COVID-19 may force the owner of The Promenade to file for bankruptcy. What we know
The owner of The Promenade in D’Iberville and more than 100 other shopping centers and malls may be forced to declare Chapter 11 bankruptcy because of the coronavirus.
CBL & Associates Properties, based in Chattanooga, Tennessee, indicated in recent filings with the Securities and Exchange Commission that it collected rent from only about one-quarter of its tenants during the coronavirus shutdown.
During April CBL collected 27% of the rents, the company said in a press release, and estimated May rent collections would be only 25% to 30%. Although the company is negotiating with tenants, CBL said it’s possible the rents won’t be collected.
Without those rent payments, CBL was unable to make a $11.3 million interest payment on June 1, the company said, or by the month-long grace period on June 30.
“CBL’s malls were already in a downward spiral entering 2020, and the COVID-19 pandemic has made things much worse.,” said Adam Levine-Weinberg, senior industrials and consumer goods specialist at The Motley Fool.
What’s ahead
The company said in June there was “substantial doubt” it will continue to operate as a going concern.
Chapter 11 would allow the company to continue to operate while restructuring its debt. Or the company could be liquidated, according to a report in the Chattanooga Times Free Press, or purchased by another mall operator such as Simon Property Group, which owns Gulfport Premium Outlets.
CBL already took major steps to reduce expenses, cutting compensation for top executives and board members by 50% and other officers by 20%. About 300 employees, or 60% of the company’s workforce, were furloughed temporarily and the remaining staff took a pay cut.
Strong history in D’Iberville
The Promenade opened in October 2009 — the first major new retail destination since Hurricane Katrina — with the first Target and Kohl’s stores in South Mississippi among the anchors.
The shopping and dining complex has expanded several times since then, adding more stores and restaurants.
Target was one of the essential stores that remained open during the pandemic so people could buy food and medicine.
Sales tax records indicate that shopping has rebounded at The Promenade and other retail areas of the city. While many of the stores were closed, the sales tax diversion was down $82,000 in April and $84,000 in May compared to 2019. By June sales rebounded and D’Iberville’s share from the state was $73,000 ahead of last year.
At one point, CBL partnered with Ramco to build the proposed Gulf Coast Galleria, but pulled out as retail began to slide. Plans for that shopping center south of The Promnade also have been altered by the coronavirus.
CBL has seen stores at its shopping centers close as retail was impacted by changing shopping habits even before the coronavirus. Now two or the company’s major tenants are closing multiple stores. JCPenney announced it soon will close 242 stores and GNC 219 U.S. locations, many of them in CBL properties. The GNC store at The Promenade isn’t on the list of stores closing.
This story was originally published July 23, 2020 at 5:50 AM.
