CoolSprings Galleria Mall, Franklin, TN
Source: CBL Properties
Mall owner CBL & Associates said Wednesday it has entered into a forbearance agreement with its lenders over a missed 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 on 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 on unsecured notes due 2026. That has triggered another grace period that expires in the middle of this month.
“The Company is continuing to engage in negotiations and discussions with the holders and lenders of the Company’s indebtedness,” CBL said in its 8-K filing with the Securities and Exchange Commission on Wednesday. “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 a 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 Moelis & Co. and Weil, Gotshal & Manges 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 most of its tenants have requested rent relief during the pandemic, and it has put a number of tenants in default for not paying.
Several retailers, including J.C. Penney, Neiman Marcus and J.Crew, have filed for protection from creditors in bankruptcy court, but no retail landlord has done so.
CBL shares, which trade under $1, are down more than 74% this year. The company has a market value of $52.3 million.