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If they cannot generate enough profits to even justify holding on to the real estate rather than putting the real estate to some other use, is that meaningfully different from failing?

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Anecdotally, but it seems like a lot of these sites that once hosted these department or big box stores don't wind up getting redeveloped. At best, they might be home to a Spirit Halloween for a couple months out of a year. Having to compete with online retailers is certainly a challenge, but it doesn't seem like what private equity does to these legacy companies benefits anyone but their investors' desire for short-term profits.

Many private equity firms are perfectly happy to extract cash from viable businesses and bankrupt them. They have an asset, and they want to convert it to some other kind of asset. It often has very little to do with whether the business is failing.

Essentially, it's arbitrage. "Can be arbitraged" is not the same as failing. You can talk about things like "efficiency", but the problem with that is that the metric being used to measure efficiency is laughably simplistic - deliberately so, it's just a way to justify socially irresponsible behavior.

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