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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. 

Simon Property Group Inc. is terminating its $3.6 billion bid to buy Taubman Centers Inc., arguing that its rival mall owner has breached the merger agreement by not taking steps to mitigate the fallout from the coronavirus pandemic, Bloomberg News reported. Simon said yesterday that it has “exercised its contractual rights” to terminate the deal, which was announced in February before the pandemic battered malls. The company said that it was asking a court to declare that Taubman has suffered a “material adverse event” and “breached the covenants in the merger agreement.” Taubman’s shares have been trading below the proposed deal price of $52.50 for months, raising speculation that the deal was in trouble or that Simon would seek to lower its bid.

Two committees will be holding hearings today in the Senate and House of Representatives looking at key issues amid the economic fallout due to the Covid-19 pandemic. Jovita Carranza, Administrator of the U.S. Small Business Administration, and Treasury Secretary Steven Mnuchin will testify before the Senate Small Business Committee for a hearing at 10 a.m. ET titled "Implementation of Title I of the CARES Act." Click here for more information. 

Also today, the House Financial Services Subcommittee on Housing, Community Development and Insurance will hold a hearing at noon ET titled "The Rent Is Still Due: America's Renters, Covid-19 and an Unprecedented Eviction Crisis." To view the legislation being considered, the hearing witness list and a link to the live webcast, please click here. 

Two committees will be holding hearings on Wednesday in the Senate and House of Representatives looking at key issues amid the economic fallout due to the Covid-19 pandemic. Jovita Carranza, Administrator of the U.S. Small Business Administration, and Treasury Secretary Steven Mnuchin will testify before the Senate Small Business Committee for a hearing on Wednesday at 10 a.m. ET titled "Implementation of Title I of the CARES Act." Click here for more information. 

Also on Wednesday, the House Financial Services Subcommittee on Housing, Community Development and Insurance will hold a hearing at noon ET titled "The Rent Is Still Due: America's Renters, Covid-19 and an Unprecedented Eviction Crisis." To view the legislation being considered, the hearing witness list and a link to the live webcast, please click here. 

Black Knight reported that of all of the types of mortgages available, government-insured mortgages have the greatest share of loans in forbearance that have little to no equity, National Mortgage News reported. This could negatively affect how those loans are treated when the forbearance period ends, the company said. The great majority of borrowers with forborne government-insured loans have 20 percent or more equity in their homes. But "just 9 percent [of borrowers with forborne loans] have 10% or less equity — typically enough to cover the cost of a sale of a property — with another 1 percent underwater on their mortgages," Ben Graboske, president of Black Knight's data and analytics division, said in a press release. "Of course, this leaves a population of nearly half a million homeowners who may lack the necessary equity to sell their homes to avoid foreclosure in a worst-case scenario," he added. About 19 percent of Federal Housing Administration and Veterans Affairs mortgages in forbearance were at loan-to-value ratios at 90 percent or higher, the firm found.

As many as 25,000 U.S. stores could close permanently this year after the coronavirus pandemic devastated an industry where many mall-based retailers were already struggling, Bloomberg News reported. The number would shatter the record set in 2019, when more than 9,800 stores closed their doors for good, according to a report from retail and tech data firm Coresight Research. Most of the closures are expected to occur in malls, with department stores and clothing shops predicted to be among the hardest hit. “If the anchor tenants close stores in the mall, other tenants are likely to follow suit,” Coresight Chief Executive Officer Deborah Weinswig said in the report, which put the expected range at 20,000 to 25,000. The U.S. has the most retail selling space per capita of any country and the lowest sales per square feet, according to commercial real estate company Cushman & Wakefield. American retailers went dark in mid-March in response to the Covid-19 outbreak, and — even though states are now beginning to ease restrictions — many shops are still shuttered or only providing limited service. As of June 5, retailers have planned about 4,000 permanent store closures, including hundreds by J.C. Penney, Victoria’s Secret and Pier 1 Imports. In March, before the extent and duration of the virus lockdown was clear, Coresight estimated that about 15,000 stores would shutter in 2020. 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.