NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases a special report which provides details regarding the going concern warning issues by Tailored Brands, Inc. and examines CMBS exposure to each of the specialty apparel retailer’s stores: Men’s Wearhouse, JoS. A. Bank, K&G Fashion Superstore, and Men’s Wearhouse and Tux.
In the quarterly filing, management indicated it was likely to pursue bankruptcy reorganization as soon as August 2. The time frame coincides with the end of a 30-day grace period following the company’s election to miss a $6.1 million interest payment due on its senior notes that was payable on July 1. In addition to disruptions caused by the COVID-19 pandemic that temporarily closed stores from March 17 through at least May 7, 2020, the company had been facing headwinds, namely the transition from corporate attire to business casual and more recently as a consequence of remote working. In the U.S., Tailored Brands operated 1,324 stores as of February 1, 2020, comprising 9.1 million square feet of leased retail space. However, in mid-July the company announced plans to close up to 500 identified stores and reduce its corporate workforce by 20%. Additionally, the retailer suspended rent payments under operating leases for April and May 2020 as well as negotiated rent deferrals for a majority its stores.
KBRA Credit Profile (KCP) examined its $700 billion coverage universe of over 1,100 transactions and identified 217 properties collateralizing 208 loans ($14.44 billion by allocated loan amount) across 226 transactions with exposure to a Tailored Brands location. Approximately 26% ($3.79 billion) of the cohort was delinquent as of July 2020 and 21% ($3.04 billion) of the cohort was with the special servicer.
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