Mall Landlords PREIT, CBL File For Bankruptcy Protection Against A Combined $2.3B
CBL & Associates Properties and PREIT each filed for Chapter 11 bankruptcy protection in the last two days.
CBL, a privately owned company, agreed in its filing to convert about $1.4B in debt to equity, so that its lenders will now control 90% of the business, Bloomberg reports. Publicly owned PREIT announced that it was filing for bankruptcy on Sunday in a release characterizing the move as part of a "prepackaged" restructuring plan that it said was supported by 95% of its lenders. In the restructuring, PREIT would put up the properties it owns free of debt as collateral for $891M of unsecured debt, as well as an additional $150M loan. The Chapter 11 suit meant still needs to be approved by a bankruptcy judge.
CBL filed a separate lawsuit against Wells Fargo, which represents its senior lenders, alleging that the bank seized rent payments from its tenants. CBL claimed the interference prevented it from paying enough of its obligations to buy time to negotiate a comprehensive agreement with all of its lenders, Bloomberg reports.
Between them, PREIT and CBL own all or part of over 121 malls and shopping centers totaling 87M SF, according to the court filings. PREIT has worked steadily over the past few years to excise malls with less than ideal fundamentals from its portfolio, while CBL is still largely dependent on those properties, Bloomberg reports. Both landlords have been hit by waves of bankruptcies and store closures among tenants during the months they were forced to keep indoor malls closed due to the coronavirus pandemic.
PREIT said in its press release that it will be able to carry out its debt restructuring plan without any interruption to its business, including payments to its vendors and contractors. CBL has asked its bankruptcy judge to allow it to spend $1.1B that Wells Fargo is holding as collateral to keep its own business running, Bloomberg reports.