Why Mall Owner CBL Properties May File for Bankruptcy

in October 2019.

Other retailers on its top 25 list that have filed for bankruptcy in recent years include Charlotte Russe (No. 16) and Claire’s (No. 23).

Major tenants are downsizing their physical presence.

While not all of CBL’s major tenants are filing for bankruptcy protection, many are struggling amid COVID-19 while others are rethinking their physical footprint as online sales grow.

A look at who is else on its top 25 tenants list in terms of revenue may give a clearer picture of its situation.

L Brands, the parent company of Bath & Body Works, Pink, Victoria’s Secret and White Barn Candle, is CBL’s top tenant in terms of revenue, renting 137 stores and accounting for 4 percent of total revenue.

L Brands said it could close 250 Victoria’s Secret and Pink stores and 50 Bath & Body Works locations.

No.2 on the list is Signet Jewelers Ltd., which rents 172 stores and accounts for nearly 3 percent of CBL’s total revenue.

Signet closed 13 percent of its stores last year, exiting Class B malls and shuttering its regional banners.

This year, the speciality jeweler said at least 150 stores in North America and 80 in Europe will not reopen following their pandemic-related shutdowns, and it will close an additional 150 stores.

Children’s Place (No. 22) announced plans in June to close 300 stores while H&M (No. 9) has plans to close 170 stores.

CBL’s restructuring plans may include a bankruptcy filing.

In a statement last week, the real estate investment trust said it reached a restructuring agreement with some of its debt holders.

The restructuring will happen via an “in-court process” expected to begin by Oct. 1.

The agreement would eliminate about $900 million of debt and $600 million of other obligations, CBL Properties said.

The plan is expected to bolster its balance sheet and increase its liquidity without disrupting operations at its malls.

Its portfolio includes more than 100 properties across 26 states.

“Reaching this agreement with our noteholders is a major milestone for CBL,” CEO Stephen D. Lebovitz said in a press release.

“The agreement will significantly improve our balance sheet by reducing leverage and increasing net cash flow and will simplify our capital structure, providing enhanced financial flexibility going forward.

The mall owner entered into a forbearance agreement— a deal between the lender and borrower to reduce or suspend payments for a certain amount of time—in July after being unable to pay millions of dollars in interest payments.

However, by August, CBL had made $30.4 million in interest payments to stay current on its unsecured debt.

CBL can’t predict its future in light of the current situation.

CBL said it will be difficult to accurately predict future quarters and will therefore not be providing full-year guidance.

However, it does expect to see additional store closures and rent loss through the end of the year.

“Operators of such malls, facing declining operating performance and weak liquidity positions, are having difficulty navigating the additional stresses brought on by the pandemic,” said Fitch Ratings in a press release about CBL’s potential bankruptcy.

The analyst expects to see “even greater occupancy issues and will see lower property cash flows due to reduced rent collections and requests for rent deferrals.”

The company said it has about $220 million in cash on hand, which is expected to be enough to cover its operations and restructuring.