The closing of sporting goods retailer Sport Chalet, founded in 1959, will impact 10 US CMBS deals, according to an analysis from Trepp. The retailer’s parent company, Vestis Retail Group, announced this week it had filed for Chapter 11 bankruptcy protection and would be closing the remaining 47 stores.
The largest loan is the $66.9 million loan on the Nut Tree Center in Vacaville, California, which makes up 8.33 percent of GSMS 2013-GC10, and where the retailer is the top tenant with 13 percent of its 323,322 sq ft. “The note has considerable room for error as the DSCR is a hefty 2.26x (for 2015),” Trepp noted in an emailed memo.
Among other sporting retailers facing financial hardship, competitor Sports Authority chain filed for bankruptcy protection last month, with plans to close 140 of its 463 stores. In February a Morningstar report noted that that bankruptcy could impact $3.13 billion in CMBS. Both of the retailers were encumbered by debt after being acquired by other firms, a Los Angeles Times report noted, arguing that the much smaller Sport Chalet was too small and not specialized enough to compete.
The other CMBS deals impacted include several others in California, the second largest being the $63 million Crossroads Marketplace loan which makes up 1.74 percent of CGCMT 2007-C6. That note is “already struggling with a DSCR of 0.65x (for 2015),” and Sport Chalet is the top tenant with 17.5 percent of the space in the 263,757 sq ft Chino Hills, California property.
Other loans include a $17.8 million Scottsdale Retail Center (Arizona), which makes up 1.98 percent of MSC 2008-T29, where Sport Chalet’s lease makes up 40 percent of the space; the $15.4 million Conejo Valley Plaza loan, which makes up 0.94 percent of MSC 2006-IQ12, where Sport Chalet occupies 64 percent of the space; and the $12 million Stockdale Plaza (San Diego), which makes up 0.85 percent of WFRBS 2014-C21, and where Sport Chalet’s lease is for almost 70 percent of space.
Update: In a separate report, Morningstar noted that $628.9 million in CMBS across 11 deals could be affected.