Having accurate valuations of commercial real estate assets has become more difficult due to tenants who are not able to pay rent. In a recent interview with GlobeSt.com, Ross Prindle, Managing Director and Global Head of the Real Estate Advisory Group at Duff & Phelps, commented “When the shutdown orders started in March, pretty much all of the prior data points became obsolete, especially for retail, hotel, senior housing and other affected real estate. So the only data point that evaluation professionals have is the public markets.”
There are many difficult questions around how to quantify the impact of COVID-19 on private real estate and make cash projections. “For example, all of the regional malls are closed,” Ross said. “There are a lot of stores that are closed in shopping centers because they are not essential businesses.” These closures are forcing significant renegotiations between landlords and tenants. “Most of the landlords are negotiating with retailers,” Ross added.
