CBL & Associates Properties Inc.
11/09/2026 | Press release | Distributed by Public on 11/09/2026 14:24
Quarterly Report for Quarter Ending SEPTEMBER 30, 2026 (Form 10-Q)
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 condensed consolidated financial statements and accompanying notes that are included in this Form 10-Q. 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 condensed consolidated financial statements. Unless stated otherwise or the context otherwise requires, references to the "Company," "we," "us" and "our" mean CBL & Associates Properties, Inc. and its subsidiaries.
Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of the federal securities laws. All statements other than statements of historical fact should be considered to be forward-looking statements. In many cases, these forward-looking statements may be identified by the use of words such as "will," "may," "should," "could," "believes," "expects," "anticipates," "estimates," "intends," "projects," "goals," "objectives," "targets," "predicts," "plans," "seeks," and variations of these words and similar expressions. Any forward-looking statement speaks only as of the date on which it is made and is qualified in its entirety by reference to the factors discussed throughout this report.
Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance or results and we can give no assurance that these expectations will be attained. It is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of known and unknown risks and uncertainties. In addition to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, such known risks and uncertainties include, without limitation:
•
general industry, economic and business conditions;
•
interest rate fluctuations;
•
costs and availability of capital, including debt, and capital requirements;
•
the ability to obtain suitable equity and/or debt financing and the continued availability of financing, in the amounts and on the terms necessary to support our future refinancing requirements and business;
•
costs and availability of real estate;
•
inability to consummate acquisition or disposition opportunities and other risks associated with acquisitions and dispositions;
•
competition from other companies and retail formats;
•
changes in retail demand and rental rates in our markets;
•
shifts in customer demands including the impact of online shopping;
•
tenant bankruptcies or store closings;
•
changes in vacancy rates at our properties;
•
changes in operating expenses;
•
changes in applicable laws, rules and regulations;
•
cyberattacks or acts of cyberterrorism;
•
uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events; and
•
other risks referenced from time to time in filings with the Securities and Exchange Commission ("SEC") and those factors listed or incorporated by reference into this report.
This list of risks and uncertainties is only a summary and is not intended to be exhaustive. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.
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, outlet centers, lifestyle centers, open-air centers and other properties. See Note 1 to the condensed consolidated financial statements for information on our property interests as of September 30, 2026. We have elected to be taxed as a REIT for federal income tax purposes.
The following summarizes our net income and net income attributable to common shareholders (in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net income |
$ |
11,845 |
$ |
75,060 |
$ |
104,551 |
$ |
85,605 |
||||||||
|
Net income attributable to common shareholders |
$ |
11,345 |
$ |
74,267 |
$ |
102,283 |
$ |
85,631 |
||||||||
Significant items that affected comparability between the three-month periods include:
•
Items increasing net income for the three months ended September 30, 2026 compared to the prior period:
•
Rental revenues were $9.1 million higher;
•
Depreciation and amortization expense was $4.8 million lower;
•
Equity in earnings was $15.5 million higher;
•
General and administrative expense was $3.6 million lower;
•
Interest and other income was $5.2 million higher; and
•
Loss on impairment was $1.7 million lower.
•
Items decreasing net income for the three months ended September 30, 2026 compared to the prior period:
•
Gain on deconsolidation was $34.0 million lower;
•
Gain on sales of real estate assets was $45.8 million lower;
•
Interest expense was $21.3 million higher;
•
Real estate taxes were $1.8 million higher; and
•
Maintenance and repairs expenses was $1.8 million higher.
Significant items that affected comparability between the nine-month periods include:
•
Items increasing net income for the nine months ended September 30, 2026 compared to the prior period:
•
Rental revenues were $18.7 million higher;
•
Gain on deconsolidation was $7.3 million higher;
•
Depreciation and amortization expense was $15.7 million lower;
•
Equity in earnings was $34.8 million higher;
•
General and administrative expense was $6.1 million lower;
•
Interest and other income was $5.0 million higher; and
•
Loss on impairment was $3.2 million lower.
•
Items decreasing net income for the nine months ended September 30, 2026 compared to the prior period:
•
Gain on sales of real estate assets was $53.7 million lower;
•
Interest expense was $15.8 million higher; and
•
Property operating expense was $4.5 million higher.
Our focus is on continuing to execute our strategy to improve occupancy, drive rent growth and transform the offerings available at our properties to include a targeted mix of retail, service, dining, entertainment and other non-retail uses, 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 of reducing overall debt, extending our debt maturity schedule and lowering our overall cost of borrowings to limit maturity risk, as well as improving net cash flow and enhancing enterprise value. During the first nine months of 2026, we reduced our debt balance and extended our debt maturity schedule through refinancings, such as the refinancing of the $634.0 million secured term loan with two new loans, which extended the maturity date five years. Additionally, we acquired Gateway Mall in Lincoln, NE for approximately $43.8 million. Also, we sold Hammock Landing and York Town Center, totaling $128.7 million in gross proceeds, consistent with our strategic focus on growing our mall portfolio and increasing cash flow through capital recycling.
Same-center NOI and FFO are non-GAAP measures. For a description of same-center NOI, a reconciliation from net income (loss) 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, a reconciliation from net income (loss) 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.
Results of Operations
Properties that were in operation for the entire year during 2025 and the nine months ended September 30, 2026 are referred to as the "Comparable Properties." Since January 2025, we have opened, acquired, deconsolidated and disposed of the following properties:
Properties Opened
|
Property |
Location |
Date of Opening |
||
|
Element by Westin (1) |
Wilmington, NC |
September 2025 |
(1)
The property is owned by a joint venture that is accounted for using the equity method of accounting and is included in equity in earnings of unconsolidated affiliates in the accompanying condensed consolidated statements of operations.
Acquisitions
|
Property |
Location |
Date of Acquisition |
||
|
Ashland Town Center |
Ashland, KY |
July 2025 |
||
|
Mesa Mall |
Grand Junction, CO |
July 2025 |
||
|
Paddock Mall |
Ocala, FL |
July 2025 |
||
|
Southgate Mall |
Missoula, MT |
July 2025 |
||
|
Gateway Mall |
Lincoln, NE |
March 2026 |
Deconsolidations
|
Property |
Location |
Date of Deconsolidation |
||
|
Southpark Mall |
Colonial Heights, VA |
July 2025 |
||
|
Jefferson Mall |
Louisville, KY |
February 2026 |
||
|
The Outlet Shoppes at Gettysburg |
Gettysburg, PA |
May 2026 |
Dispositions
|
Property |
Location |
Date of Disposition |
||
|
Monroeville Mall |
Monroeville, PA |
January 2025 |
||
|
Annex at Monroeville |
Monroeville, PA |
January 2025 |
||
|
Imperial Valley Mall |
El Centro, CA |
February 2025 |
||
|
840 Greenbrier Circle |
Chesapeake, VA |
June 2025 |
||
|
The Promenade |
D'Iberville, MS |
July 2025 |
||
|
Fremaux Town Center (1) |
Slidell, LA |
October 2025 |
||
|
Hammock Landing (1) |
West Melbourne, FL |
May 2026 |
||
|
York Town Center (1) |
York, PA |
August 2026 |
(1)
The property was owned by a joint venture that was accounted for using the equity method of accounting and was included in equity in earnings of unconsolidated affiliates in the accompanying condensed consolidated statements of operations.
We consider properties undergoing major redevelopment, properties being considered for repositioning, properties where we intend to renegotiate the terms of the debt secured by the related property or return the property to the lender as non-core. As of September 30, 2026, Arbor Place, Brookfield Square, Eastland Mall, Harford Mall, Jefferson Mall, Laurel Park Place, Old Hickory Mall, Parkdale Mall, Parkdale Crossing, Southpark Mall, The Outlet Shoppes at Gettysburg, Volusia Mall and York Galleria were designated as non-core.
Comparison of the Three Months Ended September 30, 2026 to the Three Months Ended September 30, 2025
Revenues
|
Three Months Ended September 30, |
||||||||||||||||||||||||||||||||
|
2026 |
2025 |
Change |
Malls |
Outlet Centers |
Lifestyle Centers |
Open-Air Centers |
All Other |
|||||||||||||||||||||||||
|
Rental revenues |
$ |
143,865 |
$ |
134,786 |
$ |
9,079 |
$ |
9,549 |
$ |
(1,015 |
) |
$ |
22 |
$ |
450 |
$ |
73 |
|||||||||||||||
|
Management, development and leasing fees |
1,599 |
1,226 |
373 |
- |
- |
- |
- |
373 |
||||||||||||||||||||||||
|
Other |
3,233 |
3,268 |
(35 |
) |
22 |
(90 |
) |
(11 |
) |
(10 |
) |
54 |
||||||||||||||||||||
|
Total revenues |
$ |
148,697 |
$ |
139,280 |
$ |
9,417 |
$ |
9,571 |
$ |
(1,105 |
) |
$ |
11 |
$ |
440 |
$ |
500 |
|||||||||||||||
Rental revenues increased partially due to the acquisition of four malls in July 2025 and one mall in March 2026, which resulted in an increase of $5.7 million during the current period. Also, rental revenues at the comparable properties increased $5.8 million compared to the prior period. The increase was partially offset by $2.8 million of rental revenues associated with properties sold or deconsolidated since the prior period.
Operating Expenses
|
Three Months Ended September 30, |
||||||||||||||||||||||||||||||||
|
2026 |
2025 |
Change |
Malls |
Outlet Centers |
Lifestyle Centers |
Open-Air Centers |
All Other |
|||||||||||||||||||||||||
|
Property operating |
$ |
(27,341 |
) |
$ |
(27,383 |
) |
$ |
42 |
$ |
335 |
$ |
548 |
$ |
(269 |
) |
$ |
196 |
$ |
(768 |
) |
||||||||||||
|
Real estate taxes |
(14,730 |
) |
(12,970 |
) |
(1,760 |
) |
(1,912 |
) |
4 |
287 |
(182 |
) |
43 |
|||||||||||||||||||
|
Maintenance and repairs |
(11,375 |
) |
(9,594 |
) |
(1,781 |
) |
(1,902 |
) |
62 |
(12 |
) |
56 |
15 |
|||||||||||||||||||
|
Property operating expenses |
(53,446 |
) |
(49,947 |
) |
(3,499 |
) |
(3,479 |
) |
614 |
6 |
70 |
(710 |
) |
|||||||||||||||||||
|
Depreciation and amortization |
(35,084 |
) |
(39,900 |
) |
4,816 |
4,050 |
142 |
(173 |
) |
495 |
302 |
|||||||||||||||||||||
|
General and administrative |
(14,204 |
) |
(17,787 |
) |
3,583 |
- |
- |
- |
- |
3,583 |
||||||||||||||||||||||
|
Loss on impairment |
- |
(1,736 |
) |
1,736 |
- |
- |
- |
- |
1,736 |
|||||||||||||||||||||||
|
Other |
- |
(45 |
) |
45 |
45 |
- |
- |
- |
- |
|||||||||||||||||||||||
|
Total operating expenses |
$ |
(102,734 |
) |
$ |
(109,415 |
) |
$ |
6,681 |
$ |
616 |
$ |
756 |
$ |
(167 |
) |
$ |
565 |
$ |
4,911 |
|||||||||||||
Total property operating expenses increased during the current period primarily due to higher real estate tax and maintenance and repair expenses. The acquisition of four malls in July 2025 and one mall in March 2026 resulted in an increase of $2.8 million during the current period, which was partially offset by $2.1 million related to properties sold or deconsolidated since the prior period.
Depreciation and amortization expense decreased primarily due to tenant improvement and intangible in-place lease assets recognized upon consolidation of three malls in December 2024, as well as the adoption of fresh start accounting on November 1, 2021, becoming fully depreciated or amortized since the prior period. The decrease was partially offset by the addition of tangible assets and intangible lease assets recognized upon the acquisition of four malls in July 2025 and one mall in March 2026, which resulted in an increase of $1.5 million during the current period.
General and administrative expense decreased primarily due to lower stock-based compensation expense in the current period as compared to the prior period, as well as lower professional fees expense in the current period.
During the three months ended September 30, 2025, we recorded loss on impairment of $1.7 million related to a land parcel we sold for less than its carrying value.
Other Income and Expenses
Interest and other income increased $5.2 million in the current period primarily related to excess proceeds received at one of our properties related to bonds issued by the community improvement district where the property is located.
Interest expense increased $21.3 million during the three months ended September 30, 2026 as compared to the prior period. The increase was primarily due to an increase in non-cash default interest expense on loans past their maturity date, including one loan for which non-cash default interest expense was retroactive to November 1, 2020, pursuant to the terms of a prior forbearance agreement entered into in connection with our emergence from bankruptcy on November 1, 2021. The accrued non-cash default interest is expected to be resolved when the respective property is either sold or
conveyed to the lender in satisfaction of the debt. Also, the increase is attributable to property loan interest expense due to refinancings with higher interest rates as compared to the prior period. The increase was partially offset by property-level debt discounts becoming fully accreted upon maturity of the related loans or when the related loan was deconsolidated since the prior period.
For the three months ended September 30, 2025, we recorded a $33.9 million gain on deconsolidation related to Southpark Mall. The property was deconsolidated due to a loss of control when it was placed into receivership in connection with the foreclosure process.
Equity in earnings increased $15.5 million during the three months ended September 30, 2026 as compared to the prior period. The increase was primarily due to the sale of York Town Center during the current period.
During the three months ended September 30, 2026, we recognized $5.4 million of gain on sales of real estate assets primarily related to the sale of an outparcel. During the three months ended September 30, 2025, we recognized $51.2 million of gain on sales of real estate assets primarily related to the sales of The Promenade and a land parcel.
Comparison of the Nine Months Ended September 30, 2026 to the Nine Months Ended September 30, 2025
Revenues
|
Nine Months Ended September 30, |
||||||||||||||||||||||||||||||||
|
2026 |
2025 |
Change |
Malls |
Outlet Centers |
Lifestyle Centers |
Open-Air Centers |
All Other |
|||||||||||||||||||||||||
|
Rental revenues |
$ |
427,252 |
$ |
408,599 |
$ |
18,653 |
$ |
24,460 |
$ |
(1,455 |
) |
$ |
(98 |
) |
$ |
(4,051 |
) |
$ |
(203 |
) |
||||||||||||
|
Management, development and leasing fees |
4,367 |
3,900 |
467 |
- |
- |
- |
- |
467 |
||||||||||||||||||||||||
|
Other |
9,525 |
9,454 |
71 |
(155 |
) |
15 |
1 |
91 |
119 |
|||||||||||||||||||||||
|
Total revenues |
$ |
441,144 |
$ |
421,953 |
$ |
19,191 |
$ |
24,305 |
$ |
(1,440 |
) |
$ |
(97 |
) |
$ |
(3,960 |
) |
$ |
383 |
|||||||||||||
Rental revenues increased primarily due to the acquisition of four malls in July 2025 and one mall in March 2026, which resulted in an increase of $27.3 million during the current period. Also, rental revenues at the comparable properties increased $8.5 million compared to the prior period. The increase was partially offset by $16.1 million of rental revenues associated with properties sold or deconsolidated since the prior period.
Operating Expenses
|
Nine Months Ended September 30, |
||||||||||||||||||||||||||||||||
|
2026 |
2025 |
Change |
Malls |
Outlet Centers |
Lifestyle Centers |
Open-Air Centers |
All Other |
|||||||||||||||||||||||||
|
Property operating |
$ |
(81,371 |
) |
$ |
(76,844 |
) |
$ |
(4,527 |
) |
$ |
(3,851 |
) |
$ |
577 |
$ |
61 |
$ |
525 |
$ |
(1,839 |
) |
|||||||||||
|
Real estate taxes |
(42,851 |
) |
(43,728 |
) |
877 |
(574 |
) |
142 |
1,047 |
283 |
(21 |
) |
||||||||||||||||||||
|
Maintenance and repairs |
(34,549 |
) |
(33,432 |
) |
(1,117 |
) |
(1,622 |
) |
88 |
(44 |
) |
357 |
104 |
|||||||||||||||||||
|
Property operating expenses |
(158,771 |
) |
(154,004 |
) |
(4,767 |
) |
(6,047 |
) |
807 |
1,064 |
1,165 |
(1,756 |
) |
|||||||||||||||||||
|
Depreciation and amortization |
(109,465 |
) |
(125,143 |
) |
15,678 |
12,028 |
306 |
130 |
2,324 |
890 |
||||||||||||||||||||||
|
General and administrative |
(47,573 |
) |
(53,682 |
) |
6,109 |
- |
- |
- |
- |
6,109 |
||||||||||||||||||||||
|
Loss on impairment |
- |
(3,193 |
) |
3,193 |
- |
- |
- |
- |
3,193 |
|||||||||||||||||||||||
|
Other |
30 |
(75 |
) |
105 |
105 |
- |
- |
- |
- |
|||||||||||||||||||||||
|
Total operating expenses |
$ |
(315,779 |
) |
$ |
(336,097 |
) |
$ |
20,318 |
$ |
6,086 |
$ |
1,113 |
$ |
1,194 |
$ |
3,489 |
$ |
8,436 |
||||||||||||||
Total property operating expenses increased primarily due to the acquisition of four malls in July 2025 and one mall in March 2026, which resulted in an increase of $10.2 million during the current period. Also, property operating expenses increased at the comparable properties compared to the prior period primarily due to higher property repair and maintenance expense, payroll and insurance related costs. The increase was partially offset by $7.9 million of total property operating expenses associated with properties sold or deconsolidated since the prior period.
Depreciation and amortization expense decreased primarily due to tenant improvement and intangible in-place lease assets recognized upon consolidation of three malls in December 2024, as well as the adoption of fresh start accounting on November 1, 2021, becoming fully depreciated or amortized since the prior period. Also, dispositions accounted for a $3.5 million decrease in the current period as compared to the prior period. The decrease was partially offset by the addition of tangible assets and intangible lease assets recognized upon the acquisition of four malls in July 2025 and one mall in March 2026, which resulted in an increase of $10.8 million during the current period.
General and administrative expense decreased primarily due to lower stock-based compensation expense in the current period as compared to the prior period, as well as lower professional fees expense in the current period.
During the nine months ended September 30, 2025, we recorded loss on impairment of $3.2 million related to the sales of 840 Greenbrier Circle and a land parcel, which were sold for less than their carrying values.
Other Income and Expenses
Interest and other income increased $5.0 million in the current period primarily related to excess proceeds received at one of our properties related to bonds issued by the community improvement district where the property is located.
Interest expense increased $15.8 million during the nine months ended September 30, 2026 as compared to the prior period. The increase was primarily due to an increase in non-cash default interest expense on loans past their maturity date, including one loan for which non-cash default interest expense was retroactive to November 1, 2020, pursuant to the terms of a prior forbearance agreement entered into in connection with our emergence from bankruptcy on November 1, 2021. The accrued non-cash default interest is expected to be resolved when the respective property is either sold or conveyed to the lender in satisfaction of the debt. Also, the increase is attributable to additional interest on the 2032 non-recourse bank loan, as it was modified to increase the loan balance to finance the acquisition of four malls in July 2025. The increase was partially offset due to property-level debt discounts becoming fully accreted upon maturity of the related loans or when the related loan was deconsolidated since the prior period, as well as refinancing the prior secured term loan with the secured mall loan due 2031 and the secured lifestyle centers loan due 2032.
For the nine months ended September 30, 2026, we recorded a $41.2 million gain on deconsolidation related to Jefferson Mall and The Outlet Shoppes at Gettysburg. The properties were deconsolidated due to a loss of control when they were placed into receivership in connection with the foreclosure process. For the nine months ended September 30, 2025, we recorded a $33.9 million gain on deconsolidation related to Southpark Mall. The property was deconsolidated due to a loss of control when it was placed into receivership in connection with the foreclosure process.
Equity in earnings increased $34.8 million during the nine months ended September 30, 2026 as compared to the prior period. The increase was primarily due to the sales of Hammock Landing and York Town Center.
During the nine months ended September 30, 2026, we recognized $20.4 million of gain on sales of real estate assets related to the sale of nine outparcels. During the nine months ended September 30, 2025, we recognized $74.1 million of gain on sales of real estate assets related to the sales of The Promenade, Imperial Valley Mall, Monroeville Mall, Annex at Monroeville, three outparcels associated with the Monroeville Mall properties, a land parcel associated with Imperial Valley Mall, an outparcel and a land parcel.
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 and other income) less property operating expenses (property operating, real estate taxes and maintenance and repairs).
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 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 our properties 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, amortization of above and below market lease intangibles and write-offs of landlord inducement assets 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 and current year-to-date period. New properties are excluded from same-center NOI until they meet these criteria. Properties excluded from the same-center pool that would otherwise meet these criteria are categorized as excluded properties. We exclude properties which are under major redevelopment or are being considered for repositioning, and where we are working or intend to work with the lender on a restructure of the terms of the loan secured by the property or convey the secured property to the lender ("Excluded Properties"). As of September 30, 2026, Arbor Place, Brookfield Square, Eastland Mall, Harford Mall, Jefferson Mall, Laurel Park Place, Old Hickory Mall, Parkdale Mall, Parkdale Crossing, Southpark Mall, The Outlet Shoppes at Gettysburg, Volusia Mall and York Galleria were classified as Excluded Properties.
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 income for the three and nine months ended September 30, 2026 and 2025 is as follows (in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net income |
$ |
11,845 |
$ |
75,060 |
$ |
104,551 |
$ |
85,605 |
||||||||
|
Adjustments: (1) |
||||||||||||||||
|
Depreciation and amortization, including our share of unconsolidated affiliates and net of noncontrolling interests' share |
37,904 |
42,682 |
117,865 |
133,808 |
||||||||||||
|
Interest expense, including our share of unconsolidated affiliates and net of noncontrolling interests' share |
71,543 |
49,664 |
165,175 |
150,427 |
||||||||||||
|
Abandoned projects expense |
- |
- |
- |
27 |
||||||||||||
|
Gain on sales of real estate assets |
(5,394 |
) |
(51,228 |
) |
(20,429 |
) |
(74,099 |
) |
||||||||
|
Gain on sales of real estate assets of unconsolidated affiliates |
(10,729 |
) |
- |
(22,859 |
) |
(1,867 |
) |
|||||||||
|
Adjustment for unconsolidated affiliates with negative investment |
1,279 |
6,817 |
(3,386 |
) |
10,453 |
|||||||||||
|
Loss on extinguishment of debt |
- |
- |
- |
217 |
||||||||||||
|
Loss (gain) on deconsolidation |
107 |
(33,851 |
) |
(41,152 |
) |
(33,851 |
) |
|||||||||
|
Loss on impairment, including our share of unconsolidated affiliates |
91 |
1,736 |
91 |
3,875 |
||||||||||||
|
Income tax (benefit) provision |
(1,076 |
) |
48 |
(1,664 |
) |
(54 |
) |
|||||||||
|
Lease termination fees (2) |
(59 |
) |
(394 |
) |
(533 |
) |
(1,795 |
) |
||||||||
|
Straight-line rent and above- and below-market lease amortization (2) |
2,148 |
4,500 |
6,783 |
10,605 |
||||||||||||
|
Net (income) loss attributable to noncontrolling interests in other consolidated subsidiaries |
(44 |
) |
368 |
197 |
1,379 |
|||||||||||
|
General and administrative expenses |
14,204 |
17,787 |
47,573 |
53,682 |
||||||||||||
|
Management fees and non-property level revenues (2) |
(9,256 |
) |
(2,905 |
) |
(16,769 |
) |
(11,724 |
) |
||||||||
|
Operating Partnership's share of property NOI (2) |
112,563 |
110,284 |
335,443 |
326,688 |
||||||||||||
|
Non-comparable NOI (2) |
(16,358 |
) |
(17,576 |
) |
(50,454 |
) |
(49,054 |
) |
||||||||
|
Total same-center NOI (3) |
$ |
96,205 |
$ |
92,708 |
$ |
284,989 |
$ |
277,634 |
||||||||
(1)
Adjustments are based on our Operating Partnership's pro rata ownership share, including our share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties.
(2)
We have reclassified amounts from management fees and non-property level revenues to the identified line items to conform to the current-year presentation. The current-year presentation is based on effective ownership percentages in certain unconsolidated joint ventures while the prior period was based on stated ownership percentages. The difference between the effective ownership and stated ownership percentages is due to differences in capital contributions between joint venture partners and related preferred returns.
(3)
We calculate same-center NOI based on stated ownership percentages.
Same-center NOI increased 3.8% for the three months ended September 30, 2026 as compared to the prior period. The $3.5 million increase for the three months ended September 30, 2026 compared to the same period in 2025 primarily consisted of a $6.1 million increase in revenues, partially offset by a $2.6 million increase in operating expenses. Rental revenues were $6.4 million higher primarily due to higher occupancy, increased rents and higher percentage rents in the current period, as well as a favorable variance in the estimate for uncollectable revenues during the current period as compared to the prior period. Operating expenses increased in the current period primarily due to higher repair and maintenance expense and real estate taxes, which were lower in the prior period due to tax refunds received in the prior period.
Same-center NOI increased 2.6% for the nine months ended September 30, 2026 as compared to the prior period. The $7.4 million increase for the nine months ended September 30, 2026 compared to the same period in 2025 primarily consisted of a $9.5 million increase in revenues, partially offset by a $2.1 million increase in operating expenses. Rental revenues were $9.5 million higher primarily due to higher occupancy, increased rents and higher percentage rents in the current period, as well as a favorable variance in the estimate for uncollectable revenues during the current period as compared to the prior period. Operating expenses increased in the current period primarily due to higher property operating expenses primarily associated with property repair and maintenance expense, payroll and insurance related costs, which was partially offset by lower real estate taxes in the current period.
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, malls, lifestyle centers and outlet centers earn a large portion 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 malls. The sources of our revenues by property type were as follows:
|
Nine Months Ended September 30, |
||||||||
|
2026 |
2025 |
|||||||
|
Malls |
74.6 |
% |
71.3 |
% |
||||
|
Outlet Centers |
5.1 |
% |
5.3 |
% |
||||
|
Lifestyle Centers |
7.7 |
% |
7.9 |
% |
||||
|
Open-Air Centers |
8.1 |
% |
10.5 |
% |
||||
|
All Other Properties |
4.5 |
% |
5.0 |
% |
||||
Inline and Adjacent Freestanding Tenant Store Sales
Inline and adjacent freestanding tenant store sales include reporting mall, lifestyle center and outlet center tenants of 10,000 square feet or less and exclude license agreements, which are retail leases 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 tenant sales per square foot for mall, lifestyle center and outlet center tenants of 10,000 square feet or less (Excluded Properties are not included in sales metrics):
|
Sales Per Square Foot for the Trailing Twelve Months Ended September 30, |
||||||||||
|
2026 |
2025 |
% Change |
||||||||
|
Malls, lifestyle centers and outlet centers same-center sales per square foot |
$ |
463 |
$ |
447 |
3.6% |
|||||
Occupancy
Our portfolio occupancy is summarized in the following table (Excluded Properties are not included in occupancy metrics):
|
As of September 30, |
||||
|
2026 |
2025 |
|||
|
Total portfolio |
91.5% |
90.2% |
||
|
Malls, lifestyle centers and outlet centers: |
||||
|
Total malls |
89.7% |
87.6% |
||
|
Total lifestyle centers |
94.1% |
93.3% |
||
|
Total outlet centers |
94.1% |
92.0% |
||
|
Total same-center malls, lifestyle centers and outlet centers |
90.6% |
90.4% |
||
|
Open-air centers |
94.3% |
95.3% |
||
|
All Other Properties |
96.1% |
91.0% |
||
Leasing
The following is a summary of the total square feet of leases signed in the three and nine months ended September 30, 2026 and 2025:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Operating portfolio: |
||||||||||||||||
|
New leases |
169,248 |
203,948 |
578,482 |
527,553 |
||||||||||||
|
Renewal leases |
764,535 |
768,882 |
2,194,411 |
2,233,401 |
||||||||||||
|
Development portfolio: |
||||||||||||||||
|
New leases |
- |
- |
- |
6,058 |
||||||||||||
|
Total leased |
933,783 |
972,830 |
2,772,893 |
2,767,012 |
||||||||||||
Average annual base rents per square foot are based on contractual rents in effect as of September 30, 2026 and 2025, 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:
|
Nine Months Ended September 30, |
||||||||
|
2026 |
2025 |
|||||||
|
Total portfolio (1) |
$ |
28.01 |
$ |
26.86 |
||||
|
Malls, lifestyle centers and outlet centers: |
||||||||
|
Total same-center malls, lifestyle centers and outlet centers |
32.26 |
32.33 |
||||||
|
Total malls |
32.02 |
31.63 |
||||||
|
Total lifestyle centers |
33.05 |
32.92 |
||||||
|
Total outlet centers |
32.50 |
30.40 |
||||||
|
Open-air centers |
16.08 |
16.11 |
||||||
|
All Other Properties |
22.18 |
21.96 |
||||||
(1)
Excluded Properties are not included.
Results from new and renewal leasing of comparable small shop space of less than 10,000 square feet during the three and nine months ended September 30, 2026 for spaces that were previously occupied, based on the contractual terms of the related leases inclusive of the impact of any rent concessions, are set forth below. Rent concessions typically consist of periods of free rent. The impact of such concessions was not material for the period presented below.
|
Property Type |
Square |
Prior Gross |
New Initial |
% Change |
New Average |
% Change |
||||||||||||||||||
|
Three Months Ended September 30, 2026: |
||||||||||||||||||||||||
|
All Property Types (1) |
460,268 |
$ |
40.12 |
$ |
41.54 |
3.5 |
% |
$ |
42.83 |
6.8 |
% |
|||||||||||||
|
Malls, Lifestyle Centers & Outlet Centers (2) |
434,062 |
40.87 |
41.78 |
2.2 |
% |
43.02 |
5.3 |
% |
||||||||||||||||
|
New leases (2) |
49,215 |
46.78 |
53.54 |
14.5 |
% |
59.43 |
27.0 |
% |
||||||||||||||||
|
Renewal leases (2) |
384,847 |
40.11 |
40.27 |
0.4 |
% |
40.92 |
2.0 |
% |
||||||||||||||||
|
Open-air Centers |
17,598 |
29.48 |
33.38 |
13.2 |
% |
35.20 |
19.4 |
% |
||||||||||||||||
|
Nine Months Ended September 30, 2026: |
||||||||||||||||||||||||
|
All Property Types (1) |
1,417,004 |
$ |
40.79 |
$ |
42.29 |
3.7 |
% |
$ |
43.77 |
7.3 |
% |
|||||||||||||
|
Malls, Lifestyle Centers & Outlet Centers (2) |
1,329,728 |
41.30 |
42.49 |
2.9 |
% |
43.97 |
6.5 |
% |
||||||||||||||||
|
New leases (2) |
180,394 |
39.28 |
49.26 |
25.4 |
% |
53.77 |
36.9 |
% |
||||||||||||||||
|
Renewal leases (2) |
1,149,334 |
41.61 |
41.43 |
(0.4 |
)% |
42.43 |
2.0 |
% |
||||||||||||||||
|
Open-air Centers |
65,839 |
34.27 |
39.08 |
14.0 |
% |
40.44 |
18.0 |
% |
||||||||||||||||
(1)
Includes malls, lifestyle centers, outlet centers, open-air centers and other.
(2)
The change is primarily driven by malls.
New and renewal leasing activity of comparable small shop space of less than 10,000 square feet based on the lease commencement date is as follows:
|
Number |
Square |
Term |
Initial |
Average |
Expiring |
Initial Rent |
Average Rent |
|||||||||||||||||||||||||||||||||
|
Commencement 2026: |
||||||||||||||||||||||||||||||||||||||||
|
New |
86 |
227,068 |
7.39 |
$ |
47.30 |
$ |
51.59 |
$ |
36.66 |
$ |
10.64 |
29.0 |
% |
$ |
14.93 |
40.7 |
% |
|||||||||||||||||||||||
|
Renewal |
517 |
1,554,554 |
3.06 |
42.60 |
43.78 |
42.66 |
(0.06 |
) |
(0.1 |
)% |
1.12 |
2.6 |
% |
|||||||||||||||||||||||||||
|
Commencement 2026 Total |
603 |
1,781,622 |
3.68 |
43.20 |
44.77 |
41.89 |
1.31 |
3.1 |
% |
2.88 |
6.9 |
% |
||||||||||||||||||||||||||||
|
Commencement 2027: |
||||||||||||||||||||||||||||||||||||||||
|
New |
21 |
60,307 |
8.77 |
51.93 |
56.77 |
40.60 |
11.33 |
27.9 |
% |
16.17 |
39.8 |
% |
||||||||||||||||||||||||||||
|
Renewal |
136 |
401,881 |
2.98 |
39.00 |
39.87 |
37.82 |
1.18 |
3.1 |
% |
2.05 |
5.4 |
% |
||||||||||||||||||||||||||||
|
Commencement 2027 Total |
157 |
462,188 |
3.76 |
40.69 |
42.08 |
38.19 |
2.50 |
6.5 |
% |
3.89 |
10.2 |
% |
||||||||||||||||||||||||||||
|
Total 2026/2027 |
760 |
2,243,810 |
3.69 |
$ |
42.68 |
$ |
44.22 |
$ |
41.13 |
$ |
1.55 |
3.8 |
% |
$ |
3.09 |
7.5 |
% |
|||||||||||||||||||||||
Liquidity and Capital Resources
As of September 30, 2026, we had $350.9 million available in unrestricted cash and U.S. Treasury securities, as well as unrestricted cash of $15.8 million, at our share, associated with unconsolidated joint ventures. Our total pro rata share of debt, excluding unamortized deferred financing costs and debt discounts, at September 30, 2026 was $2,504.0 million. We had $98.1 million in restricted cash at September 30, 2026 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 lenders of certain property-level mortgage indebtedness,
which are designated for debt service and operating expense obligations. We also had restricted cash of $4.6 million related to the properties that secure the 2032 non-recourse bank loan of which we may receive a portion via distributions quarterly in accordance with the provisions of the 2032 non-recourse bank loan.
During the nine months ended September 30, 2026, we continued to reinvest the cash from maturing U.S. Treasury securities into new U.S. Treasury securities. We designated our U.S. Treasury securities as available-for-sale. As of September 30, 2026, our U.S. Treasury securities have maturities through September 2027. Subsequent to September 30, 2026, we redeemed and purchased additional U.S. Treasury securities. See Note 15 for more information.
During the nine months ended September 30, 2026, we sold Hammock Landing, York Town Center and 10 outparcels, which generated gross proceeds of $95.8 million at our share. Subsequent to September 30, 2026, we sold Old Hickory Mall. See Note 15 for more information.
In January 2026, the $48.6 million loan secured by Jefferson Mall entered default. In February 2026, the property was placed into receivership and we deconsolidated the property in conjunction with the property entering receivership. In May 2026, the $9.7 million loan, at our share, secured by The Outlet Shoppes at Gettysburg was placed into receivership and we deconsolidated the property due to a loss of control. For the nine months ended September 30, 2026, we recognized gain on deconsolidation of $41.2 million. We anticipate returning the properties to the respective lenders. See Note 8.
In March 2026, we entered into a $425.0 million non-recourse loan (the "secured mall loan due 2031") that has a five-year term, maturing in April 2031, and a fixed interest rate of 7.40%. We used proceeds from redeemed U.S. Treasury securities and proceeds from the secured mall loan due 2031 to retire our existing $634.0 million secured term loan. The secured mall loan is secured by a pool of primarily mall properties that previously served as collateral for the secured term loan, which includes CherryVale Mall, Frontier Mall, Hanes Mall, Kirkwood Mall, Mall del Norte, Post Oak Mall, Richland Mall, Sunrise Mall, Turtle Creek Mall, Valley View Mall, West Towne Mall, Westmoreland Mall and Westmoreland Crossing.
In March 2026, we entered into a $176.1 million variable-rate, non-recourse loan (the "secured lifestyle centers loan due 2032") that has a five-year term, includes two one-year extension options, and is interest-only with a variable interest rate of SOFR plus 410 basis points. The secured lifestyle centers loan due 2032 is secured by Mayfaire Town Center, Pearland Town Center, Southaven Town Center and East Towne Mall, all of which served as collateral under the prior secured term loan. Also, the secured lifestyle centers loan due 2032 is subject to customary cross-default provisions with our 2032 non-recourse bank loan.
In March 2026, we acquired Gateway Mall in Lincoln, NE for a purchase price of approximately $43.8 million including acquisition costs. The acquisition of Gateway Mall was financed through a $21.0 million non-recourse, five-year loan, which carries a fixed interest rate of 6.46%.
In March 2026, the loan secured by Parkdale Mall and Parkdale Crossing entered maturity default. We are in discussions with the lender and intend to cooperate with the foreclosure or conveyance of the properties in satisfaction of the debt.
In April 2026, we closed on a $43.0 million non-recourse, five-year loan secured by Northwoods Mall, which bears a fixed interest rate of 9.12%. Proceeds from the new loan were used to retire the previous loan. Under the previous loan, cash flows were being swept by the lender.
In April 2026, we closed on a $6.6 million non-recourse, five-year loan secured by Coastal Grand Mall - Dick's Sporting Goods, which bears a fixed interest rate of 6.17%. Proceeds from the new loan were used to retire the previous loan.
In May 2026, the loan secured by Arbor Place entered maturity default. We intend to cooperate with the foreclosure or conveyance of the property in satisfaction of the debt.
In May 2026, we closed on a $97.5 million non-recourse, five-year loan secured by Fayette Mall, which bears a fixed interest rate of 7.25%. Proceeds from the new loan were used to retire the previous loan.
In May 2026, we entered into a $71.9 million non-recourse, five-year loan secured by Hamilton Place, which bears a fixed interest rate of 6.85%. Proceeds from the new loan were used to retire the previous loan.
In May 2026, the loan secured by Volusia Mall was modified, which extends the maturity date through October 2026. Subsequent to September 30, 2026, the loan secured by Volusia Mall was modified to extend the loan through January 2027. See Note 15.
In June 2026, we were notified by the lender that the loan secured by The Outlet Shoppes at Laredo was in default. In August 2026, the loan was extended through November 2026.
Subsequent to September 30, 2026, we closed on a $135.0 million non-recourse, five-year loan secured by West County Center. See Note 15 for more information.
We paid regular quarterly dividends of $0.45 per share for the first quarter of 2026 and $0.625 per share for the second and third quarters of 2026. Additionally, our board of directors declared a special dividend of $0.175 per share of common stock, which was paid in cash in the second quarter of 2026. The special dividend was made as a result of improved cash flows following the refinancing of the prior secured term loan with the secured mall loan due 2031 and the secured lifestyle centers loan due 2032. Subsequent to September 30, 2026, our board of directors authorized the repurchase of up to $25.0 million of our common stock. See Note 15 for more information.
As of September 30, 2026, our total share of consolidated, unconsolidated and other outstanding debt, excluding debt discounts and deferred financing costs, that has matured and remains outstanding in 2026 or is maturing during 2026, assuming all extension options are elected, is $422.1 million. Of the $422.1 million, $106.6 million relates to three property loans that are in receivership. Subsequent to September 30, 2026, the loan secured by Volusia Mall was extended and the loan secured by West County Center was paid off with proceeds from a new loan. See Note 15 for more information.
Cash Flows - Operating, Investing and Financing Activities
There was $163.7 million of cash, cash equivalents and restricted cash as of September 30, 2026, an increase of $1.7 million from September 30, 2025. Of this amount, $61.0 million was unrestricted cash and cash equivalents as of September 30, 2026. Also, at September 30, 2026, we had $289.9 million in U.S. Treasuries with maturities through September 2027.
Our net cash flows are summarized as follows (in thousands):
|
Nine Months Ended September 30, |
||||||||||||
|
2026 |
2025 |
Change |
||||||||||
|
Net cash provided by operating activities |
$ |
224,307 |
$ |
169,520 |
$ |
54,787 |
||||||
|
Net cash used in investing activities |
(45,577 |
) |
(73,754 |
) |
28,177 |
|||||||
|
Net cash used in financing activities |
(167,969 |
) |
(87,608 |
) |
(80,361 |
) |
||||||
|
Net cash flows |
$ |
10,761 |
$ |
8,158 |
$ |
2,603 |
||||||
Cash Provided By Operating Activities
Cash provided by operating activities increased primarily due to distributions we received from unconsolidated affiliates related to the sales of Hammock Landing and York Town Center during 2026. Also, the acquisition of four malls in July 2025 and one mall in March 2026 increased rental revenues in the current period, as well as an increase at the comparable properties. The increase was partially offset by property operating expenses due to higher property repair and maintenance expense, payroll and insurance related costs, as well as higher interest expense on the 2032 non-recourse bank loan, as it was modified to increase the loan balance to finance the acquisition of four malls in July 2025.
Cash Used In Investing Activities
Cash used in investing activities decreased primarily due to a higher volume of acquisitions in the prior period. Also, the decrease is attributable to a higher amount of net redemptions of U.S. Treasury securities and distributions from unconsolidated affiliates during the current period. The decrease was partially offset by significantly less proceeds from sales of real estate assets as compared to the prior period.
Cash Used In Financing Activities
Cash used in financing activities increased primarily due to a higher amount of principal payments on loans, net of proceeds received on new loans, as well as an increase in debt issuance costs during the current period. The increase was partially offset by a decrease in dividends paid during the current period.
Debt
The following tables summarize debt based on our pro rata ownership share, including our pro rata share of unconsolidated affiliates and excluding noncontrolling interests' share of consolidated properties. Prior to consideration of unamortized deferred financing costs or debt discounts, of our $2,504.0 million outstanding debt at September 30, 2026, $2,503.0 million constituted non-recourse debt obligations and $1.0 million constituted recourse debt obligations. We believe the tables below provide investors and lenders a clearer understanding of our total debt obligations and liquidity (in thousands):
|
September 30, 2026: |
Consolidated |
Noncontrolling |
Other Debt (1) |
Unconsolidated |
Total |
Weighted- |
|||||||||||||||||
|
Fixed-rate debt: |
|||||||||||||||||||||||
|
Non-recourse loans on operating properties |
$ |
1,042,653 |
$ |
(12,619 |
) |
$ |
106,636 |
$ |
299,717 |
$ |
1,436,387 |
5.59% |
|||||||||||
|
2032 non-recourse bank loan |
367,956 |
- |
- |
- |
367,956 |
7.70% |
(3) |
||||||||||||||||
|
Non-recourse secured mall loan due 2031 |
422,148 |
- |
- |
- |
422,148 |
7.40% |
|||||||||||||||||
|
Recourse loan on an operating property |
- |
- |
- |
1,012 |
1,012 |
7.26% |
|||||||||||||||||
|
Total fixed-rate debt |
1,832,757 |
(12,619 |
) |
106,636 |
300,729 |
2,227,503 |
6.28% |
||||||||||||||||
|
Variable-rate debt: |
|||||||||||||||||||||||
|
Non-recourse loans on operating properties |
29,305 |
(10,257 |
) |
- |
9,148 |
28,196 |
7.14% |
||||||||||||||||
|
2032 non-recourse bank loan |
72,195 |
- |
- |
- |
72,195 |
7.78% |
(3) |
||||||||||||||||
|
Non-recourse secured lifestyle centers loan due 2032 |
176,080 |
- |
- |
- |
176,080 |
7.78% |
|||||||||||||||||
|
Total variable-rate debt |
277,580 |
(10,257 |
) |
- |
9,148 |
276,471 |
7.72% |
||||||||||||||||
|
Total fixed-rate and variable-rate debt |
2,110,337 |
(22,876 |
) |
106,636 |
309,877 |
2,503,974 |
6.44% |
||||||||||||||||
|
Unamortized deferred financing costs |
(28,191 |
) |
193 |
- |
(2,195 |
) |
(30,193 |
) |
|||||||||||||||
|
Debt discounts (4) |
(56,696 |
) |
- |
- |
- |
(56,696 |
) |
||||||||||||||||
|
Total mortgage and other indebtedness, net |
$ |
2,025,450 |
$ |
(22,683 |
) |
$ |
106,636 |
$ |
307,682 |
$ |
2,417,085 |
||||||||||||
|
December 31, 2025: |
Consolidated |
Noncontrolling |
Other Debt (1) |
Unconsolidated |
Total |
Weighted- |
|||||||||||||||||
|
Fixed-rate debt: |
|||||||||||||||||||||||
|
Non-recourse loans on operating properties |
$ |
1,133,962 |
$ |
(23,881 |
) |
$ |
48,271 |
$ |
342,081 |
$ |
1,500,433 |
4.97% |
|||||||||||
|
2032 non-recourse bank loan |
367,956 |
- |
- |
- |
367,956 |
7.70% |
(3) |
||||||||||||||||
|
Recourse loan on an operating property |
- |
- |
- |
2,797 |
2,797 |
7.26% |
|||||||||||||||||
|
Total fixed-rate debt |
1,501,918 |
(23,881 |
) |
48,271 |
344,878 |
1,871,186 |
5.51% |
||||||||||||||||
|
Variable-rate debt: |
|||||||||||||||||||||||
|
Non-recourse loans on operating properties |
31,380 |
(10,983 |
) |
- |
9,261 |
29,658 |
7.46% |
||||||||||||||||
|
2032 non-recourse bank loan |
75,000 |
- |
- |
- |
75,000 |
7.97% |
(3) |
||||||||||||||||
|
Non-recourse secured term loan |
646,722 |
- |
- |
- |
646,722 |
6.74% |
|||||||||||||||||
|
Total variable-rate debt |
753,102 |
(10,983 |
) |
- |
9,261 |
751,380 |
6.89% |
||||||||||||||||
|
Total fixed-rate and variable-rate debt |
2,255,020 |
(34,864 |
) |
48,271 |
354,139 |
2,622,566 |
5.91% |
||||||||||||||||
|
Unamortized deferred financing costs |
(9,276 |
) |
83 |
- |
(3,006 |
) |
(12,199 |
) |
|||||||||||||||
|
Debt discounts (4) |
(74,959 |
) |
251 |
- |
- |
(74,708 |
) |
||||||||||||||||
|
Total mortgage and other indebtedness, net |
$ |
2,170,785 |
$ |
(34,530 |
) |
$ |
48,271 |
$ |
351,133 |
$ |
2,535,659 |
||||||||||||
(1)
Represents the outstanding loan balance for properties in receivership. Receivership properties are deconsolidated due to a loss of control when the property is placed into receivership in connection with the foreclosure process.
(2)
Weighted-average interest rate excludes amortization of deferred financing costs.
(3)
The interest rate is a fixed 7.70% for $367,956 of the outstanding loan balance through July 2030, with the remaining loan balance bearing a variable interest rate based on the 30-day SOFR plus 4.10%. The full principal balance will convert to a variable rate after July 2030. The Operating Partnership has an interest rate swap on a notional amount of $32,000 related to the variable portion of the loan to effectively fix the interest rate at 7.3975%.
(4)
In conjunction with the acquisition of the Company's partner's 50% joint venture interests in CoolSprings Galleria, Oak Park Mall and West County Center and the implementation of fresh start accounting upon emergence from bankruptcy, the Company estimated the fair value of its mortgage notes with the assistance of a third-party valuation advisor. This resulted in recognizing a debt discount, which is accreted over the term of the respective debt using the effective interest method.
The weighted-average remaining term of our total share of consolidated and unconsolidated debt, excluding debt discounts and deferred financing costs, was 3.4 years and 2.6 years at September 30, 2026 and December 31, 2025, respectively. The weighted-average remaining term of our pro rata share of fixed-rate debt, excluding debt discounts and deferred financing costs, was 3.4 years and 3.2 years at September 30, 2026 and December 31, 2025, respectively.
As of September 30, 2026 and December 31, 2025, our total share of consolidated and unconsolidated variable-rate debt, excluding debt discounts and deferred financing costs, represented 11.0% and 28.7%, respectively, of our total pro rata share of debt, excluding debt discounts and deferred financing costs.
See Note 8 to the condensed consolidated financial statements for information concerning activity related to unconsolidated affiliates.
Equity
We paid regular quarterly dividends of $0.45 per share for the first quarter of 2026 and $0.625 per share for the second and third quarters of 2026. Additionally, our board of directors declared a special dividend of $0.175 per share of common stock, which was paid in cash in the second quarter of 2026. The special dividend was made as a result of improved cash flows following the refinancing of the prior secured term loan with the secured mall loan due 2031 and the secured lifestyle centers loan due 2032. The decision to declare and pay dividends on any outstanding shares of our common stock, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our board of directors and will depend on our earnings, taxable income, FFO, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our then-current indebtedness, the annual distribution requirements under the REIT provisions of the Internal Revenue Code, Delaware law and such other factors as our board of directors deems relevant. Any dividends payable will be determined by our board of directors based upon the circumstances at the time of declaration. Our actual results of operations will be affected by a number of factors, including the revenues received from our properties, our operating expenses, interest expense, capital expenditures and the ability of the anchors and tenants at our properties to meet their obligations for payment of rents and tenant reimbursements.
Subsequent to September 30, 2026, our board of directors declared a regular cash dividend of $0.625 per share for the quarter ending December 31, 2026 and authorized the repurchase of up to $25.0 million of our common stock. See Note 15 for more information.
Upon our emergence from bankruptcy on November 1, 2021, we experienced an "ownership change" under Sections 382 and 383 of the Internal Revenue Code, which can limit our ability to use certain tax attributes-including net operating loss ("NOL") carryforwards and other deductions-to offset future taxable income. In addition, because we had built-in losses in our assets at that time, certain taxable income deductions realized during the five-year recognition period following the ownership change (the "2021 Recognition Period") were subject to limitation.
The 2021 Recognition Period expired on November 1, 2026, and our ability to recognize certain deductions is no longer limited because of the 2021 ownership change. As a result, we have greater flexibility to manage the composition of our portfolio, including by selling assets or conveying assets to lenders to satisfy related loans. Recognizing tax losses on dispositions may reduce our taxable income and cause a greater portion of distributions paid to shareholders after December 31, 2026 to be treated as a return of capital, for U.S. federal income tax purposes. A return of capital is generally not taxed when received. Instead, it reduces a shareholder's tax basis in our stock, which defers tax until that basis is recovered.
The expiration of the 2021 Recognition Period does not remove all limitations. Our NOLs and other tax attributes that arose before November 1, 2021 generally remain subject to the annual limitation under Section 382, and built-in losses disallowed during the recognition period may carry forward and remain subject to applicable limitations.
We remain subject to Sections 382 and 383 and could experience another ownership change in the future. If we experience an ownership change, our ability to use future tax deductions, net operating loss carryforwards and other tax attributes to offset future taxable income may be subject to limitations.
Capital Expenditures
The following table, which excludes expenditures for developments, redevelopments and expansions, summarizes our capital expenditures, including our share of unconsolidated affiliates' capital expenditures, for the three and nine months ended September 30, 2026 compared to the same period in 2025 (in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Tenant allowances (1) |
$ |
11,865 |
$ |
5,653 |
$ |
20,900 |
$ |
15,523 |
||||||||
|
Renovations |
104 |
- |
133 |
- |
||||||||||||
|
Maintenance capital expenditures: |
||||||||||||||||
|
Parking area and parking area lighting |
3,438 |
2,836 |
6,808 |
5,892 |
||||||||||||
|
Roof replacements |
3,725 |
772 |
4,811 |
3,652 |
||||||||||||
|
Other capital expenditures |
6,022 |
7,070 |
20,089 |
16,045 |
||||||||||||
|
Total maintenance capital expenditures |
13,185 |
10,678 |
31,708 |
25,589 |
||||||||||||
|
Capitalized overhead |
199 |
199 |
790 |
793 |
||||||||||||
|
Capitalized interest |
95 |
142 |
328 |
392 |
||||||||||||
|
Total capital expenditures |
$ |
25,448 |
$ |
16,672 |
$ |
53,859 |
$ |
42,297 |
||||||||
(1)
Tenant allowances primarily relate to new leases. Tenant allowances related to renewal leases were not material for the periods presented.
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, and readily available cash on hand will provide the necessary funding for these expenditures.
Off-Balance Sheet Arrangements
Unconsolidated Affiliates
We have ownership interests in 23 unconsolidated affiliates as of September 30, 2026 that are described in Note 8 to the condensed consolidated financial statements. The unconsolidated affiliates are accounted for using the equity method of accounting and are reflected in the condensed consolidated balance sheets as investments in unconsolidated affiliates.
The following are circumstances when we may consider entering into a joint venture with a third party:
•
Third parties may approach us with opportunities in which they have obtained land and performed some pre-development activities, but they may not have sufficient access to the capital resources or the development and leasing expertise to bring the project to fruition. We enter into such arrangements when we determine such a project is viable and we can achieve a satisfactory return on our investment. We typically earn development fees from the joint venture and provide management and leasing services to the property for a fee once the property is placed in operation.
•
We determine that we may have the opportunity to capitalize on the value we have created in a property by selling an interest in the property to a third party. This provides us with an additional source of capital that can be used to develop or acquire additional real estate assets that we believe will provide greater potential for growth. When we retain an interest in an asset rather than selling a 100% interest, it is typically because this allows us to continue to manage the property, which provides us the ability to earn fees for management, leasing, development and financing services provided to the joint venture.
•
We also pursue opportunities to contribute available land at our properties into joint venture partnerships for development of primarily non-retail uses such as hotels, office, self-storage and multifamily. We typically partner with developers who have expertise in the non-retail property types.
Critical Accounting Policies
Our discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgment about the effect of matters that are inherently uncertain and that may change in subsequent periods. We evaluate our
estimates and assumptions on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our Annual Report on Form 10-K for the year ended December 31, 2025 contains a discussion of our critical accounting policies and estimates in the Management's Discussion and Analysis of Financial Condition and Results of Operations section. There have been no material changes to these policies and estimates during the nine months ended September 30, 2026. Our significant accounting policies are disclosed in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.
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. 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 believe FFO allocable to Operating Partnership common unitholders is a useful performance measure since we conduct substantially all our business through our Operating Partnership and, therefore, it reflects the performance of our properties in absolute terms regardless of the ratio of ownership interests of our common shareholders and the noncontrolling interest in our Operating Partnership.
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.
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.
The reconciliation of net income attributable to common shareholders to FFO allocable to Operating Partnership common unitholders for the three and nine months ended September 30, 2026 and 2025 is as follows (in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net income attributable to common shareholders |
$ |
11,345 |
$ |
74,267 |
$ |
102,283 |
$ |
85,631 |
||||||||
|
Noncontrolling interest in income of Operating Partnership |
8 |
- |
24 |
8 |
||||||||||||
|
Earnings allocable to unvested restricted stock |
(327 |
) |
318 |
(1,757 |
) |
(984 |
) |
|||||||||
|
Depreciation and amortization expense of: |
||||||||||||||||
|
Consolidated properties |
35,084 |
39,900 |
109,465 |
125,143 |
||||||||||||
|
Unconsolidated affiliates |
3,093 |
3,167 |
9,348 |
9,855 |
||||||||||||
|
Non-real estate assets |
(217 |
) |
(248 |
) |
(657 |
) |
(742 |
) |
||||||||
|
Noncontrolling interests' share of depreciation and amortization in other consolidated subsidiaries |
(273 |
) |
(385 |
) |
(948 |
) |
(1,190 |
) |
||||||||
|
Loss on impairment, including our share of unconsolidated affiliates, net of taxes |
91 |
1,736 |
91 |
3,496 |
||||||||||||
|
Gain on depreciable property, including our share of unconsolidated affiliates, net of taxes |
(16,113 |
) |
(50,936 |
) |
(40,126 |
) |
(72,642 |
) |
||||||||
|
FFO allocable to Operating Partnership common unitholders |
32,691 |
67,819 |
177,723 |
148,575 |
||||||||||||
|
Debt discount accretion, including our share of unconsolidated affiliates and net of noncontrolling interests' share (1) |
4,057 |
9,180 |
14,879 |
27,584 |
||||||||||||
|
Adjustment for unconsolidated affiliates with negative investment (2) |
1,279 |
6,817 |
(3,386 |
) |
10,453 |
|||||||||||
|
Excess proceeds from CID (3) |
(4,631 |
) |
- |
(4,631 |
) |
- |
||||||||||
|
Non-cash default interest expense (4) |
25,342 |
(1,326 |
) |
26,931 |
(446 |
) |
||||||||||
|
Loss (gain) on deconsolidation (5) |
107 |
(33,851 |
) |
(41,152 |
) |
(33,851 |
) |
|||||||||
|
Loss on extinguishment of debt (6) |
- |
- |
- |
217 |
||||||||||||
|
FFO allocable to Operating Partnership common unitholders, as adjusted |
$ |
58,845 |
$ |
48,639 |
$ |
170,364 |
$ |
152,532 |
||||||||
(1)
In conjunction with the acquisition of our partners' 50% joint venture interests in CoolSprings Galleria, Oak Park Mall and West County Center and the implementation of fresh start accounting upon emergence from bankruptcy, we recognized debt discounts equal to the difference between the outstanding balance of mortgage notes payable and the estimated fair value of such mortgage notes payable. The debt discounts are accreted as additional interest expense over the terms of the respective mortgage notes payable using the effective interest method.
(2)
Represents our share of the earnings (losses) before depreciation and amortization expense of unconsolidated affiliates where we are recognizing equity in earnings (losses) on a cash basis because our investment in the unconsolidated affiliate is below zero.
(3)
During the three and nine months ended September 30, 2026, we received excess proceeds at one of our properties related to bonds issued by the community improvement district ("CID") where the property is located.
(4)
The three and nine months ended September 30, 2026 include non-cash default interest on loans past their maturity date, including one loan for which non-cash default interest expense was retroactive to November 1, 2020, pursuant to the terms of a prior forbearance agreement entered into in connection with our emergence from bankruptcy on November 1, 2021. The three and nine months ended September 30, 2025 include non-cash default interest on a loan past its maturity date and the reversal of previously accrued non-cash default interest. The accrued non-cash default interest is expected to be resolved when the respective property is either sold or conveyed to the lender in satisfaction of the debt.
(5)
During the nine months ended September 30, 2026, we deconsolidated Jefferson Mall and The Outlet Shoppes at Gettysburg due to a loss of control when the properties were placed into receivership in connection with the foreclosure process.
(6)
During the nine months ended September 30, 2025, we made a partial paydown on the 2032 non-recourse bank loan and recognized loss on extinguishment of debt related to a prepayment fee.
The increase in FFO, as adjusted, for the three and nine months ended September 30, 2026 was primarily driven by the acquisition of four malls in July 2025 and one mall in March 2026. The increase is also attributable to higher rental revenues in the current period due to higher occupancy, increased rents and higher percentage rents as compared to the prior periods. Also, lower stock-based compensation expense in the current periods as compared to the prior periods contributed to the increase. The increase was partially offset by higher property operating expenses primarily due to property repair and maintenance expense, payroll and insurance related costs during the current periods as compared to the prior periods. Additionally, the increase was partially offset by higher interest expense on the 2032 non-recourse bank loan, as it was modified to increase the loan balance to finance the acquisition of four malls in July 2025. Lastly, the increase was partially offset by dispositions since the prior periods.
CBL & Associates Properties Inc. published this content on November 09, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 09, 2026 at 20:24 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]