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Mortgage and Other Indebtedness, Net | 6 Months Ended
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Jun. 30, 2020
Debt Disclosure [Abstract] |
Mortgage and Other Indebtedness, Net | 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 (the "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 credit facility and secured term loan as of June 30, 2020. Debt of the Operating Partnership Net mortgage and other indebtedness consisted of the following:
|  | June 30, 2020 |  |  | December 31, 2019 |
|  | Amount |  |  | Weighted- Average Interest Rate (1) |  |  | Amount |  |  | Weighted- Average Interest Rate (1) |
Fixed-rate debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-recourse loans on operating Properties |  | $ | 1,230,227 |  |  |  | 5.19 | % |  | $ | 1,330,561 |  |  |  | 5.27 | %
Senior unsecured notes due 2023 (2) |  |  | 448,139 |  |  |  | 5.25 | % |  |  | 447,894 |  |  |  | 5.25 | %
Senior unsecured notes due 2024 (3) |  |  | 299,964 |  |  |  | 4.60 | % |  |  | 299,960 |  |  |  | 4.60 | %
Senior unsecured notes due 2026 (4) |  |  | 617,911 |  |  |  | 5.95 | % |  |  | 617,473 |  |  |  | 5.95 | %
Total fixed-rate debt |  |  | 2,596,241 |  |  |  | 5.31 | % |  |  | 2,695,888 |  |  |  | 5.35 | %
Variable-rate debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recourse loan on operating Property |  |  | 41,500 |  |  |  | 2.82 | % |  |  | 41,950 |  |  |  | 4.34 | %
Construction loan |  |  | 27,215 |  |  |  | 3.07 | % |  |  | 29,400 |  |  |  | 4.60 | %
Secured line of credit |  |  | 675,925 |  |  |  | 2.42 | % |  |  | 310,925 |  |  |  | 3.94 | %
Secured term loan |  |  | 447,500 |  |  |  | 2.42 | % |  |  | 465,000 |  |  |  | 3.94 | %
Total variable-rate debt |  |  | 1,192,140 |  |  |  | 2.45 | % |  |  | 847,275 |  |  |  | 3.98 | %
Total fixed-rate and variable-rate debt |  |  | 3,788,381 |  |  |  | 4.41 | % |  |  | 3,543,163 |  |  |  | 5.02 | %
Unamortized deferred financing costs (5) |  |  | ( 14,347 | ) |  |  |  |  |  |  | ( 16,148 | ) |  |  |  |
Total mortgage and other indebtedness, net |  | $ | 3,774,034 |  |  |  |  |  |  | $ | 3,527,015 |  |  |  |  |
(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 $1,861 and $2,106 as of June 30, 2020 and December 31, 2019, respectively.
(3) | The balance is net of an unamortized discount of $36 and $40 as of June 30, 2020 and December 31, 2019, respectively.
(4) | The balance is net of an unamortized discount of $7,090 and $7,527 as of June 30, 2020 and December 31, 2019, respectively.
(5) | Includes $4,795 of unamortized deferred financing costs related to the secured term loan and certain property-level, non-recourse mortgage loans that may be required to be written off in the event that a waiver or restructuring of terms cannot be negotiated and the debt is either redeemed or otherwise extinguished. Additionally, intangible lease assets and other assets includes $7,828 of unamortized deferred financing costs related to the secured line of credit that may be required to be written off in the event that a waiver or restructuring of terms cannot be negotiated and the debt is either redeemed or otherwise extinguished.
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 $2,378,939 at June 30, 2020. Senior Unsecured Notes
Description |  | Issued (1) |  | Amount |  |  | Interest Rate |  |  | Maturity Date (2)
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 ) | 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 respective dates noted above, 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.
The Company elected to not make the $11,813 interest payment due and payable on June 1, 2020, with respect to the Operating Partnership’s 5.25% senior unsecured notes due 2023 (the “2023 Notes”) (the “2023 Notes Interest Payment”). The Company also elected to not make the $18,594 interest payment due and payable on June 15, 2020, with respect to the Operating Partnership’s 5.95% senior unsecured notes due 2026 (the “2026 Notes”) (the “2026 Notes Interest Payment”). The Operating Partnership did not make either the 2023 Notes Interest Payment or the 2026 Notes Interest Payment by the last day of the respective 30-day grace periods provided for in the indenture governing the 2023 Notes and the 2026 Notes. The Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment during the applicable grace periods constituted an “event of default” with respect to each of the 2023 Notes and the 2026 Notes. The Company entered into forbearance agreements, as amended, with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts or other entities for the holders or beneficial owners (the “Holders”) of in excess of 50 % of the aggregate principal amount of each of the 2023 Notes and the 2026 Notes. Pursuant to the forbearance agreements, among other provisions, the Holders of the 2023 Notes and the 2026 Notes agreed to forbear from exercising any rights and remedies under the indenture governing the 2023 Notes and the 2026 Notes solely with respect to the respective defaults from the nonpayment of the 2023 Notes Interest Payment and the 2026 Notes Interest Payment. The event of default caused by the Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment resulted in a cross default under the secured credit facility. The Company entered into a forbearance agreement, as amended, (the “Bank Forbearance Agreement”) with the administrative agent for the lenders under the secured credit facility pursuant to which, among other provisions, the administrative agent, on behalf of itself and the lenders, agreed to forbear from exercising any rights and remedies under the secured credit facility agreement solely with respect to the specified defaults (as defined in the Bank Forbearance Agreement), including the cross-default resulting from the failure to pay the 2023 Notes Interest Payment and the 2026 Notes Interest Payment . On August 5, 2020, prior to the expiration of the forbearance periods in the forbearance agreements with the Holders of the 2023 Notes and the 2026 Notes and the Bank Forbearance Agreement, the Operating Partnership made the 2023 Notes Interest Payment to the holders of the 2023 Notes and the 2026 Notes Interest Payment to the holders of the 2026 Notes. Accordingly, from and after such payment, the nonpayment of each of the 2023 Notes Interest Payment and the 2026 Notes Interest Payment no longer constitutes (i) an “event of default” under the indenture governing the 2023 Notes and the 2026 Notes that occurred and is continuing or (ii) to the extent provided in the Bank Forbearance Agreement, an “event of default” under the secured credit facility. See Financial Covenants and Restrictions below for more information. Senior Secured Credit Facility The Company has a $1,185,000 senior secured credit facility, which includes a revolving line of credit with a borrowing capacity of $685,000 and a term loan with an outstanding balance of $447,500 at June 30, 2020. The facility matures in July 2023 and bore interest at a variable rate of LIBOR plus 2.25% through March 30, 2020. As described in Note 15 – Subsequent Events , on August 6, 2020, the Operating Partnership received a notice of imposition of base rate and post-default rate letter from the administrative agent under the secured credit facility, which (i) informed the Operating Partnership that following an asserted event of default on March 19, 2020, all outstanding loans were converted to base rate loans at the expiration of the applicable interest periods and (ii) seeks payment of $4,812 related thereto for April through June 2020. The base rate is defined as the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the LIBOR Market Index Rate plus 1.0%, plus 1.25%. The base rate on June 30, 2020 was 4.50% based on the prime rate plus 1.25%. The administrative agent also informed the Operating Partnership that from and after August 6, 2020, interest will accrue on all outstanding obligations at the post-default rate, which is equal to the rate that otherwise would be in effect plus 5.0%. The post-default interest rate at the time of notification was 9.50%. 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 June 30, 2020, the secured line of credit had an outstanding balance of $675,925. In March 2020, the Company drew $280,000 on its secured credit facility to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of COVID-19. 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 four 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 or within Management’s Discussion and Analysis which accompanies the condensed 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 condensed combined financial statements and accompanying notes for the Combined Guarantor Subsidiaries in lieu of including the condensed consolidating financial information in the notes to its condensed consolidated financial statements. These condensed combined financial statements and notes are presented as an exhibit to this quarterly report on Form 10-Q for ease of reference. Financial Covenants and Restrictions The agreements for the Notes and senior secured credit facility 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 and the senior secured credit facility. Additionally, the senior secured credit facility contains a provision that any default on a payment of non-recourse indebtedness in excess of $150,000 is also a default of the senior secured credit facility. In connection with the Company’s election to not make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment, the Company entered into forbearance agreements, as amended, with the Holders of in excess of 50 % of the aggregate principal amount of each of the 2023 Notes and the 2026 Notes. Pursuant to the forbearance agreements, among other provisions, the Holders of the 2023 Notes and the 2026 Notes agreed to forbear from exercising any rights and remedies under the indenture governing the 2023 Notes and the 2026 Notes solely with respect to the respective defaults from the nonpayment of the 2023 Notes Interest Payment and the 2026 Notes Interest Payment . The event of default caused by the Operating Partnership’s failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment resulted in a cross default under the secured credit facility. The Company entered into a forbearance agreement, as amended, (the “Bank Forbearance Agreement”) with the administrative agent for the lenders under the secured credit facility pursuant to which, among other provisions, the administrative agent, on behalf of itself and the lenders, agreed to forbear from exercising any rights and remedies under the secured credit facility agreement solely with respect to the specified defaults (as defined in the Bank Forbearance Agreement), including the cross-default resulting from the failure to pay the 2023 Notes Interest Payment and the 2026 Notes Interest Payment . On August 5, 2020, prior to the expiration of the forbearance periods in the forbearance agreements with the Holders of the 2023 Notes and the 2026 Notes and the Bank Forbearance Agreement, the Operating Partnership made the 2023 Notes Interest Payment to the holders of the 2023 Notes and the 2026 Notes Interest Payment to the holders of the 2026 Notes. Accordingly, from and after such payment, the nonpayment of each of the 2023 Notes Interest Payment and the 2026 Notes Interest Payment no longer constitutes (i) an “event of default” under the indenture governing the 2023 Notes and the 2026 Notes that occurred and is continuing or (ii) to the extent provided in the Bank Forbearance Agreement, an “event of default” under the secured credit facility. On each of May 26, 2020, June 2, 2020, June 16, 2020 and August 6, 2020, the Operating Partnership received notices of default and reservation of rights letters from the administrative agent under the secured credit facility asserting that certain defaults and events of default have occurred and continue to exist by reason of the Operating Partnership’s failure to comply with certain restrictive covenants, including the liquidity covenant, in the secured credit facility and resulting from the failure to make the 2023 Notes Interest Payment and the 2026 Notes Interest Payment prior to the expiration of the applicable grace periods. In addition, as described in Note 15 – Subsequent Events , on August 6, 2020, the Operating Partnership received a notice of imposition of base rate and post-default rate letter from the administrative agent under the secured credit facility, which (i) informed the Operating Partnership that following an asserted event of default on March 19, 2020, all outstanding loans were converted to base rate loans at the expiration of the applicable interest periods and (ii) seeks payment of approximately $4,812 related thereto for April through June 2020. The base rate is defined as the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the LIBOR Market Index Rate plus 1.0%, plus 1.25%. The base rate on June 30, 2020 was 4.50% based on the prime rate plus 1.25%. The administrative agent also informed the Operating Partnership that from and after August 6, 2020, interest will accrue on all outstanding obligations at the post-default rate, which is equal to the rate that otherwise would be in effect plus 5.0%. The post-default interest rate at the time of notification was 9.50%. Violation of each of the covenants as described above provides the lenders with the option to accelerate the maturity of the secured credit facility. As of the date of this report, the lenders under the secured credit facility have not accelerated the outstanding amount due and payable on the loans or commenced foreclosure proceedings, but they may seek to exercise one or more of these remedies in the future. In addition, as a result of the events of default asserted by the administrative agent in such letters, the administrative agent may deny the Operating Partnership’s request for future LIBOR interest periods, which would result in an increase in annual interest expense of approximately $23,100 based on the base rate and $78,600 based on the post-default rate. The Operating Partnership has commenced discussions with the administrative agent on behalf of the lenders with respect to these assertions; however, there can be no assurance that the Operating Partnership will agree upon a favorable resolution with respect to such claims. Failure to reach a consensual resolution of these claims or to complete a refinancing or other restructuring could have a material adverse effect on the Operating Partnership’s liquidity, financial condition and results of operations, which may result in filing a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in order to implement a restructuring plan. See Liquidity and Going Concern Considerations in Note 1 – Organization and Basis of Presentation and Note 15 – Subsequent Events for additional information. Mortgages on Operating Properties 2020 Loan Repayments
Date |  | Property |  | Interest Rate at Repayment Date |  |  | Scheduled Maturity Date |  | Principal Balance Repaid (1) |
February |  | Parkway Place |  | 6.50% |  |  | July 2020 |  | $ | 33,186 |
February |  | Valley View Mall |  | 6.50% |  |  | July 2020 |  |  | 51,360 |
|  |  |  |  |  |  |  |  |  | $ | 84,546 |
(1) | The Company retired the loans with borrowings from its secured line of credit.
Loans in Default As of June 30, 2020, six non-recourse loans that are each secured by one of the Company’s malls were in default. The Company has been in discussions with the lenders for each of these properties regarding a restructure of each respective loan. As of the date of this report, the lenders under each of these loans have not accelerated the outstanding amount due and payable on the loans or commenced foreclosure proceedings, but they may seek to exercise one or more of these remedies in the future. Management has previously impaired the mall that secures each loan due to a shortened expected hold period resulting from management’s assessment that there is an increased likelihood that the loan secured by each mall may not be successfully restructured or refinanced. The non-recourse loans that are in default at June 30, 2020 are as follows:
Property |  | Location |  | Interest Rate |  |  | Scheduled Maturity Date |  | Loan Amount |
Greenbrier Mall |  | Chesapeake, VA |  | 5.41% |  |  | Dec-19 |  | $ | 64,501 |
Hickory Point Mall |  | Forsyth, IL |  | 5.85% |  |  | Dec-19 |  |  | 27,446 |
Burnsville Center |  | Burnsville, MN |  | 6.00% |  |  | Jul-20 |  |  | 64,233 |
EastGate Mall |  | Cincinnati, OH |  | 5.83% |  |  | Apr-21 |  |  | 31,952 |
Park Plaza |  | Little Rock, AR |  | 5.28% |  |  | Apr-21 |  |  | 77,577 |
Asheville Mall |  | Asheville, NC |  | 5.80% |  |  | Sep-21 |  |  | 63,041 |
Scheduled Principal Payments As of June 30, 2020, 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 the secured line of credit, are as follows:
2020 (1) |  | $ | 101,401 |
2021 |  |  | 557,157 |
2022 |  |  | 465,844 |
2023 |  |  | 1,491,825 |
2024 |  |  | 341,398 |
2025 |  |  | 36,160 |
Thereafter |  |  | 711,636 |
|  |  | 3,705,421 |
Net unamortized discounts and premium |  |  | ( 8,987 | )
Unamortized deferred financing costs |  |  | ( 14,347 | )
Principal balance of loans with a maturity date prior to June 30, 2020 (2) |  |  | 91,947 |
Total mortgage and other indebtedness, net |  | $ | 3,774,034 |
(1 ) | Reflects payments for the fiscal period July 1, 2020 through December 31, 2020.
(2) | Represents the aggregate principal balance as of June 30, 2020 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 $101,401 of scheduled principal payments in 2020, $64,233 relates to the maturing principal balance of one operating property loan. The Company’s mortgage and other indebtedness had a weighted-average maturity of 3.3 years as of June 30, 2020 and 3.7 years as of December 31, 2019.

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