Some South Florida landlords are going beyond rent deferments and case-by-case deals, as the majority of tenants struggle to make rent this month and next.
William Kakon, who owns 14 retail and multifamily properties in Miami-Dade and Broward counties, is forgiving rent for his commercial and residential tenants in April and May, plus creating a fund for families in need in his communities, he said. He typically collects about $100,000 a month from his 37 tenants, which include 34 residential tenants. And he is giving a little more than $50,000 to the community, for a total of about $250,000.
“I’m trying to do what I can,” Kakon said. “Anybody should do the same if they can.”
Nationwide, only 69 percent of apartment tenants paid rent in the first five days of April — a 12-point drop from the same period last month, according to the National Multifamily Housing Council.
Lionheart Capital’s subsidiary, Out of the Box Ventures LLC, is waiving base rent for its retail portfolio across the country. That’s the equivalent of a 60 percent to 70 percent discount off monthly rent, said Ophir Sternberg, Lionheart’s founder and CEO. The company owns more than 6 million square feet of retail across 30 properties in 17 states.
Tenants have the option of only paying their portion of the common area maintenance charges (CAM) and the property taxes, in April and May, he said.
In South Florida, Out of the Box owns two properties in the Miami Design District: at 4218 Northeast Second Avenue, where Lionheart is based, and at 4300 Northeast Second Avenue.
“We’re fairly fortunate that we have low leverage on the portfolio, in general. That allows us to be more flexible in our rent collections,” Sternberg said. “We are taking a hit. … Essentially we’re sharing the pain with them [our tenants].”
Out of the Box is also offering big box spaces that it owns to the Federal Emergency Management Agency for its Covid-19 response.
The partial rent forgiveness program may be extended beyond May, Sternberg said. Some tenants are looking to renew or extend their leases as a result, he added.
A number of property owners and managers said they were working with their tenants to help them get through April, including providing information on loans and grants available to them, and offering temporary deferments or discounts.
Todd Rosenberg, co-founder and managing principal of Boca Raton-based Pebb Capital, said about 75 percent of its multifamily tenants paid in April. Fewer retail tenants were able to make their April rent payments. He said the company is working with its tenants on a case-by-case basis.
“The longer this continues, the less savings people will have to pay rent,” Rosenberg said. “I think we will presumably see more of a falloff over the next few months in the multi[family] space.”