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KBRA Credit Profile (KCP) Releases Research – Coronavirus (COVID-19): Affiliate of On-Demand Office Provider Regus Files for Bankruptcy—CMBS Exposure Examined

KBRA Credit Profile (KCP) Releases Research – Coronavirus (COVID-19): Affiliate of On-Demand Office Provider Regus Files for Bankruptcy—CMBS Exposure Examined

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases a special report that provides details on the bankruptcy filing for RGN-Group Holdings, LLC (RGN), which is a subsidiary of Regus Corporation (Regus). Regus is an on-demand office and coworking provider that offers over 1,000 locations in North America through a variety of workplace solution brands including Regus, Spaces, HQ, and Signature by Regus. U.S. operations for Regus previously filed for Chapter 11 bankruptcy in 2003. Regus faced severe headwinds operationally with business plan disruptions caused by the COVID-19 pandemic. Voluntary and government-mandated work-from-home polices muted demand for temporary office space, which lowered occupancy rates across the company’s portfolio of locations. A reduction in revenues was caused by concessions in pricing for offered workspaces, coupled with many sublessees’ inability to pay Regus amid the economic contraction caused by the pandemic. Regus has sought to defer rent payments or modify lease terms with landlords at many locations to reduce costs and boost liquidity. Due to the bankruptcy filing, if negotiations are unsuccessful, Regus could seek lease rejections, which would have an adverse impact on office, retail, and mixed-use properties that serve as collateral for CMBS loans.

KBRA Credit Profile (KCP) Releases Research – Coronavirus (COVID-19): Affiliate of On-Demand Office Provider Regus Files for Bankruptcy—CMBS Exposure Examined

KBRA Credit Profile (KCP) examined its $700 billion coverage universe of more than 1,100 transactions and identified 157 properties collateralized 151 loans ($12.97 billion by allocated loan amount) across 191 transactions with exposure to an affiliate or franchise of Regus. Regus serves as the largest tenant for 30 properties ($493.3 million) within the exposure group and operates as the sole tenant for three properties ($69.4 million). Due to the corporate structure of Regus, the RGN’s bankruptcy proceedings do not encompass all Regus locations.

Click here to view the report.

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About KBRA and KBRA Europe

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. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.

KBRA Credit Profile (KCP) Releases Research – Coronavirus (COVID-19): Affiliate of On-Demand Office Provider Regus Files for Bankruptcy—CMBS Exposure Examined

Contacts

Analytical Contacts

Brian Quintrell, Associate

+1 (215) 882-5903

bquintrell@kbra.com

Marc McDevitt, Senior Director

+1 (215) 882-5857

mmcdevitt@kbra.com

Business Development Contact

Marc Iadonisi, Senior Sales Director

+1 (215) 882-5877

miadonisi@kbra.com

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