KCP Special Report: Bed Bath & Beyond: Less Bricks, More Clicks – CMBS Exposure Examined

Earlier this week, Bed Bath & Beyond Inc. (BBBY) reported financial results for Q3 2018. Brick-and-mortar sales declined in the mid-single-digit percentage range, while sales from customer-facing digital channels reportedly experienced strong growth. BBBY has shifted its focus in recent years towards e-commerce and invested heavily in technology-related initiatives. Simultaneous with its investments in these areas, the company is actively working to optimize its portfolio of physical stores. As part of its forward-looking strategy, BBBY has retained a third-party consultant to evaluate the impact of existing leases on margins and effectuate a more proactive and aggressive approach in negotiating with its landlords.

KBRA Credit Profile (KCP) examined its roughly $595 billion coverage universe of over 925 transactions to identify CMBS exposure to BBBYs store portfolio and identified 271 loans secured by 293 properties, $12.30 billion by allocated loan amount (ALA), with exposure to BBBY as either a collateral or non-collateral/shadow tenant. There are 245 transactions with exposure to BBBY and 95.7% of the securitized debt resides in post-crisis transactions.

To view the report, click here.

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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, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Analytical Contacts:

John Carandang, Analyst
(215) 882-5927
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Maurice Etienne, Analyst
(215) 882-5856
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Patrick Czupryna, Director
(215) 882-5854
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Mike Brotschol, Senior Director
(215) 882-5853
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