News Column

Fitch: J.C. Penney Closures Will Have Limited Impact on US CMBS

January 21, 2014

NEW YORK --(BUSINESS WIRE)-- The Fitch-rated CMBS deals that are exposed to J.C. Penney's announced store closures are capable of absorbing the potential loss. However, we believe significant cash flow changes are unlikely as the stores that are closing have been underperforming for some time and are not drawing substantial traffic to their malls or centers. We believe some malls could benefit if they replace J.C. Penny with a stronger tenant. J.C. Penney announced it will close 33 of its more than 1,100 stores this week. Seven Fitch-rated deals are exposed. Our understanding is that five other legacy (non-Fitch-rated) deals have some exposure. Over the longer run, Fitch believes continuing struggles for major retailers (including J.C. Penney, Sears, and BestBuy) may impede the general stabilization we have seen in the retail CMBS market. Both J.C. Penney and Sears have significant real estate portfolios in a wide range of markets. If large scale closures take place, we would expect dominant class-A malls to re-tenant space while weak malls could be put under pressure. Additional information is available on www.fitchratings.com . The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com . All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE ' WWW.FITCHRATINGS.COM '. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Ratings Mary MacNeill Managing Director U.S. Structure Finance +1 212-908-0785 1 State Street Plaza New York, NY or Rob Rowan Senior Director Fitch Wire +1 212 908-9159 or Media Relations: Sandro Scenga , New York , +1 212-908-0278 Email: sandro.scenga@fitchratings.com Source: Fitch Ratings


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