Majors

Why Mall Owner CBL Properties May File for Bankruptcy

MajorsAug 24, 2020

Why Mall Owner CBL Properties May File for Bankruptcy

As the company nears a bankruptcy filing, here’s how it got there and how it may get out.

20200818_Shopping_bags.jpg
Mall owner CBL Properties is nearing a bankruptcy filing as retailers struggle to stay afloat and pay rent.

Chattanooga, Tenn.—Mall owner CBL Properties may soon file for bankruptcy as rent payments stall and debt piles higher.

As the company enters a restructuring process, here’s a look at how it reached the brink of bankruptcy and how it will try to recover.

COVID-19 halted the retail world and rent payments.

The company posted rough second-quarter results recently, noting the temporary closure of many of its properties and its tenants’ inability to pay rent.

While some tenants filed for bankruptcy, others were struggling financially or had negotiated abatements, CBL said.

“Leasing activity for the quarter was muted as we shifted our focus to negotiating with existing tenants,” it said.

“Most traditional retailers have paused on new store plans until they can stabilize their existing store base and have better clarity on the outlook,” the company said, but added some have seen an opportunity for growth.

The company has worked out deals with some retailers, providing flexible terms on rent and other assistance, like rent deferrals.

CBL said rent collection improved as a result, allowing more retailers to pay all or some of past-due and current rents.

The company made moves to offset the rent loss from company-wide salary reductions to furloughs, but it may prove not to be enough.

A dozen of its tenants filed for bankruptcy.

Twelve of CBL’s tenants declared bankruptcy, including JC Penney, Ascena Retail Group, Stage Stores, and GNC.

JC Penney, which placed 15th in its top 25 retailers in terms of revenue, rents 49 stores, or 5.88 million square feet of retail space, according to an SEC filing.

It accounts for 1 percent of total revenue.

Faced with a mountain of debt and struggling sales, the anchor store filed for Chapter 11 bankruptcy protection in May with plans to close 200 stores.

Ascena, which owns Ann Taylor and Lane Bryant, is No. 4 on the list, and rents 164 stores and 840,000 square feet of retail space, accounting for 4 percent of total revenue.

The company submitted a Chapter 11 filing in July with plans to close 1,600 of its stores.

GNC is No. 25, renting 65 stores. Its Chapter 11 filing in June included plans to close 1,200 locations.

Stage Stores, which owns brands like Goody’s and Bealls, didn’t make the list, so CBL didn’t disclose its store count, but the retailer planned to close more than 200 stores overall.

Forever 21, No. 13 on its top 25 list, planned to close 350 stores as part of its bankruptcy filing

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.
Lenore Fedowis the senior editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

The Latest

Bergman Jewelers family
IndependentsApr 01, 2025
Bergman Jewelers in Omaha Closing After 137 Years

The independent jeweler first opened its doors in 1888.

Coconut Grove Jewelry & Watch Show
Events & AwardsApr 01, 2025
U.S. Antique Shows Adds Fall Show in Florida

The debut event will take place in Miami’s Coconut Grove neighborhood this fall.

The Jewelry Symposium (TJS)
Events & AwardsApr 01, 2025
TJS to Host Discussion on Jewelry Industry’s Labor Shortage

The roundtable will take place May 17 ahead of the trade show’s welcome dinner.

bench jeweler 1872x1052.png
Brought to you by
The Heart of the Industry: Giving Bench Jewelers the Recognition They Deserve

Bench jewelers spend years honing their skills, Jewelers of America’s Certification validates their talents.

Peanuts x Monica Rich Kosann Collection Bracelets
CollectionsApr 01, 2025
Monica Rich Kosann Says ‘Good Grief’ in Peanuts Jewelry Collection

The “Peanuts x Monica Rich Kosann” collection features the comic strip’s classic vocabulary across 10 bracelet designs.

Weekly QuizMar 27, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Graphic for What Do We Mean When We Say “Recycled” Gold webinar
Recorded WebinarsMar 31, 2025
Watch: What Do We Mean When We Say ‘Recycled’ Gold?

Three industry experts dive into the complexities of the material often marketed as an “ethical” alternative for metal in jewelry.

Mindi Mond Clarity Earrings
TrendsMar 31, 2025
Amanda’s Style File: Dripping in Diamonds

Diamonds are not only one of the most prominent gemstones, but the birthstone for those born in April.

Facets-of-Fire-Difference-You-Can-See.jpg
Brought to you by
Natural Diamonds Should Mean More

Natural diamonds mean more than lab-grown, but when every cut is ideal, they all look the same. Customers want more—Facets of Fire delivers.

Bulgari and LVMH Watches CEO Jean-Christophe Babin
WatchesMar 31, 2025
Bulgari CEO Jean-Christophe Babin Will Also Head LVMH Watches

The longtime luxury executive led one of LVMH’s watch brands, TAG Heuer, for 12 years before taking over Bulgari in 2013.

Surveillance footage of robbery
CrimeMar 28, 2025
2 Suspects Arrested in $1.7M Smash-and-Grab Robbery of NY Jewelry Store

Authorities said the robbers fled with jewelry and 70 Rolex watches, later taking pictures of themselves posing with big stacks of cash.

Nephrite and Jadeite by Heinrich Fischer, Richard W. Hughes
SourcingMar 28, 2025
19th-Century Jade Book Now Available in English

Lotus Gemology founder Richard W. Hughes has translated Heinrich Fischer’s 1880 book “Nephrit und Jadeit” from its original German.

LÖF The Valentine Ring
CollectionsMar 28, 2025
Piece of the Week: Löf’s ‘The Valentine’ Ring

The ring's design features contrasting lines influenced by work from architecture-inspired photographer Nikola Olic.

Eggs on a shelf
SurveysMar 27, 2025
Consumer Confidence Falls in March Amid ‘Gloomy’ Outlook

The Conference Board’s index fell as consumers continued to worry about the impact of tariffs, the labor market, and the price of eggs.

Richard Rainsford memorial ring
AuctionsMar 27, 2025
300-Year-Old Ring Linked to Witch Trial Judge Goes Unsold at Auction

However, two medieval jewels surpassed estimates at Noonans Mayfair’s recent jewelry auction in London.

Austin Butler
WatchesMar 27, 2025
Austin Butler Joins Breitling as Brand Ambassador

The Oscar-nominated actor debuted in the campaign for the new “Top Time B31” collection, which introduced Breitling’s Caliber B31.

ICA Congress Brazil 2025
SourcingMar 27, 2025
Susan Jacques, Gaetano Cavalieri to Headline 2025 ICA Congress

The Congress is scheduled to take place May 19-22 in Brasilia, Brazil.

Bailey’s Fine Jewelry storefront
IndependentsMar 26, 2025
Bailey’s Fine Jewelry Acquires Fellow NC Independent Jeweler

The family-owned retailer is the new owner of Morrison Smith Jewelers in Charlotte, North Carolina.

Bulova 150 Art Deco Miss America Watch, 150 Art Deco Pocket Watch
WatchesMar 26, 2025
Bulova Celebrates 150th Anniversary With Art Deco Watches

The “150 Art Deco” collection features a Miss America timepiece and a pocket watch from the brand’s Archive Series.

Alex Wellen
MajorsMar 26, 2025
QVC Group Appoints New President

Alex Wellen, formerly CEO and president of MotorTrend Group, has taken on the role.

Jewelers of America’s new logo
Events & AwardsMar 26, 2025
Jewelers of America Announces New Funding Initiative

The Impact Initiative is part of the nonprofit association’s new three-year strategic plan.

Christies regent kashmir sapphire and regal Burmese ruby
AuctionsMar 25, 2025
Christie’s To Auction 35-Carat Sapphire, 13-Carat Ruby

The ruby and the sapphire, which Christie’s calls a “once-in-a-generation masterpiece,” are part of the upcoming Hong Kong jewelry auction.

Diamond earrings held in gloved hand
CrimeMar 25, 2025
Tiffany & Co. Earrings Swallowed Following Grab-and-Run Theft Recovered

The two pairs of earrings, snatched from a Tiffany & Co. store in Orlando, Florida, are valued at a combined $769,500.

Emmanuel Raheb CEO of Smart Age Solutions
ColumnistsMar 25, 2025
The Smart Lab: Using Short-Form Videos to Sell More Jewelry

The time to start experimenting with video content is now, writes columnist Emmanuel Raheb.

Pomellato Nudo High Jewelry Campaign
CollectionsMar 24, 2025
Pomellato’s Latest ‘Nudo’ Collections Revamp its Classic Design

From striking high jewelry to miniature fine jewelry, the new chapter continues to highlight gemstones featuring its signature 57-facet cut.

Jamie Singleton, Bill Brace, Rebecca Wooters, Bill Luth
MajorsMar 24, 2025
4 Top Executives to Depart Signet Jewelers Amid Turnaround

The jewelry giant is reducing its senior leadership by 30 percent as part of its new turnaround strategy.

Sothebys Watchcheck
WatchesMar 24, 2025
Sotheby's Now Offers Watch Repair Services

The auction house's partnership with online watch servicing platform WatchCheck makes repairs convenient and accessible, it said.

Swarovski lab-grown diamond Galaxy earrings
FinancialsMar 21, 2025
Swarovski Says Its Lab-Grown Diamond Sales Doubled in 2024

The company also noted record sales in the United States and a strong performance in its jewelry category.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy