Macy's announced last week that it will close some of its stores, while opening and replacing others. But Harris Trifon, Deutsche Bank Securities' global head of commercial real estate debt research, said that in terms of CMBS, "the impact of the announcement will be minimal."
Trifon added that even though the stores are found in many malls that collateralize CMBS, these properties are not usually pledged as collateral. Furthermore, in instances where they are pledged, the rents are comparatively low.
However, Trifon said that, "there is of course an indirect financial impact to the regional malls in the form of lost foot traffic and in-line tenants viewing the mall as less attractive due to the diminished drawing capacity."
The Macy's closures come shortly after Sears Holdings said that it will be closing 100 to 200 Sears and Kmart stores.
The effect, however, of these factors is reliant on the vacant space remaining empty for an extended time period. Trifon said that even if that happens, the financial impact will be over an extended time span.
Aside from this, he stated that the effect of the Macy's announcement will be cushioned by two added factors.
These are that there are considerably fewer stores impacted versus the Sears announcement (nine compared with 100 to 200) and nearly as many stores will be opened as closed.
Trifon stated that five Macy's stores totaling 936,000 square feet and employing 375 people together with four Bloomingdale's stores totaling 819,000 square feet and employing 463 people will be closed.
Five of the announced store closings are in malls that are backed by CMBS loans. All but one of these loans are current, Trifon noted.
There are six new stores that will be opened in the next two years, he noted. Five of these will be Macy's and one will be a Bloomingdale's. The stores will have a cumulative footprint of 823,000 square feet and will employ 1,016 people, Trifon noted in his report.
