Happy Friday. Today let’s stay home and watch a movie.
Adopting. After I write this newsletter I’m going to adopt a puppy. Seriously my kids are going to freak out. I’m open to names if you have any. I’m going to enjoy watching them clean up after the puppy during the Easter break.
Coronavirus Update:Total confirmed cases as of 5 a.m. ET: 1,017,693 — Total deaths: 53,179 — Total recoveries: 212,072
The CARES small business loans are set to open for applications today, but the banks that back them say that they are not ready.
This is part of the coronavirus stimulus package where small businesses can apply for two months of payroll assistance plus 2.5% extra for utilities. The loan applications are to start on Friday, but banks like JPMorgan say that they do not have the guidance to start lending. They are still awaiting guidance from the Small Business Administration on how to administer loans.
Banks only began receiving information from the government on Wednesday with a sample application on the Treasury’s website. On Thursday, banks received a 31-page “Interim Final Rule.” They now need time to roll these out to lenders actually to get money to borrowers. Banks estimate that this could mean a messy process for weeks.
Real Estate Investors
If you are an investor, what does this mean for you? Well, you must have a small business to apply and estimate a year of payroll costs based on your history. Yet another reason why investors should always invest in an entity and not a sole proprietor! Some investors will use this to keep their businesses running during the uncertainty of tenants and rents. Assuming they can secure the loans once they are up and running, of course.
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The Tropicana Hotel in Las Vegas will always hold its place in the city’s history of a time gone by where Frank Sinatra and his Rat Pack would get up to no good. But then came the larger-than-life hotels to dwarf the Tropicana.
The hotel was sold this week for $337.5 million in rent credits to Gaming & Leisure Properties. The seller, Penn National Gaming Inc., will continue to run the property. The rent credits equate to about three months of rent at $68 million per month.
Penn National paid employees their full salary through the end of March but have since put them on furlough.
Neighboring hotels and casinos have no reason to be smug about this deal, though. The Las Vegas strip has been closed for weeks due to the pandemic, no doubt costing billions in lost revenue. Whether the Tropicana is a harbinger of things to come for its modern counterparts remains to be seen. Luck be a lady, folks.
Manhattan real estate is proving not to be immune to the coronavirus pandemic. The number of new listings last week was down a whopping 85% compared to this time last year, according to UrbanDigs.
No one can estimate the extent of this fallout, but some say that prices could drop by 30% in the country’s most expensive market. Many sellers threw their hands up and pulled their listings off the market to wait for a more hospitable selling time.
In recent years, Manhattan has had new condo towers pop up like spring flowers. These are luxury buildings with pools, gyms, and door attendants. Many of these were counting on the spring moving season to sell off units and pay down debt, but that doesn’t seem to be a likelihood, so builders will suffer too.
Optimists are hoping for recovery to come by the summer. Pessimists say fall. Realists don’t make predictions like that.