Don’t Worry About Funding Your Projects During the COVID PandemicMay 15, 2020 • Author: Howard Taylor
In this Post-COVID world, landlord and tenant issues are emerging across Commercial Real Estate, from multi-family to retail and office. We are seeing more and more rent deferrals, enactments of force majeure or impracticality provisions, and lease buy-outs. For the sake of public health, federal and local governments exercised their police power, and shut down or restricted business functions, which means no direct compensation to the business owner is required. As a result, these tenants are not earning income and cannot pay their landlords… and landlords are scratching their heads, wondering where the next mortgage will come from.
Is Economic Uncertainty Leading to Lending Issues?
Fortunately, lenders are now modifying loans to assist with cash flow. Federal regulators have provided guidance to lenders and have encouraged them to work constructively with their borrowers. An interagency letter was issued back in March which gave banks the green light to help borrowers in good standing. This includes waiving fees, providing payment deferrals of principle and interest for up to 180 days, and extending payment terms. Most importantly, the Feds announced they “will not direct supervised institutions to automatically categorize loan modifications as troubled debt restructurings (TDRs)”. This is all really great news for CRE and increasing cash flow according to Nathan Wautier of ReinhartLaw, who anticipates that normalization of the CRE market will occur somewhere between late 2nd Quarter and early to mid-3rd Quarter.
Experienced CRE Lenders Not Intimidated
The American Banker recently interviewed Kevin Cummings, CEO of the $26.7 billion-asset Investors Bancorp. They asked Cummings how experienced lenders will fare in this economic environment. He explained that while banks were to blame for the 2008 financial crisis, the difference is that lenders started this year with plenty of capital and positive relationships with regulators and lawmakers. Sure, many lenders are seeing severe impacts, but experienced professionals are not phased. The Griffin Group’s doors are wide open, and it has been business as usual.
We have been battle tested for 40 years. While the Coronavirus has been an unprecedented moment in America’s economic history, it is not the first industry-altering event. The Griffin Group has been through and survived Prime at 21%, inverted yield curves, the 2008 Recession, September 11th, the Sarz and Ebola and H1N1 pandemics - and now COVID-19. How did we do it? When our competitors are shuttering their windows, how do we maintain business as usual? We can withstand these economic downturns and keep your projects funded because of our strong lender and borrower partnerships. At The Griffin Group, our relationships run deep and wide and our expansive knowledge of the market is unmatched.
Take a moment to browse our extensive portfolio to see some examples of our projects. You can also read all about the numerous services we provide. If you have any questions please contact us, we are here to help you with your project.