The owner of Eastland Mall says it has “substantial doubt” about its future as it’s unable to collect rent from most of its retail tenants that are struggling because of the pandemic.
The full impact of the pandemic on CBL Properties became clear in a regulatory filing made last week. CBL said it only received 27% of rents it was owed in April, and it expected about the same for May. The Chattanooga, Tenn.-based company also said it was not able to make an $11.8 million interest payment it owed on some debt as of June 1.
“Given the impact of the COVID-19 pandemic on the retail and broader markets, the ongoing weakness of the credit markets and significant uncertainties associated with each of these matters, the Company believes that there is substantial doubt that it will continue to operate as a going concern within one year after the date these condensed consolidated financial statements are issued,” CBL said in its 10-Q filing.
Eastland Mall in Bloomington has struggled for years, even before the pandemic, as the property aged and consumers shifted to online shopping. When CBL lobbied for its local property taxes to be lowered last year, it said the mall was nearly 60% vacant. (That tax dispute is still underway.)
Like other businesses, Eastland Mall temporarily closed because of the pandemic. It reopened June 1.
CBL said it has “received rent relief requests from a majority of its tenants at its properties, most often in the form of rent deferral requests, as a result of COVID-19.” It specifically cited JCPenney, which recently filed for bankruptcy. CBL said it anticipates eight JCPenney stores in its portfolio will close, costing it around $2.1 million in gross annual rent. JCPenney has also requested significant rent abatement and reductions for their remaining stores, CBL said.
Eastland Mall already lost its JCPenney store, back in October 2017. At that time, CBL promised a redevelopment plan for the mall, which has only materialized in part. H&M, Planet Fitness, and Outback Steakhouse have all opened since.
The mall continues to have an economic impact, albeit smaller in scope. CBL paid $1.1 million in property taxes on Eastland Mall for the 2018 tax year. The bulk of that money goes to schools, with the rest going to other local taxing bodies. The mall’s stores also generate sales tax revenue and jobs (including income tax revenue) for the community.
CBL owns 108 properties across 26 states.
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