Dollar Tree's acquisition of Family Dollar Stores for $8.5 billion means that the number 15th and number 65th tenants in commercial mortgage backed securities may soon occupy less commercial real estate.
The deal will merge the second (Dollar Tree) and third (Family Dollar) largest deep discount stores. To date, the companies have not discussed store closures. Based on Trepp data, there are 337 CMBS loans with Family Dollar exposure with a total balance $1.65 billion outstanding.
“If you take into account the percentage of space Family Dollar occupies, the exposure is $336.3 million,” said Trepp.
Dollar Tree shows up in 659 Loans with $5.4 billion outstanding, and $772.7 million exposure.
Dollar Tree operated 5,080 stores in 48 states and five Canadian provinces as of May 3, 2014, with total retail selling square footage of 44 million.
Family Dollar operates more than 8,200 stores in rural and urban settings across 46 states. The Matthews, North Carolina-based company’s stock price closed at $60.66 per share on Friday, down from $68.50 per share one year ago.
“Competition from peers and e-commerce will continue to drive consolidation among retailers in our view, and may lead to more store closings,” said S&P in a report today.
The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close by early 2015.