Sales slow, costs mount and investors grumble and place blame on e-commerce, tariffs or a pandemic: Another retail chain is filing for bankruptcy. While creditors cross their fingers and lawyers go to court, landlords brace for missed payments.
This is when Ivan Friedman’s phone rings.
“In my business, bad is good,” he said.
On the line, often, are the private equity firms and ownership groups who want to swoop in and buy low. To rescue a bankrupt chain, the companies need someone to renegotiate rents on hundreds of stores. It’s unpleasant but critical grunt work, and many believe Friedman does it best.
Plenty of mall mainstays have hit bottom during the four decades of his career. Friedman’s company, Manhattan-based RCS Real Estate Advisors, was the go-between for retailers and their landlords for many of them. Friedman’s arrangements can enable their survival. When Claire’s, facing a $496 million loan it couldn’t afford, filed for Chapter 11 last summer, the buyer turned to Friedman to fix its leases before closing on the sale. During Simon Property Group and Brookfield Corporation’s purchase of Express out of bankruptcy in 2024, RCS saved the brand nearly $100 million on real estate obligations, court records show.
Even those that have stayed out of bankruptcy, like Vans, Gap, Cole Hahn and Hollister, have used RCS’ services to pay less for spaces or strategize expansions.
The typical story played out one Friday night a few years ago. Friedman was en route to his beach house when a call came in from an unfamiliar number. It was the head of a private equity firm that had recently purchased a national retailer out of bankruptcy.
“We got a problem,” the executive said.
The retailer and one of its landlords, a major shopping mall owner, could not agree on a reduced rent, putting nearly 300 of its more than 1,200 stores, and their revenue, at risk. As the court deadline approached and negotiations failed to advance, the executive started to sweat.
Friedman worked out the numbers. If he could reduce the rent on that group of stores to 40 percent of the original, would the firm take that deal?
Absolutely, the executive said.
At the house, Friedman called the landlord. Only a handful of owners own most of the country’s malls, so a call from Friedman doesn’t just mean they’re about to accept less money at one location but that they may have to reduce the rent across several properties. In this case, if the landlord agreed, Friedman told him, the firm would accept all of the leases by the next day. “Take it or leave it,” Friedman said.
“He’s like the guys who play the Bond villain, and he plays the Bond villain better than anybody,” another major mall landlord who sits opposite Friedman in negotiations like this told The Real Deal. “Not a lot of people want to do this job because they want to be liked.”
“I holler a lot and tell them what they’re going to be doing, and sometimes I get away with it.”
The next morning, the landlord called Friedman to accept the terms. The good news and the speed of its delivery stunned the private equity executive.
For the last two decades, about half of Friedman’s career, the phones have been ringing in a world where the realities of retail are rapidly changing. The last few years have been particularly jarring. Foot traffic has dwindled at mid- and lower-tier malls, with 10 and 18-percent drops, respectively, compared to 2019, according to Placer.ai, which tracks consumer movement. Even one-time high-performing malls have fallen on hard times, landing in foreclosure and wiping out bondholders.
The king of the discounted mall lease isn’t worried.
“I’ve got a lot of years, and a lot of experience,” he said. “You either get old and you benefit from the years, or you get old and die. And I ain’t dying.”
Holding the line
Friedman follows the retail industry like a sports team, so Claire’s demise was no surprise. “Claire’s had been a mess for 10 years,” he said. As Maryland-based private equity firm Ames Watson began circling the 64-year-old retailer, Friedman expected a call from co-founder Lawrence Berger, whom he’s known for 15 years. Ames Watson’s purchase would require saving several million dollars per year on rent across the U.S. portfolio.
Friedman determined Ames Watson needed to keep at least 675 of Claire’s roughly 1,300 U.S. locations for the deal to pencil. Then, Friedman swung into action. “Once we lock up a deal, Ivan has to go perform,” Berger said.
Over the next six weeks, Friedman and his team of 17 examined each individual Claire’s lease, dialed the landlords and haggled.
Friedman doesn’t hire accomplished, successful negotiators. “They don’t exist,” he said. Instead, he brings on employees he can tell are “anxious for success, for money, to learn, and to become established.” Negotiation is something you teach, Friedman said, often through fire.
“You give someone 20 landlords and see how long it takes them to cry,” Friedman said. “And when they come back, because they were made to cry, they start asking the right questions. They start understanding that all landlords have the same stories of why what you’re asking is too expensive and why they can’t do it.”
For the leases held by REITs such as Simon Property Group, Brookfield and Macerich, Friedman makes personal calls to top executives.
“It’s a matter of ‘Hey guy, here are the numbers, here is what I’m going to need, and this is why I’m going to need it, you’re in or you’re out,’” Friedman said. “I holler a lot and tell them what they’re going to be doing, and sometimes I get away with it.”
Friedman is adamant that the keys to his success are relatively banal: age, experience and relationships. Yet, he and his team have crafted creative ways to convince landlords to lower rents.
Since Covid, percentage agreements, in which the landlord agrees to accept a lower base rent in exchange for a percentage of the store’s sales revenue, have become more popular in shopping mall leases. The breakpoint percentage clause outlines the shape of this agreement, and sets the revenue threshold a store must reach before cutting the landlord in. For a retailer that spends $120,000 on annual rent, the landlord might set a breakpoint rate of 5 percent. This means that after $2.4 million in sales ($120,000 divided by 0.05), the landlord begins earning 5 percent of the store’s revenue.
“I throw that out,” Friedman said.
In that example, Friedman would instead aim to get the gross rent down to about 12 percent of total sales and then cut the landlord in on 12 percent of the sales revenue growth moving forward. These post-bankruptcy leases are often short-term, aimed at giving the retailer a chance to reset and begin growing the business again.
“I’m selling them on the idea of keeping a long-term business that has value,” he said. “If they want 18 to 20 percent of sales for rent, I can’t grow. I’m dead.”
Many in the industry respect his touch and gamesmanship. Still, Friedman knows his reputation: People have called him an animal, the enemy and the devil.
“But that’s probably because they lost the last transaction,” the mall exec countered. In their small world, you’re likely to encounter Friedman more than once, which helps the sides stay civil.
“I don’t think any landlord gets excited to hear from Ivan, but the reality is that it has to be done and he’s a pretty rational person,” Berger said.
This playbook worked for Claire’s. When Ames Watson closed on its purchase in October, Friedman and RCS had successfully renegotiated more than 900 leases at heavy discounts.
Born this way
Friedman, now 84, is the child of Russian immigrants who came to Brooklyn in the early 20th century. The family lived above his father’s shop, a women’s clothing store in East New York, where Friedman began sweeping floors at age 5.
About 1960, Friedman, not yet 20, opened his own ladies’ clothing shop. An Army reservist, Friedman was briefly pulled back into active duty during the Cuban missile crisis. When he returned to New York, he expanded his business to “five or six stores,” he said. Then, picking up the pace, he bought a department store chain with 150 locations in the late 1970s.
“Having grown up in retail, there was nothing else for me to do besides the natural progression of opening up my own stores,” Friedman said. “Immigrant families are very much always focused on one thing, and don’t always have the breadth of opening up to other possibilities.”
Yet, he increasingly found the business exhausting, and as the 1980s approached, Friedman began looking for a way out. He found it in real estate.
Friedman discovered he could make more money from selling off his brick-and-mortar leases than what the stores would earn over the next decade. “That business was worth more dead than alive,” he said.
Friedman didn’t yet have a plan for his next chapter when General Electric Capital called later that year. An executive asked him to go down to Oklahoma on a semi-clandestine mission to gather information on the CEO of a retailer the company had invested in. Using his retail expertise, Friedman would operate as a “real estate consultant,” on behalf of General Electric.
“Then they said, ‘While you’re down there, maybe you can call some landlords and see if you could get some rent relief or something,’” Friedman said. “I said, hmm, that could be a business. And it was.”
Word got around that Friedman was a worthy advisor, and he soon started hearing from more retail executives with real estate problems. He then founded RCS Real Estate Advisors.
“Ivan and RCS have the power to say, ‘We’ll rip the lease up if you don’t renegotiate.’ And now we have the power to say, ‘I’ll take the space back,’ especially in a market like this.”
Upon reflection, Friedman doesn’t see too many other ways it all could have gone. He avoids grand conclusions about life or work. “Business is business, life is life” is a common Friedman-ism.
In life, he said he mostly avoids malls, except “when my wife asks me to shop.”
But business was the order of the day on a recent Thursday afternoon as he arrived at the entrance of Simon Property Group’s Jersey Gardens Outlet Mall in Elizabeth, New Jersey. Friedman stepped out from the backseat of a black Lincoln Town Car and adjusted his Paul Stuart overcoat as he scanned the property. It’s the state’s largest indoor outlet mall, and Friedman’s fingerprints are all over it. Of the 200 brands here, he’s negotiated for 26 of them.
From his coat pocket he took out a schematic of the mall’s retail spaces, printed on two sheets of paper stapled together. Red lines mark the spaces of the retailers he has represented.
“You judge a mall by how much business it does per square foot,” Friedman said. “Shitty malls do $200 to 300 per [square foot].”
This one does $930, roughly $1.2 billion per year, making it “one of the better-performing malls, especially for an outlet,” he said.
Inside, Friedman could barely walk 20 feet without pointing out former or current clients, Gap and Old Navy, Brooks Brothers, Ann Taylor Loft, True Religion and Vans. Eventually, he made it to Claire’s.
“My Claire’s,” he said.
Friedman hesitates to talk specifics about his partners, deals, nemeses or numbers. But standing among his stores, he opened up, the storefronts surfacing war stories from the negotiation room. Friedman described Covid as “a godsend” for his company. His phone barely stopped ringing with brands desperate to renegotiate their leases. Yet, few contracts had contingencies for global pandemics, which meant many retailers found themselves stuck in closed malls.
“I called up David Simon and said, ‘Don’t give me this force majeure stuff,’” he recalled.
Instead of going to court, he suggested an informal plan: “For the companies that aren’t in trouble, how about we pay a month of rent, and then you pay a month. We share the pain.”
Simon eventually agreed.
Touring the mall, Friedman seemed to sense that at least some of the brands he hadn’t worked with yet would eventually call.
“There will always be a supply of weaker companies,” Friedman said — future customers.
Upper hand?
Market conditions used to give Friedman the clear advantage in lease negotiations. From the 1980s into the early 2000s, malls boomed, and landlords had to compete to retain tenants. Friedman could more easily predict the answer to the question: “Hey, do you want some rent or no rent?”
But these are different times, as malls continue to close while demand for retail space climbs.
“This has been described as probably the best two-year period of retail demand in the last decade,” Vince Tibone, head of industrial and mall research at financial services firm Green Street, said. However, in this inverse reality where landlords have the power, quality is key.
In Class A malls — those that make more than $630 per square foot in revenue — occupancy has hovered near 95 percent in recent years. A November Green Street report showed Tanger’s third-quarter occupancy rate at 98 percent; Simon Property Group’s 96 percent occupancy is within a percentage point of its all-time high. For these landlords, a vacancy might be a chance to bring in a growing chain, like an Alo, Sephora or Everlane.
“It’s the circle of life,” the mall exec said. “Ivan and RCS have the power to say, ‘We’ll rip the lease up if you don’t renegotiate.’ And now we have the power to say, ‘I’ll take the space back,’ especially in a market like this.”
“We can say, ‘Okay, give me my five best stores back, you can keep the five worst, and we make deals,’” the exec added. “If you want to give me 100,000 square feet back of Claire’s, I can absorb that without being killed now, especially when I know I can re-lease it for higher.”
The landlord said Friedman has an advantage over the mid- and lower-tier mom-and-pop mall owners who can’t risk the expense of a vacancy. Between 2017 and 2022, an average of 40 malls per year shut down, and experts believe that trend is likely to continue among the weaker malls in the U.S.
Yet demand at the high end can mask underlying weakness. In October, a distressed debt fund seized control of The Palisades Center in West Nyack, one of the largest malls in the country, leaving CMBS bondholders with a $231 million loss. It was only the second time AAA CMBS bondholders suffered losses since the financial crisis, Bloomberg reported. Meanwhile, the 1.5 million-square-foot San Francisco Centre, another Class A mall, is over 90 percent vacant, and AAA CMBS bondholders could also take losses on at least four other deals, according to a Barclays’ report.
Retail’s been declared dead before, but Friedman believes that the industry will outlast turbulence as it always has, from department store consolidation in the 1990s, the Great Recession of 2008, the so-called retail apocalypse brought on by e-commerce in the mid 2010s and the 2020 pandemic.
People, on the other hand, don’t last forever. Friedman counts himself among a respected group of peers still working. He half jokingly compares himself to Mick Jagger and admires Vornado CEO Steven Roth, also 84. “He comes to work every single day.” (He disagrees with Roth’s decision to let his hair go gray. “I don’t believe in that.”) Although he has a succession plan in place, Friedman has no plan to step away.
“If I could move a coffin into my office so that I could die at my desk and they just wheel it over and drop me in, that would be fine,” Friedman said.