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MORTGAGE AND OTHER INDEBTEDNESS, NET

12 Months Ended

Dec. 31, 2019

NOTE 8. 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 secured line of credit and secured term loan as of December 31, 2019.

Debt of the Operating Partnership

Mortgage and other indebtedness, net, consisted of the following:

	December 31, 2019						December 31, 2018
	Amount			Weighted- Average Interest Rate ⁽¹⁾			Amount			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating Properties	$	1,330,561			5.27	%	$	1,783,097			5.33	%
Senior unsecured notes due 2023 ⁽²⁾		447,894			5.25	%		447,423			5.25	%
Senior unsecured notes due 2024 ⁽³⁾		299,960			4.60	%		299,953			4.60	%
Senior unsecured notes due 2026 ⁽⁴⁾		617,473			5.95	%		616,635			5.95	%
Total fixed-rate debt		2,695,888			5.35	%		3,147,108			5.37	%
Variable-rate debt:
Recourse loan on operating Property		41,950			4.34	%		68,607			4.97	%
Construction loan		29,400			4.60	%		8,172			5.25	%
Secured line of credit		310,925			3.94	%		—			—
Unsecured lines of credit		—			—			183,972			3.90	%
Secured term loan		465,000			3.94	%		—			—
Unsecured term loans		—			—			695,000			4.21	%
Total variable-rate debt		847,275			3.98	%		955,751			4.21	%
Total fixed-rate and variable-rate debt		3,543,163			5.02	%		4,102,859			5.10	%
Unamortized deferred financing costs		( 16,148	)					( 15,963	)
Liabilities related to assets held for sale ⁽⁵⁾		—						( 43,716	)
Total mortgage and other indebtedness, net	$	3,527,015					$	4,043,180

(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 $ 2,106 and $ 2,577, as of December 31, 2019 and 2018, respectively.

(3)	The balance is net of an unamortized discount of $ 40 and $ 47, as of December 31, 2019 and 2018, respectively.

(4)	The balance is net of an unamortized discount of $ 7,527 and $ 8,365 as of December 31, 2019 and 2018, respectively.

( 5 )

Represents a non-recourse mortgage loan secured by Cary Towne Center that is classified on the consolidated balance sheet as liabilities related to assets held for sale. The mall was sold in January 2019. See Note 6 for more information.

Non-recourse term loans, recourse term loans, the secured line of credit and the secured term loan include loans that are secured by Properties owned by the Company that have a net carrying value of $ 2,639,827 at December 31, 2019.

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		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 was 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, was 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, 2019, this ratio was 32%.

(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.

Senior Secured Credit Facility

In January 2019, the Company entered into a new $ 1,185,000 senior secured credit facility, which includes a fully funded $ 500,000 term loan and a revolving line of credit with a borrowing capacity of $ 685,000. The facility replaced all of

the Company's prior unsecured bank facilities, which included three unsecured term loans with an aggregate balance of $ 695,000 and three unsecured revolving lines of credit with an aggregate capacity of $ 1,100,000 . At closing, the Company utilized the line of credit to reduce the principal balance of the unsecured term loan from $ 695,000 to $ 500,000 . The facility matures in July 2023 and bears interest at a variable rate of LIBOR plus 2.25%. The facility had an interest rate of 3.94 % at December 31, 2019. The Operating Partnership is required to pay an annual facility fee, to be paid quarterly, which ranges from 0.25 % to 0.35 %, based on the unused capacity of the line of credit. The principal balance on the term loan will be reduced by $ 35,000 per year in quarterly installments. At December 31, 2019, the secured line of credit had an outstanding balance of $ 310,925 and the secured term loan had an outstanding balance of $ 465,000 .

The secured credit facility is secured by 17 malls and 3 associated centers that are owned by 36 wholly owned subsidiaries of the Operating Partnership (collectively the “Combined Guarantor Subsidiaries”). The Combined Guarantor Subsidiaries own an additional five malls, two associated centers and four mortgage notes receivable that are not collateral for the secured credit facility. The properties that are collateral for the secured credit facility and the properties and mortgage notes receivable that are not collateral are collectively referred to as the “Guarantor Properties.” The terms of the Notes provide that, to the extent that any subsidiary of the Operating Partnership executes and delivers a guarantee to another debt facility, the Operating Partnership shall also cause the subsidiary to guarantee the Operating Partnership’s obligations under the Notes on a senior basis. In January 2019, the Combined Guarantor Subsidiaries entered into a guarantee agreement with the issuer of the Notes to satisfy the guaranty requirement.

Each of the Combined Guarantor Subsidiaries meet the criteria in Rule 3-10(f) of SEC Regulation S-X to provide condensed consolidating financial information as additional disclosure in the notes to the Operating Partnership's consolidated financial statements because each Combined Guarantor Subsidiary is 100% owned by the Operating Partnership, the guaranty issued by each Combined Guarantor Subsidiary is full and unconditional and the guaranty issued by each Combined Guarantor Subsidiary is joint and several. However, the Operating Partnership has elected to provide combined financial statements and accompanying notes for the Combined Guarantor Subsidiaries in lieu of including the consolidating financial information in the notes to its consolidated financial statements. These combined financial statements and notes are presented as an exhibit to this annual report on Form 10-K for ease of reference.

Fixed-Rate Debt

As of December 31, 2019, fixed-rate loans on operating Properties bear interest at stated rates ranging from 4.36% to 6.50%. 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 2.1 years.

2019 Financings

In April 2019, the loan secured by Volusia Mall was refinanced to increase the principal balance to $ 50,000. In addition, the maturity date was extended to May 2024 and the fixed interest rate was reduced from 8.00% to 4.56%. The net proceeds from the new loan were used to retire the $ 41,000 existing loan and a portion of the loan secured by Honey Creek Mall, as described below.

In May 2019, the Company exercised an option to extend the loan secured by The Outlet Shoppes at Laredo to May 2021. In conjunction with the amendment, a payment of $ 10,800 was made to reduce the outstanding balance of the loan to $ 43,000. The noncontrolling interest partner in the joint venture funded its 35% share of the $10,800 payment.

2018 Financings

The following table presents the fixed-rate loans secured by the related consolidated Properties that were entered into in 2018:

Date	Property	Stated Interest Rate			Maturity Date	Amount Financed or Extended
August	Hickory Point Mall ⁽¹⁾		5.85	%	December 2019	$	27,446
September	The Outlet Shoppes at El Paso ⁽²⁾		5.10	%	October 2028		75,000
						$	102,446

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

(2)	The Company owned the property in a 75/25 consolidated joint venture. A portion of the proceeds from the non-recourse loan was used to retire a recourse loan secured by Phase II of The Outlet Shoppes at El Paso as described below.

Loan Repayments

The Company repaid the following fixed-rate loans, secured by the related consolidated Properties, in 2019 and 2018:

Date

Property

Interest

Rate at

Repayment Date

Scheduled

Maturity Date

Principal

Balance

Repaid ⁽¹⁾

2019:

April

Honey Creek Mall ⁽²⁾

8.00%

July 2019

23,539

December

The Terrace

7.25%

June 2020

11,931

35,470

2018:

January

Kirkwood Mall

5.75%

April 2018

37,295

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

(2)	The Company retired the loan using proceeds from the refinancing of the loan secured by Volusia Mall as well as proceeds from the sale of Honey Creek Mall.

Dispositions

The following is a summary of the Company's dispositions for which the fixed-rate loan secured by the mall was extinguished:

Sale/Transfer Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Balance of Non-recourse Debt		Gain on Extinguishment of Debt
2019:
January	Acadiana Mall ⁽¹⁾	5.67%	April 2017	$	119,760	$	61,795
January	Cary Towne Center ⁽²⁾	4.00%	June 2018		43,716		9,927
				$	163,476	$	71,722

(1)	The Company transferred title to the mall to the mortgage holder in satisfaction of the non-recourse debt secured by the Property.

(2)	The Company sold the mall for $ 31,500 and the net proceeds from the sale were used to satisfy a portion of the loan secured by the mall. The remaining principal balance was forgiven.

Variable-Rate Debt

The recourse loan secured by The Outlet Shoppes at Laredo bears interest at a variable interest rate indexed to LIBOR. At December 31, 2019, the interest rate was 4.34%. This loan matures in May 2021.

Loan Repayments

The Company repaid the following variable-rate loans, secured by the related consolidated properties in 2018:

Date

Property

Interest

Rate at

Repayment

Date

Scheduled

Maturity Date

Principal

Balance

Repaid ⁽¹⁾

August

Statesboro Crossing ⁽²⁾

4.24%

June 2019

10,753

September

The Outlet Shoppes at El Paso - Phase II ⁽³⁾

4.73%

December 2018

6,525

17,278

(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 that secured the loan. See Note 6 for more information.

(3)	The loan secured by the Property was retired when the joint venture closed on a new fixed-rate loan in September 2018 as described above.

Construction Loan

Financing

The Company entered into a construction loan in October 2018 to redevelop anchor space at Brookfield Square. The construction loan bears interest at a variable interest rate indexed to LIBOR. At December 31, 2019, the interest rate was 4.6%. This loan matures in October 2021 and has one 12-month extension option for an outside maturity date of October 2022. The total borrowing capacity on the loan is $ 29,400.

Financial Covenants and Restrictions

The agreements for the secured credit facility and the Notes 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 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. The Company believes that it was in compliance with all financial covenants and restrictions at December 31, 2019.

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, 2019, 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, are as follows:

2020	$	222,353
2021		556,878
2022		465,455
2023		1,126,825
2024		341,398
Thereafter		747,741
		3,460,650
Net unamortized discounts and premium		( 9,673	)
Unamortized deferred financing costs		( 16,148	)
Principal balance of loan secured by Lender Malls in default ⁽¹⁾		92,186
Total mortgage and other indebtedness, net	$	3,527,015

(1)

Represents the aggregate principal balance as of December 31, 2019 of two non-recourse loans, secured by Greenbrier Mall and Hickory Point Mall, which were in default. The loans secured by Greenbrier Mall and Hickory Point Mall matured in December 2019.

Of the $ 222,353 of scheduled principal payments in 2020, $ 149,670 relates to the maturing principal balances of three operating Property loans and $ 72,683 relates to scheduled principal amortization. Subsequent to December 31, 2019, the Company retired $ 84,803 related to two of the three operating Property loans scheduled to mature in 2020. See Note 20 for more information.

Additionally, subject to the need to maintain compliance with all applicable debt covenants, the Operating Partnership, or any affiliate of the Operating Partnership, may at any time, or from time to time, repurchase outstanding Notes in the open market or otherwise. Such Notes may, at the option of the Operating Partnership or the relevant affiliate of the Operating Partnership, be held, resold or surrendered to the Trustee for cancellation.