What’s next for product based retail?
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[{"id": "fnhbsi7", "text": "Commenting to stay posted. My .02 is they\u2019ll be in the same situation as other asset classes in regards to LLs restructuring debt with lenders, restructuring lease payments with Ts, and how to dig themselves out of the trench on both sides. \n\nWhen states begin opening back up, we should see a slow gradual incline of revenue going back to non-ess. businesses but until then, the holes are going to be getting deeper. \n\n\nI think this rapidly increased the turnover of some retail stores that were hanging on by a thread and we should begin to find what business mix is going to be able to fill in those vacancies across the nation while keeping the intent retail or keeping retail investors interested. That would be the best COA in my opinion", "replies": [], "depth": 1}, {"id": "fni1c8g", "text": "My guess is that this will be the final blow for product based retailers that were struggling before this (large department stores, game stops, etc). Product based retailers that are complimentary to grocery store (home goods store, pharmacies, etc) should be able to survive this.", "replies": [], "depth": 1}, {"id": "fni83yx", "text": "Some areas of the US were forced by coronavirus to become familiar with online purchasing of food and other goods while some areas of the US (like in San Francisco where I live) have already experienced a downward spiral in retail due to embracing online/app purchasing of goods and services. \n\nSome segments of product based retail will be fine. One retailer type that comes to mind is mattress stores. Most people have to know how a mattress *feels* before buying. \n\nOther segments of product based retail will be screwed in a permanent way. Clothing, home goods, and gadgets are good examples. \n\nNon-product based retail may see the biggest impact. Movie theaters might become as extinct as drive in theaters. Why spend $50 bucks on 2 tickets and popcorn to see a movie in a theatre if you can watch it on a 60 inch with surround sound at home?", "replies": [], "depth": 1}, {"id": "fnisp0s", "text": "BOPIS. Buy online pick up in store. I think if retailers don\u2019t have some form it this they will struggle going forward.", "replies": [], "depth": 1}, {"id": "fnixntc", "text": "I am in retail and we have a 1600 tenant portfolio. We are currently underwriting no rent collected for April thru Dec only IF we have already approved them for some sort of relief or b. They have not paid April rent. I\u2019d say the bad ones are looking like 20% tenants rent collected but about 40% rent wise. \n\nWith this info, we are seeing which properties we can or cannot make mortgage payments on based on current cash balance, reforecasting the budget to cut any non urgent CapEx, defer leasing TA( tenants won\u2019t build out in this and therefore won\u2019t be invoicing as soon).\n\nIn terms of this so far with what I know, the CMBS lenders are going to be hardest to work with as for example I\u2019ve heard that Wells Fargo has forwarded every request to the special servicer which is never a good thing. I personally am expecting the gov to pass more stimulus funding for specifically this. The problem is, under legislation passed with the bailout in 2008, CMBS companies are not eligible for stimulus funding at the current moment. This is obviously an issue but something has to happen.\n\nRetail will not die, only those were already weak before this may not come out in the end. The industry as a whole is trying to hold together and everyone on all levels from landlords to community banks want to make sure retail survives. This is a very unique situation.", "replies": [{"id": "fnjrlmn", "text": "Wouldn\u2019t CMBS work with you in this situation. I\u2019m sure banks aren\u2019t trying to foreclose", "replies": [{"id": "fnjxv2i", "text": "CMBS is servicing hell, once the loan is securitized it\u2019s split up and all the different bond buyers own a piece. So it\u2019s not really \u201cthe bank\u201d foreclosing. So many different parties with fractional interest, easiest way to handle is just follow the loan docs and foreclose and shoot it off to auction or whatever else. Kick the can down the line. It\u2019s dumb but they haven\u2019t figured out a better way to do it.", "replies": [{"id": "fnjybnj", "text": "So if a CMBS loan goes bad, what\u2019s the process of foreclosure? Special services deals with it? Do they work with you on selling it? Who takes back the property? If a special servicer takes it back like Starwood, how do they pay back bond holders? Who agrees on sale price of distressed property that has conduit financing?", "replies": [{"id": "fnjzhet", "text": "Special servicer pretty much just turns the screws and there\u2019s not really a way out. Sometimes there\u2019s an incentive for the special servicer to foreclose so they can acquire the property at a discount. Sometimes they\u2019ll just auction it off. Depends who is special servicer.\n\nDon\u2019t understand the dynamics of the whole bond repayment thing but I believe that\u2019s done on a more global level. A bond buyer is buying into a tranche of bundled loans in a giant pool and those are priced based on risk. So the b buyer has already priced in some risk that some of the individual loans or properties will go bad. I\u2019m sure there\u2019s more to it but on that side of things it\u2019s like 90% finance 10% real estate and it\u2019s a bit over my head.", "replies": [{"id": "fnlz37v", "text": "Yes, it\u2019s an extremely complex structure. I think the main issue is how would you regrade the tranches or pools? Doesn\u2019t seem like an easy solution. The sheer amount of requests alone to these CMBS lenders is insane.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fnjvjz3", "text": "Commenting as a retailer (work for a global tenant). We are quickly brainstorming new store concepts, Omnichannel opportunities, and leveraging technology. However, my company is a leader in this space so I think it will either force retailers to innovate and invest in their stores and technology OR close shop.", "replies": [], "depth": 1}]