Category: News

New Data Shows Greater Flood Risk Across America, National Flood Insurance Program Funding Scheduled to Expire September 30

Posted on by Trey Jackson

Flood Data map First Foundation

Properties across much of the United States face a far greater risk of flood damage then current estimates maintained by the Federal Emergency Management Agency (FEMA), according to new data from the First Street Foundation, a non-profit research and technology consortium.  (New York Times, June 29)

  • FEMA administers the National Flood Insurance Program (NFIP), which aims to reduce the impact of flooding on private and public structures by providing affordable federal insurance to property owners, renters and businesses and by encouraging communities to adopt and enforce floodplain management regulations.
  • Funding for NFIP is currently scheduled to expire on September 30, after numerous temporary extensions.  The federal government’s current flood maps guide homebuilders, owners and mortgage lenders about flood risk.
  • The First Street Foundation’s report, “The First National Flood Risk Assessment: Defining America’s Growing Risk” classifies 14.6 million properties as being at substantial risk from flooding, whereas FEMA classifies 8.7 million properties as facing the same risk.  (Axios, June 29)
  • In current climate conditions, 21.8 million properties are classified as at risk, according to the new report.  “When adjusting for future environmental changes, by 2050, this will raise the number of properties with any risk across the country by 7.7% percent to 23.5 million,” the report states.
  • Any home can be searched on First Street’s FloodFactor.com website, which will soon integrate its data with Realtor.com.

Matthew Eby, founder and executive director of First Street Foundation said, “There are millions of Americans who have substantial flood risk and have no idea and now they’ll be able to access that … Having that data available will change the perspective of flood risk in this country.”

The National Flood Insurance Program (NFIP)

On May 14, 2019, the House Financial Services Committee unanimously approved a five-year flood insurance reform and reauthorization bill – the National Flood Insurance Program Extension Act of 2019 (H.R. 2578).

  • The bill would renew the NFIP until Sept. 30, 2024; forgive the NFIP’s remaining $20 billion debt and boost funding for mapping, floodplain management, and mitigation for homes, businesses and infrastructure.  It has not yet made it to the floor for a vote due to pressure from coastal state interests.
  • Meanwhile, the Trump Administration plans to overhaul government-subsidized flood insurance, in a sweeping proposal that could raise rates on more expensive properties and those in higher-risk areas. The proposal would take effect on Oct. 1, 2020. (Wall Street Journal, March 23, 2019)
  • Under the current NFIP, commercial property flood insurance limits are very low – $500,000 per building and $500,000 for its contents.  Lenders typically require this base NFIP coverage, and commercial owners must purchase Supplemental Excess Flood Insurance for coverage above the NFIP limits. 
  • Only a niche market of carriers typically provides this type of excess coverage and The NFIP’s low commercial limits make it problematic for most commercial owners.
  • The Roundtable and its coalition partners support NFIP reauthorization with the inclusion of provisions that permit a voluntary “commercial exemption” for mandatory NFIP coverage if commercial property owners currently maintain adequate flood coverage.

Congress will face the possibility of yet another NFIP funding extension before September 30 if policymakers cannot agree on reforming the program through legislation.

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Roundtable to Establish Standing Policy Committee on Diversity and Inclusion; Industry Executives Discuss Needed Actions

Posted on by Trey Jackson

Roundtable Meeting

The Real Estate Roundtable’s Board of Directors recently approved establishment of a new standing committee to address inclusivity and diversity in the industry and as part of the organization’s policy agenda.  (Roundtable Weekly, June 12)

  • The new committee’s working name is the “Real Estate Diversity and Inclusion Policy Advisory Committee” (REDIPAC).  Its intended objectives are to: 
    • Encourage Roundtable members to adopt and report on quantifiable standards for attracting workers across all skill- and corporate-levels from minority and other pools of talent historically under-represented in our industry;
    • Leverage The Roundtable’s existing advocacy agenda on tax, capital, climate/energy, housing, and infrastructure policies with a view toward also including policy elements aimed to dismantle racial and other barriers to equality; and
    • Build coalitions with civil rights and real estate industry organizations to scale the effectiveness of joint initiatives.
  • The new committee’s mission statement, leadership and requests for participants are expected to be announced in July.
  • This week, African American real estate executives discussed actions needed to expand diversity at all levels of the industry during a webinar on “The Black Experience in Real Estate,” hosted by NYU’s Schack Institute of Real Estate. 
  • Schack Associate Dean Sam Chandan lead the remote discussion with four panelists:  
  • The panelists expressed their hope that recent executive-level responses to the deaths of George Floyd and other African Americans at the hands of police officers represent not simply a “moment but a movement.”  The webinar participants also agreed what is needed now are tangible actions that could bring measurable, positive changes to increase opportunities for minorities in real estate. (The Real Deal, June 26) and Bloomberg, June 23, “Black Real Estate Executives Seek Lasting Change in Diversity”)
  • The four leaders discussed their personal experiences with systemic racism and recommended inclusivity steps that CRE leaders should take in their companies.  (Registration required to watch the June 9 webinar) 

Separately, a June 24 Walker & Dunlop webinar focused on the first African American woman REIT CEO – Leslie Hale of RLJ Lodging Trust.  Roundtable Member Willy Walker, W&D’s Chairman & CEO, hosted the discussion, which addressed the opportunities for increasing diversity in commercial real estate, Ms. Hale’s approach to diversity and inclusion, the current outlook for the hospitality and retail industries, the U.S. economy and more. 

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2020 Annual Report – Leading Through Crisis

Posted on by Trey Jackson

 

View Full Report – 2020 Annual Report – Leading Through Crisis

Intro

COVID-19 RER Response Timeline

Tax

Capital and Credit

Infrastructure and Housing

Energy and Climate

Homeland Security

Roundtable Discussion with North America’s Building Trades Unions President Sean McGarvey on COVID-19, Racial Inequality, Workforce Training and Infrastructure

Posted on by Trey Jackson

Sean McGarvey, above, President of North America’s Building Trades Unions (NABTU) and Roundtable President Jeffrey DeBoer this week discussed compelling issues of importance to CRE and the Trades, including COVID-19 responses, infrastructure investment, racial inequality,  workforce development, infrastructure and capital investment.  (Watch the remote discussion on The Roundtable’s Youtube channel.)

  • NABTU is an alliance of 14 national and international unions in the building and construction industry that collectively represent over 3 million skilled craft professionals in the United States and Canada.
  • DeBoer and McGarvey’s discussed possible ways the two sectors could work constructively together on issues, including:
  • COVID-19.  McGarvey commented on how at the onset of the pandemic outbreak, a large amount of NABTU’s workforce was laid idle.  The unions urgently worked with DHS and state leaders on how the construction industry could remain in business by pursuing guidance with federal agencies such as the Centers for Disease Control and Prevention Centers (CDC).  NABTU’s extensive efforts in funding COVID-19 vaccine research and trials are also recounted. 
  • Nondiscriminatory work environments.  The discussion touched on NABTU’s June 1 statement issued in response to the nationwide protests over racial inequality.  In the remote discussion with DeBoer, McGarvey said, “At this point where people want to compare it to 1968 … its so much different now that I really thing we’re going to get somewhere this time. And the Building Trades when it comes to diversifying our membership … we even have a couple dozen formerly incarcerated programs where we are teaching curriculum inside the state prison system (until Covid came) to prepare people for when they get out to come into our training programs and go to work.”
  • Apprenticeships and training.  “There’s only one institution in the world that trains more people in hard skills than NABTU. That’s the United States military,” McGarvey noted.  The unions and their signatory contractor partners invest over $1.6 billion in private-sector money to fund and operate over 1,900 apprenticeship training and education facilities across North America that produce highly trained, craft workers.  Several Roundtable member companies participate in NABTU workforce programs.
  • Infrastructure. The effectiveness of public-private partnerships in large infrastructure investments was addressed by DeBoer and McGuire.  The two also discussed the difficulty of financing construction projects during the pandemic and how it affects the economic security of the entire industry.  The Roundtable is currently working with policymakers and stakeholders to develop and enact an effective pandemic risk/business continuity program that would add more confidence to the marketplace while a health solution is vigorously pursued on the medical front.
  • Capital investment strategies.  NABTU has interests in nearly $700 billion of capital investments and assets that include funds focused on pensions, commercial real estate development, infrastructure and other investment.   “We are about partnerships,” McGarvey noted. “We are partnered with public pension funds who see it like us … who want a minimum amount of standards of who they are going to lend to and who they are going to invest with.  So you take our nearly $700 billion … we are thinking that in about 3 years we’ll be up to about $3 trillion worth of pension fund money that’s going to have minimum requirements.”    

The remote discussion concluded on a positive note about exploring possible ways The Roundtable and NABTU could work together on mutually beneficial issues.

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Treasury Secretary Mnuchin and Industry Leaders Address Coronavirus Policy Response, Racial Injustice, and Reopening Challenges

Posted on by Trey Jackson

RER 2020 Annual Meeting visual

The Real Estate Roundtable’s first Virtual Annual Meeting this week attracted nearly 300 Roundtable members who remotely accessed discussions with Treasury Secretary Steven Mnuchin and industry leaders on COVID-19 policy responses, racial injustice and business reopening challenges.  The Roundtable’s policy advisory committee meetings also held their first remote meetings to analyze policy issues in the tax, capital and credit, sustainability and homeland security areas with subject matter experts from Capitol Hill, federal agencies and the private sector.  

  • Roundtable Chair Debra Cafaro (Chairman and CEO, Ventas, Inc.) launched the business meeting yesterday, noting the June 9 statement on racial injustice she issued with Roundtable President and CEO Jeffrey DeBoer.  (See related story below for more details)
  • Cafaro noted The Roundtable’s intense focus on the economic repercussions of the coronavirus.  She explained how the organization has successfully pivoted its focus to advocating policies that support economic recovery, including a pandemic risk insurance program modeled after TRIA; ongoing efforts to reform the Paycheck Protection Program; Federal Reserve credit lending facilities that accommodate CMBS; and federal efforts that could preserve the “rental obligation chain.”

  • Cafaro also announced that four individuals will join The Roundtable’s Board of Directors and three current Directors will depart, effective July 1.  The new Board Members are:
  • The exiting Board Members, who Cafaro thanked for their accomplished service, are:


Policy Issues & Featured Speakers   
The Roundtable’s June 11 Annual Business Meeting included the following speakers: 

  • Treasury Secretary Steven Mnuchin discussed the Administration’s work with Congress to address the economic fallout from the outbreak with The Roundtable’s Jeffrey DeBoer. Secretary Mnuchin emphasized how recent improvements to the Paycheck Protection Program (PPP) has helped small business borrowers deal with the economic impact of the global pandemic.  He added that the Administration is also considering business liability protections and pandemic risk insurance.
  • Citi’s Vice Chairman Raymond McGuire discussed “Real Estate’s Role in Addressing Racial Injustice” with Roundtable Immediate Past Chair William Rudin (Co-Chairman and CEO, Rudin Management Inc.).  McGuire noted that fortunate opportunities for an excellent education is what made the difference in his life experience and that providing similar opportunities to African American youths is of vital importance. 

  • “Reopening the Economy, Returning to the Workplace, Reinforcing Health Protections” panel featured leading industry executives discussing reopening strategies, operational protocols, potential liability concerns and more.  The discussion is available to stream at your convenience.  Separately, Roundtable Board Member and Sustainability Policy Advisory Committee Chair Tony Malkin (Chairman and CEO, Empire State Realty Trust, Inc.) was interviewed on CNBC this week on safety protocols and other measures that can be utilized for reopening businesses.  (CNBC interview, July 9)

  • Governor Jared Polis (D-CO) focused on Colorado’s approach to managing the outbreak, as it has recently reopened most businesses while practicing social distancing.  In his video interview, “States Set the Pace,” Gov. Polis discusses how state government can work with the real estate industry on practical safety measures to help businesses looking to reopen.

  • Dr. Scott Gottlieb, former Food and Drug Administration Commissioner (2017-2019) and Roundtable Chair Debra Cafaro discussed medical aspects of the novel coronavirus and his health policy perspectives on the crisis.  Dr. Gottlieb noted, “We still have a slowly expanding epidemic in the United States” that has a high case fatality rate.  He added that the world could see multiple vaccines with some targeting specific populations based on age or other factors.

  • Charlie Cook, Editor and Publisher of the Cook Political Group, outlined the dynamics of the upcoming election cycle during a health pandemic and economic downturn. Cook emphasized the importance of approximately 5 percent of independent voters who will make a choice in an election without third-party candidates. 


Roundtable Policy Committees 

The Roundtable’s Policy Advisory Committees and associated task forces also met remotely in conjunction with the Annual Meeting, offering a combination of live and recorded presentations for participants.  A video featuring all Roundtable Committee Chairs providing updates on each committee’s policy efforts is available on The Roundtable’s youtube channel.  

This week’s committee meetings analyzed policy issues in detail with high-level congressional and agency staff:

  • Research and Real Estate Capital Policy Advisory Committee (RECPAC):
    Rep. French Hill (R-AR), who serves on the House Financial Services Committee and the Congressional Oversight Commission on the CARES Act, provided insights on recent and future COVID-19 economic relief and stimulus during this joint committee meeting.  Additionally, industry experts discussed the state of real estate capital and credit markets, including the Fed’s Term Asset-Backed Securities Loan Facility (TALF). 
  • Tax Policy Advisory Committee (TPAC):
    House Ways & Means Chief Tax Counsel Andrew Grossman joined TPAC to share his perspective on committee priorities and the tax legislative outlook.  A panel of leading real estate tax authorities also discussed legislative proposals focused on the current distress in U.S. real estate – particularly debt restructurings, impaired rent and cancellation of indebtedness (COD) income.  Additional wide-ranging tax policy TPAC discussions are available on demand: 

  • Sustainability Policy Advisory Committee (SPAC):
    U.S. Environmental Protection Agency speakers provided an update on the ENERGY STAR certification program and its Portfolio Manager Benchmarking tool in the Covid-19 Era.  EPA and the Centers for Disease Control and Prevention (CDC) speakers discussed “Reopening Guidance for Cleaning and Disinfecting Workplaces.”  SPAC members also focused on “Healthy Building Strategies in a Global Pandemic” with the senior executives from the Center for Active Design and the International WELL Building Institute.  
  • Homeland Security Task Force meeting (HSTF) and Risk Management Working Group (RMWG):
    The joint meeting attendees heard briefings by government officials on the threat of civil unrest, looting, homegrown violent extremists and organized attacks on commercial properties – and the security, management and health challenges related to building re-entry.  The Task Force was also briefed on the need to enact a federal business continuity/pandemic risk program aimed at providing capacity for policyholders in need of insurance protection from the enormous costs associated with pandemics.

Next on The Roundtable’s meeting calendar is the September 22 Fall Meeting, which is restricted to Roundtable-level members only.  The Roundtable has also posted its 2021 meeting calendar dates.

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Roundtable Recommends Congressional Focus on Emergency Rental Assistance for Residential, Business Tenants Impacted by Covid-19

Posted on by Trey Jackson

Skyline Philadelphia

The Real Estate Roundtable on June 8 urged Congress to develop a policy solution that assists residential and business tenants, economically harmed by the pandemic, with meeting their due and owing rent obligations.  The letter sent was submitted for the record of a June 10 virtual hearing on “The Rent is Still Due: America’s Renters, COVID-19, and an Unprecedented Eviction Crisis” by the House Financial Services Subcommittee on Housing, Community Development. 

  • The Roundtable emphasizes in the letter that a specific rent assistance program for both residential and business tenants is needed to:
    • Keep workers housed and employed;
    • Maintain property taxes for state and local budgets that pay for essential community services;
    • Safeguard Americans’ retirement savings; and
    • Avoid a cascade of mortgage foreclosures.
  • The letter explains that tenants’ rental revenues are the foundational link in an “obligation chain” that supports local government property taxes to pay for essential community services, provides the revenue to pay the salaries and benefits of real estate industry workers, maintains the stability of the mortgage system, and supports Americans’ pension and retirement savings.  
  • Articles and studies cited in an attachment to the letter describe drastic declines in rent collections since April, especially from businesses in the retail and hospitality sectors.  A cited article published in the Washington Post on June 3 – “The next big problem for the economy: Businesses can’t pay their rent” – reports:
    • “The problem for the broader U.S. economy is that when businesses … stop paying rent, it sets off an alarming chain reaction. Landlords are now at risk of bankruptcy, too. Commercial real estate prices are falling. Jobs at property management companies and landscapers face cuts. Banks and private investors are unwilling to lend to most commercial real estate projects anymore, and cash-strapped city and local governments are realizing the property taxes they usually rely on from business properties are unlikely to be paid this summer and fall”
  • Additionally, the letter cites CoStar Risk Analytics, which reports the commercial real estate market can expect to see borrowers default on more than 13,000 loans totaling $148 billion in value.
  • The depressed state of business rent collections is a foreboding sign of diminishing commercial real estate asset values, which translates to lower property tax revenues for state and local governments to pay for infrastructure and essential health care and first-responder services. 
  • The letter’s proposes that “Congress should strengthen the ‘obligation chain’ with a robust rental assistance program specifically designed to help business and residential tenants through the current crisis.”  General assistance criteria for business and residential tenants to qualify for emergency rent support are suggested in The Roundtable’s June 8 letter.
  • The House subcommittee also heard from a coalition of national housing associations that submitted a letter focusing on the need for a residential rent assistance program.  “It is a top priority for the rental housing industry that Congress establish an emergency rental assistance program,” the groups wrote in their June 9 letter.  “We expect a significant number of residents will continue to be negatively affected by the pandemic, inhibiting their ability to pay their rent, even with the assistance provided in the CARES Act.”    

The need for policies to preserve the “rental obligation chain” and sustain economic recovery from the fallout of Covid-19 was a central topic during The Roundtable’s June 11-12 Virtual Annual Meeting.

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Real Estate Roundtable Issues Industry Imperative to Act Against Racism and Injustice

Posted on by Trey Jackson

Jeff DeBoer with Roundtable Attendees

It is a moral and economic imperative for The Real Estate Roundtable and CRE companies to take immediate and concrete actions that stand against racism and for inclusion, stated Roundtable Chair Debra Cafaro (Chairman and CEO, Ventas, Inc.) and Roundtable President and CEO Jeffrey DeBoer, in a statement issued on June 9.  (DeBoer, above center, with Roundtable meeting attendees in 2019)

  • The statement preceded a discussion yesterday on “Real Estate’s Role in Addressing Racial Injustice” between Roundtable Immediate Past Chair William Rudin (Co-Chairman and CEO, Rudin Management Inc.), and Raymond McGuire (Vice Chairman, Citi and Chairman, Banking, Capital Markets and Advisory), during The Roundtable’s first Virtual Annual Meeting.
  • McGuire said that fortunate opportunities for an excellent education is what made the difference in his life experience and that providing similar opportunities to African American youths is of vital importance.  “I do see this as a defining moment.  It’s a challenge we have to answer for history,” McGuire said.  
  • McGuire also discussed steps to combat systemic racism this week on CNBC’s Squawk Box. “We welcome the millions of dollars. We welcome the relatable messages, but we need to do more. Otherwise, it will have been another sad day in the neighborhood,” McGuire said.
  • The Roundtable’s Board yesterday approved the establishment of a standing committee to further equal opportunities and address racial disparities in the industry, with the goal of taking specific actions to bring more career opportunities to African American and other historically marginalized youth.
  • Ken McIntyre, Chief Executive Officer of the Real Estate Executive Council (REEC), will join The Roundtable’s Board of Directors, along with three other new members, effective July 1. REEC is a professional trade association composed of minority leaders in the commercial real estate industry – and is now officially one of 19 national real estate trade association partners that The Roundtable coordinates with on industry policy issues.

Cafaro and DeBoer’s statement concludes, “The moment for leadership is now. The Real Estate Roundtable commits to motivate meaningful and lasting change within our spheres of influence.”

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Industry Leaders Respond to Racial Injustice; Rental Concerns Amid COVID-19 Lockdowns Add to Uncertainty

Posted on by Trey Jackson

Real estate industry leaders this week responded to protests against racial injustice throughout the nation sparked by the May 25 death of George Floyd in Minneapolis.

  • Real Estate Roundtable Chair Debra Cafaro (Chairman and CEO, Ventas, Inc.) on June 2 stated, “The buildup and expression of anger and frustration around racial injustice is real and it is justified.  There are sadly far too many examples of systemic racism, bias and inequality in our society, and there are no fast or easy answers to dismantling hundreds of years of racism.”
  • She added, “We do not condone violence against people or property, which seems to be emanating principally from criminal and other elements, rather than from peaceful protesters who are demanding change. But We CAN stand together as allies, stand against racism when we see it, and take deliberate actions to encourage and promote diversity, equity and inclusion within and beyond our own homes, networks, and communities to ensure that everyone feels like they belong.”  (Full Statement, Ventas, June 2)
  • Real Estate Roundtable President and CEO Jeffrey DeBoer on June 1 told BisNow, “Political, business and community leaders must come together and take concrete actions to significantly and measurably combat the long-standing abuse and unequal opportunities that continue to fall, particularly across race and gender.”  (Bisnow article, June 1)
  • Roundtable Board Member and Related Companies CEO Jeff Blau also told Bisnow on Monday, “… this has been going on for a very, very long time, and I think [inequality] is probably one of the greatest risks to our country’s future that I can imagine. And I think it’s a topic that we all, as business leaders, need to focus on to try to make things better.”

James Whelan, president of the Real Estate Board of New York, said Floyd’s killing underscores “systemic issues of race and class” that the city and country have failed to address.  Whelan told The Real Deal that he condemned violence and pledged the industry would provide solutions, “not just lip service.”  (TRD, June 2) 

Economic Restart and Re-Entry Concerns

Working with its industry partners, The Roundtable is focused on identifying and addressing issues associated with building re-entry as people return to work in many regions.

  • The Real Estate Roundtable’s Building Re-Entry Working Group continues to meet weekly to address issues associated with the restarting of the economy.  This week, the Working Group shared a report from fitwel on how to adapt building design projects to respond COVID 19.
  • A recent Littler survey of more than 1,000 employers show concerns centered on when to bring employees back and how to do so safely; how to accommodate increasing remote-work requests; and liability concerns stemming from the rise in COVID-19-related employment claims and lawsuits.  (View the survey infographic and the May publication).
  • A multi-sector business coalition including real estate, tourism, technology, manufacturing, health care, and energy sector groups – led by the U.S. Chamber of Commerce – called upon Congress in a May 27 letter to enact temporary liability protections for businesses struggling to reopen and operate safely during the COVID-19 pandemic.
  • Among the more than 200 signatories to the letter are The Real Estate Roundtable, American Hotel & Lodging Association, International Council of Shopping Centers, National Apartment Association, National Association of REALTORS®, and the National Multifamily Housing Council.

In recent weeks, Roundtable members have shared their perspectives and experiences with a number of media platforms regarding workplace re-entry strategies and technologies.  (Roundtable Weekly, May 15)  Such questions are also complicated by an evolving patchwork of state-level laws and guidance.  (New York Times Interactive Map, “See How All 50 States are Re-Opening” )

Commercial Rent Shortfalls; Bank Regulator Warns About Lock-Down Impact on CRE

The Washington Post on June 3 reported in “The next big problem for the economy: Businesses can’t pay their rent” that more than 40 percent of commercial retail rents were not paid in April and May, citing Datex Property Solutions.  (Request Datex’ report on National Tenant Payment Trends.)

  • The Post story notes when businesses stop paying rent, it sets off an alarming chain reaction that could threaten the broader economy and put landlords at risk of bankruptcy. The article also mentions how an aggressive proposal in California would force landlords to renegotiate leases with tenants affected by the pandemic, posing a risk to the basis of contract law.  John Worth, executive vice president for research at Nareit, is quoted, “It’s not appropriate policy to have blanket rent forgiveness. It could really create some chaos.”
  • The Times article notes, “As landlords face rent shortfalls and renegotiation because of the pandemic, lenders are also exposed.”  It continues, “Beyond the immediate impact of business closings on tenants’ revenue are larger questions, including the already-dire trends for malls and shopping centers, how office and consumer behavior might change after the pandemic, and the effects of recent looting and vandalism on retail corridors.”
  • The Roundtable has emphasized the vital need to restore the “rent obligation chain” during this economic crisis, which would benefit all stakeholders – business and residential tenants, owners, lenders, municipal and state budgets and retirement investments. (Bisnow video interview with Jeffrey DeBoer, April 30)
  • Separately, Acting Comptroller of the Currency Brian P. Brooks on June 1 urged the nation’s mayors and governors to consider the adverse impacts of long-term regional economic shutdowns on the nation’s financial system and the commercial real estate sector.  (Office of the Comptroller of the Currency news release, June 1)
  • In letters to the National League of Cities, the U.S. Conference of Mayors, and the National Association of Governors, Brooks warned that the lengthy duration and scope of continued lockdown orders “potentially threaten the stability and orderly functioning of the financial system the OCC is charged by law to protect.”
  • Brooks also warned about the negative potential consequences for CRE, stating, “Banks are a major source of commercial real estate finance in the United States. Cutting off utilities to commercial buildings can impair their condition, structural integrity, and value, thus impairing the collateral that secures real estate loans.  Commercial real estate loan collateral is also put at risk by lengthy property vacancies that result from extended stay-at-home orders.”
  • “Apart from damage to the physical collateral, extended lockdown orders obviously impair the ability of businesses, particularly small businesses, to generate the revenue needed to pay their loan obligations,” Brooks stated.  (OCC letter to U.S. Conference of Mayors)

The challenges of restarting the economy and re-entering commercial properties will be a central topic of The Roundtable’s June 11-12 Virtual Annual Meeting and concurrent policy advisory committees.

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Protection from Frivolous Lawsuits Key to Economic Recovery, Business Groups Urge Congress

Posted on by Trey Jackson

A multi-sector coalition including real estate, tourism, technology, manufacturing, health care, and energy sector groups – led by the U.S. Chamber of Commerce – called upon Congress in a May 27 letter to enact temporary liability protections for businesses struggling to reopen and operate safely during the COVID-19 pandemic. 

  • The letter explains that American businesses face risks of frivolous litigation that will impede the nation’s path to economic recovery.  “Absent a targeted safe harbor for [businesses] that work to follow applicable guidelines, the fear and uncertainty from boundless liability threatens to impede our country’s social and economic recovery,” the groups explain.
  • The Chamber-led coalition emphasized that “recourse for those harmed by truly bad actors who engage in egregious misconduct” must be preserved.  Reasonable and temporary liability protections should also be offered for:

(1) businesses, nonprofit organizations, and educational institutions that work to follow applicable public health guidelines against COVID-19 exposure claims;

(2) healthcare workers and facilities providing critical COVID-19-related care and services;

(3) manufacturers, donors, distributors, and users of vaccines, therapeutics, medical devices, as well as PPE and other supplies (such as hand sanitizer and cleaning supplies) that are critical to the COVID-19 response; and

(4) public companies targeted by unfair and opportunistic COVID-19-related securities lawsuit

  • Among the more than 200 signatories to the letter are The Real Estate Roundtable, American Hotel & Lodging Association, International Council of Shopping Centers, National Apartment Association, National Association of REALTORS®, and the National Multifamily Housing Council.
  • Additionally, Building Owners and Managers Association (BOMA) International wrote to congressional leaders on May 27, urging them to consider business protections developed in response to prior emergencies like 9/11 as a guide for responding to Covid-19-related liability issues. (BOMA letter on business liability)  
  • “A tailored, specific legal safe harbor program for those in the commercial real estate sector, who are following public health rules, directives, and guidelines, making plans, and implementing protective measures, will support ongoing recovery efforts,” BOMA’s letter explains.
  • Senate Majority Leader Mitch McConnell (R-KY) and House Minority Leader Kevin McCarthy (R-CA) said in a joint statement early this month that any future Covid-19 relief legislation must include liability protections for employers and businesses. (See Roundtable Weekly, May 1) 
  • Senator John Cornyn (R-TX) emphasized the GOP’s position on May 18, stating on the Senate floor that “Leader McConnell and I … are working on a proposal that would put common sense reforms in place and protect those acting in good faith from being sued into oblivion.”  (Cornyn statement).  Potential employer immunity and anticipated litigation related to Covid-19 were the focus of a May 12 Senate Judiciary Committee hearing.  (Roundtable Weekly, May 15).

Several states have implemented or are considering pandemic-related liability protections that could provide a direction for federal legislation.  Utah, for example, provides law suit immunity to businesses except in cases of reckless or intentional misconduct.  (Salt Lake Tribune, May 4)

Roundtable Members Continue to Drive the “Re-Entry Discussion”

Roundtable Immediate Past Chair Bill Rudin (Co-Chairman & CEO, Rudin Management Company, Inc.) today joined CNBC for a conversation about the path forward for re-populating office spaces in New York and cities nationwide.

Business liability and building re-entry are crucial issues affecting commercial real estate operations in the Covid-19 era.  They will be discussed during The Roundtable’s virtual Annual Meeting on June 11-12, which will include remote events for both business and policy advisory committee meetings.

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CDC Summarizes “Re-Opening America” Initiatives; EPA Provides Building Water Quality Checklist; Roundtable Board Member Interviewed on Office Return

Posted on by Trey Jackson

CNBC Squawkbox interview with Owen Thomas

The Centers for Disease Control and Prevention (CDC) this week released a comprehensive summary of its initiatives and tools to enable fuller reopening of communities and businesses, as all 50 states are taking steps to return to a “new normal” after months of COVID-19 shutdowns and stay-at-home orders.  (CDC’s “Activities and Initiatives Supporting the Covid-19 Response” and NYTimes national map, May 21)

Meanwhile, the U.S. Environmental Protection Agency (EPA) recently issued an information resource and checklist to address water quality in buildings as they ramp-up operations.  EPA recommends that owners and managers take proactive steps to minimize water stagnation in plumbing systems during temporary shutdowns or reduced operations, prior to building re-population.  See:

Additionally, Roundtable Board Member Owen Thomas (CEO, Boston Properties) was interviewed yesterday on CNBC’s Squawkbox  (photo above) about the pandemic’s impact as employees return to office environments and how cities may compare to suburbs as major work hubs of the future. (CNBC interview, May 21) 

  • “We have a pandemic underway; there will be a gradual return to the office.  But I do think companies will be actively using their offices in the long-term,” Thomas said.
  • “I also hear from customers that remote work is not an acceptable replacement for the in-person interactions that happen in the office space. The ability to mentor younger employees. The spontaneous collaboration and creativity that occurs and also the culture that companies develop – it’s very difficult to do it when we’re all on Zoom and Webex.” (Thomas CNBC interview, May 21)
  • Roundtable members who have recently been interviewed about workplace return strategies and technologies include Immediate Past Chair Bill Rudin, Roundtable Member Scott Rechler and others. (Roundtable Weekly, May 15)

Two industry reports issued this month also address return-to-work guidelines and COVID-19 operational contingency plans:

  • A CBRE analysis of 203 companies’ operations across the globe – “ReEntering the World’s Workplaces” – shows many companies have implemented return-to-work guidelines stricter than local government requirements  (CBRE news release, May 15)  / (GlobeSt, May 18)
  • A Deloitte survey of 100 senior financial service institutions’ (FSI) executives with responsibility for crisis management and business continuity planning reveals that at least half of the respondents are developing COVID-19 operational contingency plans spanning at least the next three months. Part of the complexity around re-opening has to do with the scale and scope of FSI real estate. (Deloitte, May 15)

The Roundtable’s Building Re-Entry Working Group continues to meet weekly to address issues associated with the restarting of the economy. 

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