CoolSprings Galleria Mall, Franklin, TN
Source: CBL Properties
Mall owner CBL & Associates said Wednesday that a day prior it entered into a forbearance agreement with its lenders over a previously skipped interest payment.
With bills piling up and many of its retail tenants opting to not pay rent during the coronavirus pandemic, CBL did not make an $11.8 million payment on June 1, with respect to its 2023 notes, triggering a 30-day grace period that expired this week.
Then, on June 16, CBL said it would not be making an $18.6 million interest payment due that week, with respect to its unsecured notes due 2026. That has triggered another 30-day grace period that will expire later this month.
The mall owner said in its 8-K filing with the Securities and Exchange Commission on Wednesday: “The Company is continuing to engage in negotiations and discussions with the holders and lenders of the Company’s indebtedness. There can be no assurance, however, that the Company will be able to negotiate acceptable terms or to reach any agreement with respect to its indebtedness.”
It said the holders of at least 25% of the unsecured notes due in 2023 may now declare them to be due and payable immediately.
CBL added that if the payment of its 2023 notes was accelerated, it could trigger an event of default for its unsecured notes due in 2024 and in 2026, “which could lead to the acceleration of all amounts due under those notes.”
The Chattanooga, Tennessee-based real estate company, which owns 108 properties primarily in the Southeast, has been working with advisors Weil, Gotshal & Manges and Moelis & Co. to explore alternatives, which could entail a reorganization of the company.
“Given the impact of the COVID-19 pandemic on the retail and broader markets, the ongoing weakness of the credit markets and significant uncertainties associated with each of these matters, the Company believes that there is substantial doubt that it will continue to operate as a going concern,” CBL said last month.
CBL also has said the majority of its tenants have requested rent relief during the pandemic, and it has put a number of tenants in default for not paying.
If CBL ultimately were to file for bankruptcy protection, this would mark the first filing by a retail landlord during the pandemic. A number of retailers including J.C. Penney, Neiman Marcus and J.Crew have already filed.
CBL shares, which trade under $1, are down more than 74% this year. The company has a market value of $52.3 million.