The $2 trillion stimulus bill (the CARES Act) signed March 27 by President Trump offers several provisions that could aid the commercial real estate industry during the coronavirus pandemic.
With rents due on April 1, apartment landlords and multifamily investors will soon have a view into what that future may look like as the coronavirus continues its spread across large and small U.S. cities.
For tenants who can't pay their rent on April 1 because of work reduction due to the coronavirus, the stimulus bill could provide relief within three weeks when direct federal payments hit the bank accounts of individuals and families.
Still, no one yet knows whether the CARES Act, the largest in U.S. history, will be enough to enable people to continue paying their apartment rents if the economy stalls for months.
Over 3.2 million people filed initial unemployment claims for the week ending March 21, a rise from 282,00 initial claims the week before and 211,000 the week before that. The hospitality and restaurant industries were among the hardest hit, according to the Department of Labor.
Three CARES Act provisions multifamily investors should know:
Expanded unemployment benefits.
- The CARES Act will pay approximately $600 a week on top of any state unemployment benefit for people whose jobs were lost due to the coronavirus.
- The Act expands benefits to include part-time and freelance workers who are part of the gig economy.
- A person's total weekly unemployment check will vary depending on their particular state's benefit and what the person was earning at the time they became unemployed.
- The Act adds 13 weeks' coverage to what individual states provide.
- Many states provide 26 weeks, so the federal stimulus bill would increase benefits in those states to 39 weeks, as reported in The New York Times. State unemployment offices have been flooded with calls and applications so state offices are telling filers to be patient.
Stimulus checks to most adults.
- Individuals and married couples who meet income caps will receive $1,200 (singles) or $2,400 (married couples), plus $500 for each child age 16 or under. These direct payments should help U.S. residents pay their bills so they could certainly help an individual or a family pay their monthly apartment rent, but they won't arrive in time for April rents.
- Stimulus payments aren't expected to arrive for about three weeks, and may provide little help to renters in high-cost cities such as New York, San Jose and San Francisco where the median rents are above $3,000 a month.
Forbearance and eviction suspension.
- The Federal Housing Finance Agency may allow some multifamily investors who are current on their Fannie- or Freddie-backed loans as of February 1 to delay payments for a specified period of time as long as they don't evict tenants. Borrowers should reach out to their lender or servicer for the latest guidelines.
- The eviction suspension requirement applies for the duration of forbearance, which might provide “a temporary lifeline" to investors, according to The Real Deal.
- In general, The Act allows forbearance for 30 days with up to two 30-day extensions, and applies to properties with five or more units.