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Bisnow: First question, did you apply and receive money from the Paycheck Protection Program? If so, how much?

Sigal: Yes, we did, indeed.

Bisnow: How much?

Sigal: We barely got enough. [Editor’s note: Sigal would not disclose how much his company received.]

Bisnow: Some people would say, “Why? You’re a big landlord and you own a lot of these retail centers, why would you apply and receive any PPP money?”

Sigal: That’s a great question. Here’s my answer: Out of all those shopping centers, we anticipate we will distribute no cash flow this year. My company is set up to support my tenants to get through this crisis. Without PPP, half of those people I would have had to lay off.

The reality is, as a property manager, we receive a percent of income to pay our bills and when our rent collection is 55%, all of our income was cut in half and our burden just got twice and three times as hard. Thank God, there’s PPP to help us with what we need to do, so we can help our tenants do what they need to do.

Bisnow: You mentioned rent collection. How was your May 1 rent collection?

Sigal: It was OK. I would never hold it up as an example of what we want to achieve. May, so far, we’re about 30%. In April, we received about 55% of rent from our tenants.

Bisnow: How are you negotiating with your tenants? What are some of the terms you are providing for those struggling to pay rent?

Sigal: One thing I have to say is that we’re all in this together. The way I look at it, if you are open and operating and you can pay, you should pay. If you are having some difficulty, let’s sit down and have an honest conversation and let’s come up with something that helps both of us survive.

We broke down our tenants to two groups. First, the small-business people who are living hand-to-mouth and need immediate help. We were that bank. We asked them, “How much can you pay? We’ll help you get your PPP funds and we will work with you on timing and deferrals to get you those funds.”

We hired consultants, set up webinars and did what we could to help them get PPP funds.

My first focus was on the small tenants. Small businesses was my priority and need to survive. The second was big business.

Bisnow: How are you dealing with those big national credit tenants? Some of them, like AMC, Cheesecake Factory, H&M, Staples and others, have openly refused to pay rent.

Sigal: Most people did the right thing. Big tenants and small tenants did the right thing. I’m gratified with the small tenants that said they would work with us. Some have called up and said they received their PPP money and would pay us in full. Big tenants have followed.

And yes, the truth is there are big tenants that have legitimate concerns but felt like they needed to use landlords to be their bank today, and we pushed back very hard. Most of them approached it the right way and fair way. Some, not so much.

Sigal: What that means is, we are defaulting tenants who don’t pay their rent and don’t have an agreement with us. Nothing prevents them from getting on the phone and working something out. We had large tenants that just decided that they were going to help themselves.

We know, depending on the municipality, we can’t kick them out. But it’s not like you can’t file any lawsuits. In some municipalities, you can. In some other municipalities, there are limitations on how big you can be before you have an eviction. Our goal is, we want everyone in our shopping centers. We just want to figure out something where we can all come up. There shouldn’t be any winners or losers in this crisis.

Bisnow: So what does a NewMark Merrill deal with tenants look like?

Sigal: These are two different things. Big tenants and small tenants. Let’s focus on small business. In general, we’re asking what capacity do you have on your own to get help? Is this a timing issue? If it takes you 30 days to get your PPP, we’ll defer your rent until you get your PPP, and once you get it or an SBA loan, just pay us back. No late fees. No interest. No anything. Just pay me back when you get your money.

What if you’re not reopening yet? Think about gyms and movie theaters. We ask how long is your situation going to go on for? How much can you contribute? How much can you afford? What other sources can you go to? We don’t mind being part of the solution. We don’t want to be the only solution.

We want to work with people. Sometimes it’s three months of half rent and pay us the rest later. Sometimes it’s pay us current for two months and pay us back the rest in 2021. We’re not asking for interest. I’m not trying to make money. I’m trying to survive.

Bisnow: You’re in Los Angeles. You’re in one of the places that is gradually reopening, how are you preparing your properties to meet the new social distancing requirements and other health guidelines?

Sigal: We started preparing on how to reopen on the day we closed. We reached out to every community leader and made sure we communicated with community members.

At 1 a.m. the other night, I bought 10,000 masks and 10,000 disinfectant wipes. We’re going to make sure we have supplies, that our tenants have supplies, and we want to make our properties safe.

Social distancing, we’re planning on being creative. In Colorado, one of the state’s that is reopening, we have a property with a huge grass area where we host movie nights, entertainment and picnics [and] we’re going to paint giant circles so people can sit down and know that they are 6 feet apart from each other.

As for curbside pick up, it’s really parking lot pickup. We’re making sure we have a robust online presence so tenants have two storefronts, one physical and one online.

Sigal: Here is the reality: There will be some casualties. We’ll have to use those spaces as we have in the past, as different community gathering spots or pop-ups. People act like retail is reinventing themselves for the first time ever. Retail has been reinventing itself since people existed.

Yes, there will be some vacancies and some businesses may be replaced for more medical, medical testing, distribution or business will change. We’ll be the spot for that.

There is still a place for the third place. That place that is not your home and not your workplace. We’ll figure it out. In the meantime, we’ll deal with the cards that we are dealt with and continue to provide entertainment and bring people together and welcome them when they leave their home.

As for residential, for a long time we’ve been looking at housing. In Los Angeles, we have 59,000 homeless and then there are those that don’t have enough to pay rent. We need more housing. Absolutely, we are looking at housing solutions in what we do. But a lot of that is a policy standpoint. It’s a lot easier to build in some other states, but not in California.

Bisnow: Because of the coronavirus and the subsequent shutdown, the state and cities are facing a huge budget deficit. There is a concern by property owners here that this situation could increase taxes. How are you dealing with what could be more taxes to property owners?

Sigal: I have lived in California my entire life. I believe in California but for the first time in my life, I thought about what it might be like living outside of California. California is facing a choice right now: Are we going to make it attractive for business people or tax them until they die?

We’re at a breaking point. Here’s something you can print: My 2,000 tenants employ 50,000 people. Imagine what’s going to happen if you tax them out of business? We need to encourage and incentivize people. That split roll tax that’s on the ballot, that’s going to kill a lot of businesses. It’s an absolute disaster.

Bisnow: The split-roll is supposed to help schools and education in the state.

Sigal: My daughter is a special needs teacher. No one is more pro-teacher than me. But it is a joke to pass a tax that is going to get passed onto small businesses that are barely surviving today. It will destroy them. The audacity of people to say that this is going to further education. I mean, the lottery was supposed to further education. How many bills have we passed that were supposed to make education better but yet education gets worse? To pass another tax to business people that are barely surviving, what are we thinking?

Bisnow: As you know, this has been a challenging time for everyone. How have you gone through this crisis?

Sigal: I was in Utah on Friday before [expletive] hit the fan. I was going skiing. We knew something was going to happen. But it was like moving in slow motion. On Saturday night, they shut down the resort.

On Monday [after the shutdown], I get back and immediately, we start having requests from tenants for relief. By the end of the day we had 100 rent relief requests. My entire world flipped over. I thought about the mountain that we had to climb. I made a list and looked at it and I said, “I’m never going to get through this.” I have to call my investors, lenders, my tenants, my employees. I have all these things in my calendar and I need to clear it. I have payroll coming up. We don’t run a rich business. it’s still a small business.

I have people’s life savings. I spoke with a couple of these investors and they had so much faith in me, it made me incredibly nervous about my ability to deliver on their confidence. You know there are people that believe in you before you believe in yourself.

There was two weeks of absolute trying to figure it out. That was a low moment for me. But our team came together. A week into it, we started to get some stability

My grandma had a saying, “If you don’t knock on the door, God can’t answer.” We started knocking on doors. Today, I’m in a much better place. I believe we’re going to come out stronger. There will be low points but I believe our team is doing the right thing and we’re going to pull together and get through this.

Article from bisnow.com. Click here for the full article.