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Friday, 03 April 2020

Multifamily REITs Shore Up Balance Sheets to Cope with Coronavirus Impact

A number of the country's multifamily REITs made moves this week to shore up their balance sheets as the coronavirus, or Covid-19, pandemic hurtles into April. Apartment properties are expected to perform well in the long run, but skyrocketing unemployment levels could very well lead to a loss or temporary reduction of rental revenue.

Commercial Real Estate Direct Staff Report

A number of the country's multifamily REITs made moves this week to shore up their balance sheets as the coronavirus, or Covid-19, pandemic hurtles into April.

Apartment properties are expected to perform well in the long run, but skyrocketing unemployment levels could very well lead to a loss or temporary reduction of rental revenue. That will hamper, at least in the short run, landlords' cash flow.

Some municipalities are forbidding, at least temporarily, tenant evictions. And forbearance programs from Freddie Mac and Fannie Mae, which account for nearly half of all multifamily loans, include provisions that prohibit tenant evictions while loans are in forbearance.

So, property owners are shoring up the amount of cash they have access to.

REIT

Cash on Hand $mln

Debt $mln

Debt Due 2020

Equity Residential

45.75

9,036.00

1,027.00

AvalonBay Communities Inc.

755.00

7,296.00

518.73

Essex Property Trust Inc.

70.10

5,809.00

288.06

UDR Inc.

8.12

4,708.00

410.65

Apartment Investment and Management Co.

142.90

4,506.00

78.93

Mid-America Apartment Communities Inc.

20.48

4,454.00

207.79

Preferred Apartment Communities Inc.

94.38

2,637.00

77.88

Camden Property Trust

23.19

2,524.00

0.00

Bluerock Residential Growth REIT

31.68

1,433.00

91.08

NexPoint Residential Trust Inc.

74.00

1,403.00

0.00

Clipper Realty Inc.

42.50

997.90

19.46

Independence Realty Trust Inc.

9.89

985.57

8.14

Investors Real Estate Trust

26.58

648.80

14.88

BSR REIT

36.99

542.31

35.79

Apartment Investment and Management Co., for instance, late last month drew $300 million against a credit facility, adding to the $142.9 million of cash it carried on its balance sheet at the end of last year. The Denver company also has deferred $150 million of previously planned capital expenditures, but plans to continue going forward with some $135 million of construction projects this year. The company has $6.8 billion of assets - it owns 124 properties with 32,839 units - and just less than $79 million of debt maturing in the fourth quarter.

AvalonBay Communities Inc., meanwhile, also recently drew $750 million from a credit facility, further increasing cash on hand to $755 million. The Arlington, Va., company, which owns 297 properties with 86,846 units in 11 states, in February - before coronavirus became a common term - had issued $700 million of 10-year unsecured notes with a coupon of 2.3 percent, but allocated proceeds to paying down higher-cost notes that were set to mature next January. The company also has pulled back on development projects, but still plans to spend $400 million on construction both this year and next.

And NexPoint Residential Trust of Dallas expects to have between $60 million and $75 million of cash on hand by the end of March. That would include a $35 million draw against a $150 million revolving credit facility. The company also recently sold three properties, generating a net total of $43 million.

Other REITs generally have substantial access to added liquidity. Camden Property Trust of Houston, for instance, has $891.1 million available under a credit facility. While it has $2.52 billion of total mortgage debt, no loan matures until 2021. And Investors Real Estate Trust had $26.58 million of unrestricted cash at the start of 2020, with $199.9 million available in its credit facility. The Minot, N.D., REIT has $651.5 million of total debt, with $14.9 million of loans maturing this year.

Some property owners are considering payment options for tenants struggling to pay their rent. Those include Investors Management Group, a Woodland Hills, Calif., investment manager with 30 apartment properties concentrated in the southeast and northwest.

"The primary focus is on collections," explained Karlin Conklin, executive vice president with the company who spoke on a recent webinar hosted by CrowdStreet, a Portland, Ore., crowdfunding platform. "With the moratoriums on evictions, we are considering for the first-time payment options for tenants. That includes partial payments or weekly rent payments as we keep things stable. We are cutting down on expenses and halting all value-add projects until this is over."

Comments? E-mail Jim Boyle, or call him at (267) 247-0114.





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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