July 7, 2020

Weekly cash positions and summary of COVID-19 impact on commercial real estate

This data set consists of 132 assets with approximately 1,300 tenants located across the region and including retail, office, and industrial product types and shows percentage variance from budget.


At the onset of the pandemic in March we developed and have been sending a “weekly cash position” to keep all current clients abreast of cash, expenses, and upcoming tax and mortgage payments. As we settle into a more sustained period of pandemic recovery, starting in July, we will be adjusting to one update sent on the 15th of each month. We believe that this will show the most pertinent information reflecting all rents collected and recorded for the month. We will also continue to send default letters and process rent relief amendments as previously directed.

You may be wondering if a picture is emerging of the impact of the pandemic and related restrictions on commercial real estate performance beyond your property(ies). Our analysis of the revenue and net operating income performance relative to budget of the properties under management by NAI Elliott is shown in the chart above.


With respect to rent adjustments, we have drafted or processed 111 lease amendments memorializing a change to rent. This represents a tenant adjustment rate of 9% of tenants across our managed portfolio.

Additionally, we sent default notices to 10% of tenants in April. The number of tenants who were sent default notices decreased to 7% in May. Default notices were sent only to those tenants who either had not paid the full amount due for the period or had not reached an agreement with the landlord regarding a lease amendment adjusting rent payments.

The effect of adjustments by landlords to expenses also had an effect. Operating expenses were down as many landlords moved to reduce daily and routine on-site maintenance and porter service as customer traffic virtually disappeared and that decrease of expenses held steady through May. Further, “below the line” expenses including capital improvement expenditures, and in some cases, debt service forbearance resulted in reduced cash requirements. The chart below shows both operating expense and other cash transactions for the same three-month period.

Combined, we believe this summary data from March through May clearly reflects the initial impact on total revenue and net operating incomes of unpaid rent and landlord-led rent deferral, abatement, or other adjustment. May’s improvement not only represents an improvement in rent collection but the impact of government initiatives, including the Paycheck Protection Program’s non-payroll component which many tenants report they were able to obtain.

We eagerly await completion of the June financials in order to see if May’s recovery has been sustained and we will be updating you again then.

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© 2020 NAI Elliott - All Rights Reserved

© 2020 NAI Elliott - All Rights Reserved

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