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MORTGAGE AND OTHER INDEBTEDNESS, NET

12 Months Ended

Dec. 31, 2020

NOTE 9. 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, 2020.

Debt of the Operating Partnership

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

	December 31, 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	$	1,120,203			5.12	%	$	1,330,561			5.27	%
Senior unsecured notes due 2023 ⁽²⁾		—			—			447,894			5.25	%
Senior unsecured notes due 2024 ⁽³⁾		—			—			299,960			4.60	%
Senior unsecured notes due 2026 ⁽⁴⁾		—			—			617,473			5.95	%
Total fixed-rate debt		1,120,203			5.12	%		2,695,888			5.35	%
Variable-rate debt:
Recourse loans on operating Properties		68,061			4.69	%		41,950			4.34	%
Construction loan		—			—			29,400			4.60	%
Secured line of credit		—			—			310,925			3.94	%
Secured term loan		—			—			465,000			3.94	%
Total variable-rate debt		68,061			4.69	%		847,275			3.98	%
Total fixed-rate and variable-rate debt		1,188,264			5.10	%		3,543,163			5.02	%
Unamortized deferred financing costs ⁽⁵⁾		(3,433	)					(16,148	)
Total mortgage and other indebtedness, net	$	1,184,831					$	3,527,015

Mortgage and other indebtedness included in liabilities subject to compromise consisted of the following:

	December 31, 2020					December 31, 2019
	Amount		Weighted- Average Interest Rate ⁽¹⁾			Amount		Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Senior unsecured notes due 2023 ⁽⁶⁾	$	450,000		5.25	%	$	—		—
Senior unsecured notes due 2024 ⁽⁶⁾		300,000		4.60	%		—		—
Senior unsecured notes due 2026 ⁽⁶⁾		625,000		5.95	%		—		—
Total fixed-rate debt		1,375,000		5.43	%		—		—
Variable-rate debt:
Secured line of credit ⁽⁷⁾		675,926		9.50	%		—		—
Secured term loan ⁽⁷⁾		438,750		9.50	%		—		—
Total variable-rate debt		1,114,676		9.50	%		—		—
Total fixed-rate and variable-rate debt		2,489,676		7.25	%		—		—
Unpaid accrued interest ⁽⁸⁾		57,644					—
Prepetition unsecured or under secured liabilities		4,170
Total liabilities subject to compromise	$	2,551,490				$	—

(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 as of December 31, 2019.

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

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

(5)	Unamortized deferred financing costs amounting to $3,106 for certain property-level, non-recourse mortgage loans 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.

(6)

In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the senior unsecured notes subsequent to the filing of the Chapter 11 Cases. In accordance with ASC 852, unamortized deferred financing costs and debt discounts of $14,231, previously included in mortgage and other indebtedness, net in the Company’s consolidated balance sheets, related to the senior unsecured notes were charged to reorganization items in the accompanying consolidated statement of operations as part of the Company’s reorganization. The outstanding amount of the senior unsecured notes is included in liabilities subject to compromise in the accompanying consolidated balance sheets as of December 31, 2020.

(7)

The administrative agent informed the Company that 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 December 31, 2020 was 9.50%. In accordance with ASC 852, which limits the recognition of interest expense during a bankruptcy proceeding to only amounts that will be paid during the bankruptcy proceeding or that are probable of becoming allowed claims, interest has not been accrued on the secured credit facility subsequent to the filing of the Chapter 11 Cases. In accordance with ASC 852, unamortized deferred financing costs of $4,098, previously included in mortgage and other indebtedness, net in the Company’s consolidated balance sheets, related to the secured term loan were charged to reorganization items in the accompanying consolidated statement of operations as part of the Company’s reorganization. Additionally, unamortized deferred financing costs amounting to $6,965, previously included in intangible lease assets and other assets in the Company’s consolidated balance sheets, related to the secured line of credit were charged to reorganization items in the accompanying consolidated statement of operations as part of the Company’s reorganization. The outstanding amount of the secured credit facility is included in liabilities subject to compromise in the accompanying consolidated balance sheets as of December 31, 2020.

(8)	Represents interest accrued on the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases.

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 $2,197,979 at December 31, 2020.

Senior Unsecured Notes ⁽¹⁾

Description	Issued ⁽²⁾	Amount		Interest Rate			Maturity Date
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)	Subsequent to December 31, 2020, the Company entered into an amended and restated Restructuring Support Agreement with its credit facility lenders and unsecured noteholders that provides for a fully consensual comprehensive restructuring. See Note 20 for additional information.

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

The Company elected to not make the $6,900 interest payment (the “2024 Notes Interest Payment”) due and payable on October 15, 2020, with respect to the 2024 Notes. Under the indenture governing the 2024 Notes, the Operating Partnership had a 30-day grace period to make the 2024 Notes Interest Payment before the nonpayment was considered an “event of default” with respect to the 2024 Notes. The Company filed the Chapter 11 Cases prior to the end of the 30-day grace period.

Senior Secured Credit Facility

The Company has a $1,185,000 senior secured credit facility, which includes a revolving line of credit drawn to its maximum borrowing capacity of $675,926 and a term loan with an outstanding balance of $438,750 at December 31, 2020. The facility matures in July 2023 and bore interest at a variable rate of LIBOR plus 2.25% through March 30, 2020. 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) sought payment of $4,812 related thereto for April through June 2020 (the “Demand Interest”). 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 December 31, 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 and at December 31, 2020 was 9.50%. As further described in Note 2 and in Financial Covenants and Restrictions below, the filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility.

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 terms of the facility also require the principal balance on the term loan to be reduced by $35,000 per year in quarterly installments. 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 the COVID-19 pandemic. At December 31, 2020, the secured line of credit had an outstanding balance of $675,926. As a result of the event of default due to the filing of the Chapter 11 Cases described under Financial Covenants and Restrictions below, the Operating Partnership cannot borrow any additional amounts under the secured line of credit.

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.

See Financial Covenants and Restrictions below and Liquidity and Going Concern Considerations and Voluntary Reorganization under Chapter 11 in Note 2 for information on the event of default resulting from the filing of the Chapter 11 Cases.

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.

The filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligations becoming immediately due and payable with respect to the secured credit facility and the senior unsecured notes. The filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may result in acceleration of the outstanding principal and other sums due.

Certain of the Company’s properties that are pledged as collateral on non-recourse mortgage loans and the secured credit facility are subject to cash management agreements with the lenders, which restrict the cash balances associated with those properties to only be used for debt service and operating expense obligations.

Fixed-Rate Debt

As of December 31, 2020, fixed-rate loans on operating Properties bear interest at stated rates ranging from 4.36% to 5.99%. 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 1.6 years.

2020 Modifications

The maturity date for the fixed-rate loan secured by Jefferson Mall was extended from June 1, 2022 to June 1, 2026. The loan will be interest only through March 2021 when monthly payments of principal and interest will be made through the maturity date.

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.

Loan Repayments

The Company repaid the following fixed-rate loans, secured by the related consolidated Properties, in 2020 and 2019:

Date	Property	Interest Rate at Repayment Date	Scheduled Maturity Date	Principal Balance Repaid ⁽¹⁾
2020:
February	Parkway Place	6.50%	July 2020	$	33,186
February	Valley View Mall	6.50%	July 2020		51,360
				$	84,546
2019:
April	Honey Creek Mall ⁽²⁾	8.00%	July 2019	$	23,539
December	The Terrace	7.25%	June 2020		11,931
				$	35,470

(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
2020:
August	Hickory Point Mall ⁽¹⁾	5.85%	December 2019	$	27,446	$	15,446
December	Burnsville Mall ⁽¹⁾	6.00%	July 2020		64,233		17,075
				$	91,679	$	32,521
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 loans secured by operating properties bear interest at a variable interest rate indexed to LIBOR. At December 31, 2020, the interest rates ranged from 3.05% to 5.80%. These loans mature in 2021.

Financing

The Company entered into a construction loan in October 2018 to redevelop anchor space at Brookfield Square. The loan bears interest at a variable interest rate indexed to LIBOR. At December 31, 2020, the interest rate was 3.1%. This loan matures in October 2021 and has one 12-month extension option for an outside maturity date of October 2022. The Company is in discussions with the lender regarding the extension option because the filing of the Chapter 11 Cases constituted an event of default under the loan agreement. The loan was reclassified as an operating property loan during 2020 due to construction and all loan draws being completed.

Loans in Default

As of December 31, 2020, four non-recourse loans that are each secured by one of the Company’s malls were in default. The default of the four non-recourse loans occurred prior to the filing of the Chapter 11 Cases. As of December 31, 2020, the lenders under each of these loans accelerated the outstanding amount due and payable on the loans. Subsequent to December 31, 2020, Asheville Mall and Park Plaza were turned over to receivers to manage the properties (see Note 20). The foreclosure process has not yet commenced in relation to EastGate Mall. The Company is in discussions with the lender regarding a restructure of the loan secured by Greenbrier Mall. 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 December 31, 2020 are as follows:

Property	Location	Interest Rate	Scheduled Maturity Date	Loan Amount
Greenbrier Mall	Chesapeake, VA	5.41%	Dec-19	$	61,647
EastGate Mall	Cincinnati, OH	5.83%	Apr-21		31,181
Park Plaza	Little Rock, AR	5.28%	Apr-21		76,805
Asheville Mall	Asheville, NC	5.80%	Sep-21		62,121

As described in Note 2, the filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. There are 14 of such loans that have an aggregate outstanding balance of $833,444 at December 31, 2020.

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, 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, are as follows:

2021	$	560,128
2022		407,638
2023		1,502,276
2024		343,571
2025		38,355
Thereafter		764,325
Total ⁽¹⁾		3,616,293
Principal balance of loan with a maturity date prior to December 31, 2020 ⁽²⁾		61,647
Total mortgage and other indebtedness, net	$	3,677,940

(1)	Includes $2,489,676 of liabilities subject to compromise in the accompanying consolidated balance sheets as of December 31, 2020, and as the expected maturity date is subject to the outcome of the Chapter 11 Cases, the original, legal maturity dates are reflected in this table.

(2)	Represents the aggregate principal balance as of December 31, 2020 of one non-recourse loan, secured by Greenbrier Mall which was in default. The loan secured by Greenbrier Mall matured in December 2019.

Of the $560,128 of scheduled principal payments in 2021, $505,735 relates to the maturing principal balances of nine operating Property loans.