OREANDA-NEWS. Sports Authority's withdrawal from some locations, related to its Chapter 11 bankruptcy protection filing, may pressure smaller strip malls or neighborhood shopping centers, Fitch Ratings says. However, Fitch-rated CMBS deals will not see significant impacts from the store closures.

After the announcement, Fitch analyzed its impact on Fitch's CMBS portfolios. Forty-nine Fitch-rated transactions were identified with exposure to Sports Authority. Of them, 20 are CMBS 1.0 vintages while 29 are CMBS 2.0. Only 11 of the 49 have exposure to the retailer of 1% or greater, based on the loan's percentage of the pool multiplied by the tenant's net rentable area percentage. Additionally, as the majority of these transactions are multiborrower, the diversification of the properties that serve as collateral in these trusts will minimize the overall impact of problems with one tenant.

A typical Sports Authority store occupies approximately 45,000 square feet. The stores are either an inline tenant in certain malls or a stand-alone store. In either format, Fitch's analysis indicates the impact of any potential store closures related to the bankruptcy is limited for Fitch's CMBS portfolios.

However, the loss of a major tenant in smaller strip malls or neighborhood shopping centers could draw pedestrian traffic away from them. In some cases, the loss of a Sports Authority store could trigger co-tenancy clauses and/or termination options, which come into effect when a major tenant leaves its space.

The bankruptcy does not change Fitch's overall view that the retail subsector of CMBS is stabilizing. In the fourth quarter of 2015, vacancy for neighborhood malls fell by 10 bps to 10% and rents rose 0.5%, up 2.2% for the year. The regional mall vacancy rate dropped 10 bps to end the year at 7.8%. The only US region to experience a vacancy increase was the West. However, this region still exhibits the strongest operating metrics, with an average vacancy rate of 8.7% and the highest average asking rate of $24.57 psf. The Midwest continues to exhibit the weakest asset performance with a vacancy rate of 12.5% and average asking rental rate at $16.49 psf.

Liquidation sales at approximately 140 Sports Authority stores began Friday, according to media reports, with one-third of the stores beginning their sales in the coming days. Of these, 25 are reported to have begun liquidation in Texas, 19 in California, 18 in Florida and 11 in Illinois.