What Will Happen To Malls? Pandemic Sees Bankruptcy Filing For 2 Owners

Two large mall operators have filed for bankruptcy protection as malls wane in popularity with consumers amid the coronavirus pandemic.

Both CBL & Associates, which operates 107 properties across 26 states, and Pennsylvania Real Estate Investment Trust (PREIT), which owns 19 malls, filed for Chapter 11 protection on Sunday amid the pandemic as consumers shift to online shopping for their purchases.

PREIT CEO Joseph F. Coradino said in a statement: “Today’s announcement has no impact on our operations – our employees, tenants, vendors and the communities we serve –and we remain committed to continuing to deliver top-tier experiences and improving our portfolio. With the overwhelming support of our lenders, we look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multi-use ecosystems throughout our portfolio.”

The news of the bankruptcies follows a slew of temporary store closures back in March because of stay-at-home orders, which caused malls to become ghost towns without any foot traffic.

READ: 3 Retailers Announced They’re Closing Stores In October 2020

Now that the majority of stores have reopened, malls are still not faring well with consumers as they have limited capacities, face mask requirements, temperature checks, and other safety measures that are keeping shoppers away as they look to prevent the spread of the coronavirus.

This has only put more pressure on mall operators as retailers forego rent payments amid the closures, and other retailers file for bankruptcy themselves under the weight of the coronavirus, causing many mall spaces to go dark.

Some anchor store retailers, such as JC Penney, have shuttered underperforming locations. Other stores have evaluated their brick-and-mortar stores and focused their attention on their e-commerce sites, where they see the most activity from consumers.

While both CBL and PREIT have filed for bankruptcy protection, mall operator Simon Property Group has shifted toward acquiring retailers that are in bankruptcy to help keep its malls open, CNBC reported. The mall operator acquired Lucky Brands and Brooks Brothers with the assistance of Authentic Brands Group and has also recently picked up JC Penney with the help of Brookfield Asset Management.