The recently announced Shopko bankruptcy raises risk on $40 million in CMBS, Morningstar reported this week. The regional grocery chain, which operates primarily in the Midwest and Pacific Northwest, has announced the closure of 105 stores.
The commercial mortgage-backed securities that include Shopko loans “may be at an elevated risk of default because the properties could experience a material decline in net cash flow should the company decide to reject leases amid market and operational challenges,” Morningstar found.
If Shopko announces more store closings during the restructuring process, 15 CMBS loans with a combined allocated property balance of $146.6 million could be at risk.
Some important CRE-related government programs could be left to expire as a result of the extended government shutdown.
Issues that could be affected include insurance for property damage due to flooding and compensation for insured losses resulting from acts of terrorism.
CBRE topped Freddie Mac’s list of multifamily lenders by volume last year at $13.6 billion, followed by Berkadia at $9.8 billion and HFF at $7.2 billion.
These and other lenders put Freddie Mac Multifamily’s total production last year at $78 billion as it financed approximately 860,000 rental units.
Bank OZK is showing signs that big construction loans may be on the table for 2019, The Real Deal reported – even though the Arkansas-based bank lost more than a quarter of its value in October after writing off about $46 million in CRE loans, and said it was making an effort to reduce the commercial real estate portion of its portfolio.
CEO George Gleason said on the bank’s fourth-quarter conference call that it was seeing strong sales on some of the condo projects it has financed and would do more if presented with the right opportunities.