Irvine, CA

Commercial real estate owners are making strategic shifts to their 2020 business plans in response to the economic disruption related to the coronavirus pandemic. Shopoff Realty Investments, an opportunistic and value-add investor based in Irvine, CA, says that it is pushing back disposition plans for some assets and reevaluating acquisition plans.

"The main impact we've seen to our portfolio is in terms of project timelines. Many of our properties that we had planned to sell this year will now have their disposition timelines pushed back a quarter (or two), depending on the market's future recovery," Bill Shopoff, president and CEO of Shopoff Realty Investments, tells GlobeSt.com. "In addition, properties we considering for acquisition will now have to be further evaluated, as determining valuations is nearly impossible in the current market."

While the firm's investment timeline has adjusted to respond to the current market, Shopoff is also mitigating risk in its current portfolio. "We are also closely evaluating all our income producing properties and working with our tenants to determine if rents may be late/unpaid and how that will impact the property as a whole. Thankfully we have strategically built our portfolio over the years to include a variety of property types and markets, in an effort to potentially lessen overall portfolio risk. We are hopeful that any possible burdens of one property during this time may be carried by the successes of others," he says, adding that there is "no assurance that this strategy will succeed to meet its investment objectives."

The good news: the economy was already at its peak prior to this crisis, and for that reason, many investors were preparing for some sort of economic event—although nothing like this. "Fortunately, we have been anticipating and planning for an economic slowdown or recession for some time, and the underwriting and business plans for our existing assets already have these challenges and metrics built in," says Shopoff. "As a result, we were not caught off guard and are able to navigate through these difficult times. While we certainly didn't anticipate a global pandemic, we do know how to deal with challenges."

Despite nuanced changes in business strategy this year, Shopoff isn't making any significant changes to its overall investment thesis. If anything, it is sticking to its core strategy. "We're first and foremost working to protect and strengthen our current portfolio to ensure its greatest potential for success," he says. "From there, we will continue to concentrate to a large degree on the California market where we know there is a need, and also see that housing shortages continues to be a major concern for California political leadership. Our strategy of creating value through the repurposing of land and also the repositioning of commercial properties, where we work to elevate properties with the goal of transforming them into their highest and best use, has not changed."

As an SEC-registered company, Shopoff Realty would like to note that the commentary offered here "is not an offering to buy or sell any securities. Any investment in Shopoff Realty Investments programs involves substantial risks and is suitable only for accredited investors who have no need for liquidity and who can bear the loss of their entire investment. Securities offered through Shopoff Securities, Inc. member FINRA/SIPC, 2 Park Plaza, Suite 770, Irvine, CA 92614, (844) 4-SHOPOFF."