What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-16 compared with 2021-05-17 · 234 added, 172 removed, 441 unchanged (48% of the section changed)

9 unchanged sentences

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 the Company’s business plans, and to satisfy the conditions and milestones applicable under an amended and restated Restructuring Support Agreement (the “Amended RSA”), for the duration of the Chapter 11 Cases.

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.

2 unchanged sentences

general industry, economic and business conditions;

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

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;

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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 March 31, 2021.

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.

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The safety and health of our customers, employees and tenants remains a top priority.

Our financial and operating results for the first 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.

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 are beginning to see improvements in sales and traffic at our centers as vaccination rates increase and government restrictions are lessened.

Same-center sales in our mall portfolio for the first two months of 2021 were down only 3% as compared with the same period in 2020.

Additionally, sales for the first quarter 2021 increased more than 12% as compared with first quarter 2019.

However, revenues for the quarter continue to be impacted by a sustained increase in the estimate for uncollectable revenues related to rents due from tenants that filed for bankruptcy or are struggling financially.

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.

We are optimistic that the improvements to sales and traffic will continue and will begin to benefit our leasing negotiations later in the year.

The mandated property closures in 2020 resulted in nearly all our tenants closing for a period of time and/or shortening operating hours.

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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 $38.5 million since the COVID-19 pandemic began, which includes rent deferrals of $7.1 million during the three months ended March 31, 2021.

We also granted rent abatements of approximately $5.3 million during the three months ended March 31, 2021.

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.

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See Note 2 and Liquidity and Capital Resources for additional information.

We had a net loss for the three months ended March 31, 2021 of $28.3 million as compared to a net loss for the three months ended March 31, 2020 of $139.3 million.

We recorded a net loss attributable to common shareholders for the three months ended March 31, 2021 of $26.8 million as compared to a net loss attributable to common shareholders for the three months ended March 31, 2020 of $133.9 million.

In addition to the ongoing impact of the COVID-19 pandemic, significant items that affected the comparability between the three-month periods include:

Loss on impairment for the three months ended March 31, 2021 that is $76.5 million lower;

Gain on deconsolidation of $55.1 million for the three months ended March 31, 2021;

Interest expense for the three months ended March 31, 2021 that is $22.9 million lower;

Costs of $22.9 million related to our reorganization efforts;

Equity in losses of unconsolidated affiliates of $3.1 million for the three months ended March 31, 2021 compared to equity in earnings of unconsolidated affiliates of $1.0 million for the three months ended March 31, 2020.

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.

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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 .

We are currently operating our business as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

After we filed our Chapter 11 petitions, the Bankruptcy Court granted certain relief requested by the Debtors enabling us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to pay employee wages and benefits, to pay taxes and certain governmental fees and charges, to continue to operate our cash management system in the ordinary course, and to pay the prepetition claims of certain of our service providers.

For goods and services provided following the Commencement Date, we intend to pay service providers in the ordinary course.

Subject to certain exceptions, under the Bankruptcy Code, the filing of the Chapter 11 Cases automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising prior to the Commencement Date.

Accordingly, although the filing of the Chapter 11 Cases triggered defaults under the Debtors’ funded debt obligations, creditors are stayed from taking any actions against the Debtors as a result of such defaults, subject to certain limited exceptions permitted by the Bankruptcy Code.

Absent an order of the Bankruptcy Court, substantially all the Debtors’ prepetition liabilities are subject to settlement under the Bankruptcy Code.

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

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

Due to the Chapter 11 Cases, however,

the creditors’ ability to exercise remedies against the Debtors under their respective credit agreements and debt instruments was stayed as of the date of the Chapter 11 petition and continues to be stayed.

After engaging in negotiations in a Bankruptcy Court-ordered mediation, on March 21, 2021, the Company entered into the Amended RSA, with the Consenting Noteholders in excess of 69% (including joinders) of the aggregate principal amount of the senior unsecured notes and the Consenting Bank 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 Amended RSA amends and restates the Original RSA, dated as of August 18, 2020, 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 set forth in the Amended RSA and the Plan Term Sheet.

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.

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”), 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.

The Amended RSA requires that the Company file the Amended Plan and related disclosure statement no later than 25 days after the Agreement Effective Date and under the Amended RSA we must seek to have the Amended Plan confirmed and declared effective no later than November 1, 2021.

On April 15, 2021, we filed an amended Chapter 11 plan of reorganization (the “Proposed Plan”) and accompanying disclosure statement (the “Proposed Disclosure Statement”) with the Bankruptcy Court to implement the restructuring transactions.

Before the Bankruptcy Court will confirm the Proposed Plan, the Bankruptcy Code requires that at least one “impaired” class of claims vote to accept the Proposed Plan.

A class of claims votes to “accept” the Proposed Plan if voting creditors that hold a majority in number and two-thirds in amount of claims in that class approve the Proposed Plan.

The Amended RSA requires the Consenting Stakeholders vote in favor of and support the Proposed Plan.

As of the date hereof, the Consenting Bank Lenders and Consenting Noteholders each represent the requisite amount of claims necessary to accept the Proposed Plan in each of their respective classes.

For the foregoing reasons, among others, the Debtors believe that they will be able to confirm the Proposed Plan in the Chapter 11 Cases.

Under the Amended RSA, the Proposed Plan provides for the elimination of more than $1.6 billion of debt and preferred obligations as well as a significant reduction in interest expense.

In exchange for their approximately $1.375 billion in principal amount of senior unsecured notes and $133 million in principal amount of the secured credit facility, Consenting Noteholders and other noteholders will receive, in the aggregate, $95 million in cash, $555 million of new senior secured notes, of which up to $100 million, 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.

Certain Consenting Noteholders will also provide up to $50 million of new money in exchange for additional convertible secured notes.

The Amended RSA provides that the remaining Bank Lenders, holding $983.7 million in principal amount under the secured credit facility, will receive $100 million in cash and a new $883.7 million secured term loan.

Existing common and preferred stakeholders are expected to receive up to 11% of common equity in the newly reorganized company.

On April 29, 2021, we received court approval to perform under the Amended RSA .

We cannot predict the ultimate outcome of our Chapter 11 Cases at this time.

For the duration of the Chapter 11 proceedings, our operations and ability to develop and execute our business plan are subject to the risks and uncertainties associated with the chapter 11 process.

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.

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 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.

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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 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 their rights with respect thereto.

there is substantial doubt that we will continue to operate as a going concern within one year after the date our condensed consolidated financial statements are issued.

Our ability to continue as a going concern is contingent upon our ability to successfully implement the Proposed Plan , set forth in the Amended RSA, which is pending confirmation by the Bankruptcy Court.

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.

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 our ability to satisfy our financial obligations that may arise , we believe that there is substantial doubt that we will continue to operate as a going concern within one year after the date our condensed consolidated financial statements are issued.

Our ability to continue as a going concern is contingent upon our ability to successfully implement the Plan.

See Note 2 to the condensed consolidated financial statements for additional information .

Results of Operations

Properties that were in operation for the entire year during 2020 and the three months ended March 31, 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 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

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Little Rock, AR

The Company deconsolidated the property due to a loss of control when the property was placed into receivership in connection with the foreclosure process.

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

Hickory Point Mall (1)

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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 March 31, 2021 to the Three Months Ended March 31, 2020

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

Total for the

Ended March 31,

Ended June 30,

Deconsolidation

2 unchanged sentences

Total revenues

Rental revenues from the Comparable Properties declined due to rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic, including $5.3 million of rent abatements on past due rents and $6.8 million in uncollectable revenues for past due rents.

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.

Operating Expenses

Total for the

Ended March 31,

Ended June 30,

Deconsolidation

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Total operating expenses

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

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

General and administrative expenses decreased primarily due to the implementation of comprehensive programs to reduce expenses, including a reduction-in-force and other general and administrative expenses.

In the first quarter of 2021, we recognized $57.2 million of loss on impairment of real estate to write down the book value of three malls.

In the first quarter of 2020, we recognized $133.6 million of loss on impairment of real estate to write down the book value of two malls.

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.

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 and other income decreased $1.6 million to $0.8 million compared to the prior-year period primarily due to several mortgage and other notes receivable being retired since the prior year period, as well as a reduction in insurance proceeds since the prior year period.

This was partially offset by interest income related to the U.S.

Treasury securities that we invested in using a portion of the $280 million we drew on our secured line of credit in March 2020 to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic .

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.

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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 three months ended March 31, 2021, we recorded $55.1 million of gain on deconsolidation related to Asheville Mall and Park Plaza.

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

Total for the

Ended June 30,

Deconsolidation

Rental revenues

Management, development and leasing fees

Total revenues

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.

Operating Expenses

Total for the

Ended June 30,

Deconsolidation

Property operating

Real estate taxes

Maintenance and repairs

Property operating expenses

Depreciation and amortization

General and administrative

Loss on impairment

Litigation settlement

Total operating expenses

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.

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.

For the three months ended March 31, 2021, we recorded $22.9 million of reorganization items, which consists of professional and legal fees directly related to the Chapter 11 Cases.

Equity in earnings (losses) of unconsolidated affiliates decreased by $4.1 million during the three months ended March 31, 2021 compared to the prior-year period.

The decrease was primarily due to the impacts of the COVID-19 pandemic, including an increase in estimates of uncollectable rental revenues and abatements of rent.

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

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We define NOI as property operating revenues (rental revenues and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).

We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated Properties.

We believe that presenting NOI and same-center NOI (described below) based on our Operating Partnership’s pro rata share of both consolidated and unconsolidated Properties is useful since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the Properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in the Operating Partnership.

We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated P roperties.

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 P roperties is useful since we conduct substantially all our business through our Operating Partnership and, therefore, it reflects the performance of the P roperties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in the Operating Partnership.

Our definition of NOI may be different than that used by other companies, and accordingly, our calculation of NOI may not be comparable to that of other companies.

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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-month periods ended March 31, 2021 and 2020 is as follows (in thousands):

Three Months Ended March 31,

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,

Depreciation and amortization

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Lease termination fees

Straight-line rent and above- and below-market rent

Straight-line rent and above- and below-market lease amortization

Net loss attributable to noncontrolling interests in other consolidated subsidiaries

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

Same-center NOI decreased 17.2% for the three months ended March 31, 2021 as compared to the prior-year period.

The $20.8 million decrease for the three months ended March 31, 2021 compared to the same period in 2020 primarily consisted of a $24.1 million decrease in revenues offset by a $3.3 million decline in operating expenses.

Rental revenues declined $23.7 million during the quarter primarily related to rent concessions to tenants that are in bankruptcy or are struggling financially due to the impacts of the COVID-19 pandemic, including $5.8 million of rent abatements on past due rents and $4.9 million in uncollectable revenues for past due rents.

Our consolidated unencumbered properties generated approximately 35.

6 % of total consolidated NOI of $ 80 .3 million (which excludes NOI related to dispositions) for the three months ended March 31, 2021.

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.

Same-center NOI de creased 1 .9 % for the six months ended June 30 , 2021 as compared to the prior-year period.

0 million de crease for the six months ended June 30 , 2021 compared to the same period in 2020 primarily consist ed of a $ 0.6 million de crease in revenues and a $3.

4 million increase in operating expenses.

Rental revenues de creased $ 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

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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 March 31, 2020.

The Outlet Shoppes at Laredo was classified as a non-stabilized mall as of June 30, 2020.

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.

EastGate Mall, Greenbrier Mall and The Outlet Shoppes of Laredo were classified as Lender Malls as of March 31, 2021.

Burnsville Center, EastGate Mall, Hickory Point Mall, Greenbrier Mall and Park Plaza were classified as Lender Malls as of March 31, 2020.

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.

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The sources of our total revenues by property type were as follows:

As of March 31,

As of June 30,

Other Properties

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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 three months ended March 31, 2021 compared to the three months ended March 31, 2019:

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:

Stabilized mall same-center sales per square foot

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

As of March 31,

As of June 30,

Total portfolio

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

The following is a summary of the total square feet of leases signed in the three-month periods ended March 31, 2021 and 2020:

Three Months Ended March 31,

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,

Operating portfolio:

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Development portfolio:

Average annual base rents per square foot are based on contractual rents in effect as of March 31, 2021 and 2020, including the impact of any rent concessions.

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:

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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-month period ended March 31, 2021 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows:

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:

Property Type

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Renewal leases

Year-to-Date:

All Property Types (2)

Stabilized Malls

Renewal leases

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

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Liquidity and Capital Resources

As of March 31, 2021, we had $84.7 million available in unrestricted cash, $232.8 million in U.S.

Treasury securities and $1,114.7 million outstanding on our secured credit facility.

Our total pro rata share of debt at March 31, 2021 was $4,377.2 million.

The $83.5 million in restricted cash at March 31, 2021 related to cash held in escrow accounts for insurance, real estate taxes, capital expenditures and tenant allowances as required by the terms of certain mortgage notes payable, as well as amounts related to cash management agreements with lenders of certain property-level mortgage indebtedness that are designated for debt service and operating expense obligations.

During January 2021, the Company purchased $22.0 million in U.S.

Treasury securities that matured in February 2021.

During February 2021, the Company purchased $32.0 million in U.S.

Treasury securities that matured in March 2021.

During March 2021, the Company purchased $82.4 million in U.S.

Treasury securities that are scheduled to mature in June 2021.

The Company designated the U.S.

Treasury securities purchased in these transactions as available-for-sale.

In March 2021, the Company reached agreements with the lenders to modify the loans secured by Hammock Landing Phases I & II and The Pavilion at Port Orange.

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 $107.2 million at March 31, 2021.

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, the Company reached an agreement with the lender to modify the loan secured by Ambassador Infrastructure.

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, had an outstanding balance of $8.3 million, as $1.1 million was paid down in conjunction with the modification.

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.

We anticipate restructuring our unsecured debt maturities through the Chapter 11 bankruptcy process.

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.

We anticipate restructuring our unsecured debt maturities through the Chapter 11 bankruptcy process.

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Cash Flows - Operating, Investing and Financing Activities

There was $168.2 million of cash, cash equivalents and restricted cash as of March 31, 2021, an increase of $46.4 million from December 31, 2020.

Of this amount, $84.7 million was unrestricted cash and cash equivalents as of March 31, 2021.

Also, at March 31, 2021, we had $232.8 million in U.S.

Treasuries that are scheduled to mature between April 2021 and June 2021.

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):

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by operating activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

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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.

Cash Used in Investing Activities

Net cash used in investing activities for first quarter of 2020 was primarily related to the purchase of U.S.

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, in the first quarter of 2021, we had U.S.

Treasury securities mature that we immediately reinvested in additional U.S.

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 first quarter of 2021 as compared to the first quarter of 2020 as a result of programs put in place to reduce capital expenditures and preserve liquidity.

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

The net cash inflow for the first quarter of 2020 is primarily due to the $280.0 million draw on our secured credit facility in order to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic.

In the first quarter of 2021, cash used in financing activities primarily relates to principal payments on mortgages .

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

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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 March 31, 2021.

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.

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):

March 31, 2021:

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

June 30, 2021:

Noncontrolling

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Non-recourse loans on operating Properties (3)

Recourse loans on operating Properties (4)

Recourse loan on operating Property (4)

Construction loan

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Total mortgage and other indebtedness, net

March 31, 2021:

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

June 30, 2021:

Noncontrolling

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Variable-rate debt:

Recourse loan on operating Property (7)

Secured line of credit (8)

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Total liabilities subject to compromise

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

December 31, 2020:

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Non-recourse loans on operating Properties (3)

Recourse loans on operating Properties (4)

Recourse loan on operating Property (4)

Construction loan

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Total mortgage and other indebtedness, net

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

December 31, 2020:

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Total liabilities subject to compromise

During the three months ended March 31, 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.

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.

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

An unconsolidated affiliate has an interest rate swap on a notional amount outstanding of $42,323 as of March 31, 2021 and $42,654 as of December 31, 2020 related to a variable-rate loan on Ambassador Town Center to effectively fix the interest rate on this loan to a fixed-rate of 3.22%.

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%.

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%.

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In conjunction with the modification, we paid additional principal of $1,110.

U namortized deferred financing costs amounting to $2,841 and $2,005 for 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 .

U namortized 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 .

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 March 31, 2021 and December 31, 2020.

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.

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

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 March 31, 2021 and December 31, 2020 was 9.50%.

The post-default interest rate at June 30, 2021 and December 31, 2020 was 9.50%.

The outstanding amount of the secured credit facility is included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020.

Represents interest accrued on the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases.

The weighted-average remaining term of our total share of consolidated, unconsolidated and other debt was 2.9 years and 3.1 years at March 31, 2021 and December 31, 2020, respectively.

The weighted-average remaining term of our pro rata share of fixed-rate debt was 3.1 years and 3.4 years at March 31, 2021 and December 31, 2020, respectively.

As of March 31, 2021 and December 31, 2020, our pro rata share of consolidated and unconsolidated variable-rate debt represented 29.8% and 29.7%, respectively, of our total pro rata share of debt.

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.

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.

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.

As of June 30 , 2021 and December 31, 20 20 , our pro rata share of consolidated and unconsolidated variable-rate debt represented 29.

9 % and 2 9.7 %, 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.

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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 March 31, 2021, and the maximum guarantee related to the Notes is $1,375.0 million as of March 31, 2021.

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.

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Intercompany transactions between the Operating Partnership and the Guarantor Subsidiaries have been eliminated.

The summarized balance sheet information is as of March 31, 2021 and December 31, 2020 and the summarized statement of operations information is for the three-month periods ended March 31, 2021 and 2020 (amounts are presented in thousands).

Three Months Ended March 31, 2021

Year Ended December 31, 2020

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).

Net investment in real estate assets

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Total liabilities (2)

Three Months Ended March 31, 2021

Three Months Ended March 31, 2020

Three Months Ended

Total revenues (3)

Total expenses (4)

Total assets include an intercompany note receivable with a non-guarantor subsidiary of $2,030 and $4,698 as of March 31, 2021 and December 31, 2020, respectively.

Total liabilities include intercompany liabilities of $3,931 as of March 31, 2021.

Total revenues include revenues derived from non-guarantor subsidiaries of $24 for the three months ended March 31, 2021.

Total expenses include expenses incurred with non-guarantor subsidiaries of $8,331 and $10,890 for the three months ended March 31, 2021 and 2020, respectively.

Net income (loss)

Six Months Ended

Total revenues (3)

Total expenses (4)

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.

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

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.

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

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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 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 stock.

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.

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.

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Market Capitalization

Our total-market capitalization as of March 31, 2021 was as follows (in thousands, except stock prices):

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

Common stock and operating partnership units

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6.625% Series E Cumulative Redeemable Preferred Stock

Stock price for common stock and Operating Partnership units equals the closing price of CBL's common stock on March 31, 2021 on the OTC Markets, operated by the OTC Markets Group, Inc.

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

These expenditures are generally recovered over a 5 to 15-year period.

Renovation expenditures are primarily for remodeling and upgrades of malls, of which a portion is recovered from tenants over a 5 to 15-year period.

We recover these costs through fixed amounts with annual increases or pro rata cost reimbursements based on the tenant’s occupied space.

The following table, which excludes expenditures for developments, redevelopments and expansions, summarizes these capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the three month s ended March 31, 2021 compared to the same period s in 20 20 (in thousands):

Three Months Ended March 31,

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,

Tenant allowances (1)

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Developments and Redevelopments

Properties Under Development at March 31, 2021

Properties Opened During the Six Months Ended June 30, 2021

(Dollars in thousands)

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Pearland Town Center - HCA Offices

Properties Under Development at June 30, 2021

(Dollars in thousands)

CBL's Share of

Outparcel Developments:

Kirkwood Mall - Five Guys, Blaze Pizza, Thrifty White, Pancheros, Chick-fil-A

Redevelopments:

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Yield is based on expected yield upon stabilization.

Total cost includes a non-cash allocated value for the Company’s land contribution and amounts funded by a construction loan.

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.

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.

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Unconsolidated Affiliates

We have ownership interests in 29 unconsolidated affiliates as of March 31, 2021 that are described in Note 8 to the condensed consolidated financial statements.

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.

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We enter into such arrangements when we determine such a project is viable and we can achieve a satisfactory return on our investment.

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 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.

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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 March 31, 2021 and December 31, 2020.

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

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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 three months ended March 31, 2021.

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.

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

The Company believes that it is important to identify the impact of certain significant items on its FFO measures for a reader to have a complete understanding of the Company’s results of operations.

Therefore, the Company has also presented adjusted FFO measures excluding these significant items from the applicable periods.

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 $90.2 million for the three months ended March 31, 2021 from $50.9 million for the prior-year period.

Excluding the adjustments noted below, FFO of the Operating Partnership, as adjusted, increased to $68.7 million for the three months ended March 31, 2021 from $51.6 million for the same period in 2020.

The increase in FFO, as adjusted, was primarily driven by lower operating expenses and 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 .

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

Six Months Ended

Net loss attributable to common shareholders

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FFO, as adjusted, per diluted share

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.

The three months ended March 31, 2021 includes default interest expense related to loans secured by properties that were in default prior to the filing of the Chapter 11 Cases, as well as loans secured by properties that are in default due to the filing of the Chapter 11 Cases.

The three months ended March 31, 2020 includes default interest expense related to Greenbrier Mall and Hickory Point Mall.

Represents costs incurred subsequent to the filing of the Chapter 11 Cases, which consists of professional and legal fees .

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.

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.

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.

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

Three Months Ended

Six Months Ended

Diluted EPS attributable to common shareholders

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Three Months Ended

Six Months Ended

FFO allocable to Operating Partnership common unitholders

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis