Nareit's REIT Report Podcast

Bill Bayless, CEO of American Campus Communities, Inc. (NYSE: ACC), said the REIT is helping its student residents weather coronavirus-related disruption by ensuring they have a home during the crisis, regardless of their ability to pay rent on a timely basis.Speaking April 23 on the Nareit REIT Report, Bayless said the company’s Resident Hardship Program ensures students can complete their online education in an academically oriented environment without facing late fees, online payment fees, financially-related evictions, or any negative impact to their credit reports if they and their families are facing financial disruption.To date, 2,787 residents have applied under the program out of more than 100,000 residents, Bayless said. In April, the company abated $1.6 million in rent and has already abated $400,000 in rent for May.Bayless said American Campus is “very pleased and optimistic about the return to campus in the fall by students, even if classes are going to be held online.” To date, the REIT’s portfolio is about 76% preleased for the fall, and in the 30-day period after March 16, it had 5,000 students lease to return in the fall. Lease cancellations for the fall are actually slower than in prior years, he noted.

A Nareit survey of April rent collection across the REIT industry points to a strong performance by industrial, multifamily, and office REITs.Nareit Executive Vice President for Research and Investor Outreach John Worth told the REIT Report April 22 that industrial REITs saw 99% of typical rents received in April. The survey was conducted between April 8-15.Multifamily REITs collected 93.5% of typical April rents, while office REITs collected 89.3% of typical April rents. Worth noted that there had been uncertainty as to how office REITs would fare, but “the fact that nearly 90% of rents have been paid does reflect the strong credit quality of REIT tenants.”Health care REITs collected 85.7% of typical April rents, while shopping centers collected 46.2%.

On the 50th annual Earth Day celebration, Nareit Senior Vice President for ESG Issues Fulya Kocak said the social aspect of ESG is likely to see greater focus as a result of the coronavirus crisis.Speaking on the Nareit REIT Report podcast, Kocak said that while attention to social matters was already gaining a lot of interest before the crisis, “after we return to our new normal we are going to see more focus on health and wellness as well as flexibility and adaptation of the workforce to different ways of getting things done.”Kocak also commented on the upcoming Nareit ESG annual report, which will highlight the increased reporting underway by REITs. “There has been good progress made on the transparency aspects of ESG,” she said.

Kimco Realty Corp. CEO Conor Flynn said the REIT’s large national retail tenants need to pay their rent so that financial assistance can get to where it is needed most—small shop retailers.In an April 15 REIT Report interview, Flynn—who was recently diagnosed with COVID-19 and suffered mild symptoms—outlined the REIT’s efforts to help its ‘mom and pop’ tenants, including rent deferral and its new Tenant Assistance Program (TAP).Flynn said TAP’s aim is to help its smaller tenants “bridge to the other side of this” by offering free legal services to help them navigate federal and statewide assistance programs. So far, over 1,700 tenants have taken advantage of TAP and Kimco continues to try and get more tenants to actively use it. “Time is not on the side of our small shop retailers,” he said.

After steep share price declines across the REIT industry in recent weeks, a more moderating pattern appears to have set in, according to Nareit senior economist Calvin Schnure.In an April 13 REIT Report podcast interview, Schnure noted that REITs are down 13% to 15% this year, representing a significant discount. However, “the markets appear to have settled into a middle range. You’re no longer seeing the very sharp declines that we saw in March and they’re looking forward to the period when this virus is more under control and the economy can get back to work—commercial real estate included.”Schnure noted that REITs made gains in the prior week, and outpaced the S&P 500, as the sector was boosted by Federal Reserve policy provisions to support real estate if tenants fail to make rent payments.Schnure also commented that a range of factors are influencing investor sentiment, and those factors all reflect different time frames. For instance, public health news is determined by the measures taken several weeks ago to limit the spread of the coronavirus, while the unemployment news is more closely tied to what’s going on today in the economy. At the same time, policy measures by the Fed and proposals for further stimulus point to the future.

Ric Campo, chairman and CEO of Camden Property Trust (NYSE: CPT), said that while April rent collections have slowed somewhat in the past week, “generally we feel pretty good about where we are” in terms of residents’ ability and willingness to pay rent.In an April 9 REIT Report interview, Campo discussed the REIT’s efforts to help its residents weather the crisis, including the establishment of a $5 million tenant relief grant. He explained that Camden wanted to help fill the gap between when a resident might have lost a job and the receipt of federal benefits.“Business should focus on being a real partner in the community… it’s just the right thing to do to help people when times are tough,” Campo said. He noted that there was more demand for the grant than expected, with the entire $5 million amount allocated in about 16 minutes. Checks were sent out to residents within 24 hours of their grant applications being approved, he noted.

The lodging sector was one of the first industries to feel the economic brunt of the coronavirus crisis, and it will likely be one of the last to benefit from an eventual upturn, Pebblebrook Hotel Trust (NYSE: PEB) Chairman and CEO Jon Bortz said.Speaking April 9 on the REIT Report podcast, Bortz said about half of the hotels across the industry have now closed completely, with millions of employees furloughed. “We think it’s going to be a very slow recovery,” he said.By the end of March, operations at all but eight of Pebblebrook’s 54 hotels had been suspended and over 7,500 employees furloughed. Meanwhile, costs have been cut at the corporate level, with executives volunteering to either reduce or forego their compensation. Pebblebrook has cut back on capital projects and drawn down its line of credit completely. “We’re sitting on a little over $700 million that should allow us, with a fairly significant cash burn, to get through the better part of next year,” Bortz said.Bortz, who is 2020 chair of the American Hotel and Lodging Association, also described some of the advocacy efforts the group has conducted.

Nareit Senior Economist Calvin Schnure said in an April 6 REIT Report podcast interview that uncertainty surrounding the coronavirus and its impact on the economy and markets will remain high, certainly through April and likely into May.Schnure also noted that while REITs and broader stock indices are at a deep discount compared to pre-crisis levels, they are up from lows reached several weeks ago.Investors seem to be anticipating that the policy actions taken so far, notably the $2 trillion fiscal stimulus as well as Federal Reserve measures to support financial markets and make sure they continue to function smoothly, are going to help a lot of households and businesses, Schnure said. “Investors seem to anticipate these measures are going to buffer the economy and the markets from some of the worst scenarios,” he noted.

The April 2 edition of the REIT Report podcast featured Walt Rakowich on the topic of leadership during a time of crisis. Rakowich became CEO of ProLogis at the height of the economic downturn in 2008 and restored the company’s finances, enabling it to merge with AMB Property Corp. in 2011 to create Prologis, Inc.Rakowich noted that while every crisis is different, “how and why we lead is actually quite consistent.”During a crisis, a leader needs to understand that people are watching and listening even more intently than when things are going well. “How you deal with situations, how you communicate, what you say, how you treat people—all of those things matter,” he said.

In the March 30 edition of the REIT Report podcast, Nareit Senior Economist Calvin Schnure highlighted the latest developments in how the coronavirus crisis is impacting the economy and commercial real estate.Schnure noted that public health officials are indicating that “we need to prepare for a long haul,” which in turn is increasingly impacting cash flows for businesses and wages and incomes for workers.The first hard data on the magnitude of the effect came last week as initial jobless claims soared to a record 3.3 million, but “even this number understates the true impact,” Schnure said. The unemployment rate is likely to rise from 3.5% to 7.0% and is probably heading to 10% or higher in coming weeks, he added. “This is a major challenge for us in the months ahead.”