KBRA Releases Special Report: Forever 21 Identifies 178 Potential Closures – CMBS Exposure

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases a special report, “Forever 21 Identifies 178 Potential Closures – CMBS Exposure”, which examines CMBS exposure to potential Forever 21 bankruptcy closures. One of several motions filed today by Forever 21, Inc. identified the 178 U.S. stores it is considering for closure. According to bankruptcy documents, the company conducted an extensive store-by-store performance analysis of all of its locations, which considered a variety of factors including the potential to negotiate rent reductions with the applicable landlords. The company will attempt to negotiate more favorable leasing terms and determine thereafter the most beneficial course of action, whether closure or continued operations under modified leasing terms. The company does not anticipate closing all 178 locations, but reserves the right, pending court approval, to close said locations at its discretion. Procedures for store closures include liquidation sales that would commence no later than the end of October 2019 and be completed by year-end 2019. Forever 21 further requested the right to close additional locations, in excess of the 178 stores initially identified. Liquidation sales for any additional store closures may continue into 2020.

KBRA Credit Profile (KCP) reviewed the list of 178 stores, cross-referenced potential closures against its previously published CMBS exposure list, and identified 55 stores across 80 transactions that have been targeted for potential closure. The properties with exposure had an aggregate allocated balance of $10.0 billion as of August 2019. We note that the ten largest exposures all reside in SASB transactions including Mall of America ($1.4 billion), Scottsdale Fashion Square ($451.2 million), and Destiny USA Phases I & II ($430.0 million). Of these three exposures, only Destiny USA (JPMCC 2014-DSTY) has been identified as a KBRA Loan of Concern (K-LOC). KCP will continue to monitor bankruptcy proceedings for potential lease modifications or rejections, as well as additional store closures. KCP subscribers can download the list of 55 stores by clicking here.

To view the report, click here.



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About KBRA and KBRA Europe

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.


Maverick Force, Associate

(215) 882-5904


Abhi Patel, Associate

(215) 882-5885


Patrick Czupryna, Director

(215) 882-5854


Marc McDevitt, Director

(215) 882-5857


Mike Brotschol, Senior Director

(215) 882-5853


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