ULI Webinar Offers Guidance to Small-Scale Owners

How can entrepreneurial owners and developers manage the challenges presented by the pandemic? Start with a lot of communication.

“Take that first step, pick up the phone and say ‘look, here in broad strokes is the situation. Here is what I am doing to try to best address the situation. Here are the components of my plan and I want to send them to you,’” said Zachary Streit, senior vice president of George Smith Partners on addressing lenders during the Covid-19 Crisis.

Zachary Streit, Senior Vice President, George Smith Partners.  Photo courtesy of George Smith Partners

Communicating proactively with lenders by phone or Zoom was just one of the recommendations offered to local and entrepreneurial real estate owners during a recent Urban Land Institute webinar titled “How Main Street Shops Can Stay Afloat During COVID-19” and moderated by Howard Kozloff, managing partner of Los Angeles-based Agora Partners and a partner in HATCHspaces LLC.


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Christopher VanArsdale, managing partner of affordable housing developer Heleos in Washington, D.C., echoed that sentiment in regards to how his company is dealing with its lenders—some agency and some not.

“We are attempting to overcommunicate, making sure everyone is up to date in real time with what’s happening with the properties, what’s happening with collections, and we’re still not exactly sure where things are going to shake out and how forbearance will eventually look for us on those properties that have agency debt,” said VanArsdale.

Lenders are currently willing to work with borrowers, and Streit suggested that smaller-scale developers have some advantage at this time because of their relationships with regional banks, which have been the most flexible. For securing modifications with conduit loans, on the other hand, he advised hiring a consultant because they have relationships with servicers and are aware of what modifications are currently available.

D is for Deferment

Early communication is also important when dealing with tenants whose businesses have been shuttered temporarily. Owners should approach tenants as “partners” and explain to them that, while the tenant is facing difficulty, the owner is still responsible for paying the mortgage, utilities, etc., explained Allan Glass, president and CEO, ASG Real Estate Partner and a partner of HATCHspaces LLC in Los Angeles.

 “We have been advised and I think it’s in everyone’s best interest to get very comfortable with the word ‘deferment’ and make sure that any conversation you have particularly with your tenants is centered around that word and not anything like rent forgiveness,” said Glass, whose company owns a number of life sciences buildings with many “essential” and some non-essential tenants.

Time to Be Creative

Cathy Sloss Jones, president of Sloss Real Estate of Birmingham, Ala., said her firm’s talks with tenants have led to collaboration. At the company’s Pepper Place entertainment district, Sloss Real Estate has been able to morph a 110-tent Saturday farmer’s market into a drive-through farmer’s market that saw 1,200 cars during the previous weekend. Restaurant tenants who are limited to selling takeout have also been able to work with the market to create a pickup place for their customers.

“We just continue to talk to them constantly and try to come up with creative solutions together,” said Sloss.

Rely on Relationships

The coronavirus has hightlighted the importance of teambuilding for smaller owners, Glass noted. “We have been exceptionally reliant on the relationships we’ve built with our janitorial staff, our security staff and our service providers,” he said. “It just a matter of being aware of how important all those relatiohsips you are building are and being able to rely on them effectively to manage this across the entire portfolio.  

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