The pain that flowed from consumers to retailers with the coronavirus is now bearing down all the more on landlords, with two mall operators turning to the Chapter 11 bankruptcy process for a financial reworking.
Both Chattanooga, Tenn.-based CBL Properties and Philadelphia-based PREIT are starting out the week in bankruptcy court. Both mall operators maintained their doors will remain open as usual as they push restructuring plans with lenders through court.
CBL — which oversees 66.7 million square feet across 26 states, including 65 enclosed, outlet and open-air retail centers — hammered out a restructuring support agreement with lenders in August that envisions taking $1.5 billion off its balance sheet.
Stephen Lebovitz, chief executive officer of CBL, said, “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 as outlined in the RSA through a Chapter 11 voluntary bankruptcy filing will provide CBL with the best plan to emerge as a stronger and more stable company.”
The company said it had $258.3 million in unrestricted cash on hand and available-for-sale securities as of the end of September and expects that, along with its continuing cash flow, will be enough to see it through restructuring.
CBL’s ventures and most of its entities holding properties that secure mortgage loans were not included in the bankruptcy filings.
The company expects to continue meeting all debt service and other obligations under its property-level secured loans and joint venture partnerships.
Similarly, PREIT, a key retail player in Philadelphia that operates the Cherry Hill Mall, put together a deal with its lenders prior to its filing. Banks have committed to provide it with $150 million to recapitalize.
Joseph Coradino, ceo, said: “We are pleased to be moving forward with strengthening the company’s balance sheet and positioning it for long-term success through our prepackaged plan.…Today’s announcement has no impact on our operations — our employees, tenants, vendors and the communities we serve — and we remain committed to continuing to deliver top-tier experiences and improving our portfolio. With the overwhelming support of our lenders, we look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multiuse ecosystems throughout our portfolio.”
Many retailers — from Neiman Marcus Group to J. Crew to Tailored Brands Inc. — also filed for bankruptcy protection having not been prepared to weather the shutdown that came with the coronavirus.
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