CALCAP CONNECTIONS
May 2020
PRINCIPAL'S CORNER
Rent Collections in Uncertain Times
 
As the economic fallout from COVID-19 continues, more than 40 million Americans have now filed for unemployment since March. For each of the past 10 weeks, new unemployment claims have exceeded 2 million per week. We have never seen unemployment claim numbers this large. Even the Great Recession never saw jobless claims over 1 million in any week. A senior White House economic advisor predicted that the jobless rate could reach upward of 20% for May and June and stay that way into the latter part of 2020

Based on these record unemployment numbers;
commercial landlords have been hyper-focused on the impact this will have on rent collections. The following table shows the April rent collections from 54 publicly traded REITs surveyed by Nareit.
Industrial and multifamily lead the pack, with retail (as expected) finishing last. According to the National Multifamily Housing Council (NMHC) Rent Payment Tracker, 95.9% of residents made full or partial rent payments in April. This is based on its survey of 11.5 million professionally managed units across the country. At CALCAP, we collected 97.1% of rents in April and are currently at 95.2% for May (through 5/28). Given the current environment, we are pleased with these results. Despite that fact the eviction moratoriums are in place across the country, we believe that rent collections have remained high for four reasons:
 
  • The willingness of landlords to work with tenants on payment plans
  • Direct payments tenants received from the CARES Act
  • The additional $600 per week unemployment benefit
  • The general desire of residents to remain in good standing with their landlords

Going into the pandemic, the apartment industry was well positioned with occupancy rates reaching 20-year highs. Landlords are remaining cautious heading into the summer, as the re-opening of the country will dictate how quickly jobs come back. Much will depend on what type of recovery there is, and on any further government stimulus. At the end of the day, we remain cautiously optimistic as residents are continuing to show a willingness to prioritize their rental obligations.
 


Edward M. Aloe
President and CEO
626-229-9057
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Is the housing market already rebounding from COVID-19?

An update on the 5 indicators that will show when the market is back on track from the pandemic

While it is true that we have been successful in flattening the curve nationally and testing is more available, there are still spots where the number isn’t doing great.
I do not feel confident in saying the spread of this disease is behind us, so I cannot give this indicator and all clear just yet. 
If we have genuinely contained the spread of the virus, we will not get a noticeable rebound of cases when we begin to progress through the stages of reopening the economy.
This is up to us. A second wave is likely but not inevitable. If we continue to wear masks when appropriate, religiously wash our hands and remain vigilant against possible contamination, by September 1, we will be in a better position to handle whatever the fall and winter bring. 


Mortgages in forbearance rise to 4.2 million, MBA says

About 8.4% of U.S. home loans have suspended payments amid COVID-19 economic shock

About 4.2 million mortgages are now in forbearance, representing 8.4% of outstanding home loans, the Mortgage Bankers Association said on Tuesday.
The numbers increased from 4.1 million mortgages last week and an 8.2% share, MBA said.
Measured by the type of investor, Ginnie Mae mortgages were most likely to be in forbearance, the report said. Ginnie Mae loan pools, containing mortgages primarily backed by the Federal Housing Administration and the Veterans Administration, had an 11.6% share of loans in forbearance, up from 11.3% in the prior week, the MBA report said.


More good news for May: newly pending sales up almost 50% from same period in April

Inventory has also hit new lows

Does this mean that we’ve seen the worst of the COVID-19 effect on housing, and that it will rebound in May and the summer months? The jury is still out on that prediction, and of course, it depends on what happens next. But there are some bright spots.
New for-sale listings are up 12.5% month over month after the seven days ending on May 10, but year over year they were still down 27.6%.
Overall, while home listings continue to bounce back,  inventory  still remains about 20% below last year’s already low levels.
Home values continued their upward trajectory in April, with the typical U.S. home value growing 4.3% year over year to $250,492.
Also, the pace of yearly U.S. home value growth has accelerated every month this year, after having slowed down for 20 consecutive months beginning in spring 2018, Zillow said.

On the lighter side....
About CALCAP Advisors
About CALCAP
California Capital Real Estate Advisors, Inc., and its affiliate entities (CALCAP Asset Management I & II, CALCAP Properties, CALCAP Lending, and CALCAP Senior Healthcare I, collectively known as "CALCAP"), is a California based investment company founded and 2008 and headquartered in Pasadena, California. The Company sponsors alternative real estate investment opportunities focused on demographically driven housing. CALCAP has been able to consistently provide both individual and institutional investors with outstanding returns over the last 10 years. The Company's core strategies look to actively create alpha for investors while managing risk. CALCAP currently has over $300mm in Assets Under Management. To learn more visit www.calcapadvisors.com.
Social Mission
CALCAP has created the CALCAP CARES program to encourage employees to find a way to give back to the neighborhoods where we invest. CALCAP has created "GiveTime4Autism" as its initial program which will allow employees the ability to donate unused vacation and sick days for a very worthy cause.
LOS ANGELES
The Sanborn House
65 N. Catalina Avenue   
Pasadena, CA 91106

SAN DIEGO 
12626 High Bluff Drive, Suite 360
San Diego, CA 92130 

PHOENIX
740 N. 52nd Suite 200
Phoenix,AZ 85008 

SANTA BARBARA
1309 State Street Suite A
Santa Barbara, CA 93101


IRVINE
2603 Main Street, Suite 850
Irvine, CA 92614

Edward M. Aloe, President & CEO
(626) 229-9057


Patrick A. Wakeman, Principal
(858) 764-4890

Drew Buccino, Principal and COO
(602) 419-3381

Greg Blix
Director of Investor Relations
(805) 896-8500

Len Israel
CEO, CALCAP Lending, LLC
949-439-1044

Mark A. Mozilo, Principal
(626) 229-9056
View our website: www.calcapadvisors.com  
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