Commercial Real Estate Investing From A-Z What Are Top Investors Doing During This Crisis (Multiple Asset Classes Mastermind)
With over 200 years of combined real estate investing experience in one call, we hosted a mastermind call with several highly experienced investors, and multiple asset classes. They are investors in retail, office, industrial, mobile home park, multi-family. Below are the takeaways.
You can read the entire call script here: https://montecarlorei.com/steps-to-take-during-a-crisis-all-asset-classes-top-investors-mastermind/
Timing
Lots of people have a wait and see attitude. Others are taking a hands on approach and reaching out to tenants in advance. It's in times like this, that fortunes get made. That's exactly what Warren Buffett does. He has a ton of cash available for situations like this. George Ross, who has been working with Trump for several years said that now it's a great time to buy, all you need is courage.
Retail
Reality is starting to sink in as tenants don't pay rent, some tenants are saying they won't pay rent for at least 4 months. Some investors are saying that the most realistic datapoint will actually be on May 1st. We are working through lots of loan reworks as well as lease amendments are being negotiated. We're interpreting the CARES Act that was recently passed, updating all of our tenants on what they can apply for through the SBA and really trying to dial in on the loan forgiveness for April and May. So that has been a huge initiative of ours. We've a lot of legal documents and collaborating with other like minded folks across the country to figure out best practices. We were under contract in a deal, thank God, our money didn't go hard. We got in front of this guy a few weeks, we asked for an extension. But we are seeing some slowdown in CMBS and that was one of the vehicles that we were going to use, which required us to pivot a little bit and rethink this. Trammell Crow executives were sending memos to one another and the same message was sent over and over again from some of the best guys in the business: not getting over leveraged, staying lean and focused, hiring the right people, and just really doubling down on the fundamentals of the business.
Developer
I did survive the 2009 crisis, and was heavy in real estate when that happened and watched a number of people get wiped out. This is very different, it's not the same at all. But this is interesting times. I'm not a typical value add guy. I've worked in all spaces, I'm hearing from people all over the country in all different types of properties in different classes and with different challenges and different issues right now. And the one common theme is it's too early to tell really anything, we just don't know. It depends on how far and how deep this goes. We do know that the capital markets are a little tight right now, and the rules are changing daily with that, in terms of what they're asking for and covenants and reserves. And they're getting down now to where they're underwriting specific assets and specific markets by the street and block on refinances, and especially cash out refinance, and acquisitions. So the credit markets are getting very interesting.
Senior Housing, Hospitality, Multi-Family (Developer and Operator)
We are in an environment where the rules have changed and we don't know what they are. Until we know what the new rules are, it's going to be very difficult to play the game. Oftentimes you see people trying to play a new game by the old rules. And if they do, they'll get crushed. It really is like no other game. We're trying to do something that's unprecedented.
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What are you doing to prepare for what's ahead?