Fitch Ratings downgraded the ratings of regional mall real estate investment trust CBL & Associates Properties Inc. and its operating partnership.
The rating agency lowered the company's long-term issuer default rating to BB- from BB+ with a negative outlook. Fitch also lowered CBL's preferred stock to B/RR6 from BB-/RR6 and lowered the partnership's senior unsecured lines of credit, senior unsecured term loans and senior unsecured notes to BB-/RR4 from BB+/RR4.
The rating agency said the downgrade represents increasing weakness in CBL's operating performance, thanks in part to a shift in retail distribution toward e-commerce and omnichannel sales.
CBL is experiencing dwindling tenant demand for space at its class B malls, especially for less-profitable properties in weaker demographic areas.
The decline also mirrors weaker secured-mortgage availability for class B malls and a decline in CBL's unencumbered asset coverage of unsecured debt, Fitch added.