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.
Click here to view the report.
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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) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.