NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases a special report, Mo’s, Gotta Go?, which examines CMBS exposure to Modell’s Sporting Goods, Inc. The 130-year-old, fourth-generation retailer recently engaged strategic advisory firm Berkeley Research Group and law firm Cole Schotz for restructuring advice. The retailer announced plans on February 21 to close 24 of its 141 locations, but subsequently revised the closure figure to 17 stores after successfully negotiating rent concessions at seven of its locations. Negotiations with vendors have so far proven less successful. According to industry sources, vendors rejected a proposal for extended payment terms over three years and asserted payments must continue to be made within 90 days as a condition of supplying merchandise. Modell’s is expected to submit a counter proposal to its vendors in the coming days, as it attempts to avoid bankruptcy. In addition to negotiating with its vendors and closing underperforming locations, it has been reported that Modell’s is calling on landlords to accept reduced rents, as well as considering smaller store sizes and seeking outside equity in the form of a minority investor.
KBRA Credit Profile (KCP) examined its coverage universe and has identified CMBS exposure to Modell’s. Across 56 transactions, there are 32 loans secured by 33 properties—$4.38 billion by allocated loan amount (ALA)—with exposure to Modell’s as either a collateral or non-collateral/shadow tenant. Five CMBS properties ($528.9 million) are exposed to the list of 17 closing locations.
KCP will continue to monitor ongoing developments related to Modell’s and report on potential consequences for CMBS collateral within its monthly KBRA Credit Profile (KCP) report for each transaction. For subscribers of the KCP platform, a list of loans and properties exposed to Modell’s is available by clicking here.
To read the full report, click here.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
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