Tag: Coronavirus

Senate, House Signal Openness to PPP Reforms as Business Coalitions Urge Policymakers to Strike “75/25 Rule,” Extend Loan Forgiveness Period

Posted on by Trey Jackson

SBA image for PPP

Congressional lawmakers are taking steps to improve key terms of the Paycheck Protection Program (PPP) to help small business borrowers deal with the economic impact of the global pandemic.  (Washington Post, May 20 and Wall Street Journal, May 21) 

  • Under the CARES Act, a portion of PPP loans can be forgiven for the eight week period after origination.  (See “CARES Act and Implications for Real Estate”)
  • Implementing rules and guidance from the U.S. Treasury and Small Business Administration further establish a “75/25 Rule,” whereby 75% of PPP loan proceeds and forgiven amounts must be for payroll.  No more than 25% can be devoted to non-payroll business expenses like rent, mortgage interest, and utility bills.
  • Business coalitions (including the The Real Estate Roundtable) sent letters yesterday urging policymakers to take immediate action to modify these requirements by extending the PPP loan forgiveness period and striking the “75/25 Rule.”
  1. A broad business coalition initiated by the U.S. Chamber of Commerce also recommends extension of the PPP’s June 30 safe harbor date for rehiring and restoration of pay.   
  2. A separate letter focuses support for specific legislation, the Paycheck Protection Flexibility Act (H.R. 6886).  This bipartisan bill is a stand-alone “spin-off” of PPP reform provisions passed by House Democrats last week in the HEROES Act.  (Roundtable Weekly, May 15, 2020)  H.R. 6886 would likewise strike the “75/25 Rule” and extend the PPP forgiveness period to 24 weeks after loan origination.
  • A sponsor of the PP Flexibility Act, Rep. Dean Phillips (D-MN), informed in a press release that House leadership has committed to bring up H.R. 6886 for its own vote possibly as early as next week.  House Speaker Nancy Pelosi (D-CA) reportedly called the 75/25 limitation on small businesses “debilitating.”  (Roll Call, May 20)
  • Over in the Senate, Marco Rubio (R-FL), Chairman of the Senate Small Business Committee and author of the PPP provisions in the CARES Act, predicted in a tweet yesterday that the Senate would pass reforms (S. 3833) to extend the time period beyond the current June 30 deadline by which qualifying small businesses can apply for and use PPP loans.
  • Senator John Cornyn (R-TX), meanwhile, has spearheaded a bipartisan effort to amend the “75/25 Rule” to a “50/50 Rule” – where up to 50% of PPP loan and forgiveness amounts could be used for rent and other ordinary business expenses.  (Cornyn letter, May 5) (Roundtable Weekly, May 8, 2020)
  • Since passage of the CARES Act on March 27, The Roundtable has recommended elimination of the “75/25 Rule” as an inappropriate “one-size-fits-all” restriction that unduly limits businesses in meeting their rent obligations and paying for other ordinary operating expenses.  (RER’s “8-Point Plan to Reform the PPP”) 
  • Treasury Secretary Steven Mnuchin yesterday endorsed congressional efforts regarding extension of the PPP loan forgiveness period.  “One of the things we’re working with Congress on, and there is bipartisan support, is lengthening the eight-week period.  [T]hat’s something we definitely want to fix,” he said. (Advancing America’s Economy forum, May 21)
  • At The Hill’s Advancing America’s Economy forum, Mnuchin also stated he did not support reforming the “75/25 Rule.” “We want most of this money to go to workers and that we believe the 75 percent was exactly consistent with the way the program was designed,” he said.
  • A recent “tracker tool” released by the American Action Forum charts the allocation of PPP loans since the program’s inception in the CARES Act.   

The Paycheck Protection Program will be discussed at The Roundtable’s Remote Annual Business and Committee Meetings from June 11-12. 

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Roundtable Members Address Workplace Return Strategies and Technology

Posted on by Trey Jackson

CNBC interview Bill Rudin ReOpening Offices

Roundtable members addressed the challenges and techniques in reopening the workplace in a variety of media outlets this week.

  • On May 13, Roundtable Chair Debra Cafaro (Chairman & CEO, Ventas) discussed the steps being taken by the City of Chicago towards reopening with Mayor Lori Lightfoot as part of The Economic Club of Chicago’s virtual program series.  The discussion also covers the city’s response to the COVID-19 pandemic and other aspects of Mayor Lightfoot’s first year in office. (Video: Mayor Lightfoot’s Prepared Remarks: 00:45 – 29:30, followed by Q&A with Debra Cafaro: 29:30 – 54:00)
  • Roundtable Immediate Past Chair Bill Rudin (Co-Chairman & CEO, Rudin Management Company, Inc.) today joined CNBC for a conversation about the path forward for reopening office space in New York City as employees work from home amid the coronavirus pandemic.  Rudin, above, discussed his building operating system called Nantum, which tracks real time data on metrics like indoor air quality, energy usage, temperature and carbon dioxide.  Rudin also commented on the need for state and local stimulus funding from Congress to support the basic functions of municipalities that will help economic recovery.  (CNBC video, May 15)
  • Roundtable member Scott Rechler (Chairman and CEO, RXR Realty) yesterday participated in a webinar hosted by Axios’ Mike Allen on reopening the economy and the future of workplace safety.  (Axios webinar, May 14).  Rechler discusses a “Leap to Labor Day” project for his company that will rotate employees back to offices on a staggered time basis to avoid congestion.  (Watch Axios webinar)
  • Roundtable Board Member and Sustainability Policy Advisory Committee Chair, Tony Malkin (Chairman and Chief Executive Officer, Empire State Realty Trust, Inc.), was quoted this week in a New York Times article on the challenges Manhattan owners and developers may face if the change in work environments evolves from buildings to homes.  He added that New York City’s diverse and educated work force will drive an economic rebound and desire for office space that caters to large industries, including a fast-growing technology sector. (New York Times, “Manhattan Faces a Reckoning if Working From Home Becomes the Norm,” May 12)
  • Real Estate Roundtable President and CEO, Jeffrey DeBoer, discussed what building owners and managers should consider to safely manage the reentry of tenants, workers and visitors in an interview last week with  Dr. Joseph Allen, Assistant Professor at Harvard’s T.H. Chan School of Public Health and Director of its Healthy Buildings Program. (Video, May 6)

The Roundtable’s Building Re-Entry Working Group continues to meet weekly to address issues associated with the restarting of the economy.

Operations and performance standards for healthy buildings will be a topic discussed during The Roundtable’s virtual Annual Meeting on June 11-12, which will include remote events for both business and policy advisory committee meetings.

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Senate Committees Consider Workplace Reentry, Business Liability and Financial Regulations

Posted on by Trey Jackson

Senate hearing social distancing

Senate committee hearings on May 12 addressed Covid-19 issues including reopening businesses and schools, legal liability for businesses, and the role of financial regulations in combatting the economic repercussions of the pandemic.

A “new normal” for congressional hearings was on display as social distancing and remote testimony were put into effect, with lawmakers and witnesses meeting through video conferences to maintain social distancing protocols.

Workplace Re-Entry

  • The health risks associated with reopening places of work, education and recreation were explored during the Senate Health, Education, Labor and Pensions Committee hearing, “COVID-19: Safely Getting Back to Work and Back to School.”
  • Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, testified that returning too quickly could “turn the clock back, rather than going forward” on the road to economic recovery.  (Stat, May 12)
  • According to Politico, a dozen states will see their stay-at-home orders or business restrictions expire between today and Monday (May 15 to May 18) at the same time other states surpass the two-week point since reopening.  Updated reports on reopening status are available from CNN and the New York Times.

  • The U.S. Chamber of Commerce has developed an interactive state-by-state map of re-opening guidance policies.
  • The Centers for Disease Control and Prevention posted new one-page “decision tool” guidance documents on Thursday that advise businesses, restaurants and bars,  mass transit systems, and other concerns on how to safely reopen during the pandemic.

Business Liability

  • Potential employer immunity and anticipated litigation related to Covid-19 were the focus of a Senate Judiciary Committee hearing on Tuesday, “Examining Liability During the COVID-19 Pandemic.”
  • Republicans and Democrats expressed that enforceable federal guidelines from the Occupational Safety and Health Administration (OSHA) or Centers for Disease Control and Prevention (CDC), outlining proper health, safety, cleaning and other procedures, would likely be necessary to set standards for business conduct.  Senators also acknowledged that potential plaintiffs asserting liability claims would likely confront challenges in establishing that a business’s actions directly caused a Covid-related injury.   (Brownstein Hyatt Farber Schreck, May 14)
  • “One primary goal out of this hearing is to get the standards in place for business, for universities, for schools, whether they come from the CDC [or] OSHA,” Chairman Lindsey Graham (R-SC) said at the hearing.  Standards are needed so businesses “can understand what’s expected of them.  And if they do what’s expected, they don’t need to worry about getting sued. The big hole in the puzzle right now is the standard,” (The Hill, May 12)
  • The Judiciary hearing followed prior statements on employer liability from Republican congressional leaders that “these protections will be absolutely essential to future discussions surrounding recovery legislation” and that any coronavirus stimulus package will not pass the Senate without addressing business liability.  (Roundtable Weekly, May 1)

Financial Regulations

  • The Senate Banking Committee hearing on “Oversight of Financial Regulators” focused on the effectiveness of recent financial regulatory actions implemented to combat the economic impact of the pandemic.
  • Lawmakers shared the sentiment that more could be done by U.S. financial regulatory agencies to broaden the availability of various lending facilities put into effect to get more capital to businesses and communities in need.
  • During the hearing, Fed Vice Chairman for Supervision, Randy Quarles, responded to questions on the need for expanding the Fed’s Term Asset-Backed Securities Loan Facility (TALF) by saying there were no “specific changes to suggest” at this time, but that the Fed was “very sensitive to that.”
  • The Roundtable joined industry letters to the Fed on March 24 and April 14 on the need to broaden the range of the TALF to include both outstanding (legacy) CMBS, commercial mortgage loans and newly issued collateralized loan obligations.  On April 9, the Fed confirmed that the TALF would be expanded to include triple-A rated legacy non-agency CMBS and loans.
  • The Fed on May 12 also broadened the range of leveraged loans that can be used as collateral for the TALF.  The Fed will now accept new Triple-A rated collateralized loan obligations (CLOs) with leveraged loans, including refinanced loans and priced as far back as January 2019, as part of the TALF.  (Fed news release and Wall Street Journal, May 12)

Today, a business coalition including The Real Estate Roundtable wrote to financial regulators requesting they clarify their April 7 guidance encouraging financial institutions to work constructively with borrowers impacted by COVID-19.  Specifically, the coalition requests clarification that – in addition to traditional loan products – lending and financing arrangements, such as warehouse lines and repurchase agreements secured by multifamily and commercial real estate loans and commercial mortgage-related securities, are within the scope of the guidance in the Statement.  (Coalition letter, May 15)

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House Democrats Expected to Pass $3 Trillion Covid-19 Stimulus Package; Fed Chair Says Additional Fiscal Support Needed to Avoid Long-Term Economic Damage

Posted on by Trey Jackson

U.S. Capitol blue sky

The House of Representatives’ Democratic majority is expected to pass tonight the largest financial stimulus bill in U.S. history to combat the ongoing economic fallout related to the coronavirus pandemic. (H.R. 6800, Health and Economic Recovery Omnibus Emergency Solutions Act [“HEROES”] Act:  one-pager; section-by-section; state and local relief  summary.) 

  • The $3 trillion HEROES Act is considered a marker for Democratic priorities in negotiations with the Republican-controlled Senate and the White House.  The bill has been declared “dead on arrival” by Senate Majority Leader Mitch McConnell (R-KY).  (The Hill, May 12)
  • Since March, Congress has passed four Covid-19 response packages totaling $2.9 trillion. (Roundtable Weekly March 6, March 20, March 27, and April 24)
  • President Trump said he is in “no rush” to negotiate another financial rescue bill, while McConnell doesn’t plan to move forward on another economic relief bill until June at the earliest, according to a Senate Republican aide.  (Time-AP, May 9 and Bloomberg, May 13)
  • The HEROES Act would combine $950 billion in aid to state and local governments with direct cash payments, expanded unemployment insurance, support for health care testing and food stamps – along with funding for a list of non-virus related measures such as the U.S. Postal Service and vote-by-mail initiatives. (Forbes, May 12).
  • The HEROES Act would also temporarily eliminate the limitation on the deduction for State and local taxes, which was originally passed in 2017’s Tax Cuts and Job Act.  (Associated Press, May 12 and CBS News, May 13) 

Proposed Legislative Changes to the Paycheck Protection Program

The House bill also includes revisions to the Paycheck Protection Program (PPP) although it does not seek additional funding for more small business loan capacity.   

  • The HEROES Act would remove the cap that no more than 25% of PPP loan amounts could be forgiven for non-payroll business expenses, such as rent or mortgage interest.  On May 11, Treasury Secretary Steven Mnuchin told CNBC the Trump administration is sympathetic to changing the so-called “75/25 rule” that 75% of PPP proceeds must be used for payroll and benefits. “We will look at a technical fix,” Mnuchin said. (CNBC transcript, May 11)
  • The Roundtable’s 8-Point Plan to Reform the PPP recommends that Treasury and the Small Business Administration (SBA) should not apply a 75/25 rule as a categorical “one size fits all” standard that limits PPP assistance to help business meet their rent obligations and pay other ordinary operating expenses.
  • The HEROES ACT would also change the PPP requirement that the “forgiveness” period for loans would extend to 24 weeks after origination (from the March 27 CARES Act’s current 8-week limitation). (House Small Business Committee summary of the proposed changes to the PPP program and EY Tax News, May 13)
  • In other PPP news, a federal court in Michigan declared SBA’s “Ineligibility Rule” invalid in a broad ruling that respects the CARES Act’s text that Congress intended for “any business” with 500 employees or less to be eligible for PPP loans. (May 11 decision in DV Diamond Club of Flint LLC v. SBA, E.D. Mich., No. 20-cv-10899)
  • Treasury and SBA release updated rules and guidance implementing the PPP on an ongoing basis.  (U.S. Treasury’s PPP resources page) 

Federal Reserve Chair Powell Supports More Fiscal Relief

Federal Reserve Chair Jerome Powell on May 13 gave remarks on current economic issues, warning that a prolonged recession could take hold unless additional fiscal aid was devoted to bolster the economy as it reels from the impact of the coronavirus pandemic. (Video of Powell’s remarks) 

  • Powell noted Congress has already provided $2.9 trillion to battle a downturn “without modern precedent, significantly worse than any recession since World War II.”  He added, “While the coronavirus economic shock appears to be the largest on record, the fiscal response has also been the fastest and largest response for any postwar downturn.”
  • The Fed has also taken action with “unprecedented speed and force” by slashing interest rates and purchasing Treasuries and agency mortgage-backed securities to restore functionality in critical markets.
  •  He warned these actions may not be enough, stating that there is “a growing sense … that the recovery will come more slowly than we would like. We ought to do what we can to avoid these outcomes, and that may require additional policy measures.”
  • Powell drew attention to policy makers’ next steps in Washington since “the recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems.”

As Congress begins its debate over the next coronavirus package, the Fed Chairman concluded his remarks by stating, “Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This tradeoff is one for our elected representatives, who wield powers of taxation and spending.” 

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Roundtable Interview Addresses Healthy Building Operations as Governments Develop Economic Re-Opening Plans

Posted on by Trey Jackson

 

Book Covers - Healthy Buildings

With states and cities beginning to re-open economic sectors, what should building owners and managers consider to safely manage the reentry of tenants, workers and visitors?  This was the topic of an interview conducted this week by Real Estate Roundtable President and CEO, Jeffrey DeBoer, with Dr. Joseph Allen, Assistant Professor at Harvard’s T.H. Chan School of Public Health and Director of its Healthy Buildings Program. (Video, May 6)

  • He was inspired at a Roundtable Sustainability Policy Advisory Committee (SPAC) meeting to assemble a report that eventually became “The 9 Foundations of a Healthy Building.”  The publication “takes 40 years of scientific evidence, distills it down to those key factors or features that we know relate to better employee health, improved productivity and help reduce infectious disease transmission.”    
  • Building stakeholders could implement a health safety plan using “a five-step hierarchy of controls” detailed in his April 29 Harvard Business Review article, “What Makes an Office Building ‘Healthy’”
  • Healthy building metrics can contribute to building valuation.  “Start measuring … health performance indicators. Capture all those gains.” He gives a specific marketplace example featured in an April 28 Harvard Business Review podcast case study, “A Tower for the People: 425 Park Avenue.”   
  • There is increased market interest in healthy buildings, especially in light of the fallout from the global pandemic. “This healthy building movement, just like working from home and teleworking, have been slowly rising – and with COVID, it has forced a massive quickening of these movements.”  (Watch interview, May 6)
  • Resources:

The Roundtable’s Building Re-Entry Working Group continues to meet weekly to address issues associated with the restarting of the economy.

Operations and performance standards for healthy buildings will be a topic discussed during The Roundtable’s virtual Annual Meeting on June 11-12, which will include remote events for both business and policy advisory committee meetings.

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Policymakers Float Measures for Next COVID-19 Relief Package; Senators Propose Changes to Paycheck Protection Program’s “75/25 Rule”; Democrats Introduce $100 Billion Emergency Rental Assistance Bill

Posted on by Trey Jackson

U.S. Capitol Dome

House Democrats are developing another massive coronavirus aid package as they consider when to return to Washington for a vote – while Republicans have signaled they prefer to pause any negotiations on future pandemic aid until the effectiveness of current programs can be evaluated.  (Wall Street Journal, May 7) 

  • House Speaker Nancy Pelosi (D-CA) has stated her goals for the next round of pandemic relief, which include $800 billion in funding for state and local governments, in addition to unemployment support, direct payouts, Covid-19 testing and more.  (Bloomberg, April 30 – AP, May 5 – Bloomberg TV,  May 7)
  • Senate Minority Leader Charles Schumer (D-N.Y.) told MSNBC yesterday, “We need Franklin Rooseveltian-type action and we hope to take that in the House and Senate in a very big and bold way.”
  • White House National Economic Council Director Larry Kudlow today said, “We’ve kind of paused as far as formal negotiations go. Let’s have a look at what the latest round produces. You need a month or so to evaluate that.”  (Roll Call, May 8)
  • Kudlow’s remarks follow Senate Majority Leader Mitch McConnell’s (R-KY) statement earlier this week that Congress should “take a pause” before passing more pandemic relief legislation.  (The Hill, May 5)
  • Kudlow added, “The president, as you know, has put out a number of his own policy ideas, payroll tax cuts being one of them, and … COVID-19 liability restrictions for businesses.”  Kudlow also highlighted proposals to promote restaurant and travel spending, as well as allowing businesses to quickly write off their expenses as they reopen.  (CQ, May 8) 

Roundtable Pandemic Policy Communications Outreach 

  • Jeffrey DeBoer, President and CEO of The Real Estate Roundtable, on May 6 participated in the Urban Lab Podcast to discuss the pandemic’s ongoing impact on CRE, The Roundtable’s recommendations for reforming the PPP, the merits of a Pandemic Risk Insurance Act similar to TRIA, the “rent obligation chain,” and the organization’s broader engagement with policymakers.  Dr. Sam Chandan, Silverstein Chair of the NYU SPS Schack Institute and Fellow at the NYU Urban Lab, hosted the podcast. (Interview with DeBoer, May 6)
  • DeBoer also participated in a Bisnow webinar last week to discuss the government’s legislative and regulatory responses to the economic impact of the coronavirus pandemic.  (Bisnow recap, May 4 and Roundtable Weekly, May 1)
  • The Roundtable’s Senior Vice Presidents on May 5 participated in “The Policy Response to COVID-19: Implications for Real Estate” – hosted by the Pension Real Estate Association (PREA).  The supporting slides for the PREA webinar offer extensive details to various issues related to the PPP, tax changes and actions by the Federal Reserve. (Download slides) 

Small Business Aid and Rent Assistance 

  • Loan demand for the Paycheck Protection Program (PPP) was expected to quickly diminish the program’s supplemental funding that became available April 27.  Yet, more than 40 percent of the aid remains unused according to data released by the Small Business Administration yesterday. (Wall Street Journal, Demand for Small-Business Loans Cools, May 8) 
  • Lenders and participants say that reasons for the slowdown in demand include the reluctance of small businesses to sign up for a program whose loan forgiveness terms remain unclear.  To obtain forgiveness of a loan, agency rules implementing the PPP require small businesses to spend 75% of funds on payroll (and no more than 25% of PPP proceeds or forgiveness can be devoted to rent, mortgage interest, utility bills, and other debt obligations).
  • The Roundtable’s 8-Point Plan to Reform the PPP recommends that SBA and Treasury should not apply the 75/25 rule as a categorical “one size fits all” standard that limits PPP assistance, in all cases, to no more than 25% for business rent and other ordinary expenses.
  • This week, a broad bipartisan group of Senators led by John Cornyn (R-TX) proposed changing the 75-25 rule to a 50-50 rule – where up to 50% of PPP loan proceeds can be used by qualifying small businesses to pay rent, mortgage and utilities.  (Cornyn letter, May 5)
  • Sen. Cornyn and 20 other Senators urged Secretary of the Treasury Steven Mnuchin and Small Business Administration Administrator Jovita Carranza to “exercise the power of your respective offices to ensure all business sectors are able to spend at least 50 percent of the loan proceeds on the statutorily allowed non-payroll expenses.”
  • Senate Finance Committee member Cornyn on May 5 also introduced The Small Business Expense Protection Act of 2020, which would modify the CARES Act to allow business owners to claim tax deductions for ordinary business expenses, regardless of whether they were paid with a forgiven PPP loan.
  • Additionally, legislation introduced today would create a $100 billion emergency residential rental assistance fund. The Emergency Rental Assistance and Rental Market Stabilization Act of 2020 was introduced by Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, and Senator Sherrod Brown (D-OH), Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs. (House Financial Services Committee news release and bill summary.)
  • Earlier this week, The Roundtable’s Jeffrey DeBoer was quoted in GlobeSt.com about the need for a program to help both residential and business tenants with temporary, emergency rental assistance. DeBoer said, “While the focus on employment has been necessary and effective, there is presently no COVID-19 response program with the primary goal of assisting American families and businesses in meeting their obligations to pay rent, mortgages, and other ordinary debts and expenses.” (GlobeSt, May 5)
  • DeBoer added, “No landlord wants to evict a tenant, and most are working proactively with their tenants to make payment plans and reduce tensions. Without rental income, such actions disproportionately impact smaller landlords and pummel a city’s property tax collections by sending buildings into foreclosure. Ultimately, it would affect municipal workers who will lose their jobs—including teachers, police and firefighters.”
  • The “rent obligation chain” and its crucial role to support the economy and the CRE sector was also illustrated in a March 24 Wall Street Journal article, “Businesses Can’t Pay Rent. That’s a Threat to the $3 Trillion Commercial Mortgage Market.” 

The pandemic’s ongoing impact on CRE and Washington’s policy responses will be a major focus of The Roundtable’s first virtual Annual Meeting, which will be held remotely on June 11-12. 

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Congressional Republicans and Democrats Clash on Including Covid-19 Business Liability Protections in Future Pandemic Relief Legislation

Posted on by Trey Jackson

U.S. Capitol

Liability concerns in a post-coronavirus world are influencing congressional negotiations about the next pandemic relief package as states move forward on easing business restrictions and employers across the country consider plans to reopen.  (AP, April 28 and The Hill, May 1)

  • With the Senate scheduled to return to Washington on May 4, policymakers are staking their priorities about stimulus and other measures that may be included in the next round of Covid-19 related legislation.  The House announced this week they will delay their return until May 11 due to concerns about coronavirus in Washington, DC.
  • Senate Majority Leader Mitch McConnell (R-KY) and House Minority Leader Kevin McCarthy (R-CA.) said in a joint statement today that any future stimulus bill must include liability protections for employers.  “Senate and House Republicans agree these protections will be absolutely essential to future discussions surrounding recovery legislation,” according to the statement.
  • McConnell on Tuesday referred to the protections as his “red line” during an interview with Fox News.  “Let me make it perfectly clear, the Senate is not interested in passing a bill that does not have liability protection. … What I’m saying is we have a red line on liability. It won’t pass the Senate without it,” he added. (Fox interview, April 24)
  • House Speaker Nancy Pelosi (D-CA) on Wednesday said employees returning to work should have increased safety protections. “Especially now, we have every reason to protect our workers and our patients in all of this. So we would not be inclined to be supporting any immunity from liability,” Pelosi stated during a press briefing.  (National Review, April 29)
  • Senate Minority Leader Chuck Schumer (D-NY) on Tuesday said employers pushing workers to return to unsafe conditions during the pandemic should not receive protections.  He stated, “If an employer makes an employee do something that is untenable, shouldn’t an employee have some rights here?” (Bloomberg, April 28).

Negotiations on the next pandemic bill in Congress will intensify this month, as Democrats are expected to push for massive assistance to help state and local governments meet tax revenue shortfalls that pay for essential services.

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Real Estate Roundtable’s DeBoer Discusses Coronavirus Policy Responses and Need for Future Actions

Posted on by Trey Jackson

Jeffrey DeBoer, Bisnow video interview

Roundtable President and CEO Jeffrey DeBoer, above, discussed the government’s legislative and regulatory responses to the economic impact of the coronavirus pandemic – and what those policies mean for commercial real estate – in a BisNow webinar yesterday and Real Estate Executive Council Town Hall today.  (Watch April 30 Bisnow interview)

  • The discussions addressed the Paycheck Protection Program (PPP), new Federal Reserve credit lending facilities and the need for a national renter assistance program.
  • DeBoer noted that the federal response to the pandemic’s economic shockwave have provided bridge relief, and that the Small Business Administration’s (SBA) PPP and the Fed’s TALF credit facility could be improved to increase their effectiveness. 
  • The Roundtable’s Covid-19 Resource Center includes an “8-Point Plan” to improve the PPP. Additionally, the SBA on April 29 released an updated PPP FAQs document.

Restoring The Rent Obligation Chain & Future Issues

DeBoer emphasized in his discussions that there is a vital need to “restore the rent obligation chain” to benefit business and residential tenants, owners, lenders, local budgets and retirement investments. (Bisnow video)

  • Before the pandemic crisis, there was clarity on the likely income real estate assets could generate by rental obligations and contracts.  However, now those income streams are impaired. The future of certain businesses are unknown; tenants in shared buildings may default; and how employers can retain or regenerate jobs is uncertain. DeBoer noted that these challenges can be addressed by fixing the rental obligation chain.
  • DeBoer also said future issues that should be addressed include business liability, as building owners anticipate the return of occupants, workers and visitors – along with government support for a Pandemic Risk Insurance Program, which could be modeled on the highly successful Terrorism Risk Insurance Program established in the wake of 9/11. 
  • The Real Estate Roundtable recently established a Building Re-Entry Working Group to address issues associated with building re-entry, as state and local authorities seek to re-start economic sectors and allow people to return to work.
  • DeBoer also discussed what future legislative packages may include to jumpstart the economy, including infrastructure investment.

Other Roundtable videos address how the crisis has affected real estate tax issues, along with other topics, on its Youtube channel.

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Moody’s Releases Interactive Tool Showing Covid-19 Impact on Various Commercial Real Estate Property Types

Posted on by Trey Jackson

Moody’s Analytics on April 22 unveiled a new tool to help commercial real estate market participants assess how the coronavirus crisis is affecting CRE fundamentals across US markets. The COVID-19 CRE Impact Dashboard is a publicly available resource that provides access to economic, property, and construction data, analytics and insights for CRE property types. 

  • Presented as a visual mapping tool, the dashboard brings together Moody’s Analytics CRE capabilities and supplements them with up-to-date information on COVID-19 from public sources.  The dashboard also includes forecasts for market vacancies and rents under different economic scenarios for office, retail, industrial, and multi-family properties.
  • “The coronavirus pandemic is changing the landscape of commercial real estate, as businesses of all types adapt to new economic realities,” said Cristina Pieretti, Managing Director of Moody’s Analytics REIS. “We are offering our new tool to help the CRE community make the critical business decisions necessary to navigate this unprecedented event.”

To access the dashboard, and for more information, visit reis.com or Moody’s Coronavirus blog. 

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The Roundtable and Nareit Request Expansion of The Fed’s “Main Street” Lending Programs to Prevent Further Disruption to CRE Markets

Posted on by Trey Jackson
Facade on the Federal Reserve Building in Washington DC

The scope of the Federal Reserve’s “Main Street” Lending Programs should be expanded to forestall further disruption and economic dislocations in commercial real estate, according to an April 22 letter sent to Treasury Secretary Steven Mnuchin and Fed Chairman Jay Powell from The Real Estate Roundtable and Nareit. 

  • This week’s letter requests specific changes to the Fed’s Main Street New Loan Facility (MSNLF) and Main Street Expanded Loan Facility (MSELF), both established on April 9.
  • The April 22 letter emphasizes that real estate borrowers, owners and managers now face existential challenges.  The letter states, “At a time when Main Street needs credit, it cannot get it because the secondary markets that provide liquidity to Main Street lenders are clogged.”
     
  • The Roundtable and Nareit urge specific changes to enable CRE borrowers to access the Main Street New Loan Facility (MSNLF) and Main Street Expanded Loan Facility (MSELF).  The joint letter addresses (1) Underwriting/ Leverage Limitations/ Loan Size, (2) Distributions/ REITs (3) Loan Terms (4) Applicable Interest Rate Index and (5) Program Timing.
  • Previous industry letters to the Fed on March 24 and April 14 addressed the need to broaden the range of a separate credit facility – the Term Asset Backed Securities Facility (TALF).  Those letters requested that TALF eligible collateral include both outstanding (legacy) CMBS, commercial mortgage loans and newly issued collateralized loan obligations.  On April 9, the Fed confirmed that the TALF would be expanded to include triple-A rated legacy non-agency CMBS and loans.
  • Since then, as rental income has diminished, conditions in the commercial real estate sector have deteriorated further, causing real estate credit and capital markets to stall.  Therefore, it is important for the Main Street credit facilities to help bring renewed liquidity to commercial and multifamily real estate. 
  • The CARES Act permits financially stressed tenants in properties financed by federally backed loans to postpone rent payments, while several states and municipalities are currently considering additional measures to afford tenants rent forbearance. 

As the Treasury and Fed continue to take positive actions benefiting liquidity for the nation’s economy, the Main Street Lending Programs can be enhanced to support commercial real estate. 

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