The CARES Act | Key Takeaways

The CARES Act, which was signed into law on March 27, 2020, provides much needed stimulus to individuals, businesses, and hospitals in response to the economic distress caused by the COVID-19 pandemic. Additional guidance is expected from the Small Business Administration within the week.

For a more comprehensive examination of the CARES Act highlights, please review ThompsonKnight’s summary. Also see the U.S. Chamber of Commerce’s “Coronavirus Emergency Loans Small Business Guide and Checklist.”

Some of the key provisions likely to impact many of the companies we do business with include:

Paycheck Protection Program (PPP)
$350 billion aimed at providing eight weeks of cash flow assistance for small businesses. To qualify, a business must employ no more than 500 employees or meet industry size standards defined by the Small Business Administration (SBA), have been operational on Feb. 15, 2020, and have been paying employees at the time.

Loan Forgiveness Under PPP
CARES allows certain amounts of a PPP loan to be forgiven so long as it is an amount of principal that a lender reasonably expects a borrower to expend during an 8-week period (beginning on the date of the origination of the loan) on the sum of any payroll costs; payments of interest only on any covered mortgage obligation; payments on any covered rent obligation; and covered utility payments.

Continued Availability of Economic Injury Disaster Loans (EIDLs)
EIDLs continue to be available to eligible recipients. Generally speaking, with respect to EIDLs, recipients can apply directly with the Small Business Administration; recipients must be located in a declared disaster area; and recipients must be economically impacted by the subject disaster; among other requirements. See the full list of provisions here.

NAI Partners is not providing legal, tax or accounting advice. You are strongly encouraged to contact your CPA and to seek legal counsel to review your eligibility to participate in any of the above.

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In this time of uncertainty and uncharted territory, NAI Partners is a resource for you as you weigh your real estate needs, obligations and decisions. COVID-19 is impacting business in a way we’ve never seen, and much like the reactions to the outbreak, the legal ramifications will be fluid. Communication has never been more important for landlords and tenants.

We’re getting a lot of questions about lease provisions from our clients and hope some of the following will be helpful to you. Keep in mind that we’re a real estate firm, not a law firm, so this should not be construed as providing legal advice, and you are encouraged you consult with legal counsel on any legal question or issue you have.

We do, however, have decades of commercial real estate experience and can partner with you to ensure you make the right real estate decisions for your business, and can help you connect with the right professional to review your specific circumstances.

Your Lease

You’re sure to hear all kinds of advice and opinions about how leases will, or should be, administered in today’s circumstances. Our most important piece of advice is to review your specific lease with a professional to understand your specific set of circumstances. No lease is the same, and if you have multiple locations, expect each lease to be different.

Insurance

Another regular question we’re getting involves “business interruption insurance.” We recommend reviewing your policy and visiting with your insurance professional about potential coverage for your business as it relates to the COVID-19 measures being taken. Generally, “business interruption insurance” applies to physical damage to the property governed by the lease, and not the circumstances we find ourselves today.

Other Items

Other circumstances may pop up in your business, including the build-out of your premises if you’ve already signed a lease but haven’t opened yet. We can help you connect with the right professional to review your specific circumstances.

Please consider NAI Partners as your partner in real estate as we navigate through these unique times.

Understanding Office, Industrial and Retail Lease Provisions During the COVID-19 Pandemic

We also recommend familiarizing yourself with the following lease provision summaries from Baker Donelson’s “Coronavirus: Impact on Office, Retail and Industrial Leases.”

Force Majeure:

Force majeure provisions in commercial leases call for the postponement of certain landlord and tenant duties due to an unforeseeable circumstance. In the case of COVID-19, this would most likely apply to the obligation of a tenant to continuously operate its business from its premises.

Tenants and landlords should review the force majeure provisions of their leases to determine whether events related to the COVID-19 pandemic are covered.

Operating Hours, Cessation of Business, Abandonment or Vacation of a Leased Space: 

Commercial leases often require tenants to operate for minimum business hours and may also include a tenant obligation to continuously operate.

Lease parties should review their leases to understand what amount of detail is devoted to operating requirements, while landlords and tenants should engage one another to understand any modifications of lease requirements regarding operations.

Common Areas: 

To aid in social distancing many landlords are closing or imposing restrictions on the use of common breakrooms, workout facilities and other building amenities.

Landlords pondering common area changes should carefully review leases to understand obligations, and also communicate so that tenants may make appropriate plans.

Alterations: 

Tenants are considering whether and how best to de-densify work space to mitigate the risk of social spread of COVID-19, which may require physical changes in some instances.

Landlords should reasonably consider emergency alterations, while tenants should approach alteration requests in good faith with their landlords.

Communicate:

Landlords and tenants should be proactively communicating with each other and coordinating efforts to mitigate against potential impact from the COVID-19 pandemic.

If a landlord or tenant is in doubt over what it may not do (or be able to do), communicate.

*This publication does not constitute legal advice.  You are encouraged to consult with legal counsel on any legal question or issue you have.

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NAI Partners has been named a 2019 CoStar Top Sales Firm. This is the 25th time NAI Partners has been named a CoStar Power Broker in the last 17 years, with 16 of those designations coming as a Top Leasing Firm, and 9 as a Top Sales Firm.

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Michael Keegan is a Partner at NAI Partners. He specializes in the industrial sector of the commercial real estate market. Michael’s services include tenant and buyer representation, project marketing, property dispositions, build-to-suit and design build evaluations, sale-leasebacks, investment transactions, and development evaluations.

This is the second year in a row year Michael has finished among our Top 10 producers.

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See our full-page ad in today’s Houston Business Journal.

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The rankings are based off of total square footage leased and sold, and Partners ranks ahead of competitors like Transwestern, Newmark, Cushman & Wakefield, and REOC, among others.

Congratulations to our San Antonio office on this recognition!

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Partners has recently added three new professionals to its ranks in Houston:

• Tyler Casey, an Associate working on Gary Brown’s Valuation & Advisory Services group;
• Zachary Green, an Associate joining JLS’s Partners Investment Sales group; and,
• Sean Sonnier, our new Graphic Designer.

Tyler joins the comany from Novogradac & Company LLP, where his responsibilities included completing market studies, appraisals, and rent comparability studies of multifamily rental properties across the nation. He is a graduate of Texas State University with a Bachelor of Business Administration degree and a focus in Finance. In his spare time, he enjoys spending time with his wife and son, reading about investing and digital assets, and playing golf.

Zachary joins Partners from a private property investment group, where he managed multiple residential properties in The Woodlands. He is a native of the Houston area and a graduate of The University of Houston.

Sean has more than five years of agency design experience and eight years of professional design experience, and has already hit the ground running helping to expand the creativity and capabilities of the company’s marketing group.

Please join us in welcoming these talented folks to Partners!

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We’re Partners San Antonio, and we’d like to set a few things straight: first of all, we’re a newer and different firm than the company that used to be affiliated with NAI in San Antonio a decade ago. Partners San Antonio officially opened for business in 2015, and we have been hard at work developing deep relationships with our clients and the local community ever since.

Secondly, Partners is a full-service commercial real estate firm, and our unique, independent, industry-leading brokerage platform not only serves San Antonio, but enables our sales professionals to seamlessly collaborate with their colleagues in Houston and Austin as well.

Partners San Antonio can meet your needs—whether it be an office, industrial, retail or land requirement, on either the tenant/ landlord or buyer/seller side—throughout Texas. And when those requirements surge past the cozy confines of the Lone Star State, we can leverage the power of the NAI Global network to arrange transactions for you in any location throughout the world.

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