Strong Property Performance Leads to
Outstanding First Quarter 2022 Results
CBL Properties (NYSE: CBL) announced results for the first
quarter ended March 31, 2022. Financial results for the periods
from January 1, 2021, through March 31, 2021, are referred to as
those of the “Predecessor” period. Financial results for the period
from January 1, 2022, through March 31, 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 March
31,
Three Months Ended March
31,
2022
2021
Net loss attributable to common
shareholders
$
(40,722
)
$
(26,763
)
Funds from Operations ("FFO")
$
35,000
$
90,241
FFO, as adjusted (1)
$
57,478
$
68,655
(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 March
31,
2022
Portfolio same-center NOI
10.7%
Mall, Lifestyle Center and Outlet Center
same-center NOI
10.8%
(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 percentage rent and operating expense controls
contributed to an increase in total portfolio same-center NOI of
10.7% for the three months ended March 31, 2022, compared with the
prior year period.
- First quarter outperformance and revised outlook contribute to
full year 2022 same-center NOI guidance increasing to $416 - $430
million from prior guidance of $400 - $413 million and FFO, as
adjusted, per share guidance increasing to a range of $7.18 -$7.67
per diluted share compared with prior guidance of $7.00 - $7.50 per
diluted share.
- Portfolio occupancy as of March 31, 2022, was 88.3%,
representing a 290-basis point improvement compared with 85.4% as
of March 31, 2021. Same-center occupancy for malls, lifestyle
centers and outlet centers was 86.5% as of March 31, 2022,
representing a 330-basis point improvement compared with 83.2% as
of March 31, 2021.
- Same-center sales per square foot for the trailing 12-months
ended March 31, 2022, increased 12.6% as compared to the trailing
12-months (excluding 2020) ended March 31, 2021. Same-center sales
per square foot for the first quarter 2022 increased 0.9% as
compared with the first quarter 2021.
- FFO, as adjusted, allocable to Operating Partnership common
unitholders, for the three months ended March 31, 2022, was $57.5
million, compared with $68.7 million. The variance in FFO, as
adjusted, as compared with the prior year period reflects a
significant increase in NOI, 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 first quarter 2021 as a
result of the Company’s bankruptcy filing on November 1, 2020.
- As of March 31, 2022, the Company had $335.7 million of
unrestricted cash and marketable securities.
- Substantial year-to-date balance sheet improvement, resulting
in lower interest costs, extended maturity schedule and greater
financial flexibility.
“First quarter results sustained the strong operational and
financial momentum of 2021, leading us to increase guidance for the
full year," said Stephen D. Lebovitz, CBL's chief executive
officer. "Significant year-over-year occupancy gains as well as
positive tenant sales growth demonstrate the strength of our
properties. Percentage rents, short-term income and collections
were above expectations, contributing to double-digit NOI growth.
While first quarter leasing spreads were negative, we anticipate
sequential improvement going forward with higher occupancy and
increasing demand driving more favorable terms.
“As we have consistently stated, further improving our balance
sheet is also a key priority for us. We’ve made significant
progress towards accomplishing our goal of fully refinancing the
secured notes, including the recently announced partial redemption.
Additionally, since our emergence we have closed several attractive
financings, favorable modifications and extensions. These
transactions reduce borrowing costs, increase free cash flow and
create greater financial flexibility. Our strong and improving
balance sheet coupled with our intense focus on operational
improvements position CBL to deliver significant value to our
shareholders.”
NON-GAAP FINANCIAL RESULTS
Net loss attributable to common shareholders for the three
months ended March 31, 2022, was $40.7 million, compared with a net
loss of $26.8 million, for the three months ended March 31,
2021.
FFO, as adjusted, allocable to Operating Partnership common
unitholders, for the three months ended March 31, 2022, was $57.5
million, compared with $68.7 million, for the three months ended
March 31, 2021.
Same-center NOI for the three months ended March 31, 2022,
increased 10.7%, or $10.8 million, to $111.1 million as compared
with $100.4 million in the prior-year period, due to a $12.8
million increase in total revenues partially offset by a $2.1
million increase in operating expenses.
Other major variances in same-center NOI for the quarter ended
March 31, 2022, include:
- Minimum rents and other rents increased $12.1 million.
Percentage rents increased $3.0 million and tenant reimbursements
declined $2.8 million. Minimum rents included a $6.9 million
positive variance in the estimate for uncollectable revenues. The
total estimate for uncollectable revenues for the first quarter
2022 was a reversal of $2.0 million due to collections of amounts
that were previously reserved, while the prior-year period reflects
an estimate for uncollectable revenues of $4.9 million.
- Property operating expenses increased $2.5 million compared
with the prior year. Maintenance and repair expenses increased $1.0
million. Real estate tax expenses declined by $1.4 million,
partially offsetting the above increases.
LIQUIDITY
As of March 31, 2022, CBL had approximately $335.7 million
available in unrestricted cash and marketable securities.
PORTFOLIO OPERATIONAL RESULTS
Occupancy(1):
Successor
Predecessor
Three Months Ended March
31,
Three Months Ended March
31,
2022
2021
Total portfolio
88.3%
85.4%
Malls, Lifestyle Centers and Outlet
Centers:
Total malls
86.4%
83.0%
Total lifestyle centers
86.3%
82.8%
Total outlet centers
87.0%
85.4%
Total same-center malls, lifestyle centers
and outlet centers
86.5%
83.2%
All Other:
Total open-air centers
94.4%
92.0%
Total other
89.0%
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 March
31,
2022
Stabilized Malls, Lifestyle Centers and
Outlet Centers
(11.6)%
New leases
(10.1)%
Renewal leases
(11.8)%
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 March 31,
Sales Per Square Foot for the
Trailing Twelve Months Ended March 31,
2022
2021 (1)
% Change
Mall, Lifestyle Center and Outlet Center
same-center sales per square foot
$
447
$
397
12.6%
(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 March
31, 2021, is comprised of sales reported for the periods April 1
through December 31, 2019 and January 1 through March 31, 2021.
Same-center sales per square foot for the trailing twelve months
ended March 31, 2022, increased 12.6% as compared with the trailing
twelve months ended March 31, 2021 (excludes 2020). Same-center
sales per square foot for the first quarter 2022 increased 0.9% as
compared with the first quarter 2021.
FINANCING ACTIVITY
In May 2022, CBL completed the extension and modification of the
non-recourse loan secured by Arbor Place Mall in Douglasville, GA
($101.1 million). The loan’s maturity was extended to May 2026 and
maintained the existing fixed interest rate of 5.1%.
On April 28, 2022, CBL and its 50% joint venture partner, closed
on a $40.0 million non-recourse loan ($20 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.
On April 26, 2022, CBL announced that it has entered into a term
sheet for a new $65.0 million non-recourse loan. The new CMBS loan
will be secured by a pool of five open-air centers owned in a 92/8
joint venture, located in Chattanooga, TN. The open-air centers
include Hamilton Crossing, Hamilton Corner, The Terrace, The
Shoppes at Hamilton Place, and Hamilton Place - Regal.
The loan will have a ten-year term with a fixed interest rate
determined at closing and based upon an agreed upon spread plus the
greater of the 10-year swap rate or 10-year US Treasury Rate. The
rate is expected to be in the range of 5.5% - 5.75%, assuming
interest rates at closing are comparable to today’s rates. The loan
is expected to close on or around May 25th, subject to completion
of customary due diligence and documentation.
In connection with the above financing, the Company’s wholly
owned subsidiary, CBL & Associates Holdco II, LLC (the
“Issuer”) delivered a conditional notice of redemption to holders
of its 10% Senior Secured Notes due 2029 (the “10% Notes”),
pursuant to the terms of the indenture governing the 10% Notes, to
redeem $60.0 million aggregate principal amount of 10% Notes (the
“Redemption”) on May 26, 2022. The Redemption is conditioned upon
the receipt by the Issuer of net cash proceeds from the new
financing. There can be no assurances as to when or if such
condition will be satisfied and the Issuer may waive the condition
at its discretion. Following the planned redemption, $335.0 million
principal amount of 10% Notes will remain outstanding.
In March 2022, CBL closed on a new $30.0 million non-recourse
loan secured by York Town Center, that provides for a three-year
term and a fixed interest rate of 4.75%, interest only for the
first 18 months.
In February 2022, CBL closed on the extension and modification
of the $133.5 million non-recourse loan secured by Fayette Mall in
Lexington, KY. The loan maturity has been extended for two years,
with three additional one-year extension options, subject to
certain conditions. The fixed interest rate was reduced from 5.42%
to 4.25%. As part of the modification, two ground leased outparcels
were released from the collateral in exchange for the addition of a
redeveloped former middle anchor location.
On February 1, 2022, the Company completed the exchange of its
$150 million 7% Senior Secured Exchangeable Notes. The Company
issued 10.98 million shares in satisfaction of the full Exchange
Amount.
On December 8, 2021, EastGate Mall in Cincinnati, OH ($30.0
million), was placed into receivership and deconsolidated. CBL no
longer controls the property following its transfer to
receivership. Greenbrier Mall ($61.6 million) was placed into
receivership as of March 10, 2022, and deconsolidated. CBL is
cooperating in the foreclosure or conveyance of EastGate Mall,
Greenbrier Mall, as well as Asheville Mall in Asheville, NC ($62.1
million), which was placed into receivership and deconsolidated in
the first quarter 2021. Once the foreclosures or conveyances are
complete, $153.7 million of debt will be removed from CBL’s pro
rata share of total debt.
CBL and its joint venture partner have an agreement in principle
with the lender on modification of the $35.6 million recourse loan
secured by The Outlet Shoppes at Gettysburg in Gettysburg, PA. The
modified loan will have a non-recourse principal balance of $21.0
million ($10.5 million at CBL’s share). The parties have agreed to
a $20.0 million general unsecured claim in the Predecessor’s
bankruptcy case.
CBL is in the process of completing modifications and extensions
of the loans secured by Parkdale Mall in Beaumont, TX ($68.7
million) and Northwoods Mall in N. Charleston, SC ($60.3 million).
These modifications/extensions are expected to close within next
60-90 days.
CBL and its 50% JV partner have signed a term sheet with an
institutional lender for a new $42.5 million loan at Ambassador
Town Center. The new loan will have a term of 7-Years and a fixed
interest rate of 4.35%. Closing is anticipated within the next
60-90 days. Proceeds will be used to retire the existing $40.9
million loan, which matures in June 2023.
CBL currently expects to repay a $15.1 million loan (CBL’s share
$13.9 million) secured by CBL Center that matures in June 2022.
CBL is in the process of negotiating extensions and
modifications of the remaining property level mortgage loans with
maturities in 2021 and 2022.
DISPOSITIONS
CBL did not complete any significant dispositions in the first
quarter 2022.
REDEVELOPMENT ACTIVITY
Detailed project information is available in CBL’s Financial
Supplement for Q1 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 first quarter 2022 and
Management’s revised full year outlook, CBL is providing updated
guidance for 2022 FFO, as adjusted, in the range of $222 million -
$237 million or $7.18 - $7.67 per diluted share, which assumes
same-center NOI in the range of $416.0 million to $430.0 million.
Improvements in expected FFO, as adjusted, are primarily driven by
higher than anticipated NOI, partially offset by higher G&A
expense and the impact of above and below market lease amortization
following the implementation of Fresh Start accounting.
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
(6.9
)%
(3.8
)%
Updated Assumptions driving the projected change in 2022 SC
NOI:
2022 SC NOI Low End (in
millions)
2022 SC NOI High End (in
millions)
Category Explanation
Variance From Prior
Guidance
2021 Actual Same-Center NOI
$
447.0
$
447.0
Rent from new leases and contractual rent
increases
$
13.5
$
17.0
New rent from stores that opened in 2021
or expected to open in 2022 and net increases from existing tenants
including contractual rent bumps and variable rent.
$3.0 million improved expectation
following first quarter results, including higher expected
percentage rents, and stronger leasing momentum.
Lease Terminations
$
(2.5
)
$
(2.5
)
Represents rent lost in 2022 related to
stores that terminated leases in 2021.
No change
Store Closures/Non-Renewals
$
(13.5
)
$
(11.5
)
Represents rent lost in 2022 related to
stores that closed for a partial year in 2021 or are expected to
close before year-end 2022.
$3.0 million improved expectation due to
lower stores closures in 2022 following positive tenant sales and
stronger leasing activity year-to-date.
Lease Renewals/Modifications
$
(12.0
)
$
(10.0
)
Impact of negative rent spreads related to
renewals or lease modifications completed in 2021 and budgeted for
2022.
$4.0 million improved expectation
following strong leasing activity year-to-date.
Operating Expense
$
(9.5
)
$
(7.0
)
Increases in operating expenses are
primarily driven by the return to normal operating hours versus the
shortened operating hours in 2021 due to the impact of COVID,
higher contract wage rates (security/janitorial) due to the tight
labor market and inflation and higher maintenance and repair
expense related to projects that were delayed in 2021, primarily
due to labor shortages.
$4.0 million improved expectation of
operating expense for 2022 following first quarter results and
expense management.
Reserve for Watch List Tenants
$
(7.0
)
$
(3.0
)
Represents credit loss related to tenants
that may file for bankruptcy and/or close stores due to
underperformance. 2021 was impacted by a negligible credit
loss.
$2.0 - $3.0 million improved expectation
of the loss related to watch list tenants following first quarter
results.
Total Variance
$
(31.0
)
$
(17.0
)
2022 SC NOI Guidance
$
416.0
$
430.0
$16.0 - $17.0 million total increase from
prior guidance range of $400 - $413 million
% Variance
(6.9
)%
(3.8
)%
Reconciliation of GAAP Earnings Per Share to 2022 FFO, as
Adjusted, Per Share:
Low
High
Expected diluted earnings per common
share
$
(8.97
)
$
(8.50
)
Add: depreciation and amortization
12.81
12.81
Add: debt discount accretion, net of
noncontrolling interests' share
5.18
5.18
Less: Gain on depreciable property
(0.02
)
(0.02
)
Adjustment for unconsolidated affiliates
with negative investment
(0.41
)
(0.41
)
Non-cash default interest expense
(0.29
)
(0.29
)
Gain on deconsolidated
(1.17
)
(1.17
)
Reorganization item, net
0.05
0.05
Expected FFO, as adjusted, per diluted,
fully converted common share
$
7.18
$
7.65
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 income (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
For the Three Months Ended
March 31,
For the Three Months Ended
March 31,
2022
2021
REVENUES:
Rental revenues
$
135,332
$
128,175
Management, development and leasing
fees
1,769
1,659
Other
3,001
3,350
Total revenues
140,102
133,184
EXPENSES:
Property operating
(23,344
)
(21,802
)
Depreciation and amortization
(68,943
)
(48,112
)
Real estate taxes
(14,435
)
(16,551
)
Maintenance and repairs
(10,566
)
(10,781
)
General and administrative
(18,074
)
(12,612
)
Loss on impairment
—
(57,182
)
Litigation settlement
81
858
Total expenses
(135,281
)
(166,182
)
OTHER INCOME (EXPENSES):
Interest and other income
155
776
Interest expense
(90,659
)
(24,130
)
Gain on deconsolidation
36,250
55,131
Gain (loss) on sales of real estate
assets
16
(299
)
Reorganization items, net
(1,571
)
(22,933
)
Income tax provision
(801
)
(751
)
Equity in earnings (losses) of
unconsolidated affiliates
8,566
(3,076
)
Total other income (expenses)
(48,044
)
4,718
Net loss
(43,223
)
(28,280
)
Net loss attributable to noncontrolling
interests in:
Operating Partnership
15
698
Other consolidated subsidiaries
2,486
819
Net loss attributable to common
shareholders
$
(40,722
)
$
(26,763
)
Basic and diluted per share data
attributable to common shareholders:
Net loss attributable to common
shareholders
$
(1.45
)
$
(0.14
)
Weighted-average common and potential
dilutive common shares outstanding
27,998
196,509
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 March
31,
Three Months Ended March
31,
2022
2021
Net loss attributable to common
shareholders
$
(40,722
)
$
(26,763
)
Noncontrolling interest in loss of
Operating Partnership
(15
)
(698
)
Depreciation and amortization expense
of:
Consolidated properties
68,943
48,112
Unconsolidated affiliates
8,520
13,530
Non-real estate assets
(198
)
(541
)
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(899
)
(581
)
Loss on impairment
—
57,182
Gain on depreciable property
(629
)
—
FFO allocable to Operating Partnership
common unitholders
35,000
90,241
Debt discount accretion, net of
noncontrolling interests' share (1)
78,463
—
Adjustment for unconsolidated affiliates
with negative investment (2)
(12,547
)
—
Senior secured notes fair value adjustment
(3)
198
—
Litigation settlement (4)
(81
)
(858
)
Non-cash default interest expense (5)
(8,876
)
11,470
Gain on deconsolidation (6)
(36,250
)
(55,131
)
Reorganization items, net (7)
1,571
22,933
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
57,478
$
68,655
FFO per diluted share
$
1.25
$
0.45
FFO, as adjusted, per diluted
share
$
2.05
$
0.34
Weighted-average common and potential
dilutive common shares outstanding with Operating Partnership units
fully converted
28,009
201,627
(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 for the three months ended March 31,
2022. The Company elected the fair value option in conjunction with
the issuance of its Secured Notes.
(4)
Represents a credit to litigation
settlement expense in each of the three-month periods ended March
31, 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 three months ended March 31, 2022
includes the reversal of default interest expense when waivers or
forbearance agreements were obtained. The three months ended March
31, 2021 includes default interest expense related to loans secured
by properties that were in default prior to the Company filing the
Chapter 11 Cases, as well as loans secured by properties that were
in default due to the Company filing the Chapter 11 Cases.
(6)
For the three months ended March 31, 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 three months ended
March 31, 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 the Chapter 11 Cases associated with the
Company’s reorganization efforts, which consists of professional
fees, legal fees, retention bonuses, U.S. Trustee fees and debt
discounts expensed in accordance with ASC 852.
Successor
Predecessor
Three Months Ended March
31,
Three Months Ended March
31,
2022
2021
Diluted EPS attributable to common
shareholders
$
(1.45
)
$
(0.14
)
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
2.72
0.30
Loss on impairment
—
0.29
Gain on depreciable property
(0.02
)
—
FFO per diluted share
$
1.25
$
0.45
Successor
Predecessor
Three Months Ended March
31,
Three Months Ended March
31,
2022
2021
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees
$
1,395
$
1,111
Straight-line rental income adjustment
$
2,917
$
(3,263
)
Gain (loss) on outparcel sales
$
16
$
(299
)
Net amortization of acquired above- and
below-market leases
$
(6,157
)
$
52
Income tax provision
$
(801
)
$
(751
)
Interest capitalized
$
228
$
19
Estimate of uncollectable revenues
$
2,076
$
(6,486
)
Successor
Predecessor
Three Months Ended March
31,
Three Months Ended March
31,
2022
2021
Straight-line rent receivable
$
5,402
$
48,528
Same-center Net Operating Income (Dollars in
thousands)
Successor
Predecessor
Three Months Ended March
31,
Three Months Ended March
31,
2022
2021
Net loss
$
(43,223
)
$
(28,280
)
Adjustments:
Depreciation and amortization
68,943
48,112
Depreciation and amortization from
unconsolidated affiliates
8,520
13,530
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(899
)
(581
)
Interest expense
90,659
24,130
Interest expense from unconsolidated
affiliates
18,497
9,849
Noncontrolling interests' share of
interest expense in other consolidated subsidiaries
(2,570
)
(967
)
(Gain) loss on sales of real estate
assets
(16
)
299
Gain on sales of real estate assets of
unconsolidated affiliates
(629
)
—
Adjustment for unconsolidated affiliates
with negative investment
(12,547
)
—
Gain on deconsolidation
(36,250
)
(55,131
)
Loss on impairment
—
57,182
Litigation settlement
(81
)
(858
)
Reorganization items, net
1,571
22,933
Income tax provision
801
751
Lease termination fees
(1,395
)
(1,111
)
Straight-line rent and above- and
below-market lease amortization
3,240
3,211
Net loss attributable to noncontrolling
interests in other consolidated subsidiaries
2,486
819
General and administrative expenses
18,074
12,612
Management fees and non-property level
revenues
(1,086
)
(2,580
)
Operating Partnership's share of
property NOI
114,095
103,920
Non-comparable NOI
(2,979
)
(3,569
)
Total same-center NOI (1)
$
111,116
$
100,351
Total same-center NOI percentage
change
10.7
%
(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 March 31, 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 March 31, 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 March
31,
Three Months Ended March
31,
2022
2021
Malls
$
78,490
$
71,240
Outlet centers
4,326
3,745
Lifestyle centers
10,124
8,874
Open-air centers
12,815
11,572
Outparcels and other
5,361
4,920
Total same-center NOI (1)
$
111,116
$
100,351
Percentage Change:
Malls
10.2
%
Outlet centers
15.5
%
Lifestyle centers
14.1
%
Open-air centers
10.7
%
Outparcels and other
9.0
%
Total same-center NOI (1)
10.7
%
(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 March 31, 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 March 31, 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 March 31, 2022
(Successor)
Fixed Rate
Variable Rate
Total per Debt
Schedule
Unamortized
Deferred Financing Costs
Unamortized Debt
Discounts (1)
Total
Consolidated debt (2)
$
1,242,208
$
930,997
$
2,173,205
$
(2,928
)
$
(135,808
)
$
2,034,469
Noncontrolling interests' share of
consolidated debt
(29,212
)
(13,703
)
(42,915
)
(5
)
17,276
(25,644
)
Company's share of unconsolidated
affiliates' debt
608,984
89,330
698,314
(2,012
)
—
696,302
Other debt (3)
153,719
—
153,719
—
—
153,719
Company's share of consolidated,
unconsolidated and other debt
$
1,975,699
$
1,006,624
$
2,982,323
$
(4,945
)
$
(118,532
)
$
2,858,846
Weighted-average interest rate
5.68
%
3.66
%
5.00
%
As of March 31, 2021
(Predecessor)
Fixed Rate
Variable Rate
Total per Debt
Schedule
Unamortized
Deferred Financing Costs
Unamortized
Deferred Financing Costs
Total
Consolidated debt (4)
$
2,347,553
$
1,182,287
$
3,529,840
$
(3,194
)
$
—
$
3,526,646
Noncontrolling interests' share of
consolidated debt
(29,922
)
—
(29,922
)
251
—
(29,671
)
Company's share of unconsolidated
affiliates' debt
620,896
123,309
744,205
(2,865
)
—
741,340
Other debt (3)
138,926
—
138,926
—
—
138,926
Company's share of consolidated and
unconsolidated debt
$
3,077,453
$
1,305,596
$
4,383,049
$
(5,808
)
$
—
$
4,377,241
Weighted-average interest rate
5.04
%
8.62
%
(5)
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)
Includes the Company’s senior secured
notes which had a fair value of $395,593 as of March 31, 2022.
(3)
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.
(4)
Includes $2,489,676 of liabilities subject
to compromise.
(5)
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 March 31, 2021 was 9.50%.
Consolidated Balance Sheets (Unaudited; in thousands,
except share data)
March 31, 2022
December 31,
2021
ASSETS
Real estate assets:
Land
$
594,355
$
599,283
Buildings and improvements
1,161,414
1,173,106
1,755,769
1,772,389
Accumulated depreciation
(49,188
)
(19,939
)
1,706,581
1,752,450
Developments in progress
18,493
16,665
Net investment in real estate assets
1,725,074
1,769,115
Cash and cash equivalents
185,744
169,554
Available-for-sale securities - at fair
value (amortized cost of $149,936 and $149,999 as of March 31, 2022
and December 31, 2021, respectively)
149,975
149,996
Receivables:
Tenant
21,818
25,190
Other
5,356
4,793
Investments in unconsolidated
affiliates
100,685
103,655
In-place leases, net
341,152
384,705
Above market leases, net
216,648
234,286
Intangible lease assets and other
assets
102,872
104,685
$
2,849,324
$
2,945,979
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND EQUITY
Mortgage and other indebtedness, net
$
1,639,469
$
1,813,209
10% senior secured notes - at fair value
(carrying amount of $395,000 as of March 31, 2022 and December 31,
2021, respectively)
395,593
395,395
Below market leases, net
141,388
151,871
Accounts payable and accrued
liabilities
159,531
184,404
Total liabilities
2,335,981
2,544,879
Shareholders' equity:
Common stock, $.001 par value, 200,000,000
shares authorized, 31,807,511 and 20,774,716 issued and outstanding
in 2022 and 2021, respectively
32
21
Additional paid-in capital
702,996
547,726
Accumulated other comprehensive income
(loss)
39
(3
)
Accumulated deficit
(192,267
)
(151,545
)
Total shareholders' equity
510,800
396,199
Noncontrolling interests
2,543
4,901
Total equity
513,343
401,100
$
2,849,324
$
2,945,979
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220516005857/en/
Katie Reinsmidt Executive Vice President - Chief Investment
Officer 423.490.8301 katie.reinsmidt@cblproperties.com
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