Retail's Real Estate Glut Is Growing

摘要

The fall of the Toys "R" Us chain, with more than 700 U.S. stores, shows how much retail real estate has changed in just the past decade. When Bain Capital, KKR, and Vornado Realty Trust took over the company in 2005, the buyers justified the $7.5 billion price, in part because of the supposedly valuable properties that came with the deal. Real estate can put a floor under the value of a retailer and make it easier for the company to borrow. Maybe a particular store concept doesn't work out as consumers' tastes change, but in that case, investors can always sell the land and buildings to someone with a better plan. Long-term leases can be similarly valuable. But what if the problem isn't that a particular store is out of fashion, but that consumers are shopping less at brick-and-mortar retailers in general? As more storefronts empty, the valuation floor will look wobblier.