JOHNSON CITY, Tenn. (WJHL) – The owner of The Mall at Johnson City has declared Chapter 11 bankruptcy and will begin debt restructuring.
According to a statement from the Washington Prime Group, the retail real estate investment trust that owns The Mall at Johnson City, it will begin substantial restructuring of debt across their property.
However, the company explained in a statement that the Mall at Johnson City will not close.
“There will be no impact to operations, including leasing and redevelopment, at The Mall at Johnson City. The COVID-19 pandemic has created significant challenges for many consumer-facing companies, including Washington Prime Group. The Company has determined that the Chapter 11 path is the most effective next step to resolve the Company’s outstanding indebtedness as we emerge from the pandemic. Throughout the Company’s Chapter 11 process, we expect business as usual at The Mall at Johnson City, where our tenants, sponsors and employees will continue operating as normal, with a focus on providing enjoyable experiences for our guests.”Spokesperson for Washington Prime Group
The company specializes in ownership of retail properties around the world which total to over 100 separate sites.
The statement assures investors that all business operations will “continue in the ordinary course without interruption.”
“Certain subsidiaries, including Washington Prime Group’s joint ventures and the majority of the Company’s special purpose entities holding properties that secure mortgage loans will not be debtors in the Chapter 11 cases. The Mall at Johnson City is a non-debtor and will not be impacted by the Company’s Chapter 11 financial restructuring.”Spokesperson for Washington Prime Group
Shoppers at the mall are intended to tell no difference while the group’s outstanding debt is reorganized.
The release explained that the majority of WPG’s debt is due to Strategic Value Partners Global, a “distressed debt, private equity and event-driven” investment firm.
“The Company’s financial restructuring will enable WPG to right size its balance sheet and position the Company for success going forward,” said Lou Conforti, CEO and director of WPG. “During the financial restructuring, we will continue to work toward maximizing the value of our assets and our operating infrastructure. The Company expects operations to continue in the ordinary course for the benefit of our guests, tenants, vendors, stakeholders and colleagues.”
Chief Executive Officer for the Northeast Tennessee Regional Economic Partnership (NeTREP) Mitch Miller told News Channel 11 that he suspected the Mall at Johnson City to fair well, even with its parent company filing bankruptcy.
“The Johnson City Mall probably is a little different than other malls that are have been in the portfolio of Washington Prime. This one has had a lot of new investment, a lot of renovations been done. You know, it still is considered that major retail center for Johnson City and in really a serviceable mall for the entire region. So, you know, when I think about a company filing for Chapter 11 I do think that they’ll evaluate the good performers and the bad performers in this Johnson City Mall location likely will be one of their better performance or they would not be investing the money that’s been putting into it today, but as it relates to more of a national trend and what we’ve been able to see with retail, as a whole, yeah, I think, COVID, obviously has impacts on retail, especially when you had an issue where people can actually go in store visit and we’re more reliant on delivery like Amazon and other methods,” he said.
Miller also pointed out that many other malls and retailers in the region suffered after COVID, and must adapt.
“At the end of the day, retail has to be more about experience now, you know folks can get their, you know, shampoo, their clothes, you name it, their dog food delivered right to the door every single day. And so that need, that desire, it’s changed retail in terms of having to actually walk into a brick and mortar type store, and I think you’re going to continue to see that trend, you know, probably remain. But I do think as you look at experience things being offered in the Johnson City Mall has done a great job offering experience like I know recently having a concert and then they get a mural and all these things that are trying to enhance, that experience is ultimately what’s going to make retail either thrive or die,” he explained.
The Bristol Mall closed years ago, soon to become a Hard Rock Casino. Similarly, in Knoxville, East Towne Mall was demolished to make way for an Amazon Delivery station.
“It’s part of the economy in general it’s always reinventing itself in some way. And as I look at a community for instance, you can pick any city. There’s a vacant center in every single city that sits right here in Northeast Tennessee or Southwest Virginia. It’s just the reality,” Miller added.
He said in many cases – like in Kingsport with the Fort Henry Mall – vacancies will be the root problem.
“I think the thing that we need to do as a region is, find people with vision, find developers, interested parties that can go in and help repurpose some of these centers because, you know, vacancies ultimately are going to, not just the impact the center, but the properties around it as well in terms of value in terms of activity,” Miller said.
What consumers desire, he pointed out, is an experience that online shopping cannot offer.
“I personally prefer shopping in a mall because I can try on the clothes and feel the material, know what I’m getting,” Consumer Jalyn Egbert told News Channel 11.
Egbert’s sentiments echoed by Miller’s explanaition.
“For any business to make it, you’ve got to have a desirable experience,” he said.
The Fort Henry Mall in Kingsport sits mostly vacant.
“I’m not sure of what the Fort Henry mall’s plans are at this time. I would guess all options are on the table. We are seeing malls struggle all across America to find their identity. After COVID, retail across the board has taken a huge hit. The world has moved more and more to online shopping and retailers are having to consolidate and try to plan how to survive,” Kingsport Alderman James Phillips said.