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08/26/2020

Exclusive Q&A: CEO Stephen Lebovitz on CBL’s Chapter 11 restructuring

Al Urbanski
Real Estate Editor & Manager
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Stephen Lebovitz
CBL Properties CEO Stephen Lebovitz

On July 20, when reports surfaced that CBL Properties was filing Chapter 11, Chain Store Age called the company to ask for a comment and got an email reply saying that it had nothing to add. But most people who know Stephen Lebovitz, the big mall owner’s chief executive, were sure he wouldn’t surrender without a fight the company founded in 1978 by his father Charles B. Lebovitz (a.k.a. CBL). Having made a deal with noteholders to eliminate $1.5 billion of debt and financial obligations, Lebovitz got back to us about what happens next.

You’ve said that the restructuring support agreement will allow you to resume “normal operations.” But will your normal operations be enough to keep you thriving in this newly forming era of retail?
The process will not disrupt the day-to-day operations of CBL or any of our properties. Once complete, CBL will have a stronger balance sheet and extended debt maturities. As a result, CBL will have more flexibility to execute on our major strategy of transforming our properties from traditional enclosed malls to suburban town centers that offer a wide range of uses.

After the restructuring, will CBL have significant cash to invest in its properties? If so, how will you spend that money?
CBL currently has a significant cash position, which along with our positive net cash flow, provides sufficient liquidity to invest in our properties. We will continue to invest in redevelopments at our properties to diversify the uses and our income stream.

Will CBL become more active in dispositions and redevelopments of its current properties? Have you altered your mission statement following this experience?
We have maintained an active redevelopment program and are opening this year new uses such as hotels, casinos and self-storage at our properties. We do not plan to change our mission and will continue to own and operate a portfolio of market-dominant properties and look to maximize value through active leasing, management, and redevelopment. While we are always opportunistic, we do not envision any major dispositions.

The pandemic has brought forth a lot of retailer bankruptcies. More department stores are closing their doors. Simon might add Amazon fulfillment centers. Does CBL have a new leasing strategy in place considering these developments?
The pandemic has accelerated certain trends in the industry. Our team of dedicated and creative leasing and redevelopment professionals are working diligently to identify opportunities to bring in new uses. The pandemic has underscored the importance of diversifying outside of retail with dining, services, and entertainment, as well as essential businesses and other uses.