Two major mall owners file for bankruptcy, citing rent losses
Two mall operators filed for bankruptcy protection Monday, hurt by the ripple effect of the coronavirus pandemic which has forced many of its mall tenants to permanently close stores or not pay rent.
Both companies, CBL and Pennsylvania Real Estate Investment Trust, said their malls will remain open as they go through the bankruptcy process.
Even before the coronavirus-induced store closures, malls struggled to attract customers who were increasingly shopping online. The pandemic forced many malls and their retail tenants to temporarily close for months. Mall tenants, which operators rely on for rent, have been stressed this year. Some are going bankrupt and closing stores, such as J.C. Penney and California Pizza Kitchen.
The mall bankruptcies come weeks before a crucial holiday shopping season. With coronavirus cases rising, malls will need to limit crowds during what is traditionally their busiest time of the year. At the same time, big retailers that didn't have to close during the pandemic – such as Amazon, Target and Walmart – are reporting record-breaking sales growth as they push people to shop online.
CBL, which operates 107 malls, said more than 30 of its tenants have filed for bankruptcy protection this year and are shutting stores, including woman's clothing retailer Ascena, which has 100 Ann Taylor, LOFT and other stores in CBL malls. Based in Tennessee, CBL operates malls across the nation including EastGate Mall in Cincinnati and West County Center in St. Louis.
PREIT, based in Philadelphia, has more than 20 properties, including Cherry Hill Mall in Cherry Hill, New Jersey, and Viewmont Mall in Scranton, Pennsylvania.
Trouble bringing customers back
Like other malls looking to attract shoppers, PREIT has added restaurants, movie theaters and gyms to its properties in recent years. But those establishments have been hit harder by the pandemic and have stricter social distancing rules on how many people can visit.
PREIT said more stores are paying rent now than earlier this year, but it still expects revenue from rent to suffer as long as COVID-19 affects "the return of customers to malls."
Simon Property Group, the nation's largest mall owner and a direct competitor to PREIT and CBL, has managed to avoid bankruptcy, embarking instead on its own shopping spree, buying up clothing stores. Earlier this year, Simon Property bought men's clothier Brooks Brothers, fast-fashion retailer Forever 21 and denim store Lucky Brand. A deal is in place for Simon Property, along with Brookfield Asset Management, to buy J.C. Penney.