Barry Sternlicht’s Starwood Capital Group missed two monthly payments on securitized debt tied to five shopping malls anchored by bankrupt department stores including Sears and J.C. Penney, Bloomberg News reported. The delinquent May and June payments are further signs of the damage wrought by the COVID-19 pandemic and economic shutdown, especially to retail. The missed payments total $2.7 million on the $549 million commercial mortgage-backed security, according to data compiled by Bloomberg. Debt delinquencies have soared for mall owners, which lost market share to e-commerce and were hit with tenant bankruptcies even before the pandemic forced shoppers and diners to stay home. By last month, more than 9 percent of retail commercial mortgage-backed securities were managed by special servicers, the workout firms that handle delinquent debt, up from about 5 percent before the pandemic, according to property data firm Trepp. Landlords collected an average 61 percent of rent from retail tenants in June, down from 88 percent in March before the crisis, according to Datex Property Solutions. Starwood Capital, which Sternlicht founded in 1991 as a distressed real estate investing firm, now manages about $60 billion in assets. Read more.
Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store.
