CNBC: Here’s why the Forever 21 bankruptcy could be really bad news for US mall owners
According to CNBC:
A Forever 21 bankruptcy was not on U.S. mall owners’ wish lists ahead of this holiday season.
The teen apparel retailer on Sunday night announced it was filing for Chapter 11 bankruptcy, planning to close nearly 200 locations in the U.S. Forever 21 has 815 stores globally, and expects to exit most of its locations in Asia and Europe.
Forever 21′s filing comes amid a wave of announced store closures in the U.S., many of them in shopping malls, which are set to eclipse a record this year. So far in 2019, major retailers announced plans to shutter 8,558 stores in the U.S., while opening 3,446, according to a tracking by Coresight Research. Last year, there were 5,844 closures and 3,258 closures, Coresight said. The firm is anticipating announced closures could top 12,000 this year.
“There are outcomes that could be very detrimental to the mall REITs,” Vince Tibone, a lead retail analyst for Green Street Advisors’ retail team, said in a recent interview. Because of the size of some of their stores, some Forever 21 closures in malls could trigger co-tenancy clauses, he added, which means surrounding retailers would then have the ability to either break their leases or try to negotiate rents, leading to more of a ripple effect.
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