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Illustration: Aïda Amer/Axios

There's a new milestone in retail sector turmoil: Mall landlords — already plagued by plummeting foot traffic, and pushed over the edge by tenants' inability to pay rent because of the coronavirus — are filing for bankruptcy.

Driving the news: CBL & Associates Properties, which owns about 100 shopping centers across the country, and Pennsylvania Real Estate Investment Trust (PREIT), which has over two dozen locations primarily in the Northeast, filed for bankruptcy on Sunday.

  • Both companies are entering bankruptcy with restructuring plans that have been approved by a fair chunk of their creditors, so the bankruptcy process might be speedier.

Why it matters: This is rare — there hasn't been a mall operator bankruptcy in over a decade. Now, two major mall owners are seeking relief for survival, as store pain trickles up to landlords.

What's going on: Rent payments that mall operators wholly depend on came to a halt when the pandemic hit. Economic lockdowns forced retailers to close their stores, depriving them of the revenue they needed to pay rent.

  • For example: The rent collection rate across CBL's mall properties fell to 27% in April, according to company documents filed on Monday.
  • CBL has still only collected 75% of that month's rent as of Oct. 1.

Flashback: The last retail property owner to file for bankruptcy was General Growth Properties in 2009, then the 2nd biggest mall operator in the country.

  • What happened: It wasn't a byproduct of tenant turmoil. Rather — thanks to a disruption in the real estate financing markets — it couldn't refinance billions of dollars in debt (mostly in the form of short-term mortgages).

The state of play: Mall owners have been struggling for years and paying the price for banking on mega-tenants like department stores that were losing appeal, shuttering and going out of business.

  • But even then "there were underlying lease agreements that kept cash coming in, which allowed them to do enough to stay afloat," Zachary Klein, an analyst at Fitch Ratings, tells Axios.
  • Malls were trying to attract other non-traditional stores to appeal to shoppers, with mixed success. One property owned by PREIT, for instance, has a co-working space and a bowling alley — neither of which is particularly COVID-friendly.
  • Another growing trend: mall owners converting their space to apartments.

Now more tenants are disappearing. Among the retailers seeking bankruptcy protection since the pandemic hit, many have a big presence in malls, like J.C. Penney, Chuck E. Cheese, and New York & Co. Landlords have been deferring rent while these retailers restructure.

  • Ascena Retail Group said it would close the stores of brands that make up over 50% of all stores in CBL properties — a common outcome in bankruptcy.
  • Other non-bankrupt companies, like Macy's, are also closing shops.

The bottom line: The problems that pushed the mall operators into financial ruin will still be staring them down once they emerge from bankruptcy.

  • "We know COVID is a temporary event, but the shift from physical to digital retail is not a temporary event," Michael Brown, a partner at consulting firm Kearney who's focused on retail, tells Axios.

Go deeper

What COVID-19 vaccine trials still need to do

Illustration: Sarah Grillo/Axios

COVID-19 vaccines are being developed at record speed, but some experts fear the accelerated regulatory process could interfere with ongoing research about the vaccines.

Why it matters: Even after the first COVID-19 vaccines are deployed, scientific questions will remain about how they are working and how to improve them.

2 hours ago - Podcasts

Faces of COVID creator on telling the stories of those we've lost

America yesterday lost 2,762 people to COVID-19, per the CDC, bringing the total pandemic toll to 272,525. That's more than the population of Des Moines, Iowa. Or Baton Rouge, Louisiana. Or Toledo, Ohio.

Axios Re:Cap speaks with Alex Goldstein, creator of the @FacesofCOVID Twitter account, about sharing the stories behind the statistics.

2 hours ago - Health

WSJ: Pfizer expects to ship half as many COVID vaccines as planned in 2020

A Pfizer factory in Puurs, Belgiam on Dec. 3. Photo: Kenzo Tribouillard/AFP via Getty Images

Pfizer and BioNTech have halved their original estimates for how many coronavirus vaccines would be shipped globally by the end of this year, citing supply-chain issues, the Wall Street Journal first reported.

Why it matters: The U.K. government has ordered 40 million doses of Pfizer-BioNTech's vaccine — enough to inoculate some 20 million people. The companies now expect to ship 50 million vaccines by the end of 2020, per WSJ.