CMBS players should take note of retailers like Macy’s, Walmart and Sears falling by the wayside, as these store closings could lead to defaults within CMBS-bundled loans, a Forbes report says.
Jack Kern, Yardi's Director of Research and Publications, says retail's fundamentals have changed and the CMBS tranches "that support much of this are going to flare out as maturities start to reach their refinancing points."
Investors in lower tranches of CMBS will most likely be the hardest hit, as those are the riskiest loans, Forbes reports.
However, Jack adds that "retail has the curious power to reinvent itself," and store closings—along with space optimization—will support a large number of lease renegotiations. "It seems leasing power is now in the hands of the retail tenants."
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