Mall owner CBL & Associates is prepping a Chapter 11 bankruptcy filing, Bloomberg reports, citing people familiar with the matter. A CBL spokesperson declined to comment to Retail Dive on the report.
On July 15, the company and certain lenders entered into a forbearance agreement, rescuing it from the consequences of a missed $18.6 million interest payment due June 15, according to a filing with the Securities and Exchange Commission. Another forbearance agreement, formed after CBL skipped an $11.8 million payment due June 1, was extended. Both periods end Wednesday.
A bankruptcy filing would make CBL the first major mall owner to succumb to the woes besetting shopping centers, which have intensified during the pandemic.
Malls have watched footfall decline for years as shoppers gravitate to the internet, especially for undifferentiated products, and to retailers like off-price stores found in off-mall locations. All that has been exacerbated by the pandemic, first because stores and malls were locked down, and now because most shoppers remain wary of them.
"The convenience of online shopping has made it ubiquitous that has led to structural foot traffic declines over the past decade in U.S. malls," Retail Metrics President Ken Perkins said in emailed comments regarding the most recent monthly retail sales report. "The health [threats] posed by shopping [indoors] has only accelerated consumer spending patterns toward this channel."
The situation has been most stark at centers like those run by CBL, which feature the kind of mid-priced goods increasingly out of reach of their middle class consumer target. Stores run by apparel conglomerate Ascena, itself reportedly on the brink of bankruptcy, are among CBL's top tenants, Bloomberg noted.
It doesn't help that many retailers have withheld at least portions of their rent. Simon Property Group and Brookfield have taken the likes of Gap to court over unpaid rent. Nordstrom has warned its landlords not to expect full rent payments for the rest of the year.
In May, CBL said it had collected about 27% of April rents and that it expected May rent collections would be in the range of 25% to 30%. "While, in general, under the leases, CBL believes that the tenants have a clear contractual obligation to pay rent, CBL is working with tenants that may require rent deferral or relief," the company said at the time. "These tenant discussions are ongoing and at this time, CBL is unable to estimate the outcome of these discussions, the impact of these relief packages or the ultimate recoverability of any amounts deferred."
That has taken its toll. In May, CBL said its first quarter net loss more than doubled year over year to $133.9 million, from $50.2 million in the year-ago period. The company, based in Chattanooga, Tennessee, owns and manages 108 properties totaling 68.2 million square feet across 26 states.