CBL Properties Reports Results for First Quarter 2021

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CHATTANOOGA, Tenn.–(BUSINESS WIRE)– CBL Properties (OTCMKTS: CBLAQ) announced results for the first quarter ended March 31, 2021. 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.

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(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 7 of this news release.

KEY TAKEAWAYS:

FFO, as adjusted, per diluted share, was $0.34 for the first quarter 2021, compared with $0.26 per share for the first quarter 2020. The increase in FFO, as adjusted, per diluted share, as compared with the prior year period is principally a result of the decline in net interest expense of $0.11 per share during the quarter, primarily due to the post-petition interest expense payments that are not required to be made on the senior unsecured notes and secured credit facility subsequent to the Company’s bankruptcy filing on November 1, 2020.

Other major variances in the first quarter 2021 FFO, as adjusted, per diluted share, compared with the prior year period included $0.13 per share of lower property NOI, which included $0.04 per share related to the estimate for uncollectable revenues, rent abatements and write-offs for past due rents related to tenants that are in bankruptcy or struggling financially. G&A expense during the first quarter 2021 was approximately $0.03 lower, due to cost saving initiatives put in place earlier in 2020.

Sales for the first quarter 2021 increased 12.5% as compared with the first quarter 2019.

Total Portfolio same-center NOI declined 17.2% for the three months ended March 31, 2021.

Portfolio occupancy as of March 31, 2021, was 85.4%, representing a 410-basis point decline compared with 89.5% as of March 31, 2020. Same-center mall occupancy was 83.2% as of March 31, 2021, representing a 480-basis point decline compared with 88.0% as of March 31, 2020. An estimated 390-basis points of the decline in total mall portfolio occupancy was due to store closures related to tenants in bankruptcy.

“The strong rebound in the economy is benefiting our properties, with first quarter sales across the CBL portfolio gaining significantly over sales for the first quarter 2019,” said Stephen Lebovitz, Chief Executive Officer. “Customer traffic is returning to pre-pandemic levels and spending levels were certainly helped by stimulus checks and tax refunds. Leasing activity is picking up as sales and traffic levels improve. Rent collections have increased to 89% of gross rents and accounts receivable are decreasing as well.

“We will celebrate two major non-retail openings in our portfolio this quarter with the HCA medical office building opening at Pearland Town Center in Houston and a 135-room Aloft hotel opening at Hamilton Place in Chattanooga. Similarly, we have a deep opportunity set across our portfolio to create value and density at our existing centers by redeveloping former anchor buildings and utilizing parking lots and unimproved land. This quarter we will start construction on the redevelopment of a former department store parcel at Kirkwood Mall in Bismarck, ND where we will add restaurants and service uses on pads, driving additional traffic and creating value to our portfolio.

“We are also making major progress on our in-court restructuring, filing the Amended Plan and related disclosure statement in mid-April. Through this plan, we will not only provide our company with a more flexible balance sheet and improved cash flow, but importantly it offers all stakeholders, including both common and preferred shareholders, a favorable recovery. The court process has not slowed down the rebound in our business, and we are working diligently towards our planned emergence later this year. We are excited for the fresh start this will mark and for CBL’s bright future.”

FINANCIAL RESULTS

Net loss attributable to common shareholders for the three months ended March 31, 2021 was $26.8 million, or a loss of $0.14 per diluted share, compared with net loss of $133.9 million, or a loss of $0.75 per diluted share, for the three months ended March 31, 2020. Net loss for the first quarter 2021 was impacted by the deconsolidation of Park Plaza and Asheville Mall, which resulted in a $55.1 million gain on deconsolidation. Net loss for the first quarter 2021 was also impacted by an aggregate $22.9 million in reorganization items and a $57.2 million loss on impairment of real estate to write down the carrying value of Old Hickory Mall, Stroud Mall and Eastland Mall to their estimated fair values. This compares to a $133.6 million loss on impairment of real estate included in net loss for the first quarter 2020.

FFO, as adjusted, allocable to common shareholders, for the three months ended March 31, 2021, was $66.9 million, or $0.34 per diluted share, compared with $45.9 million, or $0.26 per diluted share, for the three months ended March 31, 2020. FFO, as adjusted allocable to the Operating Partnership common unitholders, for the three months ended March 31, 2021, was $68.7 million compared with $51.6 million for the three months ended March 31, 2020.

Percentage change in same-center Net Operating Income (“NOI”) (1):

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(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.

Major variances impacting same-center NOI for the three months ended March 31, 2021, include:

Same-center NOI declined $20.8 million, due to a $24.1 million decrease in revenues offset by a $3.3 million decline in operating expenses. Rental revenues declined $23.7 million, including a $17.7 million decline in minimum and other rents. Rental revenues also include a $7.1 million decline in tenant reimbursements (net of any abatements), partially offset by a $1.1 million improvement in percentage rents. Rental revenues for the three months ended March 31, 2021, included a total of $10.7 million related to uncollectable revenues and abatements compared with a total of $2.7 million in the prior year period. Property operating expenses declined $2.8 million compared with the prior year. Maintenance and repair expenses were flat. The improvement in property operating expense is primarily due to the benefit of the Company’s comprehensive programs to reduce operating expenses that were put in place in April 2020 to mitigate the impact of the COVID-19 pandemic. Real estate tax expenses declined by $0.9 million.

COVID-19 RENT COLLECTION UPDATE

The Company has collected approximately 88% of related gross rents for the period April 2020 through April 2021. As of May 2021, CBL had deferred approximately $38.5 million in rents and had collected approximately 89% of deferred rents billed to-date.

LIQUIDITY

As of March 31, 2021, on a consolidated basis, the company had $317.4 million available in unrestricted cash and marketable securities.

PORTFOLIO OPERATIONAL RESULTS

Occupancy(1):

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No Solicitation or Offer

Any new securities to be issued pursuant to the restructuring transactions may not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws but may be issued pursuant to an exemption from such registration provided in the U.S. bankruptcy code. Such new securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. This press release does not constitute an offer to sell or buy, nor the solicitation of an offer to sell or buy, any securities referred to herein, nor is this press release a solicitation of consents to or votes to accept any chapter 11 plan. Any solicitation or offer will only be made pursuant to a confidential offering memorandum and disclosure statement and only to such persons and in such jurisdictions as is permitted under applicable law.

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