cbl-10q_20200331.htm

UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _ TO _

COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)

COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)

CBL & ASSOCIATES PROPERTIES, INC.

CBL & ASSOCIATES LIMITED PARTNERSHIP

(Exact Name of registrant as specified in its charter)


Delaware (CBL & ASSOCIATES PROPERTIES, INC.)		62-1545718
Delaware (CBL & ASSOCIATES LIMITED PARTNERSHIP)		62-1542285
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN 37421-6000

(Address of principal executive office, including zip code)

423 - 855-0001

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


CBL & Associates Properties, Inc.	Yes	☒	No	☐
CBL & Associates Limited Partnership	Yes	☒	No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


CBL & Associates Properties, Inc.	Yes	☒	No	☐
CBL & Associates Limited Partnership	Yes	☒	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


CBL & Associates Properties, Inc.
Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

CBL & Associates Limited Partnership
Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


CBL & Associates Properties, Inc.	Yes	☐	No	☒
CBL & Associates Limited Partnership	Yes	☐	No	☒

Securities registered under Section 12(b) of the Act:

CBL & Associates Properties, Inc.

Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	CBL	New York Stock Exchange
7.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value	CBLprD	New York Stock Exchange
6.625% Series E Cumulative Redeemable Preferred Stock, $0.01 par value	CBLprE	New York Stock Exchange

CBL & Associates Limited Partnership: None

As of May 29, 2020, there were 191,970,853 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.

EXPLANATORY NOTE

(Dollars in thousands, except share data)

This report combines the quarterly reports on Form 10-Q for the quarter ended March 31, 2020 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we," "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.

As previously disclosed in the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on April 30, the Company relied on Release No. 34-88465 issued by the SEC on March 25, 2020, pursuant to Section 36 of the Securities Exchange Act of 1934, as amended, to delay the filing of the Company’s Quarterly Report on Form 10-Q due to circumstances related to the current novel coronavirus (“COVID-19”) pandemic. The need to address the immediate and evolving impacts of COVID-19 on the Company’s business and operations, including impacts on the operations at each of its properties, increased the demands on its employees at a time when normal working conditions were altered, with health and safety precautions in mind, to accommodate a “work from home” model.

The Company is a real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At March 31, 2020, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned an 94.2% limited partner interest for a combined interest held by the Company of 95.2%.

As the sole general partner of the Operating Partnership, the Company's subsidiary, CBL Holdings I, Inc., has exclusive control of the Operating Partnership's activities. Management operates the Company and the Operating Partnership as one business. The management of the Company consists of the same individuals that manage the Operating Partnership. The Company's only material asset is its indirect ownership of partnership interests of the Operating Partnership. As a result, the Company conducts substantially all its business through the Operating Partnership as described in the preceding paragraph. The Company also issues public equity from time to time and guarantees certain debt of the Operating Partnership. The Operating Partnership holds all of the assets and indebtedness of the Company and, through affiliates, retains the ownership interests in the Company's joint ventures. Except for the net proceeds of offerings of equity by the Company, which are contributed to the Operating Partnership in exchange for partnership units on a one-for-one basis, the Operating Partnership generates all remaining capital required by the Company's business through its operations and its incurrence of indebtedness.

We believe that combining the two quarterly reports on Form 10-Q for the Company and the Operating Partnership provides the following benefits:

•

enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;

•

eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

•

creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the differences between the Company and the Operating Partnership, this report provides separate condensed consolidated financial statements for the Company and the Operating Partnership. Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the condensed consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to condensed consolidated financial statements is presented that includes separate discussions for the Company and the Operating Partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.

In order to highlight the differences between the Company and the Operating Partnership, this report includes the following sections that provide separate financial and other information for the Company and the Operating Partnership:

•

condensed consolidated financial statements;

•

certain accompanying notes to condensed consolidated financial statements, including Note 7 - Unconsolidated Affiliates and Noncontrolling Interests; Note 8 - Mortgage and Other Indebtedness, Net; and Note 11 - Earnings per Share and Earnings per Unit;

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•

controls and procedures in Item 4 of Part I of this report;

•

information concerning unregistered sales of equity securities and use of proceeds in Item 2 of Part II of this report; and

•

certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4.

Combined Guarantor Subsidiaries of the Operating Partnership

In January 2019, the Operating Partnership entered into a new $1,185,000 senior secured credit facility which replaced all of the Operating Partnership’s prior unsecured bank facilities. The secured credit facility is secured by 17 malls and 3 associated centers that are directly or indirectly owned by 36 wholly owned subsidiaries of the Operating Partnership (collectively the “Combined Guarantor Subsidiaries”). The Combined Guarantor Subsidiaries own an additional four malls, two associated centers and four mortgage notes receivable that are not collateral for the secured credit facility. The properties that are collateral for the secured credit facility and the properties and mortgage notes receivable that are not collateral are collectively referred to as the “Guarantor Properties.” In addition to the secured credit facility, the Operating Partnership’s debt includes three separate series of senior unsecured notes (the “Notes”). Based on the terms of the Notes, to the extent that any subsidiary of the Operating Partnership executes and delivers a guarantee to another debt facility, the Operating Partnership shall also cause the subsidiary to guarantee the Operating Partnership’s obligations under the Notes on a senior basis. In January 2019, the Combined Guarantor Subsidiaries entered a guarantee agreement with the issuer of the Notes to satisfy the guaranty requirement.

This report also includes as an exhibit the condensed combined financial statements and notes to the condensed combined financial statements of the Combined Guarantor Subsidiaries. Each of the Combined Guarantor Subsidiaries meet the criteria in Rule 3-10(f) of SEC Regulation S-X to provide condensed consolidating financial information as additional disclosure in the notes to the Operating Partnership's condensed consolidated financial statements or within Management’s Discussion and Analysis which accompanies the condensed consolidated financial statements because each Combined Guarantor Subsidiary is 100% owned by the Operating Partnership, the guaranty issued by each Combined Guarantor Subsidiary is full and unconditional and the guaranty issued by each Combined Guarantor Subsidiary is joint and several. However, the Operating Partnership has elected to provide condensed combined financial statements and accompanying notes for the Combined Guarantor Subsidiaries in lieu of including the condensed consolidating financial information in the notes to its condensed consolidated financial statements. These condensed combined financial statements and notes are presented as an exhibit to this quarterly report on Form 10-Q for ease of reference.

CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

Table of Contents



PART I	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

CBL & Associates Properties, Inc.
	Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019	1

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019	2

	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2020 and 2019	3
	Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2020 and 2019	4

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	5

CBL & Associates Limited Partnership
	Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019	6

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019	7

	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2020 and 2019	8
	Condensed Consolidated Statements of Capital for the Three Months Ended March 31, 2020 and 2019	9

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	10

CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
	Notes to Unaudited Condensed Consolidated Financial Statements	11

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54

PART II	OTHER INFORMATION	55

Item 1.	Legal Proceedings	55
Item1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61

	SIGNATURES	62

PART I – FINANCIAL INFORMATION

ITEM 1: Financial Statements

CBL & Associates Properties, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

ASSETS ⁽¹⁾	March 31, 2020			December 31, 2019
Real estate assets:
Land	$	719,142		$	730,218
Buildings and improvements		5,360,133			5,631,831
		6,079,275			6,362,049
Accumulated depreciation		( 2,218,254	)		( 2,349,404	)
		3,861,021			4,012,645
Developments in progress		31,009			49,351
Net investment in real estate assets		3,892,030			4,061,996
Cash and cash equivalents		159,117			32,816
Available-for-sale securities - at fair value (amortized cost of $153,150 in 2020)		153,172			—
Receivables:
Tenant		72,157			75,252
Other		10,152			10,792
Mortgage and other notes receivable		2,928			4,662
Investments in unconsolidated affiliates		299,797			307,354
Intangible lease assets and other assets		131,962			129,474
	$	4,721,315		$	4,622,346
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness, net	$	3,789,692		$	3,527,015
Accounts payable and accrued liabilities		205,470			231,306
Total liabilities ⁽¹⁾		3,995,162			3,758,321
Commitments and contingencies (Note 8 and Note 12)
Redeemable noncontrolling interests		1,062			2,160
Shareholders' equity:
Preferred Stock, $.01 par value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable Preferred Stock, 1,815,000 shares outstanding		18			18
6.625% Series E Cumulative Redeemable Preferred Stock, 690,000 shares outstanding		7			7
Common stock, $.01 par value, 350,000,000 shares authorized, 191,965,622 and 174,115,111 issued and outstanding in 2020 and 2019, respectively		1,920			1,741
Additional paid-in capital		1,977,891			1,965,897
Accumulated other comprehensive income		22			—
Dividends in excess of cumulative earnings		( 1,284,024	)		( 1,161,351	)
Total shareholders' equity		695,834			806,312
Noncontrolling interests		29,257			55,553
Total equity		725,091			861,865
	$	4,721,315		$	4,622,346

(1)

As of March 31, 2020, includes $367,622 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $171,605 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 7 .

The accompanying notes are an integral part of these condensed consolidated statements.

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
REVENUES:
Rental revenues	$	161,173		$	190,980
Management, development and leasing fees		2,092			2,523
Other		4,309			4,527
Total revenues		167,574			198,030
OPERATING EXPENSES:
Property operating		( 25,709	)		( 28,980	)
Depreciation and amortization		( 55,902	)		( 69,792	)
Real estate taxes		( 18,448	)		( 19,919	)
Maintenance and repairs		( 11,208	)		( 12,776	)
General and administrative		( 17,836	)		( 22,007	)
Loss on impairment		( 133,644	)		( 24,825	)
Litigation settlement		—			( 88,150	)
Other		( 158	)		—
Total operating expenses		( 262,905	)		( 266,449	)
OTHER INCOME (EXPENSES):
Interest and other income		2,397			489
Interest expense		( 46,992	)		( 53,998	)
Gain on extinguishment of debt		—			71,722
Gain on sales of real estate assets		140			228
Income tax provision		( 526	)		( 139	)
Equity in earnings of unconsolidated affiliates		1,018			3,308
Total other income (expenses)		( 43,963	)		21,610
Net loss		( 139,294	)		( 46,809	)
Net loss attributable to noncontrolling interests in:
Operating Partnership		16,414			7,758
Other consolidated subsidiaries		207			75
Net loss attributable to the Company		( 122,673	)		( 38,976	)
Preferred dividends declared		—			( 11,223	)
Preferred dividends undeclared		( 11,223	)		—
Net loss attributable to common shareholders	$	( 133,896	)	$	( 50,199	)
Basic and diluted per share data attributable to common shareholders:
Net loss attributable to common shareholders	$	( 0.75	)	$	( 0.29	)
Weighted-average common and potential dilutive common shares outstanding		179,133			173,252

The accompanying notes are an integral part of these condensed consolidated statements.

Table of Contents

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands, except share data)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Net loss	$	( 139,294	)	$	( 46,809	)

Other comprehensive income:
Unrealized gain on available-for-sale securities		22			-

Comprehensive loss		( 139,272	)		( 46,809	)
Comprehensive loss attributable to noncontrolling interests in:
Operating Partnership		16,412			7,758
Other consolidated subsidiaries		207			75
Comprehensive loss attributable to the Company:	$	( 122,653	)	$	( 38,976	)

The accompanying notes are an integral part of these condensed consolidated statements.

Table of Contents

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)

				Equity
				Shareholders' Equity
	Redeemable Noncontrolling Interests			Preferred Stock		Common Stock			Additional Paid-in Capital			Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, January 1, 2019	$	3,575		$	25	$	1,727		$	1,968,280		$	( 1,005,895	)	$	964,137		$	68,028		$	1,032,165
Net loss		( 453	)		—		—			—			( 38,976	)		( 38,976	)		( 7,380	)		( 46,356	)
Dividends declared - common stock ($0.075 per share)		—			—		—			—			( 13,010	)		( 13,010	)		—			( 13,010	)
Dividends declared - preferred stock		—			—		—			—			( 11,223	)		( 11,223	)		—			( 11,223	)
Issuance of 863,174 shares of common stock and restricted common stock		—			—		9			708			—			717			—			717
Cancellation of 57,656 shares of restricted common stock		—			—		( 1	)		( 133	)		—			( 134	)		—			( 134	)
Performance stock units		—			—		—			313			—			313			—			313
Amortization of deferred compensation		—			—		—			1,033			—			1,033			—			1,033
Adjustment for noncontrolling interests		1,038			—		—			( 2,356	)		—			( 2,356	)		1,318			( 1,038	)
Distributions to noncontrolling interests		( 1,143	)		—		—			—			—			—			( 4,450	)		( 4,450	)
Contributions from noncontrolling interests		—			—		—			—			—			—			455			455
Balance, March 31, 2019	$	3,017		$	25	$	1,735		$	1,967,845		$	( 1,069,104	)	$	900,501		$	57,971		$	958,472

				Equity
				Shareholders' Equity
	Redeemable Noncontrolling Interests			Preferred Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Dividends in Excess of Cumulative Earnings			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
Balance, January 1, 2020	$	2,160		$	25	$	1,741	$	1,965,897	$	—	$	( 1,161,351	)	$	806,312		$	55,553		$	861,865
Net loss		( 1,158	)		—		—		—		—		( 122,673	)		( 122,673	)		( 15,463	)		( 138,136	)
Other comprehensive income		—			—		—		—		22		—			22			—			22
Conversion of 16,333,947 Operating Partnership common units into shares of common stock		—			—		163		20,888		—		—			21,051			( 21,051	)		—
Issuance of 1,633,345 shares of common stock and restricted common stock		—			—		17		520		—		—			537			—			537
Cancellation of