CBL US Equity☆

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes that are included in this annual report. Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have the same meanings as defined in the notes to the consolidated financial statements.

Executive Overview

We are a self-managed, self-administered, fully integrated REIT that is engaged in the ownership, development, acquisition, leasing, management and operation of regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers and office properties. Our shopping centers are located in 24 states, and are primarily in the southeastern and midwestern United States. We have elected to be taxed as a REIT for federal income tax purposes.

We conduct substantially all of our business through the Operating Partnership. 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. See Item 2 for a description of our Properties owned and under development as of December 31, 2020.

On March 11, 2020, the World Health Organization classified COVID-19 as a pandemic. Due to the extraordinary governmental actions taken to contain COVID-19, we were unable to predict the full extent of the pandemic’s impact on our results of operations for 2020 and its ongoing impact in 2021. As a result, we previously withdrew our full-year 2020 same-center NOI and FFO per share, as adjusted, guidance and underlying assumptions and do not expect to provide guidance going forward until future results can be more accurately predicted.

In response to local and state mandated closures, our entire portfolio, except for a few properties, closed in March 2020. Beginning in late April, government agencies began allowing the re-opening of properties with specified health and safety restrictions. By the close of the third quarter 2020, all our mall properties were able to reopen. As local mandates were lifted and properties reopened, stores within the properties followed suit with the majority of stores reopening by the close of the third quarter. We have implemented strict procedures and guidelines for our employees, tenants and property visitors based on CDC and other health agency recommendations. Our properties continue to update these policies and procedures, following any new mandates and regulations, as required. The safety and health of our customers, employees and tenants remains a top priority.

Our financial and operating results during 2020 reflect the ongoing impact of the temporary closure of our portfolio for a significant period due to government mandates and operating restrictions. While all properties were able to reopen by the close of the third quarter, many state and local markets continue to impose occupancy and other restrictions. These additional restrictions may have the effect of restricting traffic and sales for our tenants and have put additional pressure on our tenants’ financial health. We have worked with our tenants to enhance customer reach despite the restrictions, including offering curbside pickup, delivery and opening buy-online-pick-up-in-store locations. Revenues for the year were impacted by a substantial increase in the estimate for uncollectable revenues related to rents due from tenants that filed for bankruptcy or are struggling financially. Store closures and rent loss from pre-pandemic tenant bankruptcies, rent abatements granted and lower percentage rent related to lower retail sales also impacted revenues. We offset a portion of this decline through aggressive actions to reduce costs both at the property and corporate levels, including company-wide salary reductions, furloughs, reductions-in-force and other expense reduction initiatives. However, as properties reopened during the third quarter, certain expenses necessarily resumed.

The mandated closures resulted in nearly all our tenants closing for a period of time and/or shortening operating hours. As a result, we experienced an increased level of requests for rent deferrals and abatements, as well as defaults on rent obligations. While, in general, we believe that tenants have a clear contractual obligation to pay rent, we have been working with our tenants to address rent deferral and abatement requests. We granted rent abatements of approximately $25.4 million and deferrals of approximately $30.6 million during the year ended December 31, 2020.

We implemented a full financial COVID-19 response to improve liquidity and reduce costs. These significant actions included drawing $280 million on our secured line of credit, eliminating all non-essential expenditures, implementing a company-wide furlough and salary reduction program, implementing a permanent reduction in force and delaying and suspending capital expenditures, including redevelopment investments. See the "Liquidity and Capital Resources" section for more information.

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As discussed under Voluntary Reorganization under Chapter 11 below, the Debtors commenced the filing of the Chapter 11 Cases. The filing of the Chapter 11 Cases constituted an event of default that resulted in certain monetary obligationsbecoming 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.See Note 2 and Liquidity and Capital Resources for additional information.

We had a net loss for the year ended December 31, 2020 of $335.5 million as compared to a net loss of $131.7 million in the prior-year period. In addition to the impact of the government mandated closures and the ongoing impact of the COVID-19 pandemic, significant items that affected the comparability between the year ended December 31, 2020 and the year ended December 31, 2019 include:

• $36.0 million of costs related to our reorganization efforts;

• Loss on impairment that is $26.2 million lower in 2020 than in 2019;

• Litigation settlement expense in 2020 that is $69.6 million lower;

• Gain on extinguishment of debt that is $39.2 million lower;

Our focus is on continuing to execute our strategy to transform our properties into suburban town centers, primarily through the re-tenanting of former anchor locations as well as diversification of in-line tenancy. This operational strategy is also supported by our balance sheet strategy focused on reducing overall debt, extending our debt maturity schedule and lowering our overall cost of borrowings to limit maturity risk, improve net cash flow and enhance enterprise value. As discussed further below under Voluntary Reorganization under Chapter 11, we are pursuing a plan to recapitalize the Company, including restructuring portions of its debt, through the Chapter 11 Cases. While the industry and our Company continue to face challenges, some of which may not be in our control, we believe that the strategies in place to redevelop our Properties and diversify our tenant mix will contribute to stabilization of our portfolio and revenues in future years.

Same-center NOI and FFO are non-GAAP measures. For a description of same-center NOI, a reconciliation from net income to same-center NOI, and an explanation of why we believe this is a useful performance measure, see Non-GAAP Measure -Same-center Net Operating Income in “Results of Operations.” For a description of FFO and FFO, as adjusted, a reconciliation from net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders, and an explanation of why we believe this is a useful performance measure, see Non-GAAP Measure -Funds from Operations within the "Liquidity and Capital Resources" section.

Voluntary Reorganization under Chapter 11

On the Commencement Date, the Debtors, commenced the Chapter 11 Cases by filing voluntary petitions under Chapter 11 of the Bankruptcy Code with the Bankruptcy Court. The Debtors are authorized to continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. Pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, the Debtors’ Chapter 11 Cases are being jointly administered for procedural purposes only under the caption In re CBL & Associates Properties, Inc., et al., Case No. 20-35226. Documents filed on the docket of and other information related to the Chapter 11 Cases are available free of charge online at https://dm.epiq11.com/case/cblproperties/dockets.

We are currently operating our business as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. After we filed our Chapter 11 petitions, the Bankruptcy Court granted certain relief requested by the Debtors enabling us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to pay employee wages and benefits, to pay taxes and certain governmental fees and charges, to continue to operate our cash management system in the ordinary course, and to pay the prepetition claims of certain of our service providers. For goods and services provided following the Commencement Date, we intend to pay service providers in the ordinary course.

Subject to certain exceptions, under the Bankruptcy Code, the filing of the Chapter 11 Cases automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising prior to the Commencement Date. Accordingly,

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although the filing of the Chapter 11 Cases triggered defaults under the Debtors’ funded debt obligations, creditors are stayed from taking any actions against the Debtors as a result of such defaults, subject to certain limited exceptions permitted by the Bankruptcy Code. Absent an order of the Bankruptcy Court, substantially all of the Debtors’ prepetition liabilities are subject to settlement under the Bankruptcy Code.

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 have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. Due to the Chapter 11 Cases, however, the creditors’ ability to exercise remedies against the Debtors under their respective credit agreements and debt instruments was stayed as of the date of the Chapter 11 petition and continues to be stayed.

After engaging in negotiations in a Bankruptcy Court-ordered mediation, on March 21, 2021, the Company entered into the Amended RSA, with the Consenting Noteholders in excess of 69% (including joinders) of the aggregate principal amount of the senior unsecured notes and the Consenting Bank Lenders party to the Company’s secured credit facility who hold in the aggregate in excess of 96% (including joinders) of the aggregate outstanding principal amount of debt under the secured credit facility. The Amended RSA amends and restates the Original RSA, dated as of August 18, 2020, and sets forth, subject to certain conditions, the commitments to and obligations of, on the one hand, the Company, and on the other hand, the Consenting Noteholders and Consenting Bank Lenders, in connection with the Restructuring Transactions set forth in the Amended RSA and the Plan Term Sheet. The Amended RSA contemplates that the restructuring and recapitalization of the Debtors will occur through a joint plan of reorganization in the Chapter 11 Cases.

The Amended RSA requires that the Company file the Amended Plan and related disclosure statement no later than 25 days after the Agreement Effective Date and under the Amended RSA we must seek to have the Amended Plan confirmed and declared effective no later than November 1, 2021. Before a Bankruptcy Court will confirm the Amended Plan, the Bankruptcy Code requires at least one “impaired” class of claims votes to accept the Amended Plan. A class of claims votes to “accept” the Amended Plan if voting creditors that hold a majority in number and two-thirds in amount of claims in that class approve the Amended Plan. The Amended RSA requires the Consenting Stakeholders vote in favor of and support the Amended Plan. As of the date hereof, the Consenting Bank Lenders and Consenting Noteholders each represent the requisite amount of claims necessary to accept the Amended Plan in each of their respective classes. For the foregoing reasons, among others, the Debtors believe that they will be able to confirm the Amended Plan in the Chapter 11 Cases.

Under the Amended RSA, the proposed Amended Plan will provide for the elimination of more than $1.6 billion of debt and preferred obligations as well as a significant reduction in interest expense. In exchange for their approximately $1.375 billion in principal amount of senior unsecured notes and $133 million in principal amount of the secured credit facility, Consenting Noteholders and other noteholders will receive, in the aggregate, $95 million in cash, $555 million of new senior secured notes, of which up to $100 million, upon election by the Consenting Noteholders, may be received in the form of new convertible secured notes and 89% in common equity of the newly reorganized Company. Certain Consenting Noteholders will also provide up to $50 million of new money in exchange for additional convertible secured notes. The Amended RSA provides that the remaining Bank Lenders, holding $983.7 million in principal amount under the secured credit facility, will receive $100 million in cash and a new $883.7 million secured term loan. Existing common and preferred stakeholders are expected to receive up to 11% of common equity in the newly reorganized company. The Amended RSA is subject to Bankruptcy Court approval, which the Company will seek in accordance with the terms of the Amended RSA.

We cannot predict the ultimate outcome of our Chapter 11 Cases at this time. For the duration of the Chapter 11 proceedings, our operations and ability to develop and execute our business plan are subject to the risks and uncertainties associated with the chapter 11 process. As a result of these risks and uncertainties, the amount and composition of our assets, liabilities, officers and/or directors could be significantly different following the outcome of the Chapter 11 proceedings, and the description of our operations, properties and liquidity and capital resources included in this annual report may not accurately reflect our operations, properties and liquidity and capital resources following the Chapter 11 process.

In particular, subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, assume and assign or reject executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach subject, in the case of the rejection of unexpired leases of real property, to certain caps on damages. Counterparties to such rejected contracts or leases may

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assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate for such damages. Generally, the assumption or assumption and assignment of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance thereunder. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this annual report, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with the Debtors is qualified by any overriding rights we have under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the assumption, assumption and assignment or rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights with respect thereto.

Given the acceleration of the secured credit facility, the senior unsecured notes and certain property-level debt, as well as the inherent risks, unknown results and inherent uncertainties associated with the bankruptcy process and the direct correlation between these matters and our ability to satisfy our financial obligations that may arise, we believe that there is substantial doubt that we will continue to operate as a going concern within one year after the date our consolidated financial statements are issued. Our ability to continue as a going concern is contingent upon our ability to successfully implement the Amended Plan set forth in the Amended RSA, which is pending approval of the Bankruptcy Court. See Note 2 to the consolidated financial statements for additional information.

Results of Operations

Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019

Properties that were in operation for the entire year during both 2020 and 2019 are referred to as the “2020 Comparable Properties.” Since January 1, 2019, we have opened three self-storage facilities, deconsolidated three outlet centers and disposed of twelve properties:

Properties Opened

Property Location Date Opened

Mid Rivers Mall – Self-storage (1) St. Peters, MO January 2019

Parkdale Mall – Self Storage (1) Beaumont, TX April 2020

Hamilton Place – Self Storage (1) Chattanooga, TN July 2020

Deconsolidations

Property Location Date of Deconsolidation

The Outlet Shoppes at Atlanta (1) Woodstock, GA December 2019

The Outlet Shoppes at El Paso (1) El Paso, TX August 2019

The Outlet Shoppes of the Bluegrass (1) Simpsonville, KY November 2019

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Dispositions

Property Location Sales Date

850 Greenbrier Circle Chesapeake, VA July 2019

Acadiana Mall (1) Lafayette, LA January 2019

Barnes & Noble parcel High Point, NC July 2019

Cary Towne Center Cary, NC January 2019

Courtyard by Marriott at Pearland Town Center Pearland, TX June 2019

Dick’s Sporting Goods at Hanes Mall Winston-Salem, NC September 2019

The Forum at Grandview Madison, MS July 2019

Honey Creek Mall Terre Haute, IN April 2019

Kroger at Foothills Plaza Maryville, TN July 2019

The Shoppes at Hickory Point Forsyth, IL April 2019

Hickory Point Mall (1) Forsyth, IL August 2020

Burnsville Center (1) Burnsville, MN December 2020

Revenues

Total for the Years Ended December 31, Comparable Properties

2020 2019 Change Core Non-core Deconsolidation Dispositions Total Change

Rental revenues from the Comparable Properties declined due to (i) store closures and rent concessions that were in effect prior to the COVID-19 pandemic for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii) rent concessions to tenants that are in bankruptcy or are struggling financially primarily due to the impacts of the COVID-19 pandemic, including $25.4 million of rent abatements and $48.2 million in uncollectable revenues for past due rents. Percentage rent declined $7.6 million as a result of store closures and lower retail sales due to mandated property closures and reduced traffic.

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Operating Expenses

Total for the Years Ended December 31, Comparable Properties

2020 2019 Change Core Non-core Deconsolidation Dispositions Total Change

Property operating expenses at the Comparable Properties decreased primarily due to the implementation of comprehensive programs to reduce operating expenses to mitigate the impact of the COVID-19 pandemic, including salary reductions, furloughs, reductions-in-force and other operating expense initiatives.

The decrease in depreciation and amortization expense related to the Comparable Properties primarily relates to a lower basis in depreciable assets resulting from impairments recorded in 2019 and 2020, as well as write-offs of tenant improvements and intangible lease assets related to store closings that occurred in 2019 and 2020.

General and administrative expenses decreased $10.8 million due to the implementation of comprehensive programs to reduce expenses, including salary reductions, furloughs and a reduction-in-force, as well lower legal expenses as compared to the prior year period related to the litigation settlement and the new secured credit facility that closed in January 2019.

For the year ended December 31, 2020, we recognized $213.4 million of loss on impairment of real estate to write down the book value of six malls. For the year ended December 31, 2019, we recognized $239.5 million of loss on impairment of real estate to write down the book value of six malls and one community center. See Note 17 to the consolidated financial statements for more information.

For the year ended December 31, 2020, we recorded $23.9 million of prepetition charges representing professional fees related to our negotiations with the administrative agent and lenders under the secured credit facility and certain holders of our senior unsecured notes regarding a restructure of such indebtedness prior to the filing of the Chapter 11 Cases beginning on November 1, 2020.

For the year ended December 31, 2019, we recognized $61.8 million of litigation settlement expense related to the settlement of a class action lawsuit, net of amounts that were released. For the year ended December 31, 2020, we recognized a credit to litigation settlement expense of $7.9 million related to claim amounts that were released pursuant to the terms of the settlement agreement. See Note 16to the consolidated financial statements for more information.

Other Income and Expenses

Interest and other income increased $3.6 million during the year ended December 31, 2020 compared to the prior-year period primarily due to additional interest income related to the U.S. Treasury securities that we invested in using a significant portion of the $280 million we drew on our secured line of credit in March 2020 to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. Also, insurance settlements increased from the prior year due to an increase in weather related incidents at certain properties.

Interest expense decreased $5.6 million compared to the prior-year period. The decrease was primarily due to elimination of interest expense on the senior unsecured notes and the secured credit facility subsequent to filing the Chapter 11 Cases beginning on November 1, 2020. Also, the decrease was impacted by a $9.4 million reduction in property-level interest expense from the deconsolidation of three encumbered properties late in 2019, as well as the retirement of three

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property-level loans. The decrease was partially offset by (i) a higher outstanding balance on the secured line of credit as a result of the $280 million we drew in March 2020 to increase liquidity and preserve financial flexibility, (ii) the accrual of additional interest on the secured credit facility at a higher interest rate imposed as a result of notices of default received from the administrative agent and (iii) an increase of $11.4 million of default interest expense related to property-level non-recourse loans that are in default, which may not be payable depending on the outcome of negotiations with the lenders. 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 or the senior unsecured notes subsequent to the filing of the Chapter 11 Cases.

For the year ended December 31, 2020, we recorded a $32.5 million gain on extinguishment of debt related to two malls, Burnsville Center and Hickory Point Mall, that were transferred to the lenders in satisfaction of the non-recourse debt secured by the properties. For the year ended December 31, 2019, we recorded $71.7 million of gain on extinguishment of debt related to two malls. We transferred Acadiana Mall to the lender in satisfaction of the non-recourse debt secured by the property. We sold Cary Towne Center and used the net proceeds from the sale to satisfy a portion of the non-recourse loan that secured the property. The remaining principal balance was forgiven.

During 2019, we recorded $67.2 million of gain on deconsolidation related to The Outlet Shoppes at El Paso and The Outlet Shoppes at Atlanta.

Gain on sales of real estate assets decreased $11.6 million compared to the prior-year period. In 2020, we recognized $4.7 million of gain on sales of real estate assets primarily related to the sale of eight outparcels. In 2019, we recognized $16.3 million of gain on sales of real estate assets primarily related to the sale of two centers, a hotel, an office building and seven outparcels.

For the year ended December 31, 2020, we recorded $36.0 million of reorganization items, which consists of professional fees directly related to the Chapter 11 Cases, as well as unamortized deferred financing costs and unamortized debt discounts expensed in accordance with ASC 852.

The income tax provision of $16.8 million in 2020 relates to the Management Company, which is a taxable REIT subsidiary, and consist of a current tax provision of $2.3 million and a deferred tax provision of $14.5 million, which reflects a full valuation allowance on our deferred tax assets. The full valuation allowance was recorded due to management’s evaluation of positive and negative indicators and determination that the deferred tax assets would not be realized. The income tax provision of $3.2 million in 2019 consists of a current tax provision of $0.5 million and a deferred tax provision of $2.7 million.

Equity in earnings (losses) of unconsolidated affiliates decreased by $19.8 million during the year ended December 31, 2020 compared to the prior-year period. The decrease was primarily due to lower earnings of our unconsolidated affiliates due to the impacts of the mandated property closures during 2020 as a result of COVID-19, including an increase in estimates of uncollectable rental revenues and abatements of rent, as well as an increase in the amortization of our inside/outside basis difference related to the three properties that were deconsolidated late in 2019.

See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the year ended December 31, 2019, as amended, for a comparison of the year ended December 31, 2019 to the year ended December 31, 2018.

Non-GAAP Measure

Same-center Net Operating Income

NOI is a supplemental non-GAAP measure of the operating performance of our shopping centers and other Properties. We define NOI as property operating revenues (rental revenues, tenant reimbursements and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).

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We compute NOI based on the Operating Partnership's pro rata share of both consolidated and unconsolidated Properties. We believe that presenting NOI and same-center NOI (described below) based on our Operating Partnership’s pro rata share of both consolidated and unconsolidated Properties is useful since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the Properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in the Operating Partnership. Our definition of NOI may be different than that used by other companies, and accordingly, our calculation of NOI may not be comparable to that of other companies.

Since NOI includes only those revenues and expenses related to the operations of our shopping center Properties, we believe that same-center NOI provides a measure that reflects trends in occupancy rates, rental rates, sales at the malls and operating costs and the impact of those trends on our results of operations. Our calculation of same-center NOI excludes lease termination income, straight-line rent adjustments, and amortization of above and below market lease intangibles in order to enhance the comparability of results from one period to another.

We include a Property in our same-center pool when we have owned all or a portion of the Property since January 1 of the preceding calendar year and it has been in operation for both the entire preceding calendar year ended December 31, 2019 and the current year ended December 31, 2020. New Properties are excluded from same-center NOI, until they meet these criteria. Properties excluded from the same-center pool, which would otherwise meet these criteria, are Properties that are being repositioned or Properties where we are considering alternatives for repositioning, where we intend to renegotiate the terms of the debt secured by the related Property or return the Property to the lender. Asheville Mall, EastGate Mall, Greenbrier Mall and Park Plaza were classified as Lender Malls as of December 31, 2020.

Due to the exclusions noted above, same-center NOI should only be used as a supplemental measure of our performance and not as an alternative to GAAP operating income (loss) or net income (loss). A reconciliation of our same-center NOI to net loss for the years ended December 31, 2020 and 2019 is as follows (in thousands):

Year Ended December 31,

Adjustments: (1)

Abandoned projects expense 952 91

Gain on sales of real estate assets (4,696 ) (16,901 )

Gain on investment/deconsolidation — (67,242 )

Loss on impairment, net of noncontrolling interest 195,336 239,521

Prepetition charges 23,883 —

Reorganization items 35,977 —

Straight-line rent and above- and below-market rent (115 ) (6,781 )

Management fees and non-property level revenues (13,467 ) (12,202 )

Operating Partnership's share of property NOI 446,268 583,738

Same-center NOI decreased $115.0 million for the year ended December 31, 2020 compared to 2019. The NOI decline of 21.5% for 2020 was driven by a decline in total revenue of $139.0 million partially offset by a $23.7 million decline in total operating expenses. Rental revenues declined $134.1 million during 2020 due to (i) store closures and rent concessions that were in effect prior to the COVID-19 pandemic for tenants with high occupancy cost levels and tenants that closed in 2019 due to bankruptcy and (ii) rent concessions to tenants that are in bankruptcy or are struggling financially due

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to the impacts of the COVID-19 pandemic. The $23.7 million decrease in total operating expenses was primarily due to the implementation of comprehensive programs to reduce operating expenses to mitigate the impact of the COVID-19 pandemic, including salary reductions, furloughs, reductions-in-force and other operating expense initiatives.

Operational Review

The shopping center business is, to some extent, seasonal in nature with tenants typically achieving the highest levels of sales during the fourth quarter due to the holiday season, which generally results in higher percentage rents in the fourth quarter. Additionally, the malls earn most of their rents from short-term tenants during the holiday period. Thus, occupancy levels and revenue production are generally the highest in the fourth quarter of each year. Results of operations realized in any one quarter may not be indicative of the results likely to be experienced over the course of the fiscal year.

We derive the majority of our revenues from the Mall Properties. The sources of our revenues by property type were as follows:

Year Ended December 31,

Other Properties 9.6 % 9.0 %

Mall Store Sales

Mall store sales include reporting mall tenants of 10,000 square feet or less for Stabilized Malls and exclude license agreements, which are retail contracts that are temporary or short-term in nature and generally last more than three months but less than twelve months. The following is a comparison of our same-center sales per square foot for Mall tenants of 10,000 square feet or less (excluded Properties are not included in sales metrics):

Stabilized mall same-center sales per square foot N/A (1) $ 386 N/A

Occupancy

Our portfolio occupancy is summarized in the following table (excluded Properties are not included in occupancy metrics):

As of December 31,

Malls:

Total Mall portfolio 85.5 % 89.8 %

Same-center Malls 85.5 % 90.1 %

Non-stabilized Malls (1) 74.4 % 83.8 %

Other Properties:

Associated centers 93.2 % 95.6 %

Community centers 93.6 % 96.0 %

(1) Represents occupancy for The Outlet Shoppes at Laredo.

Bankruptcy-related store closures impacted 2020 occupancy by approximately 331 basis points or 550,000 square feet.

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Leasing

The following is a summary of the total square feet of leases signed in the year ended December 31, 2020 as compared to the prior-year period:

Year Ended December 31,

Operating portfolio:

Development portfolio:

Average annual base rents per square foot are computed based on contractual rents in effect as of December 31, 2020 and 2019, including the impact of any rent concessions. Average annual base rents per square foot for comparable small shop space of less than 10,000 square feet were as follows for each Property type (1):

December 31,

Malls (1):

Same-center Stabilized Malls $ 29.34 $ 31.97

(1) As noted in Item 2. Properties, excluded Properties are not included.

(2) Represents average annual base rents for The Outlet Shoppes at Laredo.

Results from new and renewal leasing of comparable small shop space of less than 10,000 square feet during the year ended December 31, 2020 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are as follows:

(1) Includes Stabilized Malls, associated centers, community centers and other.

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New and renewal leasing activity of comparable small shop space of less than 10,000 square feet for the year ended December 31, 2020, based on commencement date inclusive of the impact of any rent concessions, are as follows:

Liquidity and Capital Resources

As of December 31, 2020, we had $294.9 million available in unrestricted cash and U.S. Treasury securities and we had $1,114.7 million outstanding on our secured credit facility. Our total pro rata share of debt at December 31, 2020 was $4,388.7 million. The $59.9 million in restricted cash at December 31, 2020 related to cash held in escrow accounts for insurance, real estate taxes, capital expenditures and tenant allowances as required by the terms of certain mortgage notes payable, as well as amounts related to cash management agreements with our lenders that are designated for debt service and operating expense obligations.

In February 2020, we utilized our secured credit facility to pay off two loans secured by Parkway Place and Valley View Mall totaling $84.5 million. Also, we closed on a new loan secured by The Outlet Shoppes at Atlanta – Phase II in the amount of $4.7 million, with an interest rate of LIBOR plus 2.5% and a maturity date of November 2023. Proceeds were used to retire the $4.4 million existing loan. In March 2020, we drew $280.0 million on our secured line of credit to increase liquidity and preserve financial flexibility in light of the uncertainty surrounding the impact of the COVID-19 pandemic. We purchased $154.2 million, including accrued interest, of U.S. Treasury securities with a portion of the borrowings on our secured line of credit. In December 2020, we purchased an additional $82.0 million of U.S. Treasury securities with a portion of the borrowings on our secured line of credit. We recorded a $32.5 million gain on extinguishment of debt related to returning Hickory Point Mall and Burnsville Center to the lenders in August 2020 and December 2020, respectively.

In response to the COVID-19 pandemic, we implemented comprehensive programs to halt all non-essential expenditures, to reduce operating and overhead expenses and to reduce, defer or suspend capital expenditures, including redevelopment investments. These programs include a temporary reduction of up to 50% to the compensation of our Chairman of the Board, our CEO and our President as well as independent director fees, a temporary reduction of up to 20% to the compensation of our other named executive officers, salary reductions to all staff, a broad-based furlough program, a permanent reduction in workforce and 2020 capital expenditure reductions or postponements of approximately $60.0 million. While we have paused several major projects, we are pursuing capital lite solutions for backfilling many of our remaining available anchors, including joint venture partnerships, favorable lease structures and third-party arrangements – all of which benefit our portfolio while preserving capital. Additionally, we were able to achieve debt service payment deferrals for a portion of our secured loans. Securitized lenders in general have shown minimal flexibility in amending loan payments.

We elected to not make the $6.9 million 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, we 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. We filed the Chapter 11 Cases prior to the end of the 30-day grace period.

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. We anticipate restructuring our unsecured debt maturities through the Chapter 11 bankruptcy filing.

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Our total share of consolidated and unconsolidated outstanding debt maturing in 2021, assuming all extension options are elected, is $539.2 million, and we are in discussions with existing lenders. We anticipate restructuring our unsecured debt maturities through the recent Chapter 11 bankruptcy filing. 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. See Note 8 and Note 9 for more information.

We derive the majority of our revenues from leases with retail tenants, which have historically been the primary source for funding short-term liquidity and capital needs such as operating expenses, debt service, tenant construction allowances, recurring capital expenditures, dividends and distributions. We believe that the combination of cash flows generated from our operations, combined with cash on hand and our investment in U.S. Treasury securities will, for the foreseeable future, provide adequate liquidity to meet our cash needs assuming we continue to operate as a going concern within twelve months of the date our consolidated financial statements are issued. In addition to these factors, we have options available to us to generate additional liquidity, including but not limited to, joint venture investments and decreasing expenditures related to tenant construction allowances and other capital expenditures. We also generate revenues from sales of peripheral land at our properties and from sales of real estate assets when it is determined that we can realize an optimal value for the assets.

Cash Flows - Operating, Investing and Financing Activities

There was $121.7 million of cash, cash equivalents and restricted cash as of December 31, 2020, an increase of $62.7 million from December 31, 2019. Of this amount, $61.8 million was unrestricted cash as of December 31, 2020. Our net cash flows are summarized as follows (in thousands):

Year Ended December 31,

Cash Provided by Operating Activities

Cash Provided by (Used in) Investing Activities

Cash Used in Financing Activities

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See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the year ended December 31, 2019, as amended, for a comparison of the year ended December 31, 2019 to the year ended December 31, 2018.

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 our debt.

CBL is a limited guarantor of the Notes, as described in Note 9 to the consolidated financial statements, for losses suffered solely by reason of fraud or willful misrepresentation by the Operating Partnership or its affiliates. We also provide a similar limited guarantee of the Operating Partnership's obligations with respect to our secured credit facility as of December 31, 2020.

Debt of the Operating Partnership

The following tables summarize debt based on our pro rata ownership share, including our pro rata share of unconsolidated affiliates and excluding noncontrolling investors’ share of consolidated Properties, because we believe this provides investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands):

Fixed-rate debt:

Recourse loans on operating Properties (3) — — 9,360 9,360 3.74 %

Variable-rate debt:

Fixed-rate debt:

Variable-rate debt:

Prepetition unsecured or under secured liabilities 4,170 — — 4,170

Total liabilities subject to compromise $ 2,551,490 $ — $ — $ 2,551,490

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Fixed-rate debt:

Variable-rate debt:

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The following table presents our pro rata share of consolidated and unconsolidated debt as of December 31, 2020, excluding debt premiums and discounts, that is scheduled to mature in 2021 (in thousands):

Balance

Consolidated Properties:

Parkdale Mall & Crossing $ 74,406

Hamilton Crossing & Expansion 7,549

The Outlet Shoppes at Laredo 40,600

Brookfield Square Anchor Redevelopment 27,461 (2)

Unconsolidated Properties:

Ambassador Town Center - Infrastructure Improvements 9,360 (3)

Hammock Landing - Phase I & II 27,299 (3)

The Pavilion at Port Orange 26,617 (3)

The Shoppes at Eagle Point 17,293 (4)

The Outlet Shoppes of the Bluegrass - Phase II 8,872

Springs at Port Orange 15,889

(1) Loan is in the process of foreclosure.

(3) Loan was extended subsequent to December 31, 2020. See Note 20.

(4) Loan has a one-year extension option.

In addition, $231.8 million of our pro rata share of consolidated and unconsolidated debt is related to four operating property loans, Asheville Mall, EastGate Mall, Greenbrier Mall and Park Plaza, that are in default. We anticipate cooperating with the lenders on the loans secured by Asheville Mall, EastGate Mall and Park Plaza to either convey the property to the lender in satisfaction of the loan or complete a foreclosure. We are in discussions with the lender regarding the loan secured by Greenbrier Mall.

The weighted-average remaining term of our total share of consolidated and unconsolidated debt was 3.1 years and 3.9 years at December 31, 2020 and 2019, respectively. The weighted-average remaining term of our pro rata share of fixed-rate debt was 3.4 years and 4.1 years at December 31, 2020 and 2019, respectively.

As of December 31, 2020 and 2019, our pro rata share of consolidated and unconsolidated variable-rate debt represented 29.7% and 22.5%, respectively, of our total pro rata share of debt.

See Note 8 and Note 9 to the consolidated financial statements for additional information concerning the amount and terms of our outstanding indebtedness as of December 31, 2020.

Issuer and Guarantor Subsidiaries of Guaranteed Securities

In March 2020, the SEC issued Rule Release No. 33-10762, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities ("Release 33-10762”). Release 33-10762 simplifies the disclosure requirements related to certain registered securities under Rules 3-10 and 3-16 of SEC Regulation S-X, permitting registrants to provide certain alternative financial disclosures and non-financial disclosures in lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities if certain conditions are met. The amendments in Release 33-10762 are generally effective for filings on or after January 4, 2021, with early application permitted. We adopted the new disclosure requirements permitted under Release 33-10762 effective for the year ended December 31, 2020.

The Operating Partnership’s senior secured credit facility is secured by 17 malls and 3 associated centers that are directly or indirectly owned by 36 wholly owned subsidiaries of the Operating Partnership (the “Guarantor Subsidiaries”). The Guarantor Subsidiaries own an additional four malls, two associated centers and four mortgage notes receivable that

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are not collateral for the secured credit facility. The Guarantor Subsidiaries also entered into agreements to guarantee the Operating Partnership’s obligations under the senior secured credit facility.

Based on the terms of the Notes, 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 connection with entering the guarantee agreements related to the senior secured credit facility, the Guarantor Subsidiaries entered a guarantee agreement with the issuer of the Notes to satisfy the guaranty requirement.

The guarantees of the Guarantor Subsidiaries are joint and several and full and unconditional. The guarantees are unsecured and effectively subordinated to any existing and future secured debt that a Guarantor Subsidiary may have to the extent of the value of the assets securing such debt. Each Guarantor Property’s obligation will remain until the earlier of such time as (i) all guaranteed obligations have been paid in full in cash and each guaranteed obligation has been terminated or cancelled in accordance with its terms or (ii) any such Guarantor Subsidiary ceases to be a guarantor under the senior secured credit facility. The Guarantor Subsidiaries’ maximum guarantee related to the secured credit facility is $1,114.7 million as of December 31, 2020, and the maximum guarantee related to the Notes is $1,375.0 million as of December 31, 2020.

The following tables present summarized financial information for the Operating Partnership and the Guarantor Subsidiaries on a combined basis. The summarized financial information does not include the Operating Partnership’s investments in non-guarantor subsidiaries nor the earnings from non-guarantor subsidiaries. Intercompany transactions between the Operating Partnership and the Guarantor Subsidiaries have been eliminated. The summarized balance sheet information is as of December 31, 2020 and December 31, 2019 and the summarized statement of operations information is for the year ended December 31, 2020 and the year ended December 31, 2019. Amounts are presented in thousands.

Financial Covenants and Restrictions

As discussed in Note 9 to the consolidated financial statements, 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 have resulted in the automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts.

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Unencumbered Consolidated Portfolio Statistics

Unencumbered consolidated Properties:

Total Associated Centers N/A N/A 93.3 % 96.0 % 16.6 %

Total Community Centers N/A N/A 97.7 % 96.8 % 5.4 %

Total Office Buildings & Other N/A N/A 100.0 % 100.0 % 0.7 %

Total Unencumbered Consolidated Portfolio N/A $ 323 86.4 % 90.4 % 100.0 %

Mortgages on Operating Properties

2020 Loan Activity

In 2020, we utilized our secured credit facility to pay off two loans secured by Parkway Place and Valley View Mall totaling $84.5 million. Also, we closed on a new loan secured by The Outlet Shoppes at Atlanta – Phase II in the amount of $4.7 million, with an interest rate of LIBOR plus 2.5% and a maturity date of November 2023. Proceeds were used to retire the $4.4 million existing loan. In August, we modified the fixed-rate loan secured by Jefferson Mall. The modification consisted of extending the maturity date from June 1, 2022 to June 1, 2026, and the loan will be interest only through March 2021 when monthly payments of principal and interest will be made through the maturity date. The loan secured by Jefferson Mall had an outstanding balance of $60.9 million as of December 31, 2020. In September, we completed a modification and extension of the loan secured by the second phase of The Outlet Shoppes of the Bluegrass in Louisville, KY, which extended the maturity date to October 2021 with a variable interest rate of LIBOR plus 350 basis points. The loan secured by the second phase of The Outlet Shoppes of the Bluegrass had an outstanding balance of $8.9 million as of December 31, 2020. In October, the Company completed a modification and extension of the loan secured by The Shoppes at Eagle Point, which extended the maturity date to October 2022. The loan secured by The Shoppes at Eagle Point had an outstanding balance of $34.6 million, $17.3 million at our pro-rata share, as of December 31, 2020. Lastly, we recognized a $32.5 million gain on extinguishment of debt related to two consolidated malls. See Note 8 and Note 9 to the consolidated financial statements for more information on 2020 loan activity.

Equity

In 2019, we suspended all future dividends on our common stock and preferred stock, as well as distributions to all noncontrolling interest investors in our Operating Partnership. The dividend arrearage created by our board of directors’ decision to suspend the dividends that continue to accrue on our outstanding preferred stock currently makes us ineligible to use the abbreviated, and less costly, SEC Form S-3 registration statement to register our securities for sale. This means we will be required to use a registration statement on Form S-1 to register additional securities for sale with the SEC, which we expect to hinder our ability to act quickly in relation to, and raise our costs incurred in, future capital raising activities. This preferred dividend arrearage (and the Operating Partnership’s related arrearage in distributions to its preferred units of

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limited partnership underlying our outstanding preferred shares), under the terms of our preferred stock, also require that we not resume any payment of dividends on our common stock unless full cumulative dividends accrued with respect to our preferred stock (and such underlying preferred units) for all past quarters and the then-current quarter are first declared and paid in cash, or declared with a sum sufficient for the payment thereof having been set apart for such payment in cash. In addition, for so long as this distribution suspension results in the existence of an SCU Distribution Shortfall, the terms of the Operating Partnership Agreement state that we (i) may not cause the Operating Partnership to resume distributions to holders of its outstanding common units of limited partnership until all holders of SCUs have received distributions sufficient to satisfy the SCU Distribution Shortfall for all prior quarters and the then-current quarter (which effectively would also prevent the resumption of common stock dividends, since our common stock dividends are funded by distributions the Company receives on the underlying common units it holds in the Operating Partnership) and (ii) may not elect to settle any exchange requested by a holder of common units of the Operating Partnership in cash, and may only settle any such exchange through the issuance of shares of common stock or other units of the Operating Partnership ranking junior to any such units as to which a distribution shortfall exists. Our board of directors prospectively approved that, to the extent any partners exercise any or all of their exchange rights while the existence of the SCU Distribution Shortfall requires an exchange to be settled through the issuance of shares of common stock or other units of the Operating Partnership, the consideration paid shall be in the form of shares of common stock. We do not expect to pay any further dividends with respect to the Company’s outstanding common stock and preferred stock, or any distributions with respect to the Operating Partnership’s outstanding units of partnership interest, prior to the conclusion of our reorganization pursuant to the pending Chapter 11 Cases, which reorganization we also expect will extinguish all claims related to the accrued and unpaid preferred stock dividends and the Operating Partnership unit SCU Distribution Shortfall discussed above. If we successfully complete such reorganization, in connection with future dividend distributions with respect to new equity securities issued pursuant to the Chapter 11 Cases, we will review taxable income on a regular basis and take measures, if necessary, to ensure that we meet the minimum distribution requirements to maintain our status as a REIT.

See Listing Criteria in Note 2 to the consolidated financial statements for additional information regarding a notice we received from the NYSE regarding our non-compliance with the NYSE Listing Standards and our plans to address this non-compliance.

As a publicly traded company, and as a subsidiary of a publicly traded company, we previously accessed capital through both the public equity and debt markets. We have a shelf registration statement on Form S-3 on file with the SEC that previously authorized us to publicly issue unspecified amounts of senior and/or subordinated debt securities, shares of preferred stock (or depositary shares representing fractional interests therein), shares of common stock, warrants or rights to purchase any of the foregoing securities, and units consisting of two or more of these classes or series of securities and limited guarantees of debt securities issued by the Operating Partnership. This shelf registration statement also authorized the Operating Partnership to publicly issue unsubordinated debt securities. This shelf registration statement was due to expire in July 2021. However, as a result of both (i) the fact that the Company no longer qualifies as a well-known seasoned issuer under SEC rules and (ii) our loss of eligibility to use Form S-3 to register offers and sales of securities as described above, we are unable to use this shelf registration statement.

Additionally, while we had previously suspended quarterly dividend payments on our common stock during 2019, a very small amount of monthly “cash option” investments in shares continued into May 2020, pursuant to the terms of the Company’s dividend reinvestment plan (“DRIP”). Due in part to impacts on the Company’s operations and staffing resulting from ongoing efforts to address the COVID-19 pandemic, we inadvertently failed to suspend the operation of these “cash option” investments during the months of March, April and May 2020, after we lost the ability to use the Form S-3 registration statement for the DRIP, effective with the filing of our Annual Report on Form 10-K in March, due to the dividend arrearage with respect to our preferred stock. We have now fully suspended the operation of our DRIP, including the cash option feature but, as a result of this oversight, we issued a total of 6,134 shares of common stock that were not registered under the Securities Act of 1933, as amended (the “Securities Act”) for aggregate consideration of $1,346.94 prior to such suspension. The purchasers of these shares, issued pursuant to our DRIP when we were not eligible to issue shares on Form S-3, could bring claims against us for rescission and other damages under federal or state securities laws.

Our common and preferred stock outstanding at December 31, 2020 was as follows (in thousands, except stock prices):

Shares Outstanding Stock Price (1)

Common stock and operating partnership units 201,688 $ 0.04

7.375% Series D Cumulative Redeemable Preferred Stock 1,815 250.00

6.625% Series E Cumulative Redeemable Preferred Stock 690 250.00

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Contractual Obligations

The following table summarizes our significant contractual obligations as of December 31, 2020 (in thousands):

Payments Due By Period

Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years

Long-term debt:

Operating leases: (4)

Purchase obligations: (5)

Construction contracts on consolidated Properties 31,501 31,501 — — —

Our share of total purchase obligations 39,598 39,598 — — —

Other Contractual Obligations: (6)

Capital Expenditures

Deferred maintenance expenditures are generally billed to tenants as CAM expense, and most are recovered over a 5 to 15-year period. Renovation expenditures are primarily for remodeling and upgrades of Malls, of which a portion is recovered from tenants over a 5 to 15-year period. We recover these costs through fixed amounts with annual increases or pro rata cost reimbursements based on the tenant’s occupied space.

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The following table, which excludes expenditures for developments and expansions, summarizes these capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the year ended December 31, 2020 compared to 2019 (in thousands):

Year Ended December 31,

Deferred maintenance:

Parking area and parking area lighting 327 4,223

Roof repairs and replacements 2,373 5,787

Annual capital expenditures budgets are prepared for each of our Properties that are intended to provide for all necessary recurring and non-recurring capital expenditures. We believe that property operating cash flows, which include reimbursements from tenants for certain expenses, will provide the necessary funding for these expenditures.

Developments and Redevelopments

Properties Opened During the Year Ended December 31, 2020

(Dollars in thousands)

CBL's Share of

Outparcel Development:

(1) Total Cost is presented net of reimbursements to be received.

(2) Cost to Date does not reflect reimbursements until they are received.

(3) Yield is based on the expected yield upon stabilization.

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Redevelopments Completed During theYear Ended December 31, 2020

(Dollars in thousands)

CBL's Share of

Mall Redevelopments:

(1) Total Cost is presented net of reimbursements to be received.

(2) Cost to Date does not reflect reimbursements until they are received.

(3) Total cost includes amounts funded by a construction loan.

Properties under Development at December 31, 2020

(Dollars in thousands)

CBL's Share of

Outparcel Developments:

(1) Total Cost is presented net of reimbursements to be received.

(2) Cost to Date does not reflect reimbursements until they are received.

(4) Yield is based on expected yield upon stabilization.

We are continually pursuing new redevelopment opportunities and have projects in various stages of pre-development. Our shadow pipeline consists of projects for Properties on which we have completed initial project analysis and design, but which have not commenced construction as of December 31, 2020. Except for the projects presented above, we did not have any other material capital commitments as of December 31, 2020.

Off-Balance Sheet Arrangements

Unconsolidated Affiliates

We have ownership interests in 29 unconsolidated affiliates as of December 31, 2020. See Note 8 to the consolidated financial statements for more information. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the accompanying consolidated balance sheets as investments in unconsolidated affiliates.

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The following are circumstances when we may consider entering into a joint venture with a third party:

Guarantees

We may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on our investment in the joint venture. We may receive a fee from the joint venture for providing the guaranty. Additionally, when we issue a guaranty, the terms of the joint venture agreement typically provide that we may receive indemnification from the joint venture partner or have the ability to increase our ownership interest.

See Note 16 to the consolidated financial statements for information related to our guarantees of unconsolidated affiliates' debt as of December 31, 2020 and 2019.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP. In preparing our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that are reasonably likely to occur could materially impact the financial statements. Management believes that the following critical accounting policies discussed in this section reflect its more significant estimates and assumptions used in preparation of the consolidated financial statements. We have reviewed these critical accounting estimates and related disclosures with the Audit Committee of our board of directors. See Note 3 of the consolidated financial statements, included in Item 8 of this Annual Report on Form 10-K for a discussion of our significant accounting policies.

Revenue Recognition and Accounts Receivable

Minimum rental revenue from operating leases is recognized on a straight-line basis over the initial terms of the related leases. Certain tenants are required to pay percentage rent if their sales volumes exceed thresholds specified in their lease agreements. Percentage rent is recognized as revenue when the thresholds are achieved and the amounts become determinable.

We receive reimbursements from tenants for real estate taxes, insurance, CAM, and other recoverable operating expenses as provided in the lease agreements. Tenant reimbursements are recognized as revenue in the period the related operating expenses are incurred. Tenant reimbursements related to certain capital expenditures are billed to tenants over periods of 5 to 15 years and are recognized as revenue in accordance with underlying lease terms.

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We receive management, leasing and development fees from third parties and unconsolidated affiliates. Management fees are charged as a percentage of revenues (as defined in the management agreement) and are recognized as revenue when earned. Development fees are recognized as revenue on a pro rata basis over the development period. Leasing fees are charged for newly executed leases and lease renewals and are recognized as revenue when earned. Development and leasing fees received from unconsolidated affiliates during the development period are recognized as revenue to the extent of the third-party partners’ ownership interest. Fees to the extent of our ownership interest are recorded as a reduction to our investment in the unconsolidated affiliate.

Gains on sales of real estate assets are recognized when it is determined that the sale has been consummated, the buyer’s initial and continuing investment is adequate, our receivable, if any, is not subject to future subordination, and the buyer has assumed the usual risks and rewards of ownership of the asset. When we have an ownership interest in the buyer, gain is recognized to the extent of the third-party partner’s ownership interest and the portion of the gain attributable to our ownership interest is deferred.

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 estimate of the collectability of accounts receivable from tenants is based on the best information available to management at the time of evaluation.

We review current economic considerations each reporting period, including the effects of tenant bankruptcies. Additionally, with the uncertainties regarding COVID-19, our assessment also took into consideration the type of tenant and current discussions with the tenants regarding matters such as billing disputes, lease negotiations and executed deferrals or abatements, as well as recent rent payment and credit history. Evaluating and estimating uncollectable lease payments and related receivables requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. For the year ended December 31, 2020, we reduced rental revenue by $48.2 million, due to lease-related reserves and write-offs, which includes $5.6 million for straight-line rent receivables. Actual results could differ from these estimates and such differences could be material to our consolidated financial statements.

Lease Modifications

In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance related to lease concessions provided as a result of COVID-19. Under existing lease guidance, we would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election.

We have elected to apply the relief provided under the Lease Modification Q&A and will avail ourselves of the election to avoid performing a lease by lease analysis for the lease concessions that were (1) granted as relief due to the COVID-19 pandemic and (2) result in the cash flows remaining substantially the same or less than the original contract. The Lease Modification Q&A had a material impact on our consolidated financial statements for the year ended December 31, 2020. However, its future impact to us is dependent upon the extent of lease concessions granted to tenants as a result of the COVID-19 pandemic in future periods and the elections made by us at the time of entering such concessions.

The Lease Modification Q&A allows us to determine accounting policy elections at a disaggregated level, and the elections should be applied consistently by either the type of concession, underlying asset class or on another reasonable basis. As a result, we have made the following policy elections based on the type of concession agreed to with the respective tenant.

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Rent Deferrals

We will account for rental deferrals using the receivables model as described within the Lease Modification Q&A. Under the receivables model, we will continue to recognize lease revenue in a manner that is unchanged from the original lease agreement and continue to recognize lease receivables and rental revenue during deferral period.

Rent Abatements

We will account for rental abatements using the negative variable income model as described within the Lease Modification Q&A. Under the negative variable income model, we will recognize negative variable rent for the current period reduction of rental revenue associated with any lease concessions we provide.

At December 31, 2020, our receivables include $18.5 million related to receivables that have been deferred and are to be repaid over periods generally starting in late 2020 and extending for some portion of 2021. We granted abatements of $25.4 million for the year ended December 31, 2020. We continue to assess rent relief requests from our tenants but are unable to predict the resolution or impact of these discussions.For agreements that are in currently under negotiation, we do not expect the impact to be material.

Real Estate Assets

All acquired real estate assets are accounted for using the acquisition method of accounting and accordingly, the results of operations are included in the consolidated statements of operations from the respective dates of acquisition. The purchase price is allocated to (i) tangible assets, consisting of land, buildings and improvements, as if vacant, and tenant improvements and (ii) identifiable intangible assets and liabilities generally consisting of above- and below-market leases and in-place leases. We use estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation methods to allocate the purchase price to the acquired tangible and intangible assets. Liabilities assumed generally consist of mortgage debt on the real estate assets acquired. Assumed debt with a stated interest rate that is significantly different from market interest rates is recorded at its fair value based on estimated market interest rates at the date of acquisition. Following our adoption of Accounting Standards Update 2017-01, Clarifying the Definition of a Business, on a prospective basis in January 2017, we expect our future acquisitions will be accounted for as acquisitions of assets in which related transaction costs will be capitalized.

Carrying Value of Long-Lived Assets

The Company evaluates its real estate assets for impairment indicators whenever events or changes in circumstances indicate that recoverability of its investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. The prolonged outbreak of the COVID-19 pandemic resulted in sustained closure of the Company’s properties for a period of time, as well as the cessation of the operations of certain of its tenants, which has resulted and will likely continue to result in a reduction in the revenues and cash flows of many of its properties due to the adverse financial impacts on its tenants, as well as reductions in other sources of income generated by its properties. In addition to reduced revenues, the Company’s ability to obtain sufficient financing for such properties may be impaired as well as its ability to lease or re-lease properties as a result of worsening market and economic conditions resulting from the COVID-19 pandemic.

As of December 31, 2020, the Company’s evaluation of impairment of real estate assets considered its estimate of cash flow declines caused by the COVID-19 pandemic, but its other assumptions, including estimated hold period, were generally unchanged given the highly uncertain environment. The worsening of estimated future cash flows due to a change in the Company’s plans, policies, or views of market and economic conditions as it relates to one or more of its properties adversely impacted by the COVID-19 pandemic could result in the recognition of substantial impairment charges on its assets, which could adversely impact its financial results. For the year ended December 31, 2020, the Company recorded impairment charges of $213.4 related to six of its malls. As of December 31, 2020, seven other properties had impairment indicators; however, based on the Company’s plans with respect to those properties and the economic environment as of December 31, 2020, no additional impairment charges were recorded.

Investments in Unconsolidated Affiliates

We evaluate our investment in unconsolidated affiliates for impairment indicators whenever events or changes in circumstances indicate that recoverability of its investment in the asset is not reasonably assured. Furthermore, this evaluation is conducted no less frequently than quarterly, irrespective of changes in circumstances. The prolonged outbreak of the COVID-19 pandemic resulted in sustained closure of our properties for a period of time, as well as the cessation of the operations of certain of its tenants, which has resulted and will likely continue to result in a reduction in the revenues and cash flows of many of its properties due to the adverse financial impacts on its tenants, as well as reductions in other

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sources of income generated by its properties. In addition to reduced revenues, the Company’s ability to obtain sufficient financing for such properties may be impaired as well as its ability to lease or re-lease properties as a result of worsening market and economic conditions resulting from the COVID-19 pandemic.

In 2018, an unconsolidated affiliate recognized an impairment of $89.8 million related to a mall. We recorded $1.0 million as our share of the loss on impairment, which reduced the carrying value of our investment in the joint venture to zero. See Note 8 to the consolidated financial statements for additional information about this impairment loss. No impairments of investments in unconsolidated affiliates were incurred during 2020 and 2019.

Recent Accounting Pronouncements

See Note 3 to the consolidated financial statements for information on recently issued accounting pronouncements.

Non-GAAP Measure

Funds from Operations

FFO is a widely used non-GAAP measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) (computed in accordance with GAAP) excluding gains or losses on sales of depreciable operating properties and impairment losses of depreciable properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests. Adjustments for unconsolidated partnerships and joint ventures and noncontrolling interests are calculated on the same basis. We define FFO as defined above by NAREIT less dividends on preferred stock of the Company or distributions on preferred units of the Operating Partnership, as applicable. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

We believe that FFO provides an additional indicator of the operating performance of our Properties without giving effect to real estate depreciation and amortization, which assumes the value of real estate assets declines predictably over time. Since values of real estate assets have historically risen or fallen with market conditions, we believe that FFO enhances investors’ understanding of our operating performance. The use of FFO as an indicator of financial performance is influenced not only by the operations of our Properties and interest rates, but also by our capital structure.

We present both FFO allocable to Operating Partnership common unitholders and FFO allocable to common shareholders, as we believe that both are useful performance measures. We believe FFO allocable to Operating Partnership common unitholders is a useful performance measure since we conduct substantially all of our business through our Operating Partnership and, therefore, it reflects the performance of the Properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in our Operating Partnership. We believe FFO allocable to common shareholders is a useful performance measure because it is the performance measure that is most directly comparable to net income (loss) attributable to common shareholders.

In our reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders that is presented below, we make an adjustment to add back noncontrolling interest in income (loss) of our Operating Partnership in order to arrive at FFO of the Operating Partnership common unitholders. We then apply a percentage to FFO of our Operating Partnership common unitholders to arrive at FFO allocable to common shareholders. The percentage is computed by taking the weighted-average number of common shares outstanding for the period and dividing it by the sum of the weighted-average number of common shares and the weighted-average number of Operating Partnership units held by noncontrolling interests during the period.

FFO does not represent cash flows from operations as defined by GAAP, is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income (loss) for purposes of evaluating our operating performance or to cash flow as a measure of liquidity.

We believe that it is important to identify the impact of certain significant items on our FFO measures for a reader to have a complete understanding of our results of operations. Therefore, we have also presented adjusted FFO measures excluding these significant items from the applicable periods. Please refer to the reconciliation of net income (loss) attributable to common shareholders to FFO allocable to Operating Partnership common unitholders below for a description of these adjustments.

FFO allocable to Operating Partnership common unitholders decreased 61.4% to $108.2 million for the year ended December 31, 2020 compared to $280.3 million for the prior year. After making the adjustments noted below, FFO of the Operating Partnership, as adjusted, decreased 48.2% for the year ending December 31, 2020 to $140.8 million compared

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to $271.5 million in 2019. The decreases in FFO were primarily driven by lower property-level NOI, which includes the estimate for uncollectable revenuesand bad debt expense of $49.3 million and rent abatements of $25.4 million due to the mandated property closures as a result of the COVID-19 pandemic. The reduction in rental revenues was partially offset by lower operating expenses from the program we put in place to eliminate all non-essential expenditures and the company-wide furlough and salary reduction program.

The reconciliation of net loss attributable to common shareholders to FFO allocable to Operating Partnership common unitholders is as follows (in thousands):

Year Ended December 31,

Depreciation and amortization expense of:

Loss on impairment of unconsolidated affiliates — — 1,022

(Gain) loss on depreciable property, net of taxes 25 (77,250 ) (7,484 )

Prepetition charges (1) 23,883 — —

Litigation settlement, net of taxes (2) (7,855 ) 61,271 —

Gain on extinguishment of debt (4) (32,521 ) (71,722 ) —

Reorganization items (5) 35,977 — —

FFO, as adjusted, per diluted share $ 0.70 $ 1.36 $ 1.73

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The reconciliation of diluted EPSattributable to common shareholders to FFO per diluted share is as follows:

Year Ended December 31,

Diluted EPS attributable to common shareholders $ (1.75 ) $ (0.89 ) $ (0.72 )

Eliminate amounts per share excluded from FFO:

Loss on impairment, net of taxes and noncontrolling interest 0.97 1.19 0.88

Gain on depreciable property, net of taxes — (0.38 ) (0.04 )

The reconciliations of FFO allocable to Operating Partnership common unitholders to FFO allocable to common shareholders, including and excluding the adjustments noted above are as follows (in thousands):

Year Ended December 31,

Percentage allocable to common shareholders (1) 94.39 % 86.65 % 86.42 %

Percentage allocable to common shareholders (1) 94.39 % 86.65 % 86.42 %

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risk exposures, including interest rate risk. The following discussion regarding our risk management activities includes forward-looking statements that involve risk and uncertainties. Estimates of future performance and economic conditions are reflected assuming certain changes in interest rates. Caution should be used in evaluating our overall market risk from the information presented below, as actual results may differ.

Interest Rate Risk

Based on our proportionate share of consolidated and unconsolidated variable-rate debt at December 31, 2020, and excluding the secured credit facility, which is included in liabilities subject to compromise in the accompanying consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase or decrease in interest rates on variable rate debt would result in annual cash flows of approximately $9.2 million and $7.3 million, respectively, and increase or decrease annual interest expense, after the effect of capitalized interest, by approximately $0.9 million.

Based on our proportionate share of consolidated and unconsolidated variable-rate debt at December 31, 2020, and including the secured credit facility, which is included in liabilities subject to compromise in the accompanying consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase or decrease in interest rates on variable rate debt would result in annual cash flows of approximately $120.6 million and $107.6 million, respectively, and increase or decrease annual interest expense, after the effect of capitalized interest, by approximately $6.5 million.

Based on our proportionate share of total consolidated and unconsolidated debt at December 31, 2020, and excluding the secured credit facility and senior unsecured notes which are included in liabilities subject to compromise in the accompanying consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase in interest rates would decrease the fair value of debt by approximately $17.9 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $16.0 million.

Based on our proportionate share of total consolidated and unconsolidated debt at December 31, 2020, and including the secured credit facility and senior unsecured notes which are included in liabilities subject to compromise in the accompanying consolidated balance sheets due to the Chapter 11 Cases, a 0.5% increase in interest rates would decrease

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the fair value of debt by approximately $27.4 million, while a 0.5% decrease in interest rates would increase the fair value of debt by approximately $24.0 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the Index to Financial Statements and Schedules contained in Item 15 on page 85.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Controls and Procedures with Respect to the Company

Conclusion Regarding Effectiveness of Disclosure Controls and Procedures

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report, to ensure that the information required to be disclosed by the Company in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and is accumulated and communicated to our management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as a result of the material weakness described below.

Management's Report on Internal Control over Financial Reporting

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting, management of the Company determined that there was a control deficiency that constituted a material weakness, as described below.

As a result of turnover, the Company did not maintain a sufficient complement of personnel commensurate with their accounting and financial reporting requirements in accordance with U.S. GAAP and SEC regulations.

The control deficiency described above created a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis and therefore we concluded that the deficiency represents a material weakness in the Company’s internal control over financial reporting and that the Company did not maintain effective internal control over financial reporting based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (the “2013 Framework”).

Notwithstanding the identified material weakness, management believes that the Consolidated Financial Statements and related financial information included in this Form 10-K fairly present, in all material respects, the Company’s balance sheets, statements of operations, comprehensive loss and cash flows as of and for the periods presented.

Remediation Plan

The Company plans to remediate this material weakness by hiring additional personnel to enable them to meet their financial reporting requirements. The Company may also utilize outside advisors to assist on a short-term basis.

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Report of Management on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Management recognizes that there are inherent limitations in the effectiveness of internal control over financial reporting, including the potential for human error or the circumvention or overriding of internal controls. Accordingly, even effective internal control over financial reporting cannot provide absolute assurance with respect to financial statement preparation. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. In addition, any projection of the evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the polices or procedures may deteriorate.

Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in the 2013 Framework and concluded that, as of December 31, 2020, the Company did not maintain effective internal control over financial reporting for the reasons described above.

Changes in Internal Control over Financial Reporting

We have continued to address the effects of the COVID-19 pandemic on our control structure, including modifications to business modeling, forecasting and estimations, lease modifications, and accounts receivable collectability, as well as for the consequences of reductions in headcount and remote working arrangements. We are continually monitoring and assessing the COVID-19 pandemic’s effect on our internal control processes in order to minimize the impact to their design and operating effectiveness. There were no other changes in the Company’s internal control over financial reporting during our most recent fiscal quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Controls and Procedures with Respect to the Operating Partnership

Conclusion Regarding Effectiveness of Disclosure Controls and Procedures

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, whose subsidiary CBL Holdings I is the sole general partner of the Operating Partnership, the Operating Partnership has evaluated the effectiveness of its disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, as a result of the material weakness described above these officers concluded that the Operating Partnership's disclosure controls and procedures were not effective to ensure that the information required to be disclosed by the Operating Partnership in the reports that the Operating Partnership files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and is accumulated and communicated to management of the Company, acting on behalf of the Operating Partnership in its capacity as the general partner of the Operating Partnership, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Operating Partnership’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting, management of the Operating Partnership determined that there was a control deficiency that constituted a material weakness, as described below.

As a result of turnover, the Operating Partnership did not maintain a sufficient complement of personnel commensurate with their accounting and financial reporting requirements in accordance with U.S. GAAP and SEC regulations.

The control deficiency described above created a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis and therefore we concluded that the deficiency represents a material weakness in the Operating Partnership’s internal control over financial reporting and that the Operating Partnership did not maintain effective internal control over financial reporting based on criteria established in the 2013 Framework.

Notwithstanding the identified material weakness, management believes that the Consolidated Financial Statements and related financial information included in this Form 10-K fairly present, in all material respects, the Company’s balance sheets, statements of operations, comprehensive loss and cash flows as of and for the periods presented.

Remediation Plan

The Operating Partnership plans to remediate this material weakness by hiring additional personnel to enable them to meet their financial reporting requirements. The Operating Partnership may also utilize outside advisors to assist on a short-term basis.

Report of Management on Internal Control over Financial Reporting

Management of the Operating Partnership is responsible for establishing and maintaining adequate internal control over financial reporting. The Operating Partnership’s internal control over financial reporting is a process designed under the supervision of the Operating Partnership’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Management recognizes that there are inherent limitations in the effectiveness of internal control over financial reporting, including the potential for human error or the circumvention or overriding of internal controls. Accordingly, even effective internal control over financial reporting cannot provide absolute assurance with respect to financial statement preparation. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a

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timely basis by internal control over financial reporting. In addition, any projection of the evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the polices or procedures may deteriorate.

The Company's management, whose subsidiary CBL Holdings I is the sole general partner of the Operating Partnership, conducted an assessment of the effectiveness of the Operating Partnership’s internal control over financial reporting based on the framework established in the 2013 Framework and concluded that, as of December 31, 2020, the Operating Partnership did not maintain effective internal control over financial reporting for the reasons described above.

Changes in Internal Control over Financial Reporting

We have continued to address the effects of the COVID-19 pandemic on our control structure, including modifications to business modeling, forecasting and estimations, lease modifications, and accounts receivable collectability, as well as for the consequences of reductions in headcount and remote working arrangements. We are continually monitoring and assessing the COVID-19 pandemic’s effect on our internal control processes in order to minimize the impact to their design and operating effectiveness. There were no other changes in the Operating Partnership’s internal control over financial reporting during our most recent fiscal quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Incorporated herein by reference to the sections entitled “ELECTION OF DIRECTORS–General,” “ELECTION OF DIRECTORS-Impact of Our Voluntary Reorganization Under Chapter 11,” “ELECTION OF DIRECTORS–Director Nominees," "ELECTION OF DIRECTORS–Additional Executive Officers,” “–CORPORATE GOVERNANCE MATTERS–Code of Business Conduct and Ethics,” “CORPORATE GOVERNANCE MATTERS–Board of Directors’ Meetings and Committees – The Audit Committee,” and “Delinquent Section 16(a) Reports” in our definitive proxy statement filed with the SEC with respect to our Annual Meeting of Stockholders to be held on May 25, 2021.

Our Board of Directors has determined that each of A. Larry Chapman, an independent director and chairman of the audit committee, Matthew S. Dominski and Carolyn B. Tiffany, each, an independent director and member of the audit committee, qualifies as an “audit committee financial expert” as such term is defined by the rules of the Commission.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated herein by reference to the sections entitled “DIRECTOR COMPENSATION,” “EXECUTIVE COMPENSATION,” “REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS” and “Compensation Committee Interlocks and Insider Participation” in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 25, 2021.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Incorporated herein by reference to the sections entitled “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” and “Equity Compensation Plan Information as of December 31, 2020”, in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 25, 2021.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated herein by reference to the sections entitled “CORPORATE GOVERNANCE MATTERS–Director Independence” and “CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS”, in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 25, 2021.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Incorporated herein by reference to the section entitled “Independent Registered Public Accountants’ Fees and Services” under “RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS” in our definitive proxy statement filed with the Commission with respect to our Annual Meeting of Stockholders to be held on May 25, 2021.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(1) Consolidated Financial Statements Page Number

CBL & Associates Properties, Inc.

Report of Independent Registered Public Accounting Firm 86

Consolidated Balance Sheets as of December 31, 2020 and 2019 89

CBL & Associates Limited Partnership

Report of Independent Registered Public Accounting Firm 95

Consolidated Balance Sheets as of December 31, 2020 and 2019 98

CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership

Notes to Consolidated Financial Statements 104

(2) Consolidated Financial Statement Schedules

Schedule III Real Estate and Accumulated Depreciation 155

Schedule IV Mortgage Loans on Real Estate 160

(3) Exhibits

ITEM 16. FORM 10-K SUMMARY

None.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of CBL & Associates Properties, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CBL & Associates Properties, Inc. (Debtors-In-Possession) and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company filed for bankruptcy on November 1, 2020 and has experienced acceleration of the senior secured credit facility, the senior unsecured notes of CBL & Associates Limited Partnership, a wholly owned subsidiary, and certain property-level debt, as well as inherent risks and uncertainties associated with the bankruptcy process, which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Bankruptcy Proceedings

As discussed in Note 2 to the financial statements, the Company has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The accompanying financial statements do not purport to reflect or provide for the consequences of the bankruptcy proceedings. In particular, such financial statements do not purport to show (1) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities; (2) as to prepetition liabilities, the settlement amounts for allowed claims, or the status and priority thereof; (3) as to shareholder accounts, the effect of any changes that may be made in the capitalization of the Company; or (4) as to operations, the effect of any changes that may be made in its business.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Real Estate Assets – Determination of Impairment Indicators and Impairment - Refer to Note 3, Summary of Significant Accounting Policies (Carrying Value of Long-Lived Assets) and Note 17, Fair Value Measurements, to the financial statements

Critical Audit Matter Description

The Company performs an impairment analysis if events or changes in circumstances indicate that the carrying value of any of its long-lived assets may not be recoverable. The Company’s evaluation of the recoverability of consolidated 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. Significant quantitative factors include historical and forecasted information such as net operating income, occupancy statistics, and tenant sales levels. Significant qualitative factors include market conditions, age and condition of the asset, and tenant mix. The quantitative and qualitative factors impact the selection of the terminal capitalization rate which is used in both the undiscounted and discounted cash flow model as well as the discount rate used solely in the discounted cash flow model. Total real estate assets as of December 31, 2020 were $3.6 billion, net of impairment losses recorded during the year ended December 31, 2020 of $213 million.

Given (1) the Company’s evaluation of possible indications of impairment of long-lived assets involves subjectivity in assessing whether events or changes in circumstances have occurred, including a change in the expected remaining holding period of its long-live assets, indicating that the carrying amounts of real estate assets may not be recoverable and (2) the Company’s evaluation of cash flow estimates used both for determining recoverability and estimating fair value to determine impairment requires significant estimates and assumptions related to net operating income, occupancy, capitalization, and discount rates, performing procedures to (a) evaluate whether impairment indicators were appropriately identified and (b) the reasonableness of the cash flow estimates used for determining recoverability and estimating fair value required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s impairment analyses included the following, among others:

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Tenant Receivables- Collectability — Refer to Note 3 Summary of Significant Accounting Policies (Accounts Receivable) to the financial statements

Critical Audit Matter Description

The duration of the COVID-19 pandemic and its impact on a tenants’ ability to pay rents has caused uncertainty in the Company’s ongoing ability to collect rents when due. Considering the potential impact of these uncertainties, the Company performs a detailed review of amounts due from tenants to determine whether tenant receivables and straight-line rent receivables balances are realizable based on factors affecting the collectability of those balances, such as type of retailer, billing disputes, lease negotiation status, executed deferrals or abatements, as well as recent rent collection experience and tenant bankruptcies. The Company recognizes an allowance for the uncollectible portion of its tenant receivables and the uncollectible portion of its straight-line rent receivables as a reduction of rental revenues. If a lessee’s accounts receivable balance is not considered probable of collection, the Company writes off the full accounts receivable balance and straight-line rent receivable balance associated with the lease. If future lease income is not considered probable of collection, the Company recognizes lease income on a cash basis.

Given the significant judgment involved in assessing whether it is probable that a tenant will pay outstanding receivables and whether it is probable that substantially all future lease payments will be collected in accordance with the lease terms, auditing management’s evaluation of collectability of tenant receivables required a high degree of auditor judgment and an increased extent of effort. In particular, the assessment of collectability involves making significant judgments regarding the tenant’s financial condition based on information regarding type of retailer, billing disputes, lease negotiation status, executed deferrals or abatements, as well as recent rent collection experience and tenant bankruptcies.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the collectability of tenant receivables included the following, among others:

/s/ Deloitte & Touche LLP

Atlanta, Georgia

April 8, 2021

We have served as the Company's auditor since 2002.

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Consolidated Balance Sheets

(In thousands, except share data)

Real estate assets:

Receivables:

Mortgage and other notes receivable 2,337 4,662

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Liabilities subject to compromise 2,551,490 —

Commitments and contingencies (Note 9 and Note 16)

Redeemable noncontrolling interests (265 ) 2,160

Shareholders' equity:

Preferred Stock, $.01 par value, 15,000,000 shares authorized:

Accumulated other comprehensive income 18 —

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

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Consolidated Statements of Operations

(In thousands, except per share amounts)

Year Ended December 31,

REVENUES:

OPERATING EXPENSES:

Prepetition charges (23,883 ) — —

OTHER INCOME (EXPENSES):

Gain on investments/deconsolidation — 67,242 —

Reorganization items (35,977 ) — —

Equity in earnings (losses) of unconsolidated affiliates (14,854 ) 4,940 14,677

Net (income) loss attributable to noncontrolling interests in:

Preferred dividends undeclared (37,410 ) (11,223 ) —

Basic and diluted per share data attributable to common shareholders:

Net loss attributable to common shareholders $ (1.75 ) $ (0.89 ) $ (0.72 )

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

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Consolidated Statements of Comprehensive Loss

(In thousands, except per share amounts)

Year Ended December 31,

Other comprehensive income:

Unrealized gain on available-for-sale securities 18 — —

Comprehensive (income) loss attributable to noncontrolling interests in:

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Consolidated Statements of Equity

(in thousands, except share data)

Equity

Shareholders' Equity

Dividends declared - preferred stock — — — — (44,892 ) (44,892 ) — (44,892 )

Forfeiture of performance stock units — — — (250 ) — (250 ) — (250 )

Amortization of deferred compensation — — — 3,640 — 3,640 — 3,640

Distributions to noncontrolling interests (4,572 ) — — — — — (27,311 ) (27,311 )

Contributions from noncontrolling interests — — — — — — 9,609 9,609

Dividends declared - preferred stock — — — — (33,669 ) (33,669 ) — (33,669 )

Amortization of deferred compensation — — — 2,794 — 2,794 — 2,794

Distributions to noncontrolling interests (3,429 ) — — — — — (11,149 ) (11,149 )

Contributions from noncontrolling interests — — — — — — 4,654 4,654

Deconsolidation of investments — — — — — — 12,014 12,014

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Consolidated Statements of Equity

(Continued)

(in thousands, except share data)

Equity

Shareholders' Equity

Other comprehensive income — — — — 18 — 18 — 18

Amortization of deferred compensation — — — 1,769 — — 1,769 — 1,769

Distributions to noncontrolling interests — — — — — — — (912 ) (912 )

Contributions from noncontrolling interests — — — — — — — 692 692

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

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CBL & Associates Properties, Inc.

(Debtors-In-Possession)

Consolidated Statements of Cash Flows

(In thousands)

Year Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net loss to net cash provided by operating activities:

Reorganization items (non-cash) 25,294 — —

Gain on investments/deconsolidation — (67,242 ) —

Write-off of development projects 952 91 787

Gain on extinguishment of debt (32,521 ) (71,722 ) —

Distributions of earnings from unconsolidated affiliates 10,093 21,651 21,539

Changes in:

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisitions of real estate assets — (5,700 ) (3,301 )

Purchase of available-for-sale securities (235,182 ) — —

Proceeds from disposal of investments — 18,563 —

Payments received on mortgage and other notes receivable 1,095 3,010 1,274

CASH FLOWS FROM FINANCING ACTIVITIES:

Additions to deferred financing costs (590 ) (15,546 ) (1,859 )

Proceeds from issuances of common stock 5 40 156

Contributions from noncontrolling interests 692 4,654 9,609

Payment of tax withholdings for restricted stock awards (87 ) (133 ) (289 )

Distributions to noncontrolling interests (912 ) (18,758 ) (35,113 )

Dividends paid to holders of preferred stock — (33,669 ) (44,892 )

Dividends paid to common shareholders — (25,959 ) (137,813 )

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 62,664 1,546 (10,660 )

Restricted cash (1):

SUPPLEMENTAL INFORMATION

Cash paid for reorganization items $ 301 $ — $ —

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

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Unit Holders of CBL & Associates Limited Partnership

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CBL & Associates Limited Partnership and subsidiaries (Debtors-In-Possession) (the "Partnership") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, capital, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 2 to the financial statements, the Partnership filed for bankruptcy on November 1, 2020 and has experienced acceleration of its senior secured credit facility, the senior unsecured notes and certain property-level debt, as well as inherent risks and uncertainties associated with the bankruptcy process, which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Bankruptcy Proceedings

As discussed in Note 2 to the financial statements, the Partnership has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The accompanying financial statements do not purport to reflect or provide for the consequences of the bankruptcy proceedings. In particular, such financial statements do not purport to show (1) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities; (2) as to prepetition liabilities, the settlement amounts for allowed claims, or the status and priority thereof; (3) as to unitholder accounts, the effect of any changes that may be made in the capitalization of the Partnership; or (4) as to operations, the effect of any changes that may be made in its business.

Basis for Opinion

These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Real Estate Assets – Determination of Impairment Indicators and Impairment - Refer to Note 3, Summary of Significant Accounting Policies (Carrying Value of Long-Lived Assets) and Note 17, Fair Value Measurements, to the financial statements

Critical Audit Matter Description

The Partnership performs an impairment analysis if events or changes in circumstances indicate that the carrying value of any of its long-lived assets may not be recoverable. The Partnership’s evaluation of the recoverability of consolidated long-lived assets involves the comparison of undiscounted future cash flows expected to be generated by each property over the Partnership’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 Partnership considers both quantitative and qualitative factors in its impairment analysis. Significant quantitative factors include historical and forecasted information such as net operating income, occupancy statistics, and tenant sales levels. Significant qualitative factors include market conditions, age and condition of the asset, and tenant mix. The quantitative and qualitative factors impact the selection of the terminal capitalization rate which is used in both the undiscounted and discounted cash flow model as well as the discount rate used solely in the discounted cash flow model. Total real estate assets as of December 31, 2020 were $3.6 billion, net of impairment losses recorded during the year ended December 31, 2020 of $213 million.

Given (1) the Partnership’s evaluation of possible indications of impairment of long-lived assets involves subjectivity in assessing whether events or changes in circumstances have occurred, including a change in the expected remaining holding period of its long-live assets, indicating that the carrying amounts of real estate assets may not be recoverable and (2) the Partnership’s evaluation of cash flow estimates used both for determining recoverability and estimating fair value to determine impairment requires significant estimates and assumptions related to net operating income, occupancy, capitalization, and discount rates, performing procedures to (a) evaluate whether impairment indicators were appropriately identified and (b) the reasonableness of the cash flow estimates used for determining recoverability and estimating fair value required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Partnership’s impairment analyses included the following, among others:

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Tenant Receivables- Collectability — Refer to Note 3 Summary of Significant Accounting Policies (Accounts Receivable) to the financial statements

Critical Audit Matter Description