CBL & Associates Properties, Inc. — FY 2022 Form 10-K
Business context and reporting period. CBL is a REIT that owns, leases, manages and redevelops malls, outlet and lifestyle centers, open-air centers and other properties, primarily in the southeastern and midwestern United States. This filing covers the fiscal year ended December 31, 2022. CBL emerged from Chapter 11 on November 1, 2021 and adopted fresh-start accounting; therefore, 2022 Successor results are not directly comparable with Predecessor results before emergence.
Key financial and operating metrics
| Metric | FY 2022 |
|---|---|
| Total revenue | $563.0 million, including $542.2 million of rental revenue |
| Net loss | $99.5 million; net loss attributable to common shareholders was $96.0 million, or $3.20 per diluted share |
| Operating cash flow | $208.2 million |
| FFO / adjusted FFO | $178.6 million / $243.5 million, respectively; both are non-GAAP measures |
| Same-center NOI | $443.4 million, up 1.0% from the comparable 2021 pool |
| Occupancy and sales | Total portfolio occupancy was 91.0%, versus 89.3% in 2021. Same-center mall, lifestyle and outlet tenant sales per square foot were $435, versus $447 |
| Assets, liabilities and equity | Total assets of $2.678 billion, liabilities of $2.311 billion and total equity of $367.1 million at year-end |
| Debt | CBL’s pro-rata consolidated and unconsolidated debt was approximately $2.744 billion, excluding debt discounts and deferred financing costs; weighted-average rate was 5.76%. Variable-rate debt was $1.124 billion, or 41.0% of pro-rata debt |
| Liquidity | $337.1 million of unrestricted cash and U.S. Treasury securities, including $44.7 million cash and $292.4 million in Treasuries. Separately, $97.2 million was restricted cash |
| Interest expense | $217.3 million; included $117.3 million of debt-discount accretion. Cash interest paid, net of amounts capitalized, was $124.1 million |
Changes versus the prior comparable period
- Same-center NOI increased 1.0%, reflecting $13.2 million of higher revenue, partly offset by $8.7 million of higher property operating costs. Management cited increased occupancy and percentage rent, alongside higher utility costs and wage inflation.
- Portfolio occupancy improved overall, but reported same-center sales per square foot declined from $447 to $435. New and renewal leases commencing in 2022 had an average rent spread of negative 6.8% versus expiring rents; new leases were positive, while renewals were negative.
- Revenue and net-loss comparisons with 2021 are distorted by the two-month Successor period and ten-month Predecessor period, as well as fresh-start accounting, property deconsolidations and changes in debt and interest recognition. The filing does not present a directly comparable full-year 2021 Successor income statement.
- Interest expense reflects the post-bankruptcy capital structure, higher market rates and fresh-start debt discounts. The company also reported a $36.3 million gain on Greenbrier Mall deconsolidation and a $7.3 million gain on extinguishment of debt.
Outlook, risks and unusual items
- Outlook: Management expects its redevelopment and tenant-diversification strategy to help stabilize the portfolio and revenues, but provided no formal numerical earnings or operating guidance. Its balance-sheet priorities include reducing debt, extending maturities and lowering borrowing costs.
- Refinancing and maturity risk: The company reported $553.9 million of property-level debt and related obligations, including unconsolidated debt, maturing or callable within 12 months of the financial-statement issuance. It planned to refinance or extend $483.5 million and was discussing foreclosure actions for $70.4 million. Three loans totaling $151.4 million at CBL’s share had matured before year-end and remained outstanding; the company was in discussions with lenders. Some maturity totals assume extension options and should not be confused with original contractual maturities.
- Debt and rates: The secured term loan and other variable-rate borrowings expose cash flow to rate increases. Management estimated that a 0.5 percentage-point rate increase would reduce annual cash flow by about $5.6 million. The secured term loan has financial and property-level covenants; the company stated it believed it was in compliance at year-end.
- Cash distributions: CBL paid regular dividends of $0.25 per share in each of the second, third and fourth quarters of 2022. A $2.20-per-share special cash dividend was paid in January 2023 to meet REIT distribution requirements. A $0.375-per-share first-quarter 2023 dividend was subsequently declared. Future dividends remain discretionary and subject to liquidity, debt restrictions and other factors.
- Portfolio and business risks: Risks include retail tenant bankruptcies and store closures, anchor vacancies and co-tenancy clauses, competition from e-commerce, inflation and operating-cost increases, geographic concentration, refinancing access, property impairments, environmental and climate exposure, cyber incidents, and possible future public-health disruptions.
- Litigation and contingencies: After year-end mediation, parties reached an agreement in principle to resolve a securities class action, subject to documentation and court approval. The settlement was expected to be funded by D&O insurance, with no company contribution expected, but completion was not assured. A separate Delaware shareholder action was voluntarily dismissed in February 2023. CBL disclosed a $2.6 million liability for potential asbestos abatement.
- Unusual accounting and capital events: Fresh-start accounting reset asset and liability values and makes historical comparisons difficult. In February 2022, $150 million of exchangeable notes were settled through issuance of 10,982,795 common shares. The company redeemed its $395 million of senior secured notes during 2022, using proceeds from new financing. It sold eleven real estate assets for $13.4 million in gross proceeds at its share.
Important facts for investors to verify
- Current status and outcomes of the near-term maturities, lender negotiations and potential foreclosure actions, including the loans already past maturity.
- How much of reported liquidity is available for general corporate use after accounting for restricted cash, lender-controlled cash and Treasury maturities or redemptions.
- Interest-rate exposure, refinancing terms and compliance with secured-loan covenants as rates and debt maturities evolve.
- Whether occupancy gains translate into improved sales, rent collections and leasing economics, particularly given lower reported sales per square foot and negative renewal spreads.
- Completion and insurance coverage of the securities-litigation settlement, and any resulting costs or liabilities.
- The sustainability of dividend payments and adjusted FFO; adjusted FFO is non-GAAP and includes significant adjustments, including debt-discount accretion and other items.