A big payoff has arrived for investors who sliced a retail heavy commercial real estate debt index.
A loan in the Prizm Outlets Mall outside of Las Vegas posted a 120 percent loss after the property was auctioned off for just over $ 400,000, according to Bloomberg News. The buyer was not disclosed, but New York-based Kohan Retail Investment Group is now listing the property on their website.
The total realized loss on the $ 62.2 million loan, including fees and reimbursements to the master servicer, was $ 74 million. According to Bank of America, this is the biggest loss on a CMBS loan since 2008.
The Prizm sale marked the first property auction related to CMBX 6, a credit derivatives index that has heavy exposure to malls and malls. According to MP Securitized Credit Partners that short-circuit the index, 31 of the 39 shopping centers are impaired.
Carl Icahn is another investor who has sold the index short. Icahn has been preaching the short circuit ever since it became clear that the pandemic was going to destroy brick and mortar retailers and real estate.
“We believe these mortgages will suffer the same disastrous fate as mortgage-backed securities in the 2008 debacle,” Icahn told Bloomberg this week.
Icahn and other investors betting on this debt have already paid off some of their bets. Some of the country’s largest mall investors, including Simon Property Group and Starwood Capital Group, have defaulted on loans.
[Bloomberg] – – Dennis Lynch