KBRA Releases: Rock Bottom Retail — JCP Exposure Update 

Kroll Bond Rating Agency (KBRA) releases its Rock Bottom Retail — JCP Exposure Update special report, which examines CMBS exposure to the department store operator. Earlier this week, J.C. Penney Company, Inc. (NYSE: JCP) reported financial results for its fiscal second quarter 2019 — comparable store sales fell by 9.0% for the quarter. While the company continues to highlight the “long-term” and “holistic” nature of its turnaround, market participants are not responding favorably. The company’s stock is trading close to $0.60/share and its $1.6 billion term loan, which matures in 2023, is trading close to 50 cents on the dollar. While refuting claims of a pending bankruptcy filing, supported by $1.7 billion in liquidity, the company has engaged advisors to review its capital structure and evaluate the health of its balance sheet. It faces significant headwinds in transforming its business, including new tariffs on Chinese-imported consumer goods and $3.6 billion in long-term debt.

KBRA Credit Profile (KCP) examined its coverage universe of more than 1,000 commercial real estate (CRE) securitizations ($600 billion) to identify CMBS exposure to JCP. Across 289 transactions, there are 280 loans secured by 303 properties, $29.12 billion by allocated loan amount (ALA), with exposure to JCP as either a collateral (54%) or non-collateral/shadow (46%) tenant. KBRA has already identified 95 KBRA Loans of Concerns (K-LOC), $6.94 billion (24%), with exposure to JCP, including 24 specially serviced assets backing $1.46 billion in securitized debt (5%). Delinquent loans with exposure to the department store retailer represent 4.1% of the total ALA. For subscribers of the KCP platform, an updated list of loans and properties exposed to JCP is available by clicking here.

To access the full report, click here.

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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.

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