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brookfield-square-mall Photo: CBL Properties

Mall Owner CBL Skips Debt Payment, Hoards Cash While Rents Fall

CBL & Associates missed an $11.8 million coupon payment on its 5.25 percent senior unsecured notes.

(Bloomberg)—CBL & Associates Properties Inc.’s years of effort to revive its business is being threatened by months of unpaid rents, forcing the mall owner to skip an upcoming interest payment while it negotiates with creditors.

CBL elected against making the $11.8 million coupon payment due June 1 on its 5.25% senior unsecured notes, which mature in 2023. The company drew $280 million in cash from its line of credit and furloughed employees while halting redevelopment investments designed to reverse the long-term challenges facing many American malls.

“Our priority during this time of uncertainty has been to preserve cash,” Chief Executive Officer Stephen D. Lebovitz said in an earnings statement to investors last week.

CBL did not respond to an email seeking comment.

The Chattanooga, Tennessee-based company has reopened 66 of the 68 malls it owns or manages, Lebovitz said. However, it collected just 27% of billed cash rents in April and likely will get 25% to 30% of May rents, based on preliminary receipts and conversations with retailers, Lebovitz said.

CBL has 30 days to make the skipped interest payment before defaulting on the notes. Should that happen, more senior creditors may declare a default and demand immediate repayment.

“We have placed a number of tenants in default for non-payment of rent,” Lebovitz said in the May 26 statement. “We anticipate a significant portion of April and May rents will be collected later in 2020 and into 2021 under agreed upon deferral plans. However, negotiations are ongoing, and it is premature to estimate a recovery rate at this time.”

In January, the company said it was exploring several alternatives to reduce overall leverage and interest expense and to extend the maturity of its debt, among other things.

To help negotiate a possible extension of the due dates on its debt as well as other restructuring options, the company hired the law firm Weil, Gotshal & Manges LLP and financial advisory Moelis & Co. LLC.

--With assistance from Bradley Davis and Lauren Coleman-Lochner.

To contact the reporter on this story: Steven Church in Wilmington, Delaware at [email protected].

To contact the editors responsible for this story: Rick Green at [email protected]

Adam Cataldo, Boris Korby

© 2020 Bloomberg L.P.

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