US mall owners CBL, Pennsylvania REIT, file for bankruptcy

CoolSprings Galleria Mall, Franklin, TN

Source: CBL Properties

Mall owner CBL & Associates filed for Chapter 11 bankruptcy protection late Sunday, after its business was pressured by the coronavirus pandemic, highlighting the stresses the retail real estate industry is facing.

CBL’s filing came shortly after Pennsylvania Real Estate Investment Trust, the largest mall owner in Philadelphia, filed a Chapter 11 petition earlier Sunday, to execute a prepackaged financial restructuring plan. It said it plans to unlock $150 million in new borrowing, aiming to recapitalize the business and extend its debt maturities.

CBL had previously said in August that it had entered into a restructuring support agreement with a group of its bondholders, in an attempt to try to strengthen its balance sheet.

The Tennessee-based mall owner has struggled during the pandemic with its tenants not paying rent or pushing payments back. Some of those, like the department store chain J.C. Penney, have also filed for bankruptcy protection this year.

CBL operates 107 properties, totaling 66.7 million square feet across 26 states, including a handful of outlet centers.

In its bankruptcy filing, CBL listed its estimated assets and liabilities both in the range of $1 billion to $10 billion.

“After months of discussions and consideration of a number of alternatives, CBL’s management and the Board of Directors firmly believe that implementing the comprehensive restructuring … will provide CBL with the best plan to emerge as a stronger and more stable company,” CBL CEO Stephen Lebovitz said in a statement.

CBL runs a number of lower-tier, so-called B- and C-rated malls, compared with the biggest U.S. mall operator, Simon Property Group, which is the owner of many A-rated properties, which bring in more sales per square foot.

Simon’s strategy during the pandemic has pivoted to buying retailers out of bankruptcy, in part to keep those retailers’ stores in Simon malls open. It acquired the denim maker Lucky Brand and the men’s suit maker Brooks Brothers out of bankruptcy, with the help of apparel-licensing firm Authentic Brands Group. And late late month, it finalized the terms of its acquisition of Penney, with the help of mall owner Brookfield.

This story is developing. Please check back for updates.

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