Before COVID-19 hit the U.S. in a big way this month, Camden Property Trust, a multifamily REIT operating more than 56,000 apartments, was planning rent increases ranging from 5 to 5.5 percent, Chairman & CEO Ric Campo told Multi-Housing News. Now there will be no rent increases in the coming months at any of the 164 Camden properties and on-site personnel have been instructed to work with residents who may not be able to pay their rent due to lost wages or their jobs.
“We tell our people and we train our people on-site to do the right thing in this environment,” Campo told MHN. “We can work with the resident and make sure that they can try to help the best way they can.”
Some of the options being offered to Camden tenants include waiving late fees, deferring rent and putting a moratorium on evictions.
“We’re just focused on offering real-time information about what’s going on,” he said, adding that much of it is common sense. “Treat people the way you want to be treated in this situation.”
Asked about the financial hit to the public company, Campo responded: “What happens may cost us money to start with. We’ve been around a long time and we’re very strong financially. Deferring late fees or deferring rent isn’t going to put us under. We’ll be fine and our residents will appreciate it and stay with us longer.”
Campo said Camden owns about $14 billion with of real estate and has about $1 billion in annual revenue.
“We have very low leverage and very high cash flow. We have the ability to whether any kind of storm. It allows us to be flexible,” he said.
Advice for Owners-Operators
REITs and private property management companies of all sizes are following principles suggested by the National Multifamily Housing Council and National Apartment Association. NMHC has recommended the following guidelines that call for property managers to help their tenants retain their housing during the coronavirus crisis by:
- Halting evictions for 90 days for those who can show they have been financially impacted by the pandemic.
- Avoiding rent increases for 90 days.
- Creating payment plans.
- Waiving late fees.
- Identifying government and community resources to help secure food, financial assistance, healthcare and other services.
- Communicating to residents that it’s a priority for the industry to partner with them to help them retain their housing.
“We are following current government guidance regarding evictions during this uncertain time and we will continue to review our policies daily in order to help our residents as much as possible,” Stephanie Williams, president of Bozzuto Management Co., which manages about 75,000 apartments along the East Coast and in Chicago, told MHN.
“With the dramatic economic shifts and unprecedented challenges that our industry faces given the COVID-19 crisis, Bozzuto Management Co. is in support of a recent NMHC request encouraging all members and apartment firms to consider actions such as halting evictions for those who can show they have been financially impacted by COVID-19, avoiding rent increases for 90 days, waiving late fees and helping residents secure services that would provide food, financial assistance and healthcare.”
Robert Pinnegar, NAA president & CEO, said the group encourages residents with coronavirus-related financial issues to reach out to their property managers before April 1. Like Campo and Williams, the NAA stresses there is no “one approach fits all,” approach and recommends the best strategy is for owners, managers and residents to work together.
Eviction Moratoriums Abound
Many states, cities and counties around the U.S. have implemented eviction moratoriums ranging from 30 to 90 days with the Los Angeles City Council considering increasing the eviction moratorium to 12 months. HUD is also considering an eviction moratorium. Los Angeles Mayor Eric Garcetti issued an executive order giving tenants up to six months following expiration of the local emergency period to repay back rent. There are Congressional bills looking at a federal rule about evictions.
Doug Bibby, NMHC president, said members are worried that renters will use eviction moratoriums as a renter’s holiday.
“This is a fear, a real fear in our business. People think, I can’t be evicted. I won’t pay my rent,” Bibby told MHN. “If there is an open-ended moratorium without any guardrails, I think it’s very dangerous.”
Bibby and Pinnegar said the vast numbers of owners of U.S. multifamily properties are mom and pops, individual owners and small businesses, not the large REITs.
“They are the ones that will get clobbered and forced into bankruptcy if you have blanket eviction moratoriums that get carried on month after month,” Bibby said. “They have mortgages. They have property insurance. They have utility payments and so if the rent dries up, they can’t just tap the public markets like the REITs can.”
While he said it’s important to protect the renters, “you can’t tilt this so far that you disadvantage the owner/operator in the middle.”
Both Bibby and Pinnegar say they are looking for more information on a mortgage forbearance announced this week by the Federal Housing Finance Agency, Freddie Mac and Fannie Mae and want to know how far-reaching the plan would be.
The nationwide relief plan would allow multifamily borrowers mortgage forbearance of 90 days with the condition they suspend all evictions for renters unable to pay rent due to the impact of the coronavirus. Multifamily landlords whose properties are financed by Freddie Mac or Fannie Mae fully performing loans can defer payments with the condition they don’t evict tenants affected by COVID-19 during the forbearance.
FHFA Director Mark Calabria said in a written statement the GSEs are “working with mortgage servicers to ensure the programs are implemented immediately so that property owners and renters experiencing hardship because of the coronavirus can get the assistance they need.”