Retail Chain Debt

The true cause of the demise of big-box retail (and it s not Amazon) It’s debt, billions of dollars of it

(Pixabay)

Though all the trappings that historically indicate a boom in retail are accounted for consumer confidence, low unemployment and a growing economy stores continue to shutter.

Explanations of behavio上海贵族宝贝

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ral economics dominate the discussion, however a Bloomberg investigation found a common cause underlying most of the relentlessly hemorrhaging sector (almost 7,000 stores closed so far this year): delinquent loan payments.

In Pittsburgh alone, for example, almost 27 percent of retailers have delinquent loans.

Most retail chains have major debt, typically from private equity firm s leveraged buyouts, which, in combination with market conditions and negative sentiment, are causing the sector to continue close stores and Bloomberg s findings indicate its only likely to get worse.

By next year, $1.9 billion high-yield retail borrowings will mature, with an average of $5 billion borrowings subsequently maturing annually until 2025 上海夜网

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and the prospect for refinancing looks precarious as $1 trillion worth of high-yield debt across industries matures simultaneous阿爱上海同城

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ly.

With the Federal Reserve s上海贵族宝贝

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increasing of interest rates, investors who were previously willing to take on retailers debt are now阿拉爱上海同城

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backing away and so, in combination with negative sentiment toward retail, companies efforts to buy additional time seems even more unlikely.

[Bloomberg] E.K. Hudson

Tags: big box retail, Private Equity, Real Estate Finance, Retail Real Estate, shopping malls
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