U.S. retailers plan to stop paying rent to offset virus closures • Hacker News Board

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

#101

Post by bsanr » Wed, Mar 25, 2020, 1:11 AM UTC

arkades wrote: post #44

_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.

Not all rent is giant corporations. My mother is a retiree who basically pays her living expenses every month by renting out the first floor of her two-floor home. "All rent should be suspended" would drive her into bankruptcy, and ultimately leave both her and her tenant without a place to live.

Under the circumstances, the only living expenses should be gas and food. If someone who owns hundreds of thousands of dollars worth of capital doesn't have enough money set aside to weather a bad month, hopefully they've been kind and fair enough to their tenants to receive help, or have supported community efforts to help feed those in need and can receive support in turn.

Like, this is why people need to be active participants in their interests, and in the things around them.

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

#102

Post by masonic » Wed, Mar 25, 2020, 1:11 AM UTC

bsanr wrote: post #95

>Offered >Deferment >We are all in this together. Not quite sure how these square.

This attitude will just drive more properties off the leasing market and on to the relative safety of AirBnB type marketplaces.

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

#103

Post by anonsubmit2671 » Wed, Mar 25, 2020, 1:13 AM UTC

charia wrote: post #10

anonsubmit2671 wrote: post #2

Corporations should keep paying to entities who don't have as much wealth as them. For some people who aren't extraordinarily rich, it maybe their only source of income.

You realize that the retail business can be quite difficult and that a monthlong shuttering can and will drive many into bankruptcy. Rent payments without income will put the nail in the coffin for many businesses. I do agree with your sentiment. Paying their workers who are probably struggling significantly at the moment would be ideal. I don't feel that landlords need the $'s as much as those workers.

That's obvious. Corporations like Target and Walmart can weather the storm and shouldn't be gaming the situation for their advantage when they already receive enormous tax breaks, have lobbyists and corporate welfare, where mom&pop and regional chains may not be able to.

Consider Louis Rossmann, who's now had to close up shop with $37500 in rent deferred, not including salaries. There are no emergency grants or no interest loans for small businesses, only "low" interest loans which don't help recoup losses.

My mechanic, who has $16k in expenses per month, may have to default on his business, lay-off his brother-in-law, and find a salary job because his landlord is an ahole who will demand all of the back rent when the 90 days is up.

Maybe business interruption/income insurance, which often requires buying flood insurance, is worth it if actually covers force majeure.

Edit: It turns out the vast majority of BII policies do not cover pandemics, so almost all small businesses and landlords in the US are fucked. This will absolutely require federal bailout action or there will be revolution-level seething anger ready to explode.

https://www.bisnow.com/dallas-ft-worth/news/commercial-real-...

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

#104

Post by masonic » Wed, Mar 25, 2020, 1:14 AM UTC

captncraig wrote: post #16

refurb wrote: post #8

I'm not sure how widespread this will be, but it will be interesting to see the impact on commercial real estate in SF and NYC where empty storefronts are already a major issue. I'm imaging a lot of businesses were barely scraping by before the shelter-in-place. We might see a huge increase in empty storefronts after this passes.

Hopefully the landlords realize there is not going to be anybody lining up to take over these leases if they evict. Forgiving a couple months so a business doesn't have to close is almost certainly the shrewd business choice as well as the moral one.

Abandoned leases then increase the incentive to demolish and replace.

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

#105

Post by [deleted] » Wed, Mar 25, 2020, 1:16 AM UTC

arkades wrote: post #44

_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.

Not all rent is giant corporations. My mother is a retiree who basically pays her living expenses every month by renting out the first floor of her two-floor home. "All rent should be suspended" would drive her into bankruptcy, and ultimately leave both her and her tenant without a place to live.

[deleted]

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

#106

Post by anonsubmit2671 » Wed, Mar 25, 2020, 1:22 AM UTC

XMPPwocky wrote: post #57

charia wrote: post #10

Earlier quoted context omitted.

You realize that the retail business can be quite difficult and that a monthlong shuttering can and will drive many into bankruptcy. Rent payments without income will put the nail in the coffin for many businesses. I do agree with your sentiment. Paying their workers who are probably struggling significantly at the moment would be ideal. I don't feel that landlords need the $'s as much as those workers.

> 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…

If we're talking SMBs: That's rarely possible in a small business, especially where costs are high and margins too thin. Business interruption insurance (with often mandatory flood insurance) is supposed to handle that, but it's an added cost and may have exclusions that make it pointless.

For landlords, BII may or may not be worth it.

EDIT: BII doesn't cover unlisted force majeure incidents, so most tenants and landlords are hooped. The only entity with enough money and power to make people whole is Congress. They can buy a few less F-35's and nukes, and help the people on the home front.

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

#107

Post by joe_the_user » Wed, Mar 25, 2020, 1:24 AM UTC

nostromo wrote: post #37

joe_the_user wrote: post #30

The economy is effectively frozen. But you have to distinguish the production process from the monetary, contractual and ownership relations that normally control the production process. We can continue to produce necessary , essential good during this crisis and let the rest of the economy stay frozen 'till the end of this mess. The situation should be the equivalent of a war or a different natural disaster. Essenti…

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…

You can't turn off and on the economy like a switch.

Actually, you can. Money transactions can be suspended and goods can be distributed directly.

If banks fail, we have another financial crisis. The last one took a decade to recover from.

Not even, what we're looking at is the dead Frankenstein construction created to avoid dealing excess speculation of last time. The economy has been artificially supported by QE since 2008 (sure, it stopped periodically but everyone knew it could start up again, stocks values were completely absurd. Half of what happened just now was that fantasy falling rather than the cost of Covids.

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

#108

Post by jddj » Wed, Mar 25, 2020, 1:26 AM UTC

pdonis wrote: post #55

NotAnEconomist wrote: post #27

Earlier quoted context omitted.

Why would they? They're not going to have to re-issue shares at a lower price; they're going to get bailed out by the taxpayers. The conditions for government money should be: 1. All current debt is converted into shares, erasing payback preferences and on-going payments to creditors. 2. Companies must issue new shares as collateral to the government at current market rate, in exchange for the money. 3. Rather than r…

> make the shareholders take it in the wallet for their reckless business practices The problem is that those business practices weren't decided by the shareholders. The shareholders in most cases are mutual funds holding millions of people's retirement savings. Those people had no say in the business decisions made by the companies; they don't even control which individual stocks the mutual funds invest in. Their re…

So where is the accountability, then? Does it fall on whatever % of owners who are active investors? Or are they shielded by the fact that there's a mutual fund present who pledges to simply vote with the board on every decision?

Doesn't saying that these are people's retirement savings and so structurally should only ever be allowed to go up in value create perverse incentives and remove all of the responsibility from.. everyone involved?

Shareholders benefited massively and accumulated huge rewards from the market leveraging up during the borrow-for-buybacks period, and now in a downturn we're throwing our hands up and saying that we can't let those companies face any negative consequences for taking on that risk because nobody was in control? Or some people were in control, but there were also some who weren't?

Something is missing here if a company having passive shareholders means it should do well, business-practices-be-damned.

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

#109

Post by joe_the_user » Wed, Mar 25, 2020, 1:26 AM UTC

wrkronmiller wrote: post #84

wegs wrote: post #50

Earlier quoted context omitted.

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?

Pensions and institutions people need to survive get a bailout. Speculators lose their shirts.

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

#110

Post by bsanr » Wed, Mar 25, 2020, 1:26 AM UTC

swiley wrote: post #67

JMTQp8lwXL wrote: post #29

Earlier quoted context omitted.

What is the collective resolution? I'm assuming it's either everyone gets free rent, or nobody does, and I'm not sure which is being implied here.

I'm able to pay my rent. If me paying mine means the newly unemployed people don't have to during this thing then I would prefer the situation that's unfair toward me. We really kick the lowest people into the dirt here and the place we do it the most is housing. It makes our economy extremely unstable, not to mention it's pretty unpleasant to know that you're only a couple mistakes away from being in a similar situa…

Americans live in relatively huge houses, with tons of stuff that we don't need, use, or even get any sentimental value out of. I'm not saying we need to transform into Japan - it was truly nice to be able to visit wealthier family and their big houses with their "fk you" foyers and finished basements bigger than any apartment I've ever lived in - but the average American nuclear family does not need more then 2000 square feet (if that), day-to-day. Once you eliminate speculation on grandiose properties - which in turn drives up the prices of your given McMansion or SF bungalow - maybe you can figure out a way to provide everyone with decent, dignified housing that's appropriate for their family size and lifestyle. People like to say that the economy isn't zero sum, nosiree, but it's mighty suspicious how much homelessness rises in cities where apartments go for 7 figures cash, or $3k+ a month in rent.