Thursday, January 5, 2012

Macy's Closures

On the 4th day of every year, the executives at Macy's have a little ritual that involves a little slap and tickle in the board room followed by a ceremonial closure of stores sure to crush already underperforming malls and dash the hopes and dreams of adjacent in-line retailers. This year was no exception as they announced the closure of 5 Macy's and 4 Bloomingdales, all of which will have going out of business sales for 10 weeks before shuttering their doors forever. The List is below.

Parmatown Mall (aka Parmatown Shopping Center) in GMACC 2004-C2 is already in the hands of a receiver, and in late 2011 the receiver identified "critical life safety capital improvements" that were needed immediately. A March 2011 appraisal pegged the value at $29.7mm, substantially below the $62.4mm in outstanding senior mortgage.

Simon - West Ridge Mall is in BACM 2004-4 and represents 11.15% of the deal. The loan has been on and off the watchlist for low DSCR in 2011 and the most recently reported DSCR was 3Q 2011 @ 1.17x with 85% occupancy. Unfortunately Macy's is the premier anchor at the mall in terms of its location in relation to in-line retailers who will get crushed in the near-term; fortunately, Macy's is in the premier anchor at the mall and hopefully Simon can repopulate the dark space relatively quickly. The mall does have other problems - namely the other anchors, which are Sears (ugh), Burlington Coat Factory (never been in one, but what do they sell when it's not winter?), and JC Penney.
Although Hickory Hollow is not in a CMBS deal, there is an unanchored shopping center adjacent to the mall that is in BSCMS 2002-PBW1 that represents 0.24% of the deal. That property is not in default, but it's struggling.

Mall of America is the big one here, with Bloomingdale's accounting for 7.90% of the sf (expires 8/2012). The Mall also has a Macy's (9.99%). Other than this tenant, the mall has performed well with 3Q 2011 DSCR at 1.71x and occupancy at 91%. The loan is in three CMBS deals: CD 2007-CD4 (4.85%), GECMC 2007-C1 (3.11%(), and COMM 2006-C8 (10.82%).

White Flint does not have any direct exposure, but the Lord and Taylor pad within this mall is in the Lord & Taylor Portfolio in MLFT 2006-1. Just one more bullet for this property to absorb.

Mall CMBS Deal Exposure Store City State
Mall of the Mainland

Macy's Texas City TX
Parmatown Mall GMACC 2004-C2 8.67% Macy's Parma OH
Hickory Hollow

Macy's Antioch TN
Laurel Mall

Macy's Laurel MD
West Ridge Mall BACM 2004-4 11.15% Macy's Topeka KS
Mall of America Multiple see comment Bloomingdale Bloomington MN
Oakbrook Home and Furniture

Bloomingdale Oak Brook IL
White Flint

Bloomingdale North Bethesda MD
Perimeter Mall

Bloomingdale Atlanta GA

1 comment:

crabsofsteel said...

out of 800+ stores, that's not so bad. This is not going to have much effect on CMBS.