Moody's Investors Service said in a report this week that the growing gap in performance between stronger and weaker malls requires a closer look.

The ratings agency said that a default from a marginal mall can put losses on its loans well above those typical for a commercial loan. The option to renovate or reconfigure those properties can also run into many millions of dollars.

"If Moody's determines that a mall's long-term viability is in doubt we may introduce stress scenarios beyond those contemplated in our usual rating approach, which assumes long-term operational viability of the mall as the benchmark," said Tad Philipp, Moody's director of commercial real estate research, and co-author of the Moody's report U.S. CMBS: Growing Gap between Strong and Weak Malls.

The ratings agency noted that the majority of the CMBS loans collateralized by regional malls that it reviewed have been high quality. At the same time it also noted an increase in the share of malls that are not well suited to its standard approach and may merit a recovery-based approach.  

To differentiate winners and losers, Moody's said in the report that it has identified numerous characteristics that help identify which regional malls will be able to retain or attract tenants. Attributes include being the dominant or only mall within a trade area, having four or more department stores as anchors, and tenant sales averaging greater than $450 per square foot.

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