Adventus Realty Trust by its Trustee, Adventus Realty Services Inc. (the “Trust” or the “Company”) announces an update on the impact of the novel coronavirus (COVID-19) pandemic on its business.
Rent Collections
The table below summarizes our Stress Test results, actual rent collections received to date, and revised estimate of rent collections for each respective month:
|
|
August 2020 |
September 2020 |
October 2020 |
|
Rent Collections – Original Stress Test (1) |
85% |
85% |
85% |
|
Rent Collections – Actual to Date (2) |
96% |
98% |
16% |
|
Rent Collections – Revised Estimate (2) |
96% |
98% |
98% |
(1) as communicated in our April 14, 2020 News Release and April 23, 2020 Investor Conference Call
(2) as of September 25, 2020
We are constantly monitoring these collections and are carrying out a comprehensive review of tenant rents to estimate the amount which may not be collected. We have been proactively managing collections to meet or exceed our 85% stress testing and will continue to update investors of our rent collections as we maintain our enhanced communication during this time.
Adventus received several requests for rent relief over the past few months. All the requests were researched extensively resulting in Adventus entering into rent deferral agreements with several tenants while declining assistance for a number of other tenants where their financial condition did not warrant rental relief. The September and October 2020 Rent Collections - Revised Estimate (98%) section above indicates 2% of rents not collected. The 2% is comprised of approximatively 1% in rent abatement (forgiven rent), and 1% of rents which are deferred and will be repaid over the next 6 to 12 months. Presently, the 1% abated rent is holding constant, but our concerns are with increased deferred rent and deferred rent becoming abated rent as the pandemic lengthens.
While rent collections to date during the COVID-19 pandemic have been encouraging, the immediate future remains uncertain, and management continues with its comprehensive review of tenant rents to evaluate how changes in market conditions could adversely impact the Trust. Notwithstanding that our portfolio has a large percentage of Fortune 500 companies, we do anticipate some of our tenants will have financial challenges if the timeline for COVID-19 is extended.
US Unemployment Rates During COVID-19
The table below reflects the impact of COVID-19 on US employment on a monthly basis, with February 2020 being used as a base rate before COVID-19, April 2020 as the high point of US monthly unemployment rates to date, and August 2020 reflecting a significant downward movement as US businesses re-open. We will continue to monitor these monthly US unemployment rates and will provide additional communication as significant changes occur.
US job growth has been driven by re-hiring in sectors that had been hit hard by the pandemic such as: leisure and hospitality; restaurants, bars and other food and drink services; retail; and, gambling and recreation. The job improvements correlate with surveys showing consumer confidence, manufacturing and services industries stabilizing. Businesses have been reopening after shuttering in mid-March to slow the spread of COVID-19.
|
|
February 2020 |
April 2020 |
August 2020 |
|
Unemployment rate - UNITED STATES |
3.5% |
14.7% |
8.4% |
|
Unemployment rate - ILLINOIS (mainly Chicago) |
3.5% |
17.2% |
11.0% |
|
Unemployment rate - GEORGIA (mainly Atlanta) |
3.1% |
12.6% |
5.6% |
Source: United States Department of Labor
About Adventus
Adventus is a Canadian based private Real Estate Investment Trust (REIT) and is focused on US income producing commercial real estate, in the suburban office markets of Chicago, Illinois and Atlanta, Georgia. For more information on Adventus, including our team, corporate strategy, photo gallery, details of our portfolio and press releases, we invite you to visit our website at www.adventusrealty.com.
Cautionary Statements Regarding Forward-Looking Statements
This press release may contain forward-looking statements with respect to the REIT and its operations, strategy, financial performance and financial condition, as well as with respect to the previously disclosed acquisitions and future acquisitions of properties. These statements generally can be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “plan”, “forecast”, “expect”, “intend”, “would”, “could”, “if”, “may” and similar expressions. The actual results and performance of the REIT and the acquisitions discussed herein could differ materially from those expressed or implied by such statements. Accordingly, readers should not place undue reliance on forward-looking statements. These cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, changes in interest rates, competition and changes in securities or other laws or regulations or the application thereof. The cautionary statements qualify all forward-looking statements attributable to the REIT and persons acting on its behalf.
Unless otherwise stated, all forward-looking statements speak only as of the date of this press release. Except as required by applicable law, the REIT specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
ADVENTUS REALTY TRUST
By its Trustee: ADVENTUS REALTY SERVICES INC.
Per: Rodney B. Johnston, FCPA, FCA
President and Chief Executive Officer
