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Large landlords criticized the federal moratorium on evictions in force since September extended monday to June 30. Landowners and the groups that represent them say not being able to fire tenants who are behind on rent is unfair to landowners and will put their finances in jeopardy.
“All homeowners, regardless of size, have been affected by the economic conditions of the past 12 months,” said David Howard, who heads the National Rental Home Council, a Washington, DC-based group that represents owners of family homes. “It’s not sustainable.”
However, a CBS MoneyWatch review of the financial statements and loan records of the nation’s largest landlords suggests that the moratorium on evictions, which kept millions of Americans on their rent from becoming homeless during the pandemic, no. did not do much to reduce the results. In fact, the big landowners have been mostly profitable during the pandemic.
Unexpected benefit of COVID-19
Invitation Homes, the nation’s largest single-family homeowner, for example, said 2020 was the most profitable year in its history.
The company was formed in 2012 by private equity firm Blackstone to take tens of thousands of homes left empty by the foreclosure crisis of the Great Recession and turn them into rental units. Last year, it raised $ 50 million more in rent during the pandemic than from those same homes the year before. This takes into account tenants who have not been able to pay.
Like other homeowners, Invitation Homes has gained unexpected benefit from the pandemic itself. One of the biggest costs for owners is staff turnover. Invitation Homes said fewer of its tenants moved during the pandemic than normal, even putting aside federal and state eviction restrictions. As a result, turnaround costs fell nearly $ 5 million last year. The company also said property administration fees fell by nearly $ 3 million.
In addition, the moratorium does not appear to have completely halted the company’s eviction efforts. A study earlier this month by the Institute for Policy Studies into how large homeowners took advantage of the pandemic found that Invitation Homes had filed at least 550 evictions in Arizona, Florida, Georgia, the United States. ‘Illinois and Texas since the start of the pandemic. Most of them, according to the study, were filed after the federal moratorium on evictions order of September 2020.
“When there is a high concentration of business owners, rents tend to be higher, eviction rates tend to be higher and affordability becomes a real issue,” Omar Ocampo said. , researcher at IPS and one of the authors of the study.
In total, Invitations Homes profits rose 30% during the pandemic, to nearly $ 200 million in 2020, from nearly $ 150 million the year before. The company’s shares rose 64% last year. At $ 32 each, they’re currently less than a dollar from their all-time high, which was set a few weeks before lockdowns in the United States began.
A spokesperson for Invitation Homes said the company has worked with tenants affected by the pandemic and offered payment options that have helped avoid evictions. The spokesperson said the vast majority of his eviction cases are resolved without tenants losing their homes.
“While we have had a successful year from a business results perspective, we also feel very happy with the year we have had to support our residents, especially those who are suffering financially,” the spokesperson said. in a statement to CBS MoneyWatch. “While eviction is always our last resort, we will preserve our legal rights, as the CDC and state orders allow, once we have exhausted all other options.”
Invitation Homes CEO Daniel Tanner has not spoken directly against the moratorium on evictions, and the company has not joined any lawsuits brought by other homeowners against the CDC to overturn the moratorium.
But Tanner told Wall Street analysts the ban made it impossible for the company to predict future profits, and he expects the company’s outlook and results to improve once it does. will once again be able to freely expel people. Invitation Homes is also one of the largest and most prominent members of the National Rental Home Council, which has called for an end to the moratorium on evictions.
“Difficult time for owners”
The trade group released a poll last week that found the majority of its members had been negatively affected by the moratorium on evictions and that 20% would no longer be able to afford their rental accommodation if the ban was extended to- beyond March 31. Almost a third of the organization’s members said they felt pressured to “tighten the standards” on tenant selection in the future because of the moratorium on evictions.
“Whether you think the eviction moratorium is a good policy or not, it has created considerable uncertainty in the rental market,” said David Howard of NRHC. “It has been a difficult time for the owners.”
However, other homeowners appear to have resisted the pandemic, and even some. Rents for Mid-America Apartment Communities rose 2.5% in 2020 on properties they owned before the pandemic. Central America has around 100,000 apartments, making it one of the largest homeowners in the United States
The company achieved nearly $ 1.7 billion in revenue last year. Although it has offered rent deferrals to 8,000 of its tenants since the start of the pandemic, Mid-America’s operating profits have climbed to nearly $ 430 million in 2020, a 60% increase from compared to the previous year, and by far the company’s biggest increase. never reported.
“We are maintaining good momentum through 2021 and continue to believe we are at the start of a multi-year recovery cycle,” Mid-America’s Eric Bolton said in a statement at the time of the results announcement.
Stimulus boost
For apartment developer AvalonBay Communities, rents on properties he owned before the pandemic fell 3.2% last year to just over $ 2 billion. AvalonBay had nearly 80,000 apartments at the end of January, about 200 more units than the previous year.
In February, company executives told Wall Street analysts that only 3% of its apartments were occupied by non-paying tenants. The leaders said they expected the moratorium on evictions to be extended until the summer. They also said they expected AvalonBay to get a good boost from most recent stimulus bill, which includes $ 50 billion in housing assistance.
A February report from real estate data company Trepp found that apartment building owners, unlike other owners, had little difficulty making their mortgage payments. In January, the loan default rate for apartment buildings was only 2.3%. Hotel and shopping center owners had a much harder time meeting their loans, with default rates rising to 19% and 13%, respectively.
Diane Yentel, chair of the National Low-Income Housing Coalition, said the argument that landlords need an end to the moratorium on evictions due to financial hardship “is very difficult to make” for anyone. which owner.
“Some of the larger homeowners had access to other resources or protections, including paycheck protection program loans and forbearance programs,” Yentel said. “With the latest stimulus bill, Congress invested billions in housing assistance, with most of that money going directly to homeowners. So the help is on its way. It is critical that the federal moratorium on evictions be extended, at least until these emergencies. funds are spent. “
Irina Ivanova of CBS Moneywatch contributed reporting.
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