction with the modification. Additionally, the agreement provides a waiver related to the default triggered as a result of the Chapter 11 Cases.

Asheville Mall CBMS, LLC and Park Plaza Mall CBMS, LLC

During the six months ended June 30, 2021, the Company deconsolidated Asheville Mall and Park Plaza as a result of the Company losing control of these properties when each was placed in receivership as part of the foreclosure process. The Company evaluated the loss of control of each property and determined that it was no longer the primary beneficiary of the respective wholly owned subsidiaries that own these properties. As a result, the Company adjusted the combined negative equity in the two entities to zero, which represents the estimated fair value of the Company’s investments in these properties, and recognized a gain on deconsolidation of $55,131.

Continental 425 Fund LLC

Subsequent to June 30, 2021, Continental 425 Fund LLC reached an agreement with the lender to amend to the construction loan secured by Springs at Port Orange. See Note 15 for more information.

Port Orange I, LLC

In March 2021, the Company reached an agreement with the lender to modify the loan secured by The Pavilion at Port Orange. The agreement provides an additional four-year term, with a one-year extension option, for a fully extended maturity date of February 2026. Additionally, the agreement provides forbearance related to the default triggered as a result of the Chapter 11 Cases. This loan had an outstanding balance of $52,448 at June 30, 2021.

West Melbourne I, LLC

In March 2021, the Company reached agreements with the lender to modify the loans secured by Hammock Landing Phases I & II. Each agreement provides an additional four-year term, with a one-year extension option, for a fully extended maturity date of February 2026. Additionally, the agreements provide forbearance related to the default triggered as a result of the Chapter 11 Cases. These loans had a combined outstanding loan balance of $53,810 at June 30, 2021.

Impact of Chapter 11 Proceedings

Condensed Combined Financial Statements - Unconsolidated Affiliates

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

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	June 30, 2021			December 31, 2020
ASSETS:
Investment in real estate assets	$	2,457,025		$	2,346,124
Accumulated depreciation		(905,055	)		(862,435	)
		1,551,970			1,483,689
Developments in progress		15,222			28,138
Net investment in real estate assets		1,567,192			1,511,827
Other assets		190,859			174,966
Total assets	$	1,758,051		$	1,686,793
LIABILITIES:
Mortgage and other indebtedness, net	$	1,573,118		$	1,439,454
Other liabilities		73,164			45,280
Total liabilities		1,646,282			1,484,734
OWNERS' EQUITY:
The Company		117,267			132,350
Other investors		(5,498	)		69,709
Total owners' equity		111,769			202,059
Total liabilities and owners’ equity	$	1,758,051		$	1,686,793

	Three Months Ended June 30,
	2021			2020
Total revenues	$	57,747		$	46,661
Net loss ⁽¹⁾	$	(9,698	)	$	(6,511	)


	Six Months Ended June 30,
	2021			2020
Total revenues	$	116,503		$	107,175
Net loss ⁽¹⁾	$	(13,019	)	$	(1,468	)

(1)	The Company's pro rata share of net loss is $(4,275) and $(6,079) for the three months ended June 30, 2021 and 2020, respectively; and, $(7,351) and $(5,061) for the six months ended June 30, 2021 and 2020, respectively.

Variable Interest Entities

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 June 30, 2021, 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 June 30, 2021:

Unconsolidated VIEs:	Investment in Real Estate Joint Ventures and Partnerships			Maximum Risk of Loss
Ambassador Infrastructure, LLC ⁽¹⁾	$	(11	)	$	8,250
Asheville Mall CBMS, LLC		—			—
Atlanta Outlet JV, LLC ⁽¹⁾		24,537			29,073
CBL-T/C, LLC		64,342			64,342
CBL-TRS Joint Venture, LLC		18,938			18,938
Continental 425 Fund LLC		4,681			4,681
EastGate Storage, LLC ⁽¹⁾		476			3,721
El Paso Outlet Center Holding, LLC		9,126			9,126
Fremaux Town Center JV, LLC		6,306			6,306
Hamilton Place Self Storage ⁽¹⁾		994			4,495
Louisville Outlet Shoppes, LLC ⁽¹⁾		(11,103	)		8,632
Mall of South Carolina L.P.		(13,863	)		—
Mall of South Carolina Outparcel L.P.		(2,143	)		—
Park Plaza Mall CBMS, LLC		—			—
Parkdale Self Storage, LLC ⁽¹⁾		604			7,104
PHG-CBL Lexington, LLC		35			35
Self Storage at Mid Rivers, LLC ⁽¹⁾		510			3,504
Shoppes at Eagle Point, LLC ⁽¹⁾		17,887			30,627
Vision - CBL Hamilton Place, LLC		3,804			3,804
	$	125,120		$	202,638

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

Note 9 – 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 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 June 30, 2021.

Debt of the Operating Partnership

Mortgage and other indebtedness, net, consisted of the following:

	June 30, 2021						December 31, 2020
	Amount			Weighted- Average Interest Rate ⁽¹⁾			Amount			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating Properties	$	963,118			5.07	%	$	1,120,203			5.12	%
Total fixed-rate debt		963,118			5.07	%		1,120,203			5.12	%
Variable-rate debt:
Recourse loans on operating Properties		27,461			2.99	%		68,061			4.69	%
Total variable-rate debt		27,461			2.99	%		68,061			4.69	%
Total fixed-rate and variable-rate debt		990,579			5.01	%		1,188,264			5.10	%
Unamortized deferred financing costs ⁽²⁾		(2,987	)					(3,433	)
Total mortgage and other indebtedness, net	$	987,592					$	1,184,831

Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following:

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	June 30, 2021					December 31, 2020
	Amount		Weighted- Average Interest Rate ⁽¹⁾			Amount		Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Senior unsecured notes due 2023 ⁽³⁾	$	450,000		5.25	%	$	450,000		5.25	%
Senior unsecured notes due 2024 ⁽³⁾		300,000		4.60	%		300,000		4.60	%
Senior unsecured notes due 2026 ⁽³⁾		625,000		5.95	%		625,000		5.95	%
Total fixed-rate debt		1,375,000		5.43	%		1,375,000		5.43	%
Variable-rate debt:
Secured line of credit ⁽⁴⁾		675,926		9.50	%		675,926		9.50	%
Secured term loan ⁽⁴⁾		438,750		9.50	%		438,750		9.50	%
Recourse loan on operating Property ⁽⁵⁾		39,462		5.76	%		—		—
Total variable-rate debt		1,154,138		9.37	%		1,114,676		9.50	%
Total fixed-rate and variable-rate debt		2,529,138		7.23	%		2,489,676		7.25	%
Unpaid accrued interest ⁽⁶⁾		58,370					57,644
Prepetition unsecured or under secured liabilities		4,198					4,170
Total liabilities subject to compromise	$	2,591,706				$	2,551,490

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

(2)	Unamortized deferred financing costs of $2,624 for certain property-level, non-recourse mortgage loans may be required to be written off in the event a waiver or restructuring of terms cannot be negotiated and the debt is either redeemed or otherwise extinguished.

(3)

In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the senior unsecured notes subsequent to the filing of the Chapter 11 Cases. The outstanding amount of the senior unsecured notes is included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020.

(4)

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 June 30, 2021 and December 31, 2020 was 9.50%. In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the secured credit facility subsequent to the filing of the Chapter 11 Cases. The outstanding amount of the secured credit facility is included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020.

(5)	On May 26, 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy.

(6)

As of June 30, 2021, represents interest accrued on the loan secured by The Outlet Shoppes at Laredo prior to May 26, 2021, and the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases. As of December 31, 2020, represents interest accrued on the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases.

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 $2,154,326 at June 30, 2021.

Senior Unsecured Notes ⁽¹⁾

Description	Issued ⁽²⁾	Amount		Interest Rate			Maturity Date
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)	In March 2021, the Company entered into an amended and restated Restructuring Support Agreement with its secured credit facility lenders and senior unsecured noteholders that provides for a fully consensual comprehensive restructuring.

(2)	Issued by the Operating Partnership. CBL is a limited guarantor of the Operating Partnership’s obligations under the Notes.

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Senior Secured Credit Facility

The Company has a $1,185,000 senior secured credit facility, which includes a revolving line of credit drawn to its maximum borrowing capacity of $675,926 and a term loan with an outstanding balance of $438,750 at June 30, 2021. As further described in Note 2 and in Financial Covenants and Restrictions below, the filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility. 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. As a result of the 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.

See Financial Covenants and Restrictions below and Liquidity and Going Concern Considerations and Voluntary Reorganization under Chapter 11 in Note 2 for information on the event of default resulting from the filing of the Chapter 11 Cases.

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). Any default in the payment of any recourse indebtedness of the Operating Partnership greater than or equal to $50,000 will constitute an event of default under the Notes and the senior secured credit facility. Additionally, the 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.

The filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in acceleration of the outstanding principal and other sums due.

Certain of the Company’s properties that are pledged as collateral on non-recourse mortgage loans and the secured credit facility are subject to cash management agreements with the lenders, which restrict the cash balances associated with those properties to only be used for debt service, capital items and operating expense obligations.

Loans in Default

As of June 30, 2021, two non-recourse loans that are each secured by one of the Company’s malls were in default. The default of the two non-recourse loans occurred prior to the filing of the Chapter 11 Cases. As of June 2021, the lenders under each of these loans accelerated the outstanding amounts due and payable on the loans. The foreclosure process has not yet commenced for EastGate Mall. The Company is in discussions with the lender regarding a restructure of the loan secured by Greenbrier Mall. 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 June 30, 2021 are as follows:

Property	Location	Interest Rate	Scheduled Maturity Date	Loan Amount
Greenbrier Mall	Chesapeake, VA	5.41%	Dec-19	$	61,647
EastGate Mall	Cincinnati, OH	5.83%	Apr-21		30,281

As described in Note 2, the filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. The loans have an aggregate outstanding balance of $817,757 at June 30, 2021. On May 26, 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy. Subsequent to June 30, 2021, the Company entered into a forbearance agreement with the lender regarding the loan secured by Fayette Mall. See Note 15 for more information.

In conjunction with the deconsolidation of Asheville Mall and Park Plaza, the Company deconsolidated the loan securing each property, which represented $138,926 of previously consolidated debt. See Note 8 for additional information.

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Scheduled Principal Payments

As of June 30, 2021, 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 the secured line of credit, are as follows:

2021 ⁽¹⁾	$	97,868
2022		408,410
2023		1,519,979
2024		343,409
2025		37,624
2026		763,533
Total ⁽²⁾		3,170,823
Principal balance of loans with maturity date prior to June 30, 2021 ⁽³⁾		348,894
Total mortgage and other indebtedness, net	$	3,519,717

(1)	Reflects scheduled principal amortization and balloon payments for the fiscal period July 1, 2021 through December 31, 2021.

(2)	Includes $2,529,138 of liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of June 30, 2021, and as the expected maturity date is subject to the outcome of the Chapter 11 Cases, the original, legal maturity dates are reflected in this table.

(3)

Represents the aggregate principal balance as of June 30, 2021 of the loans secured by EastGate Mall, Fayette Mall, Hamilton Crossing, Greenbrier Mall, Parkdale Mall & Crossing and The Outlet Shoppes at Laredo, which are in default. The Company is in discussions with the lender regarding the loans secured by these properties. The loan secured by Greenbrier Mall matured in December 2019 and had a balance of $61,647 as of June 30, 2021. The loan secured by Parkdale Mall & Crossing matured in March 2021 and had a balance of $71,278 as of June 30, 2021. The loan secured by EastGate Mall matured in April 2021 and had a balance of $30,281 as of June 30, 2021. The loan secured by Hamilton Crossing matured in April 2021 and had a balance of $8,039 as of June 30, 2021. The loan secured by Fayette Mall matured in May 2021 and had a balance of $138,187 as of June 30, 2021. Subsequent to June 30, 2021, the Company entered into a forbearance agreement with the lender regarding the loan secured by Fayette Mall (see Note 15). The loan secured by The Outlet Shoppes at Laredo matured in May 2021 and had a balance of $39,462 as of June 30, 2021.

Of the $97,868 of scheduled principal payments for the remainder of 2021, $70,507 relates to the maturing principal balance of two operating Property loans. The loan secured by Alamance Crossing matured in July 2021 and is currently in default. The Company is in discussions with the lender regarding a loan extension.

The Company’s mortgage and other indebtedness had a weighted-average maturity of 2.6 years as of June 30, 2021 and 3.0 years as of December 31, 2020.

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.

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

Three Months Ended June 30, 2021	Malls			All Other ⁽¹⁾			Total
Revenues ⁽²⁾	$	125,504		$	11,057		$	136,561
Property operating expenses ⁽³⁾		(41,132	)		(2,385	)		(43,517	)
Interest expense		(21,584	)		(715	)		(22,299	)
Gain on sales of real estate assets		—			107			107
Other expense		(64	)		(223	)		(287	)
Segment profit	$	62,724		$	7,841			70,565
Depreciation and amortization								(47,499	)
General and administrative expense								(11,269	)
Litigation settlement								(57	)
Interest and other income								752
Reorganization items								(17,073	)
Income tax provision								(705	)
Equity in losses of unconsolidated affiliates								(4,275	)
Net loss							$	(9,561	)
Capital expenditures ⁽⁴⁾	$	10,308		$	1,979		$	12,287



Three Months Ended June 30, 2020	Malls			All Other ⁽¹⁾			Total
Revenues ⁽²⁾	$	112,002		$	12,209		$	124,211
Property operating expenses ⁽³⁾		(38,385	)		(2,400	)		(40,785	)
Interest expense		(18,960	)		(33,671	)		(52,631	)
Other expense		—			(242	)		(242	)
Gain on sales of real estate assets		—			2,623			2,623
Segment profit (loss)	$	54,657		$	(21,481	)		33,176
Depreciation and amortization								(52,663	)
General and administrative expense								(18,727	)
Interest and other income								891
Loss on impairment								(13,274	)
Income tax provision								(16,117	)
Equity in losses of unconsolidated affiliates								(6,079	)
Net loss							$	(72,793	)
Capital expenditures ⁽⁴⁾	$	9,754		$	1,377		$	11,131

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Six Months Ended June 30, 2021	Malls			All Other ⁽¹⁾			Total
Revenues ⁽²⁾	$	244,832		$	24,913		$	269,745
Property operating expenses ⁽³⁾		(86,727	)		(5,924	)		(92,651	)
Interest expense		(44,754	)		(1,675	)		(46,429	)
Other expense		(64	)		(223	)		(287	)
Loss on sales of real estate assets		—			(192	)		(192	)
Segment profit	$	113,287		$	16,899			130,186
Depreciation and amortization								(95,611	)
General and administrative expense								(23,881	)
Litigation settlement								801
Interest and other income								1,528
Reorganization items								(40,006	)
Loss on impairment								(57,182	)
Gain on deconsolidation								55,131
Income tax provision								(1,456	)
Equity in losses of unconsolidated affiliates								(7,351	)
Net loss							$	(37,841	)
Capital expenditures ⁽⁴⁾	$	13,799		$	2,616		$	16,415


Six Months Ended June 30, 2020	Malls			All Other ⁽¹⁾			Total
Revenues ⁽²⁾	$	265,353		$	26,432		$	291,785
Property operating expenses ⁽³⁾		(90,483	)		(5,667	)		(96,150	)
Interest expense		(37,107	)		(62,516	)		(99,623	)
Other expense		—			(400	)		(400	)
Gain (loss) on sales of real estate assets		(25	)		2,788			2,763
Segment profit (loss)	$	137,738		$	(39,363	)		98,375
Depreciation and amortization								(108,565	)
General and administrative expense								(36,563	)
Interest and other income								3,288
Loss on impairment								(146,918	)
Income tax provision								(16,643	)
Equity in losses of unconsolidated affiliates								(5,061	)
Net loss							$	(212,087	)
Capital expenditures ⁽⁴⁾	$	27,810		$	3,653		$	31,463

Total assets	Malls		All Other ⁽¹⁾		Total
June 30, 2021	$	3,546,596	$	717,611	$	4,264,207

December 31, 2020	$	3,702,523	$	741,217	$	4,443,740

(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 4 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.

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(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.

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 six- month periods ended June 30, 2021 and 2020.

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 six months ended June 30, 2021 and 2020 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 six- month periods ended June 30, 2021 and 2020.

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The following table presents basic and diluted EPU for common and special common units for the three and six months ended June 30, 2021 and 2020.

	Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020
Net Loss Attributable to Common Unitholders	$	(9,112	)	$	(83,529	)	$	(36,573	)	$	(233,839	)
Distributions to Common Unitholders - Declared Only		—			—			—			—
Distributions to Special Common Unitholders - Declared and Undeclared
Common units issued on conversion of SCUs		—			—			—			—
S-SCUs		—			(1,143	)		—			(2,286	)
L-SCUs		—			—			—			(433	)
K-SCUs		—			(844	)		—			(1,687	)
Total Undistributed Loss Available to Common and Special Common Unitholders	$	(9,112	)	$	(85,516	)	$	(36,573	)	$	(238,245	)

Distributed Earnings:
Common units issued on conversion of SCUs		—			—			—			—
S-SCUs		—			1,143			—			2,286
L-SCUs		—			433			—			433
K-SCUs		—			844			—			1,687
Common Units		—			—			—			—

Undistributed Loss:
Common units issued on conversion of SCUs	$	—		$	—		$	—		$	—
S-SCUs		—			—			—			—
L-SCUs		—			—			—			—
K-SCUs		—			—			—			—
Common Units		(9,112	)		(85,513	)		(36,573	)		(238,243	)

Weighted Average:
Common units issued on conversion of SCUs		936			1,697			936			1,697
S-SCUs		1,561			1,561			1,561			1,561
L-SCUs		572			572			572			572
K-SCUs		869			1,137			869			1,137
Common Units		197,624			196,736			197,639			196,513

Basic EPU:
Common units issued on conversion of SCUs	$	—		$	—		$	—		$	—
S-SCUs		—			0.73			—			1.46
L-SCUs		—			0.76			—			0.76
K-SCUs		—			0.74			—			1.48
Common Units		(0.05	)		(0.43	)		(0.18	)		(1.21	)

Total Basic EPU	$	(0.05	)	$	(0.41	)	$	(0.18	)	$	(1.16	)

Diluted EPU:
Common units issued on conversion of SCUs	$	—		$	—		$	—		$	-
S-SCUs		—			0.73			—			1.46
L-SCUs		—			0.76			—			0.76
K-SCUs		—			0.74			—			1.48
Common Units		(0.05	)		(0.43	)		(0.18	)		(1.21	)

Total Diluted EPU	$	(0.05	)	$	(0.41	)	$	(0.18	)	$	(1.16	)

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For additional information regarding the participation rights and minimum distributions relating to the common and special common units, see Note 10. Shareholders’ Equity and Partners’ Capital and Note 11. Redeemable Interests and Noncontrolling Interests of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. 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. The undeclared distributions on the preferred units and special common units ceased to cumulate as of the Commencement Date as a result of the Chapter 11 Cases.

Note 12 – Contingencies

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’ 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.

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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. On November 12, 2020, the Court in the various Delaware actions entered an order staying these matters in light of the Suggestion of Bankruptcy, as did the Court in the Tennessee actions on December 8, 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 guaranty 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 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 June 30, 2021 and December 31, 2020:

	As of June 30, 2021									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⁾		June 30, 2021		December 31, 2020
West Melbourne I, LLC - Phase I	50%	$	39,635	50%		$	19,818	Feb-2025	⁽²⁾	$	198	$	201
West Melbourne I, LLC - Phase II	50%		14,175	50%			7,088	Feb-2025	⁽²⁾		71		72
Port Orange I, LLC	50%		52,448	50%			26,224	Feb-2025	⁽²⁾		262		266
Ambassador Infrastructure, LLC	65%		8,250	100%			8,250	Mar-2025			83		94
Shoppes at Eagle Point, LLC	50%		34,285	35%	⁽³⁾		12,740	Oct-2021			127		127
EastGate Storage, LLC	50%		6,490	50%	⁽⁴⁾		3,245	Dec-2022			32		33
Self Storage at Mid Rivers, LLC	50%		5,955	50%	⁽⁴⁾		2,994	Apr-2023			30		30
Parkdale Self Storage, LLC	50%		6,392	100%	⁽⁵⁾		6,500	Jul-2024			65		65
Hamilton Place Self Storage, LLC	54%		6,770	50%	⁽⁴⁾		3,501	Sep-2024			35		35
Atlanta Outlet JV, LLC	50%		4,536	100%			4,536	Nov-2023			—		—
Louisville Outlet Shoppes, LLC	50%		8,632	100%			8,632	Oct-2021			—		—
Total guaranty liability										$	903	$	923

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(1)	Excludes any extension options.

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

(3)	The guaranty is for a fixed amount of $12,740 throughout the term of the loan, including any extensions. The loan has a one-year extension option, at the joint venture’s election, for an outside maturity date of October 2022.

(4)	Subject to the bankruptcy default being waived, the guaranty may be reduced to 25% once certain debt and operational metrics are met.

(5)	The guaranty was increased to 100% as a result of the Chapter 11 Cases filed by the Company.

As described in Note 2, the filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. As of June 30, 2021, there is a default under each of the following guaranteed loans as a result of the filing of the Chapter 11 Cases: EastGate Storage, LLC; Self Storage at Mid Rivers, LLC; Parkdale Self Storage, LLC; Hamilton Place Self Storage, LLC and Atlanta Outlet JV, 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 $10,000. 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 record a credit loss related to this guaranty for the three and six months ended June 30, 2021 and June 30, 2020.

For the three and six months ended June 30, 2021 and June 30, 2020, the Company evaluated each guaranty, listed in the table above, individually by evaluating the debt service ratio, cash flow forecasts, the performance of each loan and, where applicable, the collateral value in relation to the outstanding amount of the loan. The result of the analysis was that each loan is current, performing and, where applicable, the collateral value was greater than the outstanding amount of the loan. The Company did not record a credit loss related to the guarantees listed in the table above for the three and six months ended June 30, 2021 and June 30, 2020.

Note 13 – Share-Based Compensation

As of June 30, 2021, 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. The Compensation Committee of the Board of Directors (the “Committee”) administers the 2012 Plan.

Restricted Stock Awards

Share-based compensation expense related to the restricted stock awards was $246 and $361 for the three months ended June 30, 2021 and 2020, respectively; and $543 and $1,505 for the six months ended June 30, 2021 and 2020, respectively. Share-based compensation cost capitalized as part of real estate assets was $2 and $5 for the three months ended June 30, 2021 and 2020, respectively; and, $6 and $12 for the six months ended June 30, 2021 and 2020, respectively.

A summary of the status of the Company’s nonvested restricted stock awards as of June 30, 2021, and changes during the six months ended June 30, 2021, is presented below:

	Shares			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2021		1,519,606		$	2.15
Granted		—		$	—
Vested		(480,463	)	$	3.11
Forfeited		(15,844	)	$	2.51
Nonvested at June 30, 2021		1,023,299		$	1.70

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As of June 30, 2021, there was $1,352 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 1.9 years.

Long-Term Incentive Program

A summary of the Company’s long-term incentive program (“LTIP”) is disclosed in Note 18 to the consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. Outstanding restricted stock, and related grant/vesting/forfeiture activity during 2021 for awards made to named executive officers under the LTIP, is included in the information presented in the table above.

Performance Stock Units

There were no PSUs granted in 2021. The 1,103,537 outstanding PSUs at June 30, 2021 were granted in the first quarter of 2019. Of that amount, 566,862 PSUs are classified as a liability due to the potential cash component, which is described in the summary of the Company’s LTIP program set forth in Note 18 to the consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. None of the PSUs outstanding at June 30, 2021 were vested.

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.

Share-based compensation expense related to the PSUs was $94 and $(60) for the three months ended June 30, 2021 and 2020, respectively; and $189 and $418 for the six months ended June 30, 2021 and 2020, respectively. Unrecognized compensation costs related to the PSUs was $453 as of June 30, 2021, which is expected to be recognized over a weighted-average period of 1.6 years.

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Note 14 – Noncash Investing and Financing Activities

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

	Six Months Ended June 30,
	2021			2020
Additions to real estate assets accrued but not yet paid	$	8,332		$	14,130
Deconsolidation upon loss of control ⁽¹⁾:
Decrease in real estate assets		(84,860	)		—
Decrease in mortgage and other indebtedness		134,354			—
Decrease in operating assets and liabilities		5,808			—
Decrease in intangible lease and other assets		(171	)		—
Conversion of Operating Partnership units to common stock		—			21,051

(1)	See Note 7 for additional information.

Note 15 – Subsequent Events

In July 2021, the Company reached an agreement with the lender to amend the loan secured by Springs at Port Orange, which extends the term of the note to December 31, 2021, increases the principal amount of the loan to $44,400, or $19,314 at the Company’s share, and provides an interest rate of LIBOR plus 2.0%.

In July 2021, the Company used funds from its matured U.S. Treasury securities to purchase $149,985 in U.S. Treasury securities with maturities that range from September 2021 to October 2021.

In August 2021, the Company entered into a forbearance agreement with the lender regarding the loan secured by Fayette Mall. The forbearance agreement provides for a modified loan contingent upon the Debtors' emergence from bankruptcy and final approval from the lender.

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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, a significant factor that could cause actual outcomes to differ materially from our forward-looking statements is the impact of the risks and uncertainties associated with the Chapter 11 process on our operations and ability to develop and execute our business plans, and to satisfy the conditions and milestones applicable under the third amended Chapter 11 plan of reorganization (with technical modifications) (the “Plan”) that was confirmed by the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) on August 11, 2021. Another significant factor that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effect of the COVID-19 pandemic, and state and/or local regulatory responses 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 for the year ended December 31, 2020, 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 our business plans, and to satisfy the conditions and milestones applicable under the Plan, for the duration of the Chapter 11 Cases;

•

interest rate fluctuations;

•

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

•

the ongoing suspension of trading, and potential delisting, of our common stock and depositary shares representing interests in our Series D Preferred Stock and Series E Preferred Stock, from the NYSE, which has resulted in our common stock and the depositary shares representing interests in our Series D Preferred Stock and Series E Preferred Stock currently trading on the OTC Markets, operated by the OTC Markets Group, Inc.;

•

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;

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•

changes in applicable laws, rules and regulations;

•

disposition of real property;

•

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;

•

the withdrawal that occurred during 2020 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 June 30, 2021. 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 2021. As a result, we did not issue full-year 2021 guidance.

In response to COVID-19, 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 second quarter reflect the ongoing impact of COVID-19. While all properties are open, many state and local markets continue to impose occupancy and other restrictions, as well as imposing new restrictions as the spread of COVID-19 variants increases. 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. We have experienced encouraging improvements in sales and traffic at our centers as vaccination rates increased and government restrictions were lessened, but uncertainty remains as variants of the virus cause further outbreaks. For the six months ended June 30, 2021, same-center sales increased more than 17% as compared with the six months ended June 30, 2019, which, if sustained, bodes well for future leasing efforts. Percentage rents and short-term rents increased significantly during the quarter as a result of the sales rebound. However, revenues for the quarter continue to be impacted by declines in occupancy and rental rates from tenants that filed for bankruptcy or are struggling financially. The pandemic accelerated a number of tenant bankruptcies, resulting in a heightened level of store closures and lost rent in 2020, the impact of which has carried forward into 2021.

The mandated property closures in 2020 resulted in nearly all our tenants closing for a period of time and/or shortening operating hours. As a result, we experienced an increased level of requests for rent deferrals and abatements, as well as defaults on rent obligations. While, in general, we believe that tenants have a clear contractual obligation to pay rent, we have been working with our tenants to address rent deferral and abatement requests. We have granted rent deferrals of $40.5 million since the COVID-19 pandemic began. We also granted rent abatements of approximately $4.7 million and $10.7 million during the three and six months ended June 30, 2021, respectively.

As discussed under Voluntary Reorganization under Chapter 11 below, the Debtors commenced the filing of the Chapter 11 Cases. The filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in acceleration of the outstanding principal and other sums due. See Note 2 and Liquidity and Capital Resources for additional information.

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We had a net loss for the three and six months ended June 30, 2021 of $9.6 million and $37.8 million, respectively, as compared to a net loss for the three and six months ended June 30, 2020 of $72.8 million and $212.1 million, respectively. We recorded a net loss attributable to common shareholders for the three and six months ended June 30, 2021 of $8.9 million and $35.6 million, respectively, as compared to a net loss attributable to common shareholders for the three and six months ended June 30, 2020 of $81.5 million and $215.3 million, respectively. In addition to the ongoing impact of the COVID-19 pandemic, significant items that affected the comparability between the three and six-month periods include:

•

Loss on impairment for the three and six months ended June 30, 2021 that is $13.3 million and $89.7 million lower, respectively;

•

Gain on deconsolidation of $55.1 million for the six months ended June 30, 2021;

•

Interest expense for the three and six months ended June 30, 2021 that is $30.3 million and $53.2 million lower, respectively;

•

Reorganization items for the three and six months ended June 30, 2021 of $17.1 million and $40.0 million, respectively;

•

Income tax provision for the three and six months ended June 30, 2021 that is $15.4 million and $15.2 million lower, respectively.

Our focus is on continuing to execute our strategy to transform our properties into suburban town centers, primarily through the re-tenanting of former anchor locations as well as diversification of in-line tenancy. This operational strategy is also supported by our balance sheet strategy focused on reducing overall debt, extending our debt maturity schedule and lowering our overall cost of borrowings to limit maturity risk, improve net cash flow and enhance enterprise value. As discussed further below under Voluntary Reorganization under Chapter 11, we are pursuing a plan to recapitalize the Company, including restructuring portions of its debt, through the Chapter 11 Cases. While the industry and our Company continue to face challenges, some of which may not be within our control, we believe that the strategies in place to redevelop our Properties and diversify our tenant mix will contribute to stabilization of our portfolio and revenues in future years.

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”), 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 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/cblproperties/dockets.

The filing of the Chapter 11 Cases constituted an event of default that results in the automatic acceleration of certain monetary obligations to be immediately due and payable with respect to the secured credit facility and the senior unsecured notes. On November 2, 2020, we 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 Bankruptcy Court took up the other pending claims during the adversarial proceeding, which has now been stayed pending the confirmation our plan, discussed below.

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customer programs, pay certain critical service providers, honor insurance-related obligations, and pay certain prepetition taxes and related fees on a final basis.

After engaging in negotiations in a Bankruptcy Court-ordered mediation, on March 21, 2021 (the “Agreement Effective Date”), we entered into the First Amended and Restated Restructuring Support Agreement (the “Amended RSA”), with the Consenting Noteholders in excess of 69% (including joinders) of the aggregate principal amount of the Notes and certain lenders party to our secured credit facility who hold in the aggregate in excess of 96% (including joinders) of the aggregate outstanding principal amount of debt under the secured credit facility (the “Consenting Bank Lenders” and together with the Consenting Noteholders, the “Consenting Stakeholders”). The Amended RSA amends and restates the Original RSA and sets forth, subject to certain conditions, the commitments to and obligations of, on the one hand, the Company, and on the other hand, the Consenting Noteholders and Consenting Bank Lenders, in connection with the restructuring transactions (the “Restructuring Transactions”) set forth in the Amended RSA and the plan term sheet attached as Exhibit B to the Amended RSA (the “Plan Term Sheet”). The Amended RSA contemplates that the restructuring and recapitalization of the Debtors will occur through a joint plan of reorganization in the Chapter 11 Cases.

As required by the Amended RSA, (i) on April 15, 2021, we filed an amended Chapter 11 plan of reorganization and accompanying disclosure statement with the Bankruptcy Court; (ii) on May 18, 2021, we filed the second amended Chapter 11 plan of reorganization and accompanying disclosure statement, as further amended on May 19, 2021; and (iii) on May 25, 2021, the Company filed the Plan and accompanying disclosure statement (the “Disclosure Statement”), to implement the restructuring transactions. In addition, on May 26, 2021, the Bankruptcy Court entered an order that among other things, approved our Disclosure Statement and established dates and deadlines related to solicitation of, voting on, and confirmation of the Plan. We filed technical modifications to the Plan on August 9, 2021. The Amended RSA provides that the ongoing litigation between us and the lenders of our secured credit facility (the “Bank Lenders”) arising from the prepetition enforcement actions taken by the Bank Lenders is stayed and is to be dismissed upon the order confirming the Plan becoming a “Final Order” (as defined in the Plan).

On August 11, 2021, following the confirmation hearing, the Bankruptcy Court entered an order confirming the Plan. Pursuant to the Amended RSA, we are required to have the Plan become effective no later than November 1, 2021. We cannot predict the ultimate outcome of the Chapter 11 Cases at this time. For the duration of our Chapter 11 proceedings, our operations and ability to develop and execute our business plan is 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 our assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 proceedings, and the description of our operations, properties and liquidity and capital resources included in this quarterly report may not accurately reflect our 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 our obligations under any such executory contract or unexpired lease with the Debtors is qualified by any overriding rights we have 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.

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Results of Operations

Properties that were in operation for the entire year during 2020 and the six months ended June 30, 2021 are referred to as the “Comparable Properties.” Since January 1, 2020, we have opened two self-storage facilities, deconsolidated two properties and disposed of two properties:

Properties Opened

Property	Location	Date Opened
Parkdale Mall – Self Storage ⁽¹⁾	Beaumont, TX	April 2020
Hamilton Place – Self Storage ⁽¹⁾	Chattanooga, TN	July 2020

(1)	The property 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.

Deconsolidations

Property	Location	Date of Deconsolidation
Asheville Mall ⁽¹⁾	Asheville, NC	January 2021
Park Plaza ⁽¹⁾	Little Rock, AR	March 2021

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

Dispositions

Property	Location	Sales Date
Hickory Point Mall ⁽¹⁾	Forsyth, IL	August 2020
Burnsville Center ⁽¹⁾	Burnsville, MN	December 2020

(1)	Title to the property was transferred to the mortgage holder in satisfaction of the non-recourse debt secured by the property.

Comparison of the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020

Revenues

	Total for the Three Months Ended June 30,						Comparable Properties
	2021		2020		Change		Core		Non-core		Deconsolidation			Dispositions			Total Change
Rental revenues	$	131,316	$	120,222	$	11,094	$	17,227	$	476	$	(3,765	)	$	(2,844	)	$	11,094
Management, development and leasing fees		1,449		1,055		394		394		—		—			—			394
Other		3,796		2,934		862		773		329		(85	)		(155	)		862
Total revenues	$	136,561	$	124,211	$	12,350	$	18,394	$	805	$	(3,850	)	$	(2,999	)	$	12,350

Rental revenues from the Comparable Properties increased primarily due to prior year rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic. Percentage rent increased due to higher sales in the current period, as the COVID-19 pandemic had a significant impact on sales and traffic in the prior-year period.

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Operating Expenses

	Total for the Three Months Ended June 30,									Comparable Properties
	2021			2020			Change			Core			Non-core			Deconsolidation		Dispositions		Total Change
Property operating	$	(19,623	)	$	(16,906	)	$	(2,717	)	$	(3,656	)	$	(364	)	$	653	$	650	$	(2,717	)
Real estate taxes		(15,110	)		(17,837	)		2,727			1,552			(36	)		434		777		2,727
Maintenance and repairs		(8,784	)		(6,042	)		(2,742	)		(3,031	)		(119	)		254		154		(2,742	)
Property operating expenses		(43,517	)		(40,785	)		(2,732	)		(5,135	)		(519	)		1,341		1,581		(2,732	)
Depreciation and amortization		(47,499	)		(52,663	)		5,164			1,658			890			1,799		817		5,164
General and administrative		(11,269	)		(18,727	)		7,458			7,458			—			—		—		7,458
Loss on impairment		—			(13,274	)		13,274			—			—			13,274		—		13,274
Litigation settlement		(57	)		—			(57	)		(57	)		—			—		—		(57	)
Other		(287	)		(242	)		(45	)		(45	)		—			—		—		(45	)
Total operating expenses	$	(102,629	)	$	(125,691	)	$	23,062		$	3,879		$	371		$	16,414	$	2,398	$	23,062

Property operating expenses at the Comparable Properties increased primarily due to lessening restrictions that allowed for the reopening of properties related to the COVID-19 pandemic and the actions taken in the prior year period to reduce operating expenses to mitigate the impact of mandated property closures and the effects of the COVID-19 pandemic, including a reduction-in-force and other operating expense initiatives.

The 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.

General and administrative expenses decreased primarily due to prepetition professional and legal fees incurred in the prior-year period related to our restructuring efforts.

In the second quarter of 2020, we recognized $13.3 million of loss on impairment of real estate to write down the book value of one mall. See Note 6 to the condensed consolidated financial statements for more information.

Other Income and Expenses

Interest expense decreased $30.3 million primarily due to not recognizing interest expense on the senior unsecured notes and the secured credit facility subsequent to the filing of the Chapter 11 Cases. The decrease was partially offset by an increase of default interest expense related to property-level non-recourse loans that are in default, which may not be payable depending on the outcome of negotiations with the lenders. In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the secured credit facility or the senior unsecured notes subsequent to the filing of the Chapter 11 Cases.

The income tax provision decreased $15.4 million as compared to the prior-year period due to a full valuation allowance of $16.8 million that was recorded on our deferred tax assets in the prior-year period.

For the three months ended June 30, 2021 we recorded $17.1 million of reorganization items, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees directly related to the Chapter 11 Cases.

Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

Revenues

	Total for the Six Months Ended June 30,							Comparable Properties
	2021		2020		Change			Core			Non-core			Deconsolidation			Dispositions			Total Change
Rental revenues	$	259,491	$	281,395	$	(21,904	)	$	(7,985	)	$	(247	)	$	(6,949	)	$	(6,723	)	$	(21,904	)
Management, development and leasing fees		3,108		3,147		(39	)		(39	)		—			—			—			(39	)
Other		7,146		7,243		(97	)		199			194			(175	)		(315	)		(97	)
Total revenues	$	269,745	$	291,785	$	(22,040	)	$	(7,825	)	$	(53	)	$	(7,124	)	$	(7,038	)	$	(22,040	)

Rental revenues from the Comparable Properties declined primarily due to store closures and rent concessions to tenants that are in bankruptcy or are struggling financially as a result of the COVID-19 pandemic.

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Operating Expenses

	Total for the Six Months Ended June 30,									Comparable Properties
	2021			2020			Change			Core			Non-core			Deconsolidation		Dispositions		Total Change
Property operating	$	(41,425	)	$	(42,615	)	$	1,190		$	(1,316	)	$	(413	)	$	1,290	$	1,629	$	1,190
Real estate taxes		(31,661	)		(36,285	)		4,624			2,203			120			678		1,623		4,624
Maintenance and repairs		(19,565	)		(17,250	)		(2,315	)		(3,328	)		(146	)		394		765		(2,315	)
Property operating expenses		(92,651	)		(96,150	)		3,499			(2,441	)		(439	)		2,362		4,017		3,499
Depreciation and amortization		(95,611	)		(108,565	)		12,954			5,282			2,173			3,188		2,311		12,954
General and administrative		(23,881	)		(36,563	)		12,682			12,682			—			—		—		12,682
Loss on impairment		(57,182	)		(146,918	)		89,736			49,070			831			13,273		26,562		89,736
Litigation settlement		801			—			801			801			—			—		—		801
Other		(287	)		(400	)		113			113			—			—		—		113
Total operating expenses	$	(268,811	)	$	(388,596	)	$	119,785		$	65,507		$	2,565		$	18,823	$	32,890	$	119,785

Property operating expenses at the Comparable Properties increased primarily because of increased operating hours due to lessening restrictions at each property related to the COVID-19 pandemic and the actions taken in the prior year period to reduce operating expenses to mitigate the impact of mandated property closures and the effects of the COVID-19 pandemic, including a reduction-in-force and other operating expense initiatives.

General and administrative expenses decreased primarily due to prepetition professional and legal fees incurred in the prior-year period related to our restructuring efforts.

For the six months ended June 30, 2021, we recognized $57.2 million of loss on impairment of real estate to write down the book value of three malls. For the six months ended June 30, 2020, we recognized $146.9 million of loss on impairment of real estate to write down the book value of three malls. See Note 6 to the condensed consolidated financial statements for more information.

Other Income and Expenses

Interest expense decreased $53.2 million primarily due to not recognizing interest expense on the senior unsecured notes and the secured credit facility subsequent to the filing of the Chapter 11 Cases. The decrease was partially offset by an increase of default interest expense related to property-level non-recourse loans that are in default, which may not be payable depending on the outcome of negotiations with the lenders. In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the secured credit facility or the senior unsecured notes subsequent to the filing of the Chapter 11 Cases.

For the six months ended June 30, 2021, we recorded $55.1 million of gain on deconsolidation related to Asheville Mall and Park Plaza. See Note 8 for more information.

The income tax provision decreased $15.2 million as compared to the prior-year period due to a full valuation allowance of $16.8 million that was recorded on our deferred tax assets in the prior-year period.

For the six months ended June 30, 2021, we recorded $40.0 million of reorganization items, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees directly related to the Chapter 11 Cases.

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).

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We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated Properties. We believe that presenting NOI and same-center NOI (described below) based on our Operating Partnership’s pro rata share of both consolidated and unconsolidated Properties is useful since we conduct substantially all our business through our Operating Partnership and, therefore, it reflects the performance of the Properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in the Operating Partnership. Our definition of NOI may be different than that used by other companies, and accordingly, our calculation of NOI may not be comparable to that of other companies.

Since NOI includes only those revenues and expenses related to the operations of our shopping center Properties, we believe that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on our results of operations. Our calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, 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 categorized as Lender Malls, as defined below under Operational Review.

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 six-month periods ended June 30, 2021 and 2020 is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(9,561	)	$	(72,793	)	$	(37,841	)	$	(212,087	)
Adjustments: ⁽¹⁾
Depreciation and amortization		60,397			65,895			121,458			134,384
Interest expense		31,933			59,736			64,945			113,822
Abandoned projects expense		287			242			287			400
(Gain) loss on sales of real estate assets		(107	)		(2,623	)		192			(2,763	)
Gain on deconsolidation		—			—			(55,131	)		—
Loss on impairment		—			13,274			57,182			146,918
Litigation settlement		57			—			(801	)		—
Reorganization items		17,073			—			40,006			—
Income tax provision		705			16,117			1,456			16,643
Lease termination fees		(167	)		(1,433	)		(1,278	)		(1,653	)
Straight-line rent and above- and below-market lease amortization		2,476			(236	)		5,320			(2,031	)
Net loss attributable to noncontrolling interests in other consolidated subsidiaries		449			487			1,268			694
General and administrative expenses		11,269			18,727			23,881			36,563
Management fees and non-property level revenues		(5,166	)		(1,142	)		(7,379	)		(5,320	)
Operating Partnership's share of property NOI		109,645			96,251			213,565			225,570
Non-comparable NOI		(2,779	)		(6,071	)		(6,674	)		(14,612	)
Total same-center NOI	$	106,866		$	90,180		$	206,891		$	210,958

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

Same-center NOI increased 18.5% for the three months ended June 30, 2021 as compared to the prior-year period. The $16.7 million increase for the three months ended June 30, 2021 compared to the same period in 2020 primarily consisted of a $23.5 million increase in revenues offset by a $6.8 million increase in operating expenses. Rental revenues increased $22.9 million during the quarter primarily due to prior year rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic, as well as a decrease in uncollectable revenues in the current period as compared to the prior year period. Percentage rent increased due to higher sales in the current period, as the COVID-19 pandemic had a significant impact on sales and traffic in the prior-year period.

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Same-center NOI decreased 1.9% for the six months ended June 30, 2021 as compared to the prior-year period. The $4.0 million decrease for the six months ended June 30, 2021 compared to the same period in 2020 primarily consisted of a $0.6 million decrease in revenues and a $3.4 million increase in operating expenses. Rental revenues decreased $0.7 million during the six months ended June 30, 2021, primarily due to rent concessions to tenants that are in bankruptcy or are struggling financially as a result of the COVID-19 pandemic.

Our consolidated unencumbered properties generated approximately 35.5% of total consolidated NOI of $166.2 million (which is at our share and excludes NOI related to dispositions) for the six months ended June 30, 2021.

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.

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 June 30, 2020.

(3)

Excluded Malls - We exclude malls from our core portfolio if they are categorized as a Lender Mall, 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, EastGate Mall, Greenbrier Mall, The Outlet Shoppes of Laredo and Park Plaza were classified as Lender Malls as of June 30, 2021. Asheville Mall, Burnsville Center, EastGate Mall, Hickory Point Mall, Greenbrier Mall and Park Plaza were classified as Lender Malls as of June 30, 2020. 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.

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

	As of June 30,
	2021			2020
Malls		91.9	%		90.9	%
Other Properties		8.1	%		9.1	%

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 in 2020 because of the COVID-19 pandemic, the majority of CBL’s tenants did not report sales for the full reporting period. As a result, the following is a comparison of the change in our same-center sales per square foot for the six months ended June 30, 2021 compared to the six months ended June 30, 2019:

		% Change
Stabilized mall same-center sales per square foot		17.2%

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Occupancy

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

	As of June 30,
	2021			2020
Total portfolio		87.0	%		88.1	%
Malls:
Total Mall portfolio		85.2	%		86.6	%
Same-center Malls		85.2	%		86.8	%
Stabilized Malls		85.2	%		86.8	%
Other Properties:
Associated centers		91.3	%		90.5	%
Community centers		93.5	%		95.2	%

(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.

Bankruptcy-related store closures impacted 2021 occupancy by approximately 379 basis points or 624,000 square feet.

Leasing

The following is a summary of the total square feet of leases signed in the three- and six-month periods ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Operating portfolio:
New leases		210,225		141,751		354,422		420,117
Renewal leases		693,787		133,671		1,292,105		766,431
Development portfolio:
New leases		56,759		—		60,059		7,929
Total leased		960,771		275,422		1,706,586		1,194,477

Average annual base rents per square foot are based on contractual rents in effect as of June 30, 2021 and 2020, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each property type:

	June 30,
	2021		2020
Malls ⁽¹⁾:
Same-center Stabilized Malls	$	30.21	$	32.24
Stabilized Malls		30.21		32.24
Other Properties ⁽²⁾:		15.42		15.72
Associated centers		13.74		14.32
Community centers		16.89		16.87
Office buildings		19.26		19.16

(1)	Excluded properties are not included.

(2)	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 three- and six-month periods ended June 30, 2021 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows:

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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⁾		503,927	$	37.85	$	32.40		(14.4	)%	$	32.80		(13.3	)%
Stabilized Malls		440,701		40.72		34.40		(15.5	)%		34.77		(14.6	)%
New leases		67,997		38.63		32.70		(15.3	)%		34.60		(10.4	)%
Renewal leases		372,704		41.11		34.70		(15.6	)%		34.80		(15.3	)%

Year-to-Date:
All Property Types ⁽²⁾		1,113,692	$	34.07	$	27.88		(18.2	)%	$	28.35		(16.8	)%
Stabilized Malls		986,142		36.04		28.74		(20.3	)%		29.18		(19.1	)%
New leases		135,501		35.27		27.69		(21.5	)%		29.23		(17.1	)%
Renewal leases		850,641		36.17		28.91		(20.1	)%		29.17		(19.4	)%

(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.

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 2021:
New		66		199,355		6.73	$	28.69	$	30.58	$	31.67	$	(2.98	)	(9.4	)%	$	(1.09	)	(3.4	)%
Renewal		350		1,167,087		2.15		26.23		26.40		32.03		(5.80	)	(18.1	)%		(5.63	)	(17.6	)%
Commencement 2021 Total		416		1,366,442		2.88		26.59		27.01		31.98		(5.39	)	(16.9	)%		(4.97	)	(15.5	)%


Commencement 2022:
New		4		7,138		7.08		39.20		40.95		29.56		9.64		32.6	%		11.39		38.5	%
Renewal		81		231,942		2.69		37.95		38.27		41.88		(3.93	)	(9.4	)%		(3.61	)	(8.6	)%
Commencement 2022 Total		85		239,080		2.90		37.99		38.35		41.52		(3.53	)	(8.5	)%		(3.17	)	(7.6	)%

Total 2021/2022		501		1,605,522		2.88	$	28.28	$	28.70	$	33.40	$	(5.12	)	(15.3	)%	$	(4.70	)	(14.1	)%

Liquidity and Capital Resources

As of June 30, 2021, we had $143.9 million available in unrestricted cash and $183.5 million in U.S. Treasury securities. Our total pro rata share of debt at June 30, 2021 was $4,365.7 million. The $128.3 million in restricted cash at June 30, 2021 related to cash held in escrow accounts for insurance, real estate taxes, capital expenditures and tenant allowances as required by the terms of certain mortgage notes payable, as well as amounts related to properties that secure the credit facility and cash management agreements with lenders of certain property-level mortgage indebtedness, which are designated for debt service and operating expense obligations.

During the three and six months ended June 30, 2021, we have continued to reinvest in U.S. Treasury securities using the cash that was drawn on the secured line of credit to preserve liquidity at the beginning of the COVID-19 pandemic. We designated our U.S. Treasury securities as available-for-sale. As of June 30, 2021, our U.S. Treasury securities have maturities ranging from July 2021 through September 2021. Subsequent to June 30, 2021, we reinvested proceeds from matured U.S. Treasury securities into new U.S. Treasury securities. See Note 15 for more information.

In March 2021, we reached agreements with the lenders to modify the loans secured by Hammock Landing Phases I & II and The Pavilion at Port Orange. Each agreement provides an additional four-year term, with a one-year extension option, for a fully extended maturity date of February 2026. These loans had a combined outstanding loan balance of $106.3 million at June 30, 2021. Additionally, each such agreement provides forbearance related to the default triggered as a result of the Chapter 11 Cases. Also, in March 2021, we reached an agreement with the lender to modify the loan secured by Ambassador Infrastructure. The agreement provides an additional four-year term with a fixed interest rate of 3.0%. The extended loan, maturing in March 2025, has an outstanding balance of $8.3 million, as $1.1 million was paid down in conjunction with the modification. The agreement provides a waiver related to the default triggered as a result of the Chapter 11 Cases. On May 26, 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy. Subsequent to June 30, 2021, we entered into a forbearance agreement with the lender regarding the loan secured by Fayette Mall related to the default triggered as a result of the Chapter 11 Cases. See Note 15 for more information.

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The filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The Plan provides for a restructuring of the secured credit facility and the senior unsecured notes.

Our total share of consolidated, unconsolidated and other outstanding debt maturing during 2021, assuming all extension options are elected, is $520.6 million, and we are in discussions with the existing lenders to modify and extend or otherwise refinance the loans. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. See Note 8 and Note 9 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 $272.2 million of cash, cash equivalents and restricted cash as of June 30, 2021, an increase of $150.5 million from December 31, 2020. Of this amount, $143.9 million was unrestricted cash and cash equivalents as of June 30, 2021. Also, at June 30, 2021, we had $183.5 million in U.S. Treasuries with maturities through September 2021.

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

	Six Months Ended June 30,
	2021			2020			Change
Net cash provided by operating activities	$	130,497		$	38,370		$	92,127
Net cash provided by (used in) investing activities		44,188			(191,379	)		235,567
Net cash provided by (used in) financing activities		(24,220	)		244,079			(268,299	)
Net cash flows	$	150,465		$	91,070		$	59,395

Cash Provided by Operating Activities

Cash provided by operating activities increased $92.1 million primarily due to not paying interest on the secured credit facility and senior unsecured notes as a result of the filing of the Chapter 11 Cases. Also, operating cash flows in the prior-year period were significantly impacted by rent deferrals and abatements that we granted to tenants experiencing financial difficulties due to the COVID-19 pandemic.

Cash Provided by (Used in) Investing Activities

During the six months ended June 30, 2020, net cash used in investing activities 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. Whereas, during the six months ended June 30, 2021, we had U.S. Treasury securities mature that we immediately reinvested in new U.S. Treasury securities. We also had a decrease in additions to real estate assets in the current-year period as compared to the prior-year period as a result of programs put in place to reduce capital expenditures and preserve liquidity.

Cash Provided by (Used in) Financing Activities

During the six months ended June 30, 2020, the net cash inflow 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. During the six months ended June 30, 2021, cash used in financing activities primarily relates to principal payments on mortgages.

Debt of the Company

CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all our debt. CBL is a limited guarantor of the Notes, as described in Note 9 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 June 30, 2021.

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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):

Mortgage and other indebtedness, net, consisted of the following:
June 30, 2021:	Consolidated			Noncontrolling Interests			Other Debt ⁽¹⁾		Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽²⁾
Fixed-rate debt:
Non-recourse loans on operating Properties ⁽³⁾	$	963,118		$	(29,744	)	$	138,926	$	606,364		$	1,678,664			4.74	%
Recourse loan on operating Property ⁽⁴⁾		—			—			—		8,250			8,250			3.00	%
Construction loan		—			—			—		3,478			3,478			5.05	%
Total fixed-rate debt		963,118			(29,744	)		138,926		618,092			1,690,392			4.73	%
Variable-rate debt:
Recourse loans on operating Properties		27,461			—			—		87,251			114,712			2.83	%
Construction loans		—			—			—		36,890			36,890			3.08	%
Total variable-rate debt		27,461			—			—		124,141			151,602			2.89	%
Total fixed-rate and variable-rate debt		990,579			(29,744	)		138,926		742,233			1,841,994			4.58	%
Unamortized deferred financing costs ⁽⁵⁾		(2,987	)		238			—		(2,648	)		(5,397	)
Total mortgage and other indebtedness, net	$	987,592		$	(29,506	)	$	138,926	$	739,585		$	1,836,597

Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following:
June 30, 2021:	Consolidated			Noncontrolling Interests			Other Debt ⁽¹⁾		Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽²⁾
Fixed-rate debt:
Senior unsecured notes due 2023 ⁽⁶⁾	$	450,000		$	—		$	—	$	—		$	450,000			5.25	%
Senior unsecured notes due 2024 ⁽⁶⁾		300,000			—			—		—			300,000			4.60	%
Senior unsecured notes due 2026 ⁽⁶⁾		625,000			—			—		—			625,000			5.95	%
Total fixed-rate debt		1,375,000			—			—		—			1,375,000			5.43	%
Variable-rate debt:
Recourse loan on operating Property ⁽⁷⁾		39,462											39,462			5.76	%
Secured line of credit ⁽⁸⁾		675,926			—			—		—			675,926			9.50	%
Secured term loan ⁽⁸⁾		438,750			—			—		—			438,750			9.50	%
Total variable-rate debt		1,154,138			—			—		—			1,154,138			9.37	%
Total fixed-rate and variable-rate debt		2,529,138			—			—		—			2,529,138			7.23	%
Unpaid accrued interest ⁽⁹⁾		58,370			—			—		—			58,370
Prepetition unsecured or under secured liabilities		4,198			—			—		—			4,198
Total liabilities subject to compromise	$	2,591,706		$	—		$	—	$	—		$	2,591,706

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Mortgage and other indebtedness, net, consisted of the following:
December 31, 2020:	Consolidated			Noncontrolling Interests			Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽²⁾
Fixed-rate debt:
Non-recourse loans on operating Properties ⁽³⁾	$	1,120,203		$	(30,177	)	$	612,458		$	1,702,484			4.74	%
Recourse loan on operating Property ⁽⁴⁾		—			—			9,360			9,360			3.74	%
Construction loan		—			—			3,406			3,406			5.05	%
Total fixed-rate debt		1,120,203			(30,177	)		625,224			1,715,250			4.74	%
Variable-rate debt:
Recourse loans on operating Properties		68,061			—			88,511			156,572			4.59	%
Construction loans		—			—			33,222			33,222			3.11	%
Total variable-rate debt		68,061			—			121,733			189,794			4.33	%
Total fixed-rate and variable-rate debt		1,188,264			(30,177	)		746,957			1,905,044			4.70	%
Unamortized deferred financing costs		(3,433	)		265			(2,844	)		(6,012	)
Total mortgage and other indebtedness, net	$	1,184,831		$	(29,912	)	$	744,113		$	1,899,032

Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following:
December 31, 2020:	Consolidated			Noncontrolling Interests			Unconsolidated Affiliates			Total			Weighted- Average Interest Rate ⁽²⁾
Fixed-rate debt:
Senior unsecured notes due 2023 ⁽⁶⁾	$	450,000		$	—		$	—		$	450,000			5.25	%
Senior unsecured notes due 2024 ⁽⁶⁾		300,000			—			—			300,000			4.60	%
Senior unsecured notes due 2026 ⁽⁶⁾		625,000			—			—			625,000			5.95	%
Total fixed-rate debt		1,375,000			—			—			1,375,000			5.43	%
Variable-rate debt:
Secured line of credit ⁽⁸⁾		675,926			—			—			675,926			9.50	%
Secured term loan ⁽⁸⁾		438,750			—			—			438,750			9.50	%
Total variable-rate debt		1,114,676			—			—			1,114,676			9.50	%
Total fixed-rate and variable-rate debt		2,489,676			—			—			2,489,676			7.25	%
Unpaid accrued interest ⁽⁹⁾		57,644			—			—			57,644
Prepetition unsecured or under secured liabilities		4,170			—			—			4,170
Total liabilities subject to compromise	$	2,551,490		$	—		$	—		$	2,551,490

(1)	During the six months ended June 30, 2021, we deconsolidated Asheville Mall and Park Plaza due to a loss of control when the properties were placed into receivership in connection with the foreclosure process.

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

(3)	An unconsolidated affiliate has an interest rate swap on a notional amount outstanding of $41,989 as of June 30, 2021 and $42,654 as of December 31, 2020 related to a variable-rate loan on Ambassador Town Center to effectively fix the interest rate on this loan to a fixed-rate of 3.22%.

(4)

The unconsolidated affiliate had an interest rate swap on a notional amount outstanding of $9,360 as of December 31, 2020 related to a variable-rate loan on Ambassador Town Center - Infrastructure Improvements to effectively fix the interest rate on this loan to a fixed-rate of 3.74%. In March 2021, the loan was modified and provides an additional four-year term with a fixed interest rate of 3.0%. In conjunction with the modification, we paid additional principal of $1,110.

(5)

Unamortized deferred financing costs amounting to $2,624 and $1,879 for our share of certain consolidated and unconsolidated property-level, non-recourse mortgage loans, respectively, 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.

(6)

(7)	On May 26, 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy.

(8)

(9)

The weighted-average remaining term of our total share of consolidated, unconsolidated and other debt was 2.6 years and 3.1 years at June 30, 2021 and December 31, 2020, respectively. The weighted-average remaining term of our pro rata share of fixed-rate debt was 2.9 years and 3.4 years at June 30, 2021 and December 31, 2020, respectively.

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As of June 30, 2021 and December 31, 2020, our pro rata share of consolidated and unconsolidated variable-rate debt represented 29.9% and 29.7%, respectively, of our total pro rata share of debt.

See Note 8 to the condensed consolidated financial statements for information concerning activity related to unconsolidated affiliates.

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 June 30, 2021, and the maximum guarantee related to the Notes is $1,375.0 million as of June 30, 2021.

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 June 30, 2021 and December 31, 2020 and the summarized statement of operations information is for the three and six-month periods ended June 30, 2021 and 2020 (amounts are presented in thousands).

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	June 30, 2021			December 31, 2020
Net investment in real estate assets	$	1,361,257		$	1,428,482
Total assets ⁽¹⁾		1,687,492			1,673,179
Total liabilities ⁽²⁾		2,810,480			2,884,808

	Three Months Ended June 30,
	2021			2020
Total revenues ⁽³⁾	$	54,598		$	47,983
Total expenses ⁽⁴⁾		(67,836	)		(37,194	)
Net income (loss)		(13,001	)		8,057

	Six Months Ended June 30,
	2021			2020
Total revenues ⁽³⁾	$	109,370		$	113,410
Total expenses ⁽⁴⁾		(144,791	)		(81,054	)
Net income		7,805			26,892

(1)

Total assets include an intercompany note receivable with a non-guarantor subsidiary of $1,721 and $4,698 as of June 30, 2021 and December 31, 2020, respectively.

(2)

Total liabilities include intercompany liabilities of $4,189 as of June 30, 2021.

(3)

Total revenues include revenues derived from non-guarantor subsidiaries of $31 and $97 for the three months ended June 30, 2021 and 2020, respectively. Total revenues include revenues derived from non-guarantor subsidiaries of $55 and $97 for the six months ended June 30, 2021 and 2020, respectively.

(4)

Total expenses include expenses incurred with non-guarantor subsidiaries of $8,813 and $9,422 for the three months ended June 30, 2021 and 2020, respectively. Total expenses include expenses incurred with non-guarantor subsidiaries of $17,144 and $20,312 for the six months ended June 30, 2021 and 2020, respectively.

Financial Covenants and Restrictions

As discussed in Note 2 to the condensed consolidated financial statements, the filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts.

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 we will be required to use a registration statement on Form S-11 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), under the terms of our preferred stock, also 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”), the terms of the Operating Partnership Agreement state that we (i) may not cause the Operating Partnership to resume distributions to holders of its outstanding common units of limited partnership interest 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 would also prevent 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 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

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stock. We do not expect to pay any further dividends with respect to the Company’s outstanding common stock and preferred stock, or any distributions with respect to the Operating Partnership’s outstanding units of partnership interest, prior to the conclusion of our reorganization pursuant to the pending Chapter 11 Cases, which reorganization we also expect will extinguish all claims related to the accrued and unpaid preferred stock dividends and the Operating Partnership unit SCU Distribution Shortfall discussed above. If we successfully complete such reorganization, in connection with future dividend distributions with respect to new equity securities issued pursuant to the Chapter 11 Cases, 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 Delisting of Common Stock and Depositary Shares in Note 2 to the condensed consolidated financial statements for additional information regarding the suspension of NYSE trading in our common stock and the depositary shares representing our Series D Preferred Stock and Series E Preferred Stock pursuant to a notice we received from the NYSE regarding our non-compliance with the NYSE Listing Standards and the current status of our related appeal to the NYSE.

Market Capitalization

Our total-market capitalization as of June 30, 2021 was as follows (in thousands, except stock prices):

	Shares Outstanding		Stock Price ⁽¹⁾
Common stock and operating partnership units		201,562	$	0.12
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 June 30, 2021 on the OTC Markets, operated by the OTC Markets Group, Inc. The stock prices for the preferred stock represent the liquidation preference of each respective series of preferred stock.

Capital Expenditures

Deferred maintenance and capital expenditures are generally included in the determination of common area maintenance (“CAM”) expense that is billed to tenants in accordance with their lease agreements.

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 six months ended June 30, 2021 compared to the same periods in 2020 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Tenant allowances⁽¹⁾	$	3,375	$	1,360	$	4,252	$	8,578

Deferred maintenance:
Parking area and parking area lighting		57		15		57		270
Roof repairs and replacements		308		1,748		308		1,899
Other capital expenditures		1,782		645		2,241		3,841
Total deferred maintenance		2,147		2,408		2,606		6,010

Capitalized overhead		209		100		467		731

Capitalized interest		13		366		32		1,092

Total capital expenditures	$	5,744	$	4,234	$	7,357	$	16,411

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

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

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Developments and Redevelopments

Properties Opened During the Six Months Ended June 30, 2021

(Dollars in thousands)

					CBL's Share of
Property	Location	CBL Ownership Interest	Total Project Square Feet		Total Cost ⁽¹⁾		Cost to Date ⁽²⁾		2021 Cost		Opening Date	Initial Unleveraged Yield
Outparcel Developments:
Hamilton Place - Aloft Hotel⁽³⁾⁽⁴⁾	Chattanooga, TN	50%		89,674	$	12,000	$	11,455	$	2,628	Jun-21	9.2%
Pearland Town Center - HCA Offices	Pearland, TX	100%		48,416		14,186		12,237		4,815	Jun-21	11.8%
				138,090	$	26,186	$	23,692	$	7,443

Properties Under Development at June 30, 2021

(Dollars in thousands)

					CBL's Share of
Property	Location	CBL Ownership Interest	Total Project Square Feet		Total Cost ⁽¹⁾		Cost to Date ⁽²⁾		2021 Cost		Expected Opening Date	Initial Unleveraged Yield
Outparcel Developments:
Kirkwood Mall - Five Guys, Blaze Pizza, Thrifty White, Pancheros, Chick-fil-A	Bismarck, ND	100%		15,275	$	7,176	$	311	$	107	Q2 '22	8.9%

Redevelopments:
Cross Creek Sears Redevelopment - Longhorn's, Rooms To Go ⁽⁵⁾	Fayetteville, NC	100%		13,494		5,252		4,009		2,785	Q3 '21	5.3%
Total Properties Under Development				28,769	$	12,428	$	4,320	$	2,892

(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 a construction loan of $8,400 (at our share), a non-cash allocated value for our land contribution of $2,200 and cash contributions of $1,400.

(5)	The return reflected represents a pro forma incremental return as Total Cost excludes the cost related to the acquisition of the Sears (Cross Creek Mall) building.

Off-Balance Sheet Arrangements

Unconsolidated Affiliates

We have ownership interests in 31 unconsolidated affiliates as of June 30, 2021 that are described in Note 8 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.

•

We also have the ability to contribute land into a joint venture partnership with diverse uses, such as hotels, self-storage and multifamily. We typically partner with developers who have expertise in the diverse property types.

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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 financial statements for information related to our guarantees of unconsolidated affiliates' debt as of June 30, 2021 and December 31, 2020.

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 for the year ended December 31, 2020 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. There have been no material changes to these policies and estimates during the six months ended June 30, 2021. Our significant accounting policies are disclosed in Note 3 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Recent Accounting Pronouncements

See Note 3 to the condensed consolidated financial statements for information on recently issued accounting pronouncements.

Non-GAAP Measure

Funds from Operations

FFO is a widely used non-GAAP measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. 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 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.

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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.

We believe that it is important to identify the impact of certain significant items on our FFO measures for a reader to have a complete understanding of our results of operations. Therefore, we have also presented adjusted FFO measures excluding these significant items from the applicable periods. Please refer to the reconciliation of net income (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 increased to $50.8 million for the three months ended June 30, 2021 from $(5.2) million for the prior-year period; and increased to $141.0 million for the six months ended June 30, 2021 from $45.8 million for the prior-year period. Excluding the adjustments noted below, FFO of the Operating Partnership, as adjusted, increased to $79.5 million for the three months ended June 30, 2021 from $4.9 million for the same period in 2020; and increased to $148.2 million for the six months ended June 30, 2021 from $56.5 million from the same period in 2020. The increase in FFO, as adjusted, was primarily driven by the reduction in interest expense due to not recognizing post-petition interest expense on the senior unsecured notes and the secured credit facility subsequent to the filing of the Chapter 11 Cases, the cumulation of undeclared dividends ceasing to cumulate on the Series D Preferred Stock and the Series E Preferred Stock subsequent to the filing of the Chapter 11 Cases, a lower income tax provision in the current-year period, and costs incurred in the prior year period related to our restructuring efforts.

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 June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss attributable to common shareholders	$	(8,882	)	$	(81,452	)	$	(35,645	)	$	(215,348	)
Noncontrolling interest in loss of Operating Partnership		(230	)		(2,077	)		(928	)		(18,491	)
Depreciation and amortization expense of:
Consolidated properties		47,499			52,663			95,611			108,565
Unconsolidated affiliates		13,456			14,020			26,986			27,530
Non-real estate assets		(492	)		(812	)		(1,032	)		(1,729	)
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries		(558	)		(788	)		(1,139	)		(1,711	)
Loss on impairment		—			13,274			57,182			146,918
Loss on depreciable property		—			—			—			25
FFO allocable to Operating Partnership common unitholders		50,793			(5,172	)		141,035			45,759
Litigation settlement ⁽¹⁾		57			—			(801	)		—
Non-cash default interest expense ⁽²⁾		11,576			2,203			23,046			2,893
Gain on deconsolidation ⁽³⁾		—			—			(55,131	)		—
Reorganization items ⁽⁴⁾		17,073			7,857			40,006			7,857
FFO allocable to Operating Partnership common unitholders, as adjusted	$	79,499		$	4,888		$	148,155		$	56,509
FFO per diluted share	$	0.25		$	(0.03	)	$	0.70		$	0.23
FFO, as adjusted, per diluted share	$	0.39		$	0.02		$	0.73		$	0.28

(1)

For the three and six months ended June 30, 2021, represents the accrued expense related to the settlement of a class action lawsuit. Also, for the six months ended June 30, 2021, represents a credit to litigation settlement expense related to claim amounts that were released pursuant to the terms of the settlement agreement related to the settlement of a class action lawsuit.

(2)

The three and six months ended June 30, 2021 includes default interest expense related to loans secured by properties that were in default prior to our filing of the Chapter 11 Cases, as well as loans secured by properties that are in default due to our filing of the Chapter 11 Cases. The six months ended June 30, 2020 includes default interest expense related to Greenbrier Mall, Hickory Point Mall, Eastgate Mall, Asheville Mall, Burnsville Center and Park Plaza Mall.

(3)	During the six months ended June 30, 2021, we deconsolidated Asheville Mall and Park Plaza due to a loss of control when the properties were placed into receivership in connection with the foreclosure process.

(4)	Represents costs incurred subsequent to our filing of the Chapter 11 Cases associated with our reorganization efforts, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees.

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Diluted EPS attributable to common shareholders	$	(0.05	)	$	(0.42	)	$	(0.18	)	$	(1.16	)
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		0.30			0.32			0.59			0.66
Loss on impairment		—			0.07			0.29			0.73
FFO per diluted share	$	0.25		$	(0.03	)	$	0.70		$	0.23

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 June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
FFO allocable to Operating Partnership common unitholders	$	50,793		$	(5,172	)	$	141,035		$	45,759
Percentage allocable to common shareholders ⁽¹⁾		97.46	%		95.17	%		97.46	%		92.09	%
FFO allocable to common shareholders	$	49,503		$	(4,922	)	$	137,453		$	42,139

FFO allocable to Operating Partnership common unitholders, as adjusted	$	79,499		$	4,888		$	148,155		$	56,509
Percentage allocable to common shareholders ⁽¹⁾		97.46	%		95.17	%		97.46	%		92.09	%
FFO allocable to common shareholders, as adjusted	$	77,480		$	4,652		$	144,392		$	52,039

(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 June 30, 2021, and excluding the secured credit facility and the loan secured by The Outlet Shoppes at Laredo, which are included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase or decrease in interest rates on variable-rate debt would increase or decrease annual cash flows by approximately $1.0 million, respectively.

Based on our proportionate share of consolidated and unconsolidated variable-rate debt at June 30, 2021, and including the secured credit facility and the loan secured by The Outlet Shoppes at Laredo, which are included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase or decrease in interest rates on variable-rate debt would increase or decrease annual cash flows by approximately $6.5 million, respectively.

Based on our proportionate share of total consolidated, unconsolidated and other debt at June 30, 2021, and excluding the secured credit facility, senior unsecured notes and the loan secured by The Outlet Shoppes at Laredo, which are included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $13.7 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $14.5 million.

Based on our proportionate share of total consolidated, unconsolidated and other debt at June 30, 2021, and including the secured credit facility, senior unsecured notes and the loan secured by The Outlet Shoppes at Laredo, which are included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $26.5 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $26.4 million.

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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 June 30, 2021 and December 31, 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 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, 2021 and December 31, 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

There were no changes in the Company’s or the Operating Partnership’s internal control over financial reporting during our most recent fiscal quarter ended June 30, 2021, 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

The information in this Item 1 is incorporated by reference herein from Note 2 and Note 12.

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 for the year ended December 31, 2020. There have been no material changes to such risk factors since the filing of our Annual Report.

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

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 and Note 9 in the financial statements included in PART I of this report for a discussion of certain defaults with respect to the Company’s senior unsecured notes and secured credit facility, including defaults related to the filing of the Chapter 11 Cases, and additional asserted defaults with respect to the Company’s secured credit facility.

Preferred Dividend and Special Common Unit Distribution Arrearages

Dividends on the Series D and the Series E preferred stock are cumulative and therefore continued to accrue, prior to the filing of the Chapter 11 Cases, at an annual rate of $18.4375 per share and $16.5625 per share, respectively. We expect our Chapter 11 reorganization to extinguish all claims related to the accrued and unpaid preferred stock dividends. As of June 30, 2021, the cumulative amount of unpaid dividends on the preferred stock totaled $48.6 million.

Distributions on the Series K and S special common units are cumulative and therefore continued to accrue, prior to the filing of the Chapter 11 Cases, at an annual rate of $2.96875 per unit and $2.92875 per unit, respectively. Distributions on the Series L special common units were cumulative through May 31, 2020, 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 June 30, 2021, the cumulative amount of unpaid distributions on the special common units totaled $9.4 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
2.1		Third Amended Chapter 11 Plan (with technical modifications), as approved by the Bankruptcy Court on August 12, 2021 (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K, filed on August 10, 2021).
10.2.21		CBL & Associates Properties, Inc. Named Executive Officer Annual Incentive Compensation Plan (AIP) (Fiscal Year 2021) (incorporated by reference from the Company’s Current Report on Form 8-K, filed on May 18, 2021).*
10.2.22		Form of Amended and Restated Employment Agreement, entered into May 21, 2021 with certain Company executives (incorporated by reference from the Company’s Current Report on Form 8-K, filed on May 26, 2021).*
10.2.23		Form of Second Amended and Restated Retention Bonus Agreement for the Chairman of the Board, entered into May 21, 2021 (incorporated by reference from the Company’s Current Report on Form 8-K, filed on May 26, 2021).*
10.2.24		Form of Second Amended and Restated Retention Bonus Agreement for the Company's NEOs Other Than the Chairman of the Board, entered into May 21, 2021 (incorporated by reference from the Company’s Current Report on Form 8-K, filed on May 26, 2021).*
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: August 16, 2021