XML 33 R18.htm IDEA: XBRL DOCUMENT

Mortgage and Other Indebtedness, Net

12 Months Ended

Dec. 31, 2021

NOTE 10. MORTGAGE AND OTHER INDEBTEDNESS, NET

On the Effective Date, in exchange for their approximately $1,375,000 in principal amount of senior unsecured notes and $133,000 in principal amount of the secured credit facility, Consenting Noteholders, other noteholders, and certain holders of unsecured claims against the Company received, in the aggregate, $95,000 in cash, $455,000 of new senior secured notes, $100,000 of new exchangeable secured notes, based upon the election by certain Consenting Noteholders, and 89% in common equity of the Successor Company (subject to dilution, as set forth in the Plan). Certain Consenting Noteholders also provided $50,000 of new money in exchange for additional new exchangeable secured notes. Pursuant to the Plan the remaining lenders of the senior secured credit facility, holding $983,700 in principal amount, received $100,000 in cash and a new $883,700 secured term loan. In November 2021, HoldCo II redeemed $60,000 in principal amount of the new senior secured notes, which is included in the Successor balance sheet as of the Effective Date. See Note 2 for additional information on the secured term loan, the senior secured notes and the exchangeable notes.

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 secured term loan, the senior secured notes and the exchangeable secured notes for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates.

Debt of the Operating Partnership

Our Secured Notes and mortgage and other indebtedness, net, consisted of the following:

	Successor						Predecessor
	December 31, 2021						December 31, 2020
	Amount			Weighted- Average Interest Rate ⁽¹⁾			Amount			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt at fair value:
10% senior secured notes - at fair value (carrying amount of $395,000 as of December 31, 2021)	$	395,395			10.00	%	$	—			—

Fixed-rate debt:
Exchangeable senior secured notes		150,000			7.00	%		—			—
Non-recourse loans on operating Properties		916,927			5.04	%		1,120,203			5.12	%
Total fixed-rate debt		1,066,927			5.32	%		1,120,203			5.12	%
Variable-rate debt:
Secured term loan		880,091			3.75	%		—			—
Recourse loans on operating Properties		66,911			3.21	%		68,061			4.69	%
Total variable-rate debt		947,002			3.71	%		68,061			4.69	%
Total fixed-rate and variable-rate debt		2,013,929			4.56	%		1,188,264			5.10	%
Unamortized deferred financing costs		(1,567	)					(3,433	)
Debt discounts ⁽²⁾		(199,153	)					—
Total mortgage and other indebtedness, net	$	1,813,209					$	1,184,831

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

	Successor				Predecessor
	December 31, 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	%
Senior unsecured notes due 2024 ⁽³⁾		—		—		300,000		4.60	%
Senior unsecured notes due 2026 ⁽³⁾		—		—		625,000		5.95	%
Total fixed-rate debt		—		—		1,375,000		5.43	%
Variable-rate debt:
Secured line of credit ⁽⁴⁾		—		—		675,926		9.50	%
Secured term loan ⁽⁴⁾		—		—		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 ⁽⁵⁾		—				57,644
Prepetition unsecured or under secured liabilities		—				4,170
Total liabilities subject to compromise	$	—			$	2,551,490

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

(2)

In conjunction with fresh start accounting, the Company estimated the fair value of its mortgage notes with the assistance of a third-party valuation advisor. This resulted in recognizing a debt discount on the Effective Date. Debt discounts totaling $131,086 related to five mortgage notes payable that were past their maturity dates were fully accreted as additional interest expense during the period from November 1, 2021 through December 31, 2021. The debt discount is accreted over the term of the respective debt using the effective interest method. The remaining debt discounts at December 31, 2021 will be accreted over a weighted average period of 2.4 years.

(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 was not 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 consolidated balance sheets as of 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 would accrue on all outstanding obligations at the post-default rate, which was 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 was not 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 consolidated balance sheets as of 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 December 31, 2020, represents interest accrued on the secured credit facility and senior unsecured notes prior to the filing of the Chapter 11 Cases.

As of December 31, 2021, all the real estate assets and working capital of the Company’s consolidated subsidiaries are secured as collateral on either property-level loans, the secured term loan, the secured notes or the exchangeable notes.

Financial Covenants and Restrictions

The filing of the Chapter 11 Cases 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 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, 2021, 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 was interest only through March 2021 when monthly payments of principal and interest began. However, excess cash flows are used to partially amortize the loan, as well as being held in escrow for capital expenditures and tenant allowances.

Loan Repayments

The Company repaid the following fixed-rate loans secured by the related consolidated Properties:

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

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

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 Center ⁽¹⁾	6.00%	July 2020		64,233		17,075
				$	91,679	$	32,521

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

In conjunction with the deconsolidation of Asheville Mall, EastGate Mall and Park Plaza, the Company deconsolidated the loan securing each property. See Note 9 for additional information.

Variable-Rate Debt

The recourse loans secured by operating properties mature in 2023 and bear interest at a variable interest rate indexed to LIBOR. At December 31, 2021, the interest rates ranged from 3.00% to 3.35%.

2021 Modifications

In May 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 October 2021, Brookfield Square Anchor S, LLC filed for bankruptcy. In December 2021, the Company reached an agreement with the lender to amend the loan secured by the Brookfield Square anchor redevelopment and dismiss the bankruptcy case. The loan term was extended through December 2023 and contains a one-year extension option.

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, 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, are as follows:

2022	$	420,213
2023		90,818
2024		112,253
2025		786,067
2026		137,947
Thereafter		545,000
Total		2,092,298
Principal balance of loans with maturity date prior to December 31, 2021 ⁽¹⁾		316,631
Total mortgage and other indebtedness	$	2,408,929

(1)

Represents the aggregate principal balance as of December 31, 2021 of the loans secured by Alamance Crossing, 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 December 31, 2021. As noted above, subsequent to December 31, 2021, the Company deconsolidated Greenbrier Mall in connection with the property being placed in receivership. The loan secured by Parkdale Mall & Crossing matured in March 2021 and had a balance of $69,460 as of December 31, 2021. The

loan secured by Hamilton Crossing matured in April 2021 and had a balance of $7,868 as of December 31, 2021. The loan secured by Fayette Mall matured in May 2021 and had a balance of $135,134 as of December 31, 2021. Subsequent to December 31, 2021, the loan secured by Fayette Mall was modified to reduce the fixed interest rate to 4.25% and extend the maturity date through May 2023, with three one-year extension options, subject to certain requirements. See Note 20. The loan secured by Alamance Crossing matured in July 2021 and had a balance of $42,522 as of December 31, 2021.

Of the $420,213 of scheduled principal payments in 2022, $365,953 relates to the maturing principal balances of six operating Property loans.