The extension of many local and state emergency orders preventing office tenants from reoccupying their premises, and retail tenants from reopening their businesses—through mid-May, at the earliest—requires careful attention by asset managers and financial officers at real estate portfolio companies.

Specifically, assessing which tenants have the financial strength to restart business operations and reach pre COVID-19 revenues, to enable catching up on deferred rent and staying current on rent obligations, as they become due.

Some tenants are growing concerned that the last two months may result in the termination of their business. For landlords, this requires making the difficult decision of cutting losses now—and avoiding being dragged into litigation and a bankruptcy—or banking on the long-term success of the tenant. Landlords are encouraged to do some serious stress testing of their rent rolls and focus on how to address the rent deferrals—forced or voluntary—that have been extended to tenants.

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