CBL & ASSOCIATES PROPERTIES INC

Results of Operations

Properties that were in operation for the entire year during 2023 and the six months ended June 30, 2024 are referred to as the "Comparable Properties." Since January 2023, we have deconsolidated:

Deconsolidations

(1)

We deconsolidated the property due to a loss of control when the property was placed into receivership in connection with the foreclosure process.

(2)

The foreclosure process was completed in May 2024.

Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

Rental revenues from the Comparable Properties increased primarily due to a favorable variance in the estimate for uncollectable revenues in the current-year period as compared to the prior-year period, which was partially offset by lower tenant reimbursements and percentage rents in the current-year period. The favorable variance in the estimate for uncollectable revenues resulted from higher expense in the prior-year period due to an increase in reserves for certain at-risk tenants. Tenant reimbursements were lower due to the accrual of credits to tenants at certain properties related to reduced assessments and refunds received from successful appeals of real estate taxes at certain properties. The decline in percentage rents corresponds to the decline in tenant sales as compared to the prior-year period.

Operating Expenses

Total property operating expenses at the Comparable Properties decreased primarily due to a state franchise tax rebate related to prior years, as well as lower real estate taxes and janitorial and security costs.

Depreciation and amortization expense at the Comparable Properties decreased primarily due to assets becoming fully depreciated or amortized since the prior-year period related to the shorter useful lives that were implemented upon the adoption of fresh start accounting when we emerged from bankruptcy on November 1, 2021.

General and administrative expenses decreased as compared to the prior-year period primarily due to a reduction in consulting fees during the current-year period as compared to the prior-year period, partially offset by higher compensation expense related to annual compensation increases and higher share-based compensation expenses related to awards granted since the prior-year period.

Other Income and Expenses

Interest and other income increased $1.1 million during the three months ended June 30, 2024 as compared to the prior-year period primarily due to holding U.S. Treasury securities that carried higher interest rates in the current-year period.

Interest expense decreased $4.8 million during the three months ended June 30, 2024 as compared to the prior-year period. The decrease was primarily due to $4.2 million less accretion on property-level debt discounts as certain discounts became fully accreted since the prior year period.

Equity in earnings of unconsolidated affiliates increased $6.3 million for the three months ended June 30, 2024 as compared to the prior-year period. The increase primarily relates to distributions received in the current-year period as compared to contributions made in the prior-year period attributable to certain investments in unconsolidated affiliates in which our investment is below zero.

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

Rental revenues from the Comparable Properties decreased primarily due to lower tenant reimbursements and percentage rents. Tenant reimbursements were lower due to the accrual of credits to tenants at certain properties related to reduced assessments and refunds received from successful appeals of real estate taxes at certain properties. The decline in percentage rents corresponds to the decline in tenant sales as compared to the prior-year period.

Operating Expenses

Total property operating expenses at the Comparable Properties decreased primarily due to a state franchise tax rebate related to prior years, as well as lower real estate taxes and janitorial and security costs.

Depreciation and amortization expense at the Comparable Properties decreased primarily due to assets becoming fully depreciated or amortized since the prior-year period related to the shorter useful lives that were implemented upon the adoption of fresh start accounting when we emerged from bankruptcy on November 1, 2021.

Other Income and Expenses

Interest and other income increased $2.5 million during the six months ended June 30, 2024 as compared to the prior-year period primarily due to holding U.S. Treasury securities that carried higher interest rates in the current-year period.

Interest expense decreased $8.5 million during the six months ended June 30, 2024 as compared to the prior-year period. The decrease was primarily due to $8.5 million less accretion on property-level debt discounts as certain discounts became fully accreted since the prior year period. Also, the decrease in interest expense was impacted by higher default interest expense in the prior-year period. The decrease in interest expense was partially offset by an increase of $2.3 million in the current year period related to the term loan and open-air centers and outparcels loan due to increased variable rates.

For the six months ended June 30, 2023, we recorded a $28.2 million gain on deconsolidation related to Alamance Crossing East. 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 of unconsolidated affiliates increased $12.2 million for the six months ended June 30, 2024 as compared to the prior-year period. The increase primarily relates to distributions received in the current-year period as compared to contributions made in the prior-year period attributable to certain investments in unconsolidated affiliates in which our investment is below zero.

During the six months ended June 30, 2024 we recognized a $3.7 million gain on sales of real estate assets related to the sale of an anchor parcel. During the six months ended June 30, 2023 we recognized $1.5 million of gain on sales of real estate assets related to the sale of five land parcels.

Non-GAAP Measure