MORTGAGE AND OTHER INDEBTEDNESS, NET

Debt of the Company

CBL has no indebtedness. Either the Operating Partnership or one of its consolidated subsidiaries, that it has a direct or indirect ownership interest in, is the borrower on all of the Company's debt.

CBL is a limited guarantor of the Senior Unsecured Notes, as described below, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. The Company also provides a similar limited guarantee of the Operating Partnership's obligations with respect to its unsecured credit facilities and three unsecured term loans as of December 31, 2017.

Debt of the Operating Partnership

Mortgage and other indebtedness consisted of the following:



	December 31, 2017			December 31, 2016
	Amount		Weighted-Average Interest Rate ⁽¹⁾	Amount		Weighted-Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating Properties	$	1,796,203	5.33%	$	2,453,628	5.55%
Senior unsecured notes due 2023 ⁽²⁾	446,976		5.25%	446,552		5.25%
Senior unsecured notes due 2024 ⁽³⁾	299,946		4.60%	299,939		4.60%
Senior unsecured notes due 2026 ⁽⁴⁾	615,848		5.95%	394,260		5.95%
Total fixed-rate debt	3,158,973		5.37%	3,594,379		5.48%
Variable-rate debt:
Non-recourse loans on operating Properties	10,836		3.37%	19,055		3.13%
Recourse loans on operating Properties ⁽⁵⁾	101,187		4.00%	24,428		3.29%
Construction loan ⁽⁵⁾	—		—%	39,263		3.12%



	December 31, 2017				December 31, 2016
	Amount			Weighted-Average Interest Rate ⁽¹⁾	Amount			Weighted-Average Interest Rate ⁽¹⁾
Unsecured lines of credit	93,787			2.56%	6,024			1.82%
Unsecured term loans ⁽⁶⁾	885,000			2.81%	800,000			2.04%
Total variable-rate debt	1,090,810			2.90%	888,770			2.15%
Total fixed-rate and variable-rate debt	4,249,783			4.74%	4,483,149			4.82%
Unamortized deferred financing costs	(18,938		)		(17,855		)
Total mortgage and other indebtedness, net	$	4,230,845			$	4,465,294


(1)	Weighted-average interest rate includes the effect of debt premiums and discounts, but excludes amortization of deferred financing costs.


(2)	The balance is net of an unamortized discount of $3,024 and $3,448, as of December 31, 2017 and 2016, respectively.


(3)	The balance is net of an unamortized discount of $54 and $61, as of December 31, 2017 and 2016, respectively.


(4)	In September 2017, the Operating Partnership issued and sold an additional $225,000 of the series of 2026 Notes. The balance is net of an unamortized discount of $9,152 and $5,740 as of December 31, 2017 and 2016, respectively.


(5)	The Outlet Shoppes at Laredo opened in 2017 and the construction loan balance from December 31, 2016 is included in recourse loans on operating Properties as of December 31, 2017.


(6)	The Company extended and modified its three unsecured term loans in July 2017. See below for additional information.

Non-recourse and recourse term loans include loans that are secured by Properties owned by the Company that have a net carrying value of $2,073,448 at December 31, 2017.

Senior Unsecured Notes



Description	Issued ⁽¹⁾	Amount		Interest Rate ⁽²⁾	Maturity Date⁽³⁾
2023 Notes	November 2013	$	450,000	5.25%	December 2023
2024 Notes	October 2014	300,000		4.60%	October 2024
2026 Notes	December 2016 / September 2017 ⁽⁴⁾	625,000		5.95%	December 2026


(1)	Issued by the Operating Partnership. CBL is a limited guarantor of the Operating Partnership's obligations under the Notes as described above.

(2)

Interest is payable semiannually in arrears. The interest rate for the 2024 Notes and the 2023 Notes is subject to an increase ranging from 0.25% to 1.00% from time to time if, on or after January 1, 2016 and prior to January 1, 2020, the ratio of secured debt to total assets of the Company, as defined, is greater than 40% but less than 45%. The required ratio of secured debt to total assets for the 2026 Notes is 40% or less. As of December 31, 2017, this ratio was 23% as shown below.

(3)

The Notes are redeemable at the Operating Partnership's election, in whole or in part from time to time, on not less than 30 days and not more than 60 days' notice to the holders of the Notes to be redeemed. The 2026 Notes, the 2024 Notes and the 2023 Notes may be redeemed prior to September 15, 2026; July 15, 2024; and September 1, 2023, respectively, for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date and a make-whole premium calculated in accordance with the indenture. On or after the redemption date, the Notes are redeemable for cash at a redemption price equal to the aggregate principal amount of the Notes to be redeemed plus accrued and unpaid interest. If redeemed prior to the respective dates noted above, each issuance of Notes is redeemable at the treasury rate plus 0.50%, 0.35% and 0.40% for the 2026 Notes, the 2024 Notes and the 2023 Notes, respectively.

(4)

On September 1, 2017, the Operating Partnership issued and sold an additional $225,000 of the 2026 Notes. Interest was payable with respect to the additional issuance on December 15, 2017. After deducting underwriting discounts and other offering expenses of $1,879 and a discount of $3,938, the net proceeds from the sale were approximately $219,183. The Operating Partnership used the net proceeds to reduce amounts outstanding under its unsecured credit facilities and for general business purposes.

Unsecured Lines of Credit

The Company has three unsecured credit facilities that are used for retirement of secured loans, repayment of term loans, working capital, construction and acquisition purposes, and issuances of letters of credit.

Each facility bears interest at LIBOR plus a spread of 87.5 to 155 basis points based on credit ratings for the Operating Partnership's senior unsecured long-term indebtedness. As of December 31, 2017, the Operating Partnership's interest rate based on the credit ratings of its unsecured long-term indebtedness of Baa3 from Moody's Investors Service ("Moody's"), BBB- from Standard & Poor's Rating Services ("S&P") and BB+ from Fitch Ratings ("Fitch"), is LIBOR plus 120 basis points.

Subsequent to December 31, 2017, the Moody's rating was downgraded. See Note 19 for more information.

Additionally, the Company pays an annual facility fee that ranges from 0.125% to 0.300%, based on the credit ratings described above. As of December 31, 2017, the annual facility fee was 0.25%. The three unsecured lines of credit had a weighted-average interest rate of 2.56% at December 31, 2017.

The following summarizes certain information about the Company's unsecured lines of credit as of December 31, 2017:



	Total Capacity		Total Outstanding			Maturity Date	Extended Maturity Date
Wells Fargo - Facility A	$	500,000	$	—	⁽¹⁾	October 2019	October 2020	⁽²⁾
First Tennessee	100,000		55,899		⁽³⁾	October 2019	October 2020	⁽⁴⁾
Wells Fargo - Facility B	500,000		37,888		⁽¹⁾	October 2020
	$	1,100,000	$	93,787	⁽⁵⁾


(1)	Up to $30,000 of the capacity on this facility can be used for letters of credit.


(2)	The extension option on the facility is at the Company's election, subject to continued compliance with the terms of the facility, and has a one-time extension fee of 0.15% of the commitment amount of the credit facility.


(3)	Up to $20,000 of the capacity on this facility can be used for letters of credit.


(4)	The extension option on the facility is at the Company's election, subject to continued compliance with the terms of the facility, and has a one-time extension fee of 0.20% of the commitment amount of the credit facility.


(5)	See debt covenant section below for limitation on excess capacity.

Unsecured Term Loans

The Company has a $350,000 unsecured term loan, which bears interest at a variable rate of LIBOR plus a spread of 0.90% to 1.75% based on the credit ratings for the Operating Partnership's senior unsecured long-term indebtedness. Based on the current credit ratings for the Operating Partnership's senior unsecured long-term indebtedness, the term loan bears interest at LIBOR plus 1.35%. In July 2017, the Company exercised its option to extend the maturity date to October 2018. The term loan has a one-year extension option to extend the maturity date to October 2019. At December 31, 2017, the outstanding borrowings of $350,000 had an interest rate of 2.71%.

In July 2017, the Company closed on the modification and extension of its $400,000 unsecured term loan, with an increase in the principal balance to $490,000. The variable interest rate remains at LIBOR plus 1.50%, based on the credit ratings for the Operating Partnership's senior unsecured long-term indebtedness. In July 2018, the principal balance will be reduced to $300,000. The loan matures in July 2020 and has two one-year extension options, the second of which is at the lenders' discretion, for a July 2022 extended maturity date. At December 31, 2017, the outstanding borrowings of $490,000 had an interest rate of 2.86%.

In July 2017, the Company modified its $50,000 unsecured term loan to reduce the principal balance to $45,000 and change the interest rate to a variable rate of LIBOR plus 1.65%. The loan matures in June 2021 and has a one-year extension option at the Company's election, subject to continued compliance with the terms of the loan agreement, for an outside maturity date of June 2022. At December 31, 2017, the outstanding borrowings of $45,000 had an interest rate of 3.01%.

Fixed-Rate Debt

As of December 31, 2017, fixed-rate loans on operating Properties bear interest at stated rates ranging from 4.00% to 8.00%. Outstanding borrowings under fixed-rate loans include a net unamortized debt premium of $199 that was recorded when the Company assumed debt to acquire real estate assets that were at an above-market interest rate compared to similar debt instruments at the date of acquisition. Fixed-rate loans on operating Properties generally provide for monthly payments of principal and/or interest and mature at various dates through June 2026, with a weighted-average maturity of 3.6 years.

Financings

The following table presents the fixed-rate loans, secured by the related consolidated Properties, that were entered into in 2016:



Date	Property	Stated Interest Rate	Maturity Date ⁽¹⁾		Amount Financedor Extended
April	Hickory Point Mall ⁽²⁾	5.85%	December 2018	⁽³⁾	$	27,446
June	Hamilton Place ⁽⁴⁾	4.36%	June 2026		107,000
December	Cary Towne Center⁽⁵⁾	4.00%	March 2019	⁽⁶⁾	46,716
December	Greenbrier Mall ⁽⁷⁾	5.00%	December 2019	⁽⁸⁾	70,801


(1)	Excludes any extension options.


(2)	The loan was modified to extend the maturity date. The interest rate remains at 5.85% but the loan is now interest-only.


(3)	The loan has a one-year extension option at the Company's election for an outside maturity date of December 2019.


(4)	Proceeds from the non-recourse loan were used to retire an existing $98,181 loan with an interest rate of 5.86% that was scheduled to mature in August 2016. The Company's share of excess proceeds was used to reduce outstanding balances on its credit facilities.


(5)	The loan was restructured to extend the maturity date and reduce the interest rate from 8.5% to 4.0% interest-only payments. The Company plans to utilize excess cash flows from the mall to fund a proposed redevelopment. The original maturity date is contingent on the Company's redevelopment plans.


(6)	The loan has one two-year extension option, which is at the Company's option and contingent on the Company having met specified redevelopment criteria, for an outside maturity date of March 2021.


(7)	The loan was restructured, with an effective date of November 2016, to extend the maturity date and reduce the interest rate from 5.91% to 5.00% interest-only payments through December 2017. The interest rate will increase to 5.4075% on January 1, 2018 and thereafter require monthly principal payments of $225 and $300 in 2018 and 2019, respectively, in addition to interest.


(8)	The loan has a one-year extension option, at the Company's election, which is contingent on the mall meeting specified debt service and operational metrics. If the loan is extended, monthly principal payments of $325 will be required in 2020 in addition to interest.

Loan Repayments

The Company repaid the following fixed-rate loans, secured by the related consolidated Properties, in 2017 and 2016:



Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Principal Balance Repaid ⁽¹⁾
2017:
January	The Plaza at Fayette	5.67%	April 2017	$	37,146
January	The Shoppes at St. Clair Square	5.67%	April 2017	18,827
February	Hamilton Corner	5.67%	April 2017	14,227
March	Layton Hills Mall	5.66%	April 2017	89,526
April	The Outlet Shoppes at Oklahoma City ⁽²⁾	5.73%	January 2022	53,386
April	The Outlet Shoppes at Oklahoma City - Phase II ⁽²⁾	3.53%	April 2019	5,545
April	The Outlet Shoppes at Oklahoma City - Phase III ⁽²⁾	3.53%	April 2019	2,704
September	Hanes Mall ⁽³⁾	6.99%	October 2018	144,325
September	The Outlet Shoppes at El Paso	7.06%	December 2017	61,561
				$	427,247

2016:
April	CoolSprings Crossing	4.54%	April 2016	$	11,313
April	Gunbarrel Pointe	4.64%	April 2016	10,083
April	Stroud Mall	4.59%	April 2016	30,276
April	York Galleria	4.55%	April 2016	48,337



Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Principal Balance Repaid ⁽¹⁾
June	Hamilton Place ⁽⁴⁾	5.86%	August 2016	98,181
August	Dakota Square Mall	6.23%	November 2016	55,103
October	Southaven Towne Center	5.50%	January 2017	38,314
				$	291,607


(1)	The Company retired the loans with borrowings from its credit facilities unless otherwise noted.


(2)	The loan was retired in conjunction with the sale of the Property which secured the loan. The Company recorded an $8,500 loss on extinguishment of debt due to a prepayment fee on the early retirement. See Note 4 for more information.


(3)	We recorded a $371 loss on extinguishment of debt due to a prepayment fee on the early retirement.


(4)	The joint venture retired the loan with proceeds from a $107,000 fixed-rate non-recourse loan. See Financings section above for more information.

Additionally, the $38,150 loan secured by Fashion Square was assumed by the buyer in conjunction with the sale of the mall in July 2016. The fixed-rate loan bore interest at 4.95% and had a maturity date of June 2022.

Subsequent to December 31, 2017, an operating Property loan was retired. See Note 19 for more information.

The following is a summary of the Company's 2017 dispositions for which the title to the consolidated mall securing the related fixed-rate debt was transferred to the lender in satisfaction of the non-recourse debt:



Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Balance of Non-recourse Debt		Gain on Extinguishment of Debt
January	Midland Mall	6.10%	August 2016	$	31,953	$	3,760
June	Chesterfield Mall	5.74%	September 2016	140,000		29,187
August	Wausau Center	5.85%	April 2021	17,689		6,851
				$	189,642	$	39,798

Other

In conjunction with the divestiture of the Company's interests in a consolidated joint venture, the Company was relieved of its funding obligation related to the loan secured by vacant land owned by the joint venture, which had a principal balance of $2,466 upon the disposition of its interests in 2017. See Note 12 and Note 15 for more information.

Variable-Rate Debt

Term loans for the Company’s operating Properties bear interest at variable interest rates indexed to the LIBOR rate. At December 31, 2017, interest rates on such variable-rate loans varied from 3.37% to 4.11%. These loans mature at various dates from April 2018 to July 2020, with a weighted-average maturity of 1.3 years, and have extension options of up to two years.

Financings

The following table presents the variable-rate loan, secured by the related consolidated Property, that was extended in 2017 and 2016:



Date	Property	Stated Interest Rate	Maturity Date		Amount Extended
2017:
March	Statesboro Crossing ⁽¹⁾	LIBOR + 1.80%	June 2018		$	10,930

2016:
June	Statesboro Crossing ⁽²⁾	LIBOR + 1.80%	June 2017	⁽³⁾	$	11,035


(1)	The Company exercised the extension option under the mortgage loan.


(2)	The loan was modified to extend the maturity date.


(3)	The loan had a one-year extension option for an outside maturity date of June 2018.

Construction Loan

Financing

The following table presents the construction loan, secured by the related consolidated Property, that was entered into in 2016:



Date	Property	Stated Interest Rate		Maturity Date		Amount Financed
May	The Outlet Shoppes at Laredo ⁽¹⁾	LIBOR + 2.5%	⁽²⁾	May 2019	⁽³⁾	$	91,300


(1)	The consolidated 65/35 joint venture closed on a construction loan for the development of The Outlet Shoppes at Laredo, an outlet center located in Laredo, TX. The Operating Partnership has guaranteed 100% of the loan.


(2)	The interest rate will be reduced to LIBOR plus 2.25% once the development is complete and certain debt and operational metrics are met.


(3)	The loan has one 24-month extension option, which is at the joint venture's election, subject to continued compliance with the terms of the loan agreement, for an outside maturity date of May 2021.

Loan Repayment

The Company repaid the following construction loan, secured by the related consolidated Property, in 2016:



Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Principal Balance Repaid
December	The Outlet Shoppes at Atlanta - Parcel Development ⁽¹⁾	3.02%	December 2019	$	2,124


(1)	In conjunction with its sale in December 2016, a portion of the net proceeds was used to retire the loan secured by the Property.

Financial Covenants and Restrictions

The agreements for the unsecured lines of credit, the Notes and unsecured term loans contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum unencumbered asset and interest ratios, maximum secured indebtedness ratios, maximum total indebtedness ratios and limitations on cash flow distributions. The Company believes that it was in compliance with all financial covenants and restrictions at December 31, 2017.

Unsecured Lines of Credit and Unsecured Term Loans

The following presents the Company's compliance with key covenant ratios, as defined, of the credit facilities and term loans as of December 31, 2017:



Ratio	Required	Actual
Debt to total asset value	< 60%	50%
Unsecured indebtedness to unencumbered asset value ⁽¹⁾	< 60%	48%	⁽²⁾
Unencumbered NOI to unsecured interest expense	> 1.75x	3.3x
EBITDA to fixed charges (debt service)	> 1.5x	2.4x


(1)	The debt covenant was modified in the third quarter of 2017 to reduce the ratio from 62.5% to 60.0%. The definition of unencumbered asset value was also modified with respect to the assets that are included in the unencumbered asset pool.

(2)

The debt covenant limits the total amount of unsecured indebtedness the Company may have outstanding, which varies over time based on the ratio. Based on the Company’s outstanding unsecured indebtedness as of December 31, 2017, the total amount available to the Company to borrow on its lines of credit was $429,678 less than the total capacity of the lines of credit resulting in total availability of $576,535 as of December 31, 2017.

The agreements for the unsecured credit facilities and unsecured term loans described above contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000 or any single non-recourse indebtedness greater than $150,000 (for the Company's ownership share) of CBL, the Operating Partnership or any Subsidiary, as defined, will constitute an event of default under the agreements to the credit facilities. The credit facilities also restrict the Company's ability to enter into any transaction that could result in certain changes in its ownership or structure as described under the heading “Change of Control/Change in Management” in the agreements for the credit facilities.

Senior Unsecured Notes

The following presents the Company's compliance with key covenant ratios, as defined, of the Notes as of December 31, 2017:



Ratio	Required	Actual
Total debt to total assets	< 60%	52%
Secured debt to total assets	<45% ⁽¹⁾	23%
Total unencumbered assets to unsecured debt	>150%	208%
Consolidated income available for debt service to annual debt service charge	> 1.5x	3.1x


(1)	On January 1, 2020 and thereafter, secured debt to total assets must be less than 40% for the 2023 Notes and the 2024 Notes. The required ratio of secured debt to total assets for the 2026 Notes is 40% or less.

The agreements for the Notes described above contain default provisions customary for transactions of this nature (with applicable customary grace periods). Additionally, any default in the payment of any recourse indebtedness greater than or equal to $50,000 of the Operating Partnership will constitute an event of default under the Notes.

Other

Several of the Company’s Properties are owned by special purpose entities, created as a requirement under certain loan agreements that are included in the Company’s consolidated financial statements. The sole business purpose of the special purpose entities is to own and operate these Properties. The real estate and other assets owned by these special purpose entities are restricted under the loan agreements in that they are not available to settle other debts of the Company. However, so long as the loans are not under an event of default, as defined in the loan agreements, the cash flows from these Properties, after payments of debt service, operating expenses and reserves, are available for distribution to the Company.

Scheduled Principal Payments

As of December 31, 2017, the scheduled principal amortization and balloon payments of the Company’s consolidated debt, excluding extensions available at the Company’s option, on all mortgage and other indebtedness, including construction loans and lines of credit, are as follows:



2018	$	667,720
2019	361,411
2020	544,957
2021	498,168
2022	431,331
Thereafter	1,635,792
	4,139,379
Net unamortized discounts and premium	(12,031		)
Unamortized deferred financing costs	(18,938		)
Principal balance of loan secured by Lender Mall in foreclosure ⁽¹⁾	122,435
Total mortgage and other indebtedness, net	$	4,230,845


(1)	Represents the principal balance of the non-recourse loan, secured by Acadiana Mall, which is in default. The loan had an April 2017 maturity date.

Of the $667,720 of scheduled principal payments in 2018, $82,190 relates to the maturing principal balances of four operating Property loans, $540,000 represents the aggregate principal balance due of two unsecured term loans (the $350,000 unsecured term loan and $190,000, which matures in July 2018, of the $490,000 unsecured term loan) and $45,530 relates to scheduled principal amortization. Of the 2018 maturities, an operating Property loan with a principal balance of $27,446 has a one-year extension option and the $350,000 unsecured term loan has a one-year extension option, which are at the Company's option and subject to compliance with the terms of the respective lender agreements, leaving approximately $244,744 of loan maturities in 2018 that must be retired or refinanced. Subsequent to December 31, 2017, the Company retired an operating Property loan. See Note 19 for details.

Interest Rate Hedging Instruments

The Company recorded its derivative instruments in its consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depended on the intended use of the derivative, whether the derivative was designated as a hedge and, if so, whether the hedge met the criteria necessary to apply hedge accounting.

The Company’s objectives in using interest rate derivatives was to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily used interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involved the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges was recorded in AOCI/L and was subsequently reclassified into earnings in the period that the hedged forecasted transaction affected earnings. Such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

The Company's outstanding interest rate derivatives, that were designated as cash flow hedges of interest rate risk, matured on April 1, 2016.

The following table provides further information of the gains and losses related to the Company’s interest rate derivatives that were designated as cash flow hedges of interest rate risk in 2016 and 2015:



Hedging Instrument	Gain Recognized in OCI/L (Effective Portion)				Location of Losses Reclassified from AOCI/L into Earnings (Effective Portion)	Loss Recognized in Earnings (Effective Portion)						Location of Gains Recognized in Earnings (Ineffective Portion)	Gain Recognized in Earnings (Ineffective Portion)
Hedging Instrument	2016		2015			2016			2015				2016		2015
Interest rate contracts	$	434	$	1,915	Interest Expense	$	(443	)	$	(2,196	)	Interest Expense	$	—	$	—

See Note 2 and Note 15 for additional information regarding the Company’s former interest rate hedging instruments.