Macy's Planned Closures Put $24B Of CMBS Debt In The Crosshairs

A Macy's location at a shopping mall in Maryland.
A Macy's Location At A Shopping Mall In Maryland.

Macy’s planned closure of 150 locations could spell trouble for mall landlords on the hook for billions of dollars in debt.

The retailer anchors at least 80 malls behind approximately $24B in commercial mortgage-backed securities, according to data from CoStar Group and Morningstar DBRS.

About $3.6B of that debt is already in special servicing, meaning the malls are having trouble repaying the loans, and the majority of that is tied to three of the country's biggest mall owners: Brookfield, Simon Property Group and Unibail-Rodamco-Westfield, according to CoStar.

Macy's CEO Tony Spring said on the company's earnings call last week that the department store chain is looking at the markets in which it operates “with a focus on being in the strongest centers.”

The New York-based company hasn't disclosed which stores it would look to shutter, but if it goes through with the plan, it would reduce its already-diminished store count by 30%, leaving it with 350 locations.

The company could look to sell those boxes. Spring said on the call that selling closed stores and distribution centers would generate between $600M and $750M.

Macy’s stores going dark could diminish revenue for landlords as foot traffic falls. In malls where the retailer is an anchor, closures could trigger other stores to pull out or alter their rent agreements with property owners due to co-tenancy clauses, CoStar reported.

The company's plans carry an air of uncertainty. Although Macy’s rejected a bid from activist investors Arkhouse Management and Brigade Capital Management to go private, the firms countered this week with a $6.6B cash offer.

Continue reading this story with a free account

Log in or register
Related Topics: CMBS , Macy's , Malls
Sign up for more articles like this
Subscribe to Bisnow's National Newsletters
Related Stories

Why Hines Is Restarting Its Development Engine

How Integrated Infrastructure Can Help AI Data Centers Deploy Faster, Build Smarter

Nvidia Buys Stake In Data Center Power Company

Invesco Cuts Fees, Adds Incentives To Quell Fund Redemption Requests

Investors Anchor Big Capital Into Marinas, Betting On Shallow Supply

NYC Office Investor Warns It Could Go Under As Defaults Pile Up

Pinewood Studios Pays Owners £100M Dividend And Completes £300M Refinancing

Nike Closes 15 Stores Amid Tumultuous Year

Large Commercial Real Estate Sales Up 30% Despite Economic Headwinds

Evergrande Founder Sentenced To Life, 56 Others Sent To Prison In China

Loud And Clear: Why Aiphone Thinks Intercom Ownership Is Best For Multitenant Buildings

Coconut Grove Office Flipped For $15M Gain After One Year