KBRA Credit Profile (KCP) Releases Research – Coronavirus (COVID-19): Ascena Retail Group Files for Chapter 11 Fashionably Late–CMBS Exposure Examined

NEW YORK--(BUSINESS WIRE)--Ascena Retail Group, Inc. (Ascena) filed for Chapter 11 bankruptcy in late July, in a move to reduce debt obligations by almost $1 billion as well as to shutter underperforming locations. The fast-fashion retailer is considering the closure of upwards of 1,600 of its 2,733 locations and has so far filed motions to reject 1,280 leases.

Once the biggest national retailer of women’s and girls’ clothing, Ascena brands’ market share has been threatened by both new and existing competitors. Ongoing financial pressures were exacerbated by temporary store closures and supply chain disruptions prompted by containment and mitigation measures in response to the coronavirus (COVID-19) pandemic. The retailer owns several well-known apparel brands such as Ann Taylor, Catherines, Justice, LOFT, Lane Bryant, and Lou & Grey with brick-and-mortar footprints in malls, outlets, and shopping centers across the U.S. Ascena operated the Dressbarn and Maurices brands, which it sold last year.

KBRA Credit Profile (KCP) examined its $700 billion coverage universe of over 1,100 CMBS transactions and identified 529 properties collateralizing 472 loans—$54.77 billion by allocated loan amount—across 399 transactions with exposure to an Ascena location. Approximately 21% ($11.37 billion) of the loans were delinquent as of August 2020 and 24% ($13.3 billion) was with the special servicer. KCP will continue to monitor ongoing developments related to Ascena and its affiliated retail brands and will report on potential consequences for CMBS collateral within its monthly KCP report for each transaction.

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Related Publications

• You Are Not Going to Like the Way This Looks: CMBS Exposure to Tailored Brands (July 2020)
• Brooks Brothers Files Chapter 11—CMBS Exposure Examined (July 2020)

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