![](https://images.globest.com/contrib/content/uploads/sites/296/2020/03/Freedom-Tower-e1584100856407.jpg)
NEW YORK CITY- KAR Properties is monitoring all data in regards to the unraveling of some of the sectors of the economy and the reaction to the coronavirus pandemic, also known as COVID-19, and its tenants in the ability to meet rental payment guidelines, so in turn, the firm can service its mortgages, Shahab Karmely, principal of KAR Properties, tells GlobeSt.com.
“We’re trying to be judicial in keeping as many of our staff members as possible. We’re working with our tenants, suppliers and banks to find a middle ground that allows us to navigate this situation without too much damage over the next 30-60-90 days as these events continue to unfold,” Karmely said.
KAR Properties’ New York tenants are challenged because of the stay-at-home order Governor Andrew Cuomo issued, barring them from operating their businesses. This has hinged on the cash flow necessary to make rent payments. Now, KAR Properties’ ability to service its mortgages has become threatened because of delinquent rent payments, according to Karmely. “We’re working on a case by case basis with our tenants and each case is different,” he said. “Some people are really in need of relief and some use this as an excuse for relief. As far as our suppliers, we are honoring all our payments and keeping that chain alive. We are also paying for services we’re using.”
Karmely noted there are parts of the real estate industry that have been impacted more than others, such as travel, tourism and entertainment, which have been hit the hardest and will take the longest to recover. His thesis is if a portfolio has exposure to retail around dining and entertainment establishments, it will be on the long haul to recovery. Many hotels are expected to fail, but those who remain will become stronger and capture a bigger share of the market.
“Real estate portfolios containing better quality office assets have resources to get through this by working with their tenants and their lenders. If we bring the economy back, we’ll see recovery and the majority of those assets will survive,” he added. “When it comes to multifamily, people need a place to live and there’s a lot of relief going there. Banks and lenders will have to work but it will bounce back, with lower returns, it will find its place in the market again.”