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Rue21 Closures Put $100M In CMBS Loans At Risk

Rue21 at Waycross, Ga.

Teen retailer Rue21 filed for Chapter 11 bankruptcy protection earlier this month after announcing plans to shutter 400 stores, putting retail properties backed by $100.7M in CMBS loans at risk as a result.

In its latest report, Morningstar Credit Ratings identified 11 CMBS loans that are secured by properties where Rue21 is a primary tenant. Morningstar said the 400 locations the retailer already plans to close do not pose a great danger to exposed CMBS loans because the properties do not account for a significant portion of net rentable area. But that could change if Rue21 decides to close another chunk of its 1,179-store portfolio. The research company said the retailer's fate is a cautionary tale of how specialty stores struggle to compete against e-commerce, fast-fashion chains and discount retailers in today’s environment of shifting consumer preferences.