Landlords for industrial transport companies aren’t receiving requests to delay rents, but some are asking their lenders for relief as part of the economic fallout from the COVID-19 pandemic.
In a survey of 36 industrial transportation landlords and 185 tenants conducted by Morprop Advisers and released this week, a third of the landlords said they asked for or received relief from their mortgage lenders.
On the other end, only 2% of the surveyed tenants said they asked their landlords for rent relief this month. According to Morprop Advisors managing member Ted Morandin, that’s because those tenants expected to get funds from the Payroll Protection Program (PPP). The program ran out of funds earlier this week, but lawmakers announced a deal Tuesday to refund it, with President Donald Trump expected to sign that measure into law later this week.
According to the survey, landlords in the industrial transport industry can expect an uptick in requests for rent relief in the coming weeks and potentially months: While only 2% of surveyed tenants said they asked for assistance in April, 6% said they’re considering making the ask in May, with some eyeing an out from rent payments for three months or longer.
Morandin said the advisory group is expecting the number of tenants asking for relief “to move considerably higher,” citing poor economic forecasts for the industry and three times as many bankruptcies in 2019 than there were in 2018.
“Of course, failure to pay rent under a lease is a contractual performance failure,” Morandin said. “Landlords place high administrative burdens on tenants who request rent relief. That sucks up management time that could be dedicated to finding more revenue and making profits.”
Morandin said both landlords and tenants should examine their Force Majeure, or “Act of God,” clauses in their mortgage and lease agreement to see if the pandemic is a qualifying event that could exempt them from payments in the near future.
“Even if the clause doesn’t specifically reference a pandemic however, the impact of travel bans, quarantines and widespread school, government and business closures are not part of the normal risk of doing business and beyond the scope of any one business or even an entire industry to control, so relief is still possible. Either way, it’s worth having a look,” Morandin said.