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

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

#191

Post by HeyLaughingBoy »

oulu2006 wrote: post #153
dugmartin wrote: post #33

My wife and I just bought a small commercial building 6 months ago (great timing). We have already offered rent deferment to our tenants (a restaurant, a bookstore and a few professional offices) with a gradual payback. We are all in this together.

That's a nice gesture, but not really in it together. In it together would be rent forgiveness. The bookstore and restaurant have lost business, their customers aren't deferring payments with a gradual payback.

Being a landlord is his business. If the bookstore and restaurant lose business and can't pay their rent, he is losing business and potentially can't pay his mortgage on the building.

Being "in it together" means he's giving them time to repay the back rent instead of evicting them if they can't pay, as he legally could. Commercial lease tenants have far fewer rights than residential ones do.

It's easy to spout "rent forgiveness" but where is that money coming from?

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

#192

Post by HeyLaughingBoy »

6510 wrote: post #143
DougN7 wrote: post #48

Earlier quoted context omitted.

I think many businesses will discover they don’t need to pay for an office. Would not want to own an office building right now.

They already knew, they just liked to see the drones line up and sing the national anthem. The sense of power having inferiors around.

Really? Come on. How does a comment like this do anything to move the discussion along?

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

#193

Post by wuunderbar »

oulu2006 wrote: post #153
dugmartin wrote: post #33

My wife and I just bought a small commercial building 6 months ago (great timing). We have already offered rent deferment to our tenants (a restaurant, a bookstore and a few professional offices) with a gradual payback. We are all in this together.

That's a nice gesture, but not really in it together. In it together would be rent forgiveness. The bookstore and restaurant have lost business, their customers aren't deferring payments with a gradual payback.

What about the landlord's loan payments?

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

#194

Post by throwaway2048 »

masonic wrote: post #102
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.

I wonder how the safety of "AirBnB type marketplaces" is looking right now.

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

#195

Post by candybar »

wegs wrote: post #190
candybar wrote: post #188

Earlier quoted context omitted.

This doesn't make any sense - the Fed isn't going to provide loans to everyone, individual and business access to these loans is still gated by their own creditworthiness. And if you can make credit that easy, why do you have to do this at all? Why can't we just lend everyone money and have them pay all existing obligations? Why do you have to turn everyone who's involved in simple transactions into long-term credito…

Banks can get loans for free, and pass that onto credit-worthy businesses. Less credit-worthy businesses can get loans through the SBA through the stimulus. The government's existing programs (assuming the stimulus passes) will breach the extra 90 day gap for most. And to flip it around, if 50% of small businesses go under, banks will be left holding a lot of bad debt. Banks will go under. Landlords won't have renter…

> Banks can get loans for free, and pass that onto credit-worthy businesses.

Why would they? And who's creditworthy in your world? Are banks going to be able untangle every single contract you have to see how this affects you? Especially in a world where every single customer and every single supplier is going to look at renegotiating contracts with you? The general notion of creditworthiness implies a relatively static world - changing everything is going to make everyone questionable from a credit perspective.

> Less credit-worthy businesses can get loans through the SBA through the stimulus. The government's existing programs (assuming the stimulus passes) will breach the extra 90 day gap for most.

Then why do we need this at all? Why can't we just have the affected businesses borrow from the government? Instead of A not paying B and B borrowing from the government to cover for not being paid, why not just have A borrow from the government so that we don't have to modify every single contract in the world in a highly unpredictable manner and freezing the entire economy?

> You're assuming the economy is humming along right now. It isn't. Large parts are shut down. Some parts aren't.

Most parts aren't shut down. No one is predicting a GDP decline of over 50% or an unemployment rate above 50%. Some parts are shut down, others are doing okay.

> Those frictions are causing massive structural collapse as we debate.

And this proposal literally is the massive structural collapse - it's the equivalent of eradicating COVID-19 by killing everyone.

> Also: In most cases, up-front payment is fine while everything else is shut down. I understand the importance of credit. But the alternative is worse. If this continues for 18 months, virtually all mortgages, private and commercial, will be under water. Virtually all renters will be evicted, or rents will have gone down many-fold. Etc.

Everything isn't shut down and again your business is toast if you're forced to make up-front payments while you're not getting paid. This is silly considering that there's a perfectly reasonable alternative of bailing out from the bottom up.

And no, this isn't continuing for 18 months, that's completely absurd. The economy will simply have to go on if an extended shutdown fails to work and the economic pains reach a certain threshold. Also, it's not honest to compare the impact of a shutdown without your proposal for 18 months with the impact of removing credit from the system for a couple of months. The economy as we know it is completely done if you freeze credit for 18 months.

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

#196

Post by unethical_ban »

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…

Maybe we should learn how to, because this may not be the last pandemic we face.

Retailers and citizens can't pay rent. Landlords only need that money (per se) because they owe money to banks via mortgage, or the government via taxes. So government should order the banks to halt collections on real estate, and government should halt collections of property taxes.

Banks might go under? Have the fed print them money. Governments can't afford it? Have the government print money.

Inflation due to increased monetary supply? That's where my idea ends. Perhaps instead of the printed money being a gift, perhaps it is a zero percent long term loan.

Landlords need the money to live? Give its employees the same cushioning we should be giving all citizens through the pandemic.

edit - I am absolutely going to ask people who downvote to give a reason.

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

#197

Post by candybar »

wegs wrote: post #190
candybar wrote: post #188

Earlier quoted context omitted.

This doesn't make any sense - the Fed isn't going to provide loans to everyone, individual and business access to these loans is still gated by their own creditworthiness. And if you can make credit that easy, why do you have to do this at all? Why can't we just lend everyone money and have them pay all existing obligations? Why do you have to turn everyone who's involved in simple transactions into long-term credito…

Banks can get loans for free, and pass that onto credit-worthy businesses. Less credit-worthy businesses can get loans through the SBA through the stimulus. The government's existing programs (assuming the stimulus passes) will breach the extra 90 day gap for most. And to flip it around, if 50% of small businesses go under, banks will be left holding a lot of bad debt. Banks will go under. Landlords won't have renter…

> And to flip it around, if 50% of small businesses go under, banks will be left holding a lot of bad debt. Banks will go under. Landlords won't have renters, and will be left holding mortgages. Without action, the whole system collapses.

A lot of businesses are going to go under no matter what and this isn't directly preventable. I don't think exposure to "small businesses" is large enough to cause a systematic failure and in any case, delaying payments doesn't solve the problem, if the small businesses themselves are insolvent. What systematically delaying payments does in this case is that you're turning everyone else into a bank. In that world, a lot more entities are left holding questionable debt and you significantly increase the systematic risk this poses, as no one will be able to trust anyone.

What you want to protect are the ordinary people, not businesses and this can be done through direct payments. Business owners are on average wealthier than others - it makes no sense to try to turn the entire system upside down to help them. Keep in mind, under your proposal, most people will lose their income, since income for most people is a payment that I suppose can now be deferred.

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

#198

Post by [deleted] »

HeyLaughingBoy wrote: post #191
oulu2006 wrote: post #153

Earlier quoted context omitted.

That's a nice gesture, but not really in it together. In it together would be rent forgiveness. The bookstore and restaurant have lost business, their customers aren't deferring payments with a gradual payback.

Being a landlord is his business. If the bookstore and restaurant lose business and can't pay their rent, he is losing business and potentially can't pay his mortgage on the building. Being "in it together" means he's giving them time to repay the back rent instead of evicting them if they can't pay, as he legally could. Commercial lease tenants have far fewer rights than residential ones do. It's easy to spout "rent…

[deleted]

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

#199

Post by eli_gottlieb »

suryherhhd wrote: post #157
landryraccoon wrote: post #156

Earlier quoted context omitted.

Normally yes, but criminals are just as vulnerable to viral infection as anyone else. The basic question needs to be answered - is this virus bad enough to shut down an economy? If the answer is yes, then renaming the economy from "state sanctioned" to "black market" does nothing - the black market is just as crushed by the pandemic as any other. What people are arguing for when they argue for a shutdown is that the…

What are you smoking? This isn't Captain Planet where the gangs all come from wide ranging and diverse backgrounds, most people who might engage in black market activities are not the same people who are at risk of dying from the virus. There's no scythe of correction in play here. Similarly, the people who are most willing to go outside to engage with a black market as consumers aren't in that group either. This fan…

>most people who might engage in black market activities are not the same people who are at risk of dying from the virus.

COVID-19 has killed people under the age of 20, and even the most hardened gangster under the age of 20 has a family and friends to avoid endangering.

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

#200

Post by bdcravens »

HeyLaughingBoy wrote: post #192
6510 wrote: post #143

Earlier quoted context omitted.

They already knew, they just liked to see the drones line up and sing the national anthem. The sense of power having inferiors around.

Really? Come on. How does a comment like this do anything to move the discussion along?

Some of the underlying idea is true (most businesses don't feel confident that remote workers are as efficient as those they can directly supervise), though it was unnecessarily snarky and dramatic. I don't like the idea put forth that employers have a motivation driven by emotion; how you manage your employees is mostly driven by efficiency and profit.
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