10-Q 1 cbl-20240331.htm 10-Q 10-Q
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UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO _______________

COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)

 

CBL & ASSOCIATES PROPERTIES, INC.

(Exact Name of registrant as specified in its charter)

 

 

Delaware

62-1545718

 

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

 

2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN 37421-6000

(Address of principal executive office, including zip code)

423-855-0001

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered under Section 12(b) of the Act:

 

Title of each Class

Trading

Symbol(s)

Name of each exchange on

which registered

Common Stock, $0.001 par value

CBL

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

 

Yes

No

 

 

 

 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

 

Yes

No

 

 

 

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

 

  Yes

No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 

  Yes

No

As of May 3, 2024, 31,872,406 shares of common stock were outstanding, excluding 34 treasury shares.


 

CBL & Associates Properties, Inc.

Table of Contents

 

 

 

 

 

 

PART I

FINANCIAL INFORMATION

1

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

1

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

1

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023

2

 

Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2024 and 2023

3

 

Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2024 and 2023

4

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023

5

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

 

 

 

PART II

OTHER INFORMATION

34

 

 

 

Item 1.

Legal Proceedings

34

Item1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 3.

Defaults Upon Senior Securities

34

Item 4.

Mine Safety Disclosures

34

Item 5.

Other Information

34

Item 6.

Exhibits

35

 

 

 

 

SIGNATURES

36

 

 

 


 

PART I – FINANCIAL INFORMATION

ITEM 1: Condensed Consolidated Financial Statements (Unaudited)

 

CBL & Associates Properties, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

ASSETS (1)

 

2024

 

 

2023

 

Real estate assets:

 

 

 

 

 

 

Land

 

$

582,949

 

 

$

585,191

 

Buildings and improvements

 

 

1,218,746

 

 

 

1,216,054

 

 

 

1,801,695

 

 

 

1,801,245

 

Accumulated depreciation

 

 

(247,387

)

 

 

(228,034

)

 

 

1,554,308

 

 

 

1,573,211

 

Developments in progress

 

 

7,479

 

 

 

8,900

 

Net investment in real estate assets

 

 

1,561,787

 

 

 

1,582,111

 

Cash and cash equivalents

 

 

60,311

 

 

 

34,188

 

Restricted cash

 

 

66,946

 

 

 

88,888

 

Available-for-sale securities - at fair value (amortized cost of $235,072 and $261,869 as of March 31, 2024 and December 31, 2023, respectively)

 

 

234,998

 

 

 

262,142

 

Receivables:

 

 

 

 

 

 

Tenant

 

 

37,588

 

 

 

43,436

 

Other

 

 

7,246

 

 

 

2,752

 

Investments in unconsolidated affiliates

 

 

77,818

 

 

 

76,458

 

In-place leases, net

 

 

142,683

 

 

 

157,639

 

Intangible lease assets and other assets

 

 

154,439

 

 

 

158,291

 

 

$

2,343,816

 

 

$

2,405,905

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Mortgage and other indebtedness, net

 

$

1,860,294

 

 

$

1,888,803

 

Accounts payable and accrued liabilities

 

 

168,672

 

 

 

186,485

 

Total liabilities (1)

 

 

2,028,966

 

 

 

2,075,288

 

Shareholders' equity:

 

 

 

 

 

 

Common stock, $.001 par value, 200,000,000 shares authorized, 32,033,939 and 31,975,645 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively (excluding 140,034 treasury shares as of March 31, 2024 and excluding 34 treasury shares as of December 31, 2023)

 

32

 

 

 

32

 

Additional paid-in capital

 

 

716,706

 

 

 

719,125

 

Accumulated other comprehensive income

 

 

726

 

 

 

610

 

Accumulated deficit

 

 

(393,266

)

 

 

(380,446

)

Total shareholders' equity

 

 

324,198

 

 

 

339,321

 

Noncontrolling interests

 

 

(9,348

)

 

 

(8,704

)

Total equity

 

 

314,850

 

 

 

330,617

 

 

$

2,343,816

 

 

$

2,405,905

 

(1)
As of March 31, 2024, includes $179,986 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $205,856 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 7.

The accompanying notes are an integral part of these condensed consolidated statements.

1


 

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

REVENUES:

 

 

 

 

 

 

Rental revenues

 

$

124,027

 

 

$

130,324

 

Management, development and leasing fees

 

 

1,905

 

 

 

2,434

 

Other

 

 

3,185

 

 

 

3,601

 

Total revenues

 

 

129,117

 

 

 

136,359

 

EXPENSES:

 

 

 

 

 

 

Property operating

 

 

(23,827

)

 

 

(24,614

)

Depreciation and amortization

 

 

(38,040

)

 

 

(53,269

)

Real estate taxes

 

 

(9,269

)

 

 

(14,788

)

Maintenance and repairs

 

 

(9,938

)

 

 

(11,524

)

General and administrative

 

 

(20,414

)

 

 

(19,229

)

Loss on impairment

 

 

(836

)

 

 

 

Litigation settlement

 

 

68

 

 

 

44

 

Other

 

 

 

 

 

(198

)

Total expenses

 

 

(102,256

)

 

 

(123,578

)

OTHER INCOME (EXPENSES):

 

 

 

 

 

 

Interest and other income

 

 

4,004

 

 

 

2,665

 

Interest expense

 

 

(39,812

)

 

 

(43,524

)

Gain on deconsolidation

 

 

 

 

 

28,151

 

Gain on sales of real estate assets

 

 

3,721

 

 

 

1,596

 

Income tax benefit

 

 

158

 

 

 

101

 

Equity in earnings (losses) of unconsolidated affiliates

 

 

4,594

 

 

 

(1,256

)

Total other expenses

 

 

(27,335

)

 

 

(12,267

)

Net (loss) income

 

 

(474

)

 

 

514

 

Net loss (income) attributable to noncontrolling interests in:

 

 

 

 

 

 

Operating Partnership

 

 

 

 

 

 

Other consolidated subsidiaries

 

 

524

 

 

 

1,745

 

Net income attributable to the Company

 

 

50

 

 

 

2,259

 

Earnings allocable to unvested restricted stock

 

 

(259

)

 

 

(280

)

Net (loss) income attributable to common shareholders

 

$

(209

)

 

$

1,979

 

Basic and diluted per share data attributable to common shareholders:

 

 

 

 

 

 

Basic earnings per share

 

$

(0.01

)

 

$

0.06

 

Diluted earnings per share

 

 

(0.01

)

 

 

0.06

 

Weighted-average basic shares

 

 

31,546

 

 

 

31,304

 

Weighted-average diluted shares

 

 

31,546

 

 

 

31,369

 

 

The accompanying notes are an integral part of these condensed consolidated statements.

 

2


 

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(In thousands, except share data)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Net (loss) income

 

$

(474

)

 

$

514

 

 

 

 

 

 

 

 

Other comprehensive gain (loss):

 

 

 

 

 

 

Unrealized gain on interest rate swap

 

 

462

 

 

 

 

Unrealized (loss) gain on available-for-sale securities

 

 

(346

)

 

 

530

 

Comprehensive (loss) income

 

 

(358

)

 

 

1,044

 

Comprehensive loss attributable to noncontrolling interests in:

 

 

 

 

 

 

    Other consolidated subsidiaries

 

 

524

 

 

 

1,745

 

Comprehensive income attributable to the Company

 

 

166

 

 

 

2,789

 

Earnings allocable to unvested restricted stock

 

 

(259

)

 

 

(280

)

Comprehensive (loss) income attributable to common shareholders

 

$

(93

)

 

$

2,509

 

 

The accompanying notes are an integral part of these condensed consolidated statements.

3


 

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)

 

 

Equity

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Accumulated Deficit

 

 

Total
Shareholders'
Equity

 

 

Noncontrolling
Interests

 

 

Total
Equity

 

Balance, December 31, 2022

 

$

32

 

 

$

710,497

 

 

$

(1,054

)

 

$

(338,934

)

 

$

370,541

 

 

$

(3,412

)

 

$

367,129

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

2,259

 

 

 

2,259

 

 

 

(1,745

)

 

 

514

 

Other comprehensive income

 

 

 

 

 

 

 

 

530

 

 

 

 

 

 

530

 

 

 

 

 

 

530

 

Dividends declared - common stock

 

 

 

 

 

 

 

 

 

 

 

(12,024

)

 

 

(12,024

)

 

 

 

 

 

(12,024

)

Issuance of 152,905 shares of restricted common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of 133,221 shares of common stock associated with performance stock units, net of shares withheld for tax

 

 

 

 

 

(1,793

)

 

 

 

 

 

 

 

 

(1,793

)

 

 

 

 

 

(1,793

)

Amortization of deferred compensation

 

 

 

 

 

1,843

 

 

 

 

 

 

 

 

 

1,843

 

 

 

 

 

 

1,843

 

Compensation expense related to performance stock units

 

 

 

 

 

1,409

 

 

 

 

 

 

 

 

 

1,409

 

 

 

 

 

 

1,409

 

Distributions to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

(3

)

Balance, March 31, 2023

 

$

32

 

 

$

711,956

 

 

$

(524

)

 

$

(348,699

)

 

$

362,765

 

 

$

(5,160

)

 

$

357,605

 

 

 

 

Equity

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Other
Comprehensive
Income

 

 

Accumulated
Deficit

 

 

Total
Shareholders'
Equity

 

 

Noncontrolling
Interests

 

 

Total
Equity

 

Balance, December 31, 2023

 

$

32

 

 

$

719,125

 

 

$

610

 

 

$

(380,446

)

 

$

339,321

 

 

$

(8,704

)

 

$

330,617

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

50

 

 

 

50

 

 

 

(524

)

 

 

(474

)

Other comprehensive income

 

 

 

 

 

 

 

 

116

 

 

 

 

 

 

116

 

 

 

 

 

 

116

 

Dividends declared - common stock

 

 

 

 

 

 

 

 

 

 

 

(12,870

)

 

 

(12,870

)

 

 

 

 

 

(12,870

)

Issuance of 145,352 shares of restricted common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of 164,837 shares of common stock associated with performance stock units, net of shares withheld for tax

 

 

 

 

 

(769

)

 

 

 

 

 

 

 

 

(769

)

 

 

 

 

 

(769

)

Distributions to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(133

)

 

 

(133

)

Amortization of deferred compensation

 

 

 

 

 

2,012

 

 

 

 

 

 

 

 

 

2,012

 

 

 

 

 

 

2,012

 

Compensation expense related to performance stock units

 

 

 

 

 

1,667

 

 

 

 

 

 

 

 

 

1,667

 

 

 

 

 

 

1,667

 

Cancellation of 12,484 shares of restricted common stock

 

 

 

 

 

(292

)

 

 

 

 

 

 

 

 

(292

)

 

 

 

 

 

(292

)

Repurchases of 239,411 shares of common stock

 

 

 

 

 

(5,037

)

 

 

 

 

 

 

 

 

(5,037

)

 

 

 

 

 

(5,037

)

Contributions from noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

13

 

Balance, March 31, 2024

 

$

32

 

 

$

716,706

 

 

$

726

 

 

$

(393,266

)

 

$

324,198

 

 

$

(9,348

)

 

$

314,850

 

 

The accompanying notes are an integral part of these condensed consolidated statements.

4


 

CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net (loss) income

 

$

(474

)

 

$

514

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

38,040

 

 

 

53,269

 

Net amortization of deferred financing costs, discounts on available-for-sale securities and debt discounts

 

 

2,459

 

 

 

7,852

 

Net amortization of intangible lease assets and liabilities

 

 

3,449

 

 

 

5,337

 

Gain on sales of real estate assets

 

 

(3,721

)

 

 

(1,596

)

Gain on deconsolidation

 

 

 

 

 

(28,151

)

Write-off of development projects

 

 

 

 

 

17

 

Share-based compensation expense

 

 

3,679

 

 

 

3,252

 

Loss on impairment

 

 

836

 

 

 

 

Equity in (earnings) losses of unconsolidated affiliates

 

 

(4,594

)

 

 

1,256

 

Distributions of earnings from unconsolidated affiliates

 

 

3,692

 

 

 

3,335

 

Change in estimate of uncollectable revenues

 

 

1,522

 

 

 

(138

)

Change in deferred tax accounts

 

 

1,331

 

 

 

225

 

Changes in:

 

 

 

 

 

 

Tenant and other receivables

 

 

(356

)

 

 

7,934

 

Other assets

 

 

(4,295

)

 

 

(2,667

)

Accounts payable and accrued liabilities

 

 

(10,830

)

 

 

(17,264

)

Net cash provided by operating activities

 

 

30,738

 

 

 

33,175

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Additions to real estate assets

 

 

(6,846

)

 

 

(6,729

)

Proceeds from sales of real estate assets

 

 

6,746

 

 

 

4,622

 

Purchases of available-for-sale securities

 

 

(48,600

)

 

 

(15,004

)

Redemptions of available-for-sale securities

 

 

76,445

 

 

 

50,850

 

Additional investments in and advances to unconsolidated affiliates

 

 

(859

)

 

 

(4,682

)

Distributions in excess of equity in earnings of unconsolidated affiliates

 

 

494

 

 

 

1,504

 

Changes in other assets

 

 

(576

)

 

 

(689

)

Net cash provided by investing activities

 

 

26,804

 

 

 

29,872

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Principal payments on mortgage and other indebtedness

 

 

(34,272

)

 

 

(26,155

)

Repurchases of common stock

 

 

(5,037

)

 

 

 

Contributions from noncontrolling interests

 

 

13

 

 

 

 

Payment of tax withholdings for restricted stock awards and performance stock units

 

 

(1,062

)

 

 

(1,793

)

Distributions to noncontrolling interests

 

 

(133

)

 

 

(3

)

Dividends paid to common shareholders

 

 

(12,870

)

 

 

(82,058

)

Net cash used in financing activities

 

 

(53,361

)

 

 

(110,009

)

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

4,181

 

 

 

(46,962

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

 

 

123,076

 

 

 

141,949

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

 

$

127,257

 

 

$

94,987

 

Reconciliation from consolidated statements of cash flows to consolidated balance sheets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

60,311

 

 

$

22,555

 

Restricted cash:

 

 

 

 

 

 

Restricted cash

 

 

26,968

 

 

 

35,006

 

Mortgage escrows

 

 

39,978

 

 

 

37,426

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

 

$

127,257

 

 

$

94,987

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION

 

 

 

 

 

 

Cash paid for interest, net of amounts capitalized

 

$

34,357

 

 

$

32,762

 

The accompanying notes are an integral part of these condensed consolidated statements.

5


 

CBL & Associates Properties, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

Note 1 – Organization and Basis of Presentation

CBL & Associates Properties, Inc. (“CBL”), a Delaware corporation, is a self-managed, self-administered, fully integrated real estate investment trust (“REIT”) that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, outlet centers, lifestyle centers, open-air centers, office buildings and other properties, including single-tenant and multi-tenant parcels. Its properties are located in 22 states, but are primarily in the southeastern and midwestern United States.

CBL conducts substantially all its business through CBL & Associates Limited Partnership (the “Operating Partnership”), which is a variable interest entity ("VIE"). The Operating Partnership consolidates the financial statements of all entities in which it has a controlling financial interest or where it is the primary beneficiary of a VIE.

As of March 31, 2024, the Operating Partnership owned interests in the following properties:

 

 

Malls (1)

 

 

Outlet Centers (1)

 

 

Lifestyle Centers (1)(2)

 

 

Open-Air Centers (3)

 

 

Other (3)(4)

 

 

Total

 

Consolidated Properties

 

 

40

 

 

 

2

 

 

 

4

 

 

 

21

 

 

 

4

 

 

 

71

 

Unconsolidated Properties (5)

 

 

7

 

 

 

3

 

 

 

1

 

 

 

8

 

 

 

1

 

 

 

20

 

Total

 

 

47

 

 

 

5

 

 

 

5

 

 

 

29

 

 

 

5

 

 

 

91

 

(1)
The Company has aggregated malls, outlet centers and lifestyle centers into one reportable segment (the "Malls") because they have similar economic characteristics and they provide similar products and services to similar types of, and in many cases, the same tenants.
(2)
Alamance Crossing is made up of Alamance Crossing East and Alamance Crossing West. Alamance Crossing East was deconsolidated and placed into receivership in connection with the foreclosure process. Alamance Crossing West remains consolidated. The Company views Alamance Crossing as one property and therefore only Alamance Crossing West is reflected in the total count.
(3)
Included in “All Other” for purposes of segment reporting.
(4)
CBL's two consolidated corporate office buildings are included in the Other category.
(5)
The Operating Partnership accounts for these investments using the equity method.

CBL is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. As of March 31, 2024, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.00% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned a 98.98% limited partner interest for a combined interest held by CBL of 99.98%. As of March 31, 2024, third parties owned a 0.02% limited partner interest in the Operating Partnership.

As used herein, the term "Company" includes CBL & Associates Properties, Inc. and its subsidiaries, including CBL & Associates Limited Partnership and its subsidiaries, unless the context indicates otherwise. The term "Operating Partnership" refers to CBL & Associates Limited Partnership and its subsidiaries.

The Operating Partnership conducts the Company's property management and development activities through its wholly owned subsidiary, CBL & Associates Management, Inc. (the “Management Company"), to comply with certain requirements of the Internal Revenue Code.

The accompanying condensed consolidated financial statements are unaudited; however, they have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. All intercompany transactions have been eliminated. The results for the interim period ended March 31, 2024 are not necessarily indicative of the results to be obtained for the full fiscal year.

Reclassifications

The Company reclassified above market leases, net, of $118,673 and below market leases, net, of $80,408 from individual line items to intangible lease assets and other assets and accounts payable and accrued liabilities, respectively, on the condensed consolidated balance sheets at December 31, 2023 to conform with the current period presentation.

For the three months ended March 31, 2023, the Company reclassified payments received on mortgage and other notes receivable of $21 from an individual line item on the condensed consolidated statement of cash flows to changes in other assets from investing activities on the condensed consolidated statement of cash flows to conform with the current period presentation.

6


 

Note 2 – Summary of Significant Accounting Policies

Accounting Guidance Adopted

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform, which provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Additional optional expedients, exceptions and clarifications were created in ASU 2021-01. The guidance is effective upon issuance and generally can be applied to any contract modifications or existing and new hedging relationships through December 31, 2024. The Company elected the expedients in conjunction with transitioning certain debt instruments to alternative benchmark indexes. Since adoption, there has been no impact on our condensed consolidated financial statements through the use of the expedient.

Accounting Guidance Not Yet Adopted

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting, which amends the existing standard's disclosure requirements. Among other things, ASU 2023-07 will require companies to disclose significant segment expenses by reportable segment if they are regularly provided to the Chief Operating Decision Maker ("CODM") and disclosures of the CODM's title and position, as well as details of how the CODM uses the reported measures. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. The adoption of ASU 2023-07 is not expected to have a material impact on the Company's financial statements.

Accounts Receivable

Receivables include amounts billed and currently due from tenants pursuant to lease agreements and receivables attributable to straight-line rents associated with those lease agreements. Individual leases where the collection of rents is in dispute are assessed for collectability based on management’s best estimate of collection considering the anticipated outcome of the dispute. Individual leases that are not in dispute are assessed for collectability and upon the determination that the collection of rents over the remaining lease term is not probable, accounts receivable are reduced as an adjustment to rental revenues. Revenue from leases where collection is deemed to be less than probable is recorded on a cash basis until collectability is determined to be probable. Further, management assesses whether operating lease receivables, at a portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical collection levels and current economic trends. An allowance for the uncollectable portion of the portfolio is recorded as an adjustment to rental revenues.

Management’s collection assessment took into consideration the type of retailer, billing disputes, lease negotiation status and executed deferral or abatement agreements, as well as recent rent collection experience and tenant bankruptcies based on the best information available to management at the time of evaluation.

Note 3 – Revenues

Revenues

The following table presents the Company's revenues disaggregated by revenue source for the three months ended March 31, 2024 and 2023:

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Rental revenues

 

$

124,027

 

 

$

130,324

 

Revenues from contracts with customers:

 

 

 

 

 

 

Operating expense reimbursements

 

 

2,260

 

 

 

2,216

 

Management, development and leasing fees (1)

 

 

1,905

 

 

 

2,434

 

Marketing revenues (2)

 

 

404

 

 

 

645

 

 

 

4,569

 

 

 

5,295

 

 

 

 

 

 

 

Other revenues

 

 

521

 

 

 

740

 

Total revenues (3)

 

$

129,117

 

 

$

136,359

 

(1)
Included in All Other segment.
(2)
Marketing revenues solely relate to the Malls segment for all periods presented.
(3)
Sales taxes are excluded from revenues.

See Note 9 for information on the Company's segments.

7


 

Revenues from Contracts with Customers

Outstanding Performance Obligations

The Company has outstanding performance obligations related to certain noncancelable contracts with customers for which it will receive fixed operating expense reimbursements for providing certain maintenance and other services as described above. As of March 31, 2024, the Company expects to recognize these amounts as revenue over the following periods:

Performance obligation

 

Less than 5
years

 

 

5-20
years

 

 

Over 20
years

 

 

Total

 

Fixed operating expense reimbursements

 

$

19,320

 

 

$

44,001

 

 

$

40,721

 

 

$

104,042

 

The Company evaluates its performance obligations each period and makes adjustments to reflect any known additions or cancellations. Performance obligations related to variable consideration, which is based on sales, are constrained.

Note 4 – Leases

The components of rental revenues for the three months ended March 31, 2024 and 2023 are as follows:

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Fixed lease payments

 

$

98,304

 

 

$

98,981

 

Variable lease payments

 

 

25,723

 

 

 

31,343

 

Total rental revenues

 

$

124,027

 

 

$

130,324

 

The undiscounted future fixed lease payments to be received under the Company's operating leases as of March 31, 2024, are as follows:

Years Ending December 31,

 

Operating Leases

 

2024 (1)

 

$

292,113

 

2025

 

 

319,843

 

2026

 

 

244,269

 

2027

 

 

183,412

 

2028

 

 

131,356

 

2029

 

 

84,780

 

Thereafter

 

 

211,472

 

Total undiscounted lease payments

 

$

1,467,245

 

(1)
Reflects rental payments for the period April 1, 2024 to December 31, 2024.

Note 5 – Fair Value Measurements

The Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosure, ("ASC 820") based on whether the inputs to valuation techniques are observable or unobservable. The fair value hierarchy contains three levels of inputs that may be used to measure fair value as follows:

Level 1 –

Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.

Level 2 –

Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.

Level 3 –

Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability. Market valuations must often be determined using discounted cash flow methodologies, pricing models or similar techniques based on the Company’s assumptions and best judgment.

 

8


 

The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date and under current market conditions. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions and risk of nonperformance.

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short-term nature of these financial instruments. The estimated fair value of mortgage and other indebtedness was $1,754,060 and $1,806,486 as of March 31, 2024 and December 31, 2023, respectively. The fair value of mortgage and other indebtedness was calculated using Level 2 inputs by discounting future cash flows for mortgage and other indebtedness using estimated market rates at which similar loans would be made currently.

Fair Value Measurements on a Recurring Basis

The following table sets forth information regarding the Company's interest rate swap that was designated as a cash flow hedge of interest rate risk for the three months ended March 31, 2024. See Note 8 for more information.

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

Asset

 

Fair Value at March 31, 2024

 

 

Quoted Prices in
Active Markets
 for Identical
Assets (Level 1)

 

 

Significant
Other
Observable
Inputs (Level 2)

 

 

Significant
Unobservable
Inputs (Level 3)

 

Interest rate swap

 

$

799

 

 

$

 

 

$

799

 

 

$

 

During the three months ended March 31, 2024, the Company has continued to reinvest the cash from maturing U.S. Treasury securities into new U.S. Treasury securities. The Company designated the U.S. Treasury securities as available-for-sale (“AFS”). The table below sets forth information regarding the Company’s AFS securities that were measured at fair value for the three months ended March 31, 2024 and for the year ended December 31, 2023:

U.S. Treasury securities

 

March 31, 2024

 

 

December 31, 2023

 

Amortized cost (1)

 

$

235,072

 

 

$

261,869

 

Allowance for credit losses (2)

 

 

 

 

 

 

Total unrealized (loss) gain

 

 

(74

)

 

 

273

 

Fair value (3)

 

$

234,998

 

 

$

262,142

 

(1)
The U.S. Treasury securities held as of March 31, 2024 have maturities through September 2024.
(2)
U.S. Treasury securities have a long history with no credit losses. Additionally, the Company notes that U.S. Treasury securities are explicitly fully guaranteed by a sovereign entity that can print its own currency and that the sovereign entity’s currency is routinely held by central banks and other major financial institutions, is used in international commerce, and commonly viewed as a reserve currency, all of which qualitatively indicate that historical credit loss information should be minimally affected by current conditions and reasonable and supportable forecasts. Therefore, the Company did not record expected credit losses for its U.S. Treasury securities for the three months ended March 31, 2024, nor for the year ended December 31, 2023.
(3)
Fair value was calculated using Level 1 inputs.

Fair Value Measurements on a Nonrecurring Basis

The Company measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company’s evaluation of the recoverability of long-lived assets involves the comparison of undiscounted future cash flows expected to be generated by each property over the Company’s expected remaining holding period to the respective carrying amount. The determination of whether the carrying value is recoverable also requires management to make estimates related to probability weighted scenarios impacting undiscounted cash flow models. The Company considers both quantitative and qualitative factors in its impairment analysis of long-lived assets. Significant quantitative factors include historical and forecasted information for each property such as net operating income, occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition of the property and tenant mix. The quantitative and qualitative factors impact the selection of the terminal capitalization rate which is used in both an undiscounted and discounted cash flow model and the discount rate used in a discounted cash flow model. Due to the significant unobservable estimates and assumptions used in the valuation of long-lived assets that experience impairment, the Company classifies such long-lived assets under Level 3 in the fair value hierarchy. Level 3 inputs primarily consist of sales and market data, independent valuations and discounted cash flow models.

9


 

Long-lived Assets Measured at Fair Value in 2024

During the three months ended March 31, 2024, the Company sold an outparcel for less than its carrying value and recorded impairment of $836.

Long-lived Assets Measured at Fair Value in 2023

During the three months ended March 31, 2023, the Company recognized gain on deconsolidation of $28,151 when it adjusted the negative equity in Alamance Crossing East to zero upon deconsolidation, which represents the estimated fair value of the Company's investment in that property. See Note 7 for more information.

Note 6 – Dispositions and Held for Sale

Dispositions

Based on its analysis, the Company determined that the dispositions described below do not meet the criteria for classification as discontinued operations and are not considered to be significant disposals based on its quantitative and qualitative evaluation. Thus, the results of operations of the properties described below, as well as any related gains or losses, are included in net income (loss) for all periods presented, as applicable.

2024 Dispositions

During the three months ended March 31, 2024, the Company realized a gain of $3,721 related to the sale of an anchor parcel and gross proceeds from sales of real estate assets was $7,745. The Company recorded a loss on impairment related to an outparcel that was sold. See Note 5 for more information.

2023 Dispositions

During the three months ended March 31, 2023, the Company realized a gain of $1,596, primarily related to the sale of four land parcels. Gross proceeds from sales of real estate assets were $4,949 for the three months ended March 31, 2023.

Held for Sale

As of March 31, 2024 and 2023, there were no properties that met the criteria to be classified as held for sale.

Note 7 – Unconsolidated Affiliates and Noncontrolling Interests

Unconsolidated Affiliates

Although the Company had majority ownership of certain joint ventures during 2024 and 2023, it evaluated the investments and concluded that the other partners or owners in these joint ventures had substantive participating rights, such as approvals of:

the pro forma for the development and construction of the project and any material deviations or modifications thereto;
the site plan and any material deviations or modifications thereto;
the conceptual design of the project and the initial plans and specifications for the project and any material deviations or modifications thereto;
any acquisition/construction loans or any permanent financings/refinancings;
the annual operating budgets and any material deviations or modifications thereto;
the initial leasing plan and leasing parameters and any material deviations or modifications thereto; and
any material acquisitions or dispositions with respect to the project.

As a result of the joint control over these joint ventures, the Company accounts for these investments using the equity method of accounting.

At March 31, 2024, the Company had investments in 26 entities, which are accounted for using the equity method of accounting. The Company's ownership interest in these unconsolidated affiliates ranges from 33% to 100%. Of these entities, 17 are owned in 50/50 joint ventures.

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2023 Activity - Unconsolidated Affiliates

Alamance Crossing CMBS, LLC

In February 2023, the Company deconsolidated Alamance Crossing East as a result of the Company losing control when the property was placed in receivership. As of March 31, 2024, the loan secured by Alamance Crossing East had an outstanding balance of $41,122. See Note 5 for more information.

Condensed Combined Financial Statements - Unconsolidated Affiliates

Condensed combined financial statement information of the unconsolidated affiliates is as follows: