ML-Implode News - The retail apocalypse is having a terrifying impact on one corner of Wall Street

``"Malls are hard to turn around once they go downhill," said Steve Jellinek, vice president of CMBS analytical services for Morningstar Credit Ratings. As a result, many CMBS investments are getting wiped out, and "retail lending has really taken a beating," he said.
About $48 billion in loans backed by mall properties are at risk of default, according to Morningstar.
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"A lot of times, these malls decrease in value so fast," he said. "There is very little the servicer can do to maintain the value once tenants start leaving."

The CMBS that backed the [Hudson Valley] property took a hit worth $42 million. In this scenario, the lowest class of bondholders will likely end up empty-handed. It could also affect the second and third classes of investors from the bottom.
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It's not just the debt market that's taking a hit. Real-estate investment trusts that own the malls are suffering, and investors are being advised to avoid them.
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Class A malls -- those in wealthy areas with high occupancy rates and upscale anchors such as Nordstrom and Neiman Marcus -- are doing fine. But class B malls and those in the C and D territories are at risk of default.

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The retail apocalypse is having a terrifying impact on one corner of Wall Street