Financial Performance - Total revenues for the three months ended March 31, 2021, were $133.2 million, a decrease of 20.5% compared to $167.6 million for the same period in 2020[21]. - Net loss for the three months ended March 31, 2021, was $28.3 million, compared to a net loss of $139.3 million for the same period in 2020, representing an improvement of 79.7%[21]. - Rental revenues decreased to $128.2 million for the three months ended March 31, 2021, down 20.5% from $161.2 million in the same period of 2020[21]. - Total expenses for the three months ended March 31, 2021, were $166.2 million, a reduction of 36.7% compared to $262.9 million for the same period in 2020[21]. - The company reported a comprehensive loss of $28.3 million for the three months ended March 31, 2021, compared to a comprehensive loss of $139.3 million for the same period in 2020[24]. - Basic and diluted net loss attributable to common shareholders was $0.14 per share for the three months ended March 31, 2021, compared to a loss of $0.75 per share for the same period in 2020[21]. - The net loss for the three months ended March 31, 2021, was $28,280 compared to a net loss of $139,294 for the same period in 2020[32]. - The company reported a net loss of $28,280,000 for the three months ended March 31, 2021, compared to a net loss of $139,294,000 for the same period in 2020, indicating a significant reduction in losses[49]. - The net loss attributable to common shareholders for the three months ended March 31, 2021, was $26.8 million, compared to a net loss of $133.9 million in the prior year[148]. Cash and Liquidity - Cash and cash equivalents increased to $84.7 million as of March 31, 2021, compared to $61.8 million as of December 31, 2020[19]. - Cash and cash equivalents at the end of the period on March 31, 2021, were $168,167, compared to $185,126 at the end of the previous year[32]. - Cash and cash equivalents increased to $84.646 million as of March 31, 2021, up from $61.772 million as of December 31, 2020[35]. - Cash paid for interest, net of amounts capitalized, was $14,055 for the three months ended March 31, 2021[32]. - Cash used in investing activities decreased significantly from $172.6 million in Q1 2020 to $2.6 million in Q1 2021[179]. - The company had $84.7 million in unrestricted cash and $232.8 million in U.S. Treasury securities[175]. Debt and Liabilities - Mortgage and other indebtedness, net, decreased to $1.0 billion as of March 31, 2021, from $1.2 billion as of December 31, 2020[19]. - Total liabilities subject to compromise were $2,551,354 as of March 31, 2021[112]. - The company has a senior secured credit facility of $1,185,000, which includes a revolving line of credit and a term loan[111]. - The total mortgage and other indebtedness amounted to $3,529,839, with a weighted-average interest rate of 7.25%[111]. - The company entered into a restructuring support agreement with secured credit facility lenders and senior unsecured noteholders in March 2021[111]. - The company has not made any interest payments on its senior unsecured notes or secured credit facility since the Chapter 11 Cases commenced on November 1, 2020[67]. - The company believes there is substantial doubt about its ability to continue as a going concern within one year after the financial statements are issued[62]. Impairment and Asset Valuation - The company incurred a loss on impairment of $57,182 during the three months ended March 31, 2021[32]. - The company recorded impairment charges of $57,182 for the three months ended March 31, 2021, related to three malls[74]. - The company recognized a $57.182 million loss on impairment of real estate for the three months ended March 31, 2021, compared to a $133.644 million loss in the same period of 2020[166]. - The fair value of the Eastland Mall was determined to be $10,700, resulting in an impairment loss of $13,243 due to a decline in cash flows[88]. - The fair value of the Old Hickory Mall was assessed at $12,400, leading to an impairment loss of $20,149[88]. - The fair value of the Stroud Mall was estimated at $15,400, with an impairment loss of $23,790 recognized[88]. Operational Highlights - The company has been impacted by the COVID-19 pandemic, which has adversely affected its revenues, results of operations, and cash flows throughout 2021, with ongoing uncertainty regarding future impacts[56]. - The company is focusing on transforming properties into suburban town centers and diversifying tenant mix to stabilize portfolio and revenues[148]. - Same-center sales in the mall portfolio for the first two months of 2021 were down only 3% compared to the same period in 2020, while sales increased over 12% compared to Q1 2019[146]. - The total portfolio occupancy rate as of March 31, 2021, was 85.4%, down from 89.5% as of March 31, 2020[170]. - New leases signed in the operating portfolio decreased from 278,366 square feet in 2020 to 144,197 square feet in 2021, a decline of 48.1%[172]. Restructuring and Bankruptcy - The Company entered into a Restructuring Support Agreement with Consenting Noteholders representing over 69% of the aggregate principal amount of the Notes, aiming to eliminate more than $1,681,900 in debt and preferred obligations[59]. - The Proposed Plan includes a significant reduction in interest expense and offers Consenting Noteholders $95,000 in cash, $555,000 in new senior secured notes, and 89% in common equity of the newly reorganized Company[59]. - The company is currently operating as debtors-in-possession under Chapter 11, allowing it to continue business operations while restructuring[149]. - The ongoing litigation with the Bank Lenders is stayed and will be dismissed upon the Bankruptcy Court's confirmation of the Proposed Plan[59]. - The company anticipates restructuring its unsecured debt maturities through the Chapter 11 bankruptcy process[176]. Shareholder Information - The Company’s common stock was suspended from trading on the NYSE and began trading on the OTC Markets under new symbols due to low trading price levels[63]. - The total market capitalization as of March 31, 2021, was based on a common stock price of $0.13 and preferred stock prices of $250.00 for Series D and E[191]. - The company has 10,400,000 shares available for issuance under the 2012 Stock Incentive Plan, which was approved by shareholders[134]. Internal Controls and Governance - The company experienced a material weakness in internal control over financial reporting due to insufficient personnel to meet accounting and financial reporting requirements[211]. - The Company believes that the condensed consolidated financial statements fairly present its financial position despite identified material weaknesses[212]. - The Company plans to remediate the material weakness by hiring additional personnel and may utilize outside advisors on a short-term basis[213].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020 Or ☐ 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 & ...

Table of Contents 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 SEPTEMBER 30, 2020 or ☐ 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 & ...

[Explanatory Note](index=2&type=section&id=Explanatory%20Note) Combined Form 10-Q filings for CBL & Associates Properties, Inc. and its Operating Partnership reflect integrated business operations - CBL & Associates Properties, Inc. is a REIT that conducts nearly all its business through the CBL & Associates Limited Partnership, holding a **95.2% combined interest** as of June 30, 2020[9](index=9&type=chunk)[10](index=10&type=chunk) - The report combines the filings of the Company and the Operating Partnership to streamline disclosure and reflect how the business is managed, while providing separate financial statements to clarify differences[11](index=11&type=chunk)[12](index=12&type=chunk) - The filing was delayed due to the departure of a financial reporting staff member and developments related to the Company's indebtedness[8](index=8&type=chunk) - In January 2019, the Operating Partnership's wholly-owned subsidiaries (Combined Guarantor Subsidiaries) guaranteed its senior secured credit facility and senior unsecured notes, with condensed combined financial statements provided as an exhibit[15](index=15&type=chunk)[16](index=16&type=chunk) [PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=ITEM%201%3A%20Financial%20Statements) Financial statements show significant net losses, declining revenues, and impairment charges, with notes detailing debt defaults and going concern issues for both entities [CBL & Associates Properties, Inc. Financial Statements](index=5&type=section&id=CBL%20%26%20Associates%20Properties%2C%20Inc.%20Financial%20Statements) CBL & Associates Properties, Inc. reported a **$212.1 million net loss** for H1 2020, with declining revenues, decreased equity, and reduced operating cash flows CBL & Associates Properties, Inc. - Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$4,655,159** | **$4,622,346** | | Net investment in real estate assets | $3,835,734 | $4,061,996 | | Cash and cash equivalents | $123,388 | $32,816 | | **Total Liabilities** | **$4,001,181** | **$3,758,321** | | Mortgage and other indebtedness, net | $3,774,034 | $3,527,015 | | **Total Equity** | **$653,453** | **$861,865** | CBL & Associates Properties, Inc. - Condensed Consolidated Statement of Operations Data (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$124,211** | **$193,377** | **$291,785** | **$391,407** | | Rental revenues | $120,222 | $185,393 | $281,395 | $376,373 | | **Net Loss** | **($72,793)** | **($29,688)** | **($212,087)** | **($76,497)** | | **Net Loss Attributable to Common Shareholders** | **($81,452)** | **($35,400)** | **($215,348)** | **($85,599)** | | **Net Loss Per Share (Basic & Diluted)** | **($0.42)** | **($0.20)** | **($1.16)** | **($0.49)** | CBL & Associates Properties, Inc. - Condensed Consolidated Cash Flow Data (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $38,370 | $126,032 | | Net cash provided by (used in) investing activities | ($191,379) | $27,104 | | Net cash provided by (used in) financing activities | $244,079 | ($165,132) | | **Net Change in Cash** | **$91,070** | **($11,996)** | [CBL & Associates Limited Partnership Financial Statements](index=11&type=section&id=CBL%20%26%20Associates%20Limited%20Partnership%20Financial%20Statements) The Operating Partnership's financial results mirrored the parent company, reporting a **$212.1 million net loss** for H1 2020, with declining revenues and decreased partners' capital CBL & Associates Limited Partnership - Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$4,655,512** | **$4,622,706** | | Net investment in real estate assets | $3,835,734 | $4,061,996 | | **Total Liabilities** | **$4,001,252** | **$3,758,392** | | Mortgage and other indebtedness, net | $3,774,034 | $3,527,015 | | **Total Capital** | **$653,735** | **$862,154** | CBL & Associates Limited Partnership - Condensed Consolidated Statement of Operations Data (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$124,211** | **$193,377** | **$291,785** | **$391,407** | | **Net Loss** | **($72,793)** | **($29,688)** | **($212,087)** | **($76,497)** | | **Net Loss Attributable to Common Unitholders** | **($83,529)** | **($40,854)** | **($233,839)** | **($98,811)** | | **Net Loss Per Unit (Basic & Diluted)** | **($0.41)** | **($0.20)** | **($1.16)** | **($0.49)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail substantial doubt about going concern, significant impairment charges, debt defaults, and ongoing litigation, all exacerbated by COVID-19 impacts - Management has concluded there is **substantial doubt** about the Company's ability to continue as a going concern within one year, citing the impact of the COVID-19 pandemic, ongoing credit market weakness, and defaults on restrictive debt covenants[70](index=70&type=chunk) - The company received a notice from the NYSE on February 5, 2020, for non-compliance with the minimum **$1.00 average closing share price** requirement, with a deadline of October 14, 2020, to regain compliance[67](index=67&type=chunk) - Due to the COVID-19 pandemic's impact on tenants, the company recorded **$40.7 million** in provisions for uncollectible revenues for the six months ended June 30, 2020, and elected to use FASB relief for accounting for rent deferrals and abatements[76](index=76&type=chunk)[73](index=73&type=chunk)[302](index=302&type=chunk) Impairment Charges Recognized (Six Months Ended June 30, 2020) | Property | Location | Loss on Impairment (in thousands) | Fair Value (in thousands) | | :--- | :--- | :--- | :--- | | Burnsville Center | Burnsville, MN | $26,562 | $47,300 | | Monroeville Mall | Pittsburgh, PA | $107,082 | $67,000 | | Asheville Mall | Asheville, NC | $13,274 | $52,600 | | **Total** | | **$146,918** | **$166,900** | - The company elected not to make interest payments on its 2023 and 2026 senior notes in June 2020, leading to an "**event of default**," though payments were ultimately made on August 5, 2020, following forbearance agreements[127](index=127&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - The company received multiple notices of default from the administrative agent of its secured credit facility for failure to comply with restrictive covenants, including the liquidity covenant, leading to the assertion of a higher base interest rate and a post-default rate[137](index=137&type=chunk)[140](index=140&type=chunk) - As of June 30, 2020, six non-recourse loans secured by malls with a total balance of **$328.8 million** were in default[142](index=142&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=ITEM%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses severe COVID-19 impacts, leading to property closures, increased uncollectible rent, a **$212.1 million net loss**, and debt restructuring efforts - The COVID-19 pandemic forced the temporary closure of nearly the entire property portfolio, leading to a major increase in uncollectible revenue estimates and numerous requests for rent deferrals and abatements[201](index=201&type=chunk) - The company has engaged advisors to explore alternatives for reducing leverage and extending debt maturities, which may result in a comprehensive reorganization[204](index=204&type=chunk) - As of early August 2020, the overall rent collection rate for April through July was **over 54%**, with the company estimating it will defer **$17.0 million** in rent for Q2 2020 based on executed or active negotiations[201](index=201&type=chunk)[240](index=240&type=chunk) Comparison of Results (in thousands) | Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | **Total Revenues** | $291,785 | $391,407 | | **Net Loss** | ($212,087) | ($76,497) | | **Same-Center NOI** | $212,348 | $266,615 | | **FFO, as adjusted** | $56,509 | $129,062 | - Portfolio occupancy declined to **88.1%** as of June 30, 2020, from 90.2% a year prior, with same-center mall occupancy falling to **86.6%** from 88.3%[247](index=247&type=chunk) - The company implemented significant cost-saving measures, including salary reductions, furloughs, and a reduction of **$60.0 million to $80.0 million** in planned 2020 capital expenditures[255](index=255&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=ITEM%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its variable-rate debt, impacting annual cash flows by approximately **$6.6 million** for a 0.5% change - A 0.5% increase or decrease in interest rates on variable-rate debt would decrease or increase annual cash flows by approximately **$6.6 million**[328](index=328&type=chunk) - A 0.5% increase in interest rates would decrease the fair value of the company's total debt by approximately **$28.4 million**, while a 0.5% decrease would increase its fair value by **$36.1 million**[329](index=329&type=chunk) [Controls and Procedures](index=70&type=section&id=ITEM%204%3A%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of June 30, 2020, due to a material weakness from insufficient financial reporting personnel - Management concluded that the company's disclosure controls and procedures were **not effective** as of June 30, 2020[331](index=331&type=chunk) - A material weakness was identified in internal control over financial reporting due to **not maintaining a sufficient complement of personnel** for accounting and financial reporting requirements after recent turnover[332](index=332&type=chunk)[333](index=333&type=chunk) - The remediation plan involves hiring additional personnel and potentially engaging outside advisors to strengthen financial reporting capabilities[338](index=338&type=chunk) [PART II – OTHER INFORMATION](index=72&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=72&type=section&id=ITEM%201%3A%20Legal%20Proceedings) The company is involved in significant legal matters, including a **$90.0 million** class-action settlement and ongoing securities and shareholder derivative lawsuits - The company is managing the payout of a **$90.0 million** settlement for the Wave Lengths class action lawsuit, which involves cash payments and rent credits to tenants, with the SEC and DOJ investigating related matters[341](index=341&type=chunk) - The company and its officers/directors are defendants in a consolidated securities class-action lawsuit and nine shareholder derivative lawsuits alleging false statements and breach of fiduciary duties, with an uncertain outcome[342](index=342&type=chunk)[344](index=344&type=chunk) [Risk Factors](index=73&type=section&id=ITEM%201A.%20Risk%20Factors) Key risks include severe COVID-19 impacts, substantial doubt about going concern, material internal control weakness, and potential NYSE delisting - The COVID-19 pandemic presents a material uncertainty and risk to the company's financial condition, results of operations, and cash flows, with impacts including tenant closures, rent collection issues, and difficulty accessing capital[345](index=345&type=chunk)[347](index=347&type=chunk) - There is **substantial doubt** about the company's ability to continue as a going concern, stemming from debt defaults, the impact of COVID-19, and ongoing weakness in credit markets[349](index=349&type=chunk) - The identified material weakness in internal control over financial reporting could result in material misstatements of financial statements and cause a **loss of investor confidence**[350](index=350&type=chunk) - The company's common stock is at risk of being delisted from the NYSE for failing to maintain the minimum average share price of **$1.00**, which could reduce liquidity and market price[352](index=352&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=ITEM%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company inadvertently issued **6,134 unregistered shares** through its DRIP between March and May 2020 due to Form S-3 ineligibility - The company inadvertently issued **6,134 unregistered shares** of common stock through its DRIP between March and May 2020, after losing Form S-3 eligibility due to preferred stock dividend arrearages[354](index=354&type=chunk) [Defaults Upon Senior Securities](index=77&type=section&id=ITEM%203%3A%20Defaults%20Upon%20Senior%20Securities) The company defaulted on senior unsecured notes and its secured credit facility, with significant dividend and distribution arrearages on preferred stock and special common units - The company defaulted on interest payments for its senior unsecured notes in June 2020 and has received notices of default for breaching covenants on its senior secured credit facility[355](index=355&type=chunk) Cumulative Unpaid Dividends and Distributions as of June 30, 2020 (in millions) | Security | Cumulative Amount Unpaid | | :--- | :--- | | Preferred Stock (Series D & E) | $33.7 | | Special Common Units (Series K, S, L) | $6.8 | [Exhibits](index=78&type=section&id=ITEM%206%3A%20Exhibits) This section lists exhibits filed with the Form 10-Q, including forbearance agreements, amendments, and executive certifications - Exhibits filed with the report include multiple forbearance agreements and their amendments related to the company's debt, as well as required executive certifications[362](index=362&type=chunk)

Table of Contents 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 or ☐ 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 PARTNERSH ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 Or ☐ 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, I ...

Financial Data and Key Metrics Changes - For 2019, the company reported adjusted FFO of $1.36 per share, down from $1.73 in 2018, reflecting a decline in property level NOI and dilution from asset sales [41][42] - Same-center NOI decreased by 6.5% for the year, with a 9.1% decline in the fourth quarter due to bankruptcies and store closures [42][43] - Fourth quarter adjusted FFO per share was $0.37, a decrease of $0.08 compared to $0.45 per share for the same quarter in 2018 [41] Business Line Data and Key Metrics Changes - The company completed nearly 3.9 million square feet of total leasing activity in 2019, including 1.4 million square feet of new leases and 2.5 million square feet of renewals [21] - On a comparable same-space basis, new and renewal leases had an average gross rent decline of 8%, with renewal leases signed at an average of 11.5% lower than expiring rents [22] - Same-center mall occupancy improved by 110 basis points sequentially to 89.8%, but declined by 210 basis points year-over-year [23] Market Data and Key Metrics Changes - Mall sales increased by 3% in the fourth quarter, bringing the trailing 12-month sales to $387 per square foot compared to $379 in the prior year [25] - The company expects an additional 6 to 7 store closures over the next three years, but none are anticipated in 2020 [12] Company Strategy and Development Direction - The company is transitioning its mall business by replacing traditional retail spaces with dynamic uses such as educational facilities, fitness centers, and restaurants [6][7] - The strategy includes diversifying revenue streams and stabilizing income through redevelopment efforts, with a focus on non-apparel tenants [13][14] - The company has suspended common and preferred dividends to maintain cash flow for redevelopment and leasing programs [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the retail environment but expressed confidence in their strategy and progress made in 2019 [9][10] - The company anticipates that the changes being implemented will yield positive results in the near future [20][49] - Guidance for 2020 includes an adjusted FFO range of $1.03 to $1.13 per share, assuming a same-center NOI decline of 8% to 9.5% [45] Other Important Information - The company has reduced its total pro rata share of debt to $4.25 billion, a decrease of $409 million from December 2018 [37] - An impairment of $37.4 million was recognized on Park Plaza Mall due to declining net operating income [43][44] Q&A Session Summary Question: Will the shift away from apparel tenants lead to increased sales volume from new tenants? - Management confirmed that new users are expected to generate significantly more sales and traffic compared to previous tenants [50] Question: How does the leasing environment in 2020 compare to 2019? - Management indicated that while there are positive sales trends, challenges remain for many retailers, making the environment similar to the previous year [52] Question: What is the company's approach to capital allocation and debt management? - Management emphasized a focus on improving the balance sheet, including paying off high-yield loans and exploring refinancing options [55][60] Question: How is the company addressing debt covenants in light of declining NOI? - Management stated that they are actively working to reduce debt levels to improve coverage ratios [67] Question: What flexibility does the company have regarding preferred shares? - Management noted that while preferred shares are trading at a discount, they are not the immediate focus compared to secured debt [88] Question: How does the company plan to manage its unsecured debt? - Management is primarily focused on secured maturities but is considering options for unsecured debt as well [70]

[Explanatory Note](index=4&type=section&id=Explanatory%20Note) This report combines the quarterly filings of CBL & Associates Properties, Inc. and its Operating Partnership, reflecting their integrated business - The report is a combined Form 10-Q for **CBL & Associates Properties, Inc.** and **CBL & Associates Limited Partnership**[12](index=12&type=chunk) - The Company, a REIT, held an **86.6% interest** in the Operating Partnership as of September 30, 2019, which is its primary asset[12](index=12&type=chunk) - In January 2019, the Operating Partnership secured a new **$1.185 billion** senior secured credit facility, guaranteed by 36 wholly owned subsidiaries[13](index=13&type=chunk) [PART I – FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for CBL & Associates Properties, Inc. and its Operating Partnership [CBL & Associates Properties, Inc. Condensed Consolidated Financial Statements](index=7&type=section&id=CBL%20%26%20Associates%20Properties%2C%20Inc.%20Condensed%20Consolidated%20Financial%20Statements) CBL & Associates Properties, Inc. - Key Financial Data (in thousands) | Metric | Sept 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Balance Sheet** | | | | Total Assets | $4,769,918 | $5,340,853 | | Total Liabilities | $3,959,271 | $4,305,113 | | Total Shareholders' Equity | $772,370 | $964,137 | | **Operations (Nine Months Ended)** | **Sept 30, 2019** | **Sept 30, 2018** | | Total Revenues | $578,658 | $641,676 | | Net Loss | $(168,531) | $(33,608) | | Net Loss Attributable to Common Shareholders | $(175,715) | $(57,930) | | Diluted EPS | $(1.01) | $(0.34) | - For the nine months ended September 30, 2019, net cash provided by operating activities was **$225,200 thousand**, net cash provided by investing activities **$55,900 thousand**, and net cash used in financing activities **$275,400 thousand**[35](index=35&type=chunk)[40](index=40&type=chunk) [CBL & Associates Limited Partnership Condensed Consolidated Financial Statements](index=16&type=section&id=CBL%20%26%20Associates%20Limited%20Partnership%20Condensed%20Consolidated%20Financial%20Statements) CBL & Associates Limited Partnership - Key Financial Data (in thousands) | Metric | Sept 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Balance Sheet** | | | | Total Assets | $4,770,279 | $5,341,217 | | Total Liabilities | $3,959,342 | $4,305,184 | | Total Partners' Capital | $800,939 | $1,020,347 | | **Operations (Nine Months Ended)** | **Sept 30, 2019** | **Sept 30, 2018** | | Total Revenues | $578,658 | $641,676 | | Net Loss | $(168,531) | $(33,608) | | Net Loss Attributable to Common Unitholders | $(202,831) | $(66,908) | | Diluted EPU | $(1.01) | $(0.34) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=24&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - As of September 30, 2019, the Operating Partnership owned interests in **98 properties**, including 63 malls, 23 associated centers, and 12 other properties[70](index=70&type=chunk) - The Company adopted the new lease accounting standard (ASC 842) on January 1, 2019, changing presentation of rental revenues and recognition of right-of-use (ROU) assets and lease liabilities[79](index=79&type=chunk)[97](index=97&type=chunk) - For the nine months ended September 30, 2019, the Company recognized impairment losses on real estate totaling **$202,100 thousand** related to five malls and one community center, primarily due to declines in cash flows[122](index=122&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - In January 2019, the Company transferred title of Acadiana Mall and sold Cary Towne Center, resulting in the extinguishment of **$163,500 thousand** in non-recourse debt and a recognized gain of **$71,700 thousand**[134](index=134&type=chunk)[176](index=176&type=chunk) - In April 2019, the Company settled a class-action lawsuit, establishing a common fund valued at **$90,000 thousand**. An initial expense of **$88,200 thousand** was recorded in Q1 2019, later reduced by **$22,700 thousand**[194](index=194&type=chunk)[196](index=196&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting a net loss from store closures, impairments, and litigation, partially offset by debt extinguishment gains [Results of Operations](index=58&type=section&id=Results%20of%20Operations) Revenue and Expense Comparison (in thousands) | (Three Months Ended) | Sept 30, 2019 | Sept 30, 2018 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $187,251 | $206,878 | $(19,627) | | Total Operating Expenses | $(245,938) | $(163,546) | $(82,392) | | **(Nine Months Ended)** | **Sept 30, 2019** | **Sept 30, 2018** | **Change** | | Total Revenues | $578,658 | $641,676 | $(63,018) | | Total Operating Expenses | $(689,912) | $(540,934) | $(148,978) | - Revenue declines were primarily driven by store closures and rent concessions for tenants, including those who declared bankruptcy in 2018 and 2019[243](index=243&type=chunk)[253](index=253&type=chunk) - Same-center NOI (a non-GAAP measure) decreased **5.9%** for the third quarter and **5.5%** for the nine months ended September 30, 2019, compared to the prior-year periods, mainly due to lower rental revenues[272](index=272&type=chunk)[273](index=273&type=chunk) - Total portfolio occupancy was **90.5%** as of September 30, 2019, down from **92.0%** a year prior. Bankruptcy-related store closures impacted Q3 occupancy by approximately **409 basis points**[278](index=278&type=chunk)[279](index=279&type=chunk) - For stabilized malls, leasing spreads on new leases for the nine months ended September 30, 2019, showed an average rent increase of **9.3%**, while renewal leases saw an average decrease of **9.6%**[281](index=281&type=chunk) [Liquidity and Capital Resources](index=66&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2019, the company had **$380,200 thousand** of availability on its secured credit facility and **$34,600 thousand** in unrestricted cash[286](index=286&type=chunk) - In January 2019, the company replaced its unsecured bank facilities with a new **$1.185 billion** senior secured credit facility, comprising a $685 million line of credit and a $500 million term loan, maturing in July 2023[288](index=288&type=chunk) - Due to the class action settlement, no common stock dividends were paid for the third and fourth quarters of 2019. The settlement does not restrict dividends in 2020 or beyond[292](index=292&type=chunk)[316](index=316&type=chunk) Pro Rata Share of Debt (in thousands) | Debt Type | Sept 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Total Fixed-Rate Debt | $3,351,645 | $3,603,420 | | Total Variable-Rate Debt | $938,753 | $1,055,655 | | **Total Debt** | **$4,290,398** | **$4,659,075** | [Funds from Operations (FFO)](index=75&type=section&id=Funds%20from%20Operations%20%28FFO%29) FFO Reconciliation (in thousands) | Metric | Three Months Ended Sept 30, 2019 | Three Months Ended Sept 30, 2018 | | :--- | :--- | :--- | | FFO allocable to Operating Partnership common unitholders | $90,442 | $77,434 | | FFO, as adjusted | $67,754 | $79,218 | | **Metric** | **Nine Months Ended Sept 30, 2019** | **Nine Months Ended Sept 30, 2018** | | FFO allocable to Operating Partnership common unitholders | $203,017 | $252,481 | | FFO, as adjusted | $196,816 | $255,810 | - Adjusted FFO decreased **14.5%** for the third quarter and **23.1%** for the nine-month period year-over-year, primarily due to lower property-level NOI, dilution from asset sales, and higher G&A expenses[346](index=346&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=78&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk, where a 0.5% rate change impacts annual cash flows by approximately **$4,700 thousand** - A **0.5%** (50 basis point) increase or decrease in interest rates on the company's proportionate share of variable-rate debt would impact annual cash flows by approximately **$4,700 thousand**[352](index=352&type=chunk) [Controls and Procedures](index=78&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with changes made to internal controls for the new lease accounting standard - The CEO and CFO concluded that the Company's and Operating Partnership's disclosure controls and procedures are effective[354](index=354&type=chunk) - Changes were made to internal controls over financial reporting due to the adoption of the new lease accounting standard, ASC 842, on January 1, 2019[355](index=355&type=chunk)[358](index=358&type=chunk) [PART II – OTHER INFORMATION](index=79&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) This section details significant legal matters, including a **$90,000 thousand** class action settlement and ongoing securities lawsuits - The settlement for the Wave Lengths Hair Salons class action lawsuit received final court approval on August 22, 2019. The settlement involved a common fund valued at **$90,000 thousand**[359](index=359&type=chunk) - The Company, along with certain officers and directors, has been named as defendants in multiple securities class action and shareholder derivative lawsuits alleging violations of securities laws, including making false and misleading statements[360](index=360&type=chunk)[362](index=362&type=chunk) - In the third quarter, the Company received subpoenas from the SEC and the Department of Justice regarding the Wave Lengths litigation and related matters, and is cooperating with these inquiries[359](index=359&type=chunk) [Risk Factors](index=80&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's **2018 Annual Report on Form 10-K** have occurred - No material changes to the risk factors disclosed in the **2018 Annual Report on Form 10-K** have occurred[363](index=363&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=80&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[364](index=364&type=chunk) [Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the report, including CEO and CFO certifications and combined financial statements - The report includes required **CEO and CFO certifications** (Exhibits 31.1-32.4) and the combined financial statements of the **Combined Guarantor Subsidiaries** (Exhibit 99.1)[370](index=370&type=chunk)

Financial Data and Key Metrics Changes - Adjusted FFO per share for the quarter was $0.34, a decline of $0.06 compared to $0.40 per share for Q3 2018 [36] - Portfolio same-center NOI decreased by 5.9% for the quarter and 5.5% for the year [13][36] - Sales for the third quarter increased by 3.2%, reaching $383 per square foot [14][25] - Portfolio occupancy increased by 30 basis points sequentially but declined by 150 basis points year-over-year to 90.5% [14][22] Business Line Data and Key Metrics Changes - The company successfully sourced replacements for 27 anchor spaces, with 74% of new mall leasing and 60% of total mall leasing being nonapparel [6][11] - New leasing spreads increased by 18%, while renewal leases were signed at an average of 11% lower than expiring rent [22] - Same-center mall occupancy declined by 200 basis points to 88.7% compared to the prior year [22] Market Data and Key Metrics Changes - Bankruptcy-related store closures reduced third-quarter mall occupancy by approximately 400 basis points or 720,000 square feet [23] - Categories performing well included fast casual dining, electronics, children's and family shoes, and sporting goods [25] Company Strategy and Development Direction - The primary strategic goals are transforming properties for long-term success and strengthening the balance sheet [6] - The company is focusing on joint ventures and third-party partnerships to further its redevelopment program [10] - The anchor replacement program has made significant progress, with 27 locations committed, including a dozen already open [25] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the progress of the redevelopment program despite challenges from retailer bankruptcies and store closings [13][40] - The company anticipates reaching the mid- to high end of its FFO guidance range for 2019, assuming no additional major bankruptcy activity [38] - Management emphasized the importance of preserving cash flow to invest in properties and reduce debt [21] Other Important Information - The company announced an agreement with Exeter Capital, with Michael Ashner joining the Board of Directors [16][17] - A new capital-allocation committee will be established, chaired by Michael Ashner, to review financial plans and strategies [19] Q&A Session Summary Question: Relevance of forming a capital-allocation committee - The capital-allocation committee is an advisory group to focus on financial strategies and will not have control over day-to-day decisions [42] Question: Dividend policy for 2020 - The company is still reviewing projections for taxable income and may pay the minimum required common dividend, if any [43][44] Question: Plans for upcoming loan maturities - Discussions with lenders are ongoing regarding the refinancing or restructuring of loans maturing in December [46][59] Question: Outlook for leasing and tenant watch list - The leasing environment is expected to be challenging, with ongoing monitoring of tenants and potential impacts from bankruptcies [47][49] Question: Impact of lease restructuring on renewal spreads - The negative renewal spread is largely due to lease modifications aimed at retaining tenants [51] Question: Changes in debt renegotiation strategy - While Michael Ashner's involvement may provide additional insights, the overall strategy for managing debt remains consistent [55] Question: Bankruptcy reserve for 2020 - The company is still assessing the reserve for the upcoming year, considering the impact of bankruptcies and restructuring [68][69]

PART I – FINANCIAL INFORMATION [ITEM 1: Financial Statements](index=7&type=section&id=ITEM%201%3A%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the company and its operating partnership for the quarter ended June 30, 2019 [CBL & Associates Properties, Inc. Condensed Consolidated Balance Sheets](index=7&type=section&id=CBL%20%26%20Associates%20Properties%2C%20Inc.%20Condensed%20Consolidated%20Balance%20Sheets) CBL & Associates Properties, Inc. Condensed Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Net investment in real estate assets | $4,525,078 | $4,785,526 | | Cash and cash equivalents | $20,483 | $25,138 | | Total assets | $5,048,140 | $5,340,853 | | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | Mortgage and other indebtedness, net | $3,865,939 | $4,043,180 | | Total liabilities | $4,126,867 | $4,305,113 | | Total equity | $918,586 | $1,032,165 | - Total assets decreased by **$292.7 million** from December 31, 2018, to June 30, 2019, primarily driven by a reduction in net investment in real estate assets and cash[20](index=20&type=chunk) - Total liabilities decreased by **$178.2 million**, mainly due to a reduction in mortgage and other indebtedness[20](index=20&type=chunk) [CBL & Associates Properties, Inc. Condensed Consolidated Statements of Operations](index=9&type=section&id=CBL%20%26%20Associates%20Properties%2C%20Inc.%20Condensed%20Consolidated%20Statements%20of%20Operations) CBL & Associates Properties, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric (in thousands) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $193,377 | $214,598 | $391,407 | $434,798 | | Total operating expenses | $(177,525) | $(201,326) | $(443,974) | $(377,388) | | Net loss | $(29,688) | $(29,976) | $(76,497) | $(30,637) | | Net loss attributable to common shareholders | $(35,400) | $(35,020) | $(85,599) | $(45,340) | | Basic and diluted EPS | $(0.20) | $(0.20) | $(0.49) | $(0.26) | - Total revenues decreased by **$21.2 million (9.9%)** for the three months ended June 30, 2019, and by **$43.4 million (10.0%)** for the six months ended June 30, 2019, compared to the prior-year periods[25](index=25&type=chunk) - Net loss attributable to common shareholders increased for the six months ended June 30, 2019, to **$(85.6) million** from $(45.3) million in the prior year, primarily due to a litigation settlement expense of **$88.2 million**, partially offset by gains on extinguishment of debt of **$71.7 million**[25](index=25&type=chunk) [CBL & Associates Properties, Inc. Condensed Consolidated Statements of Equity](index=10&type=section&id=CBL%20%26%20Associates%20Properties%2C%20Inc.%20Condensed%20Consolidated%20Statements%20of%20Equity) CBL & Associates Properties, Inc. Condensed Consolidated Statements of Equity (in thousands) | Equity Item (in thousands) | Balance, January 1, 2019 | Balance, June 30, 2019 | | :--- | :--- | :--- | | Total Shareholders' Equity | $964,137 | $863,805 | | Noncontrolling interests | $68,028 | $54,781 | | Total Equity | $1,032,165 | $918,586 | - Total equity decreased by **$113.6 million** from January 1, 2019, to June 30, 2019, primarily due to net loss and dividends declared[33](index=33&type=chunk) [CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=CBL%20%26%20Associates%20Properties%2C%20Inc.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) CBL & Associates Properties, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $126,032 | $179,882 | | Net cash provided by (used in) investing activities | $27,104 | $(22,837) | | Net cash used in financing activities | $(165,132) | $(164,706) | | Net change in cash, cash equivalents and restricted cash | $(11,996) | $(7,661) | | Cash, cash equivalents and restricted cash, end of period | $45,516 | $60,511 | - Net cash provided by operating activities decreased by **$53.9 million** for the six months ended June 30, 2019, compared to the prior-year period[36](index=36&type=chunk)[40](index=40&type=chunk) - Net cash provided by investing activities increased significantly by **$49.9 million**, shifting from a net outflow in 2018 to a net inflow in 2019[36](index=36&type=chunk)[40](index=40&type=chunk) [CBL & Associates Limited Partnership Condensed Consolidated Balance Sheets](index=14&type=section&id=CBL%20%26%20Associates%20Limited%20Partnership%20Condensed%20Consolidated%20Balance%20Sheets) CBL & Associates Limited Partnership Condensed Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Net investment in real estate assets | $4,525,078 | $4,785,526 | | Cash and cash equivalents | $20,482 | $25,138 | | Total assets | $5,048,503 | $5,341,217 | | LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL | | Mortgage and other indebtedness, net | $3,865,939 | $4,043,180 | | Total liabilities | $4,126,937 | $4,305,184 | | Total capital | $918,879 | $1,032,458 | - Total assets for the Operating Partnership decreased by **$292.7 million** from December 31, 2018, to June 30, 2019, mirroring the parent company's trend[43](index=43&type=chunk) [CBL & Associates Limited Partnership Condensed Consolidated Statements of Operations](index=15&type=section&id=CBL%20%26%20Associates%20Limited%20Partnership%20Condensed%20Consolidated%20Statements%20of%20Operations) CBL & Associates Limited Partnership Condensed Consolidated Statements of Operations (in thousands, except per unit data) | Metric (in thousands) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $193,377 | $214,598 | $391,407 | $434,798 | | Total operating expenses | $(177,525) | $(201,326) | $(443,974) | $(377,388) | | Net loss | $(29,688) | $(29,976) | $(76,497) | $(30,637) | | Net loss attributable to common unitholders | $(40,854) | $(40,705) | $(98,811) | $(52,690) | | Basic and diluted EPU | $(0.20) | $(0.20) | $(0.49) | $(0.26) | - The Operating Partnership's total revenues and net loss trends are consistent with those of CBL & Associates Properties, Inc, reflecting the combined business operations[49](index=49&type=chunk) [CBL & Associates Limited Partnership Condensed Consolidated Statements of Capital](index=16&type=section&id=CBL%20%26%20Associates%20Limited%20Partnership%20Condensed%20Consolidated%20Statements%20of%20Capital) CBL & Associates Limited Partnership Condensed Consolidated Statements of Capital (in thousands) | Capital Item (in thousands) | Balance, January 1, 2019 | Balance, June 30, 2019 | | :--- | :--- | :--- | | Total Partners' Capital | $1,020,347 | $905,657 | | Noncontrolling Interests | $12,111 | $13,222 | | Total Capital | $1,032,458 | $918,879 | - Total capital for the Operating Partnership decreased by **$113.6 million** from January 1, 2019, to June 30, 2019, primarily due to net loss and distributions[57](index=57&type=chunk) [CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows](index=18&type=section&id=CBL%20%26%20Associates%20Limited%20Partnership%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) CBL & Associates Limited Partnership Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $126,031 | $179,881 | | Net cash provided by (used in) investing activities | $27,104 | $(22,837) | | Net cash used in financing activities | $(165,132) | $(164,706) | | Net change in cash, cash equivalents and restricted cash | $(11,997) | $(7,662) | | Cash, cash equivalents and restricted cash, end of period | $45,515 | $60,510 | - The Operating Partnership's cash flow trends from operating, investing, and financing activities are consistent with those of CBL & Associates Properties, Inc, reflecting the consolidated business operations[60](index=60&type=chunk)[64](index=64&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=20&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1 – Organization and Basis of Presentation](index=20&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Basis%20of%20Presentation) - CBL & Associates Properties, Inc (CBL) is a self-managed REIT engaged in ownership, development, acquisition, leasing, management, and operation of various retail and office properties across 26 states, primarily in the southeastern and midwestern US[69](index=69&type=chunk) - CBL conducts substantially all business through CBL & Associates Limited Partnership (Operating Partnership), which is a variable interest entity (VIE)[70](index=70&type=chunk) Properties Owned by Operating Partnership (as of June 30, 2019) | Property Type | Consolidated Properties | Unconsolidated Properties | Total | | :--- | :--- | :--- | :--- | | Malls | 56 | 8 | 64 | | Associated Centers | 20 | 3 | 23 | | Community Centers | 2 | 5 | 7 | | Office Buildings/Other | 5 | 2 | 7 | | Total | 83 | 18 | 101 | [Note 2 – Recent Accounting Pronouncements](index=21&type=section&id=Note%202%20%E2%80%93%20Recent%20Accounting%20Pronouncements) - The Company adopted **ASC 842, Leases**, on January 1, 2019, impacting financial statements by recognizing Right-of-Use (ROU) assets and corresponding lease liabilities for operating leases as a lessee, and narrowing the definition of initial direct costs, changing rental revenue presentation, and reporting uncollectable operating lease receivables as a reduction of rental revenues as a lessor[79](index=79&type=chunk) - **ASU 2016-13**, Measurement of Credit Losses on Financial Instruments, effective January 1, 2020, will replace the incurred loss model with a current expected credit loss model[80](index=80&type=chunk) - **ASU 2018-15**, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, effective January 1, 2020, is not expected to have a material impact[80](index=80&type=chunk) [Note 3 – Revenues](index=22&type=section&id=Note%203%20%E2%80%93%20Revenues) Company's Revenues Disaggregated by Source (in thousands) | Revenue Source (in thousands) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Rental revenues | $185,393 | $207,568 | $376,373 | $420,297 | | Operating expense reimbursements | $2,061 | $2,168 | $4,204 | $4,511 | | Management, development and leasing fees | $2,586 | $2,643 | $5,109 | $5,364 | | Marketing revenues | $1,218 | $928 | $2,092 | $2,223 | | Other revenues | $2,119 | $1,291 | $3,629 | $2,403 | | Total revenues | $193,377 | $214,598 | $391,407 | $434,798 | - Rental revenues, the largest component, decreased by **$22.2 million (10.7%)** for the three months and **$43.9 million (10.4%)** for the six months ended June 30, 2019, compared to the prior year[84](index=84&type=chunk) - Management, development, and leasing fees are recognized over time for management and development, and upon lease execution for leasing fees[90](index=90&type=chunk) [Note 4 – Leases](index=25&type=section&id=Note%204%20%E2%80%93%20Leases) - The Company adopted **ASC 842** on January 1, 2019, applying it to new leases and continuing ASC 840 for prior leases[97](index=97&type=chunk)[100](index=100&type=chunk) Components of Rental Revenues (in thousands) | Rental Revenue Component (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Fixed lease payments | $151,730 | $311,002 | | Variable lease payments | $33,663 | $65,371 | | Total rental revenues | $185,393 | $376,373 | - As a lessee, the Company has eight ground leases and one office lease, with a weighted-average remaining lease term of **39.3 years** and a weighted-average discount rate of **8.0%** as of June 30, 2019[107](index=107&type=chunk) Lessee Lease Expense (in thousands) | Lease Expense (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Operating lease expense | $207 | $425 | | Variable lease expense | $(2) | $30 | | Rent Expense | $205 | $455 | [Note 5 – Fair Value Measurements](index=28&type=section&id=Note%205%20%E2%80%93%20Fair%20Value%20Measurements) - The Company categorizes financial assets and liabilities into a three-level fair value hierarchy based on input observability[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - The estimated fair value of mortgage and other indebtedness was **$3,479,729 thousand** at June 30, 2019, calculated using Level 2 inputs by discounting future cash flows[118](index=118&type=chunk) Long-lived Assets Measured at Fair Value and Impairment Charges (in thousands) | Item (in thousands) | Total Fair Value (Level 3) | Loss on Impairment (Six Months Ended June 30, 2019) | | :--- | :--- | :--- | | Long-lived assets | $127,319 | $66,433 | - During the six months ended June 30, 2019, the Company recognized a real estate impairment loss of **$66,662 thousand** related to three malls and one community center[120](index=120&type=chunk)[121](index=121&type=chunk) [Note 6 – Dispositions and Held for Sale](index=30&type=section&id=Note%206%20%E2%80%93%20Dispositions%20and%20Held%20for%20Sale) - The Company's 2019 dispositions generated net proceeds used to reduce outstanding credit facility balances[125](index=125&type=chunk)[126](index=126&type=chunk) 2019 Dispositions (in thousands) | Property | Sales Price Gross | Sales Price Net | Gain | | :--- | :--- | :--- | :--- | | Honey Creek Mall | $14,600 | $14,360 | $0 | | The Shoppes at Hickory Point | $2,508 | $2,407 | $1,326 | | Courtyard by Marriott at Pearland Town Center | $15,100 | $14,795 | $1,910 | - The Company recognized a **$71.7 million gain on extinguishment of debt** in 2019 from transferring Acadiana Mall and selling Cary Towne Center[127](index=127&type=chunk) Properties Classified as Held for Sale (as of June 30, 2019, in thousands) | Property | Total Assets | Total Liabilities | | :--- | :--- | :--- | | 850 Greenbrier Circle | $10,233 | $35 | | Foothills Plaza - Kroger | $1,091 | $0 | | The Forum at Grandview | $32,195 | $569 | | High Point - Barnes & Noble | $1,055 | $59 | [Note 7 – Unconsolidated Affiliates and Noncontrolling Interests](index=32&type=section&id=Note%207%20%E2%80%93%20Unconsolidated%20Affiliates%20and%20Noncontrolling%20Interests) - The Company accounts for investments in **22 unconsolidated affiliates** using the equity method, with ownership interests ranging from 10.0% to 65.0%[131](index=131&type=chunk)[132](index=132&type=chunk) - In 2019, the Company entered new joint ventures for land and self-storage development[133](index=133&type=chunk)[134](index=134&type=chunk) Condensed Combined Financial Statements - Unconsolidated Affiliates (in thousands) | Metric (in thousands) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total assets | $1,597,660 | $1,623,903 | | Total liabilities | $1,353,037 | $1,359,726 | | Total owners' equity | $244,623 | $264,177 | | Total revenues (Six Months Ended June 30) | $110,097 | $112,264 | | Net income (Six Months Ended June 30) | $9,003 | $12,551 | - Noncontrolling interests in the Operating Partnership decreased from **$55,917 thousand** at December 31, 2018, to **$41,559 thousand** at June 30, 2019[140](index=140&type=chunk) [Note 8 – Mortgage and Other Indebtedness, Net](index=35&type=section&id=Note%208%20%E2%80%93%20Mortgage%20and%20Other%20Indebtedness%2C%20Net) - CBL & Associates Properties, Inc has no direct indebtedness but provides limited guarantees for the Operating Partnership's debt[145](index=145&type=chunk)[146](index=146&type=chunk) Debt of the Operating Partnership (in thousands) | Debt Type (in thousands) | June 30, 2019 | Weighted-Average Interest Rate (June 30, 2019) | | :--- | :--- | :--- | | Total fixed-rate debt | $2,946,440 | 5.31% | | Total variable-rate debt | $938,989 | 4.72% | | Total mortgage and other indebtedness, net | $3,865,939 | 5.17% | - In January 2019, the Company replaced prior unsecured bank facilities with a new **$1.185 billion senior secured credit facility**, maturing in July 2023[151](index=151&type=chunk) Compliance with Key Financial Covenants (as of June 30, 2019) | Ratio | Required | Actual | | :--- | :--- | :--- | | Total debt to total assets | < 60% | 52% | | Secured debt to total assets | < 40% | 34% | | Total unencumbered assets to unsecured debt | > 150% | 191% | | Consolidated income available for debt service to annual debt service charge | > 1.5x | 2.3x | [Note 9 – Mortgage and Other Notes Receivable](index=38&type=section&id=Note%209%20%E2%80%93%20Mortgage%20and%20Other%20Notes%20Receivable) Mortgage and Other Notes Receivable (in thousands) | Type (in thousands) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Mortgages | $3,913 | $4,884 | | Other Notes Receivable | $2,413 | $2,788 | | Total | $6,326 | $7,672 | - Mortgage and other notes receivable decreased by **$1,346 thousand** from December 31, 2018, to June 30, 2019[166](index=166&type=chunk) [Note 10 – Segment Information](index=39&type=section&id=Note%2010%20%E2%80%93%20Segment%20Information) - The Company measures performance and allocates resources based on property type, including Malls and All Other[168](index=168&type=chunk)[171](index=171&type=chunk) Segment Revenues (in thousands) | Segment (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Malls | $170,976 | $354,840 | | All Other | $22,401 | $36,567 | | Total Revenues | $193,377 | $391,407 | Segment Profit (Loss) (in thousands) | Segment (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Malls | $98,299 | $201,792 | | All Other | $(8,889) | $(29,797) | | Total Segment Profit (Loss) | $89,410 | $171,995 | [Note 11 – Earnings per Share and Earnings per Unit](index=41&type=section&id=Note%2011%20%E2%80%93%20Earnings%20per%20Share%20and%20Earnings%20per%20Unit) - Basic and diluted EPS for CBL & Associates Properties, Inc was **$(0.20)** for the three months and **$(0.49)** for the six months ended June 30, 2019, reflecting net losses[25](index=25&type=chunk)[172](index=172&type=chunk) - Basic and diluted EPU for the Operating Partnership was **$(0.20)** for the three months and **$(0.49)** for the six months ended June 30, 2019, also reflecting net losses[49](index=49&type=chunk)[174](index=174&type=chunk) - Due to net losses, contingently issuable shares/units were anti-dilutive and excluded from diluted EPS/EPU calculations for both periods[173](index=173&type=chunk)[175](index=175&type=chunk) [Note 12 – Contingencies](index=41&type=section&id=Note%2012%20%E2%80%93%20Contingencies) - In April 2019, the Company entered a settlement agreement for a class action lawsuit, establishing a common fund of **$90.0 million** and resulting in an **$88.2 million** litigation settlement expense in Q1 2019[176](index=176&type=chunk) - The settlement agreement prohibits common share dividends in Q3 and Q4 2019 but does not restrict future dividends[176](index=176&type=chunk) - The Company and its officers/directors are defendants in multiple securities class action and shareholder derivative lawsuits[179](index=179&type=chunk)[340](index=340&type=chunk) Operating Partnership's Guarantees of Unconsolidated Affiliates' Debt (in thousands) | Unconsolidated Affiliate | Company's Ownership Interest | Outstanding Balance | Percentage Guaranteed by Operating Partnership | Maximum Guaranteed Amount | | :--- | :--- | :--- | :--- | :--- | | West Melbourne I, LLC (Phase I) | 50% | $40,197 | 50% | $20,099 | | West Melbourne I, LLC (Phase II) | 50% | $15,827 | 50% | $7,914 | | Port Orange I, LLC | 50% | $54,629 | 50% | $27,315 | | Ambassador Infrastructure, LLC | 65% | $10,050 | 100% | $10,050 | | Shoppes at Eagle Point, LLC | 50% | $35,189 | 35% | $12,740 | | EastGate Storage, LLC | 50% | $6,000 | 50% | $3,000 | | Self-Storage at Mid Rivers, LLC | 50% | $5,434 | 50% | $2,717 | | Parkdale Self Storage, LLC | 50% | $0 | 100% | $6,500 | [Note 13 – Share-Based Compensation](index=44&type=section&id=Note%2013%20%E2%80%93%20Share-Based%20Compensation) - The Company has outstanding awards under the 2012 Stock Incentive Plan, issuing restricted stock awards and Performance Stock Unit (PSU) awards[194](index=194&type=chunk) Share-Based Compensation Expense (in thousands) | Award Type (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Restricted Stock Awards | $546 | $2,259 | | Performance Stock Units | $443 | $869 | - As of June 30, 2019, there was **$4,142 thousand** of unrecognized compensation cost for nonvested restricted stock awards and **$3,304 thousand** for PSUs[198](index=198&type=chunk)[206](index=206&type=chunk) [Note 14 – Noncash Investing and Financing Activities](index=46&type=section&id=Note%2014%20%E2%80%93%20Noncash%20Investing%20and%20Financing%20Activities) Noncash Investing and Financing Activities (Six Months Ended June 30, in thousands) | Activity (in thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Accrued dividends and distributions payable | $2,420 | $41,656 | | Additions to real estate assets accrued but not yet paid | $26,572 | $23,318 | | Lease liabilities arising from obtaining right-of-use assets | $4,042 | $0 | | Transfer of real estate assets in settlement of mortgage debt obligation | $(60,059) | $0 | | Decrease in mortgage and other indebtedness | $124,111 | $0 | - Significant noncash activities in 2019 included a **$60.1 million** transfer of real estate assets in mortgage debt settlement and a **$124.1 million** decrease in mortgage and other indebtedness[209](index=209&type=chunk) [Note 15 – Subsequent Events](index=46&type=section&id=Note%2015%20%E2%80%93%20Subsequent%20Events) - In July 2019, the Company completed sales of four properties for total proceeds of **$46.6 million**[210](index=210&type=chunk)[211](index=211&type=chunk) - In July 2019, the lender foreclosed on the loan secured by Triangle Town Center[212](index=212&type=chunk) - In August 2019, the Village Square note receivable's maturity date was extended to September 30, 2019[213](index=213&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial performance, highlighting a net loss increase, balance sheet strengthening efforts, and the impact of a litigation settlement [Executive Overview](index=47&type=section&id=EXECUTIVE%20OVERVIEW) Net Loss and Net Loss Attributable to Common Shareholders (in millions) | Metric (in millions) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net loss | $(29.7) | $(76.5) | | Net loss attributable to common shareholders | $(35.4) | $(85.6) | - The six-month net loss was primarily due to lower earnings from Comparable Properties and an **$88.2 million** litigation settlement expense, partially offset by **$71.7 million** in gains on debt extinguishment[221](index=221&type=chunk) - The Company replaced all unsecured lines of credit and term loans with a new **$1.185 billion** secured credit facility in January 2019, addressing significant debt maturities until 2023[224](index=224&type=chunk) - The Company completed **$120.0 million** in gross asset sales year-to-date and expects over **$200.0 million** in free cash flow to fund its redevelopment program[226](index=226&type=chunk) [Results of Operations](index=49&type=section&id=RESULTS%20OF%20OPERATIONS) [Comparison of the Three Months Ended June 30, 2019 to the Three Months Ended June 30, 2018](index=49&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202019%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202018) Revenues and Operating Expenses (Three Months Ended June 30, in thousands) | Metric (in thousands) | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $193,377 | $214,598 | $(21,221) | | Total operating expenses | $(177,525) | $(201,326) | $23,801 | - Rental revenues from Comparable Properties declined primarily due to store closures and rent concessions[229](index=229&type=chunk) - Property operating expenses at Comparable Properties decreased due to a reclassification of bad debt expense under ASC 842 and lower utilities, security, and payroll expenses[230](index=230&type=chunk) - Interest expense decreased by **$1.7 million**, mainly from lower property-level interest due to dispositions[236](index=236&type=chunk) [Comparison of the Six Months Ended June 30, 2019 to the Six Months Ended June 30, 2018](index=50&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202019%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202018) Revenues and Operating Expenses (Six Months Ended June 30, in thousands) | Metric (in thousands) | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $391,407 | $434,798 | $(43,391) | | Total operating expenses | $(443,974) | $(377,388) | $(66,586) | | Litigation settlement | $(88,150) | $0 | $(88,150) | | Gain on extinguishment of debt | $71,722 | $0 | $71,722 | - Rental revenues from Comparable Properties declined by **$28.5 million**, primarily due to store closures and rent concessions[241](index=241&type=chunk) - General and administrative expenses increased due to higher legal expenses and no longer capitalizing leasing personnel costs[243](index=243&type=chunk) - The Company recognized a **$71.7 million gain on extinguishment of debt** from Acadiana Mall and Cary Towne Center dispositions[247](index=247&type=chunk) [Non-GAAP Measure - Same-center Net Operating Income](index=52&type=section&id=Non-GAAP%20Measure%20-%20Same-center%20Net%20Operating%20Income) - NOI is a non-GAAP measure defined as property operating revenues less property operating expenses[251](index=251&type=chunk)[252](index=252&type=chunk) - Same-center NOI excludes certain items like lease termination income and straight-line rent adjustments to enhance comparability[253](index=253&type=chunk) Total Same-center NOI (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Total same-center NOI | $142,972 | $285,370 | - Same-center NOI decreased by **5.7%** for the three months and **5.3%** for the six months ended June 30, 2019, primarily due to decreased revenues[257](index=257&type=chunk)[258](index=258&type=chunk) [Operational Review](index=53&type=section&id=Operational%20Review) - The Company classifies regional malls into Stabilized, Non-stabilized, and Excluded Malls for operational analysis[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) Mall Store Sales and Occupancy | Metric | Twelve Months Ended June 30, 2019 | Twelve Months Ended June 30, 2018 | % Change | | :--- | :--- | :--- | :--- | | Stabilized mall same-center sales per square foot | $381 | $378 | 0.8% | | Stabilized mall sales per square foot | $381 | $376 | 1.3% | | | As of June 30, 2019 | As of June 30, 2018 | | | Total portfolio occupancy | 90.2% | 91.1% | | | Same-center malls occupancy | 88.1% | 89.4% | | | Non-stabilized malls occupancy | 78.0% | 71.9% | | - Bankruptcy-related store closures impacted Q2 occupancy by approximately **322 basis points** or **570,000 square feet**[265](index=265&type=chunk) - New leases for stabilized malls saw a **1.4% decline** in average gross rent PSF, while renewal leases were signed at an average of **4.2% lower** than expiring rent for the quarter[268](index=268&type=chunk) - The Company is diversifying its tenant mix, with **86%** of new mall leasing and **64%** of total mall leasing signed with non-apparel tenants[269](index=269&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - As of June 30, 2019, the Company had **$301.9 million** available on its secured credit facility and **$20.5 million** in unrestricted cash and cash equivalents[271](index=271&type=chunk) - The Company's total pro rata share of debt was **$4.4 billion** at June 30, 2019[271](index=271&type=chunk) - The Company believes operating cash flows, debt and equity sources, and disposition proceeds will provide adequate liquidity for future cash needs[275](index=275&type=chunk) [Cash Flows - Operating, Investing and Financing Activities](index=58&type=section&id=Cash%20Flows%20-%20Operating%2C%20Investing%20and%20Financing%20Activities) Net Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity (in thousands) | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $126,032 | $179,882 | $(53,850) | | Net cash provided by (used in) investing activities | $27,104 | $(22,837) | $49,941 | | Net cash used in financing activities | $(165,132) | $(164,706) | $(426) | | Net change in cash flows | $(11,996) | $(7,661) | $(4,335) | - Cash provided by operating activities decreased by **$53.9 million** due to lower rental revenues and property dispositions[279](index=279&type=chunk) - Cash provided by investing activities increased by **$49.9 million**, driven by higher proceeds from sales and reduced capital expenditures[280](index=280&type=chunk) - Cash used in financing activities remained relatively stable, with common stock dividend reductions offset by increased debt principal payments[281](index=281&type=chunk) [Debt](index=59&type=section&id=Debt) Pro Rata Share of Debt (as of June 30, 2019, in thousands) | Debt Type (in thousands) | Consolidated | Noncontrolling Interests | Unconsolidated Affiliates | Total | Weighted-Average Interest Rate | | :--- | :--- | :--- | :--- | :--- | :--- | | Total fixed-rate debt | $2,946,440 | $(93,450) | $544,829 | $3,397,819 | 5.10% | | Total variable-rate debt | $938,989 | $0 | $79,251 | $1,018,240 | 4.73% | | Total debt, net | $3,865,939 | $(92,703) | $621,720 | $4,394,956 | 5.01% | - The weighted-average remaining term of total debt was **4.5 years** at June 30, 2019, up from 4.0 years at December 31, 2018[287](index=287&type=chunk) - Variable-rate debt constituted **23.2%** of the total pro rata debt at June 30, 2019[288](index=288&type=chunk) [Equity](index=61&type=section&id=Equity) - During the six months ended June 30, 2019, the Company paid **$48.4 million** in dividends to common and preferred stockholders[292](index=292&type=chunk) - Common share dividends were suspended for Q3 and Q4 2019 due to a class action settlement, but future dividends are not restricted[293](index=293&type=chunk) Total Market Capitalization (as of June 30, 2019, in thousands) | Component (in thousands) | Value | | :--- | :--- | | Common stock and operating partnership units | $208,239 | | Preferred Stock | $626,250 | | Total market equity | $834,489 | | Company's share of total debt | $4,416,058 | | Total market capitalization | $5,250,547 | [Capital Expenditures](index=62&type=section&id=Capital%20Expenditures) Total Capital Expenditures (Six Months Ended June 30, in thousands) | Expenditure Type (in thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Tenant allowances | $11,050 | $28,221 | | Deferred maintenance | $12,372 | $13,869 | | Capitalized overhead | $1,372 | $3,291 | | Capitalized interest | $1,182 | $1,538 | | Total capital expenditures | $25,976 | $47,482 | - Total capital expenditures decreased by **$21.5 million** for the six months ended June 30, 2019, compared to the prior-year period[298](index=298&type=chunk) [Developments, Expansions and Redevelopments](index=64&type=section&id=Developments%2C%20Expansions%20and%20Redevelopments) Properties Opened During Six Months Ended June 30, 2019 (in thousands) | Property (in thousands) | CBL Ownership Interest | Total Project Square Feet | Total Cost | CBL's Share of Cost to Date | 2019 YTD Cost | Opening Date | Initial Unleveraged Yield | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mid Rivers Mall - CubeSmart Self-storage | 50% | 93,540 | $4,122 | $3,646 | $973 | Jan-19 | 9.0% | Redevelopments Completed During Six Months Ended June 30, 2019 (in thousands) | Property (in thousands) | CBL Ownership Interest | Total Project Square Feet | Total Cost | CBL's Share of Cost to Date | 2019 YTD Cost | Opening Date | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Dakota Square Mall - HomeGoods | 100% | 28,406 | $2,478 | $2,292 | $1,314 | Apr-19 | | Parkdale Mall - Macy's Redevelopment | 100% | 86,136 | $20,899 | $17,618 | $11,139 | May-19 | - The Company has several properties under redevelopment, including Sears redevelopments, diversifying offerings with dining, entertainment, and other non-retail uses[305](index=305&type=chunk)[307](index=307&type=chunk) [Off-Balance Sheet Arrangements](index=66&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company holds ownership interests in **22 unconsolidated affiliates**, accounted for using the equity method, which are off-balance sheet arrangements[309](index=309&type=chunk) - The Operating Partnership may guarantee joint venture debt to secure lower funding costs[312](index=312&type=chunk) [Critical Accounting Policies](index=66&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) - The Company's financial statements are prepared in accordance with GAAP, requiring management to make estimates and assumptions[314](index=314&type=chunk) - No material changes to critical accounting policies and estimates occurred during the six months ended June 30, 2019[315](index=315&type=chunk) [Impact of Inflation and Deflation](index=67&type=section&id=Impact%20of%20Inflation%20and%20Deflation) - Deflation can lead to high unemployment and weakened consumer demand, potentially impacting the Company's financing and rental revenues[318](index=318&type=chunk) - During inflationary periods, most tenant leases include provisions like percentage rent and escalation clauses to mitigate inflation's impact[319](index=319&type=chunk) [Non-GAAP Measure - Funds from Operations](index=67&type=section&id=Non-GAAP%20Measure%20Funds%20from%20Operations) - FFO is a non-GAAP measure of operating performance, defined by NAREIT as net income (loss) excluding certain non-cash items and gains/losses on property sales[320](index=320&type=chunk) FFO Allocable to Operating Partnership Common Unitholders (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | FFO allocable to Operating Partnership common unitholders | $68,545 | $112,575 | | FFO allocable to Operating Partnership common unitholders, as adjusted | $68,545 | $129,062 | - FFO of the Operating Partnership decreased **25.6%** for the three months and **35.7%** for the six months ended June 30, 2019, compared to prior-year periods[327](index=327&type=chunk) - Adjusted FFO decreased **26.1%** for the three months and **26.9%** for the six months, primarily due to lower property-level NOI and asset sale dilution[327](index=327&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily quantifying the potential impact of interest rate fluctuations on cash flows and debt value - A **0.5%** change in interest rates on variable-rate debt would impact annual cash flows by approximately **$5.1 million** and annual interest expense by approximately **$5.0 million**[332](index=332&type=chunk) - A **0.5%** increase in interest rates would decrease the fair value of debt by approximately **$51.1 million**, while a **0.5%** decrease would increase it by approximately **$52.8 million**[333](index=333&type=chunk) [Item 4. Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and notes modifications to internal controls related to the adoption of ASC 842 (Leases) - The Chief Executive Officer and Chief Financial Officer concluded that the Company's and Operating Partnership's disclosure controls and procedures were effective as of June 30, 2019[335](index=335&type=chunk) - Modifications were made to lease accounting processes in conjunction with the adoption of ASC 842 (Leases) on January 1, 2019[336](index=336&type=chunk) PART II - OTHER INFORMATION [ITEM 1: Legal Proceedings](index=70&type=section&id=ITEM%201%3A%20Legal%20Proceedings) This section details a significant class action lawsuit settlement and discloses ongoing securities class action and shareholder derivative lawsuits - A class action lawsuit settlement in April 2019 resulted in an **$88.2 million** litigation settlement expense in Q1 2019 and a temporary suspension of common share dividends for Q3 and Q4 2019[337](index=337&type=chunk) - The Company and its officers/directors are facing three securities class action lawsuits and three shareholder derivative lawsuits[338](index=338&type=chunk)[340](index=340&type=chunk) [ITEM 1A. Risk Factors](index=71&type=section&id=ITEM%201A.%20Risk%20Factors) This section refers to the company's 2018 Annual Report for a comprehensive discussion of risk factors, noting no material changes - No material changes to the Company's risk factors have occurred since the filing of its Annual Report on Form 10-K for the year ended December 31, 2018[341](index=341&type=chunk) [ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=ITEM%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - There were no unregistered sales of equity securities or use of proceeds to report[342](index=342&type=chunk) [ITEM 3: Defaults Upon Senior Securities](index=71&type=section&id=ITEM%203%3A%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities to report for the period - There were no defaults upon senior securities to report[343](index=343&type=chunk) [ITEM 4: Mine Safety Disclosures](index=71&type=section&id=ITEM%204%3A%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[343](index=343&type=chunk) [ITEM 5: Other Information](index=71&type=section&id=ITEM%205%3A%20Other%20Information) This section indicates that there is no other information to report for the period - There is no other information to report[343](index=343&type=chunk) [ITEM 6: Exhibits](index=72&type=section&id=ITEM%206%3A%20Exhibits) This section provides an index of exhibits filed with the Form 10-Q, including certifications and XBRL-related documents - The exhibits include certifications by the CEO and CFO, combined financial statements of the Combined Guarantor Subsidiaries, and various XBRL documents[349](index=349&type=chunk) [SIGNATURES](index=73&type=section&id=SIGNATURES) This section contains the signatures of the authorized officers certifying the filing of the report - The report is signed by Farzana Khaleel, Executive Vice President - Chief Financial Officer and Treasurer, for both CBL & Associates Properties, Inc and CBL & Associates Limited Partnership, on August 9, 2019[353](index=353&type=chunk)[354](index=354&type=chunk)