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Toys R US Collapse Impact on Real Estate (Update: Bye Bye)
Posted on 3/12/18 at 5:00 pm
Posted on 3/12/18 at 5:00 pm
Interesting article about an issue not many are talking about at the moment
LINK
About to be a lot of stand alone empty boxes. I feel like the last time we saw this was when Circuit City collapsed.
I know the Circuit City in Metairie was vacant for a long time, eventually becoming a cheap furniture store.
Update: They gone LINK
LINK
About to be a lot of stand alone empty boxes. I feel like the last time we saw this was when Circuit City collapsed.
I know the Circuit City in Metairie was vacant for a long time, eventually becoming a cheap furniture store.
Update: They gone LINK
This post was edited on 3/14/18 at 5:37 pm
3
Posted on 3/12/18 at 5:35 pm to LSUFanHouston
Target/Slidell (announced a while back) now dark.
Posted on 3/12/18 at 5:35 pm to LSUFanHouston
quote:
I feel like the last time we saw this was when Circuit City collapsed
Sports Authority and Gander Mountain also
Posted on 3/12/18 at 5:52 pm to RTN
quote:
Sports Authority
Forgot about that one. That's a good comparison. About 450 stores. So smaller... but still a pretty major retail collapse.
quote:
Gander Mountain
Nowhere near the number of stores. And aren't some of them staying open after all?
This post was edited on 3/12/18 at 5:54 pm
Posted on 3/12/18 at 5:57 pm to LSUFanHouston
I don't see how commercial real estate isn't affected by retail collapse. There are a ton of commercial mortgage-backed securities out there.
Posted on 3/12/18 at 6:00 pm to tigerpawl
quote:Pretty soon there won't be anything but wal mart and sam's on that side of town.
Target/Slidell (announced a while back) now dark.
Posted on 3/12/18 at 7:49 pm to achenator
Commercial retail and restaurant space is a bubble. Prices are absurd. I don't know what the answer is honestly, but neither one can afford them and retail is probably on a different level than restaurants as part of restaurant issues are the equipment.
I don't see toys r us having any kind of noticeable impact on the market, they aren't even in most towns unless they are like 250k people or bigger. It's just the newest giant to fall.
I honestly think toy's r us likely had very poor leadership. I don't have one nearby but everytime I went it always seemed they lacked a ton of things. Many people say they are way overpriced, so I guess they don't price match?
I don't see toys r us having any kind of noticeable impact on the market, they aren't even in most towns unless they are like 250k people or bigger. It's just the newest giant to fall.
I honestly think toy's r us likely had very poor leadership. I don't have one nearby but everytime I went it always seemed they lacked a ton of things. Many people say they are way overpriced, so I guess they don't price match?
Posted on 3/12/18 at 8:05 pm to achenator
quote:
Pretty soon there won't be anything but wal mart and sam's on that side of town.
Wonder what will become of the area. The movie theater and hotel beside it could suffer as well. Was always a strange location for a theater and hotel anyway.
A couple more hotels were recently built (10 years or less?) at that exit along I-12 as well.
This post was edited on 3/12/18 at 8:08 pm
Posted on 3/13/18 at 9:59 am to baldona
Decent article about the hedge funds use of leverage that drove Toys R Us to bankruptcy. I'm afraid this won't be the last example of this. Guess who still got their fees though.
Forbes Article on LBO of ToysRUs
Forbes Article on LBO of ToysRUs
Posted on 3/13/18 at 12:13 pm to Novae
quote:
I'm afraid this won't be the last example of this
Toys R Us
Circuit City
Winn Dixie / Bi Lo
All examples of leveraged buyouts that went south
Posted on 3/13/18 at 10:27 pm to Novae
Mitt Romney's firm was involved. Paid WAY too much.
Posted on 3/14/18 at 2:48 am to Novae
quote:
Guess who still got their fees though.
I'm unsure what you're suggesting. It appears they paid over a billion dollars for the company and were paid $183 million in advisory fees associated with the ownership. Where is the swindle that i'm missing that you appear to be alluding to?
Posted on 3/14/18 at 5:38 am to C
Probably was referring to this
quote:
Still, the bankruptcy process will impose more fees on Toys "R" Us, from the likes of Kirkland & Ellis, whose lawyers charge upwards of $1,000 an hour. The same firm advised Bain Capital when it purchased its stake in the Toys "R" Us leveraged buyout in 2005. In his filing, Toys "R" Us CEO Brandon estimates that based on his conversations with investment bank Lazard, there will be $96.5 million in fees just to procure the debtor-in-possession financing.
Posted on 3/14/18 at 9:27 am to Fat Harry
quote:
I don't see how commercial real estate isn't affected by retail collapse. There are a ton of commercial mortgage-backed securities out there.
The trickle down effect of any large company closing is going to be extremely significant. From loss of jobs to vacant real estate all sectors will experience a ripple effect whether they realize it or not.
Posted on 3/14/18 at 9:50 am to LSUFanHouston
Mervyn's department store is another. Believe this followed the classic script of loading up on debt, selling company real estate out then leasing back at high rates, and charging high debt service. Drove the company under.
Posted on 3/14/18 at 10:08 am to C
It's not a swindle, but the $1B buyout price was using other peoples' money (bank and investors) whereas the fees were paid to the equity group.
Posted on 3/14/18 at 4:04 pm to C
quote:
It appears they paid over a billion dollars for the company and were paid $183 million in advisory fees associated with the ownership.
They didn't really "pay" a billion... the vast majority was borrowed money which the bankruptcy will ultimately eliminate.
I wonder what their cash on cash return actually was.
Posted on 3/14/18 at 4:10 pm to GetBackToWork
quote:
Mervyn's department store
This placed clothed me all through middle school
Loved going in around Christmas. My mom still puts up her Town Square village at Christmas every year. I also still have a stuffed reindeer, his name is Randolph.
Posted on 3/14/18 at 5:01 pm to Novae
quote:
Guess who still got their fees though.
No one was forced to lend them the debt.
Posted on 3/14/18 at 9:46 pm to LSUFanHouston
In your update link - “...toy vendors will live to regret the day this happened.” What did any toy vendors do to cause this?
TRU was overleveraged to the point that they couldn’t cover their debt obligations. What is a toy vendor supposed to do, subsidize those payments with lower margins?
TRU was overleveraged to the point that they couldn’t cover their debt obligations. What is a toy vendor supposed to do, subsidize those payments with lower margins?
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