Weak Sales at ‘B’ Malls, Store Closures Gives Fitch Ratings the Jitters

Fitch Ratings has warned of some likely “negative rating movement” for commercial mortgage-backed securities, or CMBS, that have “high concentrations” of loans tied to regional malls and outlets. The ratings firm specifically cited “Class B and C malls” in loans approaching maturity. Melissa Che, senior director for CMBS at Fitch, said weak performance trends have resulted in negative rating outlooks for these more vulnerable malls and outlets. She noted that Fitch has already given negative outlooks on 83 malls and outlets. Che said there are 72 loans — worth approximately $6.2 billion — that are secured by regional mall and outlet properties. The CMBS’s are connected to loans from 2010 to 2012 and mature over the next three years. “These loans represent approximately 20 percent of the total Fitch-rated transactions for the same period,” she added. Che cited a variety of factors for the ratings firm’s concern with these maturing loans and the impact on CMBS’s. “Considering the changing retail landscape and increasing number of retail bankruptcies and store closures, we are closely tracking exposure to malls in our rated CMBS transactions,” Che said in the report. “Class B and C malls, in particular, are driving weaker loan performance as they generally have less

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