The real estate market, as we are all too aware, has experienced significant crashes and corrections in the past. Nevertheless, applying the lessons we have learned from history to the COVID-19 crisis has proved to be difficult. We often hear the term “this time it’s different” at present, and it really does seem to ring true. This downturn is truly unprecedented in the strength, scope and rapidity of the impact on the real economy and, hence, near-term real estate cashflows.

During a “normal” contraction, financial markets tend to react to changes in expectations for economic and cashflow growth before it actually happens, hence valuations tend to move before rents and incomes begin falling. This time, however, at least in certain segments of the real estate market, the situation has almost been completely reversed due to the impact of government-imposed lockdowns and social distancing. Many tenants have been simply unable to uphold their end of contracts and pay r