Mall owner CBL issues ‘going concern’ warning as rent payments plunge

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Mall owner CBL issues ‘going concern’ warning as rent payments plunge

By Marianne Wilson - 06/05/2020

CBL & Associates, which owns 108 properties, has serious doubts about its future amid skipped rent payments from retail tenants due to the COVID-19 pandemic. 

The Tennessee-based real estate company on Friday said in a Securities and Exchange Commission filing that it has violated a covenant in its senior secured credit facility, which means its lenders now have the option to accelerate the maturity of its debt, reported CNBC. Earlier in the week, CBL said that it did not pay an $11.8 million interest payment due June 1.  

CBL said the majority of its tenants have requested rent relief during the pandemic and that it has put a number of tenants in default for not paying, according to the report. It received approximately 27% of rent for April and expects to receive between 25% and 30% of rents in May. 

“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 in a 10-Q filing with the SEC.

The news about CBL comes a day after reports that the nation’s biggest mall owner, Simon Property Group, is suing its largest in-line tenant, Gap Inc., its failure to pay more than $65.9 million in rent and other charges due during the COVID-19 crisis. In April, Gap said in a SEC filing that it had stopped paying rent starting in April and was in discussions to renegotiate or, in some cases, even terminate leases and close stores entirely.
 

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