CBL & Associates Properties, Inc. — 2023 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2023. CBL is a retail-focused REIT operating through its Operating Partnership, with interests in 91 properties across 22 states, primarily in the Southeast and Midwest. Its portfolio includes malls, lifestyle and outlet centers, open-air centers, and other properties. CBL emerged from Chapter 11 in November 2021 and adopted fresh-start accounting; accordingly, post-emergence results are not directly comparable with predecessor-period results.
Key financial and operating metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $535.3 million | $563.0 million |
| Net income (loss) | $3.2 million | $(99.5) million |
| Net income (loss) attributable to common shareholders | $5.4 million; $0.17 per share | $(96.0) million; $(3.20) per share |
| Net cash from operating activities | $183.5 million | $208.2 million |
| Net cash from investing activities | $1.7 million | $(156.7) million |
| Net cash used in financing activities | $(204.1) million | $(145.8) million |
| Same-center NOI (non-GAAP) | $438.5 million, down 1.5% | $445.4 million |
| Adjusted FFO allocable to Operating Partnership common unitholders (non-GAAP) | $213.2 million | $243.5 million |
Revenue declined 4.9%, including a $28.3 million reduction in rental revenue. Management cited lower percentage rents and a less favorable estimate for uncollectible revenues; 2022 included recoveries that did not recur. Same-center sales per square foot fell 4.4% to $416. Portfolio occupancy was 90.9%, compared with 91.0% a year earlier; same-center mall, lifestyle and outlet occupancy was 89.8%, versus 89.6%. Average base rent for comparable small-shop space across the portfolio increased to $25.56 per square foot from $25.14.
Net income improved mainly as depreciation and amortization fell $65.8 million and interest expense fell $44.4 million. The comparison also includes $47.9 million of gains on deconsolidation in 2023 and $36.3 million in 2022. Despite higher reported FFO, adjusted FFO declined, chiefly due to weaker percentage rents, uncollectible-revenue estimates and higher borrowing costs.
Liquidity, debt and capital
- At year-end, CBL reported $34.2 million of cash and cash equivalents and $262.1 million of U.S. Treasury securities, or $296.3 million combined; the Treasuries matured through July 2024. It also had $88.9 million of restricted cash.
- CBL’s pro-rata share of consolidated and unconsolidated debt was approximately $2.656 billion before debt discounts and deferred financing costs. About $1.074 billion, or 40.4%, was variable-rate debt; the pro-rata weighted-average interest rate was 6.54%. A 0.5 percentage-point rate increase was estimated to raise annual interest expense by about $5.4 million.
- Debt maturities remain a key pressure point: the weighted-average remaining term was 2.4 years. The company reported approximately $69.8 million of past-due property debt associated with Alamance Crossing East and WestGate Mall, both in receivership. Its maturity disclosure gives pro-rata debt of approximately $106.8 million, $288.1 million and $710.1 million maturing in 2024, 2025 and 2026, respectively, after stated extensions; a separate original-maturity schedule identifies $314.2 million of 2024 maturities before extensions.
- The secured term loan balance was $799.9 million at 8.21% and matures in November 2025, with conditional extension options. Its limited guaranty was eliminated in November 2023, making the loan fully non-recourse. Management reported compliance with financial covenants at year-end.
- CBL paid regular dividends of $0.375 per share in each 2023 quarter. A $2.20-per-share special dividend, intended to meet the 2022 REIT distribution requirement, was paid in January 2023. A $0.40-per-share first-quarter 2024 dividend was declared after year-end.
Material changes, outlook and risks
- CBL deconsolidated Alamance Crossing East and WestGate Mall after losing control when each was placed in receivership, recording combined gains on deconsolidation. The properties’ loans remained past due at year-end.
- Operating cash flow decreased by $24.7 million year over year, while investing cash flow turned positive, principally reflecting Treasury security redemptions. Financing outflows increased, including dividends and lower net loan proceeds.
- CBL’s stated strategy is to improve occupancy, pursue rent growth, diversify tenant uses, redevelop former anchor space, recycle assets and reduce or extend debt. It did not provide specific financial guidance in the supplied filing text.
- Material risks include refinancing and near-term maturity exposure, variable interest rates, tenant bankruptcies and anchor closures, retail competition and e-commerce, inflation and unrecovered operating costs, property impairments, and geographic concentration. Joint-venture governance and restrictions on property-level cash flows may also limit access to liquidity and distributions.
- Unusual items include the receivership-related deconsolidations, a $3.3 million debt-extinguishment gain, and a $2.3 million litigation-settlement credit. The securities class action settlement became final in August 2023 and was funded by insurance, with no Company contribution. CBL recorded a $2.5 million liability for potential asbestos abatement; management said it was not expected to materially affect financial condition or results.
- The auditor issued unqualified opinions on the financial statements and internal control over financial reporting. The critical audit matter concerned management’s assessment of whether its intent to hold real estate assets had changed for impairment-testing purposes.
Most important facts for investors to verify
- Reconcile the differing 2024 maturity presentations, confirm extension conditions and monitor refinancing progress, especially for the 2025–2026 maturity concentration.
- Track the receivership and foreclosure outcomes for Alamance Crossing East and WestGate Mall, including any remaining obligations, guarantees or cash-flow effects.
- Assess whether occupancy, tenant sales, rental revenue and same-center NOI stabilize, and whether lease renewals can offset the reported negative rent spreads on renewals.
- Review variable-rate exposure, loan covenants, collateral cash controls and the availability of unrestricted liquidity as Treasury securities mature.
- Evaluate dividend sustainability against operating cash flow, debt service, capital spending and REIT distribution requirements; the board retains discretion over future dividends.
- Consider the effect of fresh-start accounting and non-GAAP adjustments when comparing earnings and FFO across periods.