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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

#91

Post by int_19h »

rodgerd wrote: post #84
WanderPanda wrote: post #74

Earlier quoted context omitted.

And yet again the cleanest method would be to not bail out the banks and let the assets be actioned to the highest bidder. Everything else is trading off long term efficient ressource allocation in favor of short term stability.

Funny how it's a moral hazard to bail out individuals weighed down by debt, but an economic necessity to bail out millionaires and billionaires who didn't do their risk analysis.

Or maybe they did do their risk analysis, and incorporated the likelihood of getting bailed out into that?

Re: Busted retailers use bankruptcy to break leases by the thousands

#92

Post by marcosdumay »

WanderPanda wrote: post #66
oneplane wrote: post #18

Earlier quoted context omitted.

On the other hand: what would they go do about it then? It the business fails it fails. It's not like you can pretend it is not failing and have them pay rent with their non-existent money.

Germany is proving that you can do that. Businesses are not required to file for bankruptcy anymore (because of covid), they can just pretend everything is fine and their banks do not need do depreciate their debt. Bubble alert is buzzing louder every day. If that exemption law will not be prolonged after end of September interesting things will probably follow

Pausing debt collection on a temporary disruption is a best practice, not some shady number-hiding.

If the disruption happens to not be temporary, then it will be a problem (retroactively, so a huge one). But in that case, there are more pressing issues.

Re: Busted retailers use bankruptcy to break leases by the thousands

#93

Post by JumpCrisscross »

marcosdumay wrote: post #92
WanderPanda wrote: post #66

Earlier quoted context omitted.

Germany is proving that you can do that. Businesses are not required to file for bankruptcy anymore (because of covid), they can just pretend everything is fine and their banks do not need do depreciate their debt. Bubble alert is buzzing louder every day. If that exemption law will not be prolonged after end of September interesting things will probably follow

Pausing debt collection on a temporary disruption is a best practice, not some shady number-hiding. If the disruption happens to not be temporary, then it will be a problem (retroactively, so a huge one). But in that case, there are more pressing issues.

> Pausing debt collection on a temporary disruption is a best practice

Pausing collections is fine. Pretending those loans are still performing is an exercise in fantasy.

Re: Busted retailers use bankruptcy to break leases by the thousands

#94

Post by Traster »

I want to loop this back to something discussed on HN before. During lockdown, some optimistic WFHers were saying that the transition to WFH would up-end rental markets in city centres, as employees flood out of cities since they've been allowed to work remotely and won't pay a premium for a commutable home. Well it's looking more and more like that effect is going to be almost impossible to measure in comparison to the massive recession coming. Rents are going to drop because shops are going bankrupt, those areas are going to try to find new rentals, convert to offices or housing and that'll drive down prices.

Re: Busted retailers use bankruptcy to break leases by the thousands

#95

Post by coliveira »

timy2shoes wrote: post #83
gruez wrote: post #37

Earlier quoted context omitted.

>But the moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities. I wouldn't worry about that. I fully expect the federal reserve to "fix" this by buying the toxic assets with printed money.

We can't have large investors losing money on any of their (inherently risky) investments. How will the market work if investors can lose money?

This has always been this way. Major investors will not plunge into some big investment without some kind of support from governments. The difference is that now we see this support given after the fact.

Re: Busted retailers use bankruptcy to break leases by the thousands

#96

Post by supertrope »

SketchySeaBeast wrote: post #59
landryraccoon wrote: post #41

Earlier quoted context omitted.

I hope it ends up causing residential real estate prices to fall as a consequence. Maybe then millennials will be able to afford homes. I understand some people treat their home as savings but that's bad in every way for society and for the homeowner. I have a home and the only return I expect on it is to be able to continue living there. I'm certainly not going to depend on it for my retirement, as that would be rea…

> I understand some people treat their home as savings but that's bad in every way for society and for the homeowner. I have a home and the only return I expect on it is to be able to continue living there. I'm certainly not going to depend on it for my retirement, as that would be really unwise. How else can we think about an expense of hundreds of thousands of dollars? It's ludicrous to spend that much on something…

>How else can we think about an expense of hundreds of thousands of dollars?

Cars depreciate. Rent, medical services, and groceries don't return any money when you're done using them. Houses should be thought of as consumption first and a store of value second. Sure by buying as soon as you can you are betting on appreciation in value. Houses aren't a good investment compared with even a bond mutual fund. There's a 6% transaction cost, closing costs, you have to pay mortgage interest, property tax, maintenance, insurance, utilities, and maybe even PMI. A single event like a hurricane or unfavorable neighborhood evolution can wipe you out (extreme concentration risk); a single bond issuer declaring bankruptcy is a risk that can be diversified away.

Re: Busted retailers use bankruptcy to break leases by the thousands

#97

Post by int_19h »

SketchySeaBeast wrote: post #59
landryraccoon wrote: post #41

Earlier quoted context omitted.

I hope it ends up causing residential real estate prices to fall as a consequence. Maybe then millennials will be able to afford homes. I understand some people treat their home as savings but that's bad in every way for society and for the homeowner. I have a home and the only return I expect on it is to be able to continue living there. I'm certainly not going to depend on it for my retirement, as that would be rea…

> I understand some people treat their home as savings but that's bad in every way for society and for the homeowner. I have a home and the only return I expect on it is to be able to continue living there. I'm certainly not going to depend on it for my retirement, as that would be really unwise. How else can we think about an expense of hundreds of thousands of dollars? It's ludicrous to spend that much on something…

If homes were not treated primarily as investments, I don't think you'd be spending that much.

And note that this isn't about things depreciating and falling apart. It's more about various policies that affect house prices indirectly. The existing arrangement, when you distill it down, pretty much means that once somebody becomes a homeowner, they have an economic incentive to make home ownership for other people as hard as possible, because it props their investment (and if they own more than one, and rent some out, lets them raise the rent higher).

Re: Busted retailers use bankruptcy to break leases by the thousands

#99

Post by dfxm12 »

methodin wrote: post #20
mikestew wrote: post #16

Man, with (currently) four comments mentioning that this is "what bankruptcy is for", I think the point of the article might have been missed. This isn't some sneaky "one weird trick", and that's not the reason Bloomberg is reporting on it. In fact, the tone of the article to me is, "yup, companies do it all the time, but..." And the "but" is: But the moves threaten to upend huge swaths of the real estate market and…

I would have assumed malls were already on the out prior to COVID - I assume this is just accelerating the timeline? I think every mall the knew of growing up and in college is no more except for the largest (Kind of Prussia). Did your Malls usage also include stripmalls?

FWIW, Franklin/Philadelphia Mills, Neshaminy, Moorestown, Plymouth Meeting, Cherry Hill & Deptford malls are all still open & have some overlap with shoppers in KOP's area.

There's nothing wrong with not knowing a lot of malls, but come on, you have to qualify your statement a little bit, because your comment doesn't make sense to me as someone who can drive to KOP and at least a half dozen of the other malls I've been to when I was younger.

Re: Busted retailers use bankruptcy to break leases by the thousands

#100

Post by wins32767 »

floatingatoll wrote: post #17

It's a bit depressing to see the greed-by-framing here. I feel like the banks are playing musical chairs rather than trying to operate sustainably. It seems like a more efficient approach — one that is not as economically destructive to GDP after the pandemic — would be: 1. Retailer notifies their lease holders that a given location is impacted by public health closures, reducing revenues for products originating fro…

You need a 4. Federal government issues $$$ to property tax authority to cover income gap. The property tax authority needs that revenue now to pay their bills (teachers, sanitation, fire, EMT, police, etc), an easement won't cut it. They need a backstop before they can do that since all of those are critical or legally mandated services and municipalities run very lean.
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