Summary
Is it fact or fiction that Real Estate Value of Department Stores in Malls has no value. Loans to Department stores prove nothing....
Analysis
While Cafaro and others may be trying to keep their mall anchors alive does not necessarilaly mean Department Store Anchor's real estate has no value.
Their are many factors why Developers will try and keep Department stores in business especially in these economic times. To make a blanket statement that mall anchor real estate has no value is simply foolish. Their have been examples, while not recently, where mall anchor real estate has generated substantial value upon sale.
Developers have always made special deals with Department Stores because of their draw, advertising dollars and the ability to bring tenants to their projects which translates into higher small tenant rent roles and therefore greater net profit or FFO (if a REIT).
I do agree that in the present economic times mall real estate and for that matter retail real estate in general has experienced a drop in value but so has housing and other commercial real estate. The drop in value is related to the economic times we live in coupled with the availability of real estate on the market.
Again, to make a blanket statement that Mall Anchor real estate has no value based on Developer's loaning dollars to Department Stores is just, in this writers opinion, not a logical conclusion.
