April 1st not so funny for landlords

[David Goldsmith]

This is our first due date for rental payments for most landlords under this crisis. Many businesses are closed and millions laid off. Several national retail chains have indicated they will not be making their April lease payments.

What Happens on April 1 When Countless Americans Don’t Pay Their Rent?

The coronavirus has set in motion a massive rent strike, led by ... Mattress Firm, Subway, and the Cheesecake Factory?

slate.com

Tenants groups are calling for rent strikes.

Tenants and Landlords Prepare for Non-payment of Rent

Tenants and landlords are preparing for what to do when tenants do not pay rent this month.

therealdeal.com

"“They don’t deserve rent”: Tenants weigh rent strikes as landlords plan for the worst

NY Times anticipates 40% of New York tenants may not pay rent this month:

40% of N.Y. Tenants May Not Pay Rent This Month. What Happens Then? (Published 2020)

Many unemployed tenants won’t be able to pay April rent. There will be a domino effect on landlords, real estate industry officials said.

www.nytimes.com

Evictions have been stayed for 90 days, but payments have not been cancelled, so all rent will come due July 1st if nothing changes. Several State Senators have introduced bills for rent forgiveness:

Tenants call on lawmakers to pass rent freezes

Renters are calling on state and federal lawmakers to freeze rent requirements for tenants as part of their response to the coronavirus pandemic. In the past week, several state governors have…

thehill.com

But landlords may get caught in the middle here as rents don't come in, but even if the get some mortgage relief still have to pay building personnel, utilities, Real Estate Taxes, etc

 

[David Goldsmith]

Investors See Distress Opportunities as Multifamily Rents Fall

Funds are on the prowl as rental properties and their landlords face new pressures

therealdeal.com

Cracks starting to show in U.S. multifamily markets
April collections held steady for some, but others saw a significant drop-off as all brace for May

Dan Michaels, of the Los Angeles-based real estate investment firm Stockdale Capital Partners, had a gut feeling late last year that it was time to launch a commingled distressed debt fund.

Prior to January, few knew anything of the novel coronavirus from Wuhan, China. But more than 10 years after weathering the 2008 downturn, the moment seemed right, said Michaels, a managing director at Stockdale.

The new fund went on to close $550 million in commitments from investors, including sovereign wealth funds and public pension plans, in the second week of February. It’s now targeting an 18 percent to 20 percent return on investments in troubled assets, including multifamily properties in several key markets around the country, according to Michaels.

Older rental properties with lower-income tenants are “absolutely going to get hit,” he noted. “And now we’re in a position to play offense.”

While the hospitality and retail sectors have already cratered, after tourism ground to a halt and many stores and restaurants shut their doors amid widespread stay-at-home orders, apartment building owners are beginning to feel the pressure as well.

Data from the FDIC shows there was $4.58 billion in outstanding multifamily loans held by institutions insured by the agency at the end of 2019.

And as U.S. unemployment accelerates — with jobless claims hitting 26 million since the pandemic hit — renters increasingly lack the resources to withstand major income losses, according to Harvard University’s Joint Center for Housing Studies. The report found that the median low-income renter has only $410 left after paying housing costs.

Despite the dismal forecast, a national survey of 11.5 million rental properties showed that 84 percent collected at least some rent in April. But many landlords expect that number to be significantly lower in May, and those with less affluent tenants say they have already taken a hit.

At the same time, the national data does reflect how rent collection can vary widely based on how organized the tenants are and what industries they work in, among other factors. And that’s before assessing each building’s financial underwriting.