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Mortgage and Other Indebtedness, Net

9 Months Ended

Sep. 30, 2021

Note 9 – Mortgage and Other Indebtedness, Net

Pre-Emergence 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 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 September 30, 2021.

Pre-Emergence Debt of the Operating Partnership

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

	September 30, 2021						December 31, 2020
	Amount			Weighted- Average Interest Rate ⁽¹⁾			Amount			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Non-recourse loans on operating Properties	$	955,175			5.07	%	$	1,120,203			5.12	%
Total fixed-rate debt		955,175			5.07	%		1,120,203			5.12	%
Variable-rate debt:
Recourse loans on operating Properties		67,111			3.19	%		68,061			4.69	%
Total variable-rate debt		67,111			3.19	%		68,061			4.69	%
Total fixed-rate and variable-rate debt		1,022,286			4.95	%		1,188,264			5.10	%
Unamortized deferred financing costs ⁽²⁾		(3,202	)					(3,433	)
Total mortgage and other indebtedness, net	$	1,019,084					$	1,184,831

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

	September 30, 2021					December 31, 2020
	Amount		Weighted- Average Interest Rate ⁽¹⁾			Amount		Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt:
Senior unsecured notes due 2023 ⁽³⁾	$	450,000		5.25	%	$	450,000		5.25	%
Senior unsecured notes due 2024 ⁽³⁾		300,000		4.60	%		300,000		4.60	%
Senior unsecured notes due 2026 ⁽³⁾		625,000		5.95	%		625,000		5.95	%
Total fixed-rate debt		1,375,000		5.43	%		1,375,000		5.43	%
Variable-rate debt:
Secured line of credit ⁽⁴⁾		675,926		9.50	%		675,926		9.50	%
Secured term loan ⁽⁴⁾		438,750		9.50	%		438,750		9.50	%
Total variable-rate debt		1,114,676		9.50	%		1,114,676		9.50	%
Total fixed-rate and variable-rate debt		2,489,676		7.25	%		2,489,676		7.25	%
Unpaid accrued interest ⁽⁵⁾		57,644					57,644
Prepetition unsecured or under secured liabilities		4,366					4,170
Total liabilities subject to compromise	$	2,551,686				$	2,551,490

(1)	Weighted-average interest rate excludes amortization of deferred financing costs.

(2)	Unamortized deferred financing costs of $2,310 for certain property-level, non-recourse mortgage loans may be required to be written off in the event a waiver or restructuring of terms cannot be negotiated and the debt is either redeemed or otherwise extinguished.

(3)

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. The outstanding amount of the senior unsecured notes is included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020. On the Effective Date, the senior unsecured notes were cancelled by operation of the Plan. See Note 2 for more information.

(4)

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 September 30, 2021 and 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. The outstanding amount of the secured credit facility is included in liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020. On the Effective Date, HoldCo I entered into the Exit Credit Agreement, which amended the pre-emergence secured credit facility. See Note 2 for more information.

(5)	As of September 30, 2021 and December 31, 2020, 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 $2,100,084 at September 30, 2021.

Pre-Emergence Senior Secured Credit Facility

As of September 30, 2021, the Company had a $1,185,000 senior secured credit facility, which included 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. As further described in Note 2 and in Pre-Emergence 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. 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. As a result of the events of default described under Pre-Emergence Financial Covenants and Restrictions below, the Operating Partnership could not borrow any additional amounts under the secured line of credit.

As of September 30, 2021, the secured credit facility was 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 provided 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.

See Liquidity and Going Concern Considerations and Voluntary Reorganization under Chapter 11 in Note 2 for information on the Debtors emergence from the Chapter 11 Cases and the transactions associated with the Plan.

Pre-Emergence Financial Covenants and Restrictions

The agreements for the Notes and senior secured credit facility contained default provisions customary for transactions of this nature (with applicable customary grace periods). Any default in the payment of any recourse indebtedness of the Operating Partnership greater than or equal to $50,000 would constitute an event of default under the Notes and the senior secured credit facility. Additionally, the secured credit facility contained a provision that any default on a payment of non-recourse indebtedness in excess of $150,000 was 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, capital items and operating expense obligations.

Loans in Default

As of September 30, 2021, two non-recourse loans that are each secured by one of the Company’s malls were in default. The default of the two non-recourse loans occurred prior to the filing of the Chapter 11 Cases. As of September 2021, the lenders under each of these loans accelerated the outstanding amounts due and payable on the loans. The foreclosure process has not yet commenced for 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 September 30, 2021 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		30,117

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. The Company entered forbearance and waiver agreements with many of the lenders, which waived defaults due to bankruptcy upon the Plan becoming effective. The Company remains in negotiations with lenders regarding loan extensions and loan defaults where a forbearance and/or waiver agreement have not been reached, and those loans have an aggregate outstanding balance of $727,603 at September 30, 2021.

On May 26, 2021, the subsidiary that owns The Outlet Shoppes at Laredo filed for bankruptcy. In September 2021,

the Company reached an agreement with the lender to amend the loan secured by The Outlet Shoppes at Laredo and dismiss the bankruptcy case. The loan term was extended through June 2023 and contains a one-year extension option.

In conjunction with the deconsolidation of Asheville Mall and Park Plaza, the Company deconsolidated the loan securing each property, which represented $138,926 of previously consolidated debt. See Note 8 for additional information.

Pre-Emergence Scheduled Principal Payments

As of September 30, 2021, 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 the secured line of credit, are as follows:

2021 ⁽¹⁾	$	41,365
2022		409,394
2023		1,566,756
2024		343,177
2025		37,960
2026		763,626
Total ⁽²⁾		3,162,278
Principal balance of loans with maturity date prior to September 30, 2021 ⁽³⁾		349,684
Total mortgage and other indebtedness, net	$	3,511,962

(1)	Reflects scheduled principal amortization and balloon payments for the fiscal period October 1, 2021 through December 31, 2021.

(2)

Includes $2,489,676 of liabilities subject to compromise in the accompanying condensed consolidated balance sheets as of September 30, 2021, and as the expected maturity date was subject to the outcome of the Chapter 11 Cases, the original, legal maturity dates were reflected in this table. See Note 2 for more information on the Plan and the associated transactions related to the Exit Credit Agreement, the Secured Notes, the Exchangeable Notes and the Notes.

(3)

Represents the aggregate principal balance as of September 30, 2021 of the loans secured by Alamance Crossing, EastGate Mall, Fayette Mall, Hamilton Crossing, Greenbrier Mall and Parkdale Mall & Crossing, which are in default. The Company is in discussions with the lender regarding the loans secured by these properties. The loan secured by Greenbrier Mall matured in December 2019 and had a balance of $61,647 as of September 30, 2021. The loan secured by Parkdale Mall & Crossing matured in March 2021 and had a balance of $70,507 as of September 30, 2021. The loan secured by EastGate Mall matured in April 2021 and had a balance of $30,117 as of September 30, 2021. The loan secured by Hamilton Crossing matured in April 2021 and had a balance of $7,954 as of September 30, 2021. The loan secured by Fayette Mall matured in May 2021 and had a balance of $136,670 as of September 30, 2021. The loan secured by Alamance Crossing matured in July 2021 and had a balance of $42,789 as of September 30, 2021.

Of the $41,365 of scheduled principal payments for the remainder of 2021, $27,461 relates to the maturing principal balance of one operating Property loan, which was placed into bankruptcy subsequent to September 30, 2021. See Note 15 for more information.

The Company’s mortgage and other indebtedness had a weighted-average maturity of 2.3 years as of September 30, 2021 and 3.0 years as of December 31, 2020.