How to Bolster Apartment NOI During COVID-19

Article originally posted on Multifamily Executive on August 12, 2020

It’s easy to hit your numbers when times are good.

But for multifamily pros navigating the fallout of COVID-19, 2020 has been about finding ways to maximize net operating income (NOI), even when times are tough.

“We’re really thinking things through more to make sure we keep our NOI up,” says Tammy Shields, chief operating officer for Atlanta-based Audubon, which manages 5,500 units across 21 properties from the Carolinas to Louisiana. “The message we’ve sent to our teams is we still have our jobs, and we’re essential in this economy. So let’s do our jobs now, to make sure they’re still there when we get through this thing.”

For operators on the front lines, doing so means hitting NOI numbers—a measure of income versus expenses, the most vital stat for a community’s financial health—even when it’s harder to get full rent from residents and expenses have gone up.

Tim Peterson, chief operating officer at the Boca Raton, Fla.-based Altman Cos., which oversees approximately 8,000 units, sums up what many in the multifamily sector are experiencing today.

“Income has been negatively impacted by collection and occupancy issues, and expenses have been impacted by the need to adopt new cleaning and monitoring protocols,” Peterson says. “Keeping occupancy up and vacancy down is the top driver of NOI for Altman.”

To keep her occupancy up, Shields looks at renewals on a case-by-case basis, and has reevaluated her renovation schedule to keep as many of her existing residents in place as possible.

“We’re looking at strategies where we ask if it’s worth discounting a point or two on the renewal, in order to lock that resident in and not turn the unit,” Shields says. When successful, that keeps make-ready expenses down at the same time.

One thing she’s not doing? Backing off opportunities to push rents when she can. “We’ve definitely throttled back slightly on our increases for renewals where necessary to try to reduce our turnover,” Shields explains. “But we haven’t said we’re not doing rent increases across the board at any of our deals.”

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