Dueling news articles put forth by the WSJ's commercial real estate report this morning:
Advocates, officials try to prevent Philly’s coming wave of coronavirus evictions
At a news conference last week, Councilmember Kendra Brooks called the proposals “humane protections to keep people in their homes during this unprecedented public health crisis.”
Garland noted that these are measures “that frankly most good landlords are doing.” But others, she said, are illegally locking out tenants, charging “exorbitant” late fees, and threatening to call U.S. Immigration and Customs Enforcement.
The Reinvestment Fund report also highlights the importance of legal representation for both tenants and landlords and finds better outcomes for both parties when all know their rights and responsibilities. In line with most legal proceedings, tenants who bring lawyers to eviction negotiations tend to get better deals, including being allowed to leave a unit without owing more money or entering an installment plan instead of owing a lump sum.
But nearly two in three tenants do not have an attorney when entering into agreements with landlords without a judge’s participation.
But wait! The Wall Street Journal to the rescue!
Fixed Rent Payments Could Be the Latest Pandemic Victim
LOL J/K that's if you're a publicly-traded retailer
- A number of retailers are already asking landlords to waive some of their rent in return for a share of future revenues. Ross Stores Inc. said last month that it would pay a rent equivalent to 2% of sales when its stores reopen. Guesst, a New York-based technology company, recently launched software to help retailers and landlords manage revenue-sharing arrangements.
Co-working giant WeWork, which had been looking to switch to more revenue-sharing arrangements before the pandemic, has accelerated the shift over the past month and hired two brokerage firms to renegotiate its real-estate deals. Some apartment-hotel operators, suffering from a downturn in tourism, are also looking to lower their real-estate bills and are willing to grant property owners a share of their profits in return.
Lease alternatives can come in many forms. Some firms sign deals that include a few years of revenue sharing upfront, followed by a period of fixed rent payments. Other deals include a low monthly rent, topped off by a share of revenue. Still others include no rent at all.
Average rent, Philadelphia: $1652/mo
Average salary, Philadelphia: $5666/mo
2% of average salary "revenue:" $113/mo
Go ahead and try revenue sharing with your landlord. See how well it works without a $32b market cap.
...but not a lot of it. Ross did $16b in revenue in 2019. They paid $573m in rent. 2% of their 2019 revenue is $320m. Presume they lost a quarter's worth of revenue and Q2 Q3 Q4 are at 2019 values. Their rent for 2020 is $240m and you and I both know their revenue is gonna be hella less than that.
Yeah but their locations are often in dead strip malls and other low value locations. If Ross leaves then their landlord will get 0 for who knows how long, many years I assume. Many of their locations are going to be the commercial real estate equivalents of Detroit for many years to come. I was happy to see the one in north gate finally close down but the one on aurora... might be harder to find tenants... then you think ross somewhere in mid America.... that’s going to be impossible to fill unless you setup a amazon warehouse there or something.
Make that three ways Special servicers -- firms assigned to handle vulnerable CMBS loans -- are bracing for the worst crash of their careers. They’re staffing up following years of downsizing to handle a wave of defaults, modification requests and other workouts, including potential foreclosures. CMBS is "Commercial Mortgage Backed Security" and don't worry, since BlackRock is distributing money for the Fed they'll all get bailouts.Borrowers with mortgages representing almost $150 billion in CMBS, accounting for 26% of the outstanding debt, have asked about suspending payments in recent weeks, according to Fitch Ratings. Following the last financial crisis, delinquencies and foreclosures on the debt peaked at 9% in July 2011.