Mall owner Washington Prime declares bankruptcy, calling pandemic "insurmountable"
Washington Prime Group has filed for bankruptcy protection, becoming the third major U.S. mall owner to go under because of the hit to shopping caused by the coronavirus pandemic.
Washington Prime, which operates 102 malls around the country, said stay-at-home orders and mandated business closures last year hurt business. "These measures ceased or significantly decreased foot traffic in Washington Prime Group's shopping centers, retail stores and restaurants," the company said in court documents filed Friday in the U.S. Bankruptcy Court for the Southern District of Texas. "The COVID-19 pandemic proved insurmountable."
Company officials said in a statement that a new $100 million loan will keep its malls in operation while Washington Prime goes through bankruptcy proceedings. It has has $3.5 billion in total debt and roughly $4 billion in assets, court documents show.
Washington Prime was created in 2014 after being spun off from Simon Property Group, the nation's largest mall operator. Washington Prime today manages a total of 52 million square feet of retail space, including Scottsdale Quarter in Arizona, Pearlridge Center in Hawaii, Polaris Fashion Place in Ohio and Waterford Lakes Town Center in Florida.
Although the pandemic proved to be the coup de grace for many malls, they have for years struggled to attract shoppers amid the growth of e-commerce and ongoing struggles among big-box retailers. In November, CBL and Pennsylvania Real Estate Investment Trust also filed for Chapter 11 bankruptcy protection.
Mall operators slumped further during the pandemic because anchor stores including J.C. Penney, Lord & Taylor and Neiman Marcus also filed for bankruptcy. CBL, which operates 107 malls, said more than 30 of its tenants have filed for bankruptcy protection, including women's clothing retailer Ascena.
Washington Prime said in court documents that it offered mall tenants rent forbearance during the height of the pandemic to help retailers avoid bankruptcy. That reduced its 2020 revenues by $24 million, according to the company. In 2021, Washington Prime's rent income is down about $20 million compared to 2020, its earnings show.
During the throes of the pandemic in 2020, Washington Prime's rental income plummeted about $127 million from 2019 levels due to the coronavirus outbreak.
Washington Prime said it reopened its malls in December, but sales haven't fully rebounded after some states saw a second coronavirus surge during the holiday shopping season.
Hoping to generate cash during the pandemic, Washington Prime temporarily cut senior managers' pay by 5% to 25%, froze hiring and furloughed 20% of its roughly 775 employees. The company also sold a 43-acre property, the Westminster Mall in California, for $160 million.