Busted retailers use bankruptcy to break leases by the thousands • Hacker News Board

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

#161

Post by icedchai » Thu, Aug 06, 2020, 10:19 PM UTC

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…

Except investments generally haven't tanked. NASDAQ is at an all time high... again. In general, if you held or bought more during the March crash, you'd be up now. Every investment I made then is up double digit percentages, some way more. The market is completely divorced from reality. I haven't seen gains like this since the 90's.

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

#162

Post by munk-a » Thu, Aug 06, 2020, 10:21 PM UTC

supertrope wrote: post #109

wins32767 wrote: post #100

Earlier quoted context omitted.

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.

Yes. Property tax shortfalls leads to laying off teachers.

Securing that funding is going to be a hard sell when the Dept of Edu is really enthusiastic about scrapping the whole "public education" thing for charter schools since charter schools have an out to get around silly things like Brown v. BoE[1] and, more importantly to them, Engel v. Vitale[2].

1. https://en.wikipedia.org/wiki/Brown_v._Board_of_Education

2. https://en.wikipedia.org/wiki/Engel_v._Vitale

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

#163

Post by refurb » Thu, Aug 06, 2020, 10:21 PM UTC

jrehor wrote: post #126

The US has too much retail space. Per capita, it has 5x as much as Europe (23.5 sq ft in the US vs 3-4 sq ft in most European countries) and 8-10x as much as Asia (2-3 sq ft). We may be looking at a permanent decrease as a result of this pandemic. But even if it goes down by 20%, the US will still have way more than anywhere else. I think we'll be better off when we use the excess retail space for something else whet…

I’m not sure if retail space alone is a good measure. The US (and Canada) love massive stores like Costco, Home Depot, Walmart. And there are a LOT of Walmart’s.

Those stores seem to be doing just fine during the pandemic (HD has been packed when I went).

Would be more useful to see a breakdown by retail size. Say 10000 sq ft.

I’d suggest the small places are the ones at high risk (just thinking about typical tenants).

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

#164

Post by sharklazer » Thu, Aug 06, 2020, 10:22 PM UTC

martinald wrote: post #148

brudgers wrote: post #71

Earlier quoted context omitted.

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 c…

Yes, but we're overleveraged. And I mean "We're" because the people who hold the debt is actually quite spread out and obfuscated.

I don't disagree with you in principal, but unfortunately, we have a parallel problem of how the debt market works, which is essentially to generated and then sell the debt to investors, diffusing the "risk", or rather, I think of it more as displacing it. Much less incentive for active participation in investing via debt. People who end up holding the debt are many steps away from being able to have conducted due diligence.

Not to harp on a point, but the big theme of this whole fiasco starts with the displacement of risk from the risk taker. And since we've permitted that, we're all stuck with it.

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

#165

Post by marcosdumay » Thu, Aug 06, 2020, 10:23 PM UTC

munk-a wrote: post #132

marcosdumay wrote: post #92

Earlier quoted context omitted.

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.

A large proportion of those debt collectors are gigantic soulless corporations that nobody would mind watching suffering somewhat - but that's the same as every industry. There are a lot of smaller property owners that are really hurting here and pausing debt collection might free those owners from debts but it won't put food on their table. This is, unfortunately, a very complicated problem.

Property owners will suffer anyway.

Government help was supposed to alleviate that pain, but I doubt they'll receive any - another point for UBI. But forcing the debtors into liquidation when they could otherwise survive won't help anybody.

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

#166

Post by TheOtherHobbes » Thu, Aug 06, 2020, 10:23 PM UTC

philjohn wrote: post #80

duxup wrote: post #13

Good. I like that. Now if we can just seem to adjust whatever weird tax rules or situations allow real estate to sit largely empty and apparently not not put all that much pressure on prices... that would help too. I see a lot of commercial real estate sit empty for ages and I hear from the local businesses that the rates are still high and even going up. A development not far from me has been at sub 50% capacity for…

I believe in the UK landlords are on the hook for business rates on commercial property when it's empty, so the incentive to lease at more reasonable rates is there.

Landlords get a three month exemption when a lease expires. On some industrial properties the exemption is six months.

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

#167

Post by true_religion » Thu, Aug 06, 2020, 10:24 PM UTC

Ijumfs wrote: post #89

paulryanrogers wrote: post #87

Earlier quoted context omitted.

Malls are also a place to walk, shop, and play for families during winter. In colder areas it's often dark sooner so outdoor activities are more limited.

They used to be. That all stopped in the 1990's.

It’s still done over here in the Virginia Tri State (including what Amazon is trying to force us to call Liberty Landing). It’s just that all the malls are outdoors “town centers”, so people still go out for ice skating, like music, winter beer festivals, fireworks, and movies but we do it in the freezing cold.

I think the idea of a indoor mall was great, but it’s a big building that’s hard to maintain.

Maybe future societies will just have geodesic domes around town centers to get the best of both worlds.

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

#168

Post by ghaff » Thu, Aug 06, 2020, 10:25 PM UTC

SketchySeaBeast wrote: post #140

ghaff wrote: post #130

Earlier quoted context omitted.

You mean the jobs that are likely to be at least somewhat less location-dependent coming out of this? (Not arguing for 100% remote or anything like this but still a fairly major shift. I certainly know plenty of people who have already moved out of cities to quite rural locations.)

I think this is another case of knowledge worker myopia. With the exception of Amazon, you can't really work retail remote. Those workers who can work remotely now can leave at any time, that's right, and there has been a bigger shift for them, but we can't pretend that the majority of workers are remote workers. The people who had to come to the city for work, people who worked in retail or in industry, those types…

Certainly, I'm specifically talking about the highly-paid knowledge workers in cities. But if they move out to any large degree that cascades. You don't need the higher-end luncheon spots and other amenities those workers use at that point. There aren't generally factories or distribution centers in cities.

It may even be a positive for some of those workers to the degree prices go down, albeit with fewer high-end restaurants and so forth and fewer co-workers.

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

#169

Post by true_religion » Thu, Aug 06, 2020, 10:26 PM UTC

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.

Banks being bailed out has been national policy in the US since the Great Depression. Previous to that there were 3 national panics and bank runs, and banks were considered juicy targets for robbers as well.

The federal insurance program made it so people could trust in banking again.

Now I do think that the policy has gone too far. Bank investments should receive any bailout, those are part and parcel of the normal functioning market.

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

#170

Post by floatingatoll » Thu, Aug 06, 2020, 10:27 PM UTC

supertrope wrote: post #125

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…

It's not just property tax. The investors who fund the mortgages would have to take a haircut. Which could destabilize banks, pensions, insurance companies, any institution relying on endowment earnings to operate, etc.

They're investors. Investments are not guaranteed. They're going to take the same haircut either way, whether or not the suspension of payments is carefully handled to avoid bankruptcy or is forced upon them by bankruptcy. I think that bankruptcy filings by the lender offers a higher risk of the haircut becoming permanent, relative to temporary declarations of easement throughout the lending chain.