Morgan Stanley plans to issue a $160.0 million CMBS large loan transaction backed by Altamonte mall located in Altamonte Springs, Florida.

Kroll Bond Rating Agency and Standard & Poor’s assigned preliminary ratings to the deal, MSC 2013-ALTM.    The capital structure includes $96.9 million of ‘AAA’, class A notes; $21 million of ‘AA-‘ rated class B notes; $15.7 million of ‘A-‘ rated class C notes; $19.3 million of ‘BBB-‘ rated class D notes and $7.1 million of ‘BB+’ of class E notes.

The property backing the loan securing the deal is anchored by Dillard’s, J.C. Penney, Macy’s and Sears.  JC Penney serves as collateral for the loan, and the remaining anchors own their own stores, including the underlying land, and operate them pursuant to reciprocal easement agreement (REA) with the borrower, according to KBRA presale report.  

The mall also has 125 tenants, which are predominately comprised of national retailers.

The borrower is a single purpose entity that is indirectly owned by a joint venture between General Growth Properties, Inc. (GGP), and New York State Common Retirement Fund (NYSCRF).  

J.C. Penney, the top CMBS tenant exposure according to S&P, has lost nearly a quarter of its value in the past week after announcing a  disappointing 32% drop in sales last week.  S&P noted that the retailer features heavily in legacy CMBS conduit and large loan transactions.

At least 13 conduit deals and 10 single borrower or large loan transactions have at least 3% combined exposure to J.C. Penney, Sears/K-Mart, Best Buy, Barnes & Noble, Office Depot, and OfficeMax, and 11 in total have over 5%.  

J.C. Penney  and Sears, both ‘CCC+’, account for most of the higher exposures,” said S&P. The 2 could trigger co-tenancy clauses at some malls, leading to rent reductions for other tenants, according to JP Morgan analysts.

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