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Macy’s Closures Could Put 28 Shopping Centers Backed By $3.64B In CMBS Loans At Risk


Department stores are shuttering locations en masse—earlier this month Macy’s announced it would close 15% of its portfolio, or 100 stores, starting next year—and Sears has closed both Sears and Kmart stores amid its $9B in losses.

Though the closures are supposed to alleviate pressure for retailers—allowing them to cut their losses and focus on strengthening their brands—a recent report from Morningstar Credit Ratings reveals more than $3.64B in CMBS loans issued since 2010 could be at risk following Macy's closures.

Morningstar says CMBS exposure to malls anchored by Macy’s stores is considerable, and the collateral could amount to $28.49B

There are 28 malls and shopping centers backed by $3.64B in loans at risk following Macy’s closures, particularly because the properties' sales fell below Macy’s average sales of $169/SF in 2014, Morningstar reported.


“Losing a Macy’s may not be an immediate death knell for a loan, as cash flow could absorb the vacancy,” the report reads. “However, if a mall is hit by two or more anchor closures, that’s typically the beginning of downward spiral.”

­­Morningstar analysts reached a completely different conclusion last month when luxury retailer Ralph Lauren announced plans to shutter 50 stores and cut 1,000 jobs. Morningstar found there were 30 retail centers underwritten by commercial loans that housed Ralph Lauren stores, but that the $1.44B owed in loans from these properties are in no danger of delinquency following Ralph Lauren’s closures.

“We don't believe there is a large risk in loans backed by properties where Ralph Lauren is a tenant because only a few of the leases are expiring in the next two years, and 24 of the 30 CMBS loans aren't maturing before 2020,” Morningstar Credit Ratings analyst Sarah Helwig told Bisnow last month.