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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

#211

Post by dredmorbius »

joshcain wrote: post #129
dhosek wrote: post #9

I 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…

PSA being down is interesting. I might have thought there would be greater demand for storage units as people clear stuff out of their houses to make room for home offices/gyms/etc. That said, all the people who've lost jobs or hours are probably not looking to pay $100s/month for an auxiliary junk room.

A rush to liquidity can take down even otherwise sound investments. J.K. Galbraith describes this (as a "Gresham's Law" if memory serves) in his book on the 1929 crash. Highly recommended.

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

#212

Post by ping_pong »

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…

Almost every single horror story of what could happen has NOT happened. Yes, too many people have tragically died, but a lot less than the horror stories of a million+ people. There is barely a recession, and the stock market is at all time highs. There was no supply chain implosion for food. There are no food bank lines. There is no mass homelessness.

Basically the Fed and the US government did their job. They stabilized the markets. The state governments (at least the competent ones) implemented lockdowns that cut the virus down. They will stabilize anything that is too big to fail.

I'm not too worried at this point, I don't think there will be any big problems. The Fed has learned a lot from the Great Recession and they are acting a lot more decisively than before. And I've lost a lot of money shorting the markets over the last 6 months so I've taken the other side of this and learned a lot (ie. don't fuck with the Fed).

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

#213

Post by treeman79 »

coliveira wrote: post #107
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.

If capitalism is to be the law of the land, why not let the rich lose everything? I guess they can easily live on the streets.

That’s one of the tenants (no pun) of capitalism.

Bad execution is punished by going out of business.

This forces everyone to be hyper efficient at taking raw resources and getting useful value out of them. Thus people have more goods for less money.

People get confused because government gets involved and you end up with cronyism.

Free market is as another comment says, the minimum amount of regulation possible that isn’t killing people.

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

#214

Post by dragonwriter »

treeman79 wrote: post #213
coliveira wrote: post #107

Earlier quoted context omitted.

If capitalism is to be the law of the land, why not let the rich lose everything? I guess they can easily live on the streets.

That’s one of the tenants (no pun) of capitalism. Bad execution is punished by going out of business. This forces everyone to be hyper efficient at taking raw resources and getting useful value out of them. Thus people have more goods for less money. People get confused because government gets involved and you end up with cronyism. Free market is as another comment says, the minimum amount of regulation possible that…

> People get confused because government gets involved and you end up with cronyism.

Government was involved from the beginning; capitalism was historically a redirection of the power of government from serving the feudal aristocracy to serving the mercantile class.

The utopian (and largely self-inconsistent) rationalizations for capitalism as something that magically exists separate from government and cronyism came much later than capitalism itself, and most of them even later than the early socialist critique of the reality of capitalism.

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

#215

Post by renewiltord »

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…

Well, they would rightly argue that if you want to ensure market freedom, then you should let them keep their doors open and let people decide whether to attend and let people decide whether they want to work. Just free parties making decisions.

If you decide you're going to force a shutdown and result in the unemployment of millions, you're going to have to ensure they have jobs to come back to.

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

#216

Post by bsder »

frandroid wrote: post #198
rrrrrrrrrrrryan wrote: post #192

Earlier quoted context omitted.

When corporations start buckling during sharp economic downturns, everyone's first instinct is always "let them burn." But it's often not a choice between letting entire swaths of our economy collapse, and dumping absurd amounts of our tax dollars to prop up these poorly-run companies. We can give them loans with strings attached, force them to go through bankruptcy, wipe out the shareholders but preserve the structu…

Or you know, make up for the missed opportunity of 2008/2009, where the government could have bailed out underwater homeowners so that the bailout would have trickled up to the mortgage holders, instead of pouring money into banks and letting people suffer. Thanks, Obama. Canada's CERB and CECRA have been doing wonders to keep ordinary people either afloat or employed, trickling up to small businesses all over. (I do…

> the government could have bailed out underwater homeowners

Why reward people who gambled and lost? Bust them out.

People will either buy the houses at more reasonable prices or (more likely in this case) the banks will renegotiate more reasonable terms with the original mortgage holders because they have too much supply and no buyers.

> instead of pouring money into banks and letting people suffer. Thanks, Obama.

That wasn't possible as liquidity also died. Solvent businesses couldn't give people paychecks because the banks had no cash. You had to bail the banks.

HOWEVER, what needed to happen was that the bank investors needed to get busted out. That was where Obama went wrong.

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

#217

Post by rdtwo »

ping_pong wrote: post #212
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…

Almost every single horror story of what could happen has NOT happened. Yes, too many people have tragically died, but a lot less than the horror stories of a million+ people. There is barely a recession, and the stock market is at all time highs. There was no supply chain implosion for food. There are no food bank lines. There is no mass homelessness. Basically the Fed and the US government did their job. They stabi…

I think you saw the flash waited a couple seconds realized you weren’t incinerated and assumed everything is ok. I think you are missing the fact that there is enormous destabilizing energy traveling you way that’s going to wreck your world. It would be like calling the Great Depression over after in 1930 when the market recovered.

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

#218

Post by newhotelowner »

ping_pong wrote: post #212
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…

Almost every single horror story of what could happen has NOT happened. Yes, too many people have tragically died, but a lot less than the horror stories of a million+ people. There is barely a recession, and the stock market is at all time highs. There was no supply chain implosion for food. There are no food bank lines. There is no mass homelessness. Basically the Fed and the US government did their job. They stabi…

Three things helped to survive majority of the businesses till now. PPP, EIDL, SBA.

SBA helped a lot. I have an SBA loan, and they gave us 6 months. Six months are up in October. At this point, we are not making money, but not using personal saving either. I won't be able to pay the mortgage after October.

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

#219

Post by shard »

PaulDavisThe1st wrote: post #205
shard wrote: post #190

Earlier quoted context omitted.

I was referring to landlords, which many of mine have been just small time business owners who scrimp and save to make a living. One lived in the garage of the house he was renting out in order to make ends meet. Technically they have the power since they own the properties, but laws are very tenant friendly, and often landlords get left with the short end of the stick if there is a dispute.

This is not a useful anecdata-driven analysis of the commercial real estate market. Yes, landlords like the ones you know do exist. They do not own substantive commercial real estate, and certainly not the stuff the Neiman Marcus or GNC have been renting.

You are right about Neiman Marcus, as they occupy huge spaces in shopping malls. However, GNC stores are very small, and many are in strip malls, which can cost only a few million to purchase, not out of the range of small business owners with some collateral. At a cursory search, I can't find any numbers on the percentage of CRE owned by institutions and corporations, do you have any data you can share?

In any case, my point was not to discuss how much CRE is owned by individuals and small businesses, but rather the dismissive attitude that sweeps individual and small business landlords into the same bucket as giant CRE corporations.

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

#220

Post by seanmcdirmid »

koolba wrote: post #181
patmcc wrote: post #146

Earlier quoted context omitted.

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

For most publications that time past a long time ago. There’s a limited space so even “presenting the facts” has an editorial bias when you decide which facts you are presenting. The extreme example of this is a political news site that dedicates its entire site to posting anything that paints its opponents or their positions in a negative light. They can all be “thing happens” stories, but the filter alone gives it…

The article here is not of that kind. Business publications tend to be the most report-fact-based, simply because their readers don’t make money by deluding themselves with confirmation bias.
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