Mall owner CBL Properties is expected to file for bankruptcy by the end of September, after months of being pounded by pandemic-related closures and a dried-up stream of rent that cannot sustain payments on its $3B in debt.

Specifically, the shopping center owner says it has made a deal to hand over control of the company to creditors who hold unsecured notes. Not all of its creditors have signed off on the arrangement, however, and the company says it will continue negotiations.

During the restructuring, the company says that the day-to-day operations of its shopping centers will continue. Any deal would also need to be approved by a bankruptcy judge after creditors voted on it, Bloomberg reports.

Tennessee-based CBL Properties owns or manages 108 properties totaling 68.2M SF in 26 states, including 68 enclosed, outlet and open-air retail centers and nine properties managed for third parties. In recent years, its malls have been losing anchors, such as JC Penney and Sears, as well as important in-line retailers.

Then came the coronavirus pandemic, when the company closed about two-thirds of its malls. That crushed its earnings during the second quarter, with a net loss per share for the quarter of $0.42, compared with an already anemic Q2 2019, when it lost $0.20/share.

Funds from operations, an important metric for REITs, dropped from a positive $0.34/share in Q2 2019 to a loss of $0.03/share in Q2 2020.

Over the last year, shareholders have voted with their feet about the future of CBL. As recently as last November, its stock traded for more than $1.65/share. Now it trades for $0.20/share.

“Our financial and operating results for the second quarter reflect the temporary closure of the CBL portfolio for a significant period due to government mandates," CBL CEO Stephen Lebovitz said in a statement at the time of the release of its second-quarter results in August. The company didn't hold an earnings call for the quarter.

"Revenues for the quarter were impacted by a major increase in the estimate for uncollectible revenues related to rents due from tenants that recently filed for bankruptcy or are struggling financially, as well as amounts that were abated as part of negotiations," Lebovitz said.

"Store closures and rent loss from prior tenant bankruptcies and lower percentage rent related to lower retail sales also impacted revenues," he noted.

Lebovitz also confirmed in the statement that the company was indeed in discussions with creditors.