The challenges faced by bricks-and-mortar retail businesses are also being faced by the owners of the bricks and mortar. Shopping mall owners struggle when their tenants struggle, and many landlords are now considering “doubling down” on their tenant’s business by also acting as lenders.
As reported by BNN/Bloomberg in a recent article, some mall owners are now supporting their tenants by allowing unpaid rent to be treated as ongoing loans, with the tenant providing security to the landlord for such loans. In addition to giving the tenant an opportunity to turn the business around, such security puts the landlord in a better position to control what happens to their space in the event that their tenant does not survive.
Insolvent retail businesses may find their landlords receptive to restructuring negotiations, in the right circumstances, as retail landlords sometimes find themselves partners in their tenants’ businesses, whether they like it or not.
Experienced and knowledgeable advice is crucial as struggling businesses try to map out a path to recovery.