Cove Quick Hit: Collections

As enhanced unemployment benefits have now expired, we’ll continue to closely monitor delinquency trends across our portfolio. There are a lot of dramatic headlines out there, and not just from attention-seeking press outlets. For example, the most recent Household Pulse Survey from the US Census Bureau showed that just over 1/3 (34%) of respondents nationally had little or no confidence in their ability to pay their rent next month.

Critically, however, the problem is that national and even statewide data can be irrelevant to our specific properties. And surveys reflect views that often conflict with actions. We prefer to focus on data and facts, and only those that affect us most directly.

While clearly not our base case, our original, conservative underwriting framework does incorporate recession scenarios. This means that we operate with a wide margin of safety, which allows us to calmly work through tough stretches, with our principal protected, and without panicking.

Don’t get us wrong. We know we’re not immune. We expect this broad-based recession and its historic levels of unemployment to affect us. We just don’t know how bad it will be.

As we monitor rent payment trends across our portfolio, we thought we’d share the information with you. For context, we’ll also include a link to the latest Rent Payment Tracker from the National Multifamily Housing Council (NMHC). What stands out here is the actual stability of rent payment trends, at least thus far.

Our partners at Disrupt Equity have been monitoring this data on a daily basis and comparing it to prior months in a useful format. Here, we can see that August has broadly been trending ahead of recent months. You’ll also note that mid-month is an arbitrary point in time. By staying on top of the data, property managers are able to engage with residents to discuss payment options or to help them seek rental assistance from local charities. Late payments normally continue to arrive throughout the month.

Now to the broader Cove Investments Portfolio. For our properties, the average % of August rent due collected as of 8/15 follows below:

We’d like to thank our partners for their willingness to share this data. We’ll post our monthly trends in collections as of mid-month going forward. If you have any questions or would like to discuss this data in more detail, please contact us.