CBL comes out of bankruptcy and gives up $ 1.7 billion in debt

Dive brief:

  • CBL Properties exited Chapter 11 after filing for bankruptcy a year ago.
  • As part of its reorganization, the mall operator reduced its debt by some $ 1.7 billion. Following a planned note buyback, the company will carry more than $ 1.4 billion on its post-bankruptcy balance sheet, including a term loan and new notes.
  • In a statement, CEO Stephen Lebovitz called the completed restructuring “a huge day for CBL” and said the company would use its new financial flexibility to seize market opportunities.

Dive overview:

Financial pain from the first few months of the pandemic spread from retailers to mall owners last year, with rents unpaid and stores closed amid a huge wave of bankruptcies and consolidation of the imprint.

CBL went bankrupt last fall, a day after its counterpart PREIT filed its file. A CBL advisor at the time noted in court documents that more than 30 of its tenants had filed for bankruptcy, with many stores closing. Still others have negotiated rent deferrals and other concessions from CBL.

All of this strained the REIT’s ability to pay its own debt obligations. JC Penney and Ascena, who both filed in 2020, alone accounted for $ 18.5 million in CBL’s annual revenue and 6.1 million square feet of store space. Ten other bankrupt tenants represent another turnover of 22.3 million dollars for CBL.

The situation has improved considerably in 2021. Stimulation, vaccines and bullish financial markets have led to an increase in demand and retail sales this year. Bankruptcies have slowed down considerably from the highs of 2020 and even the past years of the colloquially named retail apocalypse.

A September Placer.ai analysis of 200 malls (half indoor, half outdoor) found that foot traffic rebounded over the summer, with a 1% increase from 2019 levels in indoor malls. and 2% in outdoor malls, before dropping again, in part due to an increase in COVID-19 driven by the delta variant. Retail rents rose across the country, most strongly in the Sun Belt, according to an October Jefferies analysis.

Lebovitz said traffic to CBL malls has rebounded along with the rest of the mall industry, as has tenant demand. “As a result, we see unique opportunities for CBL using our operational expertise coupled with our improved cash flow and improved capital structure, ”he added.

As much as the restructuring and rebound in retail is benefiting CBL, so too were the company’s troubles leading up to the pandemic. Concentrated in midsize markets and midsize malls that have suffered recess over the years, CBL was in slow decline in the run-up to its Chapter 11, as do most of the retailers in its malls. The post-pandemic consumer and the individual and collective fates of its tenants will determine whether CBL’s financial restructuring was enough to change its long-term trajectory.

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