April 3rd, 2020 Multifamily Market News

Globe St. – Is Coronavirus Considered an Act of God? Get link here.

  • “he pandemic may not meet the requirements of force majeure and might not relieve parties from contractual obligations”
  • “The Covid19 situation is an “Act of God,” but not all “Acts of God” excuse a party from its contractual obligations,” Kenneth Fields, a partner at Greenberg Glusker,”
  • ““The threshold question is whether the particular act—in this case the COVID19 situation—actually prevents a party from performing its contractual obligations. If the answer to that question is no, then the analysis is over and the party must  perform those obligations.  If the answer to that question is yes, then the parties must review their contract to  determine whether it includes a so-called force majeure provision and, if so, what obligations that provision might excuse, or if  the contract does not contain such a provision, what obligations might be excused under applicable laws.”

Globe St. – SoftBank Reverses Course on $3B WeWork Buyout – Get link here

  • “SoftBank is not going to move forward with a planned $3 billion purchase of WeWork stock”
  • ““Given our fiduciary duty to our shareholders, it would be irresponsible of SoftBank to ignore the fact that the conditions were not satisfied and to nevertheless consummate the tender offer,”
  • “The unfulfilled closing conditions include, according to SoftBank:
    • The failure to obtain the necessary antitrust approvals by April 1, 2020;
    • The failure to sign and close the roll up of the China joint venture by April 1, 2020;
    • The failure to close the roll up of the Asia joint venture by April 1, 2020;
    • The existence of multiple, new, and significant pending criminal and civil investigations that have begun since the agreement was signed in October 2019, in which authorities have requested information regarding, among other things, WeWork’s financing activities, communications with investors, business dealings with Adam Neumann, operations, and financial condition; and
    • The existence of multiple new actions by governments around the world related to COVID-19, imposing restrictions against WeWork and its operations.”

Bisnow – There’s No Bailout For Landlords’: What To Expect As Anxious April Begins – Read more by clicking link.

  • ““We made the assumption, just worst-case scenario, that we’re not going to get any rent between April and August,” said Leslie Lundin, a principal at LBG Real Estate Cos., which owns 2.2M SF of retail on the West Coast. “We’re not saying that’s going to happen, but you’ve got to run the numbers somehow and start somewhere.””
  • “National groups like the National Multifamily Housing Council and the Institute of Real Estate Management have issued guidance and provided resources, like where evictions and mortgage payments are suspended and how to apply for loans through the new stimulus package.”
  • “The real estate industry can look to the UK for an early insight into what is in store for U.S. landlords today.”
  • “Brokerage firm Knight Frank estimated that just 33% of retail and food and beverage tenants in the UK paid their rent on time, and the majority asked for some sort of concession, such as a switch to monthly payments or rent holidays, typically for three or six months.”
  • “Norman Radow, the CEO of Atlanta-based RADCO Cos., said up to half the residents of his 12,000 apartment units likely won’t be paying their April rent. “I am predicting 50% delinquency. There’s no science, there’s no model … for this in any historical context in our industry,” Radow said. “I’m just assuming the worst.”
  • “Instead of a “knee-jerk” reaction by each of his property managers, Radow put together a committee to collect and respond to all requests for rental assistance and abatement as a result of COVID-19 job or income losses. He said he will address them individually: a cut in rents, no rental payments or helping usher residents to various organizations that can help, including programs just established by the $2 trillion economic rescue package passed in Congress last week.”
  • “Some owners have more blanket policies on rent forgiveness, abatement or a lack thereof. The Irvine Co. owns 125 multifamily properties totaling 60,000 units, has a broad company mandate to give its tenants flexibility.”
  • “Universe Holdings Chairman and CEO Henry Manoucheri’s biggest concern is those trying to game the current situation. California has banned evictions for 60 days to protect renters possibly impacted by the coronavirus.”

Marcus & Millichap – Thursday April 2nd Webcast – Getting Through the Global Health Crisis Together, see in link.  


Globe St. – Multifamily Rent Increases Decelerate as the Season Starts – get article here.

  • “It reports that the national average rent was $1,474 in March, having gone up by 2.9%, or $42, which is a hard drop compared to February’s 3.2% yearly rise.”
  • “Given the volatility of current economic conditions, we expect our projections will change materially over the coming weeks and months. We expect the impact of coronavirus to last three to six months before a steady recovery boosts the economy once again.”

Globe St. – US Housing Deficit Could Grow Due to Coronavirus – get article here

  • “Prior to the coronavirus pandemic, the US had a severe housing deficit. In fact, at that time, the word crisis was largely used to describe the shortage of affordable and attainable housing.”
  • “For millennials who already had anxiety about buying a primary residence as a result of the Great Recession, the COVID crisis only amplifies the anxiety as their fears are reinforced about how fleeting employment can be in a crisis. Furthermore, new construction projects that are not yet out of the ground are either completely halted or will be shelved for months to come. Ultimately this leads to more renter demand and less apartment supply.”

Globe St. – L.A. Apartment Rents Flat in March – get article here

  • “According to a new report from Apartment List, rents did not move month-over-month, but were up .5% year-over-year. The coronavirus disruption erupted in mid-March, however it is still too soon to tell the total impact on apartment rents, and the March data doesn’t reflect the disruption.”
  • “It’s also possible that a greater than normal share of renters are renewing their leases, such that the lack of moving activity is not actually translating to an increased vacancy risk for landlords,”
  • “Once shelter-in-place orders are lifted and the dust settles a bit, we expect moving activity to rebound, with postponed moves potentially causing a temporary spike,”

Globe St. – Self-Touring Technology ‘Has Become a Necessity – get article here

  • “it has now become crucial for owners to carry out apartment leasing with social distancing measures”
  • “Residents were showing up at apartment buildings and wanted to look at unit by themselves. A lot of properties have been embracing self-touring technology”
  • “oday, we are seeing a lot of properties that are deploying smart lock and an iPad with a pre-programed app for mapping and information, so the person knows where to go and what to look at”
  • “Owners were also pursuing this technology as a way to tour units off hours and when they didn’t have enough people on the weekend to do multiple tours.”



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Carlsbad, CA 92008, USA

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