CBL Properties Reports Strong Results for Second Quarter 2022

Rhea-AI Summary

CBL Properties (NYSE: CBL) reported its second-quarter results for the period ended June 30, 2022. The company faced a net loss of $41.6 million, increasing 368.3% from $8.9 million in the prior year. Funds from Operations (FFO) decreased by 39.1% to $30.9 million, with adjusted FFO at $59.9 million, down 24.7%. Despite these losses, the portfolio occupancy improved to 89.5%, up 250 basis points year-over-year. The board declared a $0.25 cash dividend for Q2 and Q3 2022, benefiting shareholders. Additionally, CBL successfully completed $663 million in financing, enhancing financial flexibility.

Positive

• Improved portfolio occupancy to 89.5%, a 250 basis point increase year-over-year.
• Declared a $0.25 cash dividend for Q2 and Q3 2022, enhancing shareholder returns.
• Successfully closed over $663 million in financing, improving cash flow and financial flexibility.

Negative

• Net loss attributable to common shareholders increased to $41.6 million from $8.9 million, a 368.3% increase.
• FFO decreased by 39.1% compared to the prior year, impacting earnings badly.
• Same-center sales per square foot declined by 3.9% for Q2 2022 compared to Q2 2021.

CHATTANOOGA, Tenn.--(BUSINESS WIRE)-- CBL Properties (NYSE: CBL) announced results for the second quarter ended June 30, 2022. Financial results for the periods from January 1, 2021, through June 30, 2021, are referred to as those of the “Predecessor” period. Financial results for the period from January 1, 2022, through June 30, 2022, are referred to as those of the “Successor” period. Results of operations as reported in the consolidated financial statements for these periods are prepared in accordance with GAAP. A description of each supplemental non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is located at the end of this news release.

		Successor					Predecessor
		Three Months Ended June 30,					Three Months Ended June 30,
		2022					2021				%
Net loss attributable to common shareholders		$	(41,598	)			$	(8,882	)			(368.3	)%
Funds from Operations ("FFO")		$	30,908				$	50,793				(39.1	)%
FFO, as adjusted (1)		$	59,869				$	79,499				(24.7	)%
		Successor					Predecessor
		Six Months Ended June 30,					Six Months Ended June 30,
		2022					2021				%
Net loss attributable to common shareholders		$	(82,320	)			$	(35,645	)			(130.9	)%
Funds from Operations ("FFO")		$	65,908				$	141,035				(53.3	)%
FFO, as adjusted (1)		$	117,347				$	148,155				(20.8	)%

(1)	For a reconciliation of FFO to FFO, as adjusted, for the periods presented, please refer to the footnotes to the Company’s reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders on page 10 of this news release.

Percentage change in same-center Net Operating Income (“NOI”) ⁽¹⁾:

		Three Months Ended June 30,			Six Months Ended June 30,
		2022			2022
Portfolio same-center NOI		1.6%			6.7%
Mall, Lifestyle Center and Outlet Center same-center NOI		1.6%			6.8%

(1)	CBL’s definition of same-center NOI excludes the impact of lease termination fees and certain non-cash items such as straight-line rents and reimbursements, write-offs of landlord inducements and net amortization of acquired above and below market leases.

KEY TAKEAWAYS:

• Increases in occupancy across the portfolio contributed to an increase in total portfolio same-center NOI of 1.6% and 6.7% for the three and six months ended June 30, 2022, respectively, compared with the prior-year periods.
• In-line year-to-date same-center NOI of $217.4 million and FFO, as adjusted, of $3.92 per share, contributes to maintained full-year 2022 same-center NOI guidance in the range of $416.0 - $430.0 million, and FFO, as adjusted, per share guidance in the range of $7.18 - $7.67 per diluted share.
• Portfolio occupancy as of June 30, 2022, was 89.5%, representing 120-basis point sequential improvement from March 31, 2022, and a 250-basis point improvement compared with 87.0% as of June 30, 2021. Same-center occupancy for malls, lifestyle centers and outlet centers was 88.0% as of June 30, 2022, representing a 250-basis point improvement compared with 85.5% as of June 30, 2021.
• Same-center sales per square foot for the trailing 12-months ended June 30, 2022, increased 6.2% to $443 as compared with $417 for the trailing 12-months (excluding 2020) ended June 30, 2021. Same-center sales per square foot for the second quarter 2022 declined 3.9% as compared with the second quarter 2021.
• FFO, as adjusted, allocable to Operating Partnership common unitholders, for the three months ended June 30, 2022, was $59.9 million, compared with $79.5 million in the prior year period. The variance in FFO, as adjusted, as compared with the prior year period reflects an increase in NOI driven by occupancy improvements and a positive variance in uncollectible revenues, offset by an increase in interest expense attributable to the senior unsecured notes and secured credit facility. Interest payments on the notes and credit facility were not required to be made during the second quarter 2021 as a result of the Company’s bankruptcy filing on November 1, 2020.
• As of June 30, 2022, the Company had $327.1 million of unrestricted cash and marketable securities.
• CBL’s Board of Directors declared a $0.25 per share cash dividend for the second and third quarters of 2022, providing cash returns to shareholders.

“CBL delivered another set of impressive operating results in the second quarter,” said Stephen D. Lebovitz, CBL's chief executive officer. “Our resilient portfolio generated improved lease spreads and significant sequential and year-over-year occupancy growth, contributing to the stability of our NOI. We are enhancing our strong free cash flow through the recent completion of redevelopment projects at Kirkwood Mall in Bismarck, North Dakota, Sunrise Mall in Brownsville, Texas, and Cross Creek Mall in Fayetteville, North Carolina, with more planned completions and new project starts anticipated in the coming months. We are seeing ongoing interest across our portfolio from hotels, multi-family, medical, entertainment, restaurants, and other new uses, which will further enhance our properties and diversify our revenue stream.

“A major highlight of the quarter was our financing accomplishments. Despite increased volatility in interest rates and other macroeconomic factors, we successfully closed more than $663.0 million in financings during the quarter, including two new multi-property loans that funded the full redemption of all $395.0 million outstanding 10% Senior Secured Notes. The two new non-recourse financings provided third-party validation of the tremendous value in CBL’s open-air and outparcel portfolios. These financings also resulted in improved cash flow through lower interest expense and enhanced our future financial flexibility by creating an unencumbered NOI pool of approximately $75.0 million.

“We were thrilled to share these financial and operational successes with shareholders through the re-start of our regular quarterly cash dividend program. We are focused on executing at a high level to further financial and operational improvements, create value across our portfolio and generate ongoing returns for our shareholders.”

NON-GAAP FINANCIAL RESULTS

Net loss attributable to common shareholders for the three months ended June 30, 2022, was $41.6 million, compared with a net loss of $8.9 million, for the three months ended June 30, 2021.

FFO, as adjusted, allocable to Operating Partnership common unitholders, for the three months ended June 30, 2022, was $59.9 million, compared with $79.5 million, for the three months ended June 30, 2021.

Same-center NOI for the three months ended June 30, 2022, increased 1.6%, or $1.7 million, to $107.4 million as compared with $105.7 million in the prior-year period. The variance was due to a $5.2 million increase in total revenues partially offset by a $3.5 million increase in operating expenses.

Other major variances in same-center NOI for the quarter ended June 30, 2022, include:

• Minimum rents and other rents increased $6.6 million. Percentage rents increased $0.7 million and tenant reimbursements and other revenues declined $2.0 million. The total estimate for uncollectible revenues and abatements for the second quarter 2022 was $0.4 million, due to collections of amounts that were previously reserved compared with an estimate for uncollectible revenues and abatement of $2.5 million for the prior year period.

• Property operating expenses increased $1.8 million compared with the prior year. Maintenance and repair and other expenses increased $2.1 million. Real estate tax expenses declined by $0.4 million, partially offsetting the above increases.

PORTFOLIO OPERATIONAL RESULTS
Occupancy⁽¹⁾:

		Successor				Predecessor
		Six Months Ended June 30,				Six Months Ended June 30,
		2022				2021
Total portfolio		89.5%				87.0%
Malls, Lifestyle Centers and Outlet Centers:
Total malls		87.9%				85.2%
Total lifestyle centers		89.4%				83.9%
Total outlet centers		87.5%				86.2%
Total same-center malls, lifestyle centers and outlet centers		88.0%				85.5%
All Other:
Total open-air centers		94.4%				92.2%
Total other		91.7%				98.7%

(1)	Occupancy for malls, lifestyle centers and outlet centers represent percentage of in-line gross leasable area under 20,000 square feet occupied. Occupancy for open-air centers represents percentage of gross leasable area occupied.

New and Renewal Leasing Activity of Same Small Shop Space Less Than 10,000 Square Feet:

% Change in Average Gross Rent Per Square Foot:
		Three Months Ended June 30,				Six Months Ended June 30,
		2022				2022
Stabilized Malls, Lifestyle Centers and Outlet Centers		(8.7)%				(10.1)%
New leases		14.2%				(1.2)%
Renewal leases		(11.2)%				(11.5)%

Same-Center Sales Per Square Foot for In-line Tenants 10,000 Square Feet or Less⁽¹⁾:

		Successor					Predecessor
		Sales Per Square Foot for the Trailing Twelve Months Ended June 30,					Sales Per Square Foot for the Trailing Twelve Months Ended June 30,
		2022					2021 (1)				% Change
Mall, Lifestyle Center and Outlet Center same-center sales per square foot		$	443				$	417			6.2%

(1)

Due to the temporary property closures that occurred during 2020 related to COVID-19, the majority of our tenants did not report sales for the full reporting period. As a result, we are not able to provide a complete measure of sales per square foot for the periods in the year ended December 31, 2020. Sales per square foot for the trailing twelve months ended June 30, 2021, is comprised of sales reported for the periods July 1 through December 31, 2019, and January 1 through June 30, 2021.

Same-center sales per square foot for the trailing twelve months ended June 30, 2022, increased 6.2% as compared with the trailing twelve months ended June 30, 2021 (excludes 2020). Same-center sales per square foot for the second quarter 2022 declined 3.9% as compared with the second quarter 2021.

DIVIDEND

On August 10, 2022, CBL’s Board of Directors declared a regular quarterly cash dividend for the three months ended September 30, 2022, of $0.25 per share. The dividend, which equates to an annual dividend payment of $1.00 per share, is payable on September 30, 2022, to shareholders of record as of September 15, 2022.

FINANCING ACTIVITY

During the quarter, CBL completed more than $663.0 million in financing activity, including funding the full redemption of all outstanding 10% Senior Secured Notes due 2029 (the “10% Notes”) utilizing net proceeds from two new non-recourse loans totaling $425.0 million, generating favorable interest expense savings. More details are outlined below.

On April 28, 2022, CBL and its 50% joint venture partner, closed on a $40.0 million non-recourse loan ($20.0 million at CBL’s share) secured by The Shoppes at Eagle Pointe, an open-air center in Cookeville, TN. The new ten-year CMBS loan bears a fixed interest rate of 5.4%. The loan replaces the maturing $33.6 million existing partially guaranteed term loan. Net proceeds to CBL after repayment of the existing loan were $6.7 million.

In May 2022, CBL completed the extension and modification of the non-recourse loan secured by Arbor Place Mall in Douglasville, GA ($100.4 million). The loan’s maturity was extended to May 2026 and maintained the existing fixed interest rate of 5.1%. CBL also completed the extension and modification of the non-recourse loan secured by Northwoods Mall in Charleston, SC ($59.9 million). The loan maturity was extended to April 2026 at the existing interest rate of 5.08%.

CBL also announced in May that it had closed on a new $65.0 million non-recourse loan secured by a pool of four open-air centers owned in a joint venture, located in Chattanooga, TN. The open-air centers include Hamilton Crossing, Hamilton Corner, The Terrace and The Shoppes at Hamilton Place/ Hamilton Place - Regal. The loan has a ten-year term with a fixed interest rate of 5.85%, interest only for three years and principal amortization based on a 30-year schedule thereafter. Net proceeds from the new loan were used to complete a partial redemption of CBL’s outstanding 10% Senior Secured Notes.

In June, CBL completed the redemption of all outstanding 10% Notes. The redemption was funded utilizing proceeds from a new $360.0 million non-recourse loan secured by a pool of high-quality outparcels and open-air centers. The new loan has an initial five-year term with one two-year extension option available to the Company, subject to certain conditions. The loan bears a floating interest rate based on 30-day SOFR plus 4.10%. $180 million principal amount of the $360 million loan has been fixed at a rate of 6.95% for a term of three years. The balance remains at a floating rate, which will allow for selective hedging at CBL’s option.

Additionally in June, CBL and its 65% joint venture partner closed on a new $42.5 million loan ($27.6 million at CBL’s share) secured by Ambassador Town Center. The new loan has a term of 7-years and a fixed interest rate of 4.35%. Proceeds were used to retire the existing $40.9 million loan, which was scheduled to mature in June 2023.

In June, CBL also repaid a $14.9 million loan (CBL’s share $13.9 million) secured by CBL Center, that was scheduled to mature.

Subsequent to second quarter end, CBL completed the modification and extensions of the loan secured by Parkdale Mall in Beaumont, TX ($68.1 million). The loan was extended to March 2026, at the existing interest rate of 5.85%.

CBL is also in the process of finalizing a modification of the loan secured by Southpark Mall in Richmond, VA ($54.8 million). The loan is expected to be extended through June 2026 at the existing interest rate of 4.85%.

As previously announced, the modification of the $35.5 million recourse loan secured by The Outlet Shoppes at Gettysburg in Gettysburg, PA is in process and is expected to be completed within the next 30 to 45 days.

In July, CBL conveyed Asheville Mall in Asheville, NC, to the lender in exchange for forgiveness of the $62.1 million loan secured by the property. The loans secured by EastGate Mall in Cincinnati, OH ($30.0 million) and Greenbrier Mall Chesapeake, VA ($61.6 million), remain in receivership and were deconsolidated based on each respective transfer date. CBL recently advised the servicer for the loan secured by Westgate Mall in Spartanburg, SC ($29.7 million) that it would cooperate with a foreclosure or conveyance of the property. CBL is in discussions with the servicer for the loan secured by Alamance Crossing East in Burlington, NC, ($42.0 million) to modify and/or extend the existing loan. If it is unable to reach a favorable agreement, CBL plans to cooperate with a foreclosure or conveyance of the property. Assuming the foreclosures or conveyances are completed for each of the four properties listed above and including the foreclosure of the $62.1 loan secured by Asheville Mall, a total of $225.4 million of debt will be removed from CBL’s pro rata share of total debt with an estimated debt yield of approximately 8.1%. CBL does not recognize earnings or receive cash flow from the properties in receivership.

CBL is in discussions with the lender to extend and/or modify the loan secured by Cross Creek Mall in Fayetteville, NC ($99.9 million) as well as West County Center located in St. Louis, MO ($82.1 million at CBL’s share). Both loans are currently scheduled to mature in 2022.

DISPOSITIONS

CBL did not complete any significant dispositions in the second quarter 2022.

REDEVELOPMENT ACTIVITY

Detailed project information is available in CBL’s Financial Supplement for Q2 2022, which can be found in the Invest – Financial Reports section of CBL’s website at cblproperties.com.

OUTLOOK AND GUIDANCE

After incorporating results for the second quarter 2022, CBL is maintaining guidance for 2022 FFO, as adjusted, in the range of $222.0 million - $237.0 million or $7.18 - $7.67 per diluted share. Same-center NOI guidance for the year was adjusted to exclude approximately $4.0 million of NOI related to Alamance Crossing East. This adjustment was fully offset by improved portfolio leasing expectations, resulting in same-center NOI guidance remaining in the range of $416.0 million to $430.0 million.

Key Guidance Assumptions:

		Low				High
2022 FFO, as adjusted		$222 million				$237 million
2022 FFO, as adjusted, per share		$	7.18			$	7.67
Weighted Average Common Shares Outstanding		30.9 million				30.9 million
2022 Same-Center NOI ("SC NOI")		$416 million				$430 million
2022 Change in Same-Center NOI			(5.2	)%			(1.2	)%

Reconciliation of GAAP Earnings Per Share to 2022 FFO, as Adjusted, Per Share:

		Low				High
Expected diluted earnings per common share		$	(6.02	)		$	(5.53	)
Depreciation and amortization			10.53				10.53
Debt discount accretion, net of noncontrolling interests' share			5.17				5.17
Loss on Impairment			0.01				0.01
Gain on depreciable property			(0.02	)			(0.02	)
Adjustment for unconsolidated affiliates with negative investment			(0.74	)			(0.74	)
Non-cash default interest expense			(0.59	)			(0.59	)
Gain on deconsolidated			(1.17	)			(1.17	)
Adjustement for litigation settlement			(0.02	)			(0.02	)
Reorganization item, net			0.03				0.03
Expected FFO, as adjusted, per diluted, fully converted common share		$	7.18			$	7.67

2022 Estimate of Capital Items:

		Low	High
2022 Estimated Deferred Maintenance/Tenant Allowances		$35 million	$45 million
2022 Estimated Development/Redevelopment Expenditures		$20 million	$30 million
2022 Estimated Principal Amortization (Including Est. Term Loan ECF)		$105 million	$120 million
Total Estimate		$160 million	$195 million

ABOUT CBL PROPERTIES

Headquartered in Chattanooga, TN, CBL Properties owns and manages a national portfolio of market-dominant properties located in dynamic and growing communities. CBL’s owned and managed portfolio is comprised of 95 properties totaling 59.6 million square feet across 24 states, including 57 high-quality enclosed malls, outlet centers and lifestyle retail centers as well as more than 30 open-air centers and other assets. CBL seeks to continuously strengthen its company and portfolio through active management, aggressive leasing and profitable reinvestment in its properties. For more information visit cblproperties.com.

NON-GAAP FINANCIAL MEASURES

Funds From Operations

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

The Company believes that FFO provides an additional indicator of the operating performance of its 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 well-maintained real estate assets have historically risen with market conditions, the Company believes that FFO enhances investors’ understanding of its operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of the Company’s properties and interest rates, but also by its capital structure.

The Company presents both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as it believes that both are useful performance measures. The Company believes FFO allocable to Operating Partnership common unitholders is a useful performance measure since it conducts substantially all of its business through its Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company’s common shareholders and the noncontrolling interest in the Operating Partnership. The Company believes FFO allocable to its common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to its common shareholders.

In the reconciliation of net income (loss) attributable to the Company’s common shareholders to FFO allocable to Operating Partnership common unitholders, located in this earnings release, the Company makes an adjustment to add back noncontrolling interest in income (loss) of its Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders. The Company then applies a percentage to FFO of the Operating Partnership common unitholders to arrive at FFO allocable to its 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 the Company’s 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 items from the applicable periods. Please refer to the reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders on page 10 of this news release for a description of these adjustments.

Same-center Net Operating Income

NOI is a supplemental non-GAAP measure of the operating performance of the Company’s shopping centers and other properties. The Company defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).

The Company computes NOI based on the Operating Partnership’s pro rata share of both consolidated and unconsolidated properties. The Company believes that presenting NOI and same-center NOI (described below) based on its Operating Partnership’s pro rata share of both consolidated and unconsolidated properties is useful since the Company conducts substantially all of its business through its Operating Partnership and, therefore, it reflects the performance of the properties in absolute terms regardless of the ratio of ownership interests of the Company’s common shareholders and the noncontrolling interest in the Operating Partnership. The Company's definition of NOI may be different than that used by other companies and, accordingly, the Company's 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 the Company’s shopping center properties, the Company believes 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 the Company’s results of operations. The Company’s calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-off of landlord inducement assets in order to enhance the comparability of results from one period to another. A reconciliation of same-center NOI to net income is located at the end of this earnings release.

Pro Rata Share of Debt

The Company presents debt based on the carrying value of its pro rata ownership share (including the carrying value of the Company’s pro rata share of unconsolidated affiliates and excluding noncontrolling interests’ share of consolidated properties) because it believes this provides investors a clearer understanding of the Company’s total debt obligations which affect the Company’s liquidity. A reconciliation of the Company’s pro rata share of debt to the amount of debt on the Company’s condensed consolidated balance sheet is located at the end of this earnings release.

Information included herein contains “forward-looking statements” within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual events, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. The reader is directed to the Company’s various filings with the Securities and Exchange Commission, including without limitation the Company’s Annual Report on Form 10-K, and the “Management's Discussion and Analysis of Financial Condition and Results of Operations” included therein, for a discussion of such risks and uncertainties.

Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)

		Successor					Predecessor
		Three Months Ended June 30,					Three Months Ended June 30,
		2022					2021
REVENUES:
Rental revenues		$	131,832				$	131,316
Management, development and leasing fees			1,786					1,449
Other			3,400					3,796
Total revenues			137,018					136,561
EXPENSES:
Property operating			(21,312	)				(19,623	)
Depreciation and amortization			(64,476	)				(47,499	)
Real estate taxes			(14,254	)				(15,110	)
Maintenance and repairs			(10,230	)				(8,784	)
General and administrative			(18,450	)				(11,269	)
Loss on impairment			(252	)				—
Litigation settlement			65					(57	)
Other			(834	)				(287	)
Total expenses			(129,743	)				(102,629	)
OTHER INCOME (EXPENSES):
Interest and other income			910					752
Interest expense			(55,117	)				(22,299	)
Gain on sales of real estate assets			3					107
Reorganization items, net			613					(17,073	)
Income tax benefit (provision)			472					(705	)
Equity in earnings (losses) of unconsolidated affiliates			2,039					(4,275	)
Total other income (expenses)			(51,080	)				(43,493	)
Net loss			(43,805	)				(9,561	)
Net loss attributable to noncontrolling interests in:
Operating Partnership			44					230
Other consolidated subsidiaries			2,373					449
Net loss attributable to the Company			(41,388	)				(8,882	)
Dividends allocable to unvested restricted stock			(210	)				—
Net loss attributable to common shareholders		$	(41,598	)			$	(8,882	)
Basic and diluted per share data attributable to common shareholders:
Net loss attributable to common shareholders		$	(1.34	)			$	(0.05	)
Weighted-average common and potential dilutive common shares outstanding			30,973					196,458

Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)

		Successor					Predecessor
		Six Months Ended June 30,					Six Months Ended June 30,
		2022					2021
REVENUES:
Rental revenues		$	267,164				$	259,491
Management, development and leasing fees			3,555					3,108
Other			6,401					7,146
Total revenues			277,120					269,745
EXPENSES:
Property operating			(44,656	)				(41,425	)
Depreciation and amortization			(133,419	)				(95,611	)
Real estate taxes			(28,689	)				(31,661	)
Maintenance and repairs			(20,796	)				(19,565	)
General and administrative			(36,524	)				(23,881	)
Loss on impairment			(252	)				(57,182	)
Litigation settlement			146					801
Other			(834	)				(287	)
Total expenses			(265,024	)				(268,811	)
OTHER INCOME (EXPENSES):
Interest and other income			1,064					1,528
Interest expense			(145,776	)				(46,429	)
Gain on deconsolidation			36,250					55,131
Gain (loss) on sales of real estate assets			19					(192	)
Reorganization items, net			(958	)				(40,006	)
Income tax provision			(329	)				(1,456	)
Equity in earnings (losses) of unconsolidated affiliates			10,606					(7,351	)
Total other income (expenses)			(99,124	)				(38,775	)
Net loss			(87,028	)				(37,841	)
Net loss attributable to noncontrolling interests in:
Operating Partnership			59					928
Other consolidated subsidiaries			4,859					1,268
Net loss attributable to the Company			(82,110	)				(35,645	)
Dividends allocable to unvested restricted stock			(210	)				—
Net loss attributable to common shareholders		$	(82,320	)			$	(35,645	)
Basic and diluted per share data attributable to common shareholders:
Net loss attributable to common shareholders		$	(2.83	)			$	(0.18	)
Weighted-average common and potential dilutive common shares outstanding			29,091					196,484

The Company's 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)

		Successor					Predecessor
		Three Months Ended June 30,					Three Months Ended June 30,
		2022					2021
Net loss attributable to common shareholders		$	(41,598	)			$	(8,882	)
Noncontrolling interest in loss of Operating Partnership			(44	)				(230	)
Depreciation and amortization expense of:
Consolidated properties			64,476					47,499
Unconsolidated affiliates			8,819					13,456
Non-real estate assets			(203	)				(492	)
Dividends allocable to unvested restricted stock			210					—
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries			(938	)				(558	)
Loss on impairment, net of taxes			186					—
FFO allocable to Operating Partnership common unitholders			30,908					50,793
Debt discount accretion, net of noncontrolling interests' share (1)			50,036					—
Adjustment for unconsolidated affiliates with negative investment (2)			(10,460	)				—
Senior secured notes fair value adjustment (3)			(593	)				—
Litigation settlement (4)			(65	)				57
Non-cash default interest expense (5)			(9,344	)				11,576
Reorganization items, net (6)			(613	)				17,073
FFO allocable to Operating Partnership common unitholders, as adjusted		$	59,869				$	79,499
FFO per diluted share		$	0.97				$	0.25
FFO, as adjusted, per diluted share		$	1.88				$	0.39
Weighted-average common and potential dilutive common shares outstanding with Operating Partnership units fully converted			31,822					201,576

(1)	In conjunction with fresh start accounting upon emergence from bankruptcy, the Company recognized debt discounts equal to the difference between the outstanding balance of mortgage notes payable and the estimated fair value of such mortgage notes payable. The debt discounts are accreted over the terms of the respective mortgage notes payable using the effective interest method.
(2)	Represents the Company’s share of the earnings (losses) before depreciation and amortization expense of unconsolidated affiliates where the Company is not recognizing equity in earnings (losses) because its investment in the unconsolidated affiliate is below zero.
(3)	Represents the fair value adjustment recorded on the Company’s 10% senior secured notes (the “Secured Notes”) as interest expense.
(4)	Represents a credit to litigation settlement expense for the three-month period ended June 30, 2022 related to claim amounts that were released pursuant to the terms of the settlement agreement related to the settlement of a class action lawsuit.
(5)	The three months ended June 30, 2022 includes the reversal of default interest expense when waivers or forbearance agreements were obtained. The three months ended June 30, 2021 includes default interest expense related to loans secured by properties that were in default prior to the Company filing bankruptcy, as well as loans secured by properties that remain in default due to the Company filing bankruptcy.
(6)	Represents costs incurred subsequent to the Company filing bankruptcy associated with the Company’s reorganization efforts, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees expensed in accordance with ASC 852.

The Company's 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)

		Successor					Predecessor
		Six Months Ended June 30,					Six Months Ended June 30,
		2022					2021
Net loss attributable to common shareholders		$	(82,320	)			$	(35,645	)
Noncontrolling interest in loss of Operating Partnership			(59	)				(928	)
Depreciation and amortization expense of:
Consolidated properties			133,419					95,611
Unconsolidated affiliates			17,339					26,986
Non-real estate assets			(401	)				(1,032	)
Dividends allocable to unvested restricted stock			210					—
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries			(1,837	)				(1,139	)
Loss on impairment, net of taxes			186					57,182
Gain on depreciable property			(629	)				—
FFO allocable to Operating Partnership common unitholders			65,908					141,035
Debt discount accretion, net of noncontrolling interests' share (1)			128,499					—
Adjustment for unconsolidated affiliates with negative investment (2)			(23,007	)				—
Senior secured notes fair value adjustment (3)			(395	)				—
Litigation settlement (4)			(146	)				(801	)
Non-cash default interest expense (5)			(18,220	)				23,046
Gain on deconsolidation (6)			(36,250	)				(55,131	)
Reorganization items, net (7)			958					40,006
FFO allocable to Operating Partnership common unitholders, as adjusted		$	117,347				$	148,155
FFO per diluted share		$	2.20				$	0.70
FFO, as adjusted, per diluted share		$	3.92				$	0.73
Weighted-average common and potential dilutive common shares outstanding with Operating Partnership units fully converted			29,926					201,601

(1)	In conjunction with fresh start accounting upon emergence from bankruptcy, the Company recognized debt discounts equal to the difference between the outstanding balance of mortgage notes payable and the estimated fair value of such mortgage notes payable. The debt discounts are accreted over the terms of the respective mortgage notes payable using the effective interest method.
(2)	Represents the Company’s share of the earnings (losses) before depreciation and amortization expense of unconsolidated affiliates where the Company is not recognizing equity in earnings (losses) because its investment in the unconsolidated affiliate is below zero.
(3)	Represents the fair value adjustment recorded on the Secured Notes as interest expense.
(4)	Represents a credit to litigation settlement expense in each of the six-month periods ended June 30, 2022 and 2021 related to claim amounts that were released pursuant to the terms of the settlement agreement related to the settlement of a class action lawsuit.
(5)	The six months ended June 30, 2022 includes the reversal of default interest expense when waivers or forbearance agreements were obtained. The six months ended June 30, 2021 includes default interest expense related to loans secured by properties that were in default prior to the Company filing bankruptcy, as well as loans secured by properties that remain in default due to the Company filing bankruptcy.
(6)	For the six months ended June 30, 2022, the Successor Company deconsolidated Greenbrier Mall due to a loss of control when the property was placed into receivership in connection with the foreclosure process. For the six months ended June 30, 2021, the Predecessor Company deconsolidated Asheville Mall and Park Plaza due to a loss of control when the properties were placed into receivership in connection with the foreclosure process.
(7)	Represents costs incurred subsequent to the Company filing bankruptcy associated with the Company’s reorganization efforts, which consists of professional fees, legal fees, retention bonuses and U.S. Trustee fees expensed in accordance with ASC 852.

The reconciliation of diluted EPS to FFO per diluted share for the three and six months ended June 30, 2022 and 2021 is as follows:

		Successor					Predecessor
		Three Months Ended June 30,					Three Months Ended June 30,
		2022					2021
Diluted EPS attributable to common shareholders		$	(1.34	)			$	(0.05	)
Add amounts per share included in FFO:
Unvested restricted stock			0.04					—
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			2.23					0.30
Loss on impairment, net of taxes			0.01					—
FFO per diluted share		$	0.94				$	0.25

		Successor					Predecessor
		Six Months Ended June 30,					Six Months Ended June 30,
		2022					2021
Diluted EPS attributable to common shareholders		$	(2.83	)			$	(0.18	)
Add amounts per share included in FFO:
Unvested restricted stock			0.08					—
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			4.96					0.59
Loss on impairment, net of taxes			0.01					0.29
Gain on depreciable property			(0.02	)				—
FFO per diluted share		$	2.20				$	0.70

		Successor					Predecessor
		Three Months Ended June 30,					Three Months Ended June 30,
		2022					2021
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees		$	1,052				$	167
Straight-line rental income adjustment		$	4,425				$	(2,549	)
Gain on outparcel sales		$	3				$	90
Net amortization of acquired above- and below-market leases		$	(4,892	)			$	73
Income tax benefit (provision)		$	472				$	(705	)
Abandoned projects expense		$	(834	)			$	(287	)
Interest capitalized		$	147				$	13
Estimate of uncollectable revenues		$	940				$	(7,253	)

		Successor					Predecessor
		Six Months Ended June 30,					Six Months Ended June 30,
		2022					2021
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees		$	2,448				$	1,278
Straight-line rental income adjustment		$	7,342				$	(5,445	)
Gain (loss) on outparcel sales, net of taxes		$	19				$	(209	)
Net amortization of acquired above- and below-market leases		$	(11,049	)			$	125
Income tax provision		$	(329	)			$	(1,456	)
Abandoned projects expense		$	(834	)			$	(287	)
Interest capitalized		$	375				$	32
Estimate of uncollectable revenues		$	3,301				$	(16,370	)
		Successor					Predecessor
		As of June 30,					As of June 30,
		2022					2021
Straight-line rent receivable		$	9,440				$	48,341

Same-center Net Operating Income
(Dollars in thousands)

		Successor					Predecessor
		Three Months Ended June 30,					Three Months Ended June 30,
		2022					2021
Net loss		$	(43,805	)			$	(9,561	)
Adjustments:
Depreciation and amortization			64,476					47,499
Depreciation and amortization from unconsolidated affiliates			8,819					13,456
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries			(938	)				(558	)
Interest expense			55,117					22,299
Interest expense from unconsolidated affiliates			21,660					10,512
Noncontrolling interests' share of interest expense in other consolidated subsidiaries			(2,525	)				(878	)
Abandoned projects expense			834					287
Gain on sales of real estate assets			(3	)				(107	)
Adjustment for unconsolidated affiliates with negative investment			(10,460	)				—
Loss on impairment, net of taxes			186					—
Litigation settlement			(65	)				57
Reorganization items, net			(613	)				17,073
Income tax (benefit) provision			(472	)				705
Lease termination fees			(1,052	)				(167	)
Straight-line rent and above- and below-market lease amortization			467					2,476
Net loss attributable to noncontrolling interests in other consolidated subsidiaries			2,373					449
General and administrative expenses			18,450					11,269
Management fees and non-property level revenues			(525	)				(5,166	)
Operating Partnership's share of property NOI			111,924					109,645
Non-comparable NOI			(4,566	)				(3,962	)
Total same-center NOI (1)		$	107,358				$	105,683
Total same-center NOI percentage change			1.6	%

(1)

CBL defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income), less property operating expenses (property operating, real estate taxes and maintenance and repairs). NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-offs of landlord inducement assets. We include a property in our same-center pool when we own all or a portion of the property as of June 30, 2022, and we owned it and it was in operation for both the entire preceding calendar year and the current year-to-date reporting period ending June 30, 2022. New properties are excluded from same-center NOI, until they meet these criteria. Properties excluded from the same-center pool that would otherwise meet these criteria are properties which are under major redevelopment or being considered for repositioning, where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender.

Same-center Net Operating Income
(Dollars in thousands)

		Successor					Predecessor
		Six Months Ended June 30,					Six Months Ended June 30,
		2022					2021
Net loss		$	(87,028	)			$	(37,841	)
Adjustments:
Depreciation and amortization			133,419					95,611
Depreciation and amortization from unconsolidated affiliates			17,339					26,986
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries			(1,837	)				(1,139	)
Interest expense			145,776					46,429
Interest expense from unconsolidated affiliates			40,157					20,361
Noncontrolling interests' share of interest expense in other consolidated subsidiaries			(5,095	)				(1,845	)
Abandoned projects expense			834					287
(Gain) loss on sales of real estate assets			(19	)				192
Gain on sales of real estate assets of unconsolidated affiliates			(629	)				—
Adjustment for unconsolidated affiliates with negative investment			(23,007	)				—
Gain on deconsolidation			(36,250	)				(55,131	)
Loss on impairment, net of taxes			186					57,182
Litigation settlement			(146	)				(801	)
Reorganization items, net			958					40,006
Income tax provision			329					1,456
Lease termination fees			(2,448	)				(1,278	)
Straight-line rent and above- and below-market lease amortization			3,707					5,320
Net loss attributable to noncontrolling interests in other consolidated subsidiaries			4,859					1,268
General and administrative expenses			36,524					23,881
Management fees and non-property level revenues			(1,049	)				(7,379	)
Operating Partnership's share of property NOI			226,580					213,565
Non-comparable NOI			(9,194	)				(9,738	)
Total same-center NOI (1)		$	217,386				$	203,827
Total same-center NOI percentage change			6.7	%

(1)

CBL defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income), less property operating expenses (property operating, real estate taxes and maintenance and repairs). NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-offs of landlord inducement assets. We include a property in our same-center pool when we own all or a portion of the property as of June 30, 2022, and we owned it and it was in operation for both the entire preceding calendar year and the current year-to-date reporting period ending June 30, 2022. New properties are excluded from same-center NOI, until they meet these criteria. Properties excluded from the same-center pool that would otherwise meet these criteria are properties which are under major redevelopment or being considered for repositioning, where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender.

Same-center Net Operating Income
(Continued)

		Successor					Predecessor
		Three Months Ended June 30,					Three Months Ended June 30,
		2022					2021
Malls		$	75,369				$	74,157
Outlet centers			4,520					4,246
Lifestyle centers			8,727					8,854
Open-air centers			13,178					12,696
Outparcels and other			5,564					5,730
Total same-center NOI (1)		$	107,358				$	105,683
Percentage Change:
Malls			1.6	%
Outlet centers			6.5	%
Lifestyle centers			(1.4	)%
Open-air centers			3.8	%
Outparcels and other			(2.9	)%
Total same-center NOI (1)			1.6	%

		Successor					Predecessor
		Six Months Ended June 30,					Six Months Ended June 30,
		2022					2021
Malls		$	153,124				$	143,851
Outlet centers			8,847					7,991
Lifestyle centers			17,830					16,527
Open-air centers			26,258					24,562
Outparcels and other			11,327					10,896
Total same-center NOI (1)		$	217,386				$	203,827
Percentage Change:
Malls			6.4	%
Lifestyle centers			10.7	%
Open-air centers			7.9	%
Outlet centers			6.9	%
Outparcels and other			4.0	%
Total same-center NOI (1)			6.7	%

(1)

CBL defines NOI as property operating revenues (rental revenues, tenant reimbursements and other income), less property operating expenses (property operating, real estate taxes and maintenance and repairs). NOI excludes lease termination income, straight-line rent adjustments, amortization of above and below market lease intangibles and write-offs of landlord inducement assets. We include a property in our same-center pool when we own all or a portion of the property as of June 30, 2022, and we owned it and it was in operation for both the entire preceding calendar year and the current year-to-date reporting period ending June 30, 2022. New properties are excluded from same-center NOI, until they meet these criteria. Properties excluded from the same-center pool that would otherwise meet these criteria are properties which are under major redevelopment or being considered for repositioning, where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender.

Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)

		As of June 30, 2022 (Successor)
		Fixed Rate				Variable Rate				Total per Debt Schedule				Unamortized Deferred Financing Costs				Unamortized Debt Discounts (1)				Total
Consolidated debt		$	881,513			$	1,270,871			$	2,152,384			$	(16,028	)		$	(100,967	)		$	2,035,389
Noncontrolling interests' share of consolidated debt			(32,771	)			(13,597	)			(46,368	)			92				15,424				(30,852	)
Company's share of unconsolidated affiliates' debt			627,434				71,786				699,220				(2,490	)			—				696,730
Other debt (2)			153,719				—				153,719				—				—				153,719
Company's share of consolidated, unconsolidated and other debt		$	1,629,895			$	1,329,060			$	2,958,955			$	(18,426	)		$	(85,543	)		$	2,854,986
Weighted-average interest rate			4.67	%			4.44	%			4.57	%
		As of June 30, 2021 (Predecessor)
		Fixed Rate				Variable Rate				Total per Debt Schedule				Unamortized Deferred Financing Costs				Unamortized Deferred Financing Costs				Total
Consolidated debt (3)		$	2,338,118			$	1,181,599			$	3,519,717			$	(2,987	)		$	—			$	3,516,730
Noncontrolling interests' share of consolidated debt			(29,744	)			—				(29,744	)			238				—				(29,506	)
Company's share of unconsolidated affiliates' debt			618,092				124,141				742,233				(2,648	)			—				739,585
Other debt (2)			138,926				—				138,926				—				—				138,926
Company's share of consolidated and unconsolidated debt		$	3,065,392			$	1,305,740			$	4,371,132			$	(5,397	)		$	—			$	4,365,735
Weighted-average interest rate			5.04	%			8.62	%	(4)		6.11	%

(1)	In conjunction with fresh start accounting, the Company estimated the fair value of its mortgage notes with the assistance of a third-party valuation advisor. This resulted in recognizing a debt discount on the Effective Date. The debt discount is accreted over the term of the respective debt using the effective interest method.
(2)	Represents the outstanding loan balance for properties that were deconsolidated due to a loss of control when the properties were placed into receivership in connection with the foreclosure process.
(3)	Includes $2,529,138 of liabilities subject to compromise.
(4)	The administrative agent informed the Company that interest would accrue on all outstanding obligations at the post-default rate, which was equal to the rate that otherwise would be in effect plus 5.0%. The post-default interest rate on June 30, 2021 was 9.50%.

Consolidated Balance Sheets
(Unaudited; in thousands, except share data)

		June 30, 2022				December 31, 2021
ASSETS
Real estate assets:
Land		$	592,553			$	599,283
Buildings and improvements			1,171,468				1,173,106
			1,764,021				1,772,389
Accumulated depreciation			(77,968	)			(19,939	)
			1,686,053				1,752,450
Developments in progress			13,201				16,665
Net investment in real estate assets			1,699,254				1,769,115
Cash and cash equivalents			177,065				169,554
Available-for-sale securities - at fair value (amortized cost of $150,057 and $149,999 as of June 30, 2022 and December 31, 2021, respectively)			150,063				149,996
Receivables:
Tenant			27,256				25,190
Other			4,084				4,793
Investments in unconsolidated affiliates			85,685				103,655
In-place leases, net			307,887				384,705
Above market leases, net			201,499				234,286
Intangible lease assets and other assets			121,749				104,685
		$	2,774,542			$	2,945,979
LIABILITIES AND EQUITY
Mortgage and other indebtedness, net		$	2,035,389			$	1,813,209
10% senior secured notes - at fair value (carrying amount of $395,000 as of December 31, 2021)			—				395,395
Below market leases, net			131,135				151,871
Accounts payable and accrued liabilities			146,393				184,404
Total liabilities			2,312,917				2,544,879
Shareholders' equity:
Common stock, $.001 par value, 200,000,000 shares authorized, 31,814,178 and 20,774,716 issued and outstanding in 2022 and 2021, respectively			32				21
Additional paid-in capital			705,884				547,726
Accumulated other comprehensive income (loss)			6				(3	)
Accumulated deficit			(241,609	)			(151,545	)
Total shareholders' equity			464,313				396,199
Noncontrolling interests			(2,688	)			4,901
Total equity			461,625				401,100
		$	2,774,542			$	2,945,979

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220815005530/en/

Katie Reinsmidt, Executive Vice President - Chief Investment Officer, 423.490.8301, katie.reinsmidt@cblproperties.com

Source: CBL Properties

FAQ

What were CBL Properties' Q2 2022 financial results?

CBL Properties reported a net loss of $41.6 million and FFO decreased by 39.1% to $30.9 million.

How much is the dividend declared by CBL Properties for Q2 and Q3 2022?

CBL Properties declared a $0.25 per share cash dividend for both Q2 and Q3 2022.

What improvement did CBL Properties see in occupancy rates?

CBL Properties' portfolio occupancy improved to 89.5%, a 250 basis point increase from the previous year.

What financing activities did CBL Properties complete in Q2 2022?

CBL completed over $663 million in financing, which included the redemption of all $395 million outstanding 10% Senior Secured Notes.

What was the change in same-center sales per square foot for CBL Properties?

Same-center sales per square foot declined by 3.9% in Q2 2022 compared to Q2 2021.