Two large California residential landlords are offering financial help for tenants suffering from coronavirus-related layoffs or income losses.
The coronavirus fallout has already ravaged the local economy and caused significant job losses. That, in turn, has increased pressure on various industries to adjust pricing. The spotlight has been on landlords as rent is considered a tenant household’s biggest expense, and an April 1 payment is coming due.
One of Orange County’s biggest landlords, Irvine Co., has offered residential tenants under financial duress the option to defer half of their rent over the next two months, repaying it over the following six months.
The landlord owns roughly 125 complexes in California with an estimated 60,000 units. The financial help is an interest-free deferral good for all of its tenants, however, Irvine Co. is hopeful those with solid finances choose to make full payments.
“Irvine Co. recognizes that families and businesses are facing health and economic hardships due to the significant impact of the COVID-19 virus, and we’re committed to providing necessary support for those who need it,” states an email to tenants, signed by Jim Krohn, president of the company’s apartment division.
The company’s email notes that tenants who cannot make household finances work, even after this offer, should contact the company to “discuss an alternative rent deferral arrangement.”
Essex Property Trust, with 23,000 rental units in Southern California, was not as specific in its announcement. Essex was a major political force behind the recent ballot-box defeat of a statewide rent-control proposition.
Essex’s press release notes unspecified payment plans for financially strapped tenants, including waiving late fees. It also will halt evictions for 90 days for impacted residents. And it will offer rent renewals for 90 days with no rent increases.
“Essex’s top priorities remain the health and safety of its residents and employees, as well as providing the necessary resources and flexibility to assist during this unprecedented time,” its statement said.
Many landlords are expected to offer some form of assistance to cash-strapped tenants. The California Apartment Association asked its member landlords to freeze rents, stop evictions “absent extraordinary circumstances,’ wave late-payment fees for impacted residents; and offer flexible repayment options for those late rents — all through May 31.
Irvine Co.’s commercial real estate division — the owner of Fashion Island and Irvine Spectrum Center — also announced Monday that it is giving its retailers a three-month rent delay.
Landlords face their own challenges, said the National Multifamily Housing Council trade group as it called for the industry to halt rent hikes and evictions for 90 days.
The council urged the federal government to include apartment owners in stimulus plans currently being debated in Congress. Landlords who will likely collect less in rent, whether they accept trade group suggestions or not, may have trouble meeting their own financial obligations for items such as mortgages, utilities, payroll, insurance and taxes.
This economic turmoil will cut landlord cash flow and slam the value of commercial properties. Green Street Advisors in Newport Beach, which tracks stock market trading among commercial real estate investment trusts, estimated values were down 24% within the first month of the U.S.coronavirus crisis.
