COVID-19: Redefining Our Why
At Intersection, we play dual roles as Property Manager and Asset Manager for the portfolio of properties we manage. Our funds own four properties and we have a very important role as stewards for our investors. However, we also have an equally important role as service provider to our third-party clients. Whether an owner or a manager, COVID-19 has challenged us in ways we could not have imagined.
Back in February, when COVID-19 was peaking in China, we realized that we needed to be prepared for the eventuality that it would find its way to the United States. So, we began the process of evaluating and creating an emergency plan should our people need to work from home. Fortunately, we became a paperless company three-years ago, and have been supplying each of our employees with laptop computers since their onboarding. With this, Intersection was already equipped to make the transition from working in office to working remote. Three weeks from that initial discussion with COVID-19 cases multiplying rapidly, we offered our entire work force voluntary work from home status. Another week later, on March 19th, California mandated shelter in place and only essential businesses could remain open. Other than a core team of people, our entire work force was working remotely. Things can happen fast, but usually not this fast!
It is now April 13th, and we are in a different world from where we were in February. I joke that each day feels like a dog year because so much changes in 24 hours. Our team is working almost seamlessly from home, and our owned and managed properties are operating efficiently. The effort we put into our planning, technology, and in the quality of the people in our organization allowed us to adapt this incredible change.
The story does not end there. In the past few weeks the real work has begun as we deal with several tenants whose businesses have been literally shut down. How can you pay the mortgage and operating expenses when your property depends on rent from businesses that have been forced to close? Even though we were getting our jobs done each day, we had to figure out ways to help our clients and investors maintain the value of their investments.
We were equally concerned about our own business. Intersection is a small business and a crisis like this one would certainly impact us as well. As such, we closely monitored stimulus activities instituted by the Federal Government. The $2.3 trillion Coronavirus Aid, Relief and Economic Security act (CARES) includes $349 billion in forgivable loans for small businesses to support payroll, rent and cover certain utility expenses. This is the Payroll Protection Provision (PPP) of the act that is focused upon supporting small businesses. This program would be a key element of our company’s plan to retain people and address major corporate expenses over the next few months.
However, the process of applying for PPP was not simple. I am so grateful that we have the systems and team to compile the information needed for our lender as we prepared our application. Through our own application for PPP, we realized that less sophisticated tenants could find the application process challenging. We learned that it is also important to have a banking relationship that has the ability to do SBA loans in order to participate. Many of our tenants who have been shut down did not have these banking relationships nor the resources to get the help they needed. Our unique insight as a small business inspired the empathy to help. Furthermore, we knew our experience could make a difference.
Our team mobilized quickly and put together a COVID-19 Tenant Resource Guide which lists all resources available to our small business tenants (Disaster Relief Direct from the SBA in addition to CARES PPP and other local resources). The two-page package is both simple and useful, and our efforts have not ended there. We have dedicated a team to become experts on CARES PPP and have built a proprietary list of banking relationships that are ready to help. Although April has been a tough month, we have actually collected more rent than expected. But with so many of our tenants closed for business, we know that May is going to be our most difficult month. Our CARES team has already put a number of our tenants in touch with SBA lenders and hopefully many of them will get inexpensive, forgivable financing to keep their businesses alive while paying rent, and retaining valuable employees.
It is really difficult to understand what the world will look like when we start to get back to work and social gatherings are allowed again. We can’t control when that will happen, but we can control what we do each day to enhance the lives of those we serve. COVID-19 and the social distancing measures taken to defeat it will never be forgotten. At Intersection, we will remember this point in time when being a small business was a competitive advantage. Our passion for the small businesses that make up our portfolio runs deep and the impact of our values as we support our tenants will be a proud moment in our company’s history. When it is all over and we are in our new normal, our values won’t have changed and the measures we have taken will be remembered. Hopefully, the relationships we care so very much about will be even stronger.