Long term repercussions from Covid-19 what will they be?

[whatnext]

Hopefully Covid will force the two condo property barons out of the market, along with those who bought downtown pads to AirBnB them. It seems that big rental outfits aren't having so much trouble collecting rents, but I bet the same isn't true for amateurs:

TORONTO, May 01, 2020 (GLOBE NEWSWIRE) -- Canadian Apartment Properties Real Estate Investment Trust (“CAPREIT”) (TSX:CAR.UN) today provided an update on current key finance and operating metrics as impacted by the COVID-19 pandemic, and the preventative measures being taken to mitigate risk across our business. This update reflects the estimated impact of the pandemic on our business as of this date, and does not imply that business conditions will not change going forward. This update also refers only to our Canadian business, exclusive of our interests in the Netherlands or Ireland residential rental business...

As of April 30, 2020:

-We have collected approximately 98% of April rents for the combined apartment and MHC portfolios. This is generally in line with the same period for our March, 2020 collections. We will closely monitor the May, 2020 collections.
-Residents approved for our rent deferral program remained well below 0.5% of residents...

https://www.globenewswire.com/news-relea...-Provides-Update-on-COVID-19-Impact.html

[misher]

Originally Posted by whatnext

Hopefully Covid will force the two condo property barons out of the market, along with those who bought downtown pads to AirBnB them. It seems that big rental outfits aren't having so much trouble collecting rents, but I bet the same isn't true for amateurs:

TORONTO, May 01, 2020 (GLOBE NEWSWIRE) -- Canadian Apartment Properties Real Estate Investment Trust (“CAPREIT”) (TSX:CAR.UN) today provided an update on current key finance and operating metrics as impacted by the COVID-19 pandemic, and the preventative measures being taken to mitigate risk across our business. This update reflects the estimated impact of the pandemic on our business as of this date, and does not imply that business conditions will not change going forward. This update also refers only to our Canadian business, exclusive of our interests in the Netherlands or Ireland residential rental business...

As of April 30, 2020:

-We have collected approximately 98% of April rents for the combined apartment and MHC portfolios. This is generally in line with the same period for our March, 2020 collections. We will closely monitor the May, 2020 collections.
-Residents approved for our rent deferral program remained well below 0.5% of residents...

https://www.globenewswire.com/news-relea...-Provides-Update-on-COVID-19-Impact.html

Are you insulting our unions who likely own large chunks of this REIT? Do you hate teachers and healthcare workers?

Seriously though being mad at a stock is stupid. REITs are great because they get rental housing built and are usually decent landlords.

[CityTech]

Originally Posted by kwoldtimer

Open Text said that 95% of their staff had been working with home, with no impact on productivity.

I wouldn't be surprised if for many office workers, especially those in "newer" industries like tech/software, productivity is actually higher when working from home. A lot of office companies have been shifting to "open office" layouts, supposedly to enable collaboration (but IMO, really just to cut down on costs), but they have a consequence of making offices louder and more distracting.

I'm an onsite consultant for a professional service company; I work out of my employer's Ottawa office on paper but I spent most of my workdays at client sites. The client I've been at most often in 2019 and 2020 has one of the worst open office implementations I've ever seen: the office is extremely overcrowded, to the point where there's regularly 10-15 minute lineups to use the coffee machine or microwave in the kitchen and they've had to get overflow parking because the office parking lot goes over capacity as early as 8am, and there's people taking calls all day just a few feet away from coders who can barely concentrate over the sound of those calls. Since that office closed 6 weeks ago, the pace of work on the project has increased significantly and we're now ahead of schedule.

Already there's rumblings of making working from home permanent in some capacity.

Given that a huge chunk of Ottawa's workforce are white collar office workers (probably the highest percentage of any CMA in the country), we might soon have the highest rate of teleworking in the country. Could make a huge difference on traffic congestion and transit ridership.

Although the federal government has just (in the last week or two) announced two major projects to expand office capacity (one is a pretty sweet inner suburban TOD project, actually) so perhaps they're not planning on it.

[CityTech]

Originally Posted by misher

Are you insulting our unions who likely own large chunks of this REIT? Do you hate teachers and healthcare workers?

Seriously though being mad at a stock is stupid. REITs are great because they get rental housing built and are usually decent landlords.

REITs also have a mandate to maximize cash flow, so they're very good at both redeveloping their units as markets change and at keeping their places rented. Here in Ottawa, you see quite a few examples of overpriced storefronts remaining vacant because the landlord would rather let the place sit empty for a few months than lower the rent. But I've noticed that places owned by REITs never do that; they'll lower the price much more quickly.

[whatnext]

Originally Posted by CityTech

REITs also have a mandate to maximize cash flow, so they're very good at both redeveloping their units as markets change and at keeping their places rented. Here in Ottawa, you see quite a few examples of overpriced storefronts remaining vacant because the landlord would rather let the place sit empty for a few months than lower the rent. But I've noticed that places owned by REITs never do that; they'll lower the price much more quickly.

Yes, I'm not sure where our resident ignoramus got the idea I was insulting REITS, he must have a reading comprehension issue. Rather I was praising them for collecting so much of their rent, now doubt to their professionalism, as opposed to Joe Blow and his one bed condo for rent.

[misher]

Originally Posted by whatnext

Yes, I'm not sure where our resident ignoramus got the idea I was insulting REITS, he must have a reading comprehension issue. Rather I was praising them for collecting so much of their rent, now doubt to their professionalism, as opposed to Joe Blow and his one bed condo for rent.

Dope my mistake.

Though I would say we should support all legal homeowners. They all pay a share of their rent in income taxes annually. If you pay tax your basically paying into insurance.

[whatnext]

Commercial landlords are going to be in for a world of hurt after all this. Even the companies who have continued paying rent are looking for deals and if they don't get them will just walk away and choose another empty storefront:

Starbucks Corp. is seeking rent relief.

The Seattle-based coffee chain said Tuesday that it’s in talks with landlords for potential lease concessions and expects to pay reduced rents after the coronavirus pandemic passes. Still, the company is current on its rent bills, according to Chief Financial Officer Patrick Grismer, even as many of its stores remain closed...

https://www.bloomberg.com/news/articles/...s-rent-even-after-pandemic?sref=x4rjnz06

[kwoldtimer]

Originally Posted by whatnext

Commercial landlords are going to be in for a world of hurt after all this. Even the companies who have continued paying rent are looking for deals and if they don't get them will just walk away and choose another empty storefront:

Starbucks Corp. is seeking rent relief.

The Seattle-based coffee chain said Tuesday that it’s in talks with landlords for potential lease concessions and expects to pay reduced rents after the coronavirus pandemic passes. Still, the company is current on its rent bills, according to Chief Financial Officer Patrick Grismer, even as many of its stores remain closed...

https://www.bloomberg.com/news/articles/...s-rent-even-after-pandemic?sref=x4rjnz06

It seems inevitable - many businesses that survive are going to be smaller/less profitable than they were pre-covid, so logically the premises they occupy will be worth less rent. Landlords who resist will find themselves with more vacancies.

[Corndogger]

Warren Buffett says Berkshire sold its entire position in airlines because of the coronavirus

Published Sat, May 2 2020 6:58 PM EDT
Updated Moments Ago

Thomas Franck@tomwfranck

This is breaking news. Please check back for updates.

Berkshire Hathaway Chairman and billionaire value investor Warren Buffett said that the conglomerate has sold the entirety of its equity position in the U.S. airline industry. The prior stake, worth a collective several billion dollars, included United, American, Southwest and Delta Airlines.

“The world has changed for the airlines. And I don’t know how it’s changed and I hope it corrects itself in a reasonably prompt way,” he said. “I don’t know if Americans have now changed their habits or will change their habits because of the extended period.”

But “I think there are certain industries, and unfortunately, I think that the airline industry, among others, that are really hurt by a forced shutdown by events that are far beyond our control,” he added.

Asked by CNBC’s Becky Quick to clarify if Berkshire had sold all of its airline holdings, Buffett answered “yes.”

He explained: “When we sell something, very often it’s going to be our entire stake. We don’t trim positions.”

His comments Saturday afternoon came after Berkshire Hathaway reported first-quarter earnings that showed Buffett and his lieutenants built up the conglomerate’s cash stockpile and only nibbled at equities during the violent stock market rout in March.

The company posted a record $137 billion in cash and equivalent funds on its balance sheet by March 31, which represents a $10 billion addition from the $127 billion it reported at the end of 2019. It also reported a net loss of nearly $50 billion for the first quarter as its equity investments sank amid the coronavirus outbreak.

The company spent just $1.8 billion buying stocks and just $1.7 billion repurchasing Berkshire Hathaway shares during the first quarter of 2020. The latest earnings filing may suggest the so-called “Oracle of Omaha” could find any of his hallmark bargain, value opportunities in the market sell-off, which took the S&P 500 down more than 30%.

Source: https://www.cnbc.com/2020/05/02/warren-b...airlines-because-of-the-coronavirus.html

[whatnext]

Originally Posted by Corndogger

Warren Buffett says Berkshire sold its entire position in airlines because of the coronavirus...

I wish I had done the same. Too late now, I'll just have to ride it out.

[Corndogger]

Originally Posted by whatnext

I wish I had done the same. Too late now, I'll just have to ride it out.

What's weird--at least to me--is that Boeing managed to raise a ton of money in the bond market and now is saying that they don't need any government help. If airlines aren't worth investing in who is Boeing going to sell it's jets to? It's not like the FedEx's of the world buy enough planes to make up for a huge drop in passenger travel.

[wave46]

Originally Posted by Corndogger

What's weird--at least to me--is that Boeing managed to raise a ton of money in the bond market and now is saying that they don't need any government help. If airlines aren't worth investing in who is Boeing going to sell it's jets to? It's not like the FedEx's of the world buy enough planes to make up for a huge drop in passenger travel.

I think there is an implicit guarantee that the US Government would step in to save Boeing should it hit a severe rough patch, as it is a major contractor.

That being said, the airliner business is a multi-year lead time affair and designs last decades, so Boeing still has lots of customers lined up for deliveries for years to come. Airlines can't get out of purchase contracts without some pain and again, world governments are probably not excited at the prospect of dozens of worldwide airlines going into bankruptcy at the same time. So, there's probably another implicit agreement of government support.

Boeing's internal culture could use a big shakeup though. The 737 MAX fiasco has not painted a happy picture inside them and fixing that was already a large order on its plate. This shutdown has made things seriously worse in that respect.

[misher]

Originally Posted by wave46

I think there is an implicit guarantee that the US Government would step in to save Boeing should it hit a severe rough patch, as it is a major contractor.

That being said, the airliner business is a multi-year lead time affair and designs last decades, so Boeing still has lots of customers lined up for deliveries for years to come. Airlines can't get out of purchase contracts without some pain and again, world governments are probably not excited at the prospect of dozens of worldwide airlines going into bankruptcy at the same time. So, there's probably another implicit agreement of government support.

Boeing's internal culture could use a big shakeup though. The 737 MAX fiasco has not painted a happy picture inside them and fixing that was already a large order on its plate. This shutdown has made things seriously worse in that respect.

Agreed with all this. Airlines like roads are integral to nations stability. Governments will offer liquidity or even purchase ownership to maintain airlines. The PR is awful if governments allow brand names to collapse.

[wave46]

Some thoughts on long-term changes:

I don't really miss a lot of the things I thought I would. I mean, it kind of is an annoyance to not have hockey, or go to the movies or be able to go to a restaurant, but daily life seems to work pretty well so far. Parents have other issues, I suppose.

It does seem that a lot of what we spend a lot of energy and money on is simply 'icing on the cake' bits of having it so good. So much of our consumer spending is dedicated to non-essentials. This has shown that a large portion of our economy is simply built around discretionary spending.

The thing I miss most is being able to see other people without hesitation. Indeed, I wonder if backyards will be bursting with people having BBQs and whatnot once some restrictions are relaxed.

I also wonder if it will make us reconsider the people we kind of socially neglect. Few cared about long-term care facilities before, but now they do. I also wonder if the trend of shipping off aging relatives will reverse and what kind of life we want for our elderly citizens. This is one person's opinion, but I'd rather have an active social life and take the risk of COVID (or whatever)-related death than being isolated when I'm hitting my older years.

"Save people by social isolation" has a weird disconnect to it - it logically makes sense, but feels almost inhumane in another sense. Together, yet apart. I'd almost rather die with my boots on than be "saved" yet very alone.

One man's musings, I suppose.

[Corndogger]

Originally Posted by wave46

Some thoughts on long-term changes:

I don't really miss a lot of the things I thought I would. I mean, it kind of is an annoyance to not have hockey, or go to the movies or be able to go to a restaurant, but daily life seems to work pretty well so far. Parents have other issues, I suppose.

It does seem that a lot of what we spend a lot of energy and money on is simply 'icing on the cake' bits of having it so good. So much of our consumer spending is dedicated to non-essentials. This has shown that a large portion of our economy is simply built around discretionary spending.

The thing I miss most is being able to see other people without hesitation. Indeed, I wonder if backyards will be bursting with people having BBQs and whatnot once some restrictions are relaxed.

I also wonder if it will make us reconsider the people we kind of socially neglect. Few cared about long-term care facilities before, but now they do. I also wonder if the trend of shipping off aging relatives will reverse and what kind of life we want for our elderly citizens. This is one person's opinion, but I'd rather have an active social life and take the risk of COVID (or whatever)-related death than being isolated when I'm hitting my older years.

"Save people by social isolation" has a weird disconnect to it - it logically makes sense, but feels almost inhumane in another sense. Together, yet apart. I'd almost rather die with my boots on than be "saved" yet very alone.

One man's musings, I suppose.

For quite some time I've had a huge fear of ending up in a nursing home and being abused. This has made that fear even worse. If it gets to the point where I can't look after myself or at least stay in my own home I'd rather tap out than have to move to a nursing home. Tapping out is likely what I'll end up doing because unless I win the lottery there's no way I could afford to have a nurse come in and help me out.

[Acajack]

I am not overly anxious but I have to say I am a teeny bit concerned about my kids and especially their generation. With respect to how this will affect their relationship to school, work, responsibility, the normalcy of not sleeping in till noon every day, etc.

Here as in most places teens and young adults have been told that there will be no return to class until September. Learning from home is only hit-and-miss and sporadic. There is no way they are spending anything close to the learning time they would normally have in class plus homework on top of that.

Some kids are still working at their part-time jobs but most are not. And those who worked enough in the previous year are getting $2000 a month for doing nothing plus there is another $1250 a month for those who are in or destined to post-secondary. There even appears to be some potential for double dipping into both pots.

Once more businesses start to open up there will need to be some rebalancing as we already have some employers saying their workers (often part-time young people) not wanting to come back because they'll make more money sitting at home. I don't think the grace amount that allows you to make $1000 a month and still keep the $2000 emergency money will be enough.

So while I am not super worried for my kids as we keep on top of things, the potential for a sub-generation of slackers and under-achievers is definitely there.

Six months of doing very little is a long time in the life of a young person.

[kwoldtimer]

Originally Posted by Acajack

I am not overly anxious but I have to say I am a teeny bit concerned about my kids and especially their generation. With respect to how this will affect their relationship to school, work, responsibility, the normalcy of not sleeping in till noon every day, etc.

Here as in most places teens and young adults have been told that there will be no return to class until September. Learning from home is only hit-and-miss and sporadic. There is no way they are spending anything close to the learning time they would normally have in class plus homework on top of that.

Some kids are still working at their part-time jobs but most are not. And those who worked enough in the previous year are getting $2000 a month for doing nothing plus there is another $1250 a month for those who are in or destined to post-secondary. There even appears to be some potential for double dipping into both pots.

Once more businesses start to open up there will need to be some rebalancing as we already have some employers saying their workers (often part-time young people) not wanting to come back because they'll make more money sitting at home. I don't think the grace amount that allows you to make $1000 a month and still keep the $2000 emergency money will be enough.

So while I am not super worried for my kids as we keep on top of things, the potential for a sub-generation of slackers and under-achievers is definitely there.

Six months of doing very little is a long time in the life of a young person.

I believe that's either/or, no?

[Acajack]

Originally Posted by kwoldtimer

I believe that's either/or, no?

According to the buzz in teenaged circles, there is a (legal) way to double dip. I did not check.

[esquire]

^ With regard to adolescents, I think that if things get back to something resembling normal in the fall with respect to school, extracurriculars, part time jobs, socializing and such then I think youngsters will come out of it unscathed for the most part except for the unfortunate ones dealing with situations that are traumatic for whatever reason.

My kids are pretty young and so far they are handling things well, but their worlds are still pretty small. Even things like losing summer activities and not having a summer vacation (outside the province, anyway) are not the end of the world. However, I am starting to worry about what will happen if we're still in a similar state come September... the thought of continuing homeschooling into the fall and not having the kids' activities to turn to gives me cold sweats.

One interesting long term implication to consider is working from home. It feels like we've crossed a major threshold as a society... the WFH genie has come out of the bottle and it isn't going back inside. That will have all kinds of implications for downtowns and office development, traffic and commuting patterns, the future of residential neighbourhoods... it's shaping up to be a bit of a seismic shift.

[wave46]

Originally Posted by esquire

^ With regard to adolescents, I think that if things get back to something resembling normal in the fall with respect to school, extracurriculars, part time jobs, socializing and such then I think youngsters will come out of it unscathed for the most part except for the unfortunate ones dealing with situations that are traumatic for whatever reason.

My kids are pretty young and so far they are handling things well, but their worlds are still pretty small. Even things like losing summer activities and not having a summer vacation (outside the province, anyway) are not the end of the world. However, I am starting to worry about what will happen if we're still in a similar state come September... the thought of continuing homeschooling into the fall and not having the kids' activities to turn to gives me cold sweats.

Kids are surprisingly resilient and can be molded quite easily. Getting them back into a routine will be fine after a few weeks, except for a few cases.

I'm almost wondering if this might make us reconsider the idea of summer vacation in school as opposed to multiple breaks throughout the year. Summer vacation seems to be a holdover from the era when farming ruled the roost and the labour was needed during the summer. With the shift from a rural to urban setting, maybe this old idea needs to be revamped. Instead of re-teaching kids what they've lost over the summer, keeping them fresher by having shorter breaks might be an idea.