Long term leases are long term liabilities and for retailers weaken the balance sheet. Private equity types dismiss such notions, yet for robust department store retailing, I would prefer the majority of stores to be owned. This makes those liabilities assets that can support cheap borrowings, hopefully less than the overall returns from the RE. Obviously this is not possible in malls, but the rents there are low for department stores.
I would support MYR slowly and selectively reacquiring stores as they became available - provided the price is very reasonable. They know the assets, so this is entirely possible. And no, I am not a RE nut. I think this dimension important for department stores.
DYOR
MYR Price at posting:
$1.18 Sentiment: Buy Disclosure: Held
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