AuthorTopic: Official Death of Retail Thread: Life Without Walmart  (Read 20394 times)

Offline RE

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🚜 Caterpillar closings impact 880 jobs, Illinois plant could be next
« Reply #165 on: March 17, 2018, 12:50:34 AM »
Not exactly retail, but same general theme.

RE

http://www.mortontimesnews.com/news/20180316/caterpillar-closings-impact-880-jobs-illinois-plant-could-be-next

Caterpillar closings impact 880 jobs, Illinois plant could be next


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By Matt Buedel
Journal Star Caterpillar/industry reporter
Posted Mar 16, 2018 at 4:21 PM

DEERFIELD — Caterpillar Inc. will close facilities in Texas and Panama as part of a plan that could eventually include the shuttering of an Illinois engine manufacturing plant and overall job losses of about 880 positions, according to a Reuters report.

The decision to close the facilities in Texas and Panama is final, and has been internally announced over the last two months, the company confirmed to Reuters.

The closures would be part of the company’s strategy to focus on the most profitable segments of its business and invest in segments and services not as closely connected to the down cycles of end users of the equipment.

Progress Rail, a wholly owned subsidiary of Caterpillar, is considering closing its engine plant in LaGrange, which would impact about 600 full-time positions, mostly in manufacturing, the company also told Reuters.

Caterpillar closed or consolidated about 30 facilities around the world as part of a major restructuring announced in the fall of 2015 that also called for more than 10,000 jobs to be eliminated.

The restructuring plan was devised in response to the worst downturn in the company’s history. From 2012 to 2016, sales and revenue declined more than 40 percent. Sales rebounded in 2017 and appear to be continuing on an upward trajectory in 2018.

The company’s stock has rebounded, as well, and gained more than 1 percent to close at $156.46 per share on Friday.
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Offline RE

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🧟 What Are Zombie Retail Stores Really Worth: Answers Emerge
« Reply #166 on: March 24, 2018, 01:11:27 AM »
https://wolfstreet.com/2018/03/22/what-are-zombie-retail-stores-really-worth-answers-emerge/

What Are Zombie Retail Stores Really Worth: Answers Emerge
by Wolf Richter • Mar 22, 2018 • 48 Comments   
“Little or nothing.” Toys “R” Us and its commercial mortgage backed securities.


Here’s what a central-bank induced credit bubble – when investors are chasing yield while willfully ignoring risks – looks like when in full bloom, and what happens when even the worst-case scenario at the outset turns out to have been more hype than realistic.

This is how it started:

In October 2016, about 11 months before it filed for bankruptcy and 17 months before it decided to liquidate its operations in the US, Toys “R” Us sold $512 million in commercial mortgage-backed securities, backed by 123 Toys “R” Us and Babies “R” Us stores across 29 states with a combined 5.1 million sq. ft. rentable area.

At the time of the deal, the over-indebted brick-and-mortar retailer, which had been stripped of cash and loaded up with debt by its PE firm owners following the leveraged buyout in 2005, was already in financial trouble, deeply engulfed in the brick-and-mortar meltdown.

Nevertheless, it was able to persuade S&P Ratings to rate the $512 million in “commercial mortgage pass-through certificates,” as they’re called (TRU Trust 2016-TOYS). The borrowing entity was Toys “R” Us Property Company II LLC. The servicer was Wells Fargo. The deal was cut into six slices, with the lowest-rated slices taking the first loss:

    A: $244.8 million, or 48%: AAA
    B: $52.1 million, or 10%: AA-
    C: $39.1 million, or 8%: A-
    D; $47.9 million: BBB-
    E: $65.1 million: BB- (junk)
    F: $62.9 million: B- (junk)

In other words: 48% of the deal was rated AAA, 66% was rated A- or higher, and about 75% was rated investment grade (BBB- or higher).

But no problem. At the time, S&P assigned a value of about $618 million to the collateral. So there was nothing that could go wrong.

S&P said at the time that the ratings were based on its “view of the collateral’s historic and projected performance, the sponsor’s [PE firms KKR, Vornado Realty Trust, and Bain Capital that own the place] and managers’ experience, the trustee-provided liquidity, the loan’s terms, and the transaction’s structure.”

It added that even in their worst-case scenario – the “dark value” scenario – things would be just fine: “We determined that the loan has a 98.3% beginning and a 91.4% ending loan-to-value (LTV) ratio based on our estimate of the portfolio value under a “dark value” scenario, where the master lease tenant is no longer able to meet its obligations, vacates, and the properties must be re-tenanted.”

And this is how it turned out:

Now the worst-case scenario has gotten a lot worse. Deutsche Bank analysts Ed Reardon and Simon Mui wrote in a note Wednesday, cited by Bloomberg, that as many as 26 of the 123 properties backing this deal may have little or no value if they’re vacated by Toys “R” Us and would have to be re-leased – which is likely given the liquidation of Toys “R” Us.

They figured that a new appraisal of the properties will likely show the value, estimated at $618 million at the time of the deal, may have dropped 34% to $407 million. Bloomberg, citing the analysts:

    Adding difficulty to valuations are the varying types of store locations – including outside malls, strip centers and standalone locations – and a retail industry “in such a state of flux.”

Other retailers that would want to move into the stores will be hard to find for many of the locations, as their own operations have gotten tangled up in the brick-and-mortar meltdown and a slew of them have filed for bankruptcy, and many more will soon do so, and they will shrink their footprint, and some of them will get liquidated. And these stores will become vacant too — if they haven’t already.

The analysts wrote that an appraised value of less than $495 million could lead to the $63-million F-tranche losing control of servicing decisions or taking losses. At an appraised value of $407 million, the losses will expand. And the brick-and-mortar meltdown has just gotten started.

While there are retailers that want new locations, and while there are some mall REITs that are looking at opportunities, they will only be interested in the best-situated properties. The analysts hoped that local real estate investors might be the best option for lower-value lots. And they won’t be willing to pay a lot for these properties.

These buyers “face massive execution risk,” the analysts wrote, including lower-than-expected rents, more retailer defaults, a long leasing process, and potential tenants that “have significant negotiating power.”

    Some loans in the deal have other large vacancies nearby, or other weak tenants that may close stores. In some cases, potential replacement tenants like Michaels Cos. and Dick’s Sporting Goods Inc. already have stores near or in the same shopping strip where a Toys “R” Us is closing, meaning they’re unlikely to step in and lease.

As the old and now forgotten banker adage goes: Bad deals are made in good times. And perhaps conversely: It takes bad times to be able to make good deals.

Brick & Mortar Meltdown and the mall REITs: The weakest plunged 80% and the strongest plunged “only” 30%. Read…  What Are We Going to Do with these Plunging Mall REITs?
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Offline azozeo

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Official Death of Retail Thread - MailChimp goes TiTs UP !
« Reply #167 on: April 01, 2018, 01:12:00 PM »
https://futurism.com/mailchimp-is-shutting-down-ico-and-blockchain-related-emails-and-people-are-freaking-out/


I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline RE

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🏬 Brick & Mortar Retail Meltdown, March Update
« Reply #168 on: April 03, 2018, 01:44:05 AM »
https://wolfstreet.com/2018/04/02/brick-mortar-retail-meltdown-march-update/

Brick & Mortar Retail Meltdown, March Update
by Wolf Richter • Apr 2, 2018 • 52 Comments   
And private equity firms are at the helm.


March was a busy month for the brick-and-mortar retail meltdown which kicked off in 2015 and has since picked up speed. We’ve followed this progression from the early days. This year, there was a brutal January, an even more brutal February, and here’s March.

Southeastern Grocers, parent of Winn-Dixie, filed for bankruptcy on March 28. It’s buckling under its debts. Its creditors have agreed to restructure some of this debt in return for equity, which will reduce the debt by $500 million. The company has also secured new financing once it emerges from bankruptcy. In the Chapter 11 filing, it said it plans to continue operating over 580 stores in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, and South Carolina. On March 14, when the company initially had announced bankruptcy plans, it also said that it would close 94 of its stores.

Michaels Companies, largest US crafts retailer with about 1,300 stores in the US and Canada, announced on March 22 that it would shutter all its 94 Aaron Brothers framing and art supplies stores. It will offer custom framing in its Michaels stores. The whole thing should be wrapped up by July 31.

Claire’s Stores filed for Chapter 11 bankruptcy on March 19, suffocating under $1.9 billion in debt. The youth-oriented jewelry and hair accessories retailer has 7,500 stores that also offer ear piercing, which was supposed to be its strategy to fight off online sales, but it wasn’t enough. Mall traffic had fallen 8% year-over-year, the debt was too high, and interest expenses ate up $183 million a year, chief financial officer Scott Huckins lamented in the court papers.
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This is a “prepackaged” bankruptcy filing where the company has reached an agreement with its creditors – which include PE firms Elliott Management, Monarch Alternative Capital LP, and Apollo Global Management – to restructure its debt, meaning that ownership will be transferred to creditors in exchange for some of the debt. This group of first-lien lenders will also provide $575 million in new capital, including a $250 million first-lien loan.

The private equity angle: Apollo acquired the company in a leveraged buyout during the LBO boom in 2007. At the date of the bankruptcy filing, Apollo owned 98% of the shares and about 28% of three types of the company’s debt. In bankruptcy proceedings, creditors take control, and Apollo is well-placed.

Toys “R” Us filed for liquidation, it announced on March 15. The toy retailer, which had filed for Chapter 11 bankruptcy last September, will close all its 735 stores in the US and liquidate their inventory. The prospects of liquidation started becoming clear earlier in March. Shuttering the US operations will destroy about 33,000 jobs over the next few months. And it puts a lot of retail space on the market that may be worth “little or nothing,” and holders of Toys “R” Us commercial mortgage backed securities are bracing for losses [read…  What Are Zombie Retail Stores Really Worth: Answers Emerge].

Bon Ton stores faces liquidation if it cannot find a buyer, according to its bankruptcy court proceedings on March 12, in which the company set out the rules for an auction of its business as a going concern. The regional department store chain based in Pennsylvania had filed for bankruptcy in February, after discussions with its creditors about restructuring its debts had collapsed. Now the bondholders are clamoring for asset liquidation, hoping to get some of their money back. If there is no bid that satisfies the court and the creditors, Bon Ton will likely be forced into liquidation.

Guitar Center is buckling under its debts. The company calls itself “the largest musical instrument retailer in the world,” and opened as it says “its 262nd location” with its Times Square flagship store in Manhattan in 2014 while it was still in PE-firm driven expansion mode. In addition, it operates 120 stores specializing in band and orchestral instruments.

In early March, it announced that it is trying to push creditors into a debt exchange. On March 14, Moody’s said if this debt exchange succeeds, it will constitute a “distressed exchange” and will count as an “event of default.” And this debt exchange, as bad as it may be, is going to be the better outcome than any alternative.

If it succeeds, it will give the company some “financial flexibility,” but will add $50 million to its indebtedness, and this total indebtedness, Moody’s said, “remains a key credit concern, particularly given Moody’s opinion that there continues to be a relatively limited revenue visibility regarding the retail environment for musical instruments.”

The private equity angle – a familiar name in the recent flurries of LBOs that collapsed into bankruptcies, including iHeartMedia, Toys “R” Us, Gymboree: Bain Capital acquired Guitar Center in an LBO during the boom in 2007, whereby the acquired company took on a large amount of debt to fund its own acquisition, and then took on more debt to expand further. This expansion drive and debt pile-up then got hit by the brick-and-mortar meltdown.

Sears Holdings is reporting ever more horrid quarters. On March 14, it reported results for Q4, ended February 3, which covered the crucial holiday sales period. Revenues plunged 28% year-over-year to 4.4 billion. According to my projections and my beautiful chart, at the rate of declines over the past four years, revenues will drop below zero in 2020, even as CEO and hedge-fund owner Eddie Lampert is still touting “progress” in SEC filings. This thing is cooked and waiting to be carved up.

Signet Jewelers, whose brands include Kay Jewelers, Zales, and Jared, announced on March 14 that it would close 200 Stores over the next 12 months after same-store sales dropped 5.2% year-over-year. “Path to brilliance,” as the company calls its new plan to save $85 million in costs in 2018 and $100 million in 2019. It’s also trying to whittle down “non-customer” facing costs in sourcing, distribution, warehousing, and corporate and support functions. Meanwhile, its shift to online sales is proceeding too slowly, accounting for 11% of its total quarterly sales, up from 7% a year earlier.

Foot Locker, with over 3,300 stores globally, announced on March 2 that it plans to close about 110 stores this year, after having closed 147 stores and opened 94 stores in 2017. CEO Richard Johnson explained that Foot Locker was trying to reduce its exposure to “deteriorating” malls. “The disruption that has characterized the retail industry recently is not going away,” he said. But unlike others, Foot Locker will be able to hang in there for a while: It escaped a rumored LBO in 2006 by KKR and Apollo, so it hasn’t been strip-mined for cash, and its shares are still publicly traded, and it still has access to funding.

Bankruptcy is becoming an increasingly common “exit” for PE firms. And the pension obligations? Read…  PE Firm Cerberus Capital’s “Rollup” Collapses into Bankruptcy
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Offline Golden Oxen

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Re: 🏬 Brick & Mortar Retail Meltdown, March Update
« Reply #169 on: April 03, 2018, 04:11:40 AM »
https://wolfstreet.com/2018/04/02/brick-mortar-retail-meltdown-march-update/

Brick & Mortar Retail Meltdown, March Update
by Wolf Richter • Apr 2, 2018 • 52 Comments   
And private equity firms are at the helm.

Articles like this are usually blamed on Amazon by the dim. I beg to differ.

What we are witnessing is the demise of the middle class into poverty as they increasingly struggle to pay the necessities of life and their meager salaries and savings are eroded by inflation.

It also mirrors my view of collapse or light doom; being that we are already in collapse and it will be slow, decisive, and imperceptible to most for a long time until the Great Awakening. Then it's going to get ugly, real mean nasty and ugly.

How I hope there is a technology looming that can save us. Not for me, I'm a geezer, but for my kids and grandchildren, they are totally clueless. Brainwashed as well by a group of elitists and banksters that tell them all is well and Doomers are ass holes, even if their old well meaning grandparents who just don't get it.   :'(

                               


Offline RE

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Re: 🏬 Brick & Mortar Retail Meltdown, March Update
« Reply #170 on: April 03, 2018, 04:17:08 AM »
We are certainly well into collapse.  The main question is when the monetary system fractures and we take a big step down.

RE
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Offline Golden Oxen

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Re: 🏬 Brick & Mortar Retail Meltdown, March Update
« Reply #171 on: April 03, 2018, 04:34:40 AM »
We are certainly well into collapse.  The main question is when the monetary system fractures and we take a big step down.

RE

It's getting close. Let's see if the Fed can print us out of the next crash.

We might already be in it, this one opened up a real big hole yesterday before PPT stepped in to moderate it. A time to be very alert to financial markets for sure.

Trump and Kudlow are both loose cannons as well, combined with that shithead at Treasury Minuchin and his trophy my shit is ice cream wife, throw the new Fed pick into the pot with this crew and you have the makings of a serious mishap.

Would feel more confident with the three stooges in charge of the financial system.

                                 

Offline Surly1

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Re: 🏬 Brick & Mortar Retail Meltdown, March Update
« Reply #172 on: April 03, 2018, 06:25:58 AM »
https://wolfstreet.com/2018/04/02/brick-mortar-retail-meltdown-march-update/

Brick & Mortar Retail Meltdown, March Update
by Wolf Richter • Apr 2, 2018 • 52 Comments   
And private equity firms are at the helm.

Articles like this are usually blamed on Amazon by the dim. I beg to differ.

What we are witnessing is the demise of the middle class into poverty as they increasingly struggle to pay the necessities of life and their meager salaries and savings are eroded by inflation.

It also mirrors my view of collapse or light doom; being that we are already in collapse and it will be slow, decisive, and imperceptible to most for a long time until the Great Awakening. Then it's going to get ugly, real mean nasty and ugly.

How I hope there is a technology looming that can save us. Not for me, I'm a geezer, but for my kids and grandchildren, they are totally clueless. Brainwashed as well by a group of elitists and banksters that tell them all is well and Doomers are ass holes, even if their old well meaning grandparents who just don't get it.   :'(

We are certainly well into collapse.  The main question is when the monetary system fractures and we take a big step down.

RE

People on both left and right can agree that the world is awash in unsecured debt, and that the Fed printing press is the only thing pumping air into the bubble as it continues to leak. I agree with you both that collapse is happening even as we frogs continue to slowly cook. Trump seems to be facilitating a financial crisis by a lack of any coordinated effort, or any observable policy in effect. Let's mortgage our grandchildren's futures in order to give money to my friends, who already have so much they couldn't spend it all if they devoted the rest of their lives to doing so, at the same time the Fed looks to be preparing to raise rates.

As George Carlin said years ago, ""They're coming for your social security money. And guess what? They'll get it .... to give to their criminal friends on Wall Street."

Nothing has changed.

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Offline RE

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💸 Chap. 11 Bankruptcies Spike 63% from Year Ago
« Reply #173 on: April 10, 2018, 12:20:08 AM »
Looks like a good year to be a bankruptcy lawyer!  ::)

RE

https://wolfstreet.com/2018/04/09/chap-11-bankruptcies-spike-63-from-year-ago/

Chap. 11 Bankruptcies Spike 63% from Year Ago
by Wolf Richter • Apr 9, 2018 • 17 Comments   
Highest level since April 2011. It’s not just the Brick & Mortar Meltdown anymore.


New Chapter 11 bankruptcies in the US spiked 63% year-over-year in March to 770 filings, the highest number of filings for any month since April 2011 (when there had been 789 filings as companies were still trying to emerge from the Great Recession).

This chart shows Chapter 11 filings back to 2011, based on data from the American Bankruptcy Institute. The last six Marches are marked with red dots. The year-over-year jump of 299 filings in March is the second largest year-over-year jump for any month since the Great Recession. It is behind only the jump of 366 filings last December, which had set a post-recession record. The yellow dots represent the last six Decembers (more on that in a moment):

A company files for Chapter 11 bankruptcy protection from creditors in order to try to restructure its debts under the supervision of a judge. This normally involves are large reduction in debt and the transfers of part or all of the ownership of the company from pre-bankruptcy owners (shareholders) to creditors. Most often, shareholders lose everything. Some unsecured creditors too lose everything. Secured creditors are often made whole. And many creditors in between get a haircut, in return for some ownership. The hope is that the company can “emerge” from bankruptcy with less debt and keep operating.

Bankruptcy filings are seasonal and usually peak in April, along with tax season. So the March jump doesn’t augur well for April.

The low points in Chapter 11 filings normally occur late in the year, before or in December, except last December when filings spiked 61% from November, to the highest level for any month since April 2013. In March, it got worse when Chapter 11 filings spiked to the highest level for any month since April 2011.


While the December 2017 spike was truly special, in January and February, filings were close to where they’d been a year ago, and I thought, OK, maybe December was just a blip. But now there’s the March spike, the second highest spike since the end of the Great Recession.

The chart below shows the year-over-year change in Chapter 11 filings. This eliminates the effects of seasonality. Red bars indicate that filings rose from a year ago. Blue bars indicate that filings fell from a year ago. Note the effects of the oil-and-gas bust in 2015 and 2016 and more recently the effects of the brick-and-mortar meltdown; but now it’s not just the brick-and-mortar meltdown anymore:

Monthly Chapter 11 filings are volatile. To smoothen out the volatility and eliminate the effects of seasonality we can look at the year-over-year changes as a three-month rolling average. For example, the three-month average year-over-year change for March is based on January, February, and March. And then the image becomes clear: There is a problem, and it’s not a blip:


The by now well-documented Brick-and-Mortar retail meltdown is responsible for part of it. Retailer bankruptcies of all sizes have been piling up in large numbers since 2016. They all started out as Chapter 11 filings, though many of them later turn into messy liquidations, like Toys ‘R’ Us.

Back on January 8, when I discussed the horrendous spike in Chapter 11 filings in December, I figured that there must have been another cause. The economy is doing OK. In Q4, it was stronger than it had been in prior years, when bankruptcies were much lower. And retailer bankruptcies alone wouldn’t cause that kind of spike. I speculated that that the advent of the new tax law had a lot to do with it.

Creditors and shareholders of failing companies knew that they could write off losses in 2017 under the old corporate tax rate of 35%, thus getting the government to pick up 35% of the tab of their losses via lower taxes. In 2018, the new tax law adds uncertainties, but shareholders and creditors knew that losses incurred in 2018 would face the new corporate tax rate of 21%, and so the government would only pick up 21% of the losses.

But in March, this logic no longer applies. So it looks like the December spike was a mix of tax consideration and a sharply deteriorating credit environment for companies.

This is a sign that the economy has arrived at the end of the “credit cycle.” The Fed is trying to push up interest rates and tighten financial conditions. Weak companies are starting to have a harder time refinancing their debts. And those that succeed face higher borrowing costs. Some sectors are getting hit harder than others, such as brick-and-mortar retail, which had a terrible March. But this is now spreading in other sectors, such as specialized subprime auto lenders.

Subprime auto-loan delinquencies have surged to the highest rate since October 1996. Scores of smaller specialized lenders have piled into this field after the Financial Crisis, some of them backed by private equity firms. Three of them have now collapsed into bankruptcy or were shut down. Allegations of fraud and misrepresentations are swirling through the bankruptcy filings. Read…  Subprime Carmageddon: Specialized Lenders Begin to Collapse
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Online Eddie

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Re: Chapter 11 Bankruptcies Spike
« Reply #174 on: April 10, 2018, 07:00:58 AM »
Bankruptcy lawyers are good guys. Their best accomplishment is when they save some poor business guy from being financially destroyed by the IRS.

It's a cookie cutter business, bankruptcy law. You just buy software and fill out boxes these days. I expect the best bankruptcy law software companies do better than any lawyer.

Chapter 11 is just a refi with the judge setting the terms. It's debatable whether it should even be called bankruptcy at all, since most people live through it. If you can't make the payments, then you get pushed into Chapter 7. That's real bankruptcy. All your shit gets sold.

In general, bankruptcy courts are very busy and not able or interested in carrying out every potential threat. When I went Chapter 11 many years ago, one of my credit cards was never even cancelled, even though I listed it, and it was supposed to be cancelled. Likewise, there is not much chance a bankruptcy judge is going to find the gold under your mattress, unless you tell him it's there. FYI.
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Online Eddie

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Re: Chapter 11 Bankruptcies Spike
« Reply #175 on: April 10, 2018, 07:04:15 AM »
Even though I know it's unstable and likely to go south, my finger on the pulse of commerce this year tells me it's going to be good for a lot of small businesses.

My own level of busy-ness is noticeably improved over the last couple of years. It might be close to a peak, but that remains to be seen.
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Offline RE

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📉 As Malls Get Crushed, Commercial Real Estate Prices Fall
« Reply #176 on: April 16, 2018, 04:29:26 AM »
https://wolfstreet.com/2018/04/13/as-malls-get-crushed-commercial-real-estate-prices-fall-to-lowest-in-nearly-two-years/

As Malls Get Crushed, Commercial Real Estate Prices Fall to Lowest in Nearly Two Years

 by Wolf Richter • Apr 13, 2018 • 28 Comments   
Leverage is why the Fed has been worried about the bubble in CRE.




Commercial real estate loans at banks in the US reached a record of $4.3 trillion. This amount is now 11% higher than it had been during the crazy peak of the prior commercial real estate bubble before it imploded during the Financial Crisis. In CRE, leverage is everything. Banks, particularly smaller regional banks that specialize in it, are on the hook.

Fed governors have pointed at CRE as one of the places where “elevated” prices threaten “financial stability” because of leverage and the connection to banks. CRE loans were in part responsible for the near-collapse of the financial system during the Financial Crisis, after CRE prices – the value of the collateral for those loans – turned down.

And now, these bubble prices have started to turn down once again.

Commercial real estate prices collapsed nearly 40% during the Financial Crisis, according to the Green Street Commercial Property Price Index (CPPI). Then prices more than doubled from the low in May 2009 and peaked in September 2017, when the index was 27% above the crazy peak of the prior bubble.

But since September 2017, the index has dropped 1.7%, including a 1% drop in March from February. It is now down 2.1% from March last year and back where it had been in May 2016.

This chart of the CPPI shows the phenomenal eight-year boom that has turned into a decline:

The chart below shows the percentage changes of the CPPI compared to the same month a year earlier going back to the Financial Crisis. Note the trend since 2015 of diminishing year-over-year price gains that turned into actual price declines late last year (red columns) and took a bigger dip in March:

“Over the past couple of years, commercial property pricing has cooled as investors take stock of record prices, slowing fundamentals, and higher Treasury rates,” the report said. “But the ho-hum performance in aggregate is a bit misleading….”

Turns out, one of the five major CRE sectors that make up the CPPI is red-hot, three are middling to declining, and one sector is plunging:

Industrial: Up 11% in March from a year ago. The sector includes warehouses and fulfillment centers, which are getting built, sold, and leased around the country as the retail industry, with Amazon at the top, is building up the infrastructure to handle the surge of e-commerce. This is the brick-and-mortar component of e-commerce.

Multi-family: The index for apartment properties has been flat for the past two years. It began to drop in 2017, but has recently ticked up a little, to where in March is was up 4% from the dip last year but remains below its peak two years ago.

Lodging: Hit by Airbnb, it took a big dive in 2015 and has not recovered since.

Office: The index dropped a steep 2% in March from February and is down 1% from March a year ago.

Retail: This is where the biggest issues are. The sector can be split into two categories – strip malls and malls.

    The sub-index for strip malls dropped 5% in March compared to March last year. It peaked at the end of 2016 and has since dropped 8%.
    The sub-index for Malls dropped 14% over the past 12 months, after plunging 5% in just one month, in March from February. It peaked at the end of 2016 and has since dropped 16%.

These price declines in the retail sector are starting to coalesce into a serious move – and it’s just the beginning. The mall sector will provide ample pain to lenders and holders of commercial mortgage-backed securities as this washes out over the next few years.

There are always winners and losers anytime there is a major structural shift. In terms of the shift from brick-and-mortar retail to e-commerce, CRE is benefiting in the industrial sector and is getting crushed in the mall sector. But this shift is happening within the overall downturn of CRE, after a most phenomenal seven-year price surge, funded by cheap loans that are now getting a lot more expensive.

March was also a busy month for the brick-and-mortar meltdown.  And private equity firms were at the helm. Read…  Brick & Mortar Retail Meltdown, March Update
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Offline RE

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🏪 Here's why Subway could close another 500 restaurants
« Reply #177 on: April 26, 2018, 12:52:04 AM »
http://money.cnn.com/2018/04/25/news/companies/subway-closing/index.html

Here's why Subway could close another 500 restaurants
by Chris Isidore   @CNNMoney April 25, 2018: 5:20 PM ET
 
America's top retailers in trouble
Fast food sandwich chain Subway expects to close about 500 stores in North America this year.

But it's also hoping to open as many as 1,000 stores overseas.

The company has 44,000 locations globally -- more than any other retailer. The National Retail Federation put its US store count at nearly 27,000 as of 2016, compared to 17,500 for Yum Brands (YUM), which runs Pizza Hut, Taco Bell and KFC, and the 14,000 locations for McDonald's (MCD).
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The company said Wednesday it expects stores to close after it rolls out a revitalization plan, announced last summer, that will require franchise owners to invest more in their operations. All Subway stores are franchise owned, rather than owned by the company. The plans to revamp locations include adding self-service kiosks, more comfortable seating and Wi-Fi and USB charging ports. In February, Subway also announced plans for a loyalty program to win back customers and stem slumping sales.

Subway's store count shrinks for first time in company's history

Store closings are new for Subway. It had a net loss of more than 350 US stores in 2016, the first year in the company's history that it trimmed rather than increased its number of stores. The privately held company has yet to disclose its 2017 store count, but there were reports of hundreds of store closings.

"Looking out over the next decade, we anticipate having a slightly smaller, but more profitable footprint in North America and a significantly larger footprint in the rest of the world," the company said on Wednesday.

Many of Subway's locations are smaller compared to other fast food rivals. That's one of the reasons there are so many of them -- it's much less expensive for a franchisee to open a Subway storefront rather than one for McDonald's or Burger King.

Related: Subway unveils loyalty program to stem slump in sales

Many traditional brick-and-mortar stores have been closing locations in recent years, as people buy more goods online. But that hasn't been the case for fast food, where there is virtually no competition from online competitors.

Fast food sales on the other hand are getting hit by the drop in retail foot traffic in the places like malls, as well as the growing demand for healthier food.

Subway also took a public relations hit in 2015 when Subway spokesman Jared Fogle pleaded guilty to charges of child pornography and crossing state lines to pay for sex with minors. He was sentenced to more than 15 years in prison. The company had not used him in a television commercial since 2013, and it quickly cut ties with him when his legal problems became public.
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Offline azozeo

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Death of Retail - Life without Ak fisheries
« Reply #178 on: June 15, 2018, 09:52:39 AM »
http://www.newsminer.com/news/alaska_news/starting-monday-chitina-fishery-closed-until-further-notice/article_ed6f1bd4-6f68-11e8-8a2d-976c85e755ee.html

I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

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Death of Retail Thread: Beer/beverage crisis hits Europe
« Reply #179 on: June 28, 2018, 11:42:58 AM »
https://www.cnbc.com/2018/06/27/beer-rationing-begins-after-a-carbon-dioxide-crisis-hits-europe.html

I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

 

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