The owners of two area shopping malls filed for Chapter 11 bankruptcy protection in November as part of a plan to reshuffle the deck amid the COVID-19 pandemic.
PREIT, which owns the Viewmont Mall in Dickson City, reached agreements with 80% of their lenders as part of a ‘restructuring agreement.’ CBL, which owns the Stroud Mall in Stroudsburg also filed for bankruptcy.
“Our court-approved expedited case timeline should allow us to emerge and quickly move to the next phase of our evolution bringing new and innovative uses to our properties as the landscape continues to rapidly evolve,” said Joseph Coradino, Chairman and CEO of the Pennsylvania Real Estate Investment Trust, or PREIT, in a statement.
With lockdowns and shutdowns, the PREIT mall group has taken a big financial hit.
Throughout the group, the company said that in the third quarter there was a decrease in revenue totaling $16.5 million. That mainly is due to bankruptcies and store closings, as well as credit losses from ‘challenged tenants.’ Mall occupancy rates are also down.
“We’ve seen this cycle happen a few times,” said Gabriella Sataniello, founder of A Line, a retail market research firm based in California. She said between the e-commerce, the recession and retail saturation in parts of the country, things have changed significantly. “Some malls are going to close and it’s unfortunate. Top tier malls, or destination malls as I call them, will succeed. Some of the lower tier malls will do okay as well, but there are a lot of malls in the middle that are going to have trouble succeeding.”
The owners of the Stroud Mall and the Viewmont Mall have vowed to remain open during the bankruptcy process.
“Bricks and mortar are still important,” Sataniello said. “There is a balance, but I think we are going to have less malls and less physical retail stores as e-commerce becomes even stronger after COVID-19. There’s been a big shift to online shopping because of the pandemic. Look at their numbers. They are incredible.”
She said many mall tenants are locked into long-term leases, which leaves mall owners in a bind.
Sataniello said many malls are seeing an uptick in local and regional stores to fill the space, but big names still attract shoppers.
“The big names are still a big draw,” she said. “But I think the big challenge is keeping two big anchor stores.”
Bob Durkin, president of the Scranton Chamber of Commerce, said in many ways this might be able to strengthen the mall owners.
“It could put them in a position to do what they need to do,” he said.
Durkin said when we come out of the pandemic, things will be different when it comes to retail.
“There’s still a desire and a need for people to experience the elements of shopping that you can’t get online. It’s a psycho-social experience. People like to shop,” he said.
Tim McGrath, General Manager of the Viewmont Mall referred all questions to corporate headquarters in Philadelphia.