NEW YORK, Feb. 7 /PRNewswire/ -- Standard & Poor's today identifies those
CMBS transactions it rates that have exposure to Kmart Corp. (Kmart; 'D')
lease rejections. When Kmart filed its petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code on Jan. 22, 2002, it also filed a
motion for an order authorizing a rejection of certain unexpired leases, and
included a schedule identifying those leases by store number, city, state,
tenant, and landlord.
The identification process has been hampered by the scarcity of store
location information because store numbers are not always available, and there
are often multiple store locations in the same city. Neither property
addresses nor zip codes were provided. This has resulted in confusion in
determining which properties have lease rejections, given the difficulty in
successfully matching the schedule to specific loans in Standard &
Poor's-rated CMBS transactions.
An initial analysis by Standard & Poor's indicates that nine lease
rejections from the filing can be found in the following four Standard and
Poor's-rated CMBS transactions: Asset Securitization Corp.'s series 1997-D5
(ASC 1997-D5), Credit Suisse First Boston Mortgage Securities Corp.'s series
1998-C1 (CSFB 1998-C1), GMAC Commercial Mortgage Securities Inc.'s series
1999-C1 (GMAC 1999-C1), and GS Mortgage Securities Corp. II's series 1998-C1
(GSM2 1998-C1) (see list).
The nine lease rejections consist of three Builder's Squares and six
Kmarts. The three Builder's Squares are found in ASC 1997-D5, and total
approximately $24.5 million, or 1.46% of the transaction. One Kmart lease
rejection was found in CSFB 1998-C1, totaling approximately $1.6 million, or
0.06% of the current outstanding pool balance. Another Kmart lease rejection
was found in GMAC 1999-C1, totaling approximately $4.7 million, or 0.36% of
the current outstanding pool balance. An additional four Kmart lease
rejections were found in GSM2 1998-C1 totaling approximately $15.5 million, or
0.87% of the current outstanding pool balance. Please note that the exposure
balances are based upon the loan amount, and thus might overstate the
exposure. However, the three Builder's Squares are credit tenant leases (CTLs)
and the two Kmarts in CSFB 1998-C1 and GMAC 1999-C1 also appear to be CTLs.
The four loans in the GSM2 1998-C1 are secured by retail properties in which
Kmart is a significant tenant.
The list below is constrained by the lack of detail provided by Kmart's
Lease Rejection Motion dated Jan. 22, 2002, and should be considered
preliminary. Standard & Poor's will continue its attempts to identify
additional lease rejections in CMBS deals. It is likely that more lease
rejections will be found in CMBS transactions. In addition, Kmart has
indicated that it will file additional lease rejections and store closings on
March 20. While none of the lease rejections identified thus far will affect
the current ratings of these CMBS transactions, Standard & Poor's will
continue to monitor this situation.
CMBS DEALS WITH REJECTED KMART LEASES
Transaction Loan Name Amount % of Deal
ASC 1997-D5 Builders Square-Daytona $8,838,427 0.53%
ASC 1997-D5 Builders Square-El Paso $7,968,310 0.47%
ASC 1997-D5 Builders Square-San Antonio $7,742,049 0.46%
CSFB 1998-C1 Kmart-Lackawanna $1,601,937 0.06%
GMAC 1999-C1 K-Mart (Campbellsville) $4,678,294 0.36%
GSM2 1998-C1 Ruston Center $4,698,189 0.26%
GSM2 1998-C1 Sunshine Hts Shopping Ctr. $4,359,954 0.24%
GSM2 1998-C1 Center of Clewiston $3,360,417 0.18%
GSM2 1998-C1 Spring Pk Plaza Shop Ctr. $3,038,288 0.17%
SOURCE Standard & Poor's
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CONTACT:
Christian Degenhardt, or Roy Chun, both of
Standard & Poor's, +1-212-438-2430
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