RadioShack’s store closures will have a much smaller impact on commercial mortgage bonds than those announced this year by several big box retailers.
The struggling consumer electronics retailer has a small footprint in the CMBS market, according to research published Friday by J.P. Morgan. Since tenant data is limited to top three lessees and since RadioShack is a small format business, its locations tend not to show up in the top three, according to the report. However, this likely understates exposure figures. “According to our estimates RadioShack is a tenant in 96 loans with a total current balance of $360 million,” the report states. “On average, its locations account for 10% of the total rentable area and the square footage weighted balance is $35.6 million.
Last week RadioShack reported that its losses from continuing operations widened in the three months ended May 3, to $98.3 million from $23.3 million a year earlier. Comparable store sales dropped by 14% year-over-year.
RadioShack has been attempting to turn itself around through a combination of drastic store design improvements and downsizing it wants to close up to 1,100 store locations (out of about 4,300 total locations). However, plans for store closures have hit a snag because the company has had trouble getting its senior lenders, who have a lien on the stores, to sign off.