CoronaVirus Megathread – Dialogue of the present-day impacts and foreseeable future predictions. – Score: 43

39 thoughts on “CoronaVirus Megathread – Dialogue of the present-day impacts and foreseeable future predictions. – Score: 43”

  1. I know this sub is mostly brokers but wanted to share my experience so far as a developer/landlord.

    – Retail tenants just can’t pay. Working with them. Some need 50% discount to be paid back. Some just need straight rent forgiveness. That I expected.

    – Some office tenants are also struggling but less so than retail. Some have very little cashflow so we’re working out deals. 50% discount for 2-3 months to be paid back in installments over the rest of 2020. Did not expect this as much.

    – Weirdly not a single residential tenant has reached out yet. Our units are fairly expensive in HCOL area. I expect we have very few service sector workers. We’re a bedroom community of NYC so I expect a lot of them are still getting a paycheck working from home. Will be interesting to see what happens on the 1st of the month.

    – Banks have been great. Was one the phone with several today and all of them have offered 90-day forbearance. We have a very strong PG from our principal so I assume that has a lot to do with it. Some banks offering principal only forbearance. Some offering no payment whatsoever.

    – On schedule to close on a $2.5 perm loan next week. Keep waiting for the call that they’re pulling it but so far everything moving forward.

    – In talks with a different bank to put a perm loan on a fully tenanted medical building. Term sheet will come next week but indicative rate is 2.9%!

    – Above bank is ready to do a deal because principal has a very large and long standing deposit relationship. Most banks I talked to about the deal were only willing to look if it included $2M+ minimum deposits. They always always want the deposits but on this one it was going to be a requirement/contingency.

    – Several banks have not adjusted their floor rate which surprised me. Probably just a matter of time.

  2. Banks are going to tighten their underwriting on basically everything as a result of this. Hotels and other leisure based real estate will get hit hard and take a while to recover. Acquisitions and new construction will be very difficult. If you are a broker, it’s going to be hard, but it creates an opportunity to pick up clients/market share if you are able to get deals done during a time like this.

  3. Single-tenant retail with strong credit or drive thru QSRs still seems healthy. Clients are more focused on investment grade and strong corporate backed leases. Currently working on 7-Eleven, Firestone, Chick Fil A, Wendy’s, Popeyes, dollar general, etc. All moving forward without major change in lender quotes (and no repricing so far for deals under app).

    Hotels are non-starter with lenders. It sounds like some CMBS is still quoting but suspect this will dry up.

    Multi-tenant retail with service oriented tenants (gyms, salons, sit down restaurants, etc) is going to take a long time before lenders want to quote. Many landlords (including myself) have already received tenant notices asking for rent relief or total abatement. These are national, well known tenants, so I can only imagine how bad it just be for ma and pa tenants.

    Multi-family is still active. Lenders are giving best pricing here.

    We are starting to get a lot of existing clients calling in about debt payment relief. Some plan to just stop paying mortgages since tenant income has dried up. Lenders will have to eat it or pray for some government intervention to help.

    Source: commercial loan broker / property owner.

  4. Had a deal fall apart a few weeks ago. Buyer was from China and could not get back in the country to close.
    Had another client last week hold off on offering on a property as they are waiting to see how the market and interest rates shake out. I think the next few months are going to be very slow and then hopefully a busy late summer/fall.

  5. My two cents from the investment side with properties in all commercial asset classes across North America.

    Current impact:

    – lending: there is very limited liquidity in the market. lenders are only lending to their clients and mostly on files that were started before this crisis. Very few lenders are looking at new properties for long term financing and the spreads are insane even from big banks.

    – retail tenants who are closed can’t pay rent, even some major corporate chains, we received about 50% of April rent from our grocery anchored and strip malls

    – office tenants who are not using their offices are wondering why they should pay rent and trying to use the situation, but most companies are still running albeit at a slower pace and revenues aren’t as strong. Some will struggle to pay rent.

    – industrial tenants, it really depends on what they do. Some are calling for more space, and some can’t work and are asking for rent relief.

    Longer term impact:

    – economy: depending how long these lockdowns last, companies (both retail and office) will go bankrupt, and the re-start of the economy will be a lot more gradual than the pundits are saying. people won’t run outside and spend a bunch of money right away.

    – lending: banks will tighten their underwriting even more, especially on retail and office, and higher spreads will make up for the lower interest rates. At the moment, there’s not a lot of li

    – retail: e-commerce will most likely increase its market share even more now that people had to do it for several months, and this will affect even the best super-regional malls. “essential services” tenants are going to be the new e-commerce resistant tenants. a lot of tenants will struggle and properties will suffer.

    – office: I believe the work from home trend is overhyped with what is happening. A lot of people are realizing how difficult it is to work from home. Also the open space offices might be reimagined to limit the spread of diseases in the future which might balance out the reduced space needs if working from home because more prevalent.

  6. WeWork will shut down a lot of their locations and a lot of office users will rethink hotelling.

  7. Anyone had a deal blow up last week? We pushed up a close from this upcoming week to Friday in case seller / lender / equity got cold feet.

  8. I was told id receive an offer last week with a CRE company. I got an email on mid week saying:

    >”all new hires have been slightly delayed. Dont go anywhere and we will be in touch shortly”

    Should I be worried about this?

  9. Predicting a severe impact to office with proof that more people can successfully work from home

  10. I’m expecting commercial tenants in some of the properties we manage to ask for some relief from landlords as their businesses slow down over the next few months.

    The big unknown for me is how to proceed on a mixed use project we currently have working towards review and permit. I’m not expecting a lot of new leasing activity in the next few months and don’t want the investor saddled with an empty building at completion.

  11. My understanding is that the debt markets for hotels have completely dried up to literally being non existent and the only thing that is selling in retail are single tenant CVSs. I am in retail and our CMBS lenders are also saying they can’t do anything atm so a special servicer is going to be looking at our cmbs loans. Some of our lenders have cut interest rates for us

  12. Any multi owners concerned about end of July (CARES act roll off)?

    Shits been rosy the past few months, but are we just in the eye of the storm?

  13. Boy, I had a big closing last Friday and you better believe I’ve been crossing my fingers for the past week before it closed. I anticipate everything will be frozen until we see if there is a hard recession from this or not, so I don’t anticipate any decent pay checks in the coming months. I’ve also been interviewing with another broker and I’m going to go ahead and assume that I won’t be migrating right now after all. Big possibility a huge recession is coming from this, but as the other comment said, still opportunities for seasoned agents who have their feet deep in a submarket.

  14. A couple deals fell through and new listings in the pipeline decided to hit pause. The CCIM exam in the spring was also postponed which is a bummer.

    We’re in a tourist town so I’m terrified things here are going to get weird. I also have thousands of SF of class A office space listed in a new mixed use project that is supposed to break ground any day. Just going to put my head down and chug along I suppose.

  15. Oh I’m sure. We are confident things will bounce back though and still have raises planned for end of 2020 ( may have to be pushed til 2021 tho)

    In terms of interest rate relief – we’ve had lenders remove the floors on our variable loans. We’ve had lenders knock off a whole point from the fixed rate through the maturity of the loan. Another center we are trying to do I/O for the next 6 months. It’s all fluid tho. We’re probably going to grant 2-3 months of relief for 25% of our 1400 tenant portfolio overall. Lenders know that this is bad and have to be reasonable. It’s the CMBS lenders that are pushing back atm due to how the loan is pooled I suppose. The feds will have to do something with the CMBS side so it can trickle down.

  16. I would suggest moving to online sources to help keep an eye on the market. Listing services like Loopnet, or the free version of it CIMLS can be used to help find and compare properties or get your own properties out there. As we are all having to change our normal schedules, I can see a migration towards listing services begin to occur. I am in fact trying to learn how to use these established services for my own. With everything changing as it is, I need to learn to change with it.

  17. I’m hoping my Commercial tenant renews at 5 years. They previously asked for 3 month extension, I said no either 5 or 10 year. They were planning to purchase another space and move out, which has been pushed back months, so I’m hoping they renew at 5 years.

    Residential unit – offering a 12 month at same rate.

    I’m sticking with my game plan to buy 2 units a year, but at this point, commercial is my only interest, and I am speculating that healthcare and industrial/distribution centers will stay solid, but retail/office will head towards a decline.

    In dentistry, outpatient medical, etc – I am betting we see some repurposed former big box stores turn into clinics over time

  18. Have received 2 emails this last week with deals blown up. One multifamily U / C about 6 months into DD and the second was a restaurant LOI that has been pulled.

  19. I’m a city planner in a town with a large amount of CRE. Any advice on how I could help?

  20. We own hotels primarily in the mid-Atlantic around D.C. We certainly took a hit, primarily due to stay at home orders. However, we’re seeing hints of optimism as occupancy is slowly beginning to improve. My opinion is that people are going to travel still, but are going to be less likely to do so by air. You’ll see more day trips and trips that are done by car than plane. Our occupancy is still lower of course, but we are off from the April lows we saw as states begin to open. Our cleaning protocols have become extremely stringent, as we sanitize every inch of the hotel.

  21. I’m a month away from a close on a 20,000 sqft office deal on Long Island. It’s been a struggle being able to keep the deal alive. Had an industrial deal blow up Tuesday. But we’re speaking to other potential buyers now. Everything is on extension but moving. So far corona has cost me 1 deal. But as an owner it’s been a pain.

  22. How is the leasing side going for everyone with offices? I’m assuming retail is an absolute standstill.

    Everyone is focusing on the rent collected and haven’t seen any articles on leasing.

  23. Brokers in retail/hospitality/leisure –

    ​

    Can you comment on COVID’s effect on your deals and/or pipeline?

    ​

    1. What’s happening with deals under escrow?
    2. If you’re cold-calling, what is some common sentiment of owners?
    3. Got anyone calling you freaking out about their stores going dark?
    4. What are you doing to mitigate risk/ add value for clients?

    Interested to hear about other property type’s issues, too!

  24. What are some myths about Real Estate Market that the Coronavirus has brought? Is there anything I can tell clients to help relieve misguided beliefs they currently may be holding?

  25. I don’t know much about debt substitution in syndications but isn’t debt sub in general simply a way of tightening the bottom line. Does it have tax advantages? Are people doing it now because they won’t be able to do it later? Does a debt substitution necessarily mean a person or company is “in trouble?”

  26. How do you feel the Canadian property market will be affected given the low dollar and stability of the countries banking system?

  27. Would appreciate some feedback…I own a 7k sf single-tenant commercial property. Tenant sells electrical supplies to contractors/construction industry (which is largely still operating in my jurisdiction), and is a multi-national with about $25B in gross revenue (private company, I did some googling). They are open with reduced hours and only allowing pickups of orders.

    They’ve asked for a 50% abatement of base rent for 3 months. It’s my primary source of income. I can probably manage, but I don’t think the savings they’d get if I agree (less than $5k/month) is really going to effect their overall liquidity or risk of going under. And if they do go under I’m still out the lost rent anyway.

    I’m inclined to give them a 25% deferral to be re-paid over the life of the lease (still 3 years left), or refuse altogether. The request was soft to start, but they could try to just withhold rent down the line like we’re seeing in some places.

    Given our respective sizes, what would you do? Any thoughts appreciated.

  28. I’m curious if anyone is seeing movement on the leasing side in the states that have been opened for a week or two now?

  29. I suspect more office space to become vacant as companies realize their workforce can function remote. Thoughts?

  30. As an owner it’s pretty difficult but as a broker I’m picking up a lot of clients. All my brokerage deals are on extension. Things are finally starting to move.

  31. How badly will my hometown’s downtown be hit?

    It’s roughly a third cosmetics, tanning, barbers etc. Another third are restaurants and the last third are various professional services and construction.

    Located in the Bay Area. Has very high rents like $30 a SF and $400 a SF to buy.

  32. Investors are going heavy on real estate investment because it’s the most safest ways to invest money in the current market situation.

  33. You would think there would be an influx of sellers….not the case…we have about nine thousand properties for sale on reoclose but these properties are owned by the municipalities when they take them back from taxpayers.

  34. This is a webinar I watched that got a lot of positive feedback. Helping to diffuse some of the negativity with stats and data and all that. No shameless self-promotion and no deal pitch. Refreshing given all the “guru” videos floating around. [https://www.youtube.com/watch?v=ZU6VyPkl99k&t=590s](https://www.youtube.com/watch?v=ZU6VyPkl99k&t=590s)

Comments are closed.