A year after bankruptcy and delisting, mall operator CBL Properties (NYSE: CBL) emerged from bankruptcy on Monday, Nov. 1, and began trading again Tuesday, Nov. 2, on the New York Stock Exchange.
Exactly a year ago on Monday, the Chattanooga, Tennessee-based real estate investment trust (REIT) filed voluntary petitions for reorganization under Chapter 11 of the bankruptcy code.
Exactly a year ago on Tuesday, the New York Stock Exchange suspended trading and delisted the company’s stock, which then began trading on the OTC Bulletin Board, or “pink sheets.” Today, CBL stock opened at $0.17 a share after dipping as low as $0.02 for a 52-week low, the company’s website shows.
Last week, CBL announced a restructured new board of directors, with Jonathan Heller, head of the New York office of Canyon Partners, as chairman, and a new board member, David Contis -- president of AGORA Advisors -- as lead director. The CBL announcement notes that Contis has held executive leadership positions at mall REITs Simon Property Group (NYSE: SPG) and The Macerich Co. (NYSE: MAC).
A major presence in a long-suffering segment
CBL Properties says on its website that it currently has a portfolio containing 63.8 million square feet across 104 properties in 24 states, “including 63 high‑quality enclosed, outlet and open-air retail centers and seven properties managed for third parties.”
The mall operator has had a major retail presence in many Southeast U.S. markets since it went public in 1993, and like many retail landlords, its portfolio of primarily Class B and C malls and shopping centers had been hit hard by changing shopping preferences and patterns for years.
For instance, in 2013, the company handed the keys to lenders holding about $100 million in debt on two major malls in South Carolina, according to an article this week in The Charleston Post & Courier newspaper [subscription required]. Then COVID-19 arrived.
In 2020 alone, more than 30 of CBL’s tenants filed for bankruptcy protection themselves, including J.C. Penney (OTCMKTS: JCPN.Q) and the parent company of multiple other brand names that had long been mall fixtures.
At the time of the Nov. 1, 2020, filing, CBL said it had the cash from operations and on hand to successfully complete a restructuring. Then on March 22 this year, the company announced an amended restructuring support agreement that eliminated more than $1.6 billion of debt and preferred obligations and significantly reduced interest expenses.
The bottom line: Proceed with caution
Retail REIT stocks overall are staging a recovery, with the 30 tracked by Nareit showing a year-to-date total return of 32.11% compared with -25.18% for all of 2020. But will CBL stock take a similar path?
Here are two Motley Fool articles that take divergent views on that:
Those articles were then. This is now. They provide good insight about fundamental conditions on the ground that still can inform your decision about whether CBL’s reemergence on the Big Board is an opportunity to buy, or if you have some of that stock from before, to sell as soon as it shows new life among traders.
Either way, it’ll be worth watching this REIT as both an individual player and a barometer for this battered industry segment. One first positive sign to watch for, of course, would be the resumption of a dividend that hasn’t been paid in more than two years.