
Some landlords say only 25% of retail tenants paid April rent - fortran77
https://www.wsj.com/livecoverage/coronavirus-2020-04-06
======
mdorazio
Here's the actual part of relevance: "Some enclosed mall and shopping center
landlords say only 25%-30% of their retail tenants have paid their April rents
thus far, according to three owners with properties around the country. "

This is a small sample and specific to a single sector of retail. That said, I
think this trend will likely hit retail more widely this month since so many
small businesses and franchisees are struggling right now.

~~~
Mountain_Skies
It'd be painful but it might make sense for mall owners to forgive the rent
while everything is closed. If their tenant goes out of business, they're not
getting the back rent and now they'll have a vacancy in a time they're
unlikely to find another tenant quickly. Waiving back rent might enable some
of their tenants to stay in business, paying rent going forward.

In the case of enclosed shopping malls, if the entire facility has shutdown,
it seems unethical to charge rent to stores that no one could physically
access. This situation is probably covered in the lease in boilerplate
language somewhere.

~~~
felipemnoa
>>It'd be painful but it might make sense for mall owners to forgive the rent
while everything is closed

You are assuming that the owner himself does not have a mortgage with a bank.
A bank would never just waive mortgage payments. The preferable thing to do is
to make a payment agreement for the late rent payments. With the first payment
for the late rent not due until conditions improve.

Although, this is what the 2 trillion stimulus package is supposed to address.
I think.

~~~
jfoutz
Well, good luck to the bank. Foreclose and enjoy owning a few acres of urban
blight.

Banks are highly specialized, and that specialization isn't well suited to
property management. Property management is highly specialized and that
specialization isn't well suited to running a retail operation. Retail
operations are highly specialized and blah blah blah.

So, you gotta pick. Either put things on pause, and hope it comes back, or let
those with specialized skills wander off and do what they do in other places.
I'm pretty sure there will be plenty of demand all over the country once
there's a vaccine. 2 years?

Funny how organizations have an appetite for risk until they start losing. Too
much avocado toast I guess.

This is glib, but, I think, has a kernel of truth. Economies work due to
markets. The market is coming back either way. Hang on to the mall in the hope
it'll bounce back, or unload it now.

~~~
r00fus
> Well, good luck to the bank. Foreclose and enjoy owning a few acres of urban
> blight.

Theoretically Id' agree with you, but that's exactly what happened in 2008.
Banks got bailed out (bigger banks got more $$) and they just rode out the
recession by getting SEC to pass a rule that removed "mark to market" rules.

There is no law or regulation that is exempt from being manipulated by the
most powerful lobby in the country.

~~~
jfoutz
_blink_ Err. No. I'm not advocating for a bank bail out. The joke about
avocado toast pointed in that direction, but was a bit opaque.

I think there's basically a pyramid. at the tippy top, there are fabulously
profitable large organizations. Those are built on smaller organizations,
recursively down to people.

I've got no problems giving a 20 year old who thought a magna shop was their
way to riches a bailout. they're young and dumb, will learn and do better next
time. The bigger you are, the more responsible you need to be. Banks should be
elite. they evaluated the alternatives and made the best bet they could.

Essentially at the lowest level, be super tolerant. the higher up an
organization gets, the more responsibility they take on. if that's too scary,
don't grow. if you need the net, keep the net. if you don't, well, best of
luck.

I know it doesn't work this way. I think it should, but I can't wave a magic
wand and make the world work like I want it to.

I think if everybody has enough money to buy food and possibly pay rent, all
the other layers "above" will sort themselves out by clever people. The bottom
drives the market. The top is like a whale eating krill. Everybody wants to be
the whale. but if there's no krill, there's not much of anything.

------
avalys
If you owe the bank a million dollars, you have a problem.

If a million people owe the bank a million dollars, the bank has a problem.

~~~
LeoTinnitus
In terms of commercial renting in the "better" states, this is why the
government requires reserves, lending only at a percentage of their income,
and take consider economic downturn in underwriting decisions.

I say this in regards to commercial lending though. Residential is no holds
barred, anything goes cause banks and mortgage companies house people without
any consideration if it's reasonable.

~~~
ichirotakahashi
The biggest problem with financial bubbles is that people get super-risk
averse. As soon as there is talk of over-indebtedness, everyone throws the
book at them. Then the bubble pops.

------
mikeyouse
Here's the linked spot in that landing page:

[https://www.wsj.com/livecoverage/coronavirus-2020-04-06/card...](https://www.wsj.com/livecoverage/coronavirus-2020-04-06/card/zxGUszbZrKt4QGa9DdbH)

Not much detail beyond the headline though..

------
cmurf
The smaller strip malls in my area might be 25% "essential" services like
restaurants. The rest are shutdown by order of the government as "non-
essential" \- places like barbers, hair and nail salons, yoga, gyms, cell and
electronics, shoes, spas, luggage, on and on, and replicated over and over
again. These small businesses aren't paying any rent, they have no meaningful
reserves.

30.2 million small businesses in the U.S. And the Payroll Protection Program
is $350 billion, is $11,666 on average. For two months. For rent and payroll.
It's not enough by a long shot.

------
jaequery
What are the implication of people not paying rent for a number of months? I
can’t fathom what this does to the economy.

~~~
FillardMillmore
It's a good question. Certainly many of these landlords have mortgages that
need to be paid on their properties and the usual maintenance and upkeep of
said properties. If landlords cant pay their mortgages, I'd assume the
properties would be foreclosed by the banks - they'd likely give tenants a
notice of some period of time before they'd be required to vacate. I don't
know all the ramifications but my guess is that property valuations are going
to go down fairly steeply as well. I've seen some efforts to hold rent strikes
and I think those efforts will have more negative than positive results. I'm
sympathetic to those that don't have enough to pay the rent because of job
loss and economic shutdown but there are certainly those out there that will
take advantage of the situation as an opportunity to try to shirk payments.

I wonder if policy could be useful here: temporary rent and mortgage freezes
perhaps?

~~~
crispyambulance
> I wonder if policy could be useful here: temporary rent and mortgage freezes
> perhaps?

That's the big question. Can't everyone just be cool with deferring payment on
rents and mortgages? Ultimately this all bubbles up to banks and investment
products, right?

I wish it were possible to just declare this "the lost Spring of 2020" and
allow the market to take a hit and then recover steadily without entire cities
beset with many months of boarded-up storefronts and foreclosed properties.

~~~
imtringued
Why not just give those who need the money a loan? Deferring rent payments and
mortgages is basically a non formal loan but it is shifting all the risk into
the banks. Let's say you are a bank and you defer 4 months of mortgage
payments and then the landlord defaults. Those 4 lost months are now the
liability of the bank. This is basically a non formal form of economic
stimulus. So what you have done is take a problem that was caused by the
government (the economic loss from quarantine dwarfs the economic loss of
everyone having the corona virus [0]) and shift all responsibility away from
it into a fragile system that is known to break frequently. The idea behind
this bullshit is to say "no bailouts" but the reality is that once the banking
system is collapsing there will be far severe bailouts than before and all the
work you have to prevent them was a complete waste and completely distorted
the economy.

Events like 2008 were entirely about markets destroying themselves but now the
situation has reversed and it's the government that is trying to deliberately
destroy the economy and then people shout louder and want even more
destruction.

------
fma
My wife owns a small business with a retail location. I had to personally
guarantee the lease.

Don't worry, landlords will get their money one way or another.

------
alephnan
Kind of weird title to quantify as “some”

~~~
_curious_
Agreed...by the time I found the blurb in reference, I was underwhelmed by how
generic the limited supporting data points were. That whole page is like WSJ
light and reeks of marketing over substance.

------
rdsubhas
> Some landlords say only 25%

Huh?? Might as well say,

> While some other landlords say 49% paid rent (which would be true for "some
> others"

> And some other landlords say 83% paid rent (which would also be true)

> Yet some other landlords say 0% paid rent (which would also be true)

After that "some" in the title, you can replace 25% with whatever number
(<100).

------
throwawaysea
Is this supposed to link to some specific article? The link takes me to a
general coronavirus landing page.

~~~
ms512
It looks like it was a specific post on the page.

The direct link is
[https://www.wsj.com/livecoverage/coronavirus-2020-04-06/card...](https://www.wsj.com/livecoverage/coronavirus-2020-04-06/card/zxGUszbZrKt4QGa9DdbH)

It'd be nice to update the HN link to the direct link.

~~~
floatingatoll
Email the mods using the footer Contact link and they’ll do that for you.

------
TimSchumann
[http://archive.is/PjdCU](http://archive.is/PjdCU)

