CBL & Associates Properties, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. CBL is a retail-focused REIT operating malls, lifestyle and outlet centers, open-air centers, and other properties, primarily in the southeastern and midwestern United States. The company emerged from Chapter 11 on November 1, 2021 and adopted fresh-start accounting; accordingly, the 2021 combined results are non-GAAP and are not fully comparable with prior years.
Financial performance and position
| Metric | 2021 | Prior comparable period |
|---|---|---|
| Total revenue | $576.9 million | $575.9 million in 2020 |
| Net loss | $639.1 million | $335.5 million in 2020 |
| Same-center NOI | $434.1 million | $408.5 million in 2020; up 6.3% |
| Operating cash flow | $164.1 million | $133.4 million in 2020 |
| Pro rata consolidated and unconsolidated debt | $3.17 billion | $1.91 billion at December 31, 2020, on the reported basis; post-emergence debt structure is substantially different |
| Cash and short-term Treasury securities | Approximately $319.5 million available; includes $169.6 million cash and $150.0 million Treasury securities | Not directly comparable |
The 2021 combined figures sum the Predecessor period through October 31 and Successor period beginning November 1; they are management-presented, non-GAAP combined results, not pro forma GAAP results. A meaningful full-year margin comparison is not clearly provided. Reported FFO allocable to Operating Partnership common unitholders was a loss of $237.7 million versus income of $108.2 million in 2020; adjusted FFO was $349.8 million versus $140.8 million.
Retail operating indicators improved: portfolio in-line occupancy was 89.3% at year-end, compared with 87.5% a year earlier; same-center mall, lifestyle, and outlet sales per square foot were $454, up 15.5% from 2019. Sales in 2020 were not considered a reliable comparison because of pandemic closures.
Material changes and unusual items
- Chapter 11 restructuring eliminated more than $1.6 billion of debt and preferred obligations. The reorganized company issued an $883.7 million secured term loan, $455 million of senior secured notes (of which $60 million was redeemed in November), and $150 million of exchangeable secured notes. Existing equity was cancelled and replaced with new equity.
- Fresh-start accounting reset asset and liability values and makes post-emergence financial statements not directly comparable with historical statements. The company recorded $436.6 million of 2021 reorganization expense, including fresh-start adjustments, restructuring costs, and professional fees.
- The $639.1 million 2021 net loss also included $146.8 million of real-estate impairment charges and a $131.1 million acceleration of debt-discount accretion on past-due property loans. A $74.3 million gain on deconsolidation partly offset these items.
- Same-center NOI improved as collections, sales, traffic, percentage rents, and leasing recovered from pandemic disruption. The company reported rent deferrals of approximately $46.4 million since the pandemic began, with more than 96% subsequently collected; it granted $14.5 million of abatements in 2021.
Liquidity, debt, outlook, and risks
- Going concern: Management disclosed substantial doubt about the company’s ability to continue as a going concern. After approximately $0.2 billion of post-year-end extensions or waivers, $1.2 billion of property-level debt and related obligations remained maturing or callable within 12 months of financial-statement issuance, including $642 million of consolidated mortgage debt and $537 million related to unconsolidated affiliates, some guaranteed by CBL. Management stated it did not have sufficient liquidity to meet these obligations as due.
- Management plans to refinance or extend maturities; if unsuccessful, it may use available liquidity to repay certain loans or convey properties to lenders. The filing states these plans are probable of alleviating substantial doubt, but outcomes depend on lender negotiations and financing availability.
- Separately, approximately $408 million of debt at the company’s share was already past due at year-end. Certain properties had entered receivership or were in discussions with lenders over restructuring or foreclosure. Subsequent events included a Fayette Mall extension, Cross Creek Mall extension only through May 2022, and Greenbrier Mall’s placement in receivership and subsequent deconsolidation.
- Debt includes $880.1 million outstanding under the variable-rate secured term loan and $395 million of 10% senior secured notes at year-end. The $150 million exchangeable notes were converted into 10,982,795 common shares in February 2022, creating dilution. Approximately 32.8% of pro rata debt was variable-rate; management estimated a 0.5 percentage-point rate increase would reduce annual cash flows by about $5.1 million.
- No numerical earnings or operating guidance is provided. Management’s stated priorities are debt reduction, extending maturities, lowering borrowing costs, and transforming properties through redevelopment and a broader mix of retail and non-retail tenants.
- Key risks include tenant failures and anchor vacancies, e-commerce competition, pandemic effects, concentrated exposure to southeastern and midwestern markets, interest-rate and refinancing risk, property impairments, and possible limits on recovering operating expenses from tenants. Dividends have not been paid since 2019; future dividends are discretionary and subject to liquidity, debt restrictions, and REIT requirements.
- Management identified a material weakness in internal control over financial reporting due to insufficient accounting and reporting personnel. Controls and disclosure controls were deemed ineffective at December 31, 2021; remediation was ongoing. The auditor gave an unmodified opinion on the financial statements but did not audit internal-control effectiveness.
- A securities class action remained pending; the filing says the outcome cannot be predicted and damages sought were unspecified. Management did not expect current litigation matters, individually or collectively, to have a material adverse effect, based on information then available.
Important facts for investors to verify
- Current status and terms of the $1.2 billion near-term debt maturities, past-due loans, lender forbearances, receiverships, and any property conveyances.
- Actual unrestricted liquidity after Treasury maturities and reinvestments, debt service, and subsequent events; distinguish cash from restricted cash and securities.
- Progress in refinancing or extending debt and compliance with secured-loan covenants, including interest coverage, debt yield, and occupancy tests.
- Post-conversion share count and dilution from the 10,982,795 shares issued for the exchangeable notes, as well as equity incentive awards.
- Whether occupancy, rent collection, leasing spreads, and same-center NOI improvements persist, particularly amid anchor closures and upcoming lease expirations.
- Remediation and independent assessment of the disclosed material weakness, and developments in the securities litigation.