NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases its Stein Mart Struggles to Find its Footing — KCP Examines CMBS Exposure special report, which examines CMBS exposure to the off-price, discount retailer. The company received a delisting notice from the Nasdaq Stock Market (“Nasdaq”) in early July 2019 and was given six months to regain compliance. While not the first retailer to experience a deterioration in same-store sales and margins, Stein Mart is handicapped with a highly leveraged balance sheet and interest burden stemming from a special dividend issued in its fiscal first quarter 2015. The company barely turned a profit in 2016 and operated at a loss in 2017 and 2018, due in part to its inability to attract national brands, manage inventory or keep prices competitive. The company retained PJ SOLOMON in January 2018 as its investment banking and financial advisor and had previously engaged Alvarez and Marsal to review its operations for performance enhancements. Stein Mart posted a profit in its fiscal first quarter 2019, but reported declines of 3.8% and 1.7%, respectively, in gross sales and same-store comps.
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 Stein Mart. Across 47 transactions, there are 50 properties, $1.0 billion, with exposure to Stein Mart as either a collateral or non-collateral tenant. Twenty-five properties with a balance of $526.5 million, or 52.4% of the exposure, collateralize mortgages securitized between 2010 and 2014, prior to Stein Mart’s special dividend distribution and subsequent reduction in earnings. For subscribers of the KCP platform, a list of loans and properties exposed to Stein Mart 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.