Buying or leasing healthcare real estate in a booming economy can be daunting. Managing your healthcare real estate during a pandemic can be overwhelming. By exclusively representing healthcare providers in real estate transactions, we have a comprehensive understanding of the unique requirements of a practice. Typically, we are giving clients unconflicted and unbiased advice to negotiate favorable real estate terms. Today, we are offering clients unconflicted and unbiased advice to protect their practice during this crisis and helping them stay well positioned so they are ready when the economy rebounds – and there is no doubt it will.
We empathize with the unease you are feeling and encourage you to try not to panic. Instead of worrying about things beyond your control, focus on things you can do. Here are a few actions you can take:
- Contact your business insurance agent to discuss your current policy and coverage. Specifically, review your business interruption insurance policy. While many policies exclude coverage for interruption caused by pandemics, due to SARS in 2002-2003, your agent or insurance provider should be able to confirm whether or not you have coverage. This is also a good time to adjust policies for any needs you anticipate in the future.
- Talk to other tenants in your building or your center. Ask what they are doing to cope and find out if they have ideas that might also work for you.
- Communicate with your Landlord. Let them know what you are doing to adapt your practice, if possible, to generate revenue (but be aware of use restrictions in your lease). Discuss options for potential rent relief. Perhaps your Landlord will consider waiving late fees, reduced rent, or deferred rent for a few months and adding those missed months back at the end of the term. Keep in mind the Landlord has obligations to meet with their lenders and depends on your rental revenue to make those payments. Also, keep in mind we may be in the early stages of this, and if your Landlord is unwilling to negotiate at this time, they may be more flexible as things progress. Landlords need to keep their tenants. They can’t afford for all their tenants to go out of business.
- Reach out to your lender, local bank, or creditor. Discuss your current loan structures, including lines of credit, equity lines, and other available means of credit. We have been made aware of a few lenders who are providing deferred practice loan payments for a period of time.
- Check in with to your student loan provider. There may be an opportunity to delay payments.
- Talk to your CPA. Go over your current financial status and any tax issues you may be facing. Discuss deferral options at the federal, state, and local levels for taxes.
- Reach out to other business partners. Call phone, cable, Internet, utilities, copier/printer services, etc., to see if they are willing to work with you. Some are giving customers special offers, discounts, and grace periods. Every little bit of relief helps.
- Contact your attorney. Review your contracts, leases, and policies. Have them read the fine print with you. In the future, there might be pressure on insurance companies and Landlords to provide assistance and, depending on your lease, your attorney may be able to help you through this. Ask for advice.
- Monitor what the government is doing. This is a very fluid situation and the government response is changing daily. Lawmakers on all levels are keenly focused on developing relief plans for small businesses. We should see movement on these issues soon.
- Research Small Business Administration options. The SBA is currently offering relatively easy-to-obtain small business loans known as economic injury disaster loans. You may want to see if you qualify.
This is an unprecedented time. Know there are many small businesses in the same position as you. Find comfort that in challenging economic times, healthcare sustains and is always one of the first industries to rebound – and when it does, you’ll be ready.
Rent is typically one of a healthcare practice’s highest fixed expenses. If you are currently leasing your space, contact us for a complimentary lease review to help determine your current situation, including potential risks and opportunities, and what options you, as a tenant, may have.