CBL & ASSOCIATES PROPERTIES INC (CBL)

ITEM 2: 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:

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general industry, economic and business conditions;

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interest rate fluctuations;

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costs and availability of capital, including debt, and capital requirements;

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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;

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costs and availability of real estate;

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inability to consummate acquisition or disposition opportunities and other risks associated with acquisitions and dispositions;

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competition from other companies and retail formats;

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changes in retail demand and rental rates in our markets;

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shifts in customer demands including the impact of online shopping;

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tenant bankruptcies or store closings;

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changes in vacancy rates at our properties;

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changes in operating expenses;

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changes in applicable laws, rules and regulations;

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cyberattacks or acts of cyberterrorism;

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uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events; and

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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.

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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 June 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):

Significant items that affected comparability between the three-month periods include:

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Items increasing net income for the three months ended June 30, 2026 compared to the prior-year period:

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Rental revenues were $5.6 million higher;

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Gain on deconsolidation was $5.9 million higher;

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Depreciation and amortization expense was $3.4 million lower;

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Interest expense was $1.2 million lower;

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Equity in earnings was $15.9 million higher;

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Gain on sales of real estate assets was $12.3 million higher; and

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Loss on impairment was $1.5 million lower.

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Items decreasing net income for the three months ended June 30, 2026 compared to the prior-year period:

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Property operating expense was $2.2 million higher.

Significant items that affected comparability between the six-month periods include:

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Items increasing net income for the six months ended June 30, 2026 compared to the prior-year period:

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Rental revenues were $9.6 million higher;

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Gain on deconsolidation was $41.3 million higher;

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Depreciation and amortization expense was $10.9 million lower;

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Interest expense was $5.6 million lower;

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Equity in earnings was $19.2 million higher;

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Real estate tax expense was $2.6 million lower;

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General and administrative expense was $2.5 million lower; and

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Loss on impairment was $1.5 million lower.

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Items decreasing net income for the six months ended June 30, 2026 compared to the prior-year period:

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Gain on sales of real estate assets was $7.8 million lower; and

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Property operating expense was $4.6 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 half 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 and sold Hammock Landing for $78.5 million 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

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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 six months ended June 30, 2026 are referred to as the "Comparable Properties." Since January 2025, we have acquired, deconsolidated and disposed of the following properties:

Acquisitions

Deconsolidations

Dispositions

(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 June 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 and York Galleria were designated as non-core.

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Comparison of the Three Months Ended June 30, 2026 to the Three Months Ended June 30, 2025

Revenues

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 $11.6 million during the current-year period. The increase was partially offset by $6.4 million of rental revenues associated with properties sold or deconsolidated since the prior-year period. Also, rental revenues at the comparable properties increased $0.9 million compared to the prior-year period.

Operating Expenses

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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.

This section of this annual report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. See Part II, 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, 2024 for a similar discussion and year-to-year comparisons between 2024 and 2023.

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. As of December 31, 2025, we own interests in 86 properties, consisting of 47 malls, 25 open-air centers, five outlet centers, four lifestyle centers and five other properties, including single-tenant and multi-tenant outparcels. As of December 31, 2025, our shopping centers are located in 22 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 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, 2025.

The following summarizes our net income (loss) and net income (loss) attributable to common shareholders (in thousands):

Significant items that affected comparability between the years include:

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Items increasing net income for the year ended December 31, 2025 compared to the year ended December 31, 2024 include:

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Rental revenues were $65.1 million higher;

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Gain on deconsolidation was $33.9 million higher;

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Equity in earnings was $30.3 million higher; and

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Gain on sales of real estate assets was $57.6 million higher.

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Items decreasing net income for the year ended December 31, 2025 compared to the year ended December 31, 2024 include:

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Depreciation and amortization was $24.6 million higher;

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Interest expense was $21.5 million higher;

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Total property operating expense was $29.2 million higher;

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Gain on consolidation was $26.7 million lower;

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General and administrative expense was $1.8 million higher;

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Loss on impairment was $1.7 million higher; and

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Interest and other income was $2.5 million lower.

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. In July 2025, we closed on the acquisition of four enclosed malls: Ashland Town Center in Ashland, KY, Mesa Mall in Grand Junction, CO, Paddock Mall in Ocala, FL, and Southgate Mall in Missoula, MT. The acquisition represents significant progress in the execution of our portfolio optimization strategy as we utilize proceeds from sales of non-core assets and open-air centers, such as the sales of two open-air centers, The Promenade and Fremaux Town Center, to invest in higher cash flow yielding opportunities.

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Results of Operations

Properties that were in operation for the entire year during both 2025 and 2024 are referred to as the “2025 Comparable Properties.” Since January 2024, we have opened, consolidated, deconsolidated, acquired and disposed of the following properties:

Properties Opened

(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 consolidated statements of operations.

Consolidations

Acquisitions

Deconsolidations

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Dispositions

(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 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 December 31, 2025, Brookfield Square, Harford Mall, Laurel Park Place and Southpark Mall were designated as non-core.

Comparison of the Results of Operations for the Years Ended December 31, 2025 and 2024

Revenues

(in thousands)

Rental revenues increased primarily due to the consolidation of three malls in December 2024, as well as the acquisition of four malls in July 2025, which resulted in an increase of $100.0 million during the current year. The increase was partially offset by $35.5 million of rental revenues associated with properties sold since the prior year. Rental revenues at the comparable properties were relatively flat compared to the prior year.

Operating Expenses

(in thousands)

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Total property operating expenses increased primarily due to the consolidation of three malls in December 2024, as well as the acquisition of four malls in July 2025, which resulted in an increase of $37.2 million during the current year. The increase was partially offset by $10.4 million of total property operating expenses associated with properties sold since the prior year. Also, the increase was impacted by state franchise tax rebates received in the prior year, as well as higher snow removal expense during the current year.

Depreciation and amortization expense increased primarily due to the addition of tangible assets and intangible lease assets recognized upon the consolidation of three malls in December 2024, as well as the acquisition of four malls in July 2025, which resulted in an increase of $61.7 million during the current year. The increase was partially offset by tenant improvement and intangible in-place lease assets recognized upon the adoption of fresh start accounting on November 1, 2021 becoming fully depreciated or amortized since the prior year. Also, dispositions accounted for an $11.5 million decrease in the current year as compared to the prior year.

General and administrative expense increased $1.8 million primarily due to fees paid to third parties associated with the modification of the 2032 non-recourse bank loan (previously referred t

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