HOUSTON – (Realty News Report) – CBL & Associates Properties, owner of 107 shopping centers including Pearland Town Center, has filed for Chapter 11 bankruptcy protection in Houston.
Chattanooga, Tenn.-based CBL has been under pressure as the coronavirus pandemic drastically reduced mall foot traffic, cut sales, and pushed many retailers toward insolvency. Roughly 30 tenants from CBL properties have filed for Chapter 11 so far this year, including major names such as J.C. Penney.
The company submitted a reorganization petition in the U.S. Bankruptcy Court for the Southern District of Texas, Houston division.
“After months of discussions and consideration of a number of alternatives, CBL’s management and the Board of Directors firmly believe that implementing the comprehensive restructuring … through a Chapter 11 voluntary bankruptcy filing will provide CBL with the best plan to emerge as a stronger and more stable company,” said Stephen D. Lebovitz, CEO of CBL. “With an aggregate of approximately $1.5 billion in unsecured debt and preferred obligations eliminated and a significant increase to net cash flow, upon emergence, CBL will be in a better position to execute on our strategies and move forward as a stable and profitable business.”
Lebovitz has been a prominent industry figure, having served as chairman of the International Council of Shopping Centers (ICSC) in 2015–2016.
Pearland Town Center sits on 110 acres at the intersection of Highway 288 and FM 518. Anchored by Dillard’s and Macy’s, the center has approximately 644,920 square feet of gross leasable area.
CBL’s national portfolio includes 107 properties totaling about 68 million square feet across 26 states. The holdings feature 68 enclosed, outlet and open-air retail centers of varying formats, plus nine properties managed on behalf of third parties.
Even before the COVID-19 pandemic, brick-and-mortar shopping centers and traditional retailers faced growing competition from e-commerce. The pandemic accelerated those trends, prompting more store closures and bankruptcies among retail chains.
A number of well-known retailers have been forced to close stores or seek bankruptcy protection in recent years, including Stein Mart, J.C. Penney, Men’s Wearhouse, Victoria’s Secret, Lord & Taylor, and Sears. These losses have reduced the pool of tenants available to shopping centers and pressured occupancy and rents.
The Emerging Trends in Real Estate report by the Urban Land Institute and PwC warns that the retail property sector must “right-size and reinvent.” The report states retail property “faces a painful shakeout as millions of small businesses and familiar national brands shutter their doors, shrinking the ranks of tenants for shopping centers and driving down occupancy and rents.”
In Houston, retail vacancy has been rising. NAI Partners reported the retail vacancy rate at 6.4 percent in the third quarter, up from 5.6 percent a year earlier, reflecting broader market challenges.
Nov. 2, 2020 Realty News Report Copyright 2020
File: CBL Mall Owner Files Chapter 11
File: (2) ICSC. Stein Mart, J.C. Penney, Men’s Wearhouse, Victoria’s Secret, Lord & Taylor — CBL Mall Owner Files Chapter 11.