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latest eviction moratorium news, COVID effects on the apartment hotel and office sectors. What is the real estate story that's getting me fired up and a review of major deals and developments from around the US. This is what you will hear in this episode of Rent TV's commercial real estate news and views with Steve Bloom on October 1 2020. I'm Steve Bloom, your host and founder and CEO of Renttv.com, our news and media company for the commercial real estate industry. Now in our 21st year providing daily news stories, market reports, video programming and more for the commercial real estate industry on our website, renttv.com and our email newsletter, the real estate insider, which goes to over 60,000 commercial real estate professionals three times each week. And it is my goal to make these new podcast shows streaming to you from the heart of Silicon Beach and Marina del Rey, a profitable use of your time. And since I haven't produced a show in a few weeks, I have some catching up on news and some venting to do on some recent events. But before I start, I want to give a huge thanks to our very first podcast sponsors, Capitol Rivers commercial and Redwood mortgage, who I will tell you about more later in the show. So let's get into this show. And I will start with perhaps the most impactful COVID related real estate issue so far. And that is the protections against eviction moratoriums. Now, on the commercial side, landlords of businesses and stores, you and your tenant are basically on your own and figuring things out. But on the residential side, there are causes for concern, as there has been a variety of eviction moratoriums from states and municipalities around the country. But the major recent news was the national eviction moratorium order given in early September by the Centers for Disease Control and Prevention. Yes, the CDC, whose order prevents evictions for about 40 million apartment renters until the end of the year. It applies to any state in which there is not already a more protective ban in effect, which many states have, including California. Not surprisingly, many states and rental housing groups immediately came out against the order, and several have started legal actions to block it, questioning the ability of an entity such as the CDC to enact such an order, as well as highlighting the negative effects of the move, which can be devastating for smaller property owners, many of whom are the mom and pops who will not be able to pay their mortgage payments, utility bills and property taxes while sustaining non paying renters for months on end. And the CDC eviction moratorium could cause more economic harm than it prevents. As David Howard, executive director of the industry industry trade group, the National Rental Home Council noted that since renters have to pay back the rent they owe, that it puts renters in a position of having to pay back rent that they likely won't have while causing immediate hardship for property owners who have no means of carrying the cost of ownership. That uncollected rent debt is a problem. Many say is just making a tough situation build up into an unmanageable situation as the tenants debt builds up. So in many ways, it would be better to have renters unable to pay vacate sooner than amass a huge debt. The better and less harmful solution would be to help renters to pay the rent, then to try and come up with policies like eviction moratoriums that do not address the cause of the problem while putting their housing suppliers at risk. Rather than suing for the right to evict during a pandemic, landlords should be working with renters to get Congress or local governments to provide emergency rental assistance to help renters and to help landlords continue to operate their rental units. And since I did note that California had passed its own moratorium bill, I'll tell you about AB 3088 passed by the state legislature, which is billed as a new Tenant Relief Act that was a compromise between tenants and landlords. Known as the Tenant Homeowner and Small Landlord Relief and Stabilization Act of 2020, the new law does provide some certainty to renters and some protections for small landlords. While it extends the eviction moratorium through January 2021, it does require that tenants show evidence of lost income due to COVID-19 in exchange for nonpayment. In addition, tenants must pay at least 25% of rent during the moratorium period. Given what the state could have done given its politics, this law is somewhat of a relief. So I guess it has been well received by landlords. However, and I know this is a bit late to be helpful, but I will tell you that for housing providers to collect the past due rent during the protected time period of March 1 2020 through January 31 2021, they must provide tenants with a notice of COVID-19 Tenant Relief Act of 2020. Now failure to provide the notice on or before September 30, today's taping will result in the inability to evict your tenant or recover rent payments that are owed during this time. This notice should accompany all 15 day notices to pay rent or move out and providing that necessary third layer of eviction protection. Here in the city of LA, the city had extended its own moratorium on evictions, late fees and rent increases, at least through October 31 2020, and maybe longer and although that date is coming up soon, the move by the city is being challenged in court by the apartment Association of Greater LA, which claimed the city's unconstitutional and overreaching abuse of power has forced landlords to absorb the economic losses suffered by their tenants because of the pandemic. Now the board's President Earl Vaughn said the city's eviction ban goes way overboard and providing benefits to renters at the expense of all landlords, particularly the small mom and pop landlords who make up most of the housing providers in LA. Many of the renters that have benefit under these ordinances have not been impacted during the pandemic and yet still chose not to pay rent. Vaughn said in a statement, as a result, the city has exposed itself to significant liability risk in particular, damages stemming from the lack of an end date on the eviction ban and prohibition on rent increases, which now that were seven months following their establishment is still a date unknown. Now just in LA County, about 138,000 households did not pay any rent at least once between May and July. According to a joint report recently released by UCLA and USC and almost 40,000 households are at least three full months behind on rent. Moving to national multifamily stats that describe what's happening in the sector. The Freddie Mac second quarter multifamily apartment investment market index, the AIMI released last week fell by 0.3% in the second quarter after posting a quarterly increase of 1.8% in the first quarter of 2020 and its NOI also fell by 1.2% marking the first time in index history where it's AIMI and the NOI were negative together in the second quarter. Now Freddie's AIMI combines multifamily rental income growth, property price growth and mortgage rates to provide a single index that measures multifamily market investment conditions. The nation along with 14 metros experienced property price contraction while nine metros experienced growth and two metros had flat property prices over the quarter. According to Freddie Mac. Now another report by National multifamily housing councils shows that multifamily fundamentals continue to show signs of distress in the wake of the widespread job and economic losses created by the coronavirus. The latest report from the NMHC rent payment tracker, which measures the number of apartment households that make a full or partial rent payment shows a drop of 2.4% or about 280,000 households year over year, as well as a monthly decline. The NMHC tracker registered that 86.2% of apartment households made a full or partial rent payment by September 13, compared to 86.9% that paid by August 13 of this year. The survey measures are 11.4 million units of professionally managed apartment units across the country. A new report from Rent Tech Direct that evaluates the impact of COVID-19 on rate payments. This month also gives further cause for concern. Their data has showed a consistent downward trend in the number of rent payments received nationwide by property managers and landlords. And the month of September has seen the biggest change with a 35% drop in total rent payments received. The debt markets are also showing signs of strain. As a Reese report REIS report found that August's remittances point to a multifamily sector displaying signs of pandemic related stress, because although the overall delinquency rate is fairly stable and even showing signs of decline, the volume of special servicing remains stubbornly high and is inching higher. Furthermore, they report that they see areas where stress on debt is hiding and likely to show up in the near future. Now shifting property types to hotels. While I won't get deep into stats and reports for that sector today, I mean, we all know that hotels and retail are for the most part taking it on the chin during the pandemic. But I will know two news stories from the past week about significant hotels, which accentuate that point. And that is the permanent closing of the Luxe Hotel here in Rodeo Drive in Beverly Hills and the foreclosure action taken by the lender for the historic classic Palmer House Hilton in Chicago. Now the Palmer House was originally built in 1871 by mogul Potter Palmer and has attracted the wealthy and famous and presidents throughout its illustrious history. Conrad Hilton purchased it in 1945 as the Hilton flagship and the current owners thought for equities paid $230 million in 2005 and have spent about $173 million to completely renovate the property and its 1641 rooms. According to the Wall Street Journal article that we saw now Thor's in default on its $333 million first mortgage and the property value was recently pegged at just 305.5 million down from an appraised value of 560 million in 2018. Now with much of the hotel business centered on conferences and Chicago getting hit with a lot of looting and rioting in its upscale areas, this hotel and others in the city could take longer to rebound. Now the journal article noted the city's hotel occupancy for the week ended September 12th was only 35% versus a national average of almost 49%. Now regarding the Luxe Hotel closing in Beverly Hills as reported in the LA Times, it is a significant blow illustrating the continued struggles facing the hotel industry amid a global pandemic and industry experts worry that more are coming considering the inflated loan due delinquency rates for hotel borrowers. Now the Luxe 360 North Rodeo Drive is owned by Ephraim Harkim who acquired the property in 1995 according to the Times article noting property records. Jeffrey's Loan Corp provided $38 million for the hotel in June 2017 and that loan matures in 2027. The article noted that according to Trepp, a major data company, nearly 60 hotels in Los Angeles and Orange counties are late on their loan payments by more than 30 days. And Heather Rosman, executive director of the Hotel Association of L.A., told the Times that they anticipate many hotels won't survive and that industry data shows one in four properties already are struggling to pay mortgages, risking foreclosure. Yikes. Now continuing with the gloomy, albeit real news, I will quickly touch on the office sector which also is getting hurt from its own set of serious challenges thanks to job losses and work from the work from home trend. And a new report by Cushman and Wakefield measures the pandemic's impact on the office market. Now in the company's baseline scenario, which they feel has a 50 percent probability, the U.S. office market will shed 145 million square feet of office space demand in the next two years through the end of 2021. Job loss is the driving force behind the degeneration of the U.S. office market with the report anticipating a loss of 1.7 million jobs in 2020. Now that's an improvement compared to the 2.6 million jobs lost in the second quarter. Now to put the impact of the pandemic in perspective, Cushman and Wakefield has determined that office demand will decrease 30 percent more during the pandemic than it did during the 2008 great financial crisis. Negative absorption will also outpace prior recessions. In the great financial crisis, absorption totaled negative 2.1 percent of total inventory. And in the previous recession, the dot com recession, total office absorption totaled negative 2.4 percent of total office inventory at the time. Now in the current pandemic, C&W estimates that office absorption will decrease 2.7 percent of total inventory. Now these numbers represent the market contraction just through the total downturn and not the long term trends and impacts beyond dealing with the change in work from home habits. And now I have a message from a sponsor of our show, Capitol Rivers commercial led by Greg Aguirre, who want to make sure that in case you haven't heard, there's a massive tax increase on the ballot in November targeted at owners and renters of commercial real estate. If that's you, then you need to be well aware of Proposition 15 and the team at Capitol Rivers commercial can tell you all about it. For most commercial properties in California, Prop 15 would end the highly prized taxpayer protections that have been afforded by Prop 13 for more than 40 years. You can look it up online. But if you want to really understand and prepare for it, you'll want to talk to an expert like Greg and his team of experts at Capitol Rivers. If you'd like to see more, check out their Prop 15 landing page on their website at CapitolRivers.com. These are not your typical real estate brokers work with the best work with Capitol Rivers. In this segment of the show, I discuss views mine as well as others concerning real estate issues such as impending legislation that could affect the industry. And in future episodes, I will get into Prop 15, rent control and other topics. But today I want to talk about the hottest real estate issue in the state today and one that I am fired up about. Yes, I am talking about the fires ravaging the state, which while this year has been the worst, have been ravaging the state each and every year for decades. While I cannot compare the loss of real estate or its value to the loss of lives and livelihoods, I know of many owners of shopping centers and apartment buildings around the state and so many of them and their properties are affected by the fires that have already occurred or the threat of future fires. The risk of buying and lending and ensuring properties in towns under threat of wildfires keeps increasing while the values are decreasing. And in some areas, the value is completely wiped away, a complete loss for the property owner and any lenders. And besides the financial damage, there is the huge damage to the environment from the smoke, the destruction of trees and foliage and wildlife, as well as the water runoff from the fires. But does it have to be this way each and every year? It's not like it's once in a century occurrence. So given that, why doesn't the state seem more prepared and coordinated in dealing with this? We are the home to the tech geniuses in Silicon Valley. Much of the equipment that took us to space was built here. Geez, a hundred years ago, we built a dam at Hetch Hetchy in Yosemite and constructed a water canal to take water to San Francisco a couple hundred miles away, just with gravity. So this can be done. It takes focus, leadership and balls. I mean, instead of blowing what is now estimated to be about $90 billion on a train no one will use and that will be bleeding money from day one, which will be 30 years from now, some of that money could have gone to build a coordinated sophisticated tech driven fire prevention and reduction infrastructure that I gotta believe could already be reducing the destruction caused by the fires. For instance, when I see hurricane news, they cut to these disaster command centers in Florida that look like they could be for NASA landing a rocket on Mars. But for real, someone please tell me why we do not have a state fire command center as well as a state fire marshal who we can all look to and have confidence in and can bring together the various disciplines and experts needed to intelligently deal with forests and fires going forward. And why don't we have the most tech sophisticated fleet of manless remote control water carrying drone aircrafts as well as other high flying video drones along with more dispersed water retention and delivery systems in high risk areas. But we also need leaders who have the cojones to do whatever it takes to make the hardcore environmentalists feel the heat from a public that is fed up with a rational, dangerous, deadly, and mainly non existent fire control and forest management strategies and all the lawsuits preventing logical fire prevention activities. While it is great to be concerned about the temperature going up to up a degree over the next 50 years, or the water rising along some coastal areas, reducing carbon emissions over decades, ain't going to remove the dead wood that is on the forest floor right now, which will burn some time in the next few years. So we need to have teams systematically clear out tenor and high fire threat areas and create more fire roads and fire buffers and invest in more firefighting staff, equipment and technology, including firefighters inspectors and conduct the systematic clearance of trees and wood around towns, along roads and under power lines. And can't we start putting more of those power lines underground? Now, the government's first obligation is to protect the lives and property of its citizens. So it makes no sense to me why every year, it seems like it is the first year these fires occur, with uncoordinated responses from a variety of state and local officials. Meanwhile, the governor signs a bill reducing car emissions, which may one day have a very negligible effect on anything. And we keep pouring money into the train and nowhere. But next year, wood that is on that forest floor right now will burn and ignite a nearby building. It is close to negligent behavior on the part of the people and the party in charge in this state. Now I will tell you about another sponsor of the show, Redwood Mortgage. Redwood Mortgage is a direct portfolio lender providing loans on commercial office, industrial, multifamily, mixed use and residential investment properties in California. In business for over 42 years, Redwood Mortgage is established, trusted and well capitalized. A good place to go when the bank say no, call Redwood Mortgage at 800 659 6593 or redwoodmortgage.com. Okay, now it's time to get into our real estate version of the sports highlight reel with our very exciting Rent TV Roundup of major deal and development news from around the US. And as I normally do, I will start with the major portfolio or corporate deals and then go from the east coast and head west. And the big corporate type portfolio transaction announced this past week that was across most newswires was that colony capital has entered into a definitive agreement to sell six of its hospitality portfolios to high gate hotels in a deal valued at $2.8 billion, which includes the assumption of $2.7 billion in debt. The six portfolios consist of 22,676 rooms across 197 hotel properties. The deal is part of colony shift to focus on digital infrastructure assets with colony capital CEO Mark Gansey noting in the release that they are thrilled to be delivering on their commitment to dispose of non core assets and harvest positive value for their hospitality business. The deal is expected to close in the first quarter of 2021 subject to customary closing conditions and third party approvals. As we noted earlier when everyone in this audience knows is obvious, the hotel sector is getting crushed from the pandemic, although some very slight improvements are being seen as some areas were reawakened. But as Erica Morphy noted in her Globe Street piece on this report, many owners of hotel properties are facing major problems as a survey by the American Hotel and Lodging Association found half of hotel owners reporting that they are in danger of foreclosure by their lenders due to COVID-19. The survey also found that more than two thirds of hotels or 67% reported that they will only be able to last six more months at current projected revenue and occupancy levels absent any further relief. Moving to individual deal and development news, I will start in New York City with news of a development that actually won't happen. And that is because as the Wall Street Journal reported last week, the plans by the owners of Industry City, the 16 building, 6 million square foot campus on the sunset park waterfront in Brooklyn, which was to add 1.3 million square feet of business, classroom, retail and office space on two vacant parcels has been withdrawn by the developers, a partnership of Jamestown, Angela Gordon and Belvedere Capital real estate partners. They needed to rezone the sites, which they already own, to allow for more retail and classroom uses. And that plan was approved by the city council, but opposed by the district's council member, Carlos Menchaca, and then last week, four of New York's congressional reps, two state senators and four members of the state assembly sent a letter to the city council opposing the project, resulting in the developers withdrawing their application, which is a total shame in light of the city politicians chasing away Amazon before the pandemic. And now with the pandemic and other things like crime and taxes leading to a spike in unemployment in the city. So it is a brilliant move to reject a developer who is willing to invest such a large amount of capital in these tough economic times. Good move. Now, a New York City deal that did go through in Long, Long Island City, Queens was the $500 million studio deal by Hackman Capital and Square Mile Capital Management for the famous Silver Cup Studios, one of the largest film and television production facilities in New York City with the property in Long Island City and another in the Port Morris neighborhood of the Bronx. Other investors in the Silver Cup acquisition include the teacher retirement system of Texas and affiliate of the United Services Automobile Association and Canada based PSP investments, according to the Wall Street Journal article by Conrad Puthier. This studio deal comes on the heels of another big studio deal the June purchase by Blackstone group of a 49 49 percent stake in three film production facilities in Hollywood, California, managed by Hudson Pacific properties in a deal that valued those buildings at 1.65 billion. Now, Silver Cup, one of New York City's most storied film studio lots, doesn't just operate the facilities that also owns the real estate. It operates 23 shooting stages at three locations in Queens and the Bronx. Now its first location opened in 1983 in a former flower silo of the Silver Cup bakery in Long Island City. Now it is one of New York's four leading production facilities along with Steiner Studios, Kauffman Astoria Studios, and Broadway Stages. Silver Cup is now going to be the first of the four to be controlled by an out of town investment firm. East Hill Secured was the exclusive adviser to the sellers, brothers Alan and Stuart Suna. Now Hackman Capital also owns Culver Studios and Television City in Southern California. And this joint venture has acquired several studio portfolios, including MBS Media Campus and MBS services located in Manhattan Beach, California from Carlisle Group in 2019 for $650 million and CBS Television City in LA for $750 million from CBS Corporation. And for the rest of the development news, I will skip out to California, where I have several interesting large scale deals and developments to report about from all over the state. And I will start with a much needed positive story about a beaten up sector retail in a city that is now taking a beating San Francisco. And that is the news that IKEA parent Incas Center's division announced that it will spend $260 million to acquire and redevelop the vacant six story, six by six development at 945 Market Street, a 250,000 square foot building completed in 2016 by Cyprus equities. Now IKEA's plan is to turn it into an urban mall to open in the fall of 2020 with a 70,000 square foot IKEA store, as well as a mix of uses that include retail, residential hotel and flexible working spaces. The sellers were TMG partners and Alexandria real estate equities, which bought it from Cyprus last year for $179 million with plans to create a project for life science uses, which obviously didn't come to fruition. Now the project sitting empty for four years after it opened in 2016 was originally intended to extend the Union Square shopping district south toward the newly opened offices for Twitter and Uber near the Civic Center Bart. Instead, it failed to attract a single tenant. Now IKEA's arrival marks a long awaited moment of redemption for the six by six mall and that mid market carter who's promised revitalization has started and stopped times over the past decade. Also in downtown San Francisco, developer Strata Investment Group was granted exclusive negotiating rights this month to develop two aging peers, peers 30 and 32 in South Beach and a nearby parking lot owned by the Port of San Francisco into 850 new residential units, 376,000 square feet of office space, a swimming pool and about three acres of publicly accessible open space. The Port Commission unanimously approved an exclusive negotiating agreement with Strata, which has teamed up with Dallas based trauma pro company and the commission must still approve a disposition and development development agreement later this year or in early 2021. Until then, the development team is required to engage with community and regulatory agencies to fine tune its proposal, which includes demolishing the two vacant peers and constructing two smaller peers that would support the new uses. Developers were asked to propose strategies to strengthen the seawall and construct flood protections for the peers. Strata and trauma crow promised to invest $369 million into rebuilding the peers to restore the deep draft of birth for active maritime use. Also about $325 million would be generated for the Port Commission from the ground leases, according to the proposal. Now the project represents $1.18 billion in total private investment. Now the two other qualified respondents that Strata beat out were Vornado Realty Trust and Tishman Spire. Of course, there are naysayers to the project with some opposing the outdoor swimming pool with access to the Chile Bay waters and the proposed 218 foot height of the residential towers, which exceed local zoning limits of 105 feet as the developers plan to use the state density bonus law to build higher. Now the port staff said that the legality of doing so is still being assessed while those complaining say that the two towers would create walls blocking the waterfront. Now the site across the Embarcadero from the piers is now home to a temporary 200 bed homeless center heading east to the East Bay city of San Ramon. Along the 680 freeway. It was announced this month that its city council approved the latest plans by Sunset Development Company led by Alex Marin Jr. To add 4,500 homes to its massive master plan Bishop branch business park in a section called City Walk, which will also include a previously announced 169 room hotel and 170,000 square feet of retail space. The homes will be built in five neighborhoods on 135 acres that Sunset already owns with construction, hopefully starting in 2021 and first deliveries in 2023 with full build out taking up to 27 years. In 2018, Sunset initially opened city center with 300,000 square feet of retail space on 15 acres, which cost $300 million to develop. Now let's go down to San Diego where IQ HQ Inc, a premier life science, real estate development company completed the acquisition of an iconic development site along San Diego's waterfront. In addition, IQ HQ introduced a new brand to capture the significance of the site, the San Diego Research and Development District, the RAD, and announced the start of construction. Said Mayor Kevin Falconer, the research and development district will transform our waterfront and bring top tier life science companies to downtown. Entitled for new office, lab and support retail space, the RAD is situated on more than eight acres and occupies three entire city blocks representing the largest urban commercial waterfront site along California's Pacific coast. With entitlement secured and key foundation permits already in place, IQ HQ is breaking ground on the first phase of the project this month with completion of the initial phase anticipated in summer 2023. Tracy Murphy, president of IQ HQ, said that the research and development district is exciting on so many levels. Not only does it represent our first acquisition in the San Diego region, which IQ HQ is proud to call home, we also have an opportunity to create the first truly urban waterfront campus dedicated to the advancement of life sciences. With an 82% increase in life science employment over the last decade, San Diego is the third largest life science market in the U.S. and it has experienced a growing demand for new class A office and lab space. And for our last deal roundup news piece, staying in downtown San Diego, a group called the San Diego Padres development team, which includes partners Tishman Spire and Ascendant Capital Partners has won the competitive bidding process to transform Tailgate Park near Petco Park into a vibrant mixed use destination called East Village Quarter. Plans for the underutilized four block area in the East Village include office, housing, recreation and retail space. And the project is expected to revitalize the East Village and further enhance game days at Petco Park, the Padres baseball stadium. The district consists of the four blocks between K Street Imperial Avenue, 12th Avenue and 14th Street. The Padres development team is comprised of local and international leaders that specialize in sports, transit centered and mixed use development, urban design and finance. The team's vision includes the creation of a 1600 space parking structure, 600 more parking spaces than currently exist on the site today, which will protect the long term parking needs of San Diegans attending Padres games and other events at the city owned Petco Park. Tishman Spire president and CEO and CEO Rob Spire said that San Diego is one of America's favorite places to live, work and discover. And that is exactly what this project is about. East Village Quarter represents an extraordinary opportunity for Tishman Spire to partner with the Padres and Ascendant Capital partners to create a dynamic, inclusive, mixed use environment that will provide vital housing and substantial open space in an urban setting. It will also host the city's best office facilities where innovative companies and their employees can thrive. Okay, good to end on an optimistic positive note. And that is it for our show today. We hope you enjoyed it and we appreciate any feedback on any of the new stories, anything else you heard in the show. So please email me those comments at sbloom at rent tv.com. Let me again thank our sponsors Capital Rivers Commercial and Redwood Mortgage for their support. And until our next podcast, this is Steve Bloom from Rent TV wishing you your clients and properties strong profits and prosperity.