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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

#141

Post by Nasrudith »

dencodev wrote: post #46
tyingq wrote: post #24

Earlier quoted context omitted.

How so? I'm genuinely curious what the downside for retailers would be in this case. As opposed to staying in place and paying the rent.

Our Lord and savior, the banks, won't lease again to those bad men at the retail companies

We saw that shift before - bankruptcy used to be more of a scar for life on credit instead of essentially vanishing in seven years. Going all "scarlet letter" made less money than defecting and accepting redemption which reflected closer to actual risk levels compared to some spiteful imaginary idea of "fairness" or "virtue".

It is part of what made the social credit's justification such a laughable lie. We did away with honor based lending centuries ago and got better results both fiscally and morally from banks! When was the last time you saw someone engage in a murderous duel over credit rating?

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

#142

Post by munk-a »

int_19h wrote: post #91
rodgerd wrote: post #84

Earlier quoted context omitted.

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?

At this point they'd be fiscally irresponsible if they didn't assume a certain level of bailing out - and they're likely "investing" in relations with various senators and representatives to make sure their name is on the list of those eligible for the bailouts.

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

#143

Post by gonehome »

vkou wrote: post #136
gonehome wrote: post #114

Earlier quoted context omitted.

Maybe someone that understands this better than I do can comment, but isn't this something that can lead to CLO collapse and systemic financial system failure (similar to 2008, but maybe not as severe?). Described in this: https://www.theatlantic.com/magazine/archive/2020/07/coronav... The Dodd-Frank act capital requirements seems like they'll protect banks a bit, but to an outside layman like me it does seem like th…

It can lead to something like that, yes. Like in 2008, the Fed will print as much money as it takes to prevent this kind of systemic collapse.

We were lucky in 2008 that there was the political will and capacity for Congress (and the incoming Obama administration) to do what they did. I think whatever people thought of the decisions at the time, the market recovery after 2008 (and all of the banks paying back those loans) is evidence that those decisions were right.

I'd be worried that the political will may not exist this time, or that the administration wouldn't be able to understand the problem well enough to even figure out what should be done.

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

#144

Post by pkaye »

Analemma_ wrote: post #72
cobookman wrote: post #47

Earlier quoted context omitted.

You could see commercial real-estate be converted to residential.

How much does that cost, and is anyone going to pay that cost when residential rents are also falling? Commercial property is so different from living quarters that I wouldn't be surprised if "conversion" isn't actually possible, short of just razing it and building from scratch.

I've seen that conversion in Silicon Valley.

There is the Valco mall in Cupertino being demolished for mixed use residential, retail and office space. That mall was dying for a decade.

https://revitalizevallco.com/

Then there is Santana Row in San Jose. Used to be a strip mall as I recall. Now its high end shopping and residential.

https://en.wikipedia.org/wiki/Santana_Row

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

#145

Post by munk-a »

DSingularity wrote: post #61
Bombthecat wrote: post #43

Earlier quoted context omitted.

The backup plan is state money.

No. The backup plan is to screw the people. Slash interest rates, eliminate fractional reserve requirements, and buy corporate bonds and securities.

I disagree - their backup plan is getting bailed out. What you listed above is just standard operating procedure for them on a day-to-day.

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

#146

Post by patmcc »

pgrote wrote: post #131
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…

>But the moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities. And? Seriously. We either have to choose to be a market that is somewhat free or not. At this point, the government is choosing winners and losers. It is a repeat of 2008. Oh no, it is too big to fail. Someone will come by with the investment to buy what is left. Perhap…

>>>And?

It's a news story, there doesn't have to be any underlying editorial message. Sometimes the news is just "thing happens".

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

#147

Post by thoughtstheseus »

gonehome wrote: post #114
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…

Maybe someone that understands this better than I do can comment, but isn't this something that can lead to CLO collapse and systemic financial system failure (similar to 2008, but maybe not as severe?). Described in this: https://www.theatlantic.com/magazine/archive/2020/07/coronav... The Dodd-Frank act capital requirements seems like they'll protect banks a bit, but to an outside layman like me it does seem like th…

Banks don’t own much of CLOs compared to other market participants, banks have much more stable and safe assets across the board, the borrowers are not individuals with mortgages but companies with diverse capital structures and interests. They are similar to CDOs and there are certainly those taking too much risk in the CLO market. The Fed brought up this issue before the pandemic and no one seemed to care...

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

#148

Post by martinald »

brudgers wrote: post #71
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…

Commercial mortgaged backed securities are an investment. Investments come with risks. Bankruptcy is just part of that risk. The US is thirty years out from the previous commercial real-estate reckoning. The S&L crisis. Everything that was booming a year ago was built on top of that reckoning.

Exactly. That is the whole deal with being a commercial landlord. It isn't just "upward-only rent adjustments" every 5-10 years and cream a load of profit. There is meant to be some risk in return.

In London a lot of commercial rents in newly gentrified areas have went up 10x+ in the last 10-20 years. There has been an awful of lot of value transferred to these landlords for really not a huge amount of work in many cases.

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

#149

Post by vkou »

jxramos wrote: post #98

Just curious, at the top of it all are municipalities relaxing property tax dues as well?

No, because regardless of whether or not there's an epidemic, someone needs to run the schools, staff the fire station, fund an overpaid police force, and fix potholes.

Theoretically, you could borrow money for all this, but then you'll just get a bigger tax bill next year.

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

#150

Post by loktarogar »

ProAm wrote: post #127
loktarogar wrote: post #81

Earlier quoted context omitted.

if that's a movie, it's impossible to google

I was just referencing the 2008 financial crisis where the US literally printed money to save businesses that should have failed.

yeah, I felt that that could have been the reference there, but the "movie" added onto the end just threw me right off
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