During the early months of the pandemic, lenders were willing to allow rent deferrals and offer other concessions to retail property owners. They figured that retail cash flow would return once the initial lockdown period passed. But now, as many landlords continue to struggle and miss payments, some banks and other lenders think it’s time to start cracking down, according to the Wall Street Journal.
- Dig Deeper: Some lenders are now worried about fast-falling retail property valuations, and will conduct foreclosure sales to recoup what is owed them.
- One of many we’ve documented: Canadian bank CIBC has launched foreclosure proceedings against a retail property at 445 Fifth Avenue owned by Harbor Group International. The property, whose former tenants include fashion and accessories retailer Charming Charlie, had a $40 million mortgage. The borrower has been in default of its debt payments since May.
- Next step: A number of owners are looking at converting malls to residential buildings or warehouses, which are more in demand. Some mall investors are also pressuring landlords to sell properties, opposing fundraising plans that they believe will only prolong the suffering. [WSJ]