Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

U.S. retailers plan to stop paying rent to offset virus closures

bloomberg.com

Post reply on HN
Print view View original

81–90 of 240 posts

Re: U.S. retailers plan to stop paying rent to offset virus closures

#81

Post by XMPPwocky »

digitaltrees wrote: post #72
XMPPwocky wrote: post #57

Earlier quoted context omitted.

> a monthlong shuttering can and will drive many into bankruptcy. They should have saved up- a decent emergency fund is three+ months of expenses, or so I'm told. In a better world... Didn't save up? You lose your business. Either it goes under or you sell it at fire-sale prices to somebody who has the assets to keep it afloat until things stabilize (possibly the government). Your workers? Of course, the government w…

But everyone will end up poorer if we let mass bankruptcy to wash over the economy. Many of these SMBs and large corps took years to establish and have domain knowledge, trained work forces, supply chains that can’t just spin up easily. A little collective sacrifice and collaboration goes a long way when everyone is sinking together.

> Many of these SMBs and large corps took years to establish and have domain knowledge, trained work forces, supply chains that can’t just spin up easily.

And the value of all that will help get them a higher price when they sell the company.

Investors too scared to snap up these bargains? Cool- the government buys it and nationalizes it.

A little collective sacrifice and collaboration goes a long way all the time- not just when you get run over by the steamroller you were picking up pennies in front of.

Re: U.S. retailers plan to stop paying rent to offset virus closures

#82

Post by csomar »

_bxg1 wrote: post #17

All rent should be suspended, across the board, for everyone. Rent is a passive expense that businesses and individuals alike who are not getting any income right now will have no hope of paying.

Rent is only one part of the chain. You have mortgages, people/funds depending on this income, people taking loans against their property, etc...

Stopping rent will stop these people and you'll have a cascade effect. You need to stop everything.

Re: U.S. retailers plan to stop paying rent to offset virus closures

#83

Post by refurb »

vkou wrote: post #40
HammockTester wrote: post #36

Earlier quoted context omitted.

As long as you're the one happily shelling out you can reasonably promote that idea.

What does this mean in this context? Are we spilling ink for the sake of the owners of these retail spaces? Do you think they are going to be any better off if these retailers just stop paying rent, and go out of business, instead? Instead of grousing, the landlords should be petitioning for their mortgage payments to be suspended for this time period.

What does this mean in this context?

It means it's easy to suggest a solution that costs you nothing personally.

Re: U.S. retailers plan to stop paying rent to offset virus closures

#84

Post by wrkronmiller »

wegs wrote: post #50
nostromo wrote: post #37

Earlier quoted context omitted.

You can't turn off and on the economy like a switch. People need to pay rent and mortgages, or loans will not be repaid. If loans don't get repaid, banks fail. If banks fail, we have another financial crisis. The last one took a decade to recover from and there weren't even that many bad mortgages (as a percent of all mortgages). Businesses right now are eating a bunch of costs. That can't last for very long before t…

Sure you can. You stop rent. You stop mortgage interest. You pause mortgage principal. You do that across the board for every rental, contract, and debt obligation in America. In 90 days, it expires, and everything starts back up again. https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3Sjhs...

And what about international obligations? What about mortgage-backed securities?

Re: U.S. retailers plan to stop paying rent to offset virus closures

#85

Post by humanrebar »

wegs wrote: post #50
nostromo wrote: post #37

Earlier quoted context omitted.

You can't turn off and on the economy like a switch. People need to pay rent and mortgages, or loans will not be repaid. If loans don't get repaid, banks fail. If banks fail, we have another financial crisis. The last one took a decade to recover from and there weren't even that many bad mortgages (as a percent of all mortgages). Businesses right now are eating a bunch of costs. That can't last for very long before t…

Sure you can. You stop rent. You stop mortgage interest. You pause mortgage principal. You do that across the board for every rental, contract, and debt obligation in America. In 90 days, it expires, and everything starts back up again. https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3Sjhs...

And how do people who make incomes on collecting on obligations (landlords, pensioners, etc.) buy new things, like food and medicine?

Re: U.S. retailers plan to stop paying rent to offset virus closures

#86

Post by zaroth »

Epidemiologists have terms like R0, CFR, and IFR to describe the spread and deadliness of a virus. Similar terms could be used to describe economic contagion.

When parts of the economy seize up, there are systemic risks that can spread through the system as debtors fail to make payments, causing creditors who rely on those payments to default themselves to higher level obligations. When the vast majority of an economy the size of the USA seizes up... we are in uncharted territory.

The lessor of a commercial storefront can't just "defer" taking rent payment for a month or two just because they're holding property versus, say, a corporation that has to make payroll. The lessor has monthly payments of their own, likely interest payments and property taxes at the very least.

While there are no shortage of estimates (arm-chair or otherwise) for the ultimate fatality rate the world will see from COVID, there have been far fewer attempts to analyze the economic fallout of wide-spread suppression measures like state-wide shelter-in-place orders.

Trillions of dollars in acute losses suffered in just a few weeks will propagate through an economy, like a virus, and magnify the ultimate damages. Restarting an economy that has suffered such a shock, like restarting an electrical grid from a wide-spread outage, is something that requires tremendous care and effort.

Speaking anecdotally, a SaaS business I work with which runs around ~$1 million in ARR has gone from effectively $0 in Accounts Receivable historically to over $100k in AR just this month. Every customer with a payment due has simply stopped paying their bills, as they wait to see how this will all shake out.

A typical small business will have ~3 months of expenses in the bank. By the end of April, if customers haven't started paying their bills, the average small business will no longer exist. The total economic impact of small business is no less than 50% of all US employment. Experts are predicting we could see 30% unemployment next month, which equates to roughly half of all small businesses caving.

Re: U.S. retailers plan to stop paying rent to offset virus closures

#88

Post by ficklepickle »

digitaltrees wrote: post #63
nickpinkston wrote: post #18

For commercial landlords, we should probably let them stop paying their mortgages, etc., and then the Fed can give 0% loans to the banks who hold the other side of those loans. It's the ciiircle of cash!

That’s an awesome idea. You should write a more concrete proposal and send it to the fed. I have a few friend there and and some of the larger REITs. I’d be happy to help get it in the right hands.

It is concerning to me that employees of the fed and REITs operate in the same social circles.

Re: U.S. retailers plan to stop paying rent to offset virus closures

#89

Post by cmurf »

wegs wrote: post #42
henrikschroder wrote: post #13

“The court system is just going to get flooded with a million of these disputes between tenants and landlords,” I'm absolutely not a big fan of collectivism, but sometimes, individualism just doesn't work. Sometimes, you have to step in and solve problems collectively. No, it won't be fair, yes it will be one-size-fits-all, no you can't please everyone. Suck it up, buttercup. Whether you like it or not, we're in this…

No, there is a one-size-fits-all solution. https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3Sjhs... Stop interest on all loans for 90 days. Defer principal on all loans by 90 days. In 90 days, payments start up as before (and just end 90 days later). Same thing bubbles for all contracts. Leases and rents are free for 90 days. Contracts switch from net 30 to net 120 terms. Etc. You pause the cycle of debt. It w…

Those payments in turn pay for other things. Stopping them, stops everything. Pensions and 401ks, all kinds of commercial paper holding money short term stops, almost all home and commercial property sales stop, companies can't pay their own big bills due to vendors or fulfill order to customers, or can't convert bonds to stocks.

It's too simple of an idea. What you are looking for is the time equivalent of printing money. Right now that's magical, it's a deus ex machina event. It's implausible. You have to innovate it, and until then it's a fantasy.

Re: U.S. retailers plan to stop paying rent to offset virus closures

#90

Post by novok »

rjkennedy98 wrote: post #32
charia wrote: post #19

I used to criticize the big tech companies for stockpiling dozens of billions of dollars instead of investing them into their businesses, but it's only now I can see why a move like that was wise. If at all possible, businesses, like people, should keep a rainy day fund. I wonder if all the companies that used their money for stock buybacks are kicking themselves in the foot right now.

you are right that most companies should have a rainy day fund, but tech companies like Apple are way way way past a rainy day fund. Apple is sitting on US treasury department level money.

Apple almost died in the 90s, and that organizational trauma persists to this day. That is probably partly one reason why they amassed so much cash, and why they don't pay as well as other SF bigtech companies.
Post reply on HN