Dallas real estate investor tallies rent deferral

Spirit Realty Capital’s holdings include restaurant, retail and entertainment buildings.

A Dallas real estate investor whose top building tenants include restaurant, retail and fitness firms says that it’s in talks with 126 of its tenants who have asked for rent relief due to the pandemic.

Spirit Realty Capital owns more than 1,750 properties in 48 states.

The rent deferral requests the company has received so far represent 42% of its contractual rents, Spirit Realty officials said in a conference call this week.

“In a COVID-19 world, some industries are doing well and some are being hit very hard,” Spirit Realty CEO Jackson Hsieh said in the call with shareholders and analysts. “The most resilient industries in our portfolio include grocers, drugstores, convenience stores, professional services, warehouse stores, logistics and distribution, office supply, pet supply, dollar stores and home improvement.

“The most challenged industries in our portfolio are movie theaters, gyms entertainment and causal dining.”

Hsieh said nine of the company’s top 10 tenants paid their April rent.

Spirit Realty’s largest tenant pool includes buildings leased to Church’s Chicken, Walgreens, Home Depot, Circle K, Dollar Tree, Life Time Fitness and Party City.

“Sixty percent of April rent has been collected so far, and we expect it to increase to a range of 65% to 70% by the end of the month,” Hsieh said. “We have already executed two rent deferral agreements out of 23 that have been approved by our investment committee.”

Hsieh said those deferrals represent $3.75 million in monthly rent.

The largest share of rent relief petitions have come from movie theater and restaurant tenants.

The company says that about 24% of the rent relief requests it has received have been approved. The forbearance generally ranges from 30 to 90 days with the deferred rents to be paid back within 12 months.

“We are evaluating each tenant deferral situation on an individual basis,” Hsieh said. “By no means does a request for rent deferral result in an agreement.

“While we will absolutely work with and support tenants in order to get them back on track, we will also enforce our contractual rights under our leases,” he said. “Many of you have heard of tenants who certainly can pay rent but chose not to.”

Hsieh said the company has shifted its property acquisition team to asset management.

“We’ve devoted over half of our employees to the asset management function on the front lines working daily with our tenants,” he said.

Spirit Realty recently arranged $300 million in additional debt and his increased its liquidity to more than $830 million.

“Our strong liquidity position gives us the ability to repay debt that matures in 2021 assist our tenants in working through these challenging times and notably to be opportunistic when attractive acquisitions present themselves,” Hsieh said.

He said he’s dealt with bad times in the real estate business before.

“I saw first-hand in 2008 and 2001 and 1998 and 1987 how quickly things can turn.”

Written by Steve Brown from Dallas Morning News. Original article: https://www.dallasnews.com/business/real-estate/2020/04/14/dallas-real-estate-investor-tallies-rent-deferrals/