The Real Deal New York

Macy’s closures spell trouble for investors with $530M in CMBS loans

At least 13 mortgages could be at risk

January 14, 2016 01:25PM

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Macy’s store in Herald Square

The shuttering of 36 Macy’s stores could impact more than $530 million in commercial mortgage-backed securities loans.

Many of the loans, backed by the store locations, make up significant parts of “legacy CMBS deals,” Sean Barry, an analyst with Trepp told the New York Observer. At least 13 CMBS loans could be affected by the store closings, and Morning Star Credit Ratings estimates losses of more than $260 million on six of those loans.

The store closings will leave shopping malls with massive vacancies, since Macy’s was often their anchor tenant. One of the biggest deals that will be affected is a $65.7 million mortgage on the Chapel Hill in Ohio, which stands to lose nearly $46.6 million, the website reported. Another is a $49.6 million loan backed by the Hudson Valley Mall in Kingston, N.Y., which could lose $7.8 million.

Earlier this week, the hedge fund Starboard Value suggested that Macy’s separate its city flagship stores from its mall properties and create joint-venture entities for each. The hedge fund had previously pushed for a real estate investment trust spinoff of the store’s real estate assets. [NYO]Kathryn Brenzel 

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