Busted Retailers Use Bankruptcy to Break Leases by the Thousands

[marmar]

(Bloomberg) With the pandemic intensifying the plight of U.S. retailers, companies from J. Crew Group Inc. to the owner of Ann Taylor are using Chapter 11 bankruptcy filings to quickly get out of costly, long-term leases and shutter thousands of stores.

By seeking court protection, firms like Neiman Marcus Group Inc. and the parent company of Men’s Wearhouse avoid the headache of protracted negotiations with individual landlords. But the moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities.

“This is now black-letter law -- a debtor can cram down a landlord,” said Melanie Cyganowski, a former bankruptcy judge who’s now a partner at law firm Otterbourg PC. “If this becomes a tsunami of retailers rejecting their leases, it’s going to trigger another part of the sea change -- the mortgages held by the landlords.”

As bankrupt firms like J.C. Penney Co. and Brooks Brothers Group Inc. look to jettison leases, landlords are already feeling the consequences. CBL & Associates Properties Inc., owner of more than 100 shopping centers in the U.S., is preparing its own bankruptcy filing after rent collections cratered. And 16% of retail property loans bundled into CMBS were delinquent in July, according to research firm Trepp. ...............(more)

https://www.bloomberg.com/news/articles/2020-08-06/busted-retailers-use-bankruptcy-to-break-leases-by-the-thousands?srnd=premium

[beachbumbob]

1. it is what it is, no issue.

[Gidney N Cloyd]

2. Kind of ironic that Trump's crashing the one business area he arguably knew something about.

[BComplex]

3. Everything that trump touches dies.

All these evangelicals think he's the "chosen one". They're worshiping the devil himself.

[sandensea]

6. Or rather, a CLOWN the devil put up to cause trouble for everyone

You know Ol' Scratch is having quite a laugh over all this.

[CrispyQ]

4. I don't see how we're not facing worse than the Great Depression.

???

[SWBTATTReg]

5. This will come back to bite these retailers and all of those that file bankruptcy to ...

break long term leases etc. (and usually I suspect it is the tenants that want the long term leases to get the better monthly rates too, go figure). Later on, I suspect that when these retailers try to engage in leasing other properties etc., they're going to find a marketplace that is going to be pretty hostile to their needs (which I don't blame them).

Retail space I suspect has been under pressure for some time being that the warehousing concept that Amazon and others are doing is reducing the demand for retail space across the Country. I suspect even trump is suffering too, being that he's been harping on such retail properties for some time and probably losing his shirt (good) being that I'm sure that occupancy rates are probably lower than he wants (although I suspect that the idiot that he is would have to lease his properties at a 200% rate or higher to even become profitable).

This is a long term trend (the reduced leasing of retail space by retailers), Malls have been closing, and very few retailers are being successful at creating a successful retail space (Target is doing good, Walmart's is holding steady, etc.)...

[3Hotdogs]

7. Last time I walked through my local malls, lots of blank walls, walls with photographic murals and

empty store fronts with stuff in them to look like the proprietors were closed for vacation.


This is in N.E., New Jersey, one of the richest counties in the country.

Big strip in the neighboring county.... used ta have a movie house and no vacancy. Now, just a Wendy's Shop Rite, Dollar store, 5 Guys hamburger and a Main Street Financial where you can borrow money at $18 % interest if you are willing to put them on your car title.


Oh --- and Arby's. Now the Arby's is up Shit's Creek. Over a year ago, they tore town the interior for a remodel. That was spring, 2019. The remodel was never completed. There is a dumpster outside and take out, only.