We will be bringing you up to date news on RREAF status among the COVID-19 outbreak. Click here to see our COVID-19 Webinar.
COVID-19 Portfolio Update April 1, 2020
With respect to RREAF’s platforms and what we are seeing and/or anticipating as a result of COVID-19, our multifamily platform, our beachfront hotels and our development projects all should be able to navigate these turbulent waters and stay afloat until the waters calm. We believe it will be a rough ride throughout Q2, calming down during Q3 and back to more (new) normal by Q4. Our development deals are progressing as per the plan with little to no interruptions / slowdowns as a result of the COVID-19 issues. Although our beachfront hotels and resorts are seeing the RevPar drop by more than 90%, we have a good basis in these assets and we have cash reserves that should allow us to get through this period with the help of the CARES Act. We are working with all of our lenders to help us mitigate the COVID-19 decline in operations and will utilize all applicable stimulus programs. Fortunately, we have a strong relationship with our lenders and they want to continue to do business with us. This reputation should help us garner favorable results from our requests. Cambria is the one asset that is going to experience the roughest ride. We are working with our lender in an attempt to get a 90-day forbearance and are focused on managing the expenses to help us through this crisis. The good news is that Charleston is a tourist / leisure destination (#1 in US) and we believe that it can recover more rapidly than other sectors in the hospitality space including the business / convention driven sectors. This should hold true on our beachfront hospitality assets as well. We also believe domestic travel may increase while International travel declines. The strongest sponsors should make it through to a more normalized market while the smaller, less capitalized companies may struggle a little more. RREAF prides itself on being better prepared to deal with adverse situations.
The fundamentals behind the economy were very strong prior to COVID-19. Once people go back to work and the Trump Administration turns everything back on (with the help of the stimulus package) we should ramp back up relatively rapidly. There should be better buys in the CRE space as we expect less competition resulting from smaller/weaker capitalized sponsors and/or fewer buyers in general participating in the market. We are actively seeking new value add opportunities while the market is down. Our reputation of executing on transactions allows us to have an advantage as Seller’s contemplate a need to exit in a buyer’s market. Please continue to reach out to us and check our site from time to time on new offerings. We have restructured our Wilmington Apartments (that we will be closing later this month) to put us in a very favorably position going forward. We are working on a similar restructuring of our portfolio acquisition in South Texas as well. For all you that have already invested in Wilmington and/or South Texas portfolio, thank you. Just know that the investment has become stronger as a result of our successful negotiations with the Seller. By way of an example, we required the Seller to escrow a reserve that we hold and can use to draw funds monthly in support of our $90,000 projected monthly revenue for a period of six months post-closing. We also elected to cut our promoted interest from 30% to 20% after our investors have received a minimum 12% IRR as a thank you for your continued support in these tough times. Please click here if you’d like to view the updated Wilmington investor package or simply reach out to Dari Mahboubi should you like more information on the changes we’ve negotiated on Wilmington and/or South Texas. I believe we still have room for investment in both.
We are prepared.
Again, RREAF’s portfolio is better positioned to handle a downturn in the economy then many others in our industry with our size / scale and devoted real estate professionals, many of whom have been through multiple real estate downturns. We are on top of all the various programs launched by the CARES Act. We have a task force focused on understanding them and making certain we do everything necessary to better our position as we get through this black swan event. The linked update will illustrate some of the programs we are most focused on and/or in process of implementing all to the benefit of our investors. Click here to learn what our Joint Task force has put together for RREAF department heads to review daily.Joint Task Force Information
Keeping you up to date.
We look forward to our more in depth conversation. I can’t set a specific time for a webinar update as all of our staff are literally on conference calls back to back every day between 7AM and 7PM. As we get further ahead of the COVID-19 pandemic and begin to return to the main offices, we will set up a webinar to better update all of our investors on RREAF sponsored assets and our direction in the near term. We will also include more detailed information of how COVID-19 has impacted your specific investments on each quarterly report which we expect to deliver in the next 30 days. In the meantime, reach out to us via email. We will try and update each of you every week.Contact Us