231 securitized commercial mortgages, with a balance of $13.9B, are now exposed due to the struggling retailer GAP. According to data obtained from Morningstar Credit Ratings, more than half of the loans are backed by collateral where leases with Gap expire within the next two years. 

32 properties with a combined balance of $819M could have their occupancy level fall below 80% if Gap vacates. However, the vast majority are offset by the relatively small space the retailer occupies, with only 14 locations compromising more than 20% of gross leaseable area. 

Gap has yet to announce US store closings, but plans to shutter 75 Old Navy and Banana Republic stores abroad are telling. Morningstar analyst Bridget Weishaar notes that Gap may close underperforming US stores.

Recently, Gap’s CEO announced to shareholders he would be open to selling clothes through other distribution channels such as Amazon.com. However, while increasing an online presence at the expense of brick-and-mortar locations could help Gap’s bottom line, it could result in more troubles for CMBS loans exposed to the retailer.