GameStop’s plan to shutter up to 200 stores could adversely affect commercial mortgage-backed securities loans with a combined allocated property balance of almost $42 million, according to Morningstar Credit Ratings. A team of analysts from the company and its recently acquired DBRS subsidiary identified the loans as most at risk based on either their low debt-service coverage ratios, the low occupancy rates of their collateral properties, or the fact that they were within five miles of another GameStop store.
“Morningstar Credit Ratings LLC (DBRS Morningstar) believes that GameStop Inc.’s impending store closures could adversely affect already underperforming retail properties even though the risk to commercial mortgage-backed securities with exposure to the retailer are minimal,” the analysts said in a report published Monday.
GameStop hasn’t identified which stores it will shut. As it continues to close locations to address worse-than-expected sales projections, it’s likely it will target ones with the aforementioned characteristics.
The video game retailer is one of the five largest tenants in 112 properties that serve as securitized commercial mortgage collateral with an allocated balance of more than $383 million. […]
Have visited GameStop on many occasions as a parent and actually was going by the local store in our town with my son when we found store was “closed for remodeling” The store always seemed to have traffic and crowded during the holidays. I have noticed that over the past couple of years the store merchandising has been changing from being largely video games to about 60% of the store space is now toys and other merchandise themed around the games. The move toward downloading content is effecting GameStop the way Blockbuster was effected in the movie sector.
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