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Analysts Tell Us Why Sears Could Impact CMBS Loans


About $56.9M of loans in five CMBS could be put at risk by Sears’ latest round of store closures, among a total of $111.9M in nine CMBS associated with the stores, according to analysts from Morningstar Credit Ratings. 

The $32.2M Midland Mall loan faces the greatest risk, as it was recently transferred to special servicing—indicating that the owner is concerned about that loan, Edward Dittmer, Morningstar’s VP and co-head of CMBS ratings, tells Bisnow

“You’ve got a B-quality mall, in what is a tertiary market—losing Sears could be a bigger problem, just because there may not be other options to fill that space,” Edward tells us.

On a positive note, the majority of loans affected aren’t part of the looming CMBS maturity wall—the wave of loans coming due for payment or refinancing in the next two years.

“That was the good news when we saw this list was that they weren’t all loans that had maturity coming up in 2016 or 2017—but there are a handful that will face that maturity wall,” Edward says.


Retailers across the board have been struggling lately, with massive store closings sweeping Macy’s and Walmart, and Aeropostale starting down the path towards bankruptcy.

Economist and head of Georgia State University’s Economic Forecasting Center Rajeev Dhawan (pictured) tells Bisnow the combination of online shopping with consumers’ increased frugality and movement towards cities has some retailers feeling “like they're in the middle of a recession.”

“If you have CMBS based solely on malls, that may not be good,” Rajeev tells us. “But on distribution and warehouse space, it looks better” because of the rise of e-commerce.