CBL Properties will seek bankruptcy protection
After saying it would cooperate with foreclosure proceedings for Burnsville Center, the mall’s half-owner announced a major debt restructuring and continuation of “business as usual” at its properties in 26 states.
Tennessee-based CBL Properties announced on Aug. 19 that a restructuring agreement with a group representing a majority of its bondholders will eliminate $900 million in debt, extend the company’s debt maturity schedule and cut annual interest payments by more than $20 million.
The agreement “contemplates that the company will commence voluntary Chapter 11 protection” in U.S. Bankruptcy Court on Oct. 1, said a statement from CEO Stephen D. Lebovitz.
“Through this process, all day-to-day operations and business of the company’s wholly owned, joint venture and third-party managed shopping centers will continue as normal,” said an Aug. 19 company news release. “CBL’s customers, tenants and partners can expect business as usual at all of CBL’s owned and managed properties.”
Stung by changes in shopping habits and revenue losses hastened by COVID-19 shutdowns, the company announced on Aug. 6 that it “anticipates cooperating with foreclosure or conveyance proceedings” for Burnsville Center and three other malls in Arkansas, Illinois and Ohio.
CBL owns half of the 94-acre Burnsville Center property, secured by loans of $64.5 million. The other owners are Seritage Growth Properties, Macy’s and J.C. Penney.
News of the pending foreclosure had Dakota County Commissioner Joe Atkins predicting a quick ownership change from lenders eager to unload the property.
CBL is “four months behind on mortgage payments” for Burnsville Center after “five years of declining cash flow, sales and occupancy,” Atkins said in a Facebook post.
In its Aug. 19 announcement, the company said it “anticipates continuing to meet all debt service and other obligations, as required, under its property level secured loans and joint venture partnerships.”
The company’s $220 million in cash, and its cash flow, are “expected to be sufficient to meet CBL’s operational and restructuring needs,” the company said.
“Reaching this agreement with our noteholders is a major milestone for CBL,” Lebovitz said. The company’s strategy is to diversify its revenue sources while transforming its properties from “traditional enclosed malls to suburban town centers,” he said.
That’s what city officials have in mind for Burnsville Center. In response to changing shopping habits, the closing of the Sears store and mounting mall vacancies, the city crafted its Burnsville Center Village redevelopment plan for the mall and the surrounding County Road 42 retail area.
It envisions a mix of uses on the mall property, located west of the freeway interchanges, and along the north and south sides of 42, which flourished after the center opened in 1977.
The plan envisions housing and new retail uses along with uses such as hotels, clinics, parks, co-sharing workplaces, start-up offices, brew pubs and maker-spaces.
The city continues to pursue special state legislation for a revitalization district that would generate revenue through tax-increment financing. The money would be used for road and infrastructure projects and development incentives.
The request didn’t pass in the 2019 and 2020 legislative sessions.
According to CBL, its portfolio of 108 “market-dominant properties” includes 68 enclosed, outlet and open-air retail centers. The company’s Burnsville Center holdings include the common areas, the Dick’s Sporting Goods parcel, two outlots, service roads and some parking.