The company says the pandemic created ‘significant’ financial challenges. Retail analysts say more malls could soon follow suit as online shopping surges.
“The company’s financial restructuring will enable Washington Prime to right size its balance sheet and position the company for success going forward,” said CEO Lou Conforti. “During the financial restructuring, we will continue to work toward maximizing the value of our assets and our operating infrastructure.”
Temporary closures and relaxation of rent to some of its tenants were the causes of the bankruptcy. Washington Prime, which warned this move was coming in recent regulatory filings, said it’s using Chapter 11 to “implement a comprehensive and consensual financial restructuring” to deleverage its nearly $1 billion in debt.
“The bankruptcy shows that while things are now getting back to normal, many of the scars left by the pandemic have not fully healed,” said Neil Saunders, retail analyst and managing director at GlobalData.
“Strong balance sheets and sound operations are needed to see property companies through this period,” he added. “Washington Prime did not have those fundamentals and so has chosen Chapter 11 as a way to restructure and pay down its debts.”
“While the trajectory for retail is far from terrible, malls are under increasing pressure from higher vacancy rates and tenants being more demanding over rent,” said Saunders.
