Although a large percentage of recently bankrupt Athlete's Foot Group can be found in CMBS transactions -- roughly one-half of the 124 Athlete's Foot locations that are closing are in malls used in CMBS -- analysts believe the closings will have minimal adverse impact on the sector.

Merrill Lynch researchers note that although analysts found $5.75 billion in loans that have exposure to Athlete's Foot branches due to close, the impact of these closures on individual deals as well as the CMBS market would be negligible considering Athlete's Foot's small store size. Analysts added that on average, Athlete's Foot stores that expected to close are 4,400 square feet. Of the locations that have CMBS exposure, the closing stores only make up 3.3% of the mall's gross lease able area.


If the loan exposure was normalized by the property's allocated loan amount and by Athlete's Foot estimated square footage, the total exposure dips to a relatively small $39.4 million. They also noted that the maximum potential exposure is only 0.5% of the pool balance. Analysts added that while Athlete's Foot has a presence in many malls, it is hardly listed among the top tenants, which makes the effort to estimate CMBS exposure rather challenging. The shoe company was listed as a tenant in the Annex A of only two of these loans: the 162-21 Jamaica Avenue Mall in Jamaica, N.Y., securitized in LB-UBS 2000-C4 and Crowe's Crossing Shopping Center in Stone Mountain, Ga., securitized in LB-UBS 2001-C24.

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