|Deal closing times are widening by 30 to 45 days in many metros as property inspections are disrupted and county recorder offices remain closed. Many commercial real estate investors and lenders, even those outside of the hard-hit hospitality, retail and senior housing sectors, are wondering what will happen on April 1 when the rent comes due. Property owners may need to get creative and offer tenants some flexibility in exchange for lease modifications.
Policymakers are intervening to provide the fiscal fuel to revive growth, including a $2 trillion economic rescue package that supports workers with direct payments and expanded unemployment benefits, and small business with $350 billion in loans. The measure, which was near approval at this writing, would also include a $150 billion in investment in the health care system, and an additional $150 billion for state and local governments. Separately, the Federal Reserve announced measures to keep credit flowing by purchasing Treasury and commercial-backed mortgage securities (CMBS) issued by the GSEs. The Federal Housing Finance Agency suspended mortgage payments for landlords with Freddie Mac and Fannie Mae loans on the condition they don’t evict tenants hurt by the coronavirus. The Federal Deposit Insurance Corp. and other regulators will allow banks to modify loans for borrowers hurt by the coronavirus without having to label the loan a “troubled debt restructuring.”
The Covid-19 economic shock is touching all asset classes and all investors. Volatility and uncertainty are here to stay for at least the next quarter, so patience and caution are critical. Owners and investors may want to reach out to a trusted mortgage broker, who can provide strong guidance to navigate a quickly shifting capital landscape.