Payless Shoes Have a Small Footprint in CMBS

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Payless ShoeSource's April 4 bankruptcy filing is more bad news for investors in U.S. shopping malls, but the closure of 400 stores in the U.S. and Puerto Rico will have a relatively limited impact on mortgage bonds.

Trepp has identified 36 loans for which the backing collateral features a Payless location reported to be closing. Nearly less than half of the loans have balances under $15 million and legacy deals are slightly more represented than new vintages. In many cases, Payless is not one of the top two tenants.

DBRS has identified a total of 56 loans, comprising $311 million in outstanding balance, in CMBS transactions that are exposed to Payless based on reporting from the largest five tenants at each property. However, because Payless is a relatively small retailer, this list is not expected to be all inclusive and at the same time will not have a large impact on larger retail loans within the CMBS market. The total exposure by outstanding balance of all CMBS (based on these top five tenants) is only 0.07%. However, for some deals, there may be some impact, and this exposure is another shoe that dropped in the retail stress story. The appendices below list all CMBS deals and loans with exposure to Payless.

Payless, a discount shoe seller, has more than 4,400 stores in over 30 countries, according to its website. 

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