Busted retailers use bankruptcy to break leases by the thousands
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Re: Busted retailers use bankruptcy to break leases by the thousands
#2Yes, this is what chapter 11 bankruptcy is meant to enable.
Re: Busted retailers use bankruptcy to break leases by the thousands
#3This is exactly why we have bankruptcy! These businesses are failing and need to renegotiate their liabilities. This is expected and healthy if you want any retailers to have any hope of survival going forwards.
Re: Busted retailers use bankruptcy to break leases by the thousands
#4It's basically the definition of bankruptcy that you need to renege on your obligations to someone. Landlords run that risk. They're hardly the ones losing the most -- think of the poor creditors and shareholders. The landlords are only losing the expense of finding their next tenant, plus any difference in the market rate when the original lease was signed and today.
Re: Busted retailers use bankruptcy to break leases by the thousands
#5[flagged]
Re: Busted retailers use bankruptcy to break leases by the thousands
#6Yes, this is what chapter 11 bankruptcy is meant to enable.
I thought the same thing, these businesses clearly are out of cash and credit and need to break leases to save SOME stores compared to losing all.
The idea of harsh leases in large retail stores kinda always made me laugh: For a JCP or the like, the setup costs, warehousing, and hiring work is so great that the only case where they would close a store is to stop cash from hemorrhaging beyond control. On a large scale this forces the only move for survival to be bankruptcy after falling way too far. If you're PREIT or such one can't help but realize that the overall outcome is that you'll push a tenant of a vast majority of your stores into really bad financial states that then leads to a much harder bankruptcy and possibly dissolving of the company, ripping stores out of ALL of your malls instead of 30%.
And thats why PREIT has so many malls with empty giant rooms and defaulted loans.
Re: Busted retailers use bankruptcy to break leases by the thousands
#7This will come back to haunt them. Good luck.
Re: Busted retailers use bankruptcy to break leases by the thousands
#8This is exactly why we have bankruptcy! These businesses are failing and need to renegotiate their liabilities. This is expected and healthy if you want any retailers to have any hope of survival going forwards.
It’s going to have severe consequences somewhere down the line as I don’t believe anything nearing the magnitude and density of the coming bankruptcies has ever occurred. That being said I agree it’s meant to be this way, and I will always prioritize RESPONSIBLE business trying to restructure and preserve jobs over landholders who basically do very little work while extractIng as much rent out of their tennants as they possibly can without them leaving.
Re: Busted retailers use bankruptcy to break leases by the thousands
#9I have a heavy exposure in REITs (my only non-index fund investment). I treat these as passive investments so I had to look to see what I was actually invested in. I have no commercial exposure, but even what I have has been hit hard by COVID. AVB (residential), PEAK (life science/medical office/senior housing) and PSA (Public Storage) are all down roughly 25% YTD. I have to imagine that REITS in retail/office space are going to be doing even worse as these three are sectors that are less likely to see long-lasting contractions.
Re: Busted retailers use bankruptcy to break leases by the thousands
#10[flagged]
technically this will allow "working people" to continue having their jobs, otherwise the retailers will have to fire anyone and go out of business.