How Will COVID-19 Change How Lenders Evaluate Deals?

Originally published on May 19, 2020 by Paul Letourneau

One doesn’t have to look far to see the immediate impact of the novel coronavirus on commercial property markets. Across the U.S., millions of white-collar workers are now working from home, stores and restaurants have closed their doors, and nearly 17 million Americans filed for unemployment insurance in the first three weeks after the pandemic began shutting down cities. Nearly one-third of apartment dwellers didn’t pay their rent in the first week of April, in addition to the countless retailers and hotel companies that are unable to make their lease or mortgage payments.

As lenders and investors grapple with these urgent challenges, many economists and industry experts are asking whether today’s social distancing measures will have lasting impacts. From a lender’s perspective, we’re already evaluating deals through a new lens. The aftermath remains unseen, but the current environment is raising several important questions about the future of all asset classes, including multifamily, office, retail and industrial.

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