10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to

Commission File Number: 000-56236

Copper Property CTL Pass Through Trust

(Exact name of registrant as specified in its charter)

New York	85-6822811
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3 Second Street, Suite 206 Jersey City, NJ 07311-4056

(Address of principal executive offices and zip code)

(201) 839-2200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐  No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

COPPER PROPERTY CTL PASS THROUGH TRUST

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	26
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
SIGNATURES		29

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

COPPER PROPERTY CTL PASS THROUGH TRUST

Consolidated Balance Sheets

(Unaudited)

(in thousands except certificate amounts)

	As of June 30, 2023		As of December 31, 2022
Assets
Investment properties:
Land and improvements	$	415,764	$	422,114
Building and other improvements	496,222		497,523
	911,986		919,637
Less: accumulated depreciation	(34,878)		(27,742)
Net investment properties	877,108		891,895
Cash and cash equivalents	33,942		48,922
Accounts receivable	41,167		42,685
Lease intangible assets, net	221,547		228,529
Right-of-use lease assets, net	86,168		87,086
Other assets, net	1,165		831
Total assets	$	1,261,097	$	1,299,948
Liabilities and Equity
Liabilities:
Accounts payable and accrued expenses	$	1,167	$	1,061
Lease intangible liabilities, net	97,093		101,920
Lease liabilities	37,734		37,676
Other liabilities	8,642		8,628
Total liabilities	144,636		149,285
Commitments and contingencies (Note 5)
Equity:
Trust certificates, no par value, 75,000,000 certificates authorized, issued and outstanding, as of June 30, 2023 and December 31, 2022	—		—
Additional paid-in capital	1,952,120		1,952,120
Accumulated distributions in excess of earnings	(835,659)		(801,457)
Total equity	1,116,461		1,150,663
Total liabilities and equity	$	1,261,097	$	1,299,948

See accompanying notes to consolidated financial statements

1

COPPER PROPERTY CTL PASS THROUGH TRUST

Consolidated Statements of Operations

(Unaudited)

(in thousands, except certificate and per certificate amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Lease income	$	25,402	$	27,690	$	50,926	$	55,396
Expenses:
Operating expenses	3,284		3,711		6,597		6,983
Depreciation and amortization	4,817		5,336		9,647		10,671
General and administrative expenses	753		2,068		2,592		4,626
Total expenses	8,854		11,115		18,836		22,280
Other income:
Gain on sales of investment properties, net	—		—		828		3,651
Other income	283		16		1,069		254
Total other income	283		16		1,897		3,905
Net income	$	16,831	$	16,591	$	33,987	$	37,021
Earnings per certificate – basic and diluted:
Net income per certificate - basic and diluted	$	0.22	$	0.22	$	0.45	$	0.49
Weighted average number of certificates outstanding – basic and diluted	75,000,000		75,000,000		75,000,000		75,000,000

See accompanying notes to consolidated financial statements

2

COPPER PROPERTY CTL PASS THROUGH TRUST

Consolidated Statements of Equity

(Unaudited)

(in thousands, except certificate and per certificate amounts)

Three Months Ended June 30, 2022	Trust Certificates	Additional Paid-in Capital		Accumulated Distributions in Excess of Earnings			Total Equity
Balance as of April 1, 2022	75,000,000	$	1,952,120	$	(677,830)		$	1,274,290
Net income		—		16,591			16,591
Distributions paid to Certificateholders ($0.35 per certificate)		—		(26,141)			(26,141)
Balance as of June 30, 2022	75,000,000	$	1,952,120	$	(687,380)		$	1,264,740
Three Months Ended June 30, 2023	Trust Certificates	Additional Paid-in Capital		Accumulated Distributions in Excess of Earnings			Total Equity
Balance as of April 1, 2023	75,000,000	$	1,952,120	$	(821,572)		$	1,130,548
Net income		—		16,831			16,831
Distributions paid to Certificateholders ($0.41 per certificate)		—		(30,918)			(30,918)
Balance as of June 30, 2023	75,000,000	$	1,952,120	$	(835,659)		$	1,116,461
Six Months Ended June 30, 2022	Trust Certificates	Additional Paid-in Capital		Accumulated Distributions in Excess of Earnings			Total Equity
Balance as of January 1, 2022	75,000,000	$	1,952,120	$	(64,750)		$	1,887,370
Net income		—		37,021		R	37,021
Distributions paid to Certificateholders ($8.80 per certificate)		—		(659,651)			(659,651)
Balance as of June 30, 2022	75,000,000	$	1,952,120	$	(687,380)		$	1,264,740
Six Months Ended June 30, 2023	Trust Certificates	Additional Paid-in Capital		Accumulated Distributions in Excess of Earnings			Total Equity
Balance as of January 1, 2023	75,000,000	$	1,952,120	$	(801,457)		$	1,150,663
Net income		—		33,987		R	33,987
Distributions paid to Certificateholders ($0.91 per certificate)		—		(68,189)			(68,189)
Balance as of June 30, 2023	75,000,000	$	1,952,120	$	(835,659)		$	1,116,461

See accompanying notes to consolidated financial statements

3

COPPER PROPERTY CTL PASS THROUGH TRUST

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	33,987	$	37,021
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,647		10,671
Amortization of above/below market leases, net	1,120		664
Gain on sales of investment of properties, net	(828)		(3,651)
Changes in assets and liabilities:
Changes in accounts receivable	1,338		1,321
Changes in other assets	(386)		(3,013)
Changes in right-of-use lease assets	917		1,043
Changes in accounts payable and accrued expenses	145		(572)
Changes in lease liabilities	58		59
Changes in other liabilities	15		1,938
Net cash provided by operating activities	46,013		45,481
Cash flows from investing activities:
Proceeds from sales of investment properties	7,196		20,961
Net cash provided by investing activities	7,196		20,961
Cash flows from financing activities:
Distributions paid to Certificateholders	(68,189)		(659,651)
Net cash used in financing activities	(68,189)		(659,651)
Net change in cash and cash equivalents	(14,980)		(593,209)
Cash and cash equivalents, at beginning of period	48,922		627,522
Cash and cash equivalents, at end of period	$	33,942	$	34,313

See accompanying notes to consolidated financial statements

4

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

(1) ORGANIZATION

Overview

Copper Property CTL Pass Through Trust, a New York common law trust (the “Trust,” “we,” “our” or “us”) was formed on December 21, 2020, in connection with the reorganization of Old Copper Company, Inc. (f/k/a J. C. Penney Company, Inc.) (“Old Copper”), effective as of January 30, 2021 (the “Effective Date”) pursuant to the terms of the Amended Joint Chapter 11 Plan of Reorganization of Old Copper and certain of its subsidiaries (collectively, the “Debtors”) (the “Plan of Reorganization”).

On the Effective Date, through separate wholly-owned property holding companies (the “PropCos”), the Trust acquired (as discussed below), 160 retail properties (the “Retail Properties”) and six distribution centers (the “Warehouses” and, together with the Retail Properties, the “Properties”), all of which were leased under two Master Leases (as discussed in Note 4) to one or more subsidiaries of Copper Retail JV LLC (“OpCo Purchaser”) (collectively with its subsidiaries, “Penney Intermediate Holdings LLC”), an entity formed by and under the joint control of Simon Property Group, L.P. and Brookfield Asset Management Inc. During 2021, the Trust sold all six Warehouses.

The Trust’s operations consist solely of (i) owning the Properties and interests as lessee of land under non-cancellable ground leases, (ii) leasing the Properties under the terms of the Retail Master Lease (as defined below) to Penney Intermediate Holdings LLC as the sole tenant and (iii) subject to market conditions and the conditions set forth in the Trust Agreement, selling the Properties to third-party purchasers through the PropCos.

As of June 30, 2023, the real estate portfolio consists of 132 Retail Properties, of which 21 are encumbered by ground leases, in the United States (the "U.S.") across 36 states and Puerto Rico, and comprising 17.5 million square feet of leasable space.

Formation

On May 15, 2020, the Debtors commenced voluntary cases under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

On October 28, 2020, the Debtors entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with OpCo Purchaser, and Copper Bidco LLC (“PropCo Purchaser” and, together with OpCo Purchaser, the “Purchasers”), an entity formed on behalf of lenders under Old Copper’s (i) senior secured superpriority, priming debtor-in-possession credit facility (the “DIP Facility”), (ii) 5.875% senior secured notes due 2023 (the “First Lien Notes”) and (iii) Amended and Restated Credit and Guaranty Agreement, dated as of June 23, 2016 (the “Term Loan Facility” and together with the First Lien Notes, the “First Lien Debt”), pursuant to which the Purchasers agreed to acquire substantially all of the Debtors’ assets and assume certain of the Debtors’ obligations in connection with the purchased assets.

On December 12, 2020, the Debtors filed the Plan of Reorganization which was confirmed by the Bankruptcy Court on December 16, 2020.

On December 21, 2020, the Trust was formed in connection with the reorganization of Old Copper.

On the Effective Date, the Plan of Reorganization became effective pursuant to its terms, at which point PropCo Purchaser and GLAS Trust Company, LLC, as the Trust's independent third-party trustee (the "Trustee"), entered into an Amended and Restated Trust Agreement (as amended, the “Trust Agreement”). In connection with the consummation of the transactions set forth in the Asset Purchase Agreement and in exchange for a $1 billion aggregate credit bid by PropCo Purchaser, comprising $900 million of claims under the DIP Facility and $100

5

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

million of claims, on a pro rata basis, under the First Lien Debt, and simultaneous release of obligations under the DIP Facility and First Lien Debt, Old Copper transferred (or caused its subsidiaries to transfer) its fee simple or ground leasehold title (as applicable) in certain properties to the PropCos and assigned (or caused such subsidiaries to assign) the Master Leases (as defined below) relating to the Properties to the Trust.

As a result, as of the Effective Date, the Trust owned, through the PropCos, 160 Retail Properties and six Warehouses, all of which were leased to one or more subsidiaries of Penney Intermediate Holdings LLC under two Master Leases. In connection with the foregoing, certain of the Debtors' lenders received their pro-rata portion of the equity interest in the Trust, as evidenced by the Trust Certificates (as defined below). The aggregate credit bid was not an indicator of the fair value of the assets and liabilities of the Trust as of the Effective Date, and it does not represent the full extent of debt that was owed to the creditor group.

The Trust accounted for the reorganization using fresh start accounting under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification ("ASC") Topic 852, which resulted in the Trust becoming a new entity for financial reporting purposes on the Effective Date. Accordingly, all assets and liabilities were recorded at fair value in accordance with accounting requirements for business combinations under ASC 805-20.

As of the Effective Date, Old Copper had no ability to exercise any control over the Properties or the Trust and has

no affiliation with the Trust. The Trust owns directly or indirectly 100% of the equity or partnership interests (as applicable) in the PropCos. Specifically, the PropCos include (i) CTL Propco I LLC, a Delaware limited liability company, CTL Propco I L.P., a Delaware limited partnership and CTL Propco PR I LLC and CTL Propco PR II LLC, Puerto Rico limited liability companies, which collectively own the fee simple or ground leasehold title (as applicable) to the Retail Properties and (ii) CTL Propco II LLC, a Delaware limited liability company and CTL Propco II L.P., a Delaware limited partnership, which collectively owned the fee simple title to the Warehouses. CTL Propco II LLC and CTL Propco II L.P. were dissolved on October 6, 2022.

Trust Agreement

The Trust is governed by the Trust Agreement between PropCo Purchaser and the Trustee. The Trust Agreement created a series of equity trust certificates designated as “Copper Property CTL Pass Through Certificates” (the “Trust Certificates”), 75 million of which were issued on the Effective Date. Each Trust Certificate represents a fractional undivided beneficial interest in the Trust and represents the interests of the holders of the Trust Certificates (“Certificateholders”) in the Trust. All Trust Certificateholders shall vote as a single class and shall be in all respects equally and ratably entitled to the benefits of the Trust Agreement without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of the Trust Agreement.

The Trustee performs trust administration duties, including treasury management and certificate administration and trustee fees, which are included in “General and administrative expenses” on the accompanying consolidated statements of operations. The Trust pays the Trustee an annual service fee of $100, which is amortized monthly. For the three and six months ended June 30, 2023, the Trust incurred trustee fees of $25 and $50, respectively. For the three and six months ended June 30, 2022, the Trust incurred trustee fees of $25 and $50, respectively.

On December 30, 2021, the Trust amended the Trust Agreement, without the consent of its Certificateholders (as provided in the Trust Agreement), to permit the Trust to invest moneys held by the Trust instead of holding them in non-interest bearing accounts. The Trust has adopted a policy to maintain its cash equivalents in a government money market fund administered by a major bulge bracket investment banking firm which invests its assets only in (i) cash and (ii) securities issued or guaranteed by the United States or certain U.S. government agencies and having a weighted average life and weighted average maturity of no more than 120 days and 60 days, respectively. Each of these government money market funds is managed to maintain a stable net asset value, thereby eliminating principal risk.

6

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

Management Agreement

The Trust has retained Hilco JCP LLC, an affiliate of Hilco Real Estate LLC, as its independent third-party manager to perform asset management duties with respect to the Properties (together with any of its affiliates, replacement or successor, the “Manager”) pursuant to an agreement with an initial term of 24 months, with automatic six month renewals until the termination of the Trust. The Trust pays the Manager a base management fee (the “Base Fee”) and a fee for each property sold (the “Asset Management Fee”). The Base Fee is an amount equal to the greater of 5.75% of the lease payments of the Properties per month and $333 per month. The Asset Management Fees consist of a closing fee of $50 for each Warehouse sold and a success fee for each Retail Property and Warehouse sold which varies based on the sales proceeds and date sold.

The Trust incurred Base Fees of $1,469 and $1,590 for the three months ended June 30, 2023 and 2022, respectively, and $2,945 and $3,181 for the six months ended June 30, 2023 and 2022, respectively, which are included in “Operating expenses” on the accompanying consolidated statements of operations, of which $490 and $530 as of June 30, 2023 and June 30, 2022, respectively, were included in “Accounts payable and accrued expenses” on the accompanying consolidated balance sheets. The Trust incurred Asset Management Fees of $0 for both the three months ended June 30, 2023 and 2022, and $15 and $143 for the six months ended June 30, 2023 and 2022, respectively, which are included in “Gain on sales of investment properties, net” on the accompanying consolidated statements of operations.

On May 12, 2021, the Trust filed a preliminary proxy statement with the U.S. Securities and Exchange Commission ("SEC") pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended, to solicit consent from Certificateholders to amend the Trust Agreement and Management Agreement. On June 11, 2021, following the expiration of the consent solicitation and upon receipt of the requisite approval from the Certificateholders, the Trust amended the Trust Agreement and the Management Agreement to effectuate the proposed amendments. As a result of the amendments, the Trust is now required to dispose of all Retail Properties by December 10, 2025.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the rules and regulations of the SEC.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates, judgments and assumptions were required in a number of areas, including, but not limited to, estimating the fair value of the investment properties as of the Effective Date, determining the useful lives of real estate properties, determination of the incremental borrowing rate in ground leases, reasonably certain lease terms for ground and master leases, and evaluating the impairment of long-lived assets.

The accompanying consolidated financial statements include the accounts of the Trust, as well as all wholly owned subsidiaries of the Trust. All intercompany balances and transactions have been eliminated in consolidation. Wholly owned subsidiaries consist of limited liability companies and limited partnerships. The Trust has evaluated the fee arrangements with the Trustee and Manager to determine if they represent a variable interest, and concluded that the fee arrangements do not create a variable interest.

The accompanying consolidated financial statements include the quarterly periods ended June 30, 2023 and 2022 and the six months ended June 30, 2023 and 2022 (the “Reporting Periods”). These consolidated financial statements should be read in conjunction with the Trust's audited Annual Report on Form 10-K, as amended, for the year ended December 31, 2022 (the“10-K”), as certain disclosures in this Quarterly Report on Form 10-Q for the

7

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

quarterly period ended June 30, 2023 that would duplicate those included in the 10-K are not included in these consolidated financial statements.

Impairment of Investment Properties

The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At such evaluation date, the Trust separately determines whether impairment indicators exist for each property. Examples of situations considered to be impairment indicators include, but are not limited to:

•a significant change in the credit quality of tenant;

•a reduction in anticipated holding period;

•a significant decrease in market price; and

•any other quantitative or qualitative events or factors deemed significant by the Trust’s management.

If the presence of one or more impairment indicators as described above is identified on an evaluation date or at any point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered impaired when the estimated future undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes certain complex or subjective assumptions that include, but are not limited to:

•projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, competitive positioning and property location;

•estimated holding period or various potential holding periods when considering probability-weighted scenarios;

•projected capital expenditures and lease origination costs;

•estimated interest and internal costs expected to be capitalized;

•projected cash flows from the anticipated or eventual disposition of an operating property;

•comparable selling prices; and

•property-specific capitalization rates and discount rates.

To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its estimated fair value. For the six months ended June 30, 2023 and 2022, no impairment charge was recorded.

Investment Properties Held for Sale

In determining whether to classify an investment property as held for sale, the Trust considers whether (i) management has committed to a plan to sell the investment property, (ii) the investment property is available for immediate sale in its present condition, subject only to terms that are usual and customary, (iii) the Trust has a legally enforceable contract that has been executed and the buyer's due diligence period, if any, has expired, and (iv) actions required for the Trust to complete the plan indicate that it is unlikely that any significant changes will be made.

If all of the above criteria are met, the Trust classifies the investment property as held for sale. When these criteria are met, the Trust (i) suspends depreciation (including depreciation for tenant improvements and building improvements) and amortization of in-place lease intangibles and any above or below market lease intangibles and (ii) records the investment property held for sale at the lower of carrying value or estimated fair value. The assets and liabilities associated with investment properties that are classified as held for sale are presented separately on the consolidated balance sheets for the most recent reporting period.

As of June 30, 2023 and December 31, 2022, there were no properties classified as held for sale.

8

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

Cash and Cash Equivalents

The Trust maintains its cash and cash equivalents at major financial institutions. At June 30, 2023 and December 31, 2022, cash equivalents consisted of investments in money market instruments. Cash and cash equivalents totaled $33,942 and $48,922 as of June 30, 2023 and December 31, 2022, respectively. The cash and cash equivalents balance at one or more of these financial institutions exceeds the Federal Depository Insurance Corporation (FDIC) insurance coverage. The Trust periodically assesses the credit risk associated with these financial institutions and believes that the risk of loss is remote. While the Trust did not have any accounts with any recently failed financial institution, nor has it experienced any losses to date on its cash and cash equivalents held in bank accounts, there is no assurance that financial institutions in which we hold our cash and cash equivalents will not fail, in which case we may be subject to a risk of loss or delay in accessing all or a portion of our funds exceeding the FDIC insurance coverage, which could adversely impact our short-term liquidity, ability to operate our business, and financial performance.

Lease Income and Accounts Receivable

The Trust accounts for leases under the provisions of FASB ASC Topic 842. The Trust commenced recognition of lease income on its Master Leases (as discussed in Note 4) as of the Effective Date. In most cases, revenue recognition under a lease begins when the lessee takes possession or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. Lease income for leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over the term of each lease. The difference between such lease income earned and the cash rent due under the provisions of a lease is recorded as straight-line rent receivable or payable and is included as a component of “Accounts receivable” in the accompanying consolidated balance sheets.

At lease commencement, the Trust estimated that collectibility was probable for the Master Leases due to the creditworthiness analysis performed. Throughout the lease term, individual leases are assessed for collectibility and upon the determination that the collection of rents over the remaining lease life is not probable, lease income is adjusted such that it is recognized on the cash basis of accounting. The Trust will remove the cash basis designation and resume recording lease income from such tenant on an accrual basis when the Trust believes that the collection of rent over the remaining lease term is probable and, generally, based upon a demonstrated payment history. For the Reporting Periods, lease income is accounted for on the accrual basis of accounting. As of June 30, 2023, lease payments of $8,518 received in advance under the terms of the Master Leases are included in "Other liabilities" in the accompanying consolidated balance sheets and will be recognized as lease income in July 2023. As of December 31, 2022, lease payments of $8,555 received in advance under the terms of the Master Leases are included in "Other liabilities" in the accompanying consolidated balance sheets and were recognized as lease income in January 2023.

The Trust records all changes in uncollectible lease income as an adjustment to “Lease income” in the accompanying consolidated statement of operations. During the Reporting Periods, there was no uncollectible lease income.

Right-of-use Lease Assets and Lease Liabilities

The Trust was assigned an interest as lessee of land under 23 non-cancellable ground leases with third party landlords which were classified as operating leases on the Effective Date. As of June 30, 2023, the Trust held an interest as lessee of land under 21 non-cancellable ground leases. Rental expense associated with land that the Trust leases under non-cancellable operating leases is recorded on a straight-line basis over the term of each lease. In accordance with the Master Lease, rental expense associated with land is paid directly by Penney Intermediate Holdings LLC and is included in “Lease income” in the accompanying consolidated statements of operations (see Note 4).

On the Effective Date, the Trust recognized right-of-use ("ROU") lease assets and lease liabilities for long-term ground leases. The lease liability is calculated by discounting future lease payments by the Trust’s incremental borrowing rate, which is determined through consideration of (i) the Trust’s entity-specific risk premium, (ii)

9

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

observable market interest rates and (iii) lease term. The ROU asset is initially measured as the same amount as the lease liability and presented net of the Trust’s existing straight-line ground rent liabilities and ground lease intangible liability. The lease liability is amortized based on changes in the value of discounted future lease payments and the ROU asset is amortized by the difference in the straight-line lease expense for the period and the change in value of the lease liability.

The Trust does not include option terms in its future lease payments where they are not reasonably certain to be exercised, however all option terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease. The Trust has elected not to separate lease and non-lease components for operating leases.

Income Taxes

The Trust is intended to qualify as a liquidating trust within the meaning of United States Treasury Regulation Section 301.7701-4(d) or, in the event it is not so treated, a partnership other than a partnership taxable as a corporation under Section 7704 of the Internal Revenue Code of 1986, as amended.

The Trust records a benefit, based on the GAAP measurement criteria, for uncertain income tax positions if the result of a tax position meets a “more likely than not” recognition threshold. All tax returns remain subject to examination by federal and various state tax jurisdictions. As of June 30, 2023 and December 31, 2022, there were no uncertain tax positions and the balance of unrecognized tax benefits was $0.

Segment Reporting

The Trust’s chief operating decision makers, which are comprised of its Principal Executive Officer and Principal Financial Officer, assess and measure the operating results of the Trust’s portfolio of properties based on net operating income and do not differentiate properties by geography, market, size or type. Each of the Trust’s investment properties is considered a separate operating segment, as each property earns revenue and incurs expenses, operating results are individually reviewed and discrete financial information is available. However, the Trust’s properties are aggregated into one reportable segment because (i) the properties have similar economic characteristics, (ii) the Trust provides similar services to its tenants and (iii) the Trust’s chief operating decision makers evaluate the collective performance of its properties.

(3) INVESTMENT PROPERTIES

As of June 30, 2023, the Trust's real estate portfolio consisted of 132 Retail Properties across 36 U.S. states and Puerto Rico.

The following table presents the amortization during the next five years and thereafter related to the lease intangible assets and liabilities for properties owned as of June 30, 2023:

10

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

	Period from July 1 to December 31, 2023		2024		2025		2026		2027		Thereafter		Total
Amortization of:
Above market lease intangibles (a)	$	3,913	$	7,827	$	7,827	$	7,827	$	7,827	$	101,747	$	136,968
In-place lease intangibles (a)	2,417		4,833		4,833		4,833		4,833		62,830		84,579
Lease intangible assets, net (b)	$	6,330	$	12,660	$	12,660	$	12,660	$	12,660	$	164,577	$	221,547
Below market lease intangibles (a)	$	2,774	$	5,548	$	5,548	$	5,548	$	5,548	$	72,127	$	97,093
Lease intangible liabilities, net (b)	$	2,774	$	5,548	$	5,548	$	5,548	$	5,548	$	72,127	$	97,093

(a) Represents the portion of the leases in which the Trust is the lessor. The amortization of above market lease intangibles is recorded as a reduction to lease income, and the amortization of below market lease intangibles is recorded as an increase to lease income. The amortization of in-place lease intangibles is recorded to depreciation and amortization expense.

(b) As of June 30, 2023, lease intangible assets, net and lease intangible liabilities, net are presented net of $30,595 and $13,408 of accumulated amortization, respectively. As of December 31, 2022, lease intangible assets, net and lease intangible liabilities, net are presented net of $24,334 and $10,853 of accumulated amortization, respectively.

As of June 30, 2023 and December 31, 2022, the weighted average amortization period for lease intangible assets and lease intangible liabilities was 17.5 years and 18.0 years, respectively.

Amortization expense for the three and six months ended June 30, 2023 and 2022 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amortization of:
In-place lease intangibles	$	1,208	$	1,350	$	2,423	$	2,700
Above market lease intangibles	$	1,957	$	2,000	$	3,913	$	4,000
Below market lease intangibles	$	1,387	$	1,668	$	2,793	$	3,336

11

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

Dispositions

The following table summarizes the disposition activity for the six months ended June 30, 2023:

Sale Date	Location	Property Type	Ownership	Square Footage	Gross Sales Proceeds		Aggregate Proceeds, Net		Gain (Loss)
3/22/23	Temecula, CA	Retail	Fee Simple	125	$	6,000	$	5,869	$	(496)
				125	$	6,000	$	5,869	$	(496)

In December 2021, a Retail Property in Queens, New York was sold for aggregate sales proceeds, net of $38,785, of which $1,326 was held in escrow after closing. In March 2023, the amounts held in escrow were released to the Trust and included in gain on sales of investment properties, net. During the six months ended June 30, 2023, net gain on sales of investment properties was $828, which includes a gain of $1,326 less $2 of selling expenses, from the release of escrow from the Retail Property in Queens, New York and a loss of $(496) from the disposition of the Retail Property in Temecula, California.

The following table summarizes the disposition activity during the six months ended June 30, 2022:

Sale Date	Location	Property Type	Ownership	Square Footage	Gross Sales Proceeds		Aggregate Proceeds, Net		Gain
1/6/22	Culver City, CA	Retail	Fee Simple	204	$	22,000	$	20,961	$	3,651
				204	$	22,000	$	20,961	$	3,651

The dispositions completed during the six months ended June 30, 2023 and 2022 did not qualify for discontinued operations treatment and are not considered individually significant.

Investment Properties Held for Sale

No Retail Properties were classified as held for sale as of June 30, 2023 or December 31, 2022.

(4) LEASES

Leases as Lessor

The Retail Properties are leased pursuant to a single retail master lease (as amended, modified or supplemented from time to time, the “Retail Master Lease”) and the Warehouses were leased pursuant to a single distribution center master lease (as amended, modified or supplemented from time to time, the “DC Master Lease”; together with the Retail Master Lease, the “Master Leases” and individually, each a “Master Lease”). On the Effective Date, Penney Intermediate Holdings LLC assigned all of its right, title and interest as lessor under the Master Leases to the applicable PropCo. Each of the Master Leases has an initial term of 20 years that commenced on December 7, 2020 and is classified as an operating lease. The Trust receives monthly base rent pursuant to the Master Leases, which was 50% abated through December 31, 2021 for each of the Retail Properties. At the beginning of the third lease year, base rent under the Retail Master Lease increases based on changes in the consumer price index (subject to a maximum 2% increase per year) and the increase is not included in fixed lease payments or the future undiscounted lease payments schedule. Upon the sale of the Warehouses in December 2021, the Trust assigned all of its right, title and interest as lessor in the DC Master Lease to the purchaser.

The Master Lease requires direct payment of all operating expenses, real estate taxes, ground lease payments (where applicable), capital expenditures and common area maintenance costs by Penney Intermediate Holdings LLC and allows for lessor reimbursement if amounts are not directly paid. Expenses paid directly by Penney Intermediate Holdings LLC are not included in the accompanying consolidated statement of operations, except for ground lease payments made by Penney Intermediate Holdings LLC, since recording cash payments made by Penney Intermediate Holdings LLC is necessary to relieve amounts due to the ground lessor included in the ground lease liabilities. Ground lease payments made by Penney Intermediate Holdings LLC of $2,016 and $2,007 for the six

12

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

months ended June 30, 2023 and 2022, respectively, were paid directly to the ground lessor by Penney Intermediate Holdings LLC and were included in “Lease income” in the accompanying consolidated statements of operations.

In certain municipalities, the Trust is required to remit sales and use taxes to governmental authorities based upon the rental income received from Properties. These taxes are required to be reimbursed by Penney Intermediate Holdings LLC to the Trust in accordance with the terms of the Master Lease, and are presented net of reimbursement from Penney Intermediate Holdings LLC on the consolidated statements of operations. During the six months ended June 30, 2023 and 2022, the Trust remitted sales and use taxes of $373 and $340, which were fully reimbursed by Penney Intermediate Holdings LLC as of the end of each corresponding Reporting Period.

From time to time the Trust may have leasing activity with replacement tenants other than Penney Intermediate Holdings LLC, but has had none to date.

Lease income related to the Trust’s operating leases during the three and six months ended June 30, 2023 and 2022 is comprised of the following:

Lease income related to fixed lease payments	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Contractual base rent	$	25,555	$	27,655	$	51,209	$	55,326
Straight-line rental income, net (a)	(588)		(636)		(1,179)		(1,273)
Lease income related to variable lease payments
Ground lease reimbursement income (b)	1,004		1,003		2,016		2,007
Other
Amortization of above and below market lease intangibles (c)	(569)		(332)		(1,120)		(664)
Lease income	$	25,402	$	27,690	$	50,926	$	55,396

(a)Represents the impact of straight-line rent (contractual rent exceeds straight line rent).

(b)Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases.

(c)Represents above and below market lease amortization recognized straight line over the lease term.

As of June 30, 2023, undiscounted lease payments to be received under operating leases, for the next five years and thereafter are as follows:

	Lease Payments
Period from July 1 to December 31, 2023	$	51,111
2024	102,222
2025	102,222
2026	102,222
2027	102,222
Thereafter	1,328,885
Total	$	1,788,884

The weighted average remaining lease terms range was approximately 17.5 years as of June 30, 2023.

Leases as Lessee

The Trust leases land under operating ground leases at certain of its Properties, which expire in various years from 2038 to 2096, including any available option periods that are reasonably certain to be exercised. All option terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease.

The components of ground lease rent expense, which are included within “Operating expenses” in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022, were as follows:

13

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amortization of:
Above market ground lease intangibles	$	(160)	$	(160)	$	(320)	$	(320)
Below market ground lease intangibles	365		424		730		849
Amortization of right-of-use assets	253		257		508		514
Interest expense	1,037		1,034		2,073		2,067
Ground lease rent expense	$	1,495	$	1,555	$	2,991	$	3,110

There were no cash payments for ground lease rent expense as these payments are made by the tenant.

As of June 30, 2023, undiscounted future rental obligations to be paid under the long-term ground leases by Penney Intermediate Holdings LLC under the terms of the Master Lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows:

	Lease Obligations
Period from July 1 to December 31, 2023	$	2,046
2024	4,124
2025	4,116
2026	4,138
2027	4,197
Thereafter	220,159
Less imputed interest	(201,046)
Lease liabilities as of June 30, 2023	$	37,734

The Trust’s long-term ground leases had a weighted average remaining lease term of 43.9 years and a weighted average discount rate of 11.0% as of June 30, 2023.

(5) COMMITMENTS AND CONTINGENCIES

Master Leases

Landlord Option Properties: On the Effective Date, the Retail Master Lease provides the Trust an option on 23 of the Retail Properties allowing current or future landlords to terminate the Retail Master Lease as to that property upon 24 months’ prior written notice. This option is limited (for the Trust, but not for future landlords) to eight Retail Properties in any lease year. As of December 31, 2022, the Trust had sold 16 Retail Properties with landlord termination options. During the six months ended June 30, 2023, no Retail Properties with landlord termination options were sold. As of June 30, 2023, there were seven remaining Retail Properties with landlord termination options.

Tenant Option Properties: On the Effective Date, the Retail Master Lease provided Penney Intermediate Holdings LLC an option to terminate the Retail Master Lease upon 24 months’ prior written notice as to all or a portion of any one or more of six specified properties. This option is limited to no more than five Properties in any lease year. As of December 31, 2022, the Trust had sold five Retail Properties with tenant termination options. During the six months ended June 30, 2023, no Retail Properties with tenant termination options were sold. As of June 30, 2023, there was one remaining Retail Property with a tenant termination option.

Substitution Options and Go Dark Rights: The Retail Master Lease provides Penney Intermediate Holdings LLC an option to terminate the Retail Master Lease with respect to selected sub-performing properties upon replacement of such sub-performing properties with a qualified replacement property in accordance with the terms and conditions of the Retail Master Lease. Notwithstanding the foregoing, Penney Intermediate Holdings LLC shall only be entitled to exercise a substitution option (i) between the third and 15th anniversary of the commencement date of the Retail Master Lease and (ii) if the aggregate allocated base rent amounts for all Go Dark/Substitution Properties (as defined

14

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

in the Retail Master Lease) during the applicable period (as described in the Retail Master Lease) is less than or equal to 15% of the aggregate first year’s base rent. The Retail Master Lease also provides Penney Intermediate Holdings LLC with the limited right to “go dark” (i.e., cease operations) at one or more Retail Properties in certain limited circumstances as set forth in the Retail Master Lease; provided that such right does not relieve Penney Intermediate Holdings LLC of its obligation to make any rent payments that are due and owing. Penney Intermediate Holdings LLC has not ceased operations at any of the Retail Properties as of June 30, 2023.

Tenant Purchase Rights: On the Effective Date, the Master Leases contained preferential offer rights in favor of Penney Intermediate Holdings LLC with respect to 70 of the Retail Properties and each of the Warehouses (the “Tenant Purchase Rights”), which enable Penney Intermediate Holdings LLC, in connection with a potential sale of such Properties, to acquire such Properties for a price determined in accordance with the procedures set forth in the Master Leases. These Tenant Purchase Rights require the Trust to reoffer a property to the tenant in the event it is not sold within a specified period of time at a specified minimum price related to the preferential purchase price. Eighteen of these Retail Properties, of which three were purchased by an affiliate of the tenant, and all of the Warehouses, of which none were purchased by the tenant, have been sold as of June 30, 2023.

Lockout Periods: The Trust agreed not to deliver notice to Penney Intermediate Holdings LLC formally commencing the sales process at those Properties subject to the Tenant Purchase Rights prior to the dates specified in the applicable Master Lease for such Properties. All lockout periods with respect to the Tenant Purchase Rights for the 70 Retail Properties have expired.

Environmental Matters

Federal law (and the laws of some states in which we own or may acquire properties) imposes liability on a landowner for the presence on the premises of hazardous substances or wastes (as defined by present and future federal and state laws and regulations). This liability is without regard to fault or knowledge of the presence of such substances and may be imposed jointly and severally upon all succeeding landowners. If such hazardous substance is discovered on a property owned by us, we could incur liability for the removal of the substances and the cleanup of the property.

There can be no assurance that we would have effective remedies against prior owners of the property. In addition, we may be liable to current or future tenants and may find it difficult or impossible to sell the property either prior to or following such a cleanup. There are no environmental matters that are expected to have a material effect on the Trust’s consolidated financial statements.

Risk of Uninsured Property Losses

The Trust maintains property damage, fire loss, environmental, and liability insurance in addition to the insurance required to be maintained by the Tenant pursuant to the Master Leases. However, there are certain types of losses (generally of a catastrophic nature) which may be either uninsurable or not economically insurable. Such excluded risks may include war, earthquakes, tornados, floods and certain other environmental hazards. Should such events occur, (i) we may suffer a loss of capital invested, (ii) tenant may suffer losses and may be unable to pay rent for the spaces, and (iii) we may suffer a loss of profits which might be anticipated from one or more properties.

Significant Risks and Uncertainties

Although disruptions stemming from the COVID-19 pandemic have subsided, inflation, rising interest rates, reduced consumer spending, labor shortages, supply chain disruptions and global capital markets volatility pose increasing risks to the Company and the U.S. economy. The ongoing and potential future impacts of the war between Russia and Ukraine is also contributing to economic and geopolitical uncertainty. While we did not incur any disruptions to our lease income and occupancy during the six months ended June 30, 2023 as a result of these adverse political and economic conditions, credit markets or other events, we continue to closely monitor the impact of these factors as they may have a negative impact on our or Penney Intermediate Holdings LLC’s business.

15

COPPER PROPERTY CTL PASS THROUGH TRUST

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except certificate and per certificate amounts)

Concentration of Credit Risk

As of June 30, 2023, all of the Properties were leased to Penney Intermediate Holdings LLC, and all of the Trust’s lease income was derived from the Master Leases (see Note 4). The Properties' tenants constitute a significant asset concentration, as all tenants are subsidiaries of Penney Intermediate Holdings LLC and Penney Intermediate Holdings LLC provides financial guarantees with respect to the Master Leases. Until the Trust materially diversifies the composition of tenants for its properties, an event that has a material adverse effect on Penney Intermediate Holdings LLC’s business, financial condition or results of operations could have a material adverse effect on the Trust’s business, financial condition or results of operations.

As of June 30, 2023, the Trust's properties are located across 36 U.S. states and Puerto Rico. For the six months ended June 30, 2023, the Trust's lease income was concentrated in two states as follows: California 18.8% and Texas 13.5%. For the six months ended June 30, 2022, the Trust's lease income was concentrated in two states as follows: California 18.5% and Texas 13.6%.

Litigation

From time to time, the Trust may be subject to various legal proceedings and claims that arise in the ordinary course of business. There are no current matters that are expected to have a material effect on the Trust’s consolidated financial statements.

(6) SUBSEQUENT EVENTS

Subsequent to June 30, 2023, we paid monthly distributions to Certificateholders of $7,897 or $0.11 per certificate in July 2023. On August 7, 2023, we announced a distribution of $7,779 or $0.10 per certificate to be paid on August 10, 2023 to Certificateholders.

16

All dollar amounts in this Form 10-Q in Item 2 are stated in thousands with the exception of per share, per square foot and per unit amounts

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act). Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described or that they will happen at all. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “should,” “intends,” “plans,” “estimates” or “anticipates” and variations of such words or similar expressions or the negative of such words. You can also identify forward-looking statements by discussions of strategies, plans or intentions. Risks, uncertainties and changes in the following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•economic, business and financial conditions, and changes in our industry and changes in the real estate markets in particular;

•economic and other developments in markets where we have a high concentration of properties;

•our business strategy;

•our projected operating results;

•rental rates and/or vacancy rates;

•material deterioration in operating performance or credit of Penney Intermediate Holdings LLC;

•frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenant;

•bankruptcy, insolvency or general downturn in the business of Penney Intermediate Holdings LLC;

•adverse impact of e-commerce developments and shifting consumer retail behavior on our tenant;

•interest rates or operating costs;

•real estate and zoning laws and changes in real property tax rates;

•real estate valuations;

•our ability to generate sufficient cash flows to make distributions to our Certificateholders;

•our ability to obtain necessary outside financing;

•the availability, terms and deployment of capital;

•general volatility of the capital and credit markets and the market price of our Certificates;

•risks generally associated with real estate dispositions, including our ability to identify and pursue disposition opportunities;

•composition of members of our executive officers;

•the ability of the Manager, Trustee or other service providers to attract and retain qualified personnel;

•governmental regulations, tax laws and rates and similar matters;

•our compliance with laws, rules and regulations;

•environmental uncertainties and exposure to natural disasters;

•pandemics or other public health crises, such as COVID-19, and the related impact on (i) our ability to manage our properties, finance our operations and perform necessary administrative and reporting

17

functions and (ii) our tenant’s ability to operate their businesses, generate sales and meet their financial obligations, including the obligation to pay rent and other charges as specified in their leases;

•geo-political events, such as the conflict in Ukraine, government responses to such events and the related impact on the economy both nationally and internationally;

•insurance coverage; and

•the likelihood or actual occurrence of terrorist attacks in the U.S.

For a further discussion of these and other factors that could impact our future results, performance or transactions, see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. Readers should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements). We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q, except as required by applicable law.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included in this report.

COVID-19 Pandemic and Economic Conditions

Although disruptions stemming from the COVID-19 pandemic have subsided, inflation, rising interest rates, reduced consumer spending, labor shortages, supply chain disruptions and global capital markets volatility pose increasing risks to the Company and the U.S. economy. The ongoing and potential future impacts of the war between Russia and Ukraine is also contributing to economic and geopolitical uncertainty. While we did not incur any disruptions to our lease income and occupancy during the six months ended June 30, 2023 as a result of these adverse political and economic conditions, credit markets or other events, any of these events could materially adversely impact the Trust or Penney Intermediate Holdings LLC's business. The Trust continues to closely monitor economic, financial and social conditions, including the effects of the COVID-19 pandemic.

Executive Summary

Copper Property CTL Pass Through Trust exists for the sole purpose of collecting, holding, administering, distributing and monetizing the Properties for the benefit of Certificateholders. As of June 30, 2023, we owned 132 retail operating properties, 21 of which are encumbered by ground leases, across 36 U.S. states and Puerto Rico representing 17,466 square feet of leasable space. The number of retail operating properties decreased to 132 as of June 30, 2023 from 133 as of December 31, 2022 as a result of one disposition during the six months ended June 30, 2023.

18

The following table summarizes our portfolio as of June 30, 2023:

Retail Properties
	# of Properties
State	Fee Owned	Ground Lease	Total	Square Feet (Buildings)	Lease income for the Six Months Ended June 30, 2023			Lease income as % of total		Lease income for the Six Months Ended June 30, 2022			Lease income as % of total
CA	17	4	21	3,103	9,457			18.6	%	9,457			18.6	%
TX	18	4	22	2,246	6,891			13.6	%	6,891			13.6	%
FL	8	1	9	1,292	4,258			8.4	%	4,258			8.4	%
NJ	5	—	5	883	2,525			5.0	%	2,525			5.0	%
WA	3	1	4	666	2,266			4.5	%	2,266			4.5	%
NY	1	2	3	470	2,155			4.2	%	2,155			4.2	%
IL	5	—	5	845	2,036			4.0	%	2,036			4.0	%
NV	2	1	3	438	1,709			3.4	%	1,709			3.4	%
AZ	4	—	4	493	1,699			3.3	%	1,699			3.3	%
MI	6	—	6	863	1,697			3.3	%	1,697			3.3	%
OH	5	—	5	645	1,528			3.0	%	1,528			3.0	%
PA	4	—	4	555	1,462			2.9	%	1,462			2.9	%
CO	2	1	3	362	1,050			2.1	%	1,050			2.1	%
KY	1	1	2	251	923			1.8	%	923			1.8	%
NM	2	—	2	266	916			1.8	%	916			1.8	%
Other	28	6	34	4,088	10,239			20.1	%	10,231			20.1	%
Total Retail	111	21	132	17,466	$	50,811	(a)	100	%	$	50,803	(a)	100	%

(a) For the six months ended June 30, 2023 and 2022, lease income consists of the following:

	Six Months Ended June 30,
	2023		2022
Base rent	$	51,111	$	51,111
Straight-line rental income	(1,177)		(1,176)
Amortization of above and below market lease	(1,139)		(1,139)
Ground lease reimbursement income	2,016		2,007
Lease income	$	50,811	$	50,803

Company Highlights — Six Months Ended June 30, 2023

Acquisitions

We had no acquisition activity during the six months ended June 30, 2023 and 2022.

19

Dispositions

The following table summarizes the disposition activity during the six months ended June 30, 2023:

Sale Date	Location	Property Type	Ownership	Square Footage	Gross Sales Proceeds		Aggregate Proceeds, Net		Gain
3/22/23	Temecula, CA	Retail	Fee Simple	125	$	6,000	$	5,869	$	(496)
				125	$	6,000	$	5,869	$	(496)

In December 2021, a Retail Property in Queens, New York was sold for aggregate sales proceeds, net of $38,785, of which $1,326 was held in escrow after closing. In March 2023, the amounts held in escrow were released to the Trust and included in gain on sales of investment properties, net. During the six months ended June 30, 2023, net gain on sales of investment properties was $828, which includes a gain of $1,326 less $2 of selling expenses, from the release of escrow from the Retail Property in Queens, New York and a loss of $(496) from the disposition of the Retail Property in Temecula, California.

The following table summarizes the disposition activity during the six months ended June 30, 2022:

Sale Date	Location	Property Type	Ownership	Square Footage	Gross Sales Proceeds		Aggregate Proceeds, Net		Gain
1/6/22	Culver City, CA	Retail	Fee Simple	204	$	22,000	$	20,961	$	3,651
				204	$	22,000	$	20,961	$	3,651

Leasing Activity

There was no leasing activity during the six months ended June 30, 2023 and 2022.

Capital Markets

There was no capital markets activity during the six months ended June 30, 2023 and 2022.

Distributions

We paid distributions to the Certificateholders of $68,189 or $0.91 per certificate during the six months ended June 30, 2023, and $659,651 or $8.80 per certificate during the six months ended June 30, 2022.

Results of Operations

For the three months ended June 30, 2023, net income attributable to Certificateholders was $16,831 or $0.22 per Certificate, as compared to $16,591 or $0.22 per Certificate for the comparable period in 2022.

For the six months ended June 30, 2023, net income attributable to Certificateholders was $33,987 or $0.45 per Certificate, as compared to $37,021 or $0.49 per Certificate for the comparable period in 2022.

The following describes the changes on the Trust’s consolidated statements of operations that affected net income attributable to Certificateholders during the three and six months ended June 30, 2023, as compared to the corresponding period in 2022:

Lease income - The decrease in lease income of $2,288 and $4,470 for the three and six months ended June 30, 2023, respectively, as compared to the corresponding period in 2022, is due to the disposition of 14 Retail Properties between June 30, 2022 and June 30, 2023.

20

Depreciation and amortization - The decrease in depreciation and amortization of $519 and $1,024 for the three and six months ended June 30, 2023, respectively, as compared to the corresponding period in 2022, is due to the disposition of 14 Retail Properties between June 30, 2022 and June 30, 2023.

General and administrative expenses - The decrease in general and administrative expenses of $1,315 and $2,034 for the three and six months ended June 30, 2023, respectively, as compared to the corresponding period in 2022, is primarily due to decreases in insurance expense and legal expenses.

Gain on sales of investment properties, net - For the six months ended June 30, 2023, the gain on sales of investment properties, net of $828 includes a loss on sale of $496 from the disposition of one property during the period, which is offset by $1,326 of additional income less $2 of selling expenses from a disposition that occurred in 2021. During the six months ended June 30, 2022, the gain on sales of investment properties, net of $3,651 was due to the disposition of one property.

Net operating income ("NOI")

We define NOI as all revenues other than (i) straight-line rental income (non-cash), (ii) amortization of above and below market lease intangibles, (iii) interest income and (iv) non-cash ground lease reimbursement income, less all operating expenses other than non-cash ground rent expense, which is comprised of amortization of right-of-use lease assets and amortization of lease liabilities, depreciation and amortization, and formation expenses. We believe that NOI, which is a supplemental non-GAAP financial measure, provides an additional and useful operating perspective not immediately apparent from “Net income” in accordance with accounting principles generally accepted in the United States ("GAAP"). Comparison of our presentation of NOI to similarly titled measures for other entities may not necessarily be meaningful due to possible differences in definition and application by such entities. For reference and as an aid in understanding our computation of NOI, a reconciliation of net income as computed in accordance with GAAP to NOI for the Reporting Periods is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	16,831	$	16,591	$	33,987	$	37,021
Adjustments to reconcile to NOI:
Depreciation and amortization of real estate	4,817		5,336		9,647		10,671
Gain on sales of investment properties, net	—		—		(828)		(3,651)
Straight-line rental income, net	588		636		1,179		1,273
Amortization of above and below market lease intangibles, net	569		332		1,120		664
Interest income	(283)		(16)		(549)		(21)
Non-cash ground rent expense, net	1,495		1,555		2,991		3,110
Non-cash ground lease reimbursement income	(1,004)		(1,003)		(2,016)		(2,007)
NOI	$	23,013	$	23,431	$	45,531	$	47,060

The decrease in NOI of $1,529 for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, is primarily due to the decrease in base rent from the sale of 14 Retail Properties between June 30, 2022 and June 30, 2023.

21

Funds from Operations

The National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a financial measure known as funds from operations ("FFO"). As defined by NAREIT, FFO means net income computed in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains from sales of real estate assets, (iii) gains and losses from change in control and (iv) provisions for impairment of investment properties. We have adopted the NAREIT definition in our computation of FFO attributable to Certificateholders. Management believes that, subject to the following limitations, FFO attributable to Certificateholders provides a basis for comparing our performance and operations to REITs.

We define Operating FFO attributable to Certificateholders as FFO attributable to Certificateholders excluding the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating transactions and other events include, but are not limited to, the impact on earnings, which are not otherwise adjusted in our calculation of FFO attributable to Certificateholders.

We believe that FFO and Operating FFO, which are supplemental non-GAAP financial measures, provide an additional and useful means to assess our operating performance compared to REITs. FFO and Operating FFO do not represent alternatives to (i) “Net Income” or “Net income attributable to Certificateholders” as indicators of our financial performance, or (ii) “Cash flows from operating activities” in accordance with GAAP as measures of our capacity to fund cash needs, including the payment of dividends. Comparison of our presentation of Operating FFO to similarly titled measures for REITs may not necessarily be meaningful due to possible differences in definition and application by such REITs.

The following table presents a reconciliation of net income to FFO and Operating FFO:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	16,831	$	16,591	$	33,987	$	37,021
Depreciation and amortization of real estate	4,817		5,336		9,647		10,671
Gain on sales of investment properties, net	—		—		(828)		(3,651)
FFO	$	21,648	$	21,927	$	42,806	$	44,041
FFO per certificate outstanding – basic and diluted	$	0.29	$	0.29	$	0.57	$	0.59
FFO	$	21,648	$	21,927	$	42,806	$	44,041
Dead deal costs	—		114		19		224
Operating FFO	$	21,648	$	22,041	$	42,825	$	44,265
Operating FFO per certificate outstanding – basic and diluted	$	0.29	$	0.29	$	0.57	$	0.59

The decrease in FFO and Operating FFO of $1,235 and $1,440, respectively, for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022 is primarily due to the decrease of lease income of $4,470 due to the sale of 14 Retail Properties between June 30, 2022 and June 30, 2023.

22

Liquidity and Capital Resources

We anticipate that cash flows from the below-listed sources will provide adequate capital for the next 12 months and beyond for all Certificateholder distributions.

Our primary expected sources and uses of liquidity are as follows:

	SOURCES		USES
▪	Rental revenues	▪	Operating and general and administrative expenses
▪	Cash and cash equivalents	▪	Sales expenses
▪	Net proceeds from the sale of real estate	▪	Distribution payments

The Trust has adopted a policy to maintain its cash equivalents in a government money market fund administered by a major bulge bracket investment banking firm which invests its assets only in (i) cash and (ii) securities issued or guaranteed by the United States or certain U.S. government agencies and having a weighted average life and weighted average maturity of no more than 120 days and 60 days, respectively. Each of these government money market funds is managed to maintain a stable net asset value, thereby eliminating principal risk.

We had no indebtedness as of June 30, 2023 and December 31, 2022.

Debt Maturities

We have no scheduled maturities and principal amortization of our indebtedness, since we had no indebtedness as of June 30, 2023 and December 31, 2022.

Distributions

The Trust is required to distribute on a monthly basis, the net proceeds from lease payments under the Master Leases (until such time as all of the Properties have been sold) and all net sales proceeds from the disposition of Properties, in each case pro rata, to Certificateholders as of the record date immediately preceding the applicable distribution date. Such distributions shall be net of (i) tax payments to be made by the Trust, (ii) fees and expenses of the Trust, the Trustee, the Manager and any other professional advisors, and (iii) funds to be set aside for the Trustee’s and Manager’s reserve accounts.

We paid distributions to the Certificateholders of $68,189 or $0.91 per certificate during the six months ended June 30, 2023, and $659,651 or $8.80 per certificate during the six months ended June 30, 2022.

Dispositions

Net sales proceeds from the disposition of Properties were included in the distributions to Certificateholders. During the six months ended June 30, 2023 and 2022, included in the amount we paid to Certificateholders was $22,929 and $617,382, respectively, of aggregate net sales proceeds.

Capital Expenditures

We anticipate that obligations related to capital improvements will not be significant as these are generally the responsibility of the Tenant under the Master Leases and should otherwise be met with cash flows from operations.

23

Summary of Cash Flows

The following table summarizes our cash flows:

	Six Months Ended June 30,
	2023		2022
Net cash provided by operating activities	$	46,013	$	45,481
Net cash provided by investing activities	7,196		20,961
Net cash used in financing activities	(68,189)		(659,651)
Change in cash, cash equivalents and restricted cash	(14,980)		(593,209)
Cash, cash equivalents and restricted cash, at beginning of period	48,922		627,522
Cash, cash equivalents and restricted cash, at end of period	$	33,942	$	34,313

Cash Flows from Operating and Investing Activities

Net cash provided by operating activities for the six months ended June 30, 2023 was $46,013, as compared to $45,481 for the six months ended June 30, 2022. The increase of $532 is primarily due to an increase of $2,627 in other assets resulting from a reduction in insurance premium, but offset by decreases in other liabilities, and lease income due to the sale of 14 Retail Properties between June 30, 2022 and June 30, 2023.

Cash flows provided by investing activities for the six months ended June 30, 2023 were $7,196, as compared to $20,961 for the six months ended June 30, 2022. Investing activities solely consists of proceeds from sales of investment properties, and the decrease in net cash provided by investing activities from the six months ended June 30, 2023 to the six months ended June 30, 2022 is due to disposition activity in each Reporting Period.

During the six months ended June 30, 2023, total net cash provided by operating and investing activities was $53,209, however $68,189 was distributed to Certificateholders in 2023, of which $22,944 were distributions of cash flows from operating and investing activities received during December 2022.

Management believes that cash flows from operations and sales of investment properties and existing cash and cash equivalents will provide sufficient liquidity to sustain future operations; however, we cannot provide any such assurances.

Cash Flows from Financing Activities

Cash flows used in financing activities for the six months ended June 30, 2023 was $68,189, as compared to $659,651 for the six months ended June 30, 2022. Financing activities for both Reporting Periods consisted of distributions paid to Certificateholders.

24

Contractual Obligations

As of June 30, 2023, we have 21 properties that are subject to long-term non-cancelable ground leases. These leases expire in various years from 2038 to 2096, including any available option periods that are reasonably certain to be exercised.

The following table summarizes the Trust’s obligations under non-cancelable operating leases as of June 30, 2023:

	Payments due by period
Period from July 1 to December 31, 2023	$	2,046
2024	4,124
2025	4,116
2026	4,138
2027	4,197
Thereafter	220,159
Less imputed interest	(201,046)
Total	$	37,734

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our 2022 Annual Report on 10-K contains a description of our critical accounting policies, including those relating to the acquisition of the Properties and impairment of long-lived assets. For the six months ended June 30, 2023, there were no significant changes to these policies.

Impact of Recently Issued Accounting Pronouncements

None.

Subsequent Events

Subsequent to June 30, 2023, we paid monthly distributions to Certificateholders of $7,897 or $0.11 per certificate in July 2023. On August 7, 2023, we announced a distribution of $7,779 or $0.10 per certificate to be paid on August 10, 2023 to Certificateholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are not exposed to interest rate risk because we currently do not hold any long-term debt or derivatives. If we were to enter into long-term debt arrangements, our interest rate risk management objectives would be to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs.

As of June 30, 2023, we did not hold any fixed or variable rate debt, and did not hold any derivative financial instruments to hedge exposures to changes in interest rates.

25

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of the Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities and Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) as of June 30, 2023. Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2023 to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms, and that it is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding the required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those internal control systems determined to be effective can provide only a level of reasonable assurance with respect to financial statement preparation and presentation. Our disclosure controls and procedures have been designed to achieve their objectives, and as noted, our Principal Executive Officer and Principal Financial Officer believe that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2023.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. Neither the Trust nor any of its subsidiaries are currently a party as plaintiff or defendant to and none of our properties are the subject of any pending legal proceedings that we believe to be material or that individually or in the aggregate would be expected to have a material effect on our business, financial condition or results of operations if determined adversely to us. We are not aware of any similar proceedings that are contemplated by governmental authorities.

ITEM 1A. RISK FACTORS

As of the date of this report, there are no material changes to our risk factors as previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities during the quarter ended June 30, 2023.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

26

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

27

ITEM 6. EXHIBITS

Exhibit No.	Description
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
32.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 (furnished herewith).
32.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 (furnished herewith).
101.SCH	Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) (filed herewith).

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COPPER PROPERTY CTL PASS THROUGH TRUST

By:	/s/ NEIL AARONSON
	Neil Aaronson
	Principal Executive Officer
Date:	August 7, 2023
By:	/s/ LARRY FINGER
	Larry Finger
	Principal Financial Officer
Date:	August 7, 2023

29

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Neil Aaronson, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Copper Property CTL Pass Through Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal     control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2023

/s/ Neil Aaronson

Neil Aaronson

Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Larry Finger, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Copper Property CTL Pass Through Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal     control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2023

/s/ Larry Finger

Larry Finger

Principal Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

of

Neil Aaronson

Principal Executive Officer

I, Neil Aaronson, Principal Executive Officer of Copper Property CTL Pass Through Trust (the “Trust”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Quarterly Report on Form 10-Q of the Trust for the period ended June 30, 2023 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2.The information contained in the Periodic Report fairly represents, in all material respects, the financial condition and results of operations of the Trust.

Date: August 7, 2023

/s/ Neil Aaronson

Neil Aaronson

Principal Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION

of

Larry Finger

Principal Financial Officer

I, Larry Finger, Principal Financial Officer of Copper Property CTL Pass Through Trust (the “Trust”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Quarterly Report on Form 10-Q of the Trust for the period ended June 30, 2023 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2.The information contained in the Periodic Report fairly represents, in all material respects, the financial condition and results of operations of the Trust.

Date: August 7, 2023

/s/ Larry Finger

Larry Finger

Principal Financial Officer

XML

Cover	6 Months Ended
	Jun. 30, 2023 shares
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	000-56236
Entity Registrant Name	Copper Property CTL Pass Through Trust
Entity Incorporation, State or Country Code	NY
Entity Tax Identification Number	85-6822811
Entity Address, Address Line One	3 Second Street, Suite 206
Entity Address, City or Town	Jersey City
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07311-4056
City Area Code	(201)
Local Phone Number	839-2200
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001837671
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding	0

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Investment properties:
Land and improvements	$ 415,764	$ 422,114
Building and other improvements	496,222	497,523
Gross investment properties	911,986	919,637
Less: accumulated depreciation	(34,878)	(27,742)
Net investment properties	877,108	891,895
Cash and cash equivalents	33,942	48,922
Accounts receivable	41,167	42,685
Lease intangible assets, net	221,547	228,529
Right-of-use lease assets, net	86,168	87,086
Other assets, net	1,165	831
Total assets	1,261,097	1,299,948
Liabilities:
Accounts payable and accrued expenses	1,167	1,061
Lease intangible liabilities, net	97,093	101,920
Lease liabilities	37,734	37,676
Other liabilities	8,642	8,628
Total liabilities	144,636	149,285
Commitments and contingencies (Note 5)
Equity:
Trust certificates, no par value, 75,000,000 certificates authorized, issued and outstanding, as of June 30, 2023 and December 31, 2022	0	0
Additional paid-in capital	1,952,120	1,952,120
Accumulated distributions in excess of earnings	(835,659)	(801,457)
Total equity	1,116,461	1,150,663
Total liabilities and equity	$ 1,261,097	$ 1,299,948

XML

Consolidated Balance Sheets (Parenthetical) - shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Trust certificates, authorized (in shares)	75,000,000	75,000,000
Trust certificates, issued (in shares)	75,000,000	75,000,000
Trust certificates, outstanding (in shares)	75,000,000	75,000,000

XML

Consolidated Statements of Operations - USD ($) $ in Thousands, shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues:
Lease income	$ 25,402	$ 27,690	$ 50,926	$ 55,396
Expenses:
Operating expenses	3,284	3,711	6,597	6,983
Depreciation and amortization	4,817	5,336	9,647	10,671
General and administrative expenses	753	2,068	2,592	4,626
Total expenses	8,854	11,115	18,836	22,280
Other income:
Gain on sales of investment properties, net	0	0	828	3,651
Other income	283	16	1,069	254
Total other income	283	16	1,897	3,905
Net income	$ 16,831	$ 16,591	$ 33,987	$ 37,021
Earnings per certificate – basic and diluted:
Net income per certificate - basic (in usd per share)	$ 0.22	$ 0.22	$ 0.45	$ 0.49
Net income per certificate - diluted (in usd per share)	$ 0.22	$ 0.22	$ 0.45	$ 0.49
Weighted average number of certificates outstanding – basic (shares)	75.0	75.0	75.0	75.0
Weighted average number of certificates outstanding – diluted (shares)	75.0	75.0	75.0	75.0

XML

Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Trust Certificates	Additional Paid-in Capital	Accumulated Distributions in Excess of Earnings
Balance (in shares) at Dec. 31, 2021		75,000,000
Balance at Dec. 31, 2021	$ 1,887,370		$ 1,952,120	$ (64,750)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	37,021			37,021
Distributions paid to Certificateholders	(659,651)			(659,651)
Balance (in shares) at Jun. 30, 2022		75,000,000
Balance at Jun. 30, 2022	1,264,740		1,952,120	(687,380)
Balance (in shares) at Mar. 31, 2022		75,000,000
Balance at Mar. 31, 2022	1,274,290		1,952,120	(677,830)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	16,591			16,591
Distributions paid to Certificateholders	(26,141)			(26,141)
Balance (in shares) at Jun. 30, 2022		75,000,000
Balance at Jun. 30, 2022	1,264,740		1,952,120	(687,380)
Balance (in shares) at Dec. 31, 2022		75,000,000
Balance at Dec. 31, 2022	1,150,663		1,952,120	(801,457)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	33,987			33,987
Distributions paid to Certificateholders	(68,189)			(68,189)
Balance (in shares) at Jun. 30, 2023		75,000,000
Balance at Jun. 30, 2023	1,116,461		1,952,120	(835,659)
Balance (in shares) at Mar. 31, 2023		75,000,000
Balance at Mar. 31, 2023	1,130,548		1,952,120	(821,572)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	16,831			16,831
Distributions paid to Certificateholders	(30,918)			(30,918)
Balance (in shares) at Jun. 30, 2023		75,000,000
Balance at Jun. 30, 2023	$ 1,116,461		$ 1,952,120	$ (835,659)

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Consolidated Statements of Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Distributions paid to certificateholders (usd per share)	$ 0.41	$ 0.35	$ 0.91	$ 8.80

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income	$ 16,831	$ 16,591	$ 33,987	$ 37,021
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,817	5,336	9,647	10,671
Amortization of above/below market leases, net	569	332	1,120	664
Gain on sales of investment properties, net	0	0	(828)	(3,651)
Changes in assets and liabilities:
Changes in accounts receivable			1,338	1,321
Changes in other assets			(386)	(3,013)
Changes in right-of-use lease assets			917	1,043
Changes in accounts payable and accrued expenses			145	(572)
Changes in lease liabilities			58	59
Changes in other liabilities			15	1,938
Net cash provided by operating activities			46,013	45,481
Cash flows from investing activities:
Proceeds from sales of investment properties			7,196	20,961
Net cash provided by investing activities			7,196	20,961
Cash flows from financing activities:
Distributions paid to Certificateholders			(68,189)	(659,651)
Net cash used in financing activities			(68,189)	(659,651)
Net change in cash and cash equivalents			(14,980)	(593,209)
Cash and cash equivalents, at beginning of period			48,922	627,522
Cash and cash equivalents, at end of period	$ 33,942	$ 34,313	$ 33,942	$ 34,313

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ORGANIZATION

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION

Overview

Copper Property CTL Pass Through Trust, a New York common law trust (the “Trust,” “we,” “our” or “us”) was formed on December 21, 2020, in connection with the reorganization of Old Copper Company, Inc. (f/k/a J. C. Penney Company, Inc.) (“Old Copper”), effective as of January 30, 2021 (the “Effective Date”) pursuant to the terms of the Amended Joint Chapter 11 Plan of Reorganization of Old Copper and certain of its subsidiaries (collectively, the “Debtors”) (the “Plan of Reorganization”).

On the Effective Date, through separate wholly-owned property holding companies (the “PropCos”), the Trust acquired (as discussed below), 160 retail properties (the “Retail Properties”) and six distribution centers (the “Warehouses” and, together with the Retail Properties, the “Properties”), all of which were leased under two Master Leases (as discussed in Note 4) to one or more subsidiaries of Copper Retail JV LLC (“OpCo Purchaser”) (collectively with its subsidiaries, “Penney Intermediate Holdings LLC”), an entity formed by and under the joint control of Simon Property Group, L.P. and Brookfield Asset Management Inc. During 2021, the Trust sold all six Warehouses.

The Trust’s operations consist solely of (i) owning the Properties and interests as lessee of land under non-cancellable ground leases, (ii) leasing the Properties under the terms of the Retail Master Lease (as defined below) to Penney Intermediate Holdings LLC as the sole tenant and (iii) subject to market conditions and the conditions set forth in the Trust Agreement, selling the Properties to third-party purchasers through the PropCos.

As of June 30, 2023, the real estate portfolio consists of 132 Retail Properties, of which 21 are encumbered by ground leases, in the United States (the "U.S.") across 36 states and Puerto Rico, and comprising 17.5 million square feet of leasable space.

Formation

On May 15, 2020, the Debtors commenced voluntary cases under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

On October 28, 2020, the Debtors entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with OpCo Purchaser, and Copper Bidco LLC (“PropCo Purchaser” and, together with OpCo Purchaser, the “Purchasers”), an entity formed on behalf of lenders under Old Copper’s (i) senior secured superpriority, priming debtor-in-possession credit facility (the “DIP Facility”), (ii) 5.875% senior secured notes due 2023 (the “First Lien Notes”) and (iii) Amended and Restated Credit and Guaranty Agreement, dated as of June 23, 2016 (the “Term Loan Facility” and together with the First Lien Notes, the “First Lien Debt”), pursuant to which the Purchasers agreed to acquire substantially all of the Debtors’ assets and assume certain of the Debtors’ obligations in connection with the purchased assets.

On December 12, 2020, the Debtors filed the Plan of Reorganization which was confirmed by the Bankruptcy Court on December 16, 2020.

On December 21, 2020, the Trust was formed in connection with the reorganization of Old Copper.

On the Effective Date, the Plan of Reorganization became effective pursuant to its terms, at which point PropCo Purchaser and GLAS Trust Company, LLC, as the Trust's independent third-party trustee (the "Trustee"), entered into an Amended and Restated Trust Agreement (as amended, the “Trust Agreement”). In connection with the consummation of the transactions set forth in the Asset Purchase Agreement and in exchange for a $1 billion aggregate credit bid by PropCo Purchaser, comprising $900 million of claims under the DIP Facility and $100

million of claims, on a pro rata basis, under the First Lien Debt, and simultaneous release of obligations under the DIP Facility and First Lien Debt, Old Copper transferred (or caused its subsidiaries to transfer) its fee simple or ground leasehold title (as applicable) in certain properties to the PropCos and assigned (or caused such subsidiaries to assign) the Master Leases (as defined below) relating to the Properties to the Trust.

As a result, as of the Effective Date, the Trust owned, through the PropCos, 160 Retail Properties and six Warehouses, all of which were leased to one or more subsidiaries of Penney Intermediate Holdings LLC under two Master Leases. In connection with the foregoing, certain of the Debtors' lenders received their pro-rata portion of the equity interest in the Trust, as evidenced by the Trust Certificates (as defined below). The aggregate credit bid was not an indicator of the fair value of the assets and liabilities of the Trust as of the Effective Date, and it does not represent the full extent of debt that was owed to the creditor group.

The Trust accounted for the reorganization using fresh start accounting under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification ("ASC") Topic 852, which resulted in the Trust becoming a new entity for financial reporting purposes on the Effective Date. Accordingly, all assets and liabilities were recorded at fair value in accordance with accounting requirements for business combinations under ASC 805-20.

As of the Effective Date, Old Copper had no ability to exercise any control over the Properties or the Trust and has

no affiliation with the Trust. The Trust owns directly or indirectly 100% of the equity or partnership interests (as applicable) in the PropCos. Specifically, the PropCos include (i) CTL Propco I LLC, a Delaware limited liability company, CTL Propco I L.P., a Delaware limited partnership and CTL Propco PR I LLC and CTL Propco PR II LLC, Puerto Rico limited liability companies, which collectively own the fee simple or ground leasehold title (as applicable) to the Retail Properties and (ii) CTL Propco II LLC, a Delaware limited liability company and CTL Propco II L.P., a Delaware limited partnership, which collectively owned the fee simple title to the Warehouses. CTL Propco II LLC and CTL Propco II L.P. were dissolved on October 6, 2022.

Trust Agreement

The Trust is governed by the Trust Agreement between PropCo Purchaser and the Trustee. The Trust Agreement created a series of equity trust certificates designated as “Copper Property CTL Pass Through Certificates” (the “Trust Certificates”), 75 million of which were issued on the Effective Date. Each Trust Certificate represents a fractional undivided beneficial interest in the Trust and represents the interests of the holders of the Trust Certificates (“Certificateholders”) in the Trust. All Trust Certificateholders shall vote as a single class and shall be in all respects equally and ratably entitled to the benefits of the Trust Agreement without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of the Trust Agreement.

The Trustee performs trust administration duties, including treasury management and certificate administration and trustee fees, which are included in “General and administrative expenses” on the accompanying consolidated statements of operations. The Trust pays the Trustee an annual service fee of $100, which is amortized monthly. For the three and six months ended June 30, 2023, the Trust incurred trustee fees of $25 and $50, respectively. For the three and six months ended June 30, 2022, the Trust incurred trustee fees of $25 and $50, respectively.

On December 30, 2021, the Trust amended the Trust Agreement, without the consent of its Certificateholders (as provided in the Trust Agreement), to permit the Trust to invest moneys held by the Trust instead of holding them in non-interest bearing accounts. The Trust has adopted a policy to maintain its cash equivalents in a government money market fund administered by a major bulge bracket investment banking firm which invests its assets only in (i) cash and (ii) securities issued or guaranteed by the United States or certain U.S. government agencies and having a weighted average life and weighted average maturity of no more than 120 days and 60 days, respectively. Each of these government money market funds is managed to maintain a stable net asset value, thereby eliminating principal risk.

Management Agreement

The Trust has retained Hilco JCP LLC, an affiliate of Hilco Real Estate LLC, as its independent third-party manager to perform asset management duties with respect to the Properties (together with any of its affiliates, replacement or successor, the “Manager”) pursuant to an agreement with an initial term of 24 months, with automatic six month renewals until the termination of the Trust. The Trust pays the Manager a base management fee (the “Base Fee”) and a fee for each property sold (the “Asset Management Fee”). The Base Fee is an amount equal to the greater of 5.75% of the lease payments of the Properties per month and $333 per month. The Asset Management Fees consist of a closing fee of $50 for each Warehouse sold and a success fee for each Retail Property and Warehouse sold which varies based on the sales proceeds and date sold.

The Trust incurred Base Fees of $1,469 and $1,590 for the three months ended June 30, 2023 and 2022, respectively, and $2,945 and $3,181 for the six months ended June 30, 2023 and 2022, respectively, which are included in “Operating expenses” on the accompanying consolidated statements of operations, of which $490 and $530 as of June 30, 2023 and June 30, 2022, respectively, were included in “Accounts payable and accrued expenses” on the accompanying consolidated balance sheets. The Trust incurred Asset Management Fees of $0 for both the three months ended June 30, 2023 and 2022, and $15 and $143 for the six months ended June 30, 2023 and 2022, respectively, which are included in “Gain on sales of investment properties, net” on the accompanying consolidated statements of operations.

On May 12, 2021, the Trust filed a preliminary proxy statement with the U.S. Securities and Exchange Commission ("SEC") pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended, to solicit consent from Certificateholders to amend the Trust Agreement and Management Agreement. On June 11, 2021, following the expiration of the consent solicitation and upon receipt of the requisite approval from the Certificateholders, the Trust amended the Trust Agreement and the Management Agreement to effectuate the proposed amendments. As a result of the amendments, the Trust is now required to dispose of all Retail Properties by December 10, 2025.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the rules and regulations of the SEC.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates, judgments and assumptions were required in a number of areas, including, but not limited to, estimating the fair value of the investment properties as of the Effective Date, determining the useful lives of real estate properties, determination of the incremental borrowing rate in ground leases, reasonably certain lease terms for ground and master leases, and evaluating the impairment of long-lived assets.

The accompanying consolidated financial statements include the accounts of the Trust, as well as all wholly owned subsidiaries of the Trust. All intercompany balances and transactions have been eliminated in consolidation. Wholly owned subsidiaries consist of limited liability companies and limited partnerships. The Trust has evaluated the fee arrangements with the Trustee and Manager to determine if they represent a variable interest, and concluded that the fee arrangements do not create a variable interest.

The accompanying consolidated financial statements include the quarterly periods ended June 30, 2023 and 2022 and the six months ended June 30, 2023 and 2022 (the “Reporting Periods”). These consolidated financial statements should be read in conjunction with the Trust's audited Annual Report on Form 10-K, as amended, for the year ended December 31, 2022 (the“10-K”), as certain disclosures in this Quarterly Report on Form 10-Q for the

quarterly period ended June 30, 2023 that would duplicate those included in the 10-K are not included in these consolidated financial statements.

Impairment of Investment Properties

The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At such evaluation date, the Trust separately determines whether impairment indicators exist for each property. Examples of situations considered to be impairment indicators include, but are not limited to:

•a significant change in the credit quality of tenant;

•a reduction in anticipated holding period;

•a significant decrease in market price; and

•any other quantitative or qualitative events or factors deemed significant by the Trust’s management.

If the presence of one or more impairment indicators as described above is identified on an evaluation date or at any point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered impaired when the estimated future undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes certain complex or subjective assumptions that include, but are not limited to:

•projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, competitive positioning and property location;

•estimated holding period or various potential holding periods when considering probability-weighted scenarios;

•projected capital expenditures and lease origination costs;

•estimated interest and internal costs expected to be capitalized;

•projected cash flows from the anticipated or eventual disposition of an operating property;

•comparable selling prices; and

•property-specific capitalization rates and discount rates.

To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its estimated fair value. For the six months ended June 30, 2023 and 2022, no impairment charge was recorded.

Investment Properties Held for Sale

In determining whether to classify an investment property as held for sale, the Trust considers whether (i) management has committed to a plan to sell the investment property, (ii) the investment property is available for immediate sale in its present condition, subject only to terms that are usual and customary, (iii) the Trust has a legally enforceable contract that has been executed and the buyer's due diligence period, if any, has expired, and (iv) actions required for the Trust to complete the plan indicate that it is unlikely that any significant changes will be made.

If all of the above criteria are met, the Trust classifies the investment property as held for sale. When these criteria are met, the Trust (i) suspends depreciation (including depreciation for tenant improvements and building improvements) and amortization of in-place lease intangibles and any above or below market lease intangibles and (ii) records the investment property held for sale at the lower of carrying value or estimated fair value. The assets and liabilities associated with investment properties that are classified as held for sale are presented separately on the consolidated balance sheets for the most recent reporting period.

As of June 30, 2023 and December 31, 2022, there were no properties classified as held for sale.

Cash and Cash Equivalents

The Trust maintains its cash and cash equivalents at major financial institutions. At June 30, 2023 and December 31, 2022, cash equivalents consisted of investments in money market instruments. Cash and cash equivalents totaled $33,942 and $48,922 as of June 30, 2023 and December 31, 2022, respectively. The cash and cash equivalents balance at one or more of these financial institutions exceeds the Federal Depository Insurance Corporation (FDIC) insurance coverage. The Trust periodically assesses the credit risk associated with these financial institutions and believes that the risk of loss is remote. While the Trust did not have any accounts with any recently failed financial institution, nor has it experienced any losses to date on its cash and cash equivalents held in bank accounts, there is no assurance that financial institutions in which we hold our cash and cash equivalents will not fail, in which case we may be subject to a risk of loss or delay in accessing all or a portion of our funds exceeding the FDIC insurance coverage, which could adversely impact our short-term liquidity, ability to operate our business, and financial performance.

Lease Income and Accounts Receivable

The Trust accounts for leases under the provisions of FASB ASC Topic 842. The Trust commenced recognition of lease income on its Master Leases (as discussed in Note 4) as of the Effective Date. In most cases, revenue recognition under a lease begins when the lessee takes possession or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. Lease income for leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over the term of each lease. The difference between such lease income earned and the cash rent due under the provisions of a lease is recorded as straight-line rent receivable or payable and is included as a component of “Accounts receivable” in the accompanying consolidated balance sheets.

At lease commencement, the Trust estimated that collectibility was probable for the Master Leases due to the creditworthiness analysis performed. Throughout the lease term, individual leases are assessed for collectibility and upon the determination that the collection of rents over the remaining lease life is not probable, lease income is adjusted such that it is recognized on the cash basis of accounting. The Trust will remove the cash basis designation and resume recording lease income from such tenant on an accrual basis when the Trust believes that the collection of rent over the remaining lease term is probable and, generally, based upon a demonstrated payment history. For the Reporting Periods, lease income is accounted for on the accrual basis of accounting. As of June 30, 2023, lease payments of $8,518 received in advance under the terms of the Master Leases are included in "Other liabilities" in the accompanying consolidated balance sheets and will be recognized as lease income in July 2023. As of December 31, 2022, lease payments of $8,555 received in advance under the terms of the Master Leases are included in "Other liabilities" in the accompanying consolidated balance sheets and were recognized as lease income in January 2023.

The Trust records all changes in uncollectible lease income as an adjustment to “Lease income” in the accompanying consolidated statement of operations. During the Reporting Periods, there was no uncollectible lease income.

Right-of-use Lease Assets and Lease Liabilities

The Trust was assigned an interest as lessee of land under 23 non-cancellable ground leases with third party landlords which were classified as operating leases on the Effective Date. As of June 30, 2023, the Trust held an interest as lessee of land under 21 non-cancellable ground leases. Rental expense associated with land that the Trust leases under non-cancellable operating leases is recorded on a straight-line basis over the term of each lease. In accordance with the Master Lease, rental expense associated with land is paid directly by Penney Intermediate Holdings LLC and is included in “Lease income” in the accompanying consolidated statements of operations (see Note 4).

On the Effective Date, the Trust recognized right-of-use ("ROU") lease assets and lease liabilities for long-term ground leases. The lease liability is calculated by discounting future lease payments by the Trust’s incremental borrowing rate, which is determined through consideration of (i) the Trust’s entity-specific risk premium, (ii)

observable market interest rates and (iii) lease term. The ROU asset is initially measured as the same amount as the lease liability and presented net of the Trust’s existing straight-line ground rent liabilities and ground lease intangible liability. The lease liability is amortized based on changes in the value of discounted future lease payments and the ROU asset is amortized by the difference in the straight-line lease expense for the period and the change in value of the lease liability.

The Trust does not include option terms in its future lease payments where they are not reasonably certain to be exercised, however all option terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease. The Trust has elected not to separate lease and non-lease components for operating leases.

Income Taxes

The Trust is intended to qualify as a liquidating trust within the meaning of United States Treasury Regulation Section 301.7701-4(d) or, in the event it is not so treated, a partnership other than a partnership taxable as a corporation under Section 7704 of the Internal Revenue Code of 1986, as amended.

The Trust records a benefit, based on the GAAP measurement criteria, for uncertain income tax positions if the result of a tax position meets a “more likely than not” recognition threshold. All tax returns remain subject to examination by federal and various state tax jurisdictions. As of June 30, 2023 and December 31, 2022, there were no uncertain tax positions and the balance of unrecognized tax benefits was $0.

Segment Reporting

The Trust’s chief operating decision makers, which are comprised of its Principal Executive Officer and Principal Financial Officer, assess and measure the operating results of the Trust’s portfolio of properties based on net operating income and do not differentiate properties by geography, market, size or type. Each of the Trust’s investment properties is considered a separate operating segment, as each property earns revenue and incurs expenses, operating results are individually reviewed and discrete financial information is available. However, the Trust’s properties are aggregated into one reportable segment because (i) the properties have similar economic characteristics, (ii) the Trust provides similar services to its tenants and (iii) the Trust’s chief operating decision makers evaluate the collective performance of its properties.

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INVESTMENT PROPERTIES

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

INVESTMENT PROPERTIES

INVESTMENT PROPERTIES

As of June 30, 2023, the Trust's real estate portfolio consisted of 132 Retail Properties across 36 U.S. states and Puerto Rico.

The following table presents the amortization during the next five years and thereafter related to the lease intangible assets and liabilities for properties owned as of June 30, 2023:

	Period from July 1 to December 31, 2023		2024		2025		2026		2027		Thereafter		Total
Amortization of:
Above market lease intangibles (a)	$	3,913	$	7,827	$	7,827	$	7,827	$	7,827	$	101,747	$	136,968
In-place lease intangibles (a)	2,417		4,833		4,833		4,833		4,833		62,830		84,579
Lease intangible assets, net (b)	$	6,330	$	12,660	$	12,660	$	12,660	$	12,660	$	164,577	$	221,547
Below market lease intangibles (a)	$	2,774	$	5,548	$	5,548	$	5,548	$	5,548	$	72,127	$	97,093
Lease intangible liabilities, net (b)	$	2,774	$	5,548	$	5,548	$	5,548	$	5,548	$	72,127	$	97,093

(a) Represents the portion of the leases in which the Trust is the lessor. The amortization of above market lease intangibles is recorded as a reduction to lease income, and the amortization of below market lease intangibles is recorded as an increase to lease income. The amortization of in-place lease intangibles is recorded to depreciation and amortization expense.

(b) As of June 30, 2023, lease intangible assets, net and lease intangible liabilities, net are presented net of $30,595 and $13,408 of accumulated amortization, respectively. As of December 31, 2022, lease intangible assets, net and lease intangible liabilities, net are presented net of $24,334 and $10,853 of accumulated amortization, respectively.

As of June 30, 2023 and December 31, 2022, the weighted average amortization period for lease intangible assets and lease intangible liabilities was 17.5 years and 18.0 years, respectively.

Amortization expense for the three and six months ended June 30, 2023 and 2022 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amortization of:
In-place lease intangibles	$	1,208	$	1,350	$	2,423	$	2,700
Above market lease intangibles	$	1,957	$	2,000	$	3,913	$	4,000
Below market lease intangibles	$	1,387	$	1,668	$	2,793	$	3,336

Dispositions

The following table summarizes the disposition activity for the six months ended June 30, 2023:

Sale Date	Location	Property Type	Ownership	Square Footage	Gross Sales Proceeds		Aggregate Proceeds, Net		Gain (Loss)
3/22/23	Temecula, CA	Retail	Fee Simple	125	$	6,000	$	5,869	$	(496)
				125	$	6,000	$	5,869	$	(496)

In December 2021, a Retail Property in Queens, New York was sold for aggregate sales proceeds, net of $38,785, of which $1,326 was held in escrow after closing. In March 2023, the amounts held in escrow were released to the Trust and included in gain on sales of investment properties, net. During the six months ended June 30, 2023, net gain on sales of investment properties was $828, which includes a gain of $1,326 less $2 of selling expenses, from the release of escrow from the Retail Property in Queens, New York and a loss of $(496) from the disposition of the Retail Property in Temecula, California.

The following table summarizes the disposition activity during the six months ended June 30, 2022:

Sale Date	Location	Property Type	Ownership	Square Footage	Gross Sales Proceeds		Aggregate Proceeds, Net		Gain
1/6/22	Culver City, CA	Retail	Fee Simple	204	$	22,000	$	20,961	$	3,651
				204	$	22,000	$	20,961	$	3,651

The dispositions completed during the six months ended June 30, 2023 and 2022 did not qualify for discontinued operations treatment and are not considered individually significant.

Investment Properties Held for Sale

No Retail Properties were classified as held for sale as of June 30, 2023 or December 31, 2022.

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LEASES

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

LEASES

LEASES

Leases as Lessor

The Retail Properties are leased pursuant to a single retail master lease (as amended, modified or supplemented from time to time, the “Retail Master Lease”) and the Warehouses were leased pursuant to a single distribution center master lease (as amended, modified or supplemented from time to time, the “DC Master Lease”; together with the Retail Master Lease, the “Master Leases” and individually, each a “Master Lease”). On the Effective Date, Penney Intermediate Holdings LLC assigned all of its right, title and interest as lessor under the Master Leases to the applicable PropCo. Each of the Master Leases has an initial term of 20 years that commenced on December 7, 2020 and is classified as an operating lease. The Trust receives monthly base rent pursuant to the Master Leases, which was 50% abated through December 31, 2021 for each of the Retail Properties. At the beginning of the third lease year, base rent under the Retail Master Lease increases based on changes in the consumer price index (subject to a maximum 2% increase per year) and the increase is not included in fixed lease payments or the future undiscounted lease payments schedule. Upon the sale of the Warehouses in December 2021, the Trust assigned all of its right, title and interest as lessor in the DC Master Lease to the purchaser.

The Master Lease requires direct payment of all operating expenses, real estate taxes, ground lease payments (where applicable), capital expenditures and common area maintenance costs by Penney Intermediate Holdings LLC and allows for lessor reimbursement if amounts are not directly paid. Expenses paid directly by Penney Intermediate Holdings LLC are not included in the accompanying consolidated statement of operations, except for ground lease payments made by Penney Intermediate Holdings LLC, since recording cash payments made by Penney Intermediate Holdings LLC is necessary to relieve amounts due to the ground lessor included in the ground lease liabilities. Ground lease payments made by Penney Intermediate Holdings LLC of $2,016 and $2,007 for the six

months ended June 30, 2023 and 2022, respectively, were paid directly to the ground lessor by Penney Intermediate Holdings LLC and were included in “Lease income” in the accompanying consolidated statements of operations.

In certain municipalities, the Trust is required to remit sales and use taxes to governmental authorities based upon the rental income received from Properties. These taxes are required to be reimbursed by Penney Intermediate Holdings LLC to the Trust in accordance with the terms of the Master Lease, and are presented net of reimbursement from Penney Intermediate Holdings LLC on the consolidated statements of operations. During the six months ended June 30, 2023 and 2022, the Trust remitted sales and use taxes of $373 and $340, which were fully reimbursed by Penney Intermediate Holdings LLC as of the end of each corresponding Reporting Period.

From time to time the Trust may have leasing activity with replacement tenants other than Penney Intermediate Holdings LLC, but has had none to date.

Lease income related to the Trust’s operating leases during the three and six months ended June 30, 2023 and 2022 is comprised of the following:

Lease income related to fixed lease payments	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Contractual base rent	$	25,555	$	27,655	$	51,209	$	55,326
Straight-line rental income, net (a)	(588)		(636)		(1,179)		(1,273)
Lease income related to variable lease payments
Ground lease reimbursement income (b)	1,004		1,003		2,016		2,007
Other
Amortization of above and below market lease intangibles (c)	(569)		(332)		(1,120)		(664)
Lease income	$	25,402	$	27,690	$	50,926	$	55,396

(a)Represents the impact of straight-line rent (contractual rent exceeds straight line rent).

(b)Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases.

(c)Represents above and below market lease amortization recognized straight line over the lease term.

As of June 30, 2023, undiscounted lease payments to be received under operating leases, for the next five years and thereafter are as follows:

	Lease Payments
Period from July 1 to December 31, 2023	$	51,111
2024	102,222
2025	102,222
2026	102,222
2027	102,222
Thereafter	1,328,885
Total	$	1,788,884

The weighted average remaining lease terms range was approximately 17.5 years as of June 30, 2023.

Leases as Lessee

The Trust leases land under operating ground leases at certain of its Properties, which expire in various years from 2038 to 2096, including any available option periods that are reasonably certain to be exercised. All option terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease.

The components of ground lease rent expense, which are included within “Operating expenses” in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amortization of:
Above market ground lease intangibles	$	(160)	$	(160)	$	(320)	$	(320)
Below market ground lease intangibles	365		424		730		849
Amortization of right-of-use assets	253		257		508		514
Interest expense	1,037		1,034		2,073		2,067
Ground lease rent expense	$	1,495	$	1,555	$	2,991	$	3,110

There were no cash payments for ground lease rent expense as these payments are made by the tenant.

As of June 30, 2023, undiscounted future rental obligations to be paid under the long-term ground leases by Penney Intermediate Holdings LLC under the terms of the Master Lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows:

	Lease Obligations
Period from July 1 to December 31, 2023	$	2,046
2024	4,124
2025	4,116
2026	4,138
2027	4,197
Thereafter	220,159
Less imputed interest	(201,046)
Lease liabilities as of June 30, 2023	$	37,734

The Trust’s long-term ground leases had a weighted average remaining lease term of 43.9 years and a weighted average discount rate of 11.0% as of June 30, 2023.

LEASES

LEASES

Leases as Lessor

The Retail Properties are leased pursuant to a single retail master lease (as amended, modified or supplemented from time to time, the “Retail Master Lease”) and the Warehouses were leased pursuant to a single distribution center master lease (as amended, modified or supplemented from time to time, the “DC Master Lease”; together with the Retail Master Lease, the “Master Leases” and individually, each a “Master Lease”). On the Effective Date, Penney Intermediate Holdings LLC assigned all of its right, title and interest as lessor under the Master Leases to the applicable PropCo. Each of the Master Leases has an initial term of 20 years that commenced on December 7, 2020 and is classified as an operating lease. The Trust receives monthly base rent pursuant to the Master Leases, which was 50% abated through December 31, 2021 for each of the Retail Properties. At the beginning of the third lease year, base rent under the Retail Master Lease increases based on changes in the consumer price index (subject to a maximum 2% increase per year) and the increase is not included in fixed lease payments or the future undiscounted lease payments schedule. Upon the sale of the Warehouses in December 2021, the Trust assigned all of its right, title and interest as lessor in the DC Master Lease to the purchaser.

The Master Lease requires direct payment of all operating expenses, real estate taxes, ground lease payments (where applicable), capital expenditures and common area maintenance costs by Penney Intermediate Holdings LLC and allows for lessor reimbursement if amounts are not directly paid. Expenses paid directly by Penney Intermediate Holdings LLC are not included in the accompanying consolidated statement of operations, except for ground lease payments made by Penney Intermediate Holdings LLC, since recording cash payments made by Penney Intermediate Holdings LLC is necessary to relieve amounts due to the ground lessor included in the ground lease liabilities. Ground lease payments made by Penney Intermediate Holdings LLC of $2,016 and $2,007 for the six

months ended June 30, 2023 and 2022, respectively, were paid directly to the ground lessor by Penney Intermediate Holdings LLC and were included in “Lease income” in the accompanying consolidated statements of operations.

In certain municipalities, the Trust is required to remit sales and use taxes to governmental authorities based upon the rental income received from Properties. These taxes are required to be reimbursed by Penney Intermediate Holdings LLC to the Trust in accordance with the terms of the Master Lease, and are presented net of reimbursement from Penney Intermediate Holdings LLC on the consolidated statements of operations. During the six months ended June 30, 2023 and 2022, the Trust remitted sales and use taxes of $373 and $340, which were fully reimbursed by Penney Intermediate Holdings LLC as of the end of each corresponding Reporting Period.

From time to time the Trust may have leasing activity with replacement tenants other than Penney Intermediate Holdings LLC, but has had none to date.

Lease income related to the Trust’s operating leases during the three and six months ended June 30, 2023 and 2022 is comprised of the following:

Lease income related to fixed lease payments	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Contractual base rent	$	25,555	$	27,655	$	51,209	$	55,326
Straight-line rental income, net (a)	(588)		(636)		(1,179)		(1,273)
Lease income related to variable lease payments
Ground lease reimbursement income (b)	1,004		1,003		2,016		2,007
Other
Amortization of above and below market lease intangibles (c)	(569)		(332)		(1,120)		(664)
Lease income	$	25,402	$	27,690	$	50,926	$	55,396

(a)Represents the impact of straight-line rent (contractual rent exceeds straight line rent).

(b)Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases.

(c)Represents above and below market lease amortization recognized straight line over the lease term.

As of June 30, 2023, undiscounted lease payments to be received under operating leases, for the next five years and thereafter are as follows:

	Lease Payments
Period from July 1 to December 31, 2023	$	51,111
2024	102,222
2025	102,222
2026	102,222
2027	102,222
Thereafter	1,328,885
Total	$	1,788,884

The weighted average remaining lease terms range was approximately 17.5 years as of June 30, 2023.

Leases as Lessee

The Trust leases land under operating ground leases at certain of its Properties, which expire in various years from 2038 to 2096, including any available option periods that are reasonably certain to be exercised. All option terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease.

The components of ground lease rent expense, which are included within “Operating expenses” in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amortization of:
Above market ground lease intangibles	$	(160)	$	(160)	$	(320)	$	(320)
Below market ground lease intangibles	365		424		730		849
Amortization of right-of-use assets	253		257		508		514
Interest expense	1,037		1,034		2,073		2,067
Ground lease rent expense	$	1,495	$	1,555	$	2,991	$	3,110

There were no cash payments for ground lease rent expense as these payments are made by the tenant.

As of June 30, 2023, undiscounted future rental obligations to be paid under the long-term ground leases by Penney Intermediate Holdings LLC under the terms of the Master Lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows:

	Lease Obligations
Period from July 1 to December 31, 2023	$	2,046
2024	4,124
2025	4,116
2026	4,138
2027	4,197
Thereafter	220,159
Less imputed interest	(201,046)
Lease liabilities as of June 30, 2023	$	37,734

The Trust’s long-term ground leases had a weighted average remaining lease term of 43.9 years and a weighted average discount rate of 11.0% as of June 30, 2023.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Master Leases

Landlord Option Properties: On the Effective Date, the Retail Master Lease provides the Trust an option on 23 of the Retail Properties allowing current or future landlords to terminate the Retail Master Lease as to that property upon 24 months’ prior written notice. This option is limited (for the Trust, but not for future landlords) to eight Retail Properties in any lease year. As of December 31, 2022, the Trust had sold 16 Retail Properties with landlord termination options. During the six months ended June 30, 2023, no Retail Properties with landlord termination options were sold. As of June 30, 2023, there were seven remaining Retail Properties with landlord termination options.

Tenant Option Properties: On the Effective Date, the Retail Master Lease provided Penney Intermediate Holdings LLC an option to terminate the Retail Master Lease upon 24 months’ prior written notice as to all or a portion of any one or more of six specified properties. This option is limited to no more than five Properties in any lease year. As of December 31, 2022, the Trust had sold five Retail Properties with tenant termination options. During the six months ended June 30, 2023, no Retail Properties with tenant termination options were sold. As of June 30, 2023, there was one remaining Retail Property with a tenant termination option.

Substitution Options and Go Dark Rights: The Retail Master Lease provides Penney Intermediate Holdings LLC an option to terminate the Retail Master Lease with respect to selected sub-performing properties upon replacement of such sub-performing properties with a qualified replacement property in accordance with the terms and conditions of the Retail Master Lease. Notwithstanding the foregoing, Penney Intermediate Holdings LLC shall only be entitled to exercise a substitution option (i) between the third and 15th anniversary of the commencement date of the Retail Master Lease and (ii) if the aggregate allocated base rent amounts for all Go Dark/Substitution Properties (as defined

in the Retail Master Lease) during the applicable period (as described in the Retail Master Lease) is less than or equal to 15% of the aggregate first year’s base rent. The Retail Master Lease also provides Penney Intermediate Holdings LLC with the limited right to “go dark” (i.e., cease operations) at one or more Retail Properties in certain limited circumstances as set forth in the Retail Master Lease; provided that such right does not relieve Penney Intermediate Holdings LLC of its obligation to make any rent payments that are due and owing. Penney Intermediate Holdings LLC has not ceased operations at any of the Retail Properties as of June 30, 2023.

Tenant Purchase Rights: On the Effective Date, the Master Leases contained preferential offer rights in favor of Penney Intermediate Holdings LLC with respect to 70 of the Retail Properties and each of the Warehouses (the “Tenant Purchase Rights”), which enable Penney Intermediate Holdings LLC, in connection with a potential sale of such Properties, to acquire such Properties for a price determined in accordance with the procedures set forth in the Master Leases. These Tenant Purchase Rights require the Trust to reoffer a property to the tenant in the event it is not sold within a specified period of time at a specified minimum price related to the preferential purchase price. Eighteen of these Retail Properties, of which three were purchased by an affiliate of the tenant, and all of the Warehouses, of which none were purchased by the tenant, have been sold as of June 30, 2023.

Lockout Periods: The Trust agreed not to deliver notice to Penney Intermediate Holdings LLC formally commencing the sales process at those Properties subject to the Tenant Purchase Rights prior to the dates specified in the applicable Master Lease for such Properties. All lockout periods with respect to the Tenant Purchase Rights for the 70 Retail Properties have expired.

Environmental Matters

Federal law (and the laws of some states in which we own or may acquire properties) imposes liability on a landowner for the presence on the premises of hazardous substances or wastes (as defined by present and future federal and state laws and regulations). This liability is without regard to fault or knowledge of the presence of such substances and may be imposed jointly and severally upon all succeeding landowners. If such hazardous substance is discovered on a property owned by us, we could incur liability for the removal of the substances and the cleanup of the property.

There can be no assurance that we would have effective remedies against prior owners of the property. In addition, we may be liable to current or future tenants and may find it difficult or impossible to sell the property either prior to or following such a cleanup. There are no environmental matters that are expected to have a material effect on the Trust’s consolidated financial statements.

Risk of Uninsured Property Losses

The Trust maintains property damage, fire loss, environmental, and liability insurance in addition to the insurance required to be maintained by the Tenant pursuant to the Master Leases. However, there are certain types of losses (generally of a catastrophic nature) which may be either uninsurable or not economically insurable. Such excluded risks may include war, earthquakes, tornados, floods and certain other environmental hazards. Should such events occur, (i) we may suffer a loss of capital invested, (ii) tenant may suffer losses and may be unable to pay rent for the spaces, and (iii) we may suffer a loss of profits which might be anticipated from one or more properties.

Significant Risks and Uncertainties

Although disruptions stemming from the COVID-19 pandemic have subsided, inflation, rising interest rates, reduced consumer spending, labor shortages, supply chain disruptions and global capital markets volatility pose increasing risks to the Company and the U.S. economy. The ongoing and potential future impacts of the war between Russia and Ukraine is also contributing to economic and geopolitical uncertainty. While we did not incur any disruptions to our lease income and occupancy during the six months ended June 30, 2023 as a result of these adverse political and economic conditions, credit markets or other events, we continue to closely monitor the impact of these factors as they may have a negative impact on our or Penney Intermediate Holdings LLC’s business.

Concentration of Credit Risk

As of June 30, 2023, all of the Properties were leased to Penney Intermediate Holdings LLC, and all of the Trust’s lease income was derived from the Master Leases (see Note 4). The Properties' tenants constitute a significant asset concentration, as all tenants are subsidiaries of Penney Intermediate Holdings LLC and Penney Intermediate Holdings LLC provides financial guarantees with respect to the Master Leases. Until the Trust materially diversifies the composition of tenants for its properties, an event that has a material adverse effect on Penney Intermediate Holdings LLC’s business, financial condition or results of operations could have a material adverse effect on the Trust’s business, financial condition or results of operations.

As of June 30, 2023, the Trust's properties are located across 36 U.S. states and Puerto Rico. For the six months ended June 30, 2023, the Trust's lease income was concentrated in two states as follows: California 18.8% and Texas 13.5%. For the six months ended June 30, 2022, the Trust's lease income was concentrated in two states as follows: California 18.5% and Texas 13.6%.

Litigation

From time to time, the Trust may be subject to various legal proceedings and claims that arise in the ordinary course of business. There are no current matters that are expected to have a material effect on the Trust’s consolidated financial statements.

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SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTSSubsequent to June 30, 2023, we paid monthly distributions to Certificateholders of $7,897 or $0.11 per certificate in July 2023. On August 7, 2023, we announced a distribution of $7,779 or $0.10 per certificate to be paid on August 10, 2023 to Certificateholders.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net income	$ 16,831	$ 16,591	$ 33,987	$ 37,021

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the rules and regulations of the SEC.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates, judgments and assumptions were required in a number of areas, including, but not limited to, estimating the fair value of the investment properties as of the Effective Date, determining the useful lives of real estate properties, determination of the incremental borrowing rate in ground leases, reasonably certain lease terms for ground and master leases, and evaluating the impairment of long-lived assets.

The accompanying consolidated financial statements include the accounts of the Trust, as well as all wholly owned subsidiaries of the Trust. All intercompany balances and transactions have been eliminated in consolidation. Wholly owned subsidiaries consist of limited liability companies and limited partnerships. The Trust has evaluated the fee arrangements with the Trustee and Manager to determine if they represent a variable interest, and concluded that the fee arrangements do not create a variable interest.

The accompanying consolidated financial statements include the quarterly periods ended June 30, 2023 and 2022 and the six months ended June 30, 2023 and 2022 (the “Reporting Periods”). These consolidated financial statements should be read in conjunction with the Trust's audited Annual Report on Form 10-K, as amended, for the year ended December 31, 2022 (the“10-K”), as certain disclosures in this Quarterly Report on Form 10-Q for the

quarterly period ended June 30, 2023 that would duplicate those included in the 10-K are not included in these consolidated financial statements.

Impairment of Investment Properties and Investment Properties Held for Sale

Impairment of Investment Properties

The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At such evaluation date, the Trust separately determines whether impairment indicators exist for each property. Examples of situations considered to be impairment indicators include, but are not limited to:

•a significant change in the credit quality of tenant;

•a reduction in anticipated holding period;

•a significant decrease in market price; and

•any other quantitative or qualitative events or factors deemed significant by the Trust’s management.

If the presence of one or more impairment indicators as described above is identified on an evaluation date or at any point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered impaired when the estimated future undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes certain complex or subjective assumptions that include, but are not limited to:

•projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, competitive positioning and property location;

•estimated holding period or various potential holding periods when considering probability-weighted scenarios;

•projected capital expenditures and lease origination costs;

•estimated interest and internal costs expected to be capitalized;

•projected cash flows from the anticipated or eventual disposition of an operating property;

•comparable selling prices; and

•property-specific capitalization rates and discount rates.

To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its estimated fair value. For the six months ended June 30, 2023 and 2022, no impairment charge was recorded.

Investment Properties Held for Sale

In determining whether to classify an investment property as held for sale, the Trust considers whether (i) management has committed to a plan to sell the investment property, (ii) the investment property is available for immediate sale in its present condition, subject only to terms that are usual and customary, (iii) the Trust has a legally enforceable contract that has been executed and the buyer's due diligence period, if any, has expired, and (iv) actions required for the Trust to complete the plan indicate that it is unlikely that any significant changes will be made.

If all of the above criteria are met, the Trust classifies the investment property as held for sale. When these criteria are met, the Trust (i) suspends depreciation (including depreciation for tenant improvements and building improvements) and amortization of in-place lease intangibles and any above or below market lease intangibles and (ii) records the investment property held for sale at the lower of carrying value or estimated fair value. The assets and liabilities associated with investment properties that are classified as held for sale are presented separately on the consolidated balance sheets for the most recent reporting period.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Trust maintains its cash and cash equivalents at major financial institutions. At June 30, 2023 and December 31, 2022, cash equivalents consisted of investments in money market instruments. Cash and cash equivalents totaled $33,942 and $48,922 as of June 30, 2023 and December 31, 2022, respectively. The cash and cash equivalents balance at one or more of these financial institutions exceeds the Federal Depository Insurance Corporation (FDIC) insurance coverage. The Trust periodically assesses the credit risk associated with these financial institutions and believes that the risk of loss is remote. While the Trust did not have any accounts with any recently failed financial institution, nor has it experienced any losses to date on its cash and cash equivalents held in bank accounts, there is no assurance that financial institutions in which we hold our cash and cash equivalents will not fail, in which case we may be subject to a risk of loss or delay in accessing all or a portion of our funds exceeding the FDIC insurance coverage, which could adversely impact our short-term liquidity, ability to operate our business, and financial performance.

Lease Income and Accounts Receivable

Lease Income and Accounts Receivable

The Trust accounts for leases under the provisions of FASB ASC Topic 842. The Trust commenced recognition of lease income on its Master Leases (as discussed in Note 4) as of the Effective Date. In most cases, revenue recognition under a lease begins when the lessee takes possession or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. Lease income for leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over the term of each lease. The difference between such lease income earned and the cash rent due under the provisions of a lease is recorded as straight-line rent receivable or payable and is included as a component of “Accounts receivable” in the accompanying consolidated balance sheets.

At lease commencement, the Trust estimated that collectibility was probable for the Master Leases due to the creditworthiness analysis performed. Throughout the lease term, individual leases are assessed for collectibility and upon the determination that the collection of rents over the remaining lease life is not probable, lease income is adjusted such that it is recognized on the cash basis of accounting. The Trust will remove the cash basis designation and resume recording lease income from such tenant on an accrual basis when the Trust believes that the collection of rent over the remaining lease term is probable and, generally, based upon a demonstrated payment history. For the Reporting Periods, lease income is accounted for on the accrual basis of accounting. As of June 30, 2023, lease payments of $8,518 received in advance under the terms of the Master Leases are included in "Other liabilities" in the accompanying consolidated balance sheets and will be recognized as lease income in July 2023. As of December 31, 2022, lease payments of $8,555 received in advance under the terms of the Master Leases are included in "Other liabilities" in the accompanying consolidated balance sheets and were recognized as lease income in January 2023.

The Trust records all changes in uncollectible lease income as an adjustment to “Lease income” in the accompanying consolidated statement of operations. During the Reporting Periods, there was no uncollectible lease income.

Right-of-use Lease Assets and Lease Liabilities

Right-of-use Lease Assets and Lease Liabilities

The Trust was assigned an interest as lessee of land under 23 non-cancellable ground leases with third party landlords which were classified as operating leases on the Effective Date. As of June 30, 2023, the Trust held an interest as lessee of land under 21 non-cancellable ground leases. Rental expense associated with land that the Trust leases under non-cancellable operating leases is recorded on a straight-line basis over the term of each lease. In accordance with the Master Lease, rental expense associated with land is paid directly by Penney Intermediate Holdings LLC and is included in “Lease income” in the accompanying consolidated statements of operations (see Note 4).

On the Effective Date, the Trust recognized right-of-use ("ROU") lease assets and lease liabilities for long-term ground leases. The lease liability is calculated by discounting future lease payments by the Trust’s incremental borrowing rate, which is determined through consideration of (i) the Trust’s entity-specific risk premium, (ii)

observable market interest rates and (iii) lease term. The ROU asset is initially measured as the same amount as the lease liability and presented net of the Trust’s existing straight-line ground rent liabilities and ground lease intangible liability. The lease liability is amortized based on changes in the value of discounted future lease payments and the ROU asset is amortized by the difference in the straight-line lease expense for the period and the change in value of the lease liability.

The Trust does not include option terms in its future lease payments where they are not reasonably certain to be exercised, however all option terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease. The Trust has elected not to separate lease and non-lease components for operating leases.

Income Taxes

Income Taxes

The Trust is intended to qualify as a liquidating trust within the meaning of United States Treasury Regulation Section 301.7701-4(d) or, in the event it is not so treated, a partnership other than a partnership taxable as a corporation under Section 7704 of the Internal Revenue Code of 1986, as amended.

The Trust records a benefit, based on the GAAP measurement criteria, for uncertain income tax positions if the result of a tax position meets a “more likely than not” recognition threshold. All tax returns remain subject to examination by federal and various state tax jurisdictions.

Segment Reporting

Segment Reporting

The Trust’s chief operating decision makers, which are comprised of its Principal Executive Officer and Principal Financial Officer, assess and measure the operating results of the Trust’s portfolio of properties based on net operating income and do not differentiate properties by geography, market, size or type. Each of the Trust’s investment properties is considered a separate operating segment, as each property earns revenue and incurs expenses, operating results are individually reviewed and discrete financial information is available. However, the Trust’s properties are aggregated into one reportable segment because (i) the properties have similar economic characteristics, (ii) the Trust provides similar services to its tenants and (iii) the Trust’s chief operating decision makers evaluate the collective performance of its properties.

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INVESTMENT PROPERTIES (Tables)

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Amortization related to the acquired lease intangible assets and liabilities

The following table presents the amortization during the next five years and thereafter related to the lease intangible assets and liabilities for properties owned as of June 30, 2023:

	Period from July 1 to December 31, 2023		2024		2025		2026		2027		Thereafter		Total
Amortization of:
Above market lease intangibles (a)	$	3,913	$	7,827	$	7,827	$	7,827	$	7,827	$	101,747	$	136,968
In-place lease intangibles (a)	2,417		4,833		4,833		4,833		4,833		62,830		84,579
Lease intangible assets, net (b)	$	6,330	$	12,660	$	12,660	$	12,660	$	12,660	$	164,577	$	221,547
Below market lease intangibles (a)	$	2,774	$	5,548	$	5,548	$	5,548	$	5,548	$	72,127	$	97,093
Lease intangible liabilities, net (b)	$	2,774	$	5,548	$	5,548	$	5,548	$	5,548	$	72,127	$	97,093

(a) Represents the portion of the leases in which the Trust is the lessor. The amortization of above market lease intangibles is recorded as a reduction to lease income, and the amortization of below market lease intangibles is recorded as an increase to lease income. The amortization of in-place lease intangibles is recorded to depreciation and amortization expense.

(b) As of June 30, 2023, lease intangible assets, net and lease intangible liabilities, net are presented net of $30,595 and $13,408 of accumulated amortization, respectively. As of December 31, 2022, lease intangible assets, net and lease intangible liabilities, net are presented net of $24,334 and $10,853 of accumulated amortization, respectively.

Amortization expense

Amortization expense for the three and six months ended June 30, 2023 and 2022 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amortization of:
In-place lease intangibles	$	1,208	$	1,350	$	2,423	$	2,700
Above market lease intangibles	$	1,957	$	2,000	$	3,913	$	4,000
Below market lease intangibles	$	1,387	$	1,668	$	2,793	$	3,336

Dispositions

The following table summarizes the disposition activity for the six months ended June 30, 2023:

Sale Date	Location	Property Type	Ownership	Square Footage	Gross Sales Proceeds		Aggregate Proceeds, Net		Gain (Loss)
3/22/23	Temecula, CA	Retail	Fee Simple	125	$	6,000	$	5,869	$	(496)
				125	$	6,000	$	5,869	$	(496)

The following table summarizes the disposition activity during the six months ended June 30, 2022:

Sale Date	Location	Property Type	Ownership	Square Footage	Gross Sales Proceeds		Aggregate Proceeds, Net		Gain
1/6/22	Culver City, CA	Retail	Fee Simple	204	$	22,000	$	20,961	$	3,651
				204	$	22,000	$	20,961	$	3,651

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LEASES (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Lease income related to operating leases

Lease income related to the Trust’s operating leases during the three and six months ended June 30, 2023 and 2022 is comprised of the following:

Lease income related to fixed lease payments	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Contractual base rent	$	25,555	$	27,655	$	51,209	$	55,326
Straight-line rental income, net (a)	(588)		(636)		(1,179)		(1,273)
Lease income related to variable lease payments
Ground lease reimbursement income (b)	1,004		1,003		2,016		2,007
Other
Amortization of above and below market lease intangibles (c)	(569)		(332)		(1,120)		(664)
Lease income	$	25,402	$	27,690	$	50,926	$	55,396

(a)Represents the impact of straight-line rent (contractual rent exceeds straight line rent).

(b)Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases.

(c)Represents above and below market lease amortization recognized straight line over the lease term.

Undiscounted lease payments to be received under operating leases

As of June 30, 2023, undiscounted lease payments to be received under operating leases, for the next five years and thereafter are as follows:

	Lease Payments
Period from July 1 to December 31, 2023	$	51,111
2024	102,222
2025	102,222
2026	102,222
2027	102,222
Thereafter	1,328,885
Total	$	1,788,884

Components of ground lease rent expense

The components of ground lease rent expense, which are included within “Operating expenses” in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amortization of:
Above market ground lease intangibles	$	(160)	$	(160)	$	(320)	$	(320)
Below market ground lease intangibles	365		424		730		849
Amortization of right-of-use assets	253		257		508		514
Interest expense	1,037		1,034		2,073		2,067
Ground lease rent expense	$	1,495	$	1,555	$	2,991	$	3,110

Undiscounted future rental obligations to be paid under long-term ground and office leases

As of June 30, 2023, undiscounted future rental obligations to be paid under the long-term ground leases by Penney Intermediate Holdings LLC under the terms of the Master Lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows:

	Lease Obligations
Period from July 1 to December 31, 2023	$	2,046
2024	4,124
2025	4,116
2026	4,138
2027	4,197
Thereafter	220,159
Less imputed interest	(201,046)
Lease liabilities as of June 30, 2023	$	37,734

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ORGANIZATION (Details) ft² in Millions		3 Months Ended		6 Months Ended
	Jan. 30, 2021 USD ($) shares	Jun. 30, 2023 USD ($) ft² property state	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) ft² property state	Jun. 30, 2022 USD ($)	Dec. 31, 2021 property	Jan. 30, 2021 property	Jan. 30, 2021	Jan. 30, 2021 lease	Oct. 28, 2020
Real Estate [Line Items]
Number of master leases							2		2
Number of real estate properties encumbered | property		21		21
Number of states operated in | state		36		36
Square feet of leasable space | ft²		17.5		17.5
Asset purchase agreement, consideration	$ 1,000,000,000
Trust certificates issued (in shares) | shares	75,000,000
Related party, annual service fee				$ 100
General and administrative expenses		$ 753,000	$ 2,068,000	$ 2,592,000	$ 4,626,000
Management agreement term				24 months
Management agreement automatic renewal term				6 months
Base management fee percentage				5.75%
Base management fee, monthly amount				$ 333,000
Closing fee per DC property sold				50,000
Base management fees		1,469,000	1,590,000	2,945,000	3,181,000
Base management fees payable		490,000	530,000	490,000	530,000
Asset management fees		0	0	15,000	143,000
Related Party
Real Estate [Line Items]
General and administrative expenses		$ 25,000	$ 25,000	$ 50,000	$ 50,000
PropCos
Real Estate [Line Items]
Ownership percentage by parent								100.00%
Senior Notes | First Lien Notes | Old Copper
Real Estate [Line Items]
Interest rate										5.875%
Credit Facility | First Lien Notes
Real Estate [Line Items]
Asset purchase agreement, debt assumed	$ 100,000,000
Credit Facility | DIP Facility
Real Estate [Line Items]
Asset purchase agreement, debt assumed	$ 900,000,000
Retail
Real Estate [Line Items]
Number of real estate properties | property		132		132			160
Warehouse
Real Estate [Line Items]
Number of real estate properties | property							6
Number of real estate properties sold, cumulative | property						6

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) property segment lease	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) property	Jan. 30, 2021 lease
Accounting Policies [Abstract]
Provision for impairment of investment properties	$ 0	$ 0
Number of properties held for sale | property	0		0
Cash and cash equivalents	$ 33,942		$ 48,922
Lease payments received in advance	$ 8,518		8,555
Number of lease contracts | lease	21			23
Unrecognized tax benefits	$ 0		$ 0
Number of reportable segments | segment	1

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INVESTMENT PROPERTIES - Additional Information (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2021 USD ($)	Jun. 30, 2023 USD ($) state property	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) state property	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) property	Jan. 30, 2021 property
Real Estate Properties [Line Items]
Number of states operated in | state		36		36
Acquired lease intangible assets, net, accumulated amortization		$ 30,595		$ 30,595		$ 24,334
Acquired lease intangible liabilities, accumulated amortization		13,408		$ 13,408		$ 10,853
Weighted average amortization period for acquired lease intangible assets and liabilities				17 years 6 months		18 years
Aggregate Proceeds, Net				$ 7,196	$ 20,961
Gain on sales of investment properties, net		$ 0	$ 0	828	$ 3,651
Selling expenses				2
Queens, NY
Real Estate Properties [Line Items]
Aggregate Proceeds, Net	$ 38,785
Escrow amount	$ 1,326			1,326
Gain on sales of investment properties, net				$ 828
Retail
Real Estate Properties [Line Items]
Number of real estate properties | property		132		132			160
Retail | Discontinued Operations, Held-for-Sale or Disposed of by Sale
Real Estate Properties [Line Items]
Number of real estate properties | property		0		0		0

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INVESTMENT PROPERTIES - Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Acquired lease intangible assets, net
Period from July 1 to December 31, 2023	$ 6,330		$ 6,330
2024	12,660		12,660
2025	12,660		12,660
2026	12,660		12,660
2027	12,660		12,660
Thereafter	164,577		164,577
Total	221,547		221,547		$ 228,529
Acquired below market lease intangibles
Period from July 1 to December 31, 2023	2,774		2,774
2024	5,548		5,548
2025	5,548		5,548
2026	5,548		5,548
2027	5,548		5,548
Thereafter	72,127		72,127
Total	97,093		97,093		$ 101,920
Amortization of below market lease intangibles	1,387	$ 1,668	2,793	$ 3,336
Above market lease intangibles
Acquired lease intangible assets, net
Period from July 1 to December 31, 2023	3,913		3,913
2024	7,827		7,827
2025	7,827		7,827
2026	7,827		7,827
2027	7,827		7,827
Thereafter	101,747		101,747
Total	136,968		136,968
Acquired below market lease intangibles
Amortization of lease intangible assets	1,957	2,000	3,913	4,000
In-place lease value intangibles
Acquired lease intangible assets, net
Period from July 1 to December 31, 2023	2,417		2,417
2024	4,833		4,833
2025	4,833		4,833
2026	4,833		4,833
2027	4,833		4,833
Thereafter	62,830		62,830
Total	84,579		84,579
Acquired below market lease intangibles
Amortization of lease intangible assets	$ 1,208	$ 1,350	$ 2,423	$ 2,700

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INVESTMENT PROPERTIES - Dispositions (Details) ft² in Thousands, $ in Thousands			3 Months Ended		6 Months Ended
	Mar. 22, 2023 USD ($) ft²	Jan. 06, 2022 USD ($) ft²	Jun. 30, 2023 USD ($) ft²	Jun. 30, 2022 USD ($) ft²	Jun. 30, 2023 USD ($) ft²	Jun. 30, 2022 USD ($) ft²
Real Estate Properties [Line Items]
Aggregate Proceeds, Net					$ 7,196	$ 20,961
Gain (Loss)			$ 0	$ 0	$ 828	$ 3,651
Temecula, CA
Real Estate Properties [Line Items]
Square Footage | ft²	125		125		125
Gross Sales Proceeds	$ 6,000		$ 6,000		$ 6,000
Aggregate Proceeds, Net	5,869				5,869
Gain (Loss)	$ (496)				$ (496)
Culver City, CA
Real Estate Properties [Line Items]
Square Footage | ft²		204		204		204
Gross Sales Proceeds		$ 22,000		$ 22,000		$ 22,000
Aggregate Proceeds, Net		20,961				20,961
Gain (Loss)		$ 3,651				$ 3,651

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LEASES - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Real Estate [Line Items]
Master lease, term	20 years		20 years
Master lease, percent rent abatement in first year			50.00%
Annual increase in base rent at the beginning of the third lease year			2.00%
Ground lease reimbursement income	$ 1,004	$ 1,003	$ 2,016	$ 2,007
Sales and use taxes			$ 373	340
Lessor, weighted average remaining lease terms			17 years 6 months
Amortization of below market lease intangibles	$ 1,387	1,668	$ 2,793	3,336
Weighted average remaining lease terms	43 years 10 months 24 days		43 years 10 months 24 days
Weighted average incremental borrowing rate, lessee	11.00%		11.00%
Ground lease
Real Estate [Line Items]
Interest expense	$ 1,037	1,034	$ 2,073	2,067
Amortization of right-of-use assets	253	257	508	514
Amortization of below market lease intangibles	365	424	730	849
Above market lease intangibles
Real Estate [Line Items]
Amortization of lease intangible assets	1,957	2,000	3,913	4,000
Above market lease intangibles | Ground lease
Real Estate [Line Items]
Amortization of lease intangible assets	$ 160	$ 160	$ 320	$ 320

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LEASES - Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Lease income related to fixed lease payments
Contractual base rent	$ 25,555	$ 27,655	$ 51,209	$ 55,326
Straight-line rental income, net	(588)	(636)	(1,179)	(1,273)
Lease income related to variable lease payments
Ground lease reimbursement income	1,004	1,003	2,016	2,007
Other
Amortization of above and below market leases	(569)	(332)	(1,120)	(664)
Lease income	$ 25,402	$ 27,690	$ 50,926	$ 55,396

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LEASES - Undiscounted Lease Payments to be Received (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Leases [Abstract]
Period from July 1 to December 31, 2023	$ 51,111
2024	102,222
2025	102,222
2026	102,222
2027	102,222
Thereafter	1,328,885
Total	$ 1,788,884

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LEASES - Components of ground lease rent expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Real Estate [Line Items]
Amortization of below market lease intangibles	$ 1,387	$ 1,668	$ 2,793	$ 3,336
Ground lease rent expense	1,495	1,555	2,991	3,110
Ground lease
Real Estate [Line Items]
Amortization of below market lease intangibles	365	424	730	849
Amortization of right-of-use assets	253	257	508	514
Interest expense	1,037	1,034	2,073	2,067
Above market lease intangibles
Real Estate [Line Items]
Amortization of above market ground lease intangibles	(1,957)	(2,000)	(3,913)	(4,000)
Above market lease intangibles | Ground lease
Real Estate [Line Items]
Amortization of above market ground lease intangibles	$ (160)	$ (160)	$ (320)	$ (320)

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LEASES - Undiscounted Future Rental Obligations (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Period from July 1 to December 31, 2023	$ 2,046
2024	4,124
2025	4,116
2026	4,138
2027	4,197
Thereafter	220,159
Less imputed interest	(201,046)
Lease liabilities	$ 37,734	$ 37,676

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COMMITMENTS AND CONTINGENCIES (Details)		6 Months Ended		12 Months Ended
	Jan. 30, 2021 property	Jun. 30, 2023 state property	Jun. 30, 2022 property	Dec. 31, 2022 property
Real Estate [Line Items]
Go dark/substitution properties allocated base rent as a percentage of total base rent		15.00%
Number of states operated in | state		36
Concentration risk, number of states		2	2
Geographic Concentration Risk | Lease Income | California
Real Estate [Line Items]
Concentration risk, percentage		18.80%	18.50%
Geographic Concentration Risk | Lease Income | Texas
Real Estate [Line Items]
Concentration risk, percentage		13.50%	13.60%
Retail
Real Estate [Line Items]
Number of properties subject to termination rights by lessor	23	7
Termination rights by lessor, written notice period	24 months
Number of properties subject to termination rights by lessor, in any lease year	8
Number of properties sold				16
Number of properties subject to termination rights by lessee, sold		0		5
Number of properties subject to termination rights by lessee	6	1
Number of properties subject to termination rights by lessee, in any lease year	5
Number of properties subject to lockout period		70
Properties with tenant purchase rights, sold, cumulative		18
Properties with tenant purchase rights, purchased by tenant, cumulative		3

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SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended
	Aug. 07, 2023	Jul. 31, 2023
Subsequent Event [Line Items]
Distribution	$ 7,779	$ 7,897
Distribution (usd per share)	$ 0.10	$ 0.11