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Mortgage and Other Indebtedness, Net

3 Months Ended

Mar. 31, 2022

Note 8 – Mortgage and Other Indebtedness, Net

Debt of the Company

CBL has no indebtedness. Consolidated subsidiaries that it has a direct or indirect ownership interest in are the borrowers on all the Company's debt.

CBL is a limited guarantor of the secured term loan and the 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:

	March 31, 2022						December 31, 2021
	Amount			Weighted- Average Interest Rate ⁽¹⁾			Amount			Weighted- Average Interest Rate ⁽¹⁾
Fixed-rate debt at fair value:
Secured Notes - at fair value (carrying amount of $395,000 as of March 31, 2022 and December 31, 2021)	$	395,593			10.00	%	$	395,395			10.00	%

Fixed-rate debt:
Exchangeable senior secured notes		—			—			150,000			7.00	%
Non-recourse loans on operating properties		847,208			4.83	%		916,927			5.04	%
Total fixed-rate debt		847,208			4.83	%		1,066,927			5.32	%
Variable-rate debt:
Secured term loan		864,611			3.75	%		880,091			3.75	%
Non-recourse loans on operating properties		66,386			3.45	%		66,911			3.21	%
Total variable-rate debt		930,997			3.73	%		947,002			3.71	%
Total fixed-rate and variable-rate debt		1,778,205			4.26	%		2,013,929			4.56	%
Unamortized deferred financing costs		(2,928	)					(1,567	)
Debt discounts ⁽²⁾		(135,808	)					(199,153	)
Total mortgage and other indebtedness, net	$	1,639,469					$	1,813,209

(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. The debt discount is accreted over the term of the respective debt using the effective interest method. The remaining debt discounts at March 31, 2022 will be accreted over a weighted average period of 3.1 years.

As of March 31, 2022, 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 or the Secured Notes.

In February 2022, 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. As part of the modification, two ground leased outparcels were released from the collateral in exchange for the addition of the redeveloped former middle anchor location.

In March 2022, the Company deconsolidated Greenbrier Mall as a result of the Company losing control when the property was placed in receivership. See Note 7 for additional information.

In March 2022, the loan secured by Cross Creek Mall was extended through May 2022. The Company remains in discussions with the lender regarding an extension. As of March 31, 2022, the loan had an outstanding balance of $101,077.

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 condensed 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 agreement, the cash flows from these properties, after payments of debt service, operating expenses and reserves, are available for distribution to the Company.

Exit Credit Agreement

On November 1, 2021, CBL & Associates HoldCo I, LLC (“HoldCo I”), a wholly owned subsidiary of the Operating Partnership, entered into an amended and restated credit agreement (the “Exit Credit Agreement”), providing for an $883,700 senior secured term loan that matures

November 1, 2025. The Operating Partnership provided a limited guaranty up to a maximum of $175,000 (the “Principal Liability Cap”). The Principal Liability Cap will be reduced by an amount equal to 100% of the first $2,500 in principal amortization made by HoldCo I each calendar year and will be reduced further by 50% of the principal amortization payments made by HoldCo I each calendar year in excess of the first $2,500 in principal amortization for such calendar year. As of March 31, 2022, the Principal Liability Cap had been reduced to $160,661. The Principal Liability Cap is eliminated when the loan balance is reduced below $650,000.

Secured Notes Indenture

Subsequent to March 31, 2022, HoldCo II delivered a conditional notice of redemption to holders of the Secured Notes, pursuant to the terms of the indenture governing the Secured Notes, to redeem $60,000 aggregate principal amount of the Secured Notes on May 26, 2022. See Note 14 for additional information.

Exchangeable Notes Indenture

On the Effective Date, HoldCo II entered into a secured exchangeable notes indenture relating to the issuance of 7.0% exchangeable senior secured notes due 2028 (the “Exchangeable Notes”) in an aggregate principal amount of $150,000. In December 2021, the Company announced that HoldCo II exercised its optional exchange right with respect to all the $150,000 aggregate principal amount of the Exchangeable Notes. The exchange date was January 28, 2022, and settlement occurred on February 1, 2022. Per the terms of the indenture governing the Exchangeable Notes, shares of the Company’s common stock, par value $0.001, plus cash in lieu of fractional shares, were issued to settle the exchange. On February 1, 2022, the Company issued 10,982,795 shares of common stock to holders of the Exchangeable Notes in satisfaction of principal, accrued interest and the makewhole payment, and all the Exchangeable Notes were cancelled in accordance with the terms of the indenture.

Scheduled Principal Payments

As of March 31, 2022, 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 ⁽¹⁾⁽²⁾	$	409,393
2023		215,407
2024		111,867
2025		785,230
2026		137,616
Thereafter		395,000
Total		2,054,513
Principal balance of loans with maturity date prior to March 31, 2022 ⁽³⁾		118,692
Total mortgage and other indebtedness	$	2,173,205

(1)	Reflects scheduled principal amortization and balloon payments for the fiscal period April 1, 2022 through December 31, 2022.

(2)	Subsequent to March 31, 2022, the loan secured by Arbor Place was extended for an additional four years, with a new maturity date of May 2026. See Note 14.

(3)

Represents the aggregate principal balance as of March 31, 2022 of the loans secured by Alamance Crossing, Hamilton Crossing 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 Parkdale Mall & Crossing matured in March 2021 and had a balance of $68,662 as of March 31, 2022. The loan secured by Hamilton Crossing matured in April 2021 and had a balance of $7,780 as of March 31, 2022. The loan secured by Alamance Crossing matured in July 2021 and had a balance of $42,250 as of March 31, 2022.

Of the $409,393 of scheduled principal payments for the remainder of 2022, $362,722 relates to the maturing principal balance of six operating property loans. The Company is in discussions with the lenders regarding extensions.