Kmarts announcement last week that it is planning to buy Sears Roebuck & Co. - in a transaction valued at $11 billion - might result in increased collateral concentration as well as potential store closings. Both companies have a considerable presence in CMBS deals.

In a recent report, Merrill Lynch said that the downside of the merger is it would likely result in store closings. "Kmart has demonstrated a strategic pattern of streamlining its real estate," analysts wrote, noting that the retailer closed almost 600 of its stores as part of its January 2002 bankruptcy. Earlier this year, the retail chain also sold 50 stores to Sears, as well as 18 of its locations to Home Depot.

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