Help Me With Sign Hawaii Banking Rental Application

Help me with industry sign banking hawaii rental application

[Music] welcome to hawaii business now on the jpeg podcast i'm your host jean-paul gideon and today we have a very special panel of guests who are going to be speaking on a nationwide survey that started in hawaii about commercial rents ryan can you tell us more about this survey the hawaii commercial rent survey is designed to better understand the economic impact from government imposed restrictions we know there's going to be a downward spiral if something happens to our small businesses we're finding that commercial rent relief addresses the most pressing need facing our local economy which is to keep businesses in place so people have jobs to return to with this third survey what do you expect the results are going to be well we expect the situation to get progressively worse for businesses that are severely affected by qubit 19. turning the lights off and on for businesses may seem simple but unfortunately businesses don't operate in a vacuum they're interdependent they have employees suppliers service providers marketers like jpg specialists utilities and it takes time and resources to switch these off and back on on top of that there's commercial rent so businesses are facing dire straits and those disproportionately impacted represent about 40 percent of the entire market that's a huge number for the third survey we expect unpaid background as well as unpayable future rent to go up without commercial rent relief we see these numbers only getting worse i've seen that a guy picked up on the national news had some coverage in forbes so it's really catching traction and now you're doing a national and why why are you doing the national survey in addition to the hawaii survey if our two surveys here in hawaii are any indication that of what we can expect nationally then we know that there's actually a need for commercial rent relief across the country and we need to help support this major part of the economy while federal efforts like ppp has helped strengthen the cash balances of these small businesses that was only expected to last two and a half months it's already been nine and experts say we're only halfway through we can use national survey data to isolate the need to a specific population and determine which businesses have priority additional federal intervention is needed to help support the commercial land attendant situation so landlords are able to give tenants a break it's a win-win situation landlords don't have vacancies so they can cover their own expenses like property taxes businesses stay open and they keep people employed and tax revenue returns to government so this props up the budgets of you know of governments and it maintains their government salaries we need commercial rent relief to gas up our economy and keep that money circulating throughout it's a vital and important way to save small businesses to again keep our neighbors and friends employed you know you guys see the struggle firsthand so tell us more about it you know we see it every day there's another store closing at least once a week but you know unlike when you open up a store or restaurant you know there's no media release they kind of close quietly unless they're a national brand or somebody that's been around for a long time prior to the pandemic there were over 21 000 retail establishments in hawaii actually 21.6 retail thousand retail establishments in hawaii and that equated to about 27 percent of the jobs in hawaii you hero came out with a survey and said that like 40 percent or they're expecting about 40 percent of the businesses to close so for retail that means there's going to be about 8 640 stores closing lease rent is one of the largest monthly expenses that anybody has you know we have to pay our lease rent you still have to pay utilities you have to pay your taxes you have insurance and all of that and just because we were been closed for so long the bills still keep piling up and that's something that everybody has and everybody kind of needs help on right now when you walk through waikiki or koolina or any of these other resort areas you see how many stores have been boarded up already the signs are gone they're closed they're not coming back and that's really sad not only for economy as well restaurants in general operate on a very slim margin and so uh employment costs are are the highest you know costs that we have and oftentimes restaurants depending on the time of the year and sometimes for some restaurants all year long they're paying you know last month's bills with this month's income the impact on the you know on the employees and our ability to take care of our employees and cover employees i think it was one of the biggest wake-up calls for me about you know how important what we do for the community in terms of providing employment and and benefits to to a great number of the population restaurant industry employs about 90 000 um you know uh people here in the state and that's uh that's a lot when you're your sales drops by you know 50 60 70 percent your rent is a fixed cost and typically in the restaurant industry i'm not sure about retail but runs around 10 could be anywhere between 8 12 is the norm when your sales drops by 50 your 10 rent then becomes you know uh 20 24 and more and all sudden you're operating in the you know in the red and you know for a month or two we can we can get by three or four a little bit but once you get to four five or six months it's impossible to um to sustain that and be able to to make rent payments a lot of restaurants are nearing their cliff where they'll be back on their own you know ability to pay and without additional uh assistance from the feds i think you know you're going to see more closures the restaurant association is doing its best to keep track of closures i know tina mentioned some of the numbers in her industry right now we're uh at a about 50 just for oahu alone 50 permanent restaurant closures without additional help additional relief we're going to see more closures and i don't know how those landlords are going to be able to deal with those closures because once a restaurant closes um in this market it's going to be a good long while before it reopens and that's where i think the landlords really need to think about their long-term best interest we're not seeing a lot of bankruptcies and a lot of the reasons is they're just closing their doors and walking away they're walking away from their lease commitments they're walking away from their business at hand just shutting it and leaving the landlord unfortunately is still left to keep their centers operational they still have to pay the real property tax they still have to pay insurance they still have to keep the lights on um so there's some ongoing costs that they're facing and with the tenants not being open not being there in business anymore it creates a real conundrum for them trying to get this landlord tenant relief opportunity is it enables the tenant and the landlord to get back together and have a conversation to look at how can we restructure the the lease rents right not everyone has deep pockets i mean we're seeing landlords sell off their i mean sell off i should say raid their child's college funds raid their retirement uh and so forth in order to pay their bills in working with a lot of these businesses is how can we really how can you help them survive it's more so how can we defer um you know principal payments and have an interest only can we make a principle and interest referral for a period of time how will that get them over the hump and how can we work with them and potentially their landlord if that comes into place to put the two parties together a small businessman i tried to pivot and do whatever i could to muster up any business in the beginning but for the first six months the bottom just fell out because there were no promotions in the restaurants we couldn't do any saplings in the stores there's no sporting events there were no concerts for us to sponsor no golf tournament so literally every way that we tried to to market there there was no marketing being done or we weren't asked to be uh you know to go out there and to promote our brands but you know looking back i i need to thank ryan because uh we first when he first started this we collaborated and talked and and he said one of the things that we needed to do was to uh start the conversations you know with our with our landlords and i did and in the beginning they they kind of held fast and they said no we're not we're not doing any relief no abatements no no uh nothing for the first three months and finally they said okay we'll prorate it you know we'll you won't have to pay for three months but then you have to start making it up well you know three months later we're still not the income is isn't there but the rent got increased but through perseverance and uh the awareness that ryan created i believe that the landlords kind of understand and we saw it so my uh one of my landlords did come into my office and on my board next to my desk are all the promotions that we had planned to do from march through the end of the year and he looked at it and he said justin is are all of these done that didn't happen i said yes he goes okay i understand you know i understand where you're coming from and how how bad you've been hurt you know over the past several months so he said hey take a picture of that we're going to put some stuff together and i'll i'll plead your case to the powers that he and then finally after eight months my landlord did is considering and gonna give us a chance to uh uh you know to take give us some rent relief how important and dire is the need for commercial rent relief because it stems at the top you know it is dire because that is the number one reason a lot of stores are closing that's what all this red they're in the red because of it a lot of retail owners especially the smaller ones you know they're rating their kids college funds wedding funds savings um because they can't pay their um their lease rent you know there is a dire need for help we see it every day where um you know more and more stores are trying to figure out how are we going to stay open you know yes it is the holiday season yes we've had to pivot too on how we're doing things where you know um you can buy online you can pick it up at the store curbside you know we're seeing a lot more online sales people are not going to the malls like they did in the past you know so it's like how do you keep getting that foot traffic to come in we also knew that black friday was going to be very different because you had the 50 occupancy so their sales are a lot longer now you know it's all throughout november and december you're seeing these black friday sales but is that going to be enough to keep these people afloat and we don't know yet you know we're hoping but there's so many who need help especially with their lease rent it's mission critical that we continue to get help uh and through a variety of ways i think if you know the if the city and county um and the state are able to to help with real property taxes or issues like that uh then that takes pressure off the landlords if that can pass through to to the tenants um then that would help us as well so there's a i think a variety of avenues that that we can help solve this problem but we're gonna need all the help that we can get because without it more and more restaurants you know will be closing their doors wow um yes it's very dire people are struggling people are struggling to pay their notes to keep their just to keep the debt service coverage ratios in compliance with the the loan notes that they they've made and so the bank is in a precarious situation where they can do so much but then the fdic is overseeing and regulating the financial institutions and saying you can't do so much you know they put rules on you of how much you can do and if you're doing too much they're saying shouldn't this loan be written down or shouldn't something else happen that could be not necessarily ideal for the borrower so it's a it's a tough situation from that perspective but i must say that all the banks in the island stepped up to help their their customers and really looked at the forbearance plan looked at how can i what can we do what tools do we have at hand that we can use to help them when you get both the tenant and the landlord together many times what we've been doing is trying to get the two parties in a room together to start talking so we'll might offer advice to the landlord saying you know it'd be great if this goes dark on you if this landlord if this tenant goes out of business is that good for you can you find a replacement very easily and nine times out of ten it's difficult again location location is key but there aren't tons of businesses out there looking to expand and scoop up spaces that's just not the time for expansion right now and then with the the tenant it's working through here's some tools you can use when talking to your landlord of how you can restructure it so you will you know because everyone's trying to make it the best for them so how can we balance that out and that's that's the name of the game is everybody has to cooperate and there is a huge need to answer your question a huge need it's like trying to operate your business with one arm tying behind your back and you're going into the ring with a heavyweight fighter it's going to be a challenge in our discussions with our landlords is that not only you know would the landlord not have the income that they would be receiving from from the rent that we pay but then they would be responsible for real property tasks because triple net leases are pretty much the standard and so there's a pretty big exposure for landlords if they lose a tenant not only would they lose income but then they become responsible to pay income and in particular with the family properties that we're looking at that's a real hardship on on a family that's looking at that money for you know uh retirement income or what have you so it's a it's a real challenge you know just just so that your listeners know the first two survey reports can be found on my website at ibmhawaii.com and if i can also comment on your previous question about the need for commercial rent relief by just quickly reviewing the results of our second survey because this really emphasizes why it's so important for your listeners to participate and to complete the third survey to help so we can pronounce this need even further during our second survey the results were sobering over 80 percent expect revenue to decrease this year and next year okay we broke the survey into two time periods during the first six month period from march to september 40 have not paid rent in full and 10 have not paid rent at all only 11 receive rent reductions from their landlord moving to the forecast period from october to december one in four businesses expect to miss full rent from now through the rest of the year only five percent like we talked about were able to restructure their lease and we keep going back to this rent restructuring because this is what will allow businesses and landlords and banks to set new expectations onto where they're through and and to commodity emerge out of the pandemic together with the extreme drop in tourism uh i mean we've all seen the effects but if we could also start back with you tina and your retail merchants of hawaii all of your members how's the drop in tourism affected all of them and this chain reaction that it started you know tourism is so prevalent here in hawaii and we're all so dependent on it it's kind of like the story of that 20 bill you know the tourist comes to hawaii and pays for their room with the twenty dollar bill the hotel pays the front desk worker with the twenty dollar bill the front desk worker takes that twenty dollar bill and buys a plate lunch the plate lunch lady goes and takes that twenty dollar bills and buys vegetables from the local farmer the local farmer takes a 20 bill and gives it to the delivery man and the to deliver to the grocery stores and stuff and that delivery man will go and buy shoes for his son or daughter well when s mething breaks in there you know there's no trickle-down effect with no tourism a lot of stores have closed um because that was their customers you know coming in and it's no sense you open up and you know you're losing money because you know you still have to pay employees to have to pay the electricity the rent and all of that kind of stuff um so we've seen that hurt a lot of businesses how much federal money do we need to make this happen to really get our commercial rent relief a reality we have unpaid commercial rent of 60 million dollars per month so if you think about that it's already been nine months into the pandemic and sources say you know experts are saying that we're only halfway through so the dollar amount that we need to address this problem continues to increase as time passes and if you think about you know 60 million dollars times nine we're halfway through this is easily a billion dollar problem if we sit back and do nothing so to start with we've been trying to say that about 150 million dollars would be appropriate that amount of money would be able to subsidize these businesses that really didn't get the relief from the initial programs or may have gotten some helicopter money but they need a lot more so we're looking at helping 5 000 businesses with this 150 million dollars and that would cover full rent for between two to three months and now you're able to support somewhere between 40 to 80 000 employees and there would be this trickle down effect or this domino effect to improving the economy because this means so much more tax revenue for the state of hawaii as well as the counties and that's going to prop up our government budgets brian with the results that you're getting from this survey which can be found on ibmhaway.com i filled it out i received it from our credit union it was about five minutes to do is 20 questions just click the button and move to the next one where are you going to take these results what are you going gonna do with it and what's the next steps well thank you for taking the survey and completing it you know every every response comes so we plan to take the national survey results straight to congress we do have some political insiders for helping us and they're going to try to help to keep commercial rent relief as a top priority and to be sure to include this in the next round of fiscal stimulus you know there's a chain effect john paul if you're able to help landlords with commercial rent relief as you can see they can pass that benefit on and hopefully more to keep their tenants open who can thereby keep their employees working so do you see the chain effect the economy can can continue to be stimulated and this will exploit the economic recovery absolutely so the next step you're going to take it to congress we saw that the counties were continuing to collect property taxes as they were also requiring businesses to shut down and they were not giving any sort of grace or relief on landowners and so because of that behavior the landowners were expecting full rent from tenants despite a government-imposed lockdown and it started at the end of march but it went on through april got extended through may and you know even into june so you think about how long of a time period that is right we talked about businesses on average had 15 days of of cash reserves to cover operating expenses and they had to wither through three and a half months and then we shut down again in august all the way through september on top of that add the travel quarantine so this has been an ongoing effort and that's why we've also taken so long to get this passed you know we did meet with for example governor ige and he was very positive on our proposal but at the time you know he only had a small amount of money as five to ten million dollars and we we knew that that wouldn't be enough to make a meaningful difference so we said you know for now let's wait until more funding is available let's have this initial amount of money go to those who need it most and you know we're going to continue to analyze the situation and try to be a be a resource for lawmakers that they can take our developed data and make better decisions going forward at the county level for honolulu because the people who you see here and those who aren't here they've worked so hard on this you know we have been in discussions multiple discussions with mayor-elect blangiardi and with his business background he understands the urgency and the need to address commercial rent relief so we have also received strong support from city council and they passed resolution 20-208 urging city administration to establish a commercial landlord attendant grant program we've been presenting to the newly elected city council members for bringing them up to speed so this is an ongoing effort and where people can help is really you know for your listeners to if they want to read more about our findings the first two survey reports can be found like you said on my website at ibm hawaii.com we're going to post the third survey link there as well and hopefully we can post it maybe below the video so any of your listeners can easily find it by scrolling down absolutely that's exactly how we'll do it and we'll link to everyone's association uh your business and if you wanted to put your personal profiles on we'll share the linkedin the youtubes websites i want to tag everybody up to share this as much as possible and that really is the network effect as justin said we're going to echo that we're all in this together and aloha [Music] you