Coping with COVID
SC Biz News is speaking with small businesses and community leaders about the impact of the new coronavirus on business and industry, and how this is changing how they operate.
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Chris Price, the president and owner of a boutique portfolio developer in Charleston, said that banks could be the champion of small businesses seeking a lifeline during the COVID-19 outbreak.
Price, who opened PrimeSouth Group LLC in 1989, has 130 commercial real estate tenants. As a portfolio company, PrimeSouth Group develops viable commercial space and then holds on to the property as investments.
Price said the space his company owns is about 40% office and 60% retail, including some larger chains along with food and beverage businesses that have been hit particularly hard during the shutdown.
“We’ve been fully operational,” Price said. “We have reduced hours, and we haven’t been letting people in the office. We’re all kind of in this together.”
Price said that during the Great Recession, which was sparked, in part, by risky sub-prime lending, banks had to be bailed out. With the coronavirus outbreak, Price said banks are going to be the solution.
“That’s a 180-degree turnaround from the 2008 recession,” Price said. “I hope people understand that. This chain reaction that’s going to occur, the banks have been a solution. We have a package of eight banks that we work with. All eight banks have been absolutely phenomenal. They have a clear-cut process that’s either deferral or interest-only that’s helping these landlords.”
Price said his company is going through its portfolio of buildings and tenants to see where problems might occur or where businesses might need help.
“We’re identifying those first to see how we can work with those tenants, get them over the 60-day, 90-day hump. It helps us help the tenant,” Price said. “If you can’t pay rent, we will figure out the reimbursement process. Don’t pay rent; we’ll help you out.”
Like many other companies, PrimeSouth took lessons from the Great Recession and learned to structure their business in anticipation of the next downturn. Even though he didn’t know it would be sparked by a health care crisis, the negative impact on business has been similar to the Great Recession in terms of cash flow and employment struggles.
“The diversity between retail, residential and business has been a godsend for us,” Price said. “We are positioned to weather and hopefully take advantage of things. Office is kind of picking up the slack so we can work with the retail guys and restaurant guys.”
Price said that commercial real estate sales are certainly going to slow down; people will be more cautious, and credit lending likely will tighten up as banks begin to evaluate risk.
“We’ve had several deals fall apart because of this. I do think the banks are going to be more cautious as we go forward,” he said. “Credit markets are tightening up. You’re going to see more of that.”
He said many projects have not fallen apart, including a large signature-asset restaurant that’s still on track to open. Price said that he has heard from architects, engineering companies and construction firms who want to make sure they’re top of mind when the COVID-19 lockdown passes.
“My phone has been ringing for the first time from architects, engineers and construction companies — that hasn’t happened for months,” he said. “People are starting to look at their pipeline, to make sure they’re going to be busy going forward.”
Price said he’s not nervous about the future, but a lot depends on how long the lockdown lasts and when people feel comfortable going back to a restaurant or opening a business. He said that PrimeSouth is definitely exposed but that he’s confident the company will make it through.
“It’s going to be very interesting when we come out of this and see how much damage is done, especially on the restaurant side,” Price said. “There are going to be some big restaurants that are not going to come out of this.”