Retail landlord CBL Properties anticipates it will be returning a mall and an open-air shopping center to their lenders and is also in talks about a third possible foreclosure.
CBL, based in Chattanooga, Tennessee, on Friday reported on the status of the Jefferson Mall in Louisville, Kentucky; Arbor Place mall in Douglasville, Georgia; and The Outlet Shoppes at Gettysburg in Gettysburg, Pennsylvania.
When it released its fourth-quarter earnings, CBL said it was in discussions with lenders for the three retail centers and plans "to cooperate with the foreclosure or conveyance of the properties in satisfaction of the debt." In a supplement to its financial results, CBL said it expected that it will be returning the Jefferson Mall and the Gettysburg outlet center to their lenders.
CBL, a real estate investment trust, did not respond to a request from CoStar News seeking comment.
The REIT has an owned-and-managed portfolio of 88 properties totaling 53.9 million square feet across 22 states, including 55 enclosed malls, outlet centers and lifestyle retail centers as well as more than 25 open-air centers.
Last year, the REIT generated $240 million from the sale of properties, using the proceeds to reduce its leverage and to redeploy that capital into the $178.9 million acquisition of four enclosed malls, according to CEO Stephen Lebovitz.
Arbor Place Mall, a 1.2 million-square-foot regional shopping center, is the largest of the three CBL malls heading for foreclosure. It's the subject of a specially serviced $85 million commercial mortgage-backed securities, or CMBS, loan that is set to mature on May 1. The collateral for the loan consists of a 546,374-square-foot portion of the mall's space.
The servicer, Trimont Real Estate Advisors, has been in regular contact with CBL, the borrower, since November regarding plans to pay off the loan at maturity, with the borrower most recently indicating in January that it was reviewing options, according to CMBS servicer commentary.
The loan's transfer to special servicing came despite the mall maintaining relatively high occupancy in the face of ongoing challenges in the retail sector. Nearly all of the mall’s space is leased, with occupancy in the mid‑to‑high 90% range, depending on how it's measured. Overall leasing of the mall is 98.2% including anchor-owned space and collateral occupancy at 96.2% when counting executed and pending leases, according to servicer notes.
The Outlet Shoppes at Gettysburg is subject to a $19.3 million current balance CMBS loan that matured October last year without payoff and defaulted, according to CBL. The property was at 80.5% occupancy as of November last year, according to recent rent rolls. The 249,937-square-foot open-air shopping center is about 55 miles northwest of Baltimore and 40 miles south of Harrisburg, Pennsylvania.
CBL has been attempting to refinance the property without success and has not yet submitted a formal proposal to the lender for review, according to CMBS servicer commentary. The servicer reported that most leases are rolling over the next two years, thus hindering refinancing efforts. The lender has been pursuing a dual-track approach, moving forward with foreclosure proceedings while continuing workout discussions with CBL.
And CBL is giving up ownership of Jefferson Mall, telling lenders it does not plan to repay the $48.8 million loan at its June due date, according to past CMBS commentary. The REIT notified the special servicer, Argentic Services, in December that it no longer wants to retain the 417,955-square-foot mall. The loan moved to special servicing.
Special servicers plan to seek a receivership appointment and file foreclosure proceedings, according to CMBS commentary.