Apache is functioning normally
By James Rogers
The fallout from Bed Bath & Beyond Inc.’s bankruptcy continues, with Moody’s weighing the impact of the troubled home goods retailer’s demise on commercial mortgage-backed securities (CMBS) loans
The fallout from Bed Bath & Beyond Inc.’s bankruptcy continues, with Moody’s weighing the impact of the troubled home goods retailer’s demise on commercial mortgage-backed securities (CMBS) loans.
“Moody’s has identified approximately 135 CMBS loans with a total balance of approximately $3.6 billion–or less than 1% of the CMBS universe we rate–with exposure to Bed Bath & Beyond as a top five tenant,” wrote Moody’s Vice President of Structured Finance, Matthew Halpern, in a note Wednesday. “The size of the exposure in our rated CMBS universe is generally limited with only 22 properties with exposure to the tenant exceeding 25% of the property’s square feet.”
Halpern warns that, if unable to backfill those retail spaces quickly, a sizeable tenant closure may put a loan at an increased risk of default. “However, the tenant had already announced several store closures in recent years allowing landlords more time to plan for potential re-tenanting,” he added. “Due to the overall size of the loan and property exposure, we expect an overall limited impact to CMBS we rate.”
Bed Bath & Beyond bankruptcy: These companies could benefit from the retailer’s demise
Bed Bath & Beyond’s bankruptcy follows a troubled couple of years marked by strategic missteps, cash burn, challenging underlying business trends and the impact of the COVID-19 pandemic.
After several months teetering on the brink of bankruptcy, Bed Bath & Beyond announced its Chapter 11 filing on April 23. The company and “certain of its subsidiaries” are now operating their business and managing their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court, according to the SEC filing. Debtor-in-possession, or DIP, financing lets companies keep operating in chapter 11 bankruptcy.
The company has entered into a $240 million DIP term loan credit facility from Sixth Street Specialty Lending Inc. (TSLX), Sixth Street Lending Partners and TAO Talents, if approved by the bankruptcy court.
Bed Bath & Beyond bankruptcy:Here’s what happens next
Bed Bath & Beyond also expects to receive a Nasdaq delisting notice, according to the filing.
The company’s stock is down 24.7% Wednesday.
On Tuesday Moody’s downgraded Bed Bath & Beyond’s probability of default rating to D-PD from Ca-PD.
-James Rogers
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04-26-23 0941ET
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Source: morningstar.com