Results Demonstrate Strong Recovery and Ongoing
Momentum in Operational Improvements
CBL Properties (NYSE: CBL) announced results for the fourth
quarter and year ended December 31, 2021. 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.
Fourth Quarter Financial Results:
Successor
Predecessor
Non-GAAP Combined
Predecessor
Period from
November 1,
For the One
Three Months
Three Months
through
Month Ended
Ended
Ended
December 31,
October 31,
December 31,
December 31,
2021
2021
2021
2020
Net loss attributable to common
shareholders
$
(151,545
)
$
(393,262
)
$
(544,807
)
$
(63,045
)
Funds from Operations ("FFO")
$
(92,968
)
$
(360,265
)
$
(453,233
)
$
50,986
FFO, as adjusted (1)
$
63,178
$
43,163
$
106,341
$
75,270
Full-Year Financial Results:
Successor
Predecessor
Non-GAAP Combined
Predecessor
Period from
Period from
November 1,
January 1,
through
through
Year Ended
Year Ended
December 31,
October 31,
December 31,
December 31,
2021
2021
2021
2020
Net loss attributable to common
shareholders
$
(151,545
)
$
(470,627
)
$
(622,172
)
$
(332,494
)
Funds from Operations ("FFO")
$
(92,968
)
$
(144,738
)
$
(237,706
)
$
108,175
FFO, as adjusted (1)
$
63,178
$
286,649
$
349,827
$
140,755
(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 income (loss) attributable
to common shareholders to FFO allocable to Operating Partnership
common unitholders on page 11 of this news release.
KEY TAKEAWAYS:
- As of December 31, 2021, the Company had $319.5 million of
unrestricted cash and marketable securities.
- Total portfolio same-center Net Operating Income (“NOI”)
increased 5.3% for the three months ended December 31, 2021,
compared with the prior year period. Total portfolio same-center
NOI increased 6.3% for the full year ended December 31, 2021,
compared with the prior year.
- Same-center sales per square foot for the fourth quarter and
full-year ended December 31, 2021, increased 13.0% and 15.5%,
respectively as compared with the fourth quarter and full-year
ended December 31, 2019.
- Portfolio occupancy as of December 31, 2021, was 89.3%,
representing a 90-basis point improvement from the sequential
quarter and a 180-basis point improvement compared with 87.5% as of
December 31, 2020. Same-center occupancy for malls, lifestyle
centers and outlet centers was 87.6% as of December 31, 2021,
representing a 130-basis point increase sequentially and a
170-basis point improvement compared with 85.9% as of December 31,
2020.
- FFO, as adjusted, allocable to Operating Partnership common
unitholders, for the three months ended December 31, 2021 was
$106.3 million, compared with $75.3 million. The increase in FFO,
as adjusted, as compared with the prior year period is principally
a result of $7.5 million lower net interest expense and a $3.7
million positive variance from undeclared preferred dividends
accrued in the prior year period.
- FFO, as adjusted, allocable to Operating Partnership common
unitholders, for the twelve months ended December 31, 2021 was
$349.8 million, compared with $140.8 million, for the twelve months
ended December 31, 2020.
“2021 was a transformational year for CBL," said Stephen D.
Lebovitz, CBL's Chief Executive Officer. "We emerged from our
restructuring with a strong balance sheet and a renewed focus to
capitalize on the substantial opportunities ahead for CBL.
“2021 was also a year of outstanding financial performance for
CBL. Our properties showed dramatic improvement across all key
indicators despite ongoing challenges from the pandemic. Results
for the fourth quarter built on the positive trends we experienced
throughout the year. Higher traffic and sales drove substantial
increases in percentage and short-term rents. Occupancy showed
sequential and year-over-year improvement, reflecting strong
underlying trends for our retailers. Over three million square feet
of new and renewal leases were signed, demonstrating continued and
growing interest in our properties. Despite inflationary pressures
and increased operating hours, we effectively mitigated increases
in overall operating expenses. I am grateful to the entire CBL team
for their hard work, focus and execution of our strategic
priorities.
“Following emergence, we have further improved our balance
sheet, reducing debt by more than $200 million in a few short
months. We have made solid progress on additional balance sheet
initiatives, which will lower interest expense and increase our
capital structure flexibility.
“Our strong balance sheet and robust financial performance
position us to create substantial value for our shareholders
through return of capital as well as opportunistic growth. We are
highly confident in the future stability of our portfolio of nearly
45 open-air, lifestyle and outlet and other properties in addition
to more than 40 market-dominant malls and see substantial
opportunities ahead for CBL.”
COMBINED NON-GAAP FINANCIAL RESULTS
Net loss attributable to common shareholders for the three
months ended December 31, 2021, was $544.8 million, compared with
net loss of $63.0 million, for the three months ended December 31,
2020.
Net loss attributable to common shareholders for the twelve
months ended December 31, 2021, was $622.2 million, compared with
net loss of $332.5 million, for the twelve months ended December
31, 2020.
FFO, as adjusted, allocable to Operating Partnership common
unitholders, for the three months ended December 31, 2021, was
$106.3 million, compared with $75.3 million, for the three months
ended December 31, 2020.
FFO, as adjusted, allocable to Operating Partnership common
unitholders, for the twelve months ended December 31, 2021, was
$349.8 million, compared with $140.8 million, for the twelve months
ended December 31, 2020.
Percentage change in same-center Net
Operating Income (“NOI”) (1):
Three Months Ended
Year Ended
December 31,
December 31,
2021
2021
Portfolio same-center NOI
5.3%
6.3%
Mall, Lifestyle Center and Outlet Center
same-center NOI
4.8%
4.8%
(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.
Major variances impacting same-center NOI for the twelve months
ended December 31, 2021, include:
- Same-center NOI increased $25.7 million, due to a $39.0 million
increase in total revenues partially offset by a $13.2 million
increase in operating expenses.
- Rental revenues increased $36.9 million, including an $18.9
million increase in percentage rents and a $20.9 million decline in
tenant reimbursements. The total estimate for uncollectable
revenues for 2021 was $1.7 million compared with $44.0 million in
the prior year period.
- Property operating expenses increased $10.2 million compared
with the prior year, primarily due to the return to full operations
following the reopening of CBL’s properties. Maintenance and repair
expenses increased $8.2 million. Real estate tax expenses declined
by $5.2 million, partially offsetting the above increases.
LIQUIDITY As of December 31, 2021, CBL had approximately
$319.5 million available in unrestricted cash and marketable
securities.
PORTFOLIO OPERATIONAL RESULTS
Occupancy(1):
As of December 31,
2021
2020
Total portfolio
89.3%
87.5%
Malls, Lifestyle Centers and Outlet
Centers:
Total malls
87.2%
85.5%
Total lifestyle centers
86.7%
84.8%
Total outlet centers
93.6%
89.1%
Total same-center malls, lifestyle centers
and outlet centers
87.6%
85.9%
Total malls, lifestyle centers and outlet
centers
87.6%
85.8%
All Other:
Total open-air centers
94.8%
93.4%
Total other
90.5%
99.3%
(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
Year Ended
December 31,
December 31,
2021
2021
Stabilized Malls, Lifestyle Centers and
Outlet Centers
(1.1)%
(12.7)%
New leases
2.3%
(13.5)%
Renewal leases
(1.5)%
(12.6)%
Same-Center Sales Per Square Foot for In-line Tenants 10,000
Square Feet or Less:
Year Ended December
31,
2021
2019 (1)
% Change
Mall, Lifestyle Center and Outlet Center
same-center sales per square foot
$
454
$
393
15.5%
(1)
Due to the temporary property and store
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 year ended December 31, 2020, and
instead have presented the 2019 amount for comparative
purposes.
Sales per square foot for the fourth quarter 2021 increased
13.0% as compared with the fourth quarter 2019, with all but five
of CBL’s 54 reporting properties demonstrating an increase over the
comparable period. For the full year ended December 31, 2021, sales
per square foot increased 15.5% as compared with the full year
ended December 31, 2019, with all but three of CBL’s 54 reporting
properties demonstrating an increase over the comparable
period.
FINANCING ACTIVITY In February 2022, CBL closed on the
extension and modification of the $134.1 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 requirements. 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 the 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. 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.
On November 8, 2021, the Company completed the redemption of
$60.0 million of its 10% Secured Notes. Following the redemption,
the Company has $395 million in 10% Secured Notes outstanding.
In October 2021, the loan secured by The Shoppes at Eagle Point
was extended to October 2022. CBL is in the process of securing a
new loan.
In October 2021, Brookfield Square Anchor S, LLC filed for
bankruptcy. In December 2021, CBL reached an agreement with the
lender to amend the $27.5 million loan secured by Brookfield Square
Anchor S and dismiss the bankruptcy case. The loan term was
extended through December 2023 and contains a one-year extension
option.
In December 2021, the $8.1 million loan secured by The Outlet
Shoppes of the Bluegrass - Phase II was extended to October 2022
and contains a six-month extension option.
Subsequent to December 31, 2021, the $102.3 million non-recourse
loan secured by Cross Creek Mall was extended to May 2022. CBL is
in discussions with the lender for a potential longer-term
extension and modification.
In February 2022, the loans secured by York Town Center, with a
combined outstanding balance of $29.8 million, were extended
through May 1, 2022. The Company is in the process of securing a
new loan.
CBL and its joint venture partner have an agreement in principle
with the lender on modification of the $35.8 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 unsecured deficiency claim. Other terms are being
finalized.
CBL is in discussions with the lender on a potential
modification and extension of the loans secured by Parkdale Mall in
Beaumont, TX ($69.5 million), Arbor Place Mall in Douglasville, GA
($101.8 million) and Northwoods Mall in N. Charleston, SC ($60.7
million).
CBL is in the process of negotiating extensions and
modifications of the remaining property level mortgage loans with
maturities in 2021 and 2022.
DISPOSITIONS In December 2021, CBL sold its interest in
the Continental 425 Fund LLC joint venture. This joint venture
owned the Springs at Port Orange, an apartment complex in Port
Orange, FL, which was secured by a $44.4 million loan. CBL received
$7.1 million in proceeds after factoring in its share of the
outstanding debt.
In November 2021, CBL completed the sale of its self-storage
portfolio for a gross sales price of $42.0 million. After repayment
of approximately $25.9 million ($16.4 million at CBL’s share) in
recourse loans secured by the properties, the sale generated cash
to CBL of approximately $7.6 million.
The portfolio included self-storage facilities that CBL and its
joint venture partner had developed on available land at CBL’s Mid
Rivers Mall in St. Charles, MO, Eastgate Mall in Cincinnati, OH,
Parkdale Mall in Beaumont, TX and Hamilton Place in Chattanooga,
TN.
In 2021, CBL generated more than $63.0 million in gross
proceeds, at its share, from asset sales.
DEVELOPMENT AND LEASING PROGRESS In 2021, CBL opened more
than 1.7 million square feet of new retail, dining, entertainment,
and other uses across its portfolio. This included unique uses such
as Hollywood Casino at York Galleria Mall in York, PA; the
expansion of High Caliber Karting & Entertainment at Meridian
Mall in Okemos, MI; Aloft by Marriott hotel and Trader Joe’s at
Hamilton Place in Chattanooga, TN; Tilt at Richland Mall in Waco,
TX; and the first Belong Gaming location in the United States at
Pearland Town Center in Pearland, TX. CBL also welcomed OFFLINE by
Aerie to Fayette Mall in Lexington, KY; Pottery Barn at Friendly
Center in Greensboro, NC; and Tradehome Shoes at both Oak Park Mall
in Kansas City, KS and Post Oak Mall in College Station, TX.
Openings anticipated in 2022 include Von Maur at West Towne Mall
in Madison, WI; OFFLINE by Aerie, Rose & Remington and Palmetto
Moon at Hamilton Place; Main Event at Sunrise Mall in Brownsville,
TX; and a new and expanded Scheels at Dakota Square Mall in Minot,
ND.
Additional offerings, including new restaurants, fitness, hotel
and other uses are planned or under negotiation and will be
announced as details are finalized.
Detailed project information is available in CBL’s Financial
Supplement for Q4 2021, which can be found in the Invest –
Financial Reports section of CBL’s website at
cblproperties.com.
2022 DIVIDEND POLICY CBL anticipates distributing the
minimum required distribution (90% -100% of taxable income) to
maintain its status as a Real Estate Investment Trust (REIT). Any
required distributions are expected to be determined and announced
in the fourth quarter 2022 and, subject to IRS guidelines, may be
distributed in all cash or in a combination of cash and common
stock, as determined at the time by CBL’s Board of Directors.
OUTLOOK AND GUIDANCE CBL is providing guidance for 2022
FFO, as adjusted, in the range of $216.5 million - $231.8 million
or $7.00 - $7.50 per diluted share, which assumes same-center NOI
in the range of $400.0 million to $413.0 million.
Key Guidance Assumptions:
Low
High
2022 FFO, as adjusted
$216.5 million
$231.8 million
2022 FFO, as adjusted, per share
$
7.00
$
7.50
Weighted Average Common Shares
Outstanding
30.9 million
30.9 million
2022 Same-Center NOI ("SC NOI")
$400.0 million
$413.0 million
2022 Change in Same-Center NOI
(10.5
)%
(7.5
)%
Commenting on 2022 guidance, Lebovitz stated, “Given the range
of extraordinary factors which impacted 2021 results, we expect
2022 to be more reflective of CBL’s ongoing financial performance.
The largest driver of this normalization is expected to be lower
percentage rents and short-term income; however, we also anticipate
increases in expenses, driven by inflationary pressure, wage growth
and completion of certain maintenance and repair projects that were
previously delayed. Our guidance for 2022 also reflects overall
uncertainty surrounding headwinds facing the U.S. economy. Despite
these impacts, we expect strong levels of leasing activity in 2022
and a renewed focus on our redevelopment program to position us for
growth in 2023 and beyond.”
Assumptions driving the projected change in 2022 SC
NOI:
2022 SC NOI
Low End
(in millions)
2022 SC NOI
High End
(in millions)
Variance Explanation
2021 Actual Same-Center NOI
$
447.0
$
447.0
Assumes Parkdale Mall and Crossing, The
Outlet Shoppes at Laredo and The Outlet Shoppes at Gettysburg
return to the same-center pool for full-year 2022.
Rent from new leases and contractual rent
increases
$
10.5
$
14.0
Represents new rent from stores that
opened in 2021 or expected to open in 2022 as well as net increases
from existing tenants including contractual rent bumps and variable
rent. Contractual increases are partially offset by a substantial
projected decline in percentage rent.
Lease Terminations
$
(2.5
)
$
(2.5
)
Represents rent lost in 2022 related to
stores that terminated leases in 2021.
Store Closures/Non-Renewals
$
(16.5
)
$
(14.5
)
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.
Lease Renewals/Modifications
$
(16.0
)
$
(14.0
)
Impact of negative rent spreads related to
renewals or lease modifications completed in 2021 and budgeted for
2022, including a substantial projected decline in percentage
rents.
Operating Expense
$
(13.5
)
$
(11.0
)
Increases in operating expenses are
primarily driven by the expectation that operating hours will
return to normal versus the shortened operating hours in 2021 due
to the impact of COVID, inflationary contract increases
(security/janitorial) and higher maintenance and repair expense
related to projects that were delayed in 2021, primarily due to
labor shortages.
Reserve for Watch List Tenants
$
(9.0
)
$
(6.0
)
Represents credit loss related to tenants
that may file for bankruptcy and/or close due to underperformance.
2021 was impacted by a negligible credit loss.
Total Variance
$
(47.0
)
$
(34.0
)
2022 SC NOI Guidance
$
400.0
$
413.0
% Variance
(10.5
)%
(7.5
)%
Reconciliation of GAAP Earnings Per Share to 2022 FFO, as
Adjusted, Per Share:
Low
High
Expected diluted earnings per common
share
$
(6.90
)
$
(6.40
)
Add: depreciation and amortization
10.31
10.31
Add: debt discount accretion, net of
noncontrolling interests' share
3.59
3.59
Expected FFO, as adjusted, per diluted,
fully converted common share
$
7.00
$
7.50
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 11 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.
Combined Results Our financial results for the periods
from January 1, 2021 through October 31, 2021, and the year ended
December 31, 2020 are referred to as those of the “Predecessor”
period. Our financial results for the period from November 1, 2021
through December 31, 2021 are referred to as those of the
“Successor” period. Our results of operations as reported in our
consolidated financial statements for these periods are prepared in
accordance with GAAP. Although GAAP requires that we report our
results for the period from January 1, 2021 through October 31,
2021 and the period from November 1, 2021 through December 31, 2021
separately, management views the Company’s operating results for
the year ended December 31, 2021 by combining the results of the
applicable Predecessor and Successor periods because such
presentation provides the most meaningful comparison of our results
to prior periods.
The Company cannot adequately benchmark the operating results of
the period from November 1, 2021 through December 31, 2021 against
any of the previous periods reported in its consolidated financial
statements without combining it with the period from October 1,
2021 through October 31, 20221 or January 1, 2021 through October
31, 2021 and does not believe that reviewing the results of this
period in isolation would be useful in identifying trends in or
reaching conclusions regarding the Company’s overall operating
performance. Management believes that the key performance metrics
such as revenue, NOI and FFO for the Successor period when combined
with the Predecessor period provide more meaningful comparisons to
other periods and are useful in identifying current business
trends. Accordingly, in addition to presenting our results of
operations as reported in our consolidated financial statements in
accordance with GAAP, the tables and discussion herein also present
the combined results for the three months and year ended December
31, 2021.
The combined results for the three months ended December 31,
2021, which we refer to herein as the results for the “three months
ended December 31, 2021” represent the sum of the reported amounts
for the Predecessor period from October 1, 2021 through October 31,
2021 and the Successor period from November 1, 2021 through
December 31, 2021. The combined results for the year ended December
31, 2021, which we refer to herein as the results for the "year
ended December 31, 2021" represent the sum of the reported amounts
for the Predecessor period from January 1, 2021 through October 31,
2021 and the Successor period from November 1, 2021 through
December 31, 2021. These combined results are not considered to be
prepared in accordance with GAAP and have not been prepared as pro
forma results per applicable regulations. The combined operating
results do not reflect the actual results we would have achieved
absent our emergence from bankruptcy and may not be indicative of
future results. Accordingly, the results for the three months and
year ended December 31, 2020 may not be comparable, particularly
for statement of operations line items significantly impacted by
the reorganization transactions, the impact of fresh start
accounting on depreciation and amortization, the discount to the
carrying value of its debt and the impact of interest expense not
being recognized while in Chapter 11 bankruptcy protection from the
Petition Date of November 1, 2020 to October 31, 2021.
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
Period from
Period from
For the Three
November 1,
October 1,
Months
through
through
Ended
December 31,
October 31,
December 31,
2021
2021
2020
REVENUES:
Rental revenues
$
103,252
$
45,892
$
148,588
Management, development and leasing
fees
1,500
755
1,549
Other
4,094
1,263
4,042
Total revenues
108,846
47,910
154,179
EXPENSES:
Property operating
(15,258
)
(7,492
)
(21,050
)
Depreciation and amortization
(49,504
)
(16,483
)
(52,988
)
Real estate taxes
(9,598
)
(5,169
)
(16,186
)
Maintenance and repairs
(7,581
)
(3,440
)
(8,457
)
General and administrative
(9,175
)
(5,779
)
(12,136
)
Loss on impairment
—
(26,439
)
(66,394
)
Litigation settlement
118
43
5,375
Prepetition charges
—
—
(3,112
)
Other
(3
)
(354
)
(553
)
Total expenses
(91,001
)
(65,113
)
(175,501
)
OTHER INCOME (EXPENSES):
Interest and other income
510
16
1,133
Interest expense
(195,488
)
(6,947
)
(39,903
)
Gain on extinguishment of debt
—
—
17,114
Gain on deconsolidation
19,126
—
—
Gain (loss) on sales of real estate
assets
(3
)
3,695
1,988
Reorganization items, net
(1,403
)
(383,148
)
(35,977
)
Income tax benefit (provision)
5,885
(856
)
353
Equity in earnings (losses) of
unconsolidated affiliates
797
(1,248
)
(2,404
)
Total other expenses
(170,576
)
(388,488
)
(57,696
)
Net loss
(152,731
)
(405,691
)
(79,018
)
Net loss attributable to noncontrolling
interests in:
Operating Partnership
—
460
662
Other consolidated subsidiaries
1,186
11,969
19,052
Net loss attributable to the
Company
(151,545
)
(393,262
)
(59,304
)
Preferred dividends undeclared
—
—
(3,741
)
Net loss attributable to common
shareholders
$
(151,545
)
$
(393,262
)
$
(63,045
)
Basic and diluted per share data
attributable to common
shareholders:
Net loss attributable to common
shareholders
$
(7.50
)
$
(1.99
)
$
(0.32
)
Weighted-average common and potential
dilutive common shares
outstanding
20,208
197,625
196,429
Consolidated Statements of
Operations
(Unaudited; in thousands, except per share
amounts)
Successor
Predecessor
Period from
Period from
November 1,
January 1,
through
through
Year Ended
December 31,
October 31,
December 31,
2021
2021
2020
REVENUES:
Rental revenues
$
103,252
$
450,922
$
554,064
Management, development and leasing
fees
1,500
5,642
6,800
Other
4,094
11,465
14,997
Total revenues
108,846
468,029
575,861
EXPENSES:
—
—
—
Property operating
(15,258
)
(72,735
)
(84,061
)
Depreciation and amortization
(49,504
)
(158,574
)
(215,030
)
Real estate taxes
(9,598
)
(50,787
)
(69,686
)
Maintenance and repairs
(7,581
)
(32,487
)
(34,132
)
General and administrative
(9,175
)
(43,160
)
(53,425
)
Loss on impairment
—
(146,781
)
(213,358
)
Litigation settlement
118
932
7,855
Prepetition charges
—
—
(23,883
)
Other
(3
)
(745
)
(953
)
Total expenses
(91,001
)
(504,337
)
(686,673
)
OTHER INCOME (EXPENSES):
—
—
—
Interest and other income
510
2,055
6,396
Interest expense
(195,488
)
(72,415
)
(200,663
)
Gain on extinguishment of debt
—
—
32,521
Gain on deconsolidation
19,126
55,131
—
Gain (loss) on sales of real estate
assets
(3
)
12,187
4,696
Reorganization items, net
(1,403
)
(435,162
)
(35,977
)
Income tax benefit (provision)
5,885
(1,078
)
(16,836
)
Equity in earnings (losses) of
unconsolidated affiliates
797
(10,823
)
(14,854
)
Total other expenses
(170,576
)
(450,105
)
(224,717
)
Net loss
(152,731
)
(486,413
)
(335,529
)
Net loss attributable to noncontrolling
interests in:
Operating Partnership
—
2,473
19,762
Other consolidated subsidiaries
1,186
13,313
20,683
Net loss attributable to the
Company
(151,545
)
(470,627
)
(295,084
)
Preferred dividends undeclared
—
—
(37,410
)
Net loss attributable to common
shareholders
$
(151,545
)
$
(470,627
)
$
(332,494
)
Basic and diluted per share data
attributable to common
shareholders:
Net loss attributable to common
shareholders
$
(7.50
)
$
(2.39
)
$
(1.75
)
Weighted-average common and potential
dilutive common shares
outstanding
20,208
196,591
190,277
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
Non-GAAP
Combined
Predecessor
Period from
Period from
Three
Three
November 1,
October 1,
Months
Months
through
through
Ended
Ended
December 31,
October 31,
December 31,
December 31,
2021
2021
2021
2020
Net loss attributable to common
shareholders
$
(151,545
)
$
(393,262
)
$
(544,807
)
$
(63,045
)
Noncontrolling interest in loss of
Operating Partnership
—
(460
)
(460
)
(662
)
Depreciation and amortization expense
of:
Consolidated properties
49,504
16,483
65,987
52,988
Unconsolidated affiliates
9,847
4,660
14,507
14,767
Non-real estate assets
(132
)
(145
)
(277
)
(625
)
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(622
)
(191
)
(813
)
(809
)
Loss on impairment, net of noncontrolling
interests' share
—
15,704
15,704
48,372
Gain on depreciable property, net of
taxes
(20
)
(3,054
)
(3,074
)
—
FFO allocable to Operating Partnership
common unitholders
(92,968
)
(360,265
)
(453,233
)
50,986
Debt discount accretion, net of
noncontrolling interests' share (1)
184,637
—
184,637
—
Adjustment for unconsolidated affiliates
with negative investment
(4,574
)
—
(4,574
)
—
Senior secured notes fair value adjustment
(2)
395
—
395
—
Litigation settlement (3)
(118
)
(43
)
(161
)
(5,375
)
Non-cash default interest expense (4)
(6,471
)
3,107
(3,364
)
7,684
Gain on deconsolidation (5)
(19,126
)
—
(19,126
)
—
Reorganization items, net of
noncontrolling interests' share (6)
1,403
400,364
401,767
35,977
Prepetition charges (7)
—
—
—
3,112
Gain on extinguishment of debt (8)
—
—
—
(17,114
)
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
63,178
$
43,163
$
106,341
$
75,270
(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 as interest expense on the
Effective Date. The debt discount is accreted over the term of the
respective debt using the effective interest method.
(2)
As of December 31, 2021, represents the
fair value adjustment recorded on the Company’s 10% senior secured
notes (the “Secured Notes”) as interest expense. The Company
elected the fair value option in conjunction with the issuance of
its Secured Notes.
(3)
For the Predecessor period from January 1,
2021 through October 31, 2021 and the year ended December 31, 2020,
represents a credit to litigation settlement expense related to
claim amounts that were released pursuant to the terms of the
settlement agreement related to the settlement of a class action
lawsuit. For the year ended December 31, 2019, represents expense
associated with the settlement of the class action lawsuit.
(4)
The Successor period from November 1, 2021
through December 31, 2021 includes the reversal of default interest
expense. The Predecessor period from January 1, 2021 through
October 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 remain in default due to the Company filing the Chapter 11
Cases. The Predecessor year ended December 31, 2020 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.
(5)
During the Successor period from November
1, 2021 through December 31, 2021, the Successor Company
deconsolidated EastGate Mall due to a loss of control when the
property was placed into receivership in connection with the
foreclosure process. For the Predecessor period from January 1,
2021 through October 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.
(6)
For the Successor period from November 1,
2021 through December 31, 2021, reorganization items represent
costs incurred subsequent to the Company filing the Chapter 11
Cases associated with the Company’s reorganization efforts. For the
Predecessor period from January 1, 2021 through October 31, 2021
reorganization items represent adjustments related to the fair
value of the Successor Company, adjustments related to the write
off of the Predecessor Company’s debt and the issuance of new debt
of the Successor Company, as well as 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 and U.S. Trustee fees. For the
Predecessor year ended December 31, 2020, reorganization items
represent 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 unamortized deferred financing costs
and debt discounts expensed in accordance with ASC 852.
(7)
For the Predecessor year ended December
31, 2020, represents professional fees related to the Company’s
negotiations with the administrative agent and lenders under the
secured credit facility and certain holders of the Predecessor
Company’s senior unsecured notes regarding a restructure of such
indebtedness prior to the filing of voluntary petitions under
Chapter 11 of title 11 of the United States Code in the United
States Bankruptcy Court for the Southern District of Texas
beginning on November 1, 2020.
(8)
The Predecessor year ended December 31,
2020 includes a gain on extinguishment of debt related to the
non-recourse loans secured by Burnsville Center and Hickory Point
Mall, which were conveyed to the lender. The Predecessor year ended
December 31, 2019 includes a gain on extinguishment of debt related
to the non-recourse loan secured by Acadiana Mall, which was
conveyed to the lender.
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
Non-GAAP
Combined
Predecessor
Period from
Period from
November 1,
January 1,
through
through
Year ended
Year ended
December 31,
October 31,
December 31,
December 31,
2021
2021
2021
2020
Net loss attributable to common
shareholders
$
(151,545
)
$
(470,627
)
$
(622,172
)
$
(332,494
)
Noncontrolling interest in loss of
Operating Partnership
—
(2,473
)
(2,473
)
(19,762
)
Depreciation and amortization expense
of:
Consolidated properties
49,504
158,574
208,078
215,030
Unconsolidated affiliates
9,847
45,126
54,973
56,734
Non-real estate assets
(132
)
(1,593
)
(1,725
)
(3,056
)
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(622
)
(1,901
)
(2,523
)
(3,638
)
Loss on impairment, net of noncontrolling
interests' share
—
136,046
136,046
195,336
(Gain) loss on depreciable property, net
of taxes
(20
)
(7,890
)
(7,910
)
25
FFO allocable to Operating Partnership
common unitholders
(92,968
)
(144,738
)
(237,706
)
108,175
Debt discount accretion, net of
noncontrolling interests' share (1)
184,637
—
184,637
—
Adjustment for unconsolidated affiliates
with negative investment
(4,574
)
—
(4,574
)
—
Senior secured notes fair value adjustment
(2)
395
—
395
—
Litigation settlement (3)
(118
)
(932
)
(1,050
)
(7,855
)
Non-cash default interest expense (4)
(6,471
)
35,072
28,601
13,096
Gain on deconsolidation (5)
(19,126
)
(55,131
)
(74,257
)
—
Reorganization items, net of
noncontrolling interests' share (6)
1,403
452,378
453,781
35,977
Prepetition charges (7)
—
—
—
23,883
Gain on extinguishment of debt (8)
—
—
—
(32,521
)
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
63,178
$
286,649
$
349,827
$
140,755
(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 as interest expense on the
Effective Date. The debt discount is accreted over the term of the
respective debt using the effective interest method.
(2)
As of December 31, 2021, represents the
fair value adjustment recorded on the Company’s Secured Notes as
interest expense. The Company elected the fair value option in
conjunction with the issuance of its Secured Notes.
(3)
For the successor period from November 1,
2021 through December 31, 2021, for the predecessor period from
January 1, 2021 through October 31, 2021 and the year ended
December 31, 2020, represents a credit to litigation settlement
expense related to claim amounts that were released pursuant to the
terms of the settlement agreement related to the settlement of a
class action lawsuit.
(4)
The successor period from November 1, 2021
through December 31, 2021 includes the reversal of default interest
expense. The predecessor period from January 1, 2021 through
October 31, 2021 includes default interest expense related to loans
secured by properties that were in default prior to the Company
filing voluntary petitions under chapter 11 of title 11 of the
United States Code in the United States Bankruptcy Court for the
Southern District of Texas, as well as loans secured by properties
that remain in default due to the Company filing voluntary
petitions under chapter 11 of title 11 of the United States Code.
The predecessor year ended December 31, 2020 includes default
interest expense related to loans secured by properties that were
in default prior to the Company filing voluntary petitions under
chapter 11 of title 11 of the United States Code in the United
States Bankruptcy Court for the Southern District of Texas, as well
as loans secured by properties that were in default due to the
Company filing voluntary petitions under chapter 11 of title 11 of
the United States Code.
(5)
For the successor period from November 1,
2021 through December 31, 2021, the Company deconsolidated EastGate
Mall due to a loss of control when the property was placed into
receivership in connection with the foreclosure process. For the
predecessor period from January 1, 2021 through October 31, 2021,
the 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.
(6)
For the successor period from November 1,
2021 through December 31, 2021, reorganization items represent
costs incurred subsequent to the Company filing voluntary petitions
under chapter 11 of title 11 of the United States Code in the
United States Bankruptcy Court for the Southern District of Texas
associated with the Company’s reorganization efforts. For the
predecessor period from January 1, 2021 through October 31, 2021
reorganization items represent adjustments related to the fair
value of the successor Company, adjustments related to the write
off of the predecessor Company’s debt and the issuance of new debt
of the successor Company, as well as costs incurred subsequent to
the Company filing voluntary petitions under chapter 11 of title 11
of the United States Code in the United States Bankruptcy Court for
the Southern District of Texas associated with the Company’s
reorganization efforts, which consists of professional fees, legal
fees, retention bonuses and U.S. Trustee fees. For the predecessor
year ended December 31, 2020, reorganization items represent costs
incurred subsequent to the Company filing voluntary petitions under
chapter 11 of title 11 of the United States Code in the United
States Bankruptcy Court for the Southern District of Texas
associated with the Company’s reorganization efforts, which
consists of professional fees, legal fees, retention bonuses, U.S.
Trustee fees and unamortized deferred financing costs and debt
discounts expensed in accordance with ASC 852.
(7)
For the predecessor year ended December
31, 2020, represents professional fees related to the Company’s
negotiations with the administrative agent and lenders under the
secured credit facility and certain holders of the predecessor
Company’s senior unsecured notes regarding a restructure of such
indebtedness prior to the filing of voluntary petitions under
Chapter 11 of title 11 of the United States Code in the United
States Bankruptcy Court for the Southern District of Texas
beginning on November 1, 2020.
(8)
The predecessor year ended December 31,
2020 includes a gain on extinguishment of debt related to the
non-recourse loans secured by Burnsville Center and Hickory Point
Mall, which were conveyed to the lender.
Successor
Predecessor
Non-GAAP
Combined
Predecessor
Period from
Period from
For the Three
Three
November 1,
October 1,
Months
Months
through
through
Ended
Ended
December 31,
October 31,
December 31,
December 31,
2021
2021
2021
2020
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees
$
3,597
$
1,518
$
5,115
$
2,701
Straight-line rental income adjustment
$
1,361
$
(901
)
$
460
$
718
Gain (loss) on outparcel sales, net of
taxes
$
(23
)
$
(1
)
$
(24
)
$
1,988
Net amortization of acquired above- and
below-market leases
$
(3,291
)
$
40
$
(3,251
)
$
28
Income tax benefit (provision)
$
5,885
$
(856
)
$
5,029
$
353
Abandoned projects expense
$
(3
)
$
(354
)
$
(357
)
$
(553
)
Interest capitalized
$
221
$
101
$
322
$
424
Estimate of uncollectable revenues
$
(782
)
$
(2,007
)
$
(2,789
)
$
6,040
Successor
Predecessor
Non-GAAP
Combined
Predecessor
Period from
Period from
November 1,
January 1,
through
through
Year Ended
Year Ended
December 31,
October 31,
December 31,
December 31,
2021
2021
2021
2020
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees
$
3,597
$
4,843
$
8,440
$
6,076
Straight-line rental income adjustment
$
1,361
$
(2,051
)
$
(690
)
$
(1,254
)
Gain (loss) on outparcel sales, net of
taxes
$
(23
)
$
3,584
$
3,561
$
4,721
Net amortization of acquired above- and
below-market leases
$
(3,291
)
$
225
$
(3,066
)
$
1,369
Income tax benefit (provision)
$
5,885
$
(1,078
)
$
4,807
$
(16,836
)
Abandoned projects expense
$
(3
)
$
(745
)
$
(748
)
$
(953
)
Interest capitalized
$
221
$
133
$
354
$
1,954
Estimate of uncollectable revenues
$
(782
)
$
(6,046
)
$
(6,828
)
$
(49,329
)
Successor
Predecessor
As of
As of
December 31,
December 31,
2021
2020
Straight-line rent receivable
$
2,452
$
53,157
Same-center Net Operating
Income
(Dollars in thousands)
Successor
Predecessor
Non-GAAP
Combined
Predecessor
Period from
Period from
For the
For the
November 1,
October 1,
Three Months
Three Months
through
through
Ended
Ended
December 31,
October 31,
December 31,
December 31,
2021
2021
2021
2020
Net loss
$
(152,731
)
$
(405,691
)
$
(558,422
)
$
(79,018
)
Adjustments:
Depreciation and amortization
49,504
16,483
65,987
52,988
Depreciation and amortization from
unconsolidated affiliates
9,847
4,660
14,507
14,767
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(622
)
(191
)
(813
)
(809
)
Interest expense
195,488
6,947
202,435
39,903
Interest expense from unconsolidated
affiliates
11,425
3,507
14,932
8,974
Noncontrolling interests' share of
interest expense in other consolidated subsidiaries
(1,464
)
(282
)
(1,746
)
(603
)
Abandoned projects expense
3
354
357
553
(Gain) loss on sales of real estate
assets
3
(3,695
)
(3,692
)
(1,988
)
Adjustment for unconsolidated affiliates
with negative investment
(4,574
)
—
(4,574
)
—
Gain on extinguishment of debt
—
—
—
(17,114
)
Gain on deconsolidation
(19,126
)
—
(19,126
)
—
Loss on impairment, net of noncontrolling
interests' share
—
15,704
15,704
48,372
Prepetition charges
—
—
—
3,112
Litigation settlement
(118
)
(43
)
(161
)
(5,375
)
Reorganization items, net of
noncontrolling interests' share
1,403
400,364
401,767
35,977
Income tax (benefit) provision
(5,885
)
856
(5,029
)
(353
)
Lease termination fees
(3,597
)
(1,518
)
(5,115
)
(2,701
)
Straight-line rent and above- and
below-market lease amortization
1,930
861
2,791
(746
)
Net loss attributable to noncontrolling
interests in other
consolidated subsidiaries
1,186
11,969
13,155
19,052
General and administrative expenses
9,175
5,779
14,954
9,024
Management fees and non-property level
revenues
(2,801
)
(19,462
)
(22,263
)
(611
)
Operating Partnership's share of
property NOI
89,046
36,602
125,648
123,404
Non-comparable NOI
(4,170
)
(1,748
)
(5,918
)
(9,750
)
Total same-center NOI (1)
$
84,876
$
34,854
$
119,730
$
113,654
Total same-center NOI percentage
change
5.3
%
Same-center Net Operating
Income
(Dollars in thousands)
Successor
Predecessor
Non-GAAP
Combined
Predecessor
Period from
Period from
Year Ended
Year Ended
November 1,
January 1,
December 31,
December 31,
through
through
December 31,
October 31,
2021
2021
2021
2020
Net loss
$
(152,731
)
$
(486,413
)
$
(639,144
)
$
(335,529
)
Adjustments:
Depreciation and amortization
49,504
158,574
208,078
215,030
Depreciation and amortization from
unconsolidated affiliates
9,847
45,126
54,973
56,734
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(622
)
(1,901
)
(2,523
)
(3,638
)
Interest expense
195,488
72,415
267,903
200,663
Interest expense from unconsolidated
affiliates
11,425
34,514
45,939
32,975
Noncontrolling interests' share of
interest expense in other consolidated subsidiaries
(1,464
)
(2,790
)
(4,254
)
(2,329
)
Abandoned projects expense
3
745
748
952
(Gain) loss on sales of real estate
assets
3
(12,187
)
(12,184
)
(4,696
)
Gain on sales of real estate assets of
unconsolidated affiliates
—
(70
)
(70
)
—
Adjustment for unconsolidated affiliates
with negative investment
(4,574
)
—
(4,574
)
—
Gain on extinguishment of debt
—
—
—
(32,521
)
Gain on deconsolidation
(19,126
)
(55,131
)
(74,257
)
—
Loss on impairment, net of noncontrolling
interests' share
—
136,046
136,046
195,336
Prepetition charges
—
—
—
23,883
Litigation settlement
(118
)
(932
)
(1,050
)
(7,855
)
Reorganization items, net of
noncontrolling interests' share
1,403
452,378
453,781
35,977
Income tax (benefit) provision
(5,885
)
1,078
(4,807
)
16,836
Lease termination fees
(3,597
)
(4,843
)
(8,440
)
(6,076
)
Straight-line rent and above- and
below-market lease amortization
1,930
1,826
3,756
(115
)
Net loss attributable to noncontrolling
interests in other
consolidated subsidiaries
1,186
13,313
14,499
20,683
General and administrative expenses
9,175
43,160
52,335
53,425
Management fees and non-property level
revenues
(2,801
)
(26,604
)
(29,405
)
(13,467
)
Operating Partnership's share of
property NOI
89,046
368,304
457,350
446,268
Non-comparable NOI
(4,170
)
(19,069
)
(23,239
)
(37,814
)
Total same-center NOI (1)
$
84,876
$
349,235
$
434,111
$
408,454
Total same-center NOI percentage
change
6.3
%
Same-center Net Operating
Income
(Continued)
Non-GAAP
Combined
Predecessor
For the Three
For the Three
Months Ended
Months Ended
December 31,
December 31,
2021
2020
Malls
$
87,064
$
83,062
Lifestyle centers
11,183
9,324
Open-air centers
12,387
12,766
Outlet centers
3,458
3,121
Outparcels and other
5,638
5,381
Total same-center NOI (1)
$
119,730
$
113,654
Percentage Change:
Malls
4.8
%
Lifestyle centers
19.9
%
Open-air centers
(3.0
)%
Outlet centers
10.8
%
Outparcels and other
4.8
%
Total same-center NOI (1)
5.3
%
Non-GAAP Combined
Predecessor
Year Ended
Year Ended
December 31,
December 31,
2021
2020
Malls
$
310,892
$
296,527
Lifestyle centers
40,006
33,083
Open-air centers
48,282
47,976
Outlet centers
13,100
11,070
Outparcels and other
21,831
19,798
Total same-center NOI (1)
$
434,111
$
408,454
Percentage Change:
Malls
4.8
%
Lifestyle centers
20.9
%
Open-air centers
0.6
%
Outlet centers
18.3
%
Outparcels and other
10.3
%
Total same-center NOI (1)
6.3
%
(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 December 31,
2021, 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 December 31, 2021. 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 December 31, 2021
(Successor)
Unamortized
Total per
Deferred
Unamortized
Variable
Debt
Financing
Debt
Fixed Rate
Rate
Schedule
Costs (1)
Discounts (2)
Total
Consolidated debt (3)
$
1,461,927
$
947,002
$
2,408,929
$
(1,567
)
$
(199,153
)
$
2,208,209
Noncontrolling interests' share of
consolidated debt
(29,381
)
—
(29,381
)
—
13,519
(15,862
)
Company's share of unconsolidated
affiliates' debt
612,322
90,691
703,013
(1,971
)
—
701,042
Other debt (4)
92,072
—
92,072
—
—
92,072
Company's share of consolidated,
unconsolidated and other debt
$
2,136,940
$
1,037,693
$
3,174,633
$
(3,538
)
$
(185,634
)
$
2,985,461
Weighted-average interest rate
5.84
%
3.63
%
5.12
%
As of December 31, 2020
(Predecessor)
Unamortized
Unamortized
Total per
Deferred
Deferred
Variable
Debt
Financing
Financing
Fixed Rate
Rate
Schedule
Costs
Costs
Total
Consolidated debt (5)
$
2,495,203
$
1,182,737
$
3,677,940
$
(3,433
)
$
—
$
3,674,507
Noncontrolling interests' share of
consolidated debt
(30,177
)
—
(30,177
)
265
—
(29,912
)
Company's share of unconsolidated
affiliates' debt
625,225
121,732
746,957
(2,844
)
—
744,113
Company's share of consolidated and
unconsolidated debt
$
3,090,251
$
1,304,469
$
4,394,720
$
(6,012
)
$
—
$
4,388,708
Weighted-average interest rate
5.04
%
8.75
%
(6)
6.14
%
(1)
Unamortized deferred financing costs of
$629 for the Company’s share of unconsolidated property-level,
non-recourse mortgage loans may be required to be written off in
the event that a waiver or restructuring of terms cannot be
negotiated and the debt is either redeemed or otherwise
extinguished.
(2)
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.
(3)
Includes the Company’s senior secured
notes which had a fair value of $395,395 as of December 31,
2021.
(4)
During the period from November 1, 2021
through December 31, 2021, the successor Company deconsolidated
Asheville Mall and EastGate Mall due to a loss of control when the
properties were placed into receivership in connection with the
foreclosure process.
(5)
Includes $2,489,676 included in
liabilities subject to compromise in the accompanying consolidated
balance sheets as of December 31, 2020.
(6)
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 December 31, 2020 was 9.50%.
Consolidated Balance Sheets
(Unaudited; in thousands, except share
data)
Successor
Predecessor
December 31,
December 31,
2021
2020
ASSETS
Real estate assets:
Land
$
599,283
$
695,711
Buildings and improvements
1,173,106
5,135,074
1,772,389
5,830,785
Accumulated depreciation
(19,939
)
(2,241,421
)
1,752,450
3,589,364
Developments in progress
16,665
28,327
Net investment in real estate assets
1,769,115
3,617,691
Cash and cash equivalents
169,554
61,781
Available-for-sale securities - at fair
value (amortized cost of $149,999 and $233,053 as of December 31,
2021 and December 31, 2020, respectively)
149,996
233,071
Receivables:
Tenant
25,190
103,655
Other
4,409
5,958
Mortgage and other notes receivable
384
2,337
Investments in unconsolidated
affiliates
103,655
279,355
In-place leases, net
384,705
5,682
Above market leases, net
234,286
2,021
Intangible lease assets and other
assets
104,685
132,189
$
2,945,979
$
4,443,740
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND EQUITY
Mortgage and other indebtedness, net
$
1,813,209
$
1,184,831
10% senior secured notes - at fair value
(carrying amount of $395,000 as of December 31, 2021)
395,395
—
Below market leases, net
151,871
6,051
Accounts payable and accrued
liabilities
184,404
167,336
Total liabilities not subject to
compromise
2,544,879
1,358,218
Liabilities subject to compromise
—
2,551,490
Commitments and contingencies
Redeemable noncontrolling interests
—
(265
)
Shareholders' equity:
Successor common stock, $.001 par value,
200,000,000 shares authorized, 20,774,716 issued and outstanding in
2021
21
—
Predecessor preferred stock, $.01 par
value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable
Preferred Stock, 1,815,000 shares
outstanding in 2020
—
18
6.625% Series E Cumulative Redeemable
Preferred Stock, 690,000 shares
outstanding in 2020
—
7
Predecessor common stock, $.01 par value,
350,000,000 shares authorized, 196,569,917 issued and outstanding
in 2020
—
1,966
Additional paid-in capital
547,726
1,986,269
Accumulated other comprehensive income
(loss)
(3
)
18
Retained earnings (dividends in excess of
cumulative earnings)
(151,545
)
(1,456,435
)
Total shareholders' equity
396,199
531,843
Noncontrolling interests
4,901
2,454
Total equity
401,100
534,297
$
2,945,979
$
4,443,740
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220331005955/en/
Katie Reinsmidt, Executive Vice President - Chief Investment
Officer, 423.490.8301, katie.reinsmidt@cblproperties.com
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