CBL Properties (NYSE: CBL) announced results for the second
quarter ended June 30, 2022. Financial results for the periods from
January 1, 2021, through June 30, 2021, are referred to as those of
the “Predecessor” period. Financial results for the period from
January 1, 2022, through June 30, 2022, are referred to as those of
the “Successor” period. Results of operations as reported in the
consolidated financial statements for these periods are prepared in
accordance with GAAP. A description of each supplemental non-GAAP
financial measure and the related reconciliation to the comparable
GAAP financial measure is located at the end of this news
release.
Successor
Predecessor
Three Months Ended June
30,
Three Months Ended June
30,
2022
2021
%
Net loss attributable to common
shareholders
$
(41,598
)
$
(8,882
)
(368.3
)%
Funds from Operations ("FFO")
$
30,908
$
50,793
(39.1
)%
FFO, as adjusted (1)
$
59,869
$
79,499
(24.7
)%
Successor
Predecessor
Six Months Ended June
30,
Six Months Ended June
30,
2022
2021
%
Net loss attributable to common
shareholders
$
(82,320
)
$
(35,645
)
(130.9
)%
Funds from Operations ("FFO")
$
65,908
$
141,035
(53.3
)%
FFO, as adjusted (1)
$
117,347
$
148,155
(20.8
)%
(1)
For a reconciliation of FFO to FFO, as
adjusted, for the periods presented, please refer to the footnotes
to the Company’s reconciliation of net loss attributable to common
shareholders to FFO allocable to Operating Partnership common
unitholders on page 10 of this news release.
Percentage change in same-center Net Operating Income (“NOI”)
(1):
Three Months Ended June
30,
Six Months Ended June
30,
2022
2022
Portfolio same-center NOI
1.6%
6.7%
Mall, Lifestyle Center and Outlet Center
same-center NOI
1.6%
6.8%
(1)
CBL’s definition of same-center NOI
excludes the impact of lease termination fees and certain non-cash
items such as straight-line rents and reimbursements, write-offs of
landlord inducements and net amortization of acquired above and
below market leases.
KEY TAKEAWAYS:
- Increases in occupancy across the portfolio contributed to an
increase in total portfolio same-center NOI of 1.6% and 6.7% for
the three and six months ended June 30, 2022, respectively,
compared with the prior-year periods.
- In-line year-to-date same-center NOI of $217.4 million and FFO,
as adjusted, of $3.92 per share, contributes to maintained
full-year 2022 same-center NOI guidance in the range of $416.0 -
$430.0 million, and FFO, as adjusted, per share guidance in the
range of $7.18 - $7.67 per diluted share.
- Portfolio occupancy as of June 30, 2022, was 89.5%,
representing 120-basis point sequential improvement from March 31,
2022, and a 250-basis point improvement compared with 87.0% as of
June 30, 2021. Same-center occupancy for malls, lifestyle centers
and outlet centers was 88.0% as of June 30, 2022, representing a
250-basis point improvement compared with 85.5% as of June 30,
2021.
- Same-center sales per square foot for the trailing 12-months
ended June 30, 2022, increased 6.2% to $443 as compared with $417
for the trailing 12-months (excluding 2020) ended June 30, 2021.
Same-center sales per square foot for the second quarter 2022
declined 3.9% as compared with the second quarter 2021.
- FFO, as adjusted, allocable to Operating Partnership common
unitholders, for the three months ended June 30, 2022, was $59.9
million, compared with $79.5 million in the prior year period. The
variance in FFO, as adjusted, as compared with the prior year
period reflects an increase in NOI driven by occupancy improvements
and a positive variance in uncollectible revenues, offset by an
increase in interest expense attributable to the senior unsecured
notes and secured credit facility. Interest payments on the notes
and credit facility were not required to be made during the second
quarter 2021 as a result of the Company’s bankruptcy filing on
November 1, 2020.
- As of June 30, 2022, the Company had $327.1 million of
unrestricted cash and marketable securities.
- CBL’s Board of Directors declared a $0.25 per share cash
dividend for the second and third quarters of 2022, providing cash
returns to shareholders.
“CBL delivered another set of impressive operating results in
the second quarter,” said Stephen D. Lebovitz, CBL's chief
executive officer. “Our resilient portfolio generated improved
lease spreads and significant sequential and year-over-year
occupancy growth, contributing to the stability of our NOI. We are
enhancing our strong free cash flow through the recent completion
of redevelopment projects at Kirkwood Mall in Bismarck, North
Dakota, Sunrise Mall in Brownsville, Texas, and Cross Creek Mall in
Fayetteville, North Carolina, with more planned completions and new
project starts anticipated in the coming months. We are seeing
ongoing interest across our portfolio from hotels, multi-family,
medical, entertainment, restaurants, and other new uses, which will
further enhance our properties and diversify our revenue
stream.
“A major highlight of the quarter was our financing
accomplishments. Despite increased volatility in interest rates and
other macroeconomic factors, we successfully closed more than
$663.0 million in financings during the quarter, including two new
multi-property loans that funded the full redemption of all $395.0
million outstanding 10% Senior Secured Notes. The two new
non-recourse financings provided third-party validation of the
tremendous value in CBL’s open-air and outparcel portfolios. These
financings also resulted in improved cash flow through lower
interest expense and enhanced our future financial flexibility by
creating an unencumbered NOI pool of approximately $75.0
million.
“We were thrilled to share these financial and operational
successes with shareholders through the re-start of our regular
quarterly cash dividend program. We are focused on executing at a
high level to further financial and operational improvements,
create value across our portfolio and generate ongoing returns for
our shareholders.”
NON-GAAP FINANCIAL RESULTS
Net loss attributable to common shareholders for the three
months ended June 30, 2022, was $41.6 million, compared with a net
loss of $8.9 million, for the three months ended June 30, 2021.
FFO, as adjusted, allocable to Operating Partnership common
unitholders, for the three months ended June 30, 2022, was $59.9
million, compared with $79.5 million, for the three months ended
June 30, 2021.
Same-center NOI for the three months ended June 30, 2022,
increased 1.6%, or $1.7 million, to $107.4 million as compared with
$105.7 million in the prior-year period. The variance was due to a
$5.2 million increase in total revenues partially offset by a $3.5
million increase in operating expenses.
Other major variances in same-center NOI for the quarter ended
June 30, 2022, include:
- Minimum rents and other rents increased $6.6 million.
Percentage rents increased $0.7 million and tenant reimbursements
and other revenues declined $2.0 million. The total estimate for
uncollectible revenues and abatements for the second quarter 2022
was $0.4 million, due to collections of amounts that were
previously reserved compared with an estimate for uncollectible
revenues and abatement of $2.5 million for the prior year
period.
- Property operating expenses increased $1.8 million compared
with the prior year. Maintenance and repair and other expenses
increased $2.1 million. Real estate tax expenses declined by $0.4
million, partially offsetting the above increases.
PORTFOLIO OPERATIONAL RESULTS Occupancy(1):
Successor
Predecessor
Six Months Ended June
30,
Six Months Ended June
30,
2022
2021
Total portfolio
89.5%
87.0%
Malls, Lifestyle Centers and Outlet
Centers:
Total malls
87.9%
85.2%
Total lifestyle centers
89.4%
83.9%
Total outlet centers
87.5%
86.2%
Total same-center malls, lifestyle centers
and outlet centers
88.0%
85.5%
All Other:
Total open-air centers
94.4%
92.2%
Total other
91.7%
98.7%
(1)
Occupancy for malls, lifestyle centers and
outlet centers represent percentage of in-line gross leasable area
under 20,000 square feet occupied. Occupancy for open-air centers
represents percentage of gross leasable area occupied.
New and Renewal Leasing Activity of Same Small Shop Space
Less Than 10,000 Square Feet:
% Change in Average Gross Rent Per
Square Foot:
Three Months Ended June
30,
Six Months Ended June
30,
2022
2022
Stabilized Malls, Lifestyle Centers and
Outlet Centers
(8.7)%
(10.1)%
New leases
14.2%
(1.2)%
Renewal leases
(11.2)%
(11.5)%
Same-Center Sales Per Square Foot for In-line Tenants 10,000
Square Feet or Less(1):
Successor
Predecessor
Sales Per Square Foot for the
Trailing Twelve Months Ended June 30,
Sales Per Square Foot for the
Trailing Twelve Months Ended June 30,
2022
2021 (1)
% Change
Mall, Lifestyle Center and Outlet Center
same-center sales per square foot
$
443
$
417
6.2%
(1)
Due to the temporary property closures
that occurred during 2020 related to COVID-19, the majority of our
tenants did not report sales for the full reporting period. As a
result, we are not able to provide a complete measure of sales per
square foot for the periods in the year ended December 31, 2020.
Sales per square foot for the trailing twelve months ended June 30,
2021, is comprised of sales reported for the periods July 1 through
December 31, 2019, and January 1 through June 30, 2021.
Same-center sales per square foot for the trailing twelve months
ended June 30, 2022, increased 6.2% as compared with the trailing
twelve months ended June 30, 2021 (excludes 2020). Same-center
sales per square foot for the second quarter 2022 declined 3.9% as
compared with the second quarter 2021.
DIVIDEND
On August 10, 2022, CBL’s Board of Directors declared a regular
quarterly cash dividend for the three months ended September 30,
2022, of $0.25 per share. The dividend, which equates to an annual
dividend payment of $1.00 per share, is payable on September 30,
2022, to shareholders of record as of September 15, 2022.
FINANCING ACTIVITY
During the quarter, CBL completed more than $663.0 million in
financing activity, including funding the full redemption of all
outstanding 10% Senior Secured Notes due 2029 (the “10% Notes”)
utilizing net proceeds from two new non-recourse loans totaling
$425.0 million, generating favorable interest expense savings. More
details are outlined below.
On April 28, 2022, CBL and its 50% joint venture partner, closed
on a $40.0 million non-recourse loan ($20.0 million at CBL’s share)
secured by The Shoppes at Eagle Pointe, an open-air center in
Cookeville, TN. The new ten-year CMBS loan bears a fixed interest
rate of 5.4%. The loan replaces the maturing $33.6 million existing
partially guaranteed term loan. Net proceeds to CBL after repayment
of the existing loan were $6.7 million.
In May 2022, CBL completed the extension and modification of the
non-recourse loan secured by Arbor Place Mall in Douglasville, GA
($100.4 million). The loan’s maturity was extended to May 2026 and
maintained the existing fixed interest rate of 5.1%. CBL also
completed the extension and modification of the non-recourse loan
secured by Northwoods Mall in Charleston, SC ($59.9 million). The
loan maturity was extended to April 2026 at the existing interest
rate of 5.08%.
CBL also announced in May that it had closed on a new $65.0
million non-recourse loan secured by a pool of four open-air
centers owned in a joint venture, located in Chattanooga, TN. The
open-air centers include Hamilton Crossing, Hamilton Corner, The
Terrace and The Shoppes at Hamilton Place/ Hamilton Place - Regal.
The loan has a ten-year term with a fixed interest rate of 5.85%,
interest only for three years and principal amortization based on a
30-year schedule thereafter. Net proceeds from the new loan were
used to complete a partial redemption of CBL’s outstanding 10%
Senior Secured Notes.
In June, CBL completed the redemption of all outstanding 10%
Notes. The redemption was funded utilizing proceeds from a new
$360.0 million non-recourse loan secured by a pool of high-quality
outparcels and open-air centers. The new loan has an initial
five-year term with one two-year extension option available to the
Company, subject to certain conditions. The loan bears a floating
interest rate based on 30-day SOFR plus 4.10%. $180 million
principal amount of the $360 million loan has been fixed at a rate
of 6.95% for a term of three years. The balance remains at a
floating rate, which will allow for selective hedging at CBL’s
option.
Additionally in June, CBL and its 65% joint venture partner
closed on a new $42.5 million loan ($27.6 million at CBL’s share)
secured by Ambassador Town Center. The new loan has a term of
7-years and a fixed interest rate of 4.35%. Proceeds were used to
retire the existing $40.9 million loan, which was scheduled to
mature in June 2023.
In June, CBL also repaid a $14.9 million loan (CBL’s share $13.9
million) secured by CBL Center, that was scheduled to mature.
Subsequent to second quarter end, CBL completed the modification
and extensions of the loan secured by Parkdale Mall in Beaumont, TX
($68.1 million). The loan was extended to March 2026, at the
existing interest rate of 5.85%.
CBL is also in the process of finalizing a modification of the
loan secured by Southpark Mall in Richmond, VA ($54.8 million). The
loan is expected to be extended through June 2026 at the existing
interest rate of 4.85%.
As previously announced, the modification of the $35.5 million
recourse loan secured by The Outlet Shoppes at Gettysburg in
Gettysburg, PA is in process and is expected to be completed within
the next 30 to 45 days.
In July, CBL conveyed Asheville Mall in Asheville, NC, to the
lender in exchange for forgiveness of the $62.1 million loan
secured by the property. The loans secured by EastGate Mall in
Cincinnati, OH ($30.0 million) and Greenbrier Mall Chesapeake, VA
($61.6 million), remain in receivership and were deconsolidated
based on each respective transfer date. CBL recently advised the
servicer for the loan secured by Westgate Mall in Spartanburg, SC
($29.7 million) that it would cooperate with a foreclosure or
conveyance of the property. CBL is in discussions with the servicer
for the loan secured by Alamance Crossing East in Burlington, NC,
($42.0 million) to modify and/or extend the existing loan. If it is
unable to reach a favorable agreement, CBL plans to cooperate with
a foreclosure or conveyance of the property. Assuming the
foreclosures or conveyances are completed for each of the four
properties listed above and including the foreclosure of the $62.1
loan secured by Asheville Mall, a total of $225.4 million of debt
will be removed from CBL’s pro rata share of total debt with an
estimated debt yield of approximately 8.1%. CBL does not recognize
earnings or receive cash flow from the properties in
receivership.
CBL is in discussions with the lender to extend and/or modify
the loan secured by Cross Creek Mall in Fayetteville, NC ($99.9
million) as well as West County Center located in St. Louis, MO
($82.1 million at CBL’s share). Both loans are currently scheduled
to mature in 2022.
DISPOSITIONS
CBL did not complete any significant dispositions in the second
quarter 2022.
REDEVELOPMENT ACTIVITY
Detailed project information is available in CBL’s Financial
Supplement for Q2 2022, which can be found in the Invest –
Financial Reports section of CBL’s website at
cblproperties.com.
OUTLOOK AND GUIDANCE
After incorporating results for the second quarter 2022, CBL is
maintaining guidance for 2022 FFO, as adjusted, in the range of
$222.0 million - $237.0 million or $7.18 - $7.67 per diluted share.
Same-center NOI guidance for the year was adjusted to exclude
approximately $4.0 million of NOI related to Alamance Crossing
East. This adjustment was fully offset by improved portfolio
leasing expectations, resulting in same-center NOI guidance
remaining in the range of $416.0 million to $430.0 million.
Key Guidance Assumptions:
Low
High
2022 FFO, as adjusted
$222 million
$237 million
2022 FFO, as adjusted, per share
$
7.18
$
7.67
Weighted Average Common Shares
Outstanding
30.9 million
30.9 million
2022 Same-Center NOI ("SC NOI")
$416 million
$430 million
2022 Change in Same-Center NOI
(5.2
)%
(1.2
)%
Reconciliation of GAAP Earnings Per Share to 2022 FFO, as
Adjusted, Per Share:
Low
High
Expected diluted earnings per common
share
$
(6.02
)
$
(5.53
)
Depreciation and amortization
10.53
10.53
Debt discount accretion, net of
noncontrolling interests' share
5.17
5.17
Loss on Impairment
0.01
0.01
Gain on depreciable property
(0.02
)
(0.02
)
Adjustment for unconsolidated affiliates
with negative investment
(0.74
)
(0.74
)
Non-cash default interest expense
(0.59
)
(0.59
)
Gain on deconsolidated
(1.17
)
(1.17
)
Adjustement for litigation settlement
(0.02
)
(0.02
)
Reorganization item, net
0.03
0.03
Expected FFO, as adjusted, per diluted,
fully converted common share
$
7.18
$
7.67
2022 Estimate of Capital Items:
Low
High
2022 Estimated Deferred Maintenance/Tenant
Allowances
$35 million
$45 million
2022 Estimated Development/Redevelopment
Expenditures
$20 million
$30 million
2022 Estimated Principal Amortization
(Including Est. Term Loan ECF)
$105 million
$120 million
Total Estimate
$160 million
$195 million
ABOUT CBL PROPERTIES
Headquartered in Chattanooga, TN, CBL Properties owns and
manages a national portfolio of market-dominant properties located
in dynamic and growing communities. CBL’s owned and managed
portfolio is comprised of 95 properties totaling 59.6 million
square feet across 24 states, including 57 high-quality enclosed
malls, outlet centers and lifestyle retail centers as well as more
than 30 open-air centers and other assets. CBL seeks to
continuously strengthen its company and portfolio through active
management, aggressive leasing and profitable reinvestment in its
properties. For more information visit cblproperties.com.
NON-GAAP FINANCIAL MEASURES
Funds From Operations
FFO is a widely used non-GAAP measure of the operating
performance of real estate companies that supplements net income
(loss) determined in accordance with GAAP. The National Association
of Real Estate Investment Trusts ("NAREIT") defines FFO as net
income (loss) (computed in accordance with GAAP) excluding gains or
losses on sales of depreciable operating properties and impairment
losses of depreciable properties, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships
and joint ventures and noncontrolling interests. Adjustments for
unconsolidated partnerships and joint ventures and noncontrolling
interests are calculated on the same basis. We define FFO as
defined above by NAREIT less dividends on preferred stock of the
Company or distributions on preferred units of the Operating
Partnership, as applicable. The Company’s method of calculating FFO
may be different from methods used by other REITs and, accordingly,
may not be comparable to such other REITs.
The Company believes that FFO provides an additional indicator
of the operating performance of its properties without giving
effect to real estate depreciation and amortization, which assumes
the value of real estate assets declines predictably over time.
Since values of well-maintained real estate assets have
historically risen with market conditions, the Company believes
that FFO enhances investors’ understanding of its operating
performance. The use of FFO as an indicator of financial
performance is influenced not only by the operations of the
Company’s properties and interest rates, but also by its capital
structure.
The Company presents both FFO allocable to Operating Partnership
common unitholders and FFO allocable to common shareholders, as it
believes that both are useful performance measures. The Company
believes FFO allocable to Operating Partnership common unitholders
is a useful performance measure since it conducts substantially all
of its business through its Operating Partnership and, therefore,
it reflects the performance of the properties in absolute terms
regardless of the ratio of ownership interests of the Company’s
common shareholders and the noncontrolling interest in the
Operating Partnership. The Company believes FFO allocable to its
common shareholders is a useful performance measure because it is
the performance measure that is most directly comparable to net
income (loss) attributable to its common shareholders.
In the reconciliation of net income (loss) attributable to the
Company’s common shareholders to FFO allocable to Operating
Partnership common unitholders, located in this earnings release,
the Company makes an adjustment to add back noncontrolling interest
in income (loss) of its Operating Partnership in order to arrive at
FFO of the Operating Partnership common unitholders. The Company
then applies a percentage to FFO of the Operating Partnership
common unitholders to arrive at FFO allocable to its common
shareholders. The percentage is computed by taking the
weighted-average number of common shares outstanding for the period
and dividing it by the sum of the weighted-average number of common
shares and the weighted-average number of Operating Partnership
units held by noncontrolling interests during the period.
FFO does not represent cash flows from operations as defined by
GAAP, is not necessarily indicative of cash available to fund all
cash flow needs and should not be considered as an alternative to
net income (loss) for purposes of evaluating the Company’s
operating performance or to cash flow as a measure of
liquidity.
The Company believes that it is important to identify the impact
of certain significant items on its FFO measures for a reader to
have a complete understanding of the Company’s results of
operations. Therefore, the Company has also presented adjusted FFO
measures excluding these items from the applicable periods. Please
refer to the reconciliation of net loss attributable to common
shareholders to FFO allocable to Operating Partnership common
unitholders on page 10 of this news release for a description of
these adjustments.
Same-center Net Operating Income
NOI is a supplemental non-GAAP measure of the operating
performance of the Company’s shopping centers and other properties.
The Company defines NOI as property operating revenues (rental
revenues, tenant reimbursements and other income) less property
operating expenses (property operating, real estate taxes and
maintenance and repairs).
The Company computes NOI based on the Operating Partnership’s
pro rata share of both consolidated and unconsolidated properties.
The Company believes that presenting NOI and same-center NOI
(described below) based on its Operating Partnership’s pro rata
share of both consolidated and unconsolidated properties is useful
since the Company conducts substantially all of its business
through its Operating Partnership and, therefore, it reflects the
performance of the properties in absolute terms regardless of the
ratio of ownership interests of the Company’s common shareholders
and the noncontrolling interest in the Operating Partnership. The
Company's definition of NOI may be different than that used by
other companies and, accordingly, the Company's calculation of NOI
may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to
the operations of the Company’s shopping center properties, the
Company believes that same-center NOI provides a measure that
reflects trends in occupancy rates, rental rates, sales at the
malls and operating costs and the impact of those trends on the
Company’s results of operations. The Company’s calculation of
same-center NOI excludes lease termination income, straight-line
rent adjustments, amortization of above and below market lease
intangibles and write-off of landlord inducement assets in order to
enhance the comparability of results from one period to another. A
reconciliation of same-center NOI to net income is located at the
end of this earnings release.
Pro Rata Share of Debt
The Company presents debt based on the carrying value of its pro
rata ownership share (including the carrying value of the Company’s
pro rata share of unconsolidated affiliates and excluding
noncontrolling interests’ share of consolidated properties) because
it believes this provides investors a clearer understanding of the
Company’s total debt obligations which affect the Company’s
liquidity. A reconciliation of the Company’s pro rata share of debt
to the amount of debt on the Company’s condensed consolidated
balance sheet is located at the end of this earnings release.
Information included herein contains “forward-looking
statements” within the meaning of the federal securities laws. Such
statements are inherently subject to risks and uncertainties, many
of which cannot be predicted with accuracy and some of which might
not even be anticipated. Future events and actual events, financial
and otherwise, may differ materially from the events and results
discussed in the forward-looking statements. The reader is directed
to the Company’s various filings with the Securities and Exchange
Commission, including without limitation the Company’s Annual
Report on Form 10-K, and the “Management's Discussion and Analysis
of Financial Condition and Results of Operations” included therein,
for a discussion of such risks and uncertainties.
Consolidated Statements of Operations (Unaudited; in
thousands, except per share amounts)
Successor
Predecessor
Three Months Ended June
30,
Three Months Ended June
30,
2022
2021
REVENUES:
Rental revenues
$
131,832
$
131,316
Management, development and leasing
fees
1,786
1,449
Other
3,400
3,796
Total revenues
137,018
136,561
EXPENSES:
Property operating
(21,312
)
(19,623
)
Depreciation and amortization
(64,476
)
(47,499
)
Real estate taxes
(14,254
)
(15,110
)
Maintenance and repairs
(10,230
)
(8,784
)
General and administrative
(18,450
)
(11,269
)
Loss on impairment
(252
)
—
Litigation settlement
65
(57
)
Other
(834
)
(287
)
Total expenses
(129,743
)
(102,629
)
OTHER INCOME (EXPENSES):
Interest and other income
910
752
Interest expense
(55,117
)
(22,299
)
Gain on sales of real estate assets
3
107
Reorganization items, net
613
(17,073
)
Income tax benefit (provision)
472
(705
)
Equity in earnings (losses) of
unconsolidated affiliates
2,039
(4,275
)
Total other income (expenses)
(51,080
)
(43,493
)
Net loss
(43,805
)
(9,561
)
Net loss attributable to noncontrolling
interests in:
Operating Partnership
44
230
Other consolidated subsidiaries
2,373
449
Net loss attributable to the
Company
(41,388
)
(8,882
)
Dividends allocable to unvested restricted
stock
(210
)
—
Net loss attributable to common
shareholders
$
(41,598
)
$
(8,882
)
Basic and diluted per share data
attributable to common shareholders:
Net loss attributable to common
shareholders
$
(1.34
)
$
(0.05
)
Weighted-average common and potential
dilutive common shares outstanding
30,973
196,458
Consolidated Statements of Operations (Unaudited; in
thousands, except per share amounts)
Successor
Predecessor
Six Months Ended June
30,
Six Months Ended June
30,
2022
2021
REVENUES:
Rental revenues
$
267,164
$
259,491
Management, development and leasing
fees
3,555
3,108
Other
6,401
7,146
Total revenues
277,120
269,745
EXPENSES:
Property operating
(44,656
)
(41,425
)
Depreciation and amortization
(133,419
)
(95,611
)
Real estate taxes
(28,689
)
(31,661
)
Maintenance and repairs
(20,796
)
(19,565
)
General and administrative
(36,524
)
(23,881
)
Loss on impairment
(252
)
(57,182
)
Litigation settlement
146
801
Other
(834
)
(287
)
Total expenses
(265,024
)
(268,811
)
OTHER INCOME (EXPENSES):
Interest and other income
1,064
1,528
Interest expense
(145,776
)
(46,429
)
Gain on deconsolidation
36,250
55,131
Gain (loss) on sales of real estate
assets
19
(192
)
Reorganization items, net
(958
)
(40,006
)
Income tax provision
(329
)
(1,456
)
Equity in earnings (losses) of
unconsolidated affiliates
10,606
(7,351
)
Total other income (expenses)
(99,124
)
(38,775
)
Net loss
(87,028
)
(37,841
)
Net loss attributable to noncontrolling
interests in:
Operating Partnership
59
928
Other consolidated subsidiaries
4,859
1,268
Net loss attributable to the
Company
(82,110
)
(35,645
)
Dividends allocable to unvested restricted
stock
(210
)
—
Net loss attributable to common
shareholders
$
(82,320
)
$
(35,645
)
Basic and diluted per share data
attributable to common shareholders:
Net loss attributable to common
shareholders
$
(2.83
)
$
(0.18
)
Weighted-average common and potential
dilutive common shares outstanding
29,091
196,484
The Company's reconciliation of net loss attributable to
common shareholders to FFO allocable to Operating Partnership
common unitholders is as follows: (in thousands, except per
share data)
Successor
Predecessor
Three Months Ended June
30,
Three Months Ended June
30,
2022
2021
Net loss attributable to common
shareholders
$
(41,598
)
$
(8,882
)
Noncontrolling interest in loss of
Operating Partnership
(44
)
(230
)
Depreciation and amortization expense
of:
Consolidated properties
64,476
47,499
Unconsolidated affiliates
8,819
13,456
Non-real estate assets
(203
)
(492
)
Dividends allocable to unvested restricted
stock
210
—
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(938
)
(558
)
Loss on impairment, net of taxes
186
—
FFO allocable to Operating Partnership
common unitholders
30,908
50,793
Debt discount accretion, net of
noncontrolling interests' share (1)
50,036
—
Adjustment for unconsolidated affiliates
with negative investment (2)
(10,460
)
—
Senior secured notes fair value adjustment
(3)
(593
)
—
Litigation settlement (4)
(65
)
57
Non-cash default interest expense (5)
(9,344
)
11,576
Reorganization items, net (6)
(613
)
17,073
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
59,869
$
79,499
FFO per diluted share
$
0.97
$
0.25
FFO, as adjusted, per diluted
share
$
1.88
$
0.39
Weighted-average common and potential
dilutive common shares outstanding with Operating Partnership units
fully converted
31,822
201,576
(1)
In conjunction with fresh start accounting
upon emergence from bankruptcy, the Company recognized debt
discounts equal to the difference between the outstanding balance
of mortgage notes payable and the estimated fair value of such
mortgage notes payable. The debt discounts are accreted over the
terms of the respective mortgage notes payable using the effective
interest method.
(2)
Represents the Company’s share of the
earnings (losses) before depreciation and amortization expense of
unconsolidated affiliates where the Company is not recognizing
equity in earnings (losses) because its investment in the
unconsolidated affiliate is below zero.
(3)
Represents the fair value adjustment
recorded on the Company’s 10% senior secured notes (the “Secured
Notes”) as interest expense.
(4)
Represents a credit to litigation
settlement expense for the three-month period ended June 30, 2022
related to claim amounts that were released pursuant to the terms
of the settlement agreement related to the settlement of a class
action lawsuit.
(5)
The three months ended June 30, 2022
includes the reversal of default interest expense when waivers or
forbearance agreements were obtained. The three months ended June
30, 2021 includes default interest expense related to loans secured
by properties that were in default prior to the Company filing
bankruptcy, as well as loans secured by properties that remain in
default due to the Company filing bankruptcy.
(6)
Represents costs incurred subsequent to
the Company filing bankruptcy associated with the Company’s
reorganization efforts, which consists of professional fees, legal
fees, retention bonuses and U.S. Trustee fees expensed in
accordance with ASC 852.
The Company's reconciliation of net loss attributable to
common shareholders to FFO allocable to Operating Partnership
common unitholders is as follows: (in thousands, except per
share data)
Successor
Predecessor
Six Months Ended June
30,
Six Months Ended June
30,
2022
2021
Net loss attributable to common
shareholders
$
(82,320
)
$
(35,645
)
Noncontrolling interest in loss of
Operating Partnership
(59
)
(928
)
Depreciation and amortization expense
of:
Consolidated properties
133,419
95,611
Unconsolidated affiliates
17,339
26,986
Non-real estate assets
(401
)
(1,032
)
Dividends allocable to unvested restricted
stock
210
—
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(1,837
)
(1,139
)
Loss on impairment, net of taxes
186
57,182
Gain on depreciable property
(629
)
—
FFO allocable to Operating Partnership
common unitholders
65,908
141,035
Debt discount accretion, net of
noncontrolling interests' share (1)
128,499
—
Adjustment for unconsolidated affiliates
with negative investment (2)
(23,007
)
—
Senior secured notes fair value adjustment
(3)
(395
)
—
Litigation settlement (4)
(146
)
(801
)
Non-cash default interest expense (5)
(18,220
)
23,046
Gain on deconsolidation (6)
(36,250
)
(55,131
)
Reorganization items, net (7)
958
40,006
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
117,347
$
148,155
FFO per diluted share
$
2.20
$
0.70
FFO, as adjusted, per diluted
share
$
3.92
$
0.73
Weighted-average common and potential
dilutive common shares outstanding with Operating Partnership units
fully converted
29,926
201,601
(1)
In conjunction with fresh start accounting
upon emergence from bankruptcy, the Company recognized debt
discounts equal to the difference between the outstanding balance
of mortgage notes payable and the estimated fair value of such
mortgage notes payable. The debt discounts are accreted over the
terms of the respective mortgage notes payable using the effective
interest method.
(2)
Represents the Company’s share of the
earnings (losses) before depreciation and amortization expense of
unconsolidated affiliates where the Company is not recognizing
equity in earnings (losses) because its investment in the
unconsolidated affiliate is below zero.
(3)
Represents the fair value adjustment
recorded on the Secured Notes as interest expense.
(4)
Represents a credit to litigation
settlement expense in each of the six-month periods ended June 30,
2022 and 2021 related to claim amounts that were released pursuant
to the terms of the settlement agreement related to the settlement
of a class action lawsuit.
(5)
The six months ended June 30, 2022
includes the reversal of default interest expense when waivers or
forbearance agreements were obtained. The six months ended June 30,
2021 includes default interest expense related to loans secured by
properties that were in default prior to the Company filing
bankruptcy, as well as loans secured by properties that remain in
default due to the Company filing bankruptcy.
(6)
For the six months ended June 30, 2022,
the Successor Company deconsolidated Greenbrier Mall due to a loss
of control when the property was placed into receivership in
connection with the foreclosure process. For the six months ended
June 30, 2021, the Predecessor Company deconsolidated Asheville
Mall and Park Plaza due to a loss of control when the properties
were placed into receivership in connection with the foreclosure
process.
(7)
Represents costs incurred subsequent to
the Company filing bankruptcy associated with the Company’s
reorganization efforts, which consists of professional fees, legal
fees, retention bonuses and U.S. Trustee fees expensed in
accordance with ASC 852.
The reconciliation of diluted EPS to FFO per diluted share for
the three and six months ended June 30, 2022 and 2021 is as
follows:
Successor
Predecessor
Three Months Ended June
30,
Three Months Ended June
30,
2022
2021
Diluted EPS attributable to common
shareholders
$
(1.34
)
$
(0.05
)
Add amounts per share included in FFO:
Unvested restricted stock
0.04
—
Eliminate amounts per share excluded from
FFO:
Depreciation and amortization expense,
including amounts from
consolidated properties, unconsolidated
affiliates, non-real estate
assets and excluding amounts allocated to
noncontrolling
interests
2.23
0.30
Loss on impairment, net of taxes
0.01
—
FFO per diluted share
$
0.94
$
0.25
Successor
Predecessor
Six Months Ended June
30,
Six Months Ended June
30,
2022
2021
Diluted EPS attributable to common
shareholders
$
(2.83
)
$
(0.18
)
Add amounts per share included in FFO:
Unvested restricted stock
0.08
—
Eliminate amounts per share excluded from
FFO:
Depreciation and amortization expense,
including amounts from
consolidated properties, unconsolidated
affiliates, non-real estate
assets and excluding amounts allocated to
noncontrolling
interests
4.96
0.59
Loss on impairment, net of taxes
0.01
0.29
Gain on depreciable property
(0.02
)
—
FFO per diluted share
$
2.20
$
0.70
Successor
Predecessor
Three Months Ended June
30,
Three Months Ended June
30,
2022
2021
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees
$
1,052
$
167
Straight-line rental income adjustment
$
4,425
$
(2,549
)
Gain on outparcel sales
$
3
$
90
Net amortization of acquired above- and
below-market leases
$
(4,892
)
$
73
Income tax benefit (provision)
$
472
$
(705
)
Abandoned projects expense
$
(834
)
$
(287
)
Interest capitalized
$
147
$
13
Estimate of uncollectable revenues
$
940
$
(7,253
)
Successor
Predecessor
Six Months Ended June
30,
Six Months Ended June
30,
2022
2021
SUPPLEMENTAL FFO INFORMATION:
Lease termination fees
$
2,448
$
1,278
Straight-line rental income adjustment
$
7,342
$
(5,445
)
Gain (loss) on outparcel sales, net of
taxes
$
19
$
(209
)
Net amortization of acquired above- and
below-market leases
$
(11,049
)
$
125
Income tax provision
$
(329
)
$
(1,456
)
Abandoned projects expense
$
(834
)
$
(287
)
Interest capitalized
$
375
$
32
Estimate of uncollectable revenues
$
3,301
$
(16,370
)
Successor
Predecessor
As of June 30,
As of June 30,
2022
2021
Straight-line rent receivable
$
9,440
$
48,341
Same-center Net Operating Income (Dollars in
thousands)
Successor
Predecessor
Three Months Ended June
30,
Three Months Ended June
30,
2022
2021
Net loss
$
(43,805
)
$
(9,561
)
Adjustments:
Depreciation and amortization
64,476
47,499
Depreciation and amortization from
unconsolidated affiliates
8,819
13,456
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(938
)
(558
)
Interest expense
55,117
22,299
Interest expense from unconsolidated
affiliates
21,660
10,512
Noncontrolling interests' share of
interest expense in other consolidated subsidiaries
(2,525
)
(878
)
Abandoned projects expense
834
287
Gain on sales of real estate assets
(3
)
(107
)
Adjustment for unconsolidated affiliates
with negative investment
(10,460
)
—
Loss on impairment, net of taxes
186
—
Litigation settlement
(65
)
57
Reorganization items, net
(613
)
17,073
Income tax (benefit) provision
(472
)
705
Lease termination fees
(1,052
)
(167
)
Straight-line rent and above- and
below-market lease amortization
467
2,476
Net loss attributable to noncontrolling
interests in other consolidated subsidiaries
2,373
449
General and administrative expenses
18,450
11,269
Management fees and non-property level
revenues
(525
)
(5,166
)
Operating Partnership's share of
property NOI
111,924
109,645
Non-comparable NOI
(4,566
)
(3,962
)
Total same-center NOI (1)
$
107,358
$
105,683
Total same-center NOI percentage
change
1.6
%
(1)
CBL defines NOI as property operating
revenues (rental revenues, tenant reimbursements and other income),
less property operating expenses (property operating, real estate
taxes and maintenance and repairs). NOI excludes lease termination
income, straight-line rent adjustments, amortization of above and
below market lease intangibles and write-offs of landlord
inducement assets. We include a property in our same-center pool
when we own all or a portion of the property as of June 30, 2022,
and we owned it and it was in operation for both the entire
preceding calendar year and the current year-to-date reporting
period ending June 30, 2022. New properties are excluded from
same-center NOI, until they meet these criteria. Properties
excluded from the same-center pool that would otherwise meet these
criteria are properties which are under major redevelopment or
being considered for repositioning, where we intend to renegotiate
the terms of the debt secured by the related property or return the
property to the lender.
Same-center Net Operating Income (Dollars in
thousands)
Successor
Predecessor
Six Months Ended June
30,
Six Months Ended June
30,
2022
2021
Net loss
$
(87,028
)
$
(37,841
)
Adjustments:
Depreciation and amortization
133,419
95,611
Depreciation and amortization from
unconsolidated affiliates
17,339
26,986
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(1,837
)
(1,139
)
Interest expense
145,776
46,429
Interest expense from unconsolidated
affiliates
40,157
20,361
Noncontrolling interests' share of
interest expense in other consolidated subsidiaries
(5,095
)
(1,845
)
Abandoned projects expense
834
287
(Gain) loss on sales of real estate
assets
(19
)
192
Gain on sales of real estate assets of
unconsolidated affiliates
(629
)
—
Adjustment for unconsolidated affiliates
with negative investment
(23,007
)
—
Gain on deconsolidation
(36,250
)
(55,131
)
Loss on impairment, net of taxes
186
57,182
Litigation settlement
(146
)
(801
)
Reorganization items, net
958
40,006
Income tax provision
329
1,456
Lease termination fees
(2,448
)
(1,278
)
Straight-line rent and above- and
below-market lease amortization
3,707
5,320
Net loss attributable to noncontrolling
interests in other consolidated subsidiaries
4,859
1,268
General and administrative expenses
36,524
23,881
Management fees and non-property level
revenues
(1,049
)
(7,379
)
Operating Partnership's share of
property NOI
226,580
213,565
Non-comparable NOI
(9,194
)
(9,738
)
Total same-center NOI (1)
$
217,386
$
203,827
Total same-center NOI percentage
change
6.7
%
(1)
CBL defines NOI as property operating
revenues (rental revenues, tenant reimbursements and other income),
less property operating expenses (property operating, real estate
taxes and maintenance and repairs). NOI excludes lease termination
income, straight-line rent adjustments, amortization of above and
below market lease intangibles and write-offs of landlord
inducement assets. We include a property in our same-center pool
when we own all or a portion of the property as of June 30, 2022,
and we owned it and it was in operation for both the entire
preceding calendar year and the current year-to-date reporting
period ending June 30, 2022. New properties are excluded from
same-center NOI, until they meet these criteria. Properties
excluded from the same-center pool that would otherwise meet these
criteria are properties which are under major redevelopment or
being considered for repositioning, where we intend to renegotiate
the terms of the debt secured by the related property or return the
property to the lender.
Same-center Net Operating Income (Continued)
Successor
Predecessor
Three Months Ended June
30,
Three Months
Ended June 30,
2022
2021
Malls
$
75,369
$
74,157
Outlet centers
4,520
4,246
Lifestyle centers
8,727
8,854
Open-air centers
13,178
12,696
Outparcels and other
5,564
5,730
Total same-center NOI (1)
$
107,358
$
105,683
Percentage Change:
Malls
1.6
%
Outlet centers
6.5
%
Lifestyle centers
(1.4
)%
Open-air centers
3.8
%
Outparcels and other
(2.9
)%
Total same-center NOI (1)
1.6
%
Successor
Predecessor
Six Months Ended June
30,
Six Months Ended June
30,
2022
2021
Malls
$
153,124
$
143,851
Outlet centers
8,847
7,991
Lifestyle centers
17,830
16,527
Open-air centers
26,258
24,562
Outparcels and other
11,327
10,896
Total same-center NOI (1)
$
217,386
$
203,827
Percentage Change:
Malls
6.4
%
Lifestyle centers
10.7
%
Open-air centers
7.9
%
Outlet centers
6.9
%
Outparcels and other
4.0
%
Total same-center NOI (1)
6.7
%
(1)
CBL defines NOI as property operating
revenues (rental revenues, tenant reimbursements and other income),
less property operating expenses (property operating, real estate
taxes and maintenance and repairs). NOI excludes lease termination
income, straight-line rent adjustments, amortization of above and
below market lease intangibles and write-offs of landlord
inducement assets. We include a property in our same-center pool
when we own all or a portion of the property as of June 30, 2022,
and we owned it and it was in operation for both the entire
preceding calendar year and the current year-to-date reporting
period ending June 30, 2022. New properties are excluded from
same-center NOI, until they meet these criteria. Properties
excluded from the same-center pool that would otherwise meet these
criteria are properties which are under major redevelopment or
being considered for repositioning, where we intend to renegotiate
the terms of the debt secured by the related property or return the
property to the lender.
Company's Share of Consolidated and Unconsolidated Debt
(Dollars in thousands)
As of June 30, 2022
(Successor)
Fixed Rate
Variable Rate
Total per Debt
Schedule
Unamortized
Deferred Financing Costs
Unamortized Debt
Discounts (1)
Total
Consolidated debt
$
881,513
$
1,270,871
$
2,152,384
$
(16,028
)
$
(100,967
)
$
2,035,389
Noncontrolling interests' share of
consolidated debt
(32,771
)
(13,597
)
(46,368
)
92
15,424
(30,852
)
Company's share of unconsolidated
affiliates' debt
627,434
71,786
699,220
(2,490
)
—
696,730
Other debt (2)
153,719
—
153,719
—
—
153,719
Company's share of consolidated,
unconsolidated and other debt
$
1,629,895
$
1,329,060
$
2,958,955
$
(18,426
)
$
(85,543
)
$
2,854,986
Weighted-average interest rate
4.67
%
4.44
%
4.57
%
As of June 30, 2021
(Predecessor)
Fixed Rate
Variable Rate
Total per Debt
Schedule
Unamortized
Deferred Financing Costs
Unamortized
Deferred Financing Costs
Total
Consolidated debt (3)
$
2,338,118
$
1,181,599
$
3,519,717
$
(2,987
)
$
—
$
3,516,730
Noncontrolling interests' share of
consolidated debt
(29,744
)
—
(29,744
)
238
—
(29,506
)
Company's share of unconsolidated
affiliates' debt
618,092
124,141
742,233
(2,648
)
—
739,585
Other debt (2)
138,926
—
138,926
—
—
138,926
Company's share of consolidated and
unconsolidated debt
$
3,065,392
$
1,305,740
$
4,371,132
$
(5,397
)
$
—
$
4,365,735
Weighted-average interest rate
5.04
%
8.62
%
(4)
6.11
%
(1)
In conjunction with fresh start
accounting, the Company estimated the fair value of its mortgage
notes with the assistance of a third-party valuation advisor. This
resulted in recognizing a debt discount on the Effective Date. The
debt discount is accreted over the term of the respective debt
using the effective interest method.
(2)
Represents the outstanding loan balance
for properties that were deconsolidated due to a loss of control
when the properties were placed into receivership in connection
with the foreclosure process.
(3)
Includes $2,529,138 of liabilities subject
to compromise.
(4)
The administrative agent informed the
Company that interest would accrue on all outstanding obligations
at the post-default rate, which was equal to the rate that
otherwise would be in effect plus 5.0%. The post-default interest
rate on June 30, 2021 was 9.50%.
Consolidated Balance Sheets (Unaudited; in thousands,
except share data)
June 30, 2022
December 31,
2021
ASSETS
Real estate assets:
Land
$
592,553
$
599,283
Buildings and improvements
1,171,468
1,173,106
1,764,021
1,772,389
Accumulated depreciation
(77,968
)
(19,939
)
1,686,053
1,752,450
Developments in progress
13,201
16,665
Net investment in real estate assets
1,699,254
1,769,115
Cash and cash equivalents
177,065
169,554
Available-for-sale securities - at fair
value (amortized cost of $150,057 and $149,999 as of June 30, 2022
and December 31, 2021, respectively)
150,063
149,996
Receivables:
Tenant
27,256
25,190
Other
4,084
4,793
Investments in unconsolidated
affiliates
85,685
103,655
In-place leases, net
307,887
384,705
Above market leases, net
201,499
234,286
Intangible lease assets and other
assets
121,749
104,685
$
2,774,542
$
2,945,979
LIABILITIES AND EQUITY
Mortgage and other indebtedness, net
$
2,035,389
$
1,813,209
10% senior secured notes - at fair value
(carrying amount of $395,000 as of December 31, 2021)
—
395,395
Below market leases, net
131,135
151,871
Accounts payable and accrued
liabilities
146,393
184,404
Total liabilities
2,312,917
2,544,879
Shareholders' equity:
Common stock, $.001 par value, 200,000,000
shares authorized, 31,814,178 and 20,774,716 issued and outstanding
in 2022 and 2021, respectively
32
21
Additional paid-in capital
705,884
547,726
Accumulated other comprehensive income
(loss)
6
(3
)
Accumulated deficit
(241,609
)
(151,545
)
Total shareholders' equity
464,313
396,199
Noncontrolling interests
(2,688
)
4,901
Total equity
461,625
401,100
$
2,774,542
$
2,945,979
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220815005530/en/
Katie Reinsmidt, Executive Vice President - Chief Investment
Officer, 423.490.8301, katie.reinsmidt@cblproperties.com
CBL and Associates Prope... (NYSE:CBL)
Historical Stock Chart
From Apr 2024 to May 2024
CBL and Associates Prope... (NYSE:CBL)
Historical Stock Chart
From May 2023 to May 2024