The FBI and the Securities and Exchange Commission are investigating CBL and Associates, which owns Wausau Center mall, over accounting irregularities, the Wall Street Journal reported last week. That in turn has sparked a class action lawsuit against the company, filed in federal court in Tennessee.
Numerous law firms across the country are soliciting those affected by what’s being called CBL’s misleading statements to investors to join the case.
In a statement, CBL leaders have denied the federal investigation, saying no one from those agencies has contacted them. Company CFO Farzana Mitchell did not respond to requests for further comment.
In Wausau, city Economic Development Manager Christian Schock says the alleged investigation won’t necessarily affect the much-debated renovation project with the mall. To fund that project, the city agreed to loan CBL $4.1 million to move Younkers into a renovated former J.C. Penney space.
The city approved the agreement in February but CBL has not yet signed the agreement—a wait that already weeks ago caused worry among some city officials.
Then came the unexpected news last month that Sears was closing its Wausau Center location, making it the second anchor to vacate the mall—which also had city leaders rethinking the $4.1 million loan.
Another thing not adding to anyone’s confidence in Wausau Center’s future: when national retailor Aeropostale, which has a store in Wausau Center, filed for Chapter 11 bankruptcy protection.
All that aside, the alleged pending investigation of CBL is not related per se to Wausau Center, Schock says. The mall is one of dozens of mall properties owned by the real estate investment trust based in Tennessee.
But Wausau Center is only one of three malls categorized as “repositioning” by CBL, according to the company’s latest SEC filing of April 27. That report describes repositioning as “Malls where we have determined that the current format of the Property no longer represents the best use of the Property and we are in the process of evaluating alternative strategies for the Property, which may include major redevelopment or an alternative retail or non-retail format, or… after evaluating alternative strategies for the Property, we have determined that the Property no longer meets our criteria for long-term investment.”
Repositioning also means that most of Wausau Center’s financial metrics are not included in the SEC filing. Another Madison Square, was classified as a repositioning property until it was sold in the second quarter of last year.
Schock says Wausau’s loan to CBL is to be spent on infrastructure that would benefit the city and the mall no matter who owns it. City leaders previously had said they would have more ideas about Wausau Center mall’s future after attending the International Shopping Center Convention, which happened two weeks ago. They have not yet revealed any further plans.
In response to the Wall Street Journal’s report about the investigation into CBL, Wausau Mayor Robert Mielke said in a press release that the city hasn’t and won’t sign the final agreement with CBL until the “resolution of any outstanding issues.”