Sears Closings Pose ‘Little Risk’ to CMBS, Fitch Ratings Says
Commercial-mortgage bond holdings probably will not suffer from Sears Holdings Corp.’s closing of as many as 120 stores, according to Fitch Ratings.
Kmart or Sears is listed as the tenant on 255 loans packaged into the securities, Fitch said in a statement yesterday. The value of these loans is $7.74 billion, according to a statement from the rating company in New York.
Fitch “sees little risk of a negative impact on CMBS,” according to the statement.
The largest U.S. department store chain reported that it would close as many as 120 locations after same-store sales fell 5.2 percent in the eight weeks ended Dec. 25. Sears is the second-largest tenant in the $600 billion commercial-mortgage backed securities market, with stores found in 197 deals, Standard & Poor’s said in note to clients yesterday.
Fitch said 27 loans, totaling $156.8 million, are single- tenant buildings secured by a Sears or Kmart store. The majority of these mortgages are contained in transactions sold between 2005 and 2008, according to Fitch.
The highest single-tenant concentration is a $5.26 million loan secured by a stand-alone Kmart in Maui, Hawaii. The store was not on a partial list of stores to be closed released by Sears yesterday.
Top-ranked bonds tied to shopping malls, office buildings and hotels are yielding 259 basis points more than Treasuries through yesterday, unchanged from a week earlier, according to the Barclays Capital CMBS AAA Super Duper index. The spread has narrowed after soaring to a 20-month high of 323 basis points on Oct. 4 amid the European debt crisis. A basis point is 0.01 percentage point.
To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net
To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net
Rate this Page