Washington Prime Group, a major mall owner of more than 100 locations across the United States, filed for bankruptcy
https://www.cnn.com/2021/06/14/business/washington-prime-group-mall-bankruptcy/index.html
[{"id": "h1vycvv", "text": "I was reviewing their portfolio here in Florida yesterday. They have a lot of junk they should have dispose long ago.", "replies": [{"id": "h1vzlsn", "text": "They\u2019re tough to work with. Have tried buying several smaller things from them for redevelopment/repositioning over the past couple of years, nothing has popped yet. One guy says yes, passes me along to someone else who says no they\u2019ll only GL or BTS. Clearly they could have used the capital.", "replies": [{"id": "h1w1147", "text": "I mean, besides for redeveloping I really don't know what they were waiting for or what their strategy is.", "replies": [{"id": "h1xcnol", "text": "Bailout?", "replies": [{"id": "h1xd6qw", "text": "This is not 2010.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "h1wictr", "text": "They were a spin-off of simon, where simon offloaded all the junk from their portfolio.", "replies": [{"id": "h1wjjp6", "text": "Once a dog, always a dog", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h1wfy72", "text": "They could've tore down their sites and rebuilt condos, or put up apartments in those locations.  Or convert existing space into condo.  There's a huge housing shortage they could've capitalized on.", "replies": [{"id": "h1wjgm9", "text": "You're not wrong but that costs an insane amount of money. They or their shareholders clearly didn't want to do it. Or maybe they just couldn't (for a number of reason i suppose). Let them get bought out of bankruptcy for pennies on the dollar and someone else inject the much needed capital to redevelop.", "replies": [{"id": "h1wt57z", "text": "Yorktown Shopping Center did ita", "replies": [], "depth": 3}], "depth": 2}, {"id": "h1xd1wd", "text": "Sounds good and every mall owner wants to do that.  \n\nProblem is you need entitlements which are expensive and sometimes impossible. Next you have A reciprocal easement agreement (REA) that covers the site, and generally every anchor store can block your development (and they will just to get a payout). Finally it costs a shit ton of money to build, and who is going to give money to a failing mall company (who doesnt know resi) to redevelop a failing mall?", "replies": [{"id": "h1yn25b", "text": "But it's already happening.  Just take a look at Yorktown Mall (Downer's Grove, IL).\n\nOtherwise, what's your solution?", "replies": [{"id": "h1z0xyc", "text": "Vote in elected officials that are willing to support developments (and even require it).", "replies": [{"id": "h1z422n", "text": "And support re-development.  Many City Councils think new retailers are going to come in and take over these vacant sites.  Yet these same City Council Members personally order from online retailers.\n\nAs property values near these sites decline (Who wants to live by a vacant mall?), and as the community loses commercial tax base, they'll be forced to look at redevelopment options.\n\nBig retail is not coming back anytime soon.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "h1y8djn", "text": "There is a thing called zoning that stops this.", "replies": [{"id": "h1yabpj", "text": "Zoning can be changed.  Unless the town would prefer an abandoned mall with no tax revenue, over Condos/apartments &amp; tax revenue.", "replies": [{"id": "h1yl2tr", "text": "I have been in the industry for 20-years, I don\u2019t need a rudimentary explanation.", "replies": [{"id": "h1ylrq4", "text": "\"There is a thing called zoning that stops this.\"", "replies": [{"id": "h1zeydi", "text": "Yes. No need to quote me unless you want to share my advice. I don\u2019t think you understand, towns don\u2019t just let you change zoning unless it\u2019s providing multiple benefits. There is a whole process for this I was being concise.", "replies": [{"id": "h1zp34t", "text": "I was being concise as well.\n\nnever said that.  I only said zoning can be changed. Never said how hard or easy.  Only that it can be done.\n\nRetail is not coming back &amp; these communities are going to have to figure out what to do to replace that tax base.\n\nYorktown in Downers Grove, IL is an example of mall redevelopment.  My point is that it is already being done.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "h1zqby0", "text": "Yeah they absolutely cannot and would not do that. Individual deal complexities (costs, zoning/entitlements, etc) they are a RETAIL REIT. They specialize in RETAIL and almost certainly have restrictive covenants at various levels which preclude them from participating in the development or operations of any other asset class.", "replies": [{"id": "h1zup58", "text": "Then shut it down. Put those remaining  out of a job, investors in the REIT take a hit. Lawsuits from Investors, Communities to follow.\n\nI guess that's the only option.", "replies": [{"id": "h20kdzf", "text": "that\u2019s basically what\u2019s happening to a certain extent although there\u2019s no grounds for investor litigation unless there was specific malfeasance from WPG. They are filing chpt 11 to restructure their liabilities so they\u2019ll be selling a bunch of properties and working with creditors to reach an agreement that is mutually acceptable for the company to continue operating while settling debts. \n\nWelcome to the world of class B suburban retail post covid.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "h210kah", "text": "For tax reasons it is very difficult for a REIT to construct condos - condos are considered dealer inventory by the IRS and selling them is bad income for the REIT. Would need to create a TRS which the street hates to make it happen, and even in this instance I can\u2019t begin to fathom what you\u2019d need to sell a condo for to make it accretive after tax loss to investors. Way way way too much brain damage for a REIT to develop condos.", "replies": [], "depth": 2}], "depth": 1}, {"id": "h1xbp75", "text": "I wonder if this will happen to other major mall owner?", "replies": [], "depth": 1}, {"id": "h26jl7b", "text": "Brookfield Asset Management has entered the chat...", "replies": [], "depth": 1}]