Though consumer spending has rebounded since the dark days of 2020, one major investor is betting that it won't be enough to save retail real estate's laggards.

Daniel McNamara, whose hedge fund betting against shopping malls returned more than double its investment over a four-month period last year, is launching a new fund based on the same strategy for the year ahead, Bloomberg reports. McNamara's success last year came working for a division of MatlinPatterson, wherein his fund MP Securitized Credit Partners shorted an index of commercial mortgage-backed securities with heavy exposure to malls and produced a 119% return from its launch in February of 2020 to its closure in May.

McNamara's new firm, Polpo Capital, will operate with largely the same strategy, forming a hedge fund that is starting with $100M and targeting 15% in returns with a relatively low loan-to-value ratio, Bloomberg reports. Despite the fact that CMBS delinquencies are in decline and the number of distressed assets to hit the market this year has been below projections, McNamara told Bloomberg he believes the conditions will be ripe for distressed asset buyers in 2022.

One such reason for McNamara's optimistic outlook on market pessimism is his belief that a number of loans grouped in CMBS packages exited delinquency because of forbearance agreements, and that many borrowers won't be in any better a financial position once those agreements expire, Bloomberg reports.

Another justification for betting against shopping mall-dependent CMBS loans is that forbearance itself is more tightly restricted in securitized loans. As much as $40B tied up in the type of loans McNamara is targeting with Polpo Capital is scheduled to mature over the next three years, $13B of which will mature in 2022. About 73% of that $13B can no longer be refinanced, United Capital Markets CEO John Devaney told Bisnow in early October, creating what some, including McNamara, have referred to as a wall of maturity.

Adding to the difficulty of such securities is the fact that a large number of involved malls are of the Class-B and Class-C varieties, many of which have lost more than 70% of their value since the last time they received financing, according to data from CRED iQ reported by MarketWatch. That cratering of value will likely lead to liquidation of many of those loans, a big reason why McNamara is far from alone in the bet he is placing.