Favorite Stock to Short, page-292

Some good discussion here guys. I think another thing to consider is that these are exceptional times. Whilst it is no doubt very useful to look at FLT's balance sheet to see how well it can weather a storm, I think it is very conservative to look at FLT in isolation, under current circumstances. If FLT was facing a company specific crisis, then yes this would make perfect sense. However, we are facing a global crisis afflicting all corners of industry/commerce/economy.

Look at this way, in normal times FLT is one of the best tenants a landlord can hope for, and a very beneficial presence in a shopping centre. FLT attracts a lot of foot traffic per square metre of shop. It has some of the lowest FCCR's of any B&M retailer that I have examined (from those I have examined, I think only NCK beats it, thanks to NCK's very high GM'and relatively low inventories).

So if I am a landlord or shopping centre, what would I be inclined to do in a period of trouble? If I asked FLT to pack-up and leave, who would fill the void? Travel may be at the very epicentre of this storm, but clearly all discretionary retail is affected. It's not as if their shops are amenable to the likes of Woolies or Coles. So is it more rational to cut them some slack and help them ride out the storm, knowing that this storm has to end eventually. Or should I send the strongest B&M travel agent broke, thus sending all remaining B&M retail online, and losing a valuable income stream for ever (travellers)?

Let's face it, as much as each human victim is a tragedy, this virus will not wipe out humanity - not even close. What's more, eventually there will be a vaccine, and if not, given the speed of propagation, we will soon be seeing this event through the rear view mirror. In short, the disruption cannot have a life span of years (this is not WW2).

Rents, I believe, have been running at roughly 85% of marketing expenditure. So further to @Transversal's earlier comments, I suspect this is a significant source of relief.