Liquidating reit

21-Feb-2018 07:49

"If you look at, kind of, where that pressure point has been, it's more than just our apparel business is bad, it's because, well, they couldn't survive with leverage on it." How is it that so many private equity investors — known for having some of the smartest minds in finance — missed the impending degradation of the sector?Decades ago, it was among the most popular of leveraged-buyout plays.Before the 2005 changes, it was not uncommon for a retailer to be in bankruptcy for 18 months or so, but now that's not possible.Which means, Chapter 11 is now turning into liquidation much more frequently.With more than half of 2017 still ahead, the retail industry is seeing a record-setting pace for bankruptcy filings and store closings — and more are expected in the not too distant future, despite what most consider a healthy consumer.This tipping point for retail is the result of a number of compounding reasons, but the inability to pay looming, massive debt bills is dealing the final death blow to many.When the recession hit, shopping center landlords began giving concessions, like lower rent or better lease terms, to retailers hoping to fend off the fears of ghost malls devoid of retailers and shoppers.Some restructuring experts say a number of these retailers should have filed for bankruptcy during or shortly after the recession, but were able to hold on thanks to loans in received in the form of debt at historically "There was a huge availability of capital and concessions made to retailers during the recession, which kept them hanging on," said Michael Appel, president of retail restructuring practice Appel Associates.

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Now for many, there's nothing left." Appel was chairman of Loehmann's while it attempted, though ultimately failed, to restructure. "You can do a financial restructuring, but if you don't have a defensible business proposition, you get liquidated anyway," he said.

But other spending categories are also rising, including health care and education.