PEI - 2 REITs Declare Bankruptcy but the Outcomes Will Be Much Different
Bankruptcies are extremely rare in the REIT sector . After all, REITs are required to keep the bulk of their assets in physical properties, or debt backed by real estate. Most real estate tends to appreciate over time, and as long as it holds its value, a REIT can sell properties to pay down debt in a pinch.
However, several mall REITs were already struggling entering 2020, because of the so-called retail apocalypse. Mall values have plunged because of falling rent and occupancy rates in many places. The COVID-19 pandemic exacerbated those problems. That culminated in bankruptcy filings from CBL & Associates (NYSE: CBL) and Pennsylvania Real Estate Investment Trust (NYSE: PEI) over the weekend.
These two bankruptcy filings have very different implications for investors, though. Let's take a look.
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2 REITs Declare Bankruptcy, but the Outcomes Will Be Much Different