Real Estate Firms Bucking Trend of Fewer Bankruptcies In 2021

Real estate firms bucked the trend for fewer bankruptcies in companies with assets over $ 100 million this year, according to a new report from Cornerstone Research.

With the recovery from the pandemic, only 43 large corporate bankruptcies were filed in the first half of 2021, compared to 89 in the same period in 2020.

Still suffering from the aftermath of the Covid-19 battles in shopping malls and hotels, real estate was a notable exception to the trend of lower bankruptcies.

Real estate firms accounted for four of the nine megaplides with assets in excess of $ 1 billion in the first half of the year, including Knotel, Le Jeune Villas Developments, EHT US1, and Corp. Group banking.

Using a different industry measure, Cornerstone said five of the top nine corporate bankruptcies were filed by real estate investors.

Cornerstone found that the second and third largest bankruptcies by asset for the period were REITs: Washington Prime Group with assets of $ 4.03 billion with a focus on shopping malls and Hospitality Investors Trust with assets of $ 1.7 billion Focus on hotels.

None of the bankruptcies would have made it into the top 20 bankruptcies by asset list in 2020, according to Cornerstone.

Troubled times could still lie ahead for some large companies that have survived the pandemic through rising debt levels, warned JB Doyle, co-author of the report and director of Cornerstone Research. “Despite the decline in the number of major bankruptcies in the first half of 2021, future increases in borrowing costs could be of concern, especially for companies that are heavily indebted as a result of the COVID-19 pandemic. We’ll see if the increase in debt from the pandemic will affect bankruptcy filings in the future. “