There is little risk of a negative impact on CMBS from the closure of 100 to 120 Sears and Kmart stores under the U.S. Sears Holdings Corp., according to a Fitch Ratings report.
The nation's fourth-largest retailer said the closures are a result of a lower demand for electronics and apparel and a sales decrease in its layaway program. Sears announced the closures Tuesday but did not say which of the properties in its portfolio would be sold or subleased.
Fitch has identified 255 Fitch-rated loans with a Sears of Kmart entity listed as a tenant. The total value of these loans is $7.74 billion. Of those loans, 27 are single-tenant facilities secured by a Sears or Kmart. Those loans total $156.8 million.
"The majority of these single asset loans are in transactions issued between 2005 and 2008 and are well diversified," explained Fitch analysts.
The highest single tenant concentration is secured by a stand-alone Kmart property located in the Kahului section of Maui, HI. The property secures a $5.26 million loan in the Mortgage Capital Funding, Inc. 1998-MC2 transaction.
However, the deal has enough credit support in the class rated 'B+' to absorb a total loss of the loan without impacting investment-grade ratings.
The retailer however could be facing additional problems. The company expects a 50% decline in fourth quarter profit, according to the New York Times.