Kroll Bond Rating Agency, Inc. (Kroll) recently released a special report on an auction of real estate properties that were occupied by Toys “R” Us. The auction was conducted over a two-day period on August 13 and 14, 2018. Of the total 246 properties, 123 partially secure a $512-million loan that was securitized in a single borrower transaction, TRU 2016-TOYS, in 2016.
According to bankruptcy filings, bids totaling $116.9 million ($93/sf) from several third-party purchasers were accepted for 32 assets. Ollie’s Bargain Outlet was responsible for the bulk of the total bid price, having submitted an offer of $42 million for 12 stores ($87/sf), followed closely by Scandinavian Designs, which bid $36 million for 15 stores ($64/sf). The bids for the 32 assets compare with the aggregate of Kroll’s property level “As Dark” values of $103.6 million ($82/sf) for the same set of stores.
In accordance with the bidding procedures outlined in bankruptcy filings, offers from third-party purchasers were eventually accepted for the 32 assets referred to above.
Trepp reports the “As Dark” value for the entire portfolio of $560 million, suggesting that if all the stores were sold “as is,” the proceeds would be in excess of the current loan amount of $489 million plus $5 million in principal and interest advances. However, it is likely the best store locations were “cherry-picked” by the interested bidders, and it may be more difficult to obtain the estimated “As Dark” values for the remaining stores to fully repay the CMBS loan.