CBL & ASSOCIATES PROPERTIES INC

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 six months ended June 30, 2026 and 2025 is as follows (in thousands):

(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)

The three and six months ended June 30, 2026 and 2025 include default interest on loans past their maturity date.

(4)

During the three months ended June 30, 2026, we deconsolidated The Outlet Shoppes at Gettysburg due to a loss of control when the property was placed into receivership in connection with the foreclosure process. During the six months ended June 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.

(5)

During the six months ended June 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 six months ended June 30, 2026 was primarily driven by the acquisition of four malls in July 2025 and one mall in March 2026. Also, real estate tax refunds received and lower stock-based compensation expense in the current-year periods as compared to the prior-year 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, as well as an unfavorable variance in the estimate for uncollectable revenues during the current-year periods as compared to the prior-year 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-year periods.