The Fall of the Mall

Issue 43

11.02.20 - Two owners of a combined 130 or so malls across the US have filed for bankruptcy, further demonstrating that the pandemic and changing consumer shopping habits continue to pose a challenge for the retail industry.

CBL Properties and PREIT filed for Chapter 11 this past weekend and both will continue operating while they navigate the restructuring process. Many mall owners across the country have been warning that they were in bad position due to the fact that some of their largest tenants, including JC Penney, Tailored Brands and Ascena Retail Group, have filed for bankruptcy earlier this year.

CBL said in its bankruptcy filing that it has assets and estimated liabilities between $1 billion to $10 billion. The Tennessee-based company, which is the larger of the two, said in August that uncollected rents from retailers, declining customer traffic and mounting debt of about $1 billion were the factors in its decision to file for bankruptcy. The company owns around 100 malls, mostly in the Southeastern United States and the Midwest.

For PREIT, the Pennsylvania-based company voluntarily filed for Chapter 11. The prepackaged financial plan ensures $150 million in funding to "recapitalize the business and extend the company's debt maturity schedule," it said in a statement they released recently. The plan reportedly has "overwhelming support" from its lenders and the company is looking to quickly emerge from the process of bankruptcy.

This year has been tough to say the least for both retailers and mall owners everywhere. A months-long lockdown of non-essential businesses, including malls, prevented people from shopping in traditional modes and accelerated the shift to online shopping and e-commerce. Many major retailers have also filed for bankruptcy during the pandemic, with the number reaching its peak this past summer.

Source: CNBC