Q&A with Evergreen’s Steve Rappin on Managing a Multifamily Portfolio in a Pandemic
By Paul Bubny
For Chicago-based Evergreen Real Estate Group, the onset of the COVID-19 pandemic meant rapid adjustment to an unprecedented set of operating circumstances. However, the owner/developer/manager’s base of primarily affordable housing also afforded it a measure of downside protection. Connect Media caught up with CEO Steve Rappin recently for a rundown of how Evergreen met the challenges.
Q: Evergreen has fared relatively well in terms of rent collection during this time. What’s the key to this success?
A: We’re still primarily an affordable housing company. We’ve got about 8,500 units at 80 different properties across 10 states. Primarily the type of affordable housing we have is Section 8, and these apartments are under a HAP contract. What we have seen is about a 20% decrease in the portion that the actual residents pay, as unemployment has skyrocketed and often it’s the lower-paying jobs in hospitality, restaurants, etc. So as with any other type of multifamily company, even Class A owners, we’re working with residents on payment plans, and there’s currently a no-eviction policy in place for Chicago and the 10 states that we’re in.
We really have double protection, because even if a resident loses their job and was previously paying 30% of the rent, we can go back to HUD with a certification that this resident has lost their income and HUD will adjust its payment from 70% of the rent to 100% until the employee is re-employed. So Evergreen and other companies with Section 8 housing are well-hedged against downturns like this, given that the federal government is paying the rent.
With the market-rate units that we have, it has not been as bad as we expected. We’re still collecting between 90% and 95% of our rents.
Q: What kinds of adjustments have you had to make in terms of operations during the lockdown?
A: Our corporate office has 60 employees, and when the orders were implemented, basically overnight we transitioned to a work-from-home company with a technology challenge and an inability to get out to properties as we normally do. In terms of the properties, there were a ton of adjustments that we had to make. Like other companies, we closed all common amenity areas. We went through a very strict protocol of cleaning—door handles, elevators, countertops, laundry room equipment—and we made sure that all of our maintenance people had the proper PPE. Initially from a maintenance standpoint we were only servicing emergency calls. It was really an exercise in getting the right supplies to the sites, which were able to do.
This has been a tough time for our employees. One of the things that we have offered has been flexible work arrangements, where we could alternate days and reduce hours. It’s easy for us in the corporate ivy tower; we’re sitting in our living rooms on Zoom calls all day. These folks at the properties are on the front lines, so we wanted to accommodate them the best we could. I think they were really grateful for that.
About half of our 8,500 units are seniors, and when COVID hit, I thought, “These are the most vulnerable folks; they’re not going to be able to go out anymore. How are they going to get their basic necessities of food and medicine?” The social service coordinators at our properties did periodic wellness checks on our senior residents, to make sure that all of their needs were being met.
Q: Talk about how the pandemic has affected your development activities.
A: In all of the states where we were working, construction was deemed essential. So the key was to get them the PPE they needed and make sure social distancing was in place. The real accommodation was for projects where we do rehab of existing properties, which involves both common areas and residents’ units. So we stopped doing any work inside of residents’ units and only did work to common areas and exteriors, to not impact the residents, particularly the elderly.
We have also implemented a Health Check program, which is done online. This will be for our worksites and also our corporate office and our satellite offices. Our employees will be required to go into this program several times a day and assess themselves. This information is then sent up to managers to make sure we don’t have any hotspots for COVID.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.
Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).