HOW TO MAXIMIZE YOUR EXPERIENCE IN THIS WEBINAR
HOW TO MAXIMIZE YOUR EXPERIENCE IN THIS WEBINAR • If you are experiencing problems with connectivity (lag, delay, loading signal, echo etc. ): – Hover the video – Click the gear icon on the lower right corner of the video – Click on 360 p to lower your resolution • If you’d like to watch this webinar in full screen: – Hover the video – Click on the icon on the lower right corner of the video • If you’d like to hide the live chat session – Hover the live chat section – Click the icon on the upper right corner of the live chat section We’re Monitoring the Chat Function 1
KEITH SEEMS IMMUNE TO EVERYTHING 2
MY TENANTS DIDN’T PAY RENT ON APRIL 1 ST: NOW WHAT? - 30+ Years in the Rental Apartment Business across North America - Worked through 17 global and local recessions - Apartment Leasing, Apartment Brokerage, Student Housing, New Apartment Construction Derek Lobo, CEO Broker of Record Thanks to: Sandy Mandel, Sanford Mandel Valuation Inc. 3
HIGH LEVVEL THOUGHT At a high level, people will pay rent based on how they voted. 4
RISK WHO’S AT RISK? C Class Buildings Solid B Buildings with Solid B Tenants Upscale seniors building on a preauthorized payment plan Top of market rent building with students and young renters Student Housing New Apartment Construction in Lease Up 5
WHO’S AT RISK: ASSET CLASSES Lowest Risk Highest Risk • • Self storage Industrial Apartments (short term risk) Office (medium to long term risk) Retail (short, medium and long-term risk) Residential – Single Family Homes Hotels/hospitality (severe short term risk) 6
How Many Tenants Paid Rent April 1 st? • Cross-Canada Survey – https: //svnrock. ca/ – Survey will be open for another week – 125 respondents so far 7
HOW MANY TENANTS PAID RENT APRIL 1 ST? 73% *Very Preliminary 8
HOW MANY TENANTS PAID RENT APRIL 1 ST? Pre-1960 s Buildings: 1960 -1989 Buildings: After 1990 74% 71% 55% 9
HOW MANY TENANTS PAID RENT APRIL 1 ST? Unit Type Avg. Rent Collected Bachelor $967 83% 1 Bed $1, 073 89% 2 Bed $1, 345 83% 3 Bed $1, 535 88% No preliminary trends based on unit type. 10
HOW MANY TENANTS PAID RENT APRIL 1 ST? Monthly Rent Avg. Rent Collected Less than $800 77% $800 -$999 73% $1, 000 -$1, 299 91% $1, 300 -$1, 499 89% $1, 500 -$2, 000 90% $2, 000+ 92% Units with lower monthly rents appear to have been affected more This is a preliminary analysis, we’ll keep analyzing to refine this as more data comes in. 11
WHAT HAVE YOU LEARNED SO FAR FROM COLLECTING RENT APRIL 1 ST? • Most tenants who can, have paid • Importance of calling your tenants ahead of rent payment date • Defaults are lower than expected, but will compound by May 1 st. • Some tenants are offering to pay partial rent rather than nothing • Small percentage of tenants with post-dated cheques requested rents to be deferred. However, there may be higher number of cheques returned NSF this month. 12
Preliminary results tell us this… • Most landlords are expecting the stress to begin May 1 st • Buildings with lower price points saw greatest stress April 1 st 13
OUR BEST ADVICE: SPEAK TO YOUR TENANTS, AND BE READY WITH A PLAN FOR YOUR LENDER We’re giving you the tools today to get ahead of the curve with your tenants, and your lender. 14
TOOLS AVAILABLE FROM SVN ROCK ADVISORS • Visit: https: //svnrock. ca/events/webinars/ – Document 1: Template Letter – Helping Tenants Prior to April 1 – Document 2: Template Letter Upon non-Payment after April 1 – Document 3: Rental Arrears Payment Agreement – Document 4: Financial Health of Your Operation Bulletin – Document 5: Template Telephone Script for Landlords – Recouping Rent Payments After April 1 st. 15
DOWNLOAD OUR TELEPHONE SCRIPT • Fully editable • Available to all webinar attendees. • Download at: https: //svnrock. ca/events/webinars/ 16
MAKE THE FIRST MOVE: CALL YOUR TENANTS 1. 2. 3. 4. 5. Review their file Identify who’s at risk? Who would qualify for financial help? Who in your organization should call? Ask for evidence of employment interruption Agree to a payment plan (document available) 17
SHOWCASE IDEAS: • Get post dated cheques or pre-authorized payments for any tenant on a payment plan • For May 1 st, give tenants and incentive to pay early • Pay by credit card 18
SHOWCASE IDEA: EXTENDING LEASE LENGTHS Month JAN FEB MAR Rent Paid? APR X MAY JUN JUL AUG SEPT ? Repayment + Rent Original Lease: June 1 2019 -May 30, 2020 Revised Lease: June 1 2019 - September 30, 2020 19
BUILDING OPERATIONS • Rental traffic is going to be reduced: Any vacancies will take longer to rent. • Previously expected rent levels may be compromised – they’re not going up. • Bad debt can be expected to increase. • Utility consumption, particularly water, will increase for the duration of this crisis. • Spring and student rush may not happen. 20
BUILDING OPERATIONS • Risk of non-payment is less from legacy tenants with below market rents; higher risk from new tenants paying top of market rent. • Less affected: Buildings with older demographic. • More affected: Buildings with younger, less affluent tenants and higher rents. 21
VALUATION & STABILLITY • Rental apartments are recession proof, but not virus proof. • The loss of a single tenant can be catastrophic in other asset classes: It’s not for apartments. • The strength of multi family was tested and proven in the 2008 financial crisis. 22
FUNDAMENTALS FOR THE RENTAL APARTMENT INDUSTRY IN CANADA ARE UNCHANGED • Shortage of rental product across the country • Little prospect of new, affordable, supply • Low turnover rates • Gap between in-place rents and potential market rents. 23
CAP RATES • Interest rates have gone down • Cap rates don’t follow interest rates lock-step • Range Example: 4. 00% -> 4. 125% -> 4. 25% 24
PLANNING FOR NEXT STEPS… YOUR LEVEL OF LIQUIDITY AND PREPAREDNESS You need an audit for your lender: – A review of your tenant profile: Who’s likely to pay rent? Who can apply for government programs? Who’s likely to be a longer term problem? – How is this going to impact your revenue over the next 2 months? – What’s the plan for the next 2 -3 months? – How does your lender help you? 25
THE PLAN FOR NEW APARTMENT CONSTRUCTION The Financial/Payment Plan for your Lender Detailed Marketing, Leasing & Operational Plan (in writing) Regular Reporting Based on Plan Invite your Lender Our to See Your Operations (not tomorrow!) 26
PARTICIPATE IN OUR CONFIDENTIAL CROSS CANADA SURVEY: It’s on the front of the webpage • How many renters didn’t pay their rent April 1 st? • Our confidential survey will be open for another week • We’re sharing the full results next Thursday April 9 th at 10. 30 EST www. svnrock. ca • All survey participants will get a copy of our detailed analysis 27
NEW APARTMENT CONSTRUCTION DEVELOPER UNIVERSITY (ONLINE) STARTING TUESDAY APRIL 14 TH 28
KEITH SEEMS IMMUNE TO EVERYTHING 29
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