Wednesday, February 2, 2011

Border's Taking a Dirt Nap?

It's becoming more and more definitive that Border's books is going into bankruptcy. As reported in Traffic Court this week, they've announced that they're just going to ease those rent payments in as late as possible to preserve liquidity (sounds like a rental house tenant on the bad side of town that I'm dealing with, just fancier words). In a bankruptcy, leases get thrown out the window, stores probably go dark, and it impacts the CMBS deals - so which ones have the most exposure?

There are a few ways to look at exposure to events such as a bankruptcy, but given the average store footprint is substantial (let's call it 20k-50k sq ft) a big dark space is going to destroy a lot of these retail centers.

The deals with >10% exposure to a Border's, by non-defeased loan size, are:
  1. CSFB 2004-C5 - 19.70%
  2. WBCMT 2004-C14 - 15.36%
  3. DLJCM 1998-CF1 - 14.50%
  4. ASC 1997-D5 - 13.68%
  5. JPMCC 2001-CIB3 - 13.10%
  6. CSFB 2001-CK3 - 11.47%
  7. JPMCC 2006-CB14 - 10.98%

There are some real gems too, such as CSFB 2003-CPN1 Northgate Mall which is scheduled to mature in November 2012, is already behind on the mortgage with a 0.93x DSCR, and a 156% LTV.

*If I were a fancy Wall Street firm or data provider, I'd have a cleaner and scrubbed set of data, but as it were, I'm using Bloomberg and I didn't scrub the data so I'm certain there are some cases where I have a "Mexican Across the Border Restaurant" instead of "Border's Books". Also, I see several Border's Books that just got missed for some reason. Further, if they're not a top 3 tenant (like in a mall), they don't show up. And, finally, if it is a single loan with multiple properties it's not fair to target it using the whole loan approach. For a fully scrubbed guaranteed accuracy list, please send an email for PayPal instructions for the $25,000 fee and we'll get right on it.

1 comment:

Concrete Jungle said...

FYI, Deutsche Bank came out with an exposure list today, but they took the approach of measuring exposures by including the percentage square feet occupied by Borders, whereas I took the full loan balance divided by the deal size. Both have their merits, but the key difference of opinion is that DB considers them a junior anchor which will have little impact, while I keep thinking of the Borders in the shopping center near Riverchase Galleria (in Birmingham, which we wrote about recently) which is going to leave a gaping hole in the middle of the shopping center and put the adjacent stores out of business.

Also, Deutsche Bank did a much more thorough job and caught a few that I'd missed - like the one in DBUBS 2011-LC1A (0.1%, $2.1mm, 6k sq ft)