Suffocating under retailers’ inability to pay rent and more than $3 billion in debt, CBL Properties is on its way toward declaring bankruptcy.
The company announced that it reached an agreement with some of its creditors to hand control to holders of its unsecured notes and that it is negotiating with senior lenders and others who haven’t yet signed onto the deal. The process will attempt to eliminate roughly $900 million of debt, according to Bloomberg.
“They never got their debt to a place where they could get through the next downturn like we’re seeing now,” Vince Tibone, a senior analyst at Green Street Advisors, told Bloomberg.
Like many mall owners, CBL Properties has been struggling as anchor stores, like Sears and J.C. Penney, and mainstays, such as Forever 21, have gone bankrupt. To fill space, CBL has turned to non-traditional tenants, such as fitness centers and medical offices.
However, amid the coronavirus pandemic, CBL collected only 27 percent of billed cash rents in April and likely will get 25 to 30 percent of May rents, according to the company.
The company owns 91 malls across the country, most of which are in the south and midwest.
Issues collecting rent have been the norm for many commercial property owners. Simon Property Group, the largest U.S. mall operator, saw net income fall by nearly half, to $254.2 million, this quarter, although the company was able to collect 73 percent of July rent.
[Bloomberg] — Sasha Jones