San Francisco’s largest landlord, Veritas, will forgive 50% of missed rent from April through July, the company announced in a mass email to its tenants, Thursday.
That promise comes with one caveat: Tenants must enter an agreement to pay back the other half of their rent over the next twelve months.
“That’s a pretty big deal,” said Alexander Quinn, director of research for Northern California at real estate services firm JLL.
Quinn has monitored companies operating in Northern California like Veritas during the pandemic and said Veritas’ deal is unique.
“Most of the deals that I’ve seen are just about extending payments later, but not actually forgiving rent,” he said.
While this may seem like a gift for cash-strapped tenants who have lost income due to the pandemic, tenants advocates say the offer doesn’t go far enough.
It also comes after three months of heated negotiations between Veritas and a coalition including the Veritas Tenants Association and San Francisco Council of District Merchants Associations, which represents mom and pop shops across the city.
Those groups argued for Veritas to offer 100% rent forgiveness for both residential and commercial tenants from the beginning of the shelter-in-place in March through August 31, which they estimated would cost the company between $3 and $4 million. That’s according to emails between Veritas and the tenants and merchant groups, which were obtained by KQED.
Veritas confirmed the emails and offer but declined to comment directly.
“The Veritas Tenants Association is deeply disappointed in Veritas’ refusal to engage us on the pressing issue of rent relief,” Debbie Nunez, a Veritas tenant who represents the Veritas Tenants Association wrote, in a statement. “For three months, we have been asking for a seat at the table on the issues affecting our lives. It’s a simple request. But Veritas has ignored our voices and created a program that is inadequate for the times we’re in.”
The tenants also called on Veritas to contribute $3.6 million to a small business relief fund.
If that number sounds familiar, it’s the same amount the federal government loaned Veritas in the Paycheck Protection Program. Advocates and politicians â including House Speaker Nancy Pelosi â publicly lambasted Veritas for accepting a federal Paycheck Protection Program loan, saying they seriously stretched the definition of a “small business,” the intended recipients of those loans.
Veritas CEO Yat-Pang Au wrote in a June letter to the Veritas Tenants Association, “While we are not going to engage in a debate over Veritas’ qualifications for the PPP loan, it is important to restate that we are, in fact, a small business with many front-line workers who would have lost their jobs without the loan.”
Maryo Mogannam, president of the council of merchants associations, said he was “concerned” about Veritas’ “approach” with his group. “Their lack of equitable relief for small businesses which are suffering the lion’s share of the COVID-19 pandemic is alarming,” he said, “particularly” in light of their PPP loan.
Veritas did not agree to pay into the small business relief fund in any of its correspondence with the groups.
In Au’s final response to the groups, which was sent just today, he also said no matter what happens with state and local eviction moratoriums, Veritas would honor its own eviction moratorium through the end of 2020 and place a moratorium on rental increases through the end of the year.
Nunez, the Veritas tenant, said her fellow tenants are in dire financial straits.
“Fifty percent relief is not enough for tenants who have lost jobs and are now depleting their savings or taking out loans to keep their homes,” she said. “Fifty percent is not enough for a real-estate investment firm with documented access to millions of dollars in capital and whose CEO alone is reported to be worth more than $100 million. Fifty percent is not enough, and the Veritas Tenants Association will continue to fight alongside local merchants for our homes and our communities.”
While it may seem generous, Quinn from JLL said Veritas has less leverage in these negotiations due to San Francisco’s eviction moratorium.
“It may take time to recoup revenue,” Quinn said, since Veritas cannot simply evict its tenants and find new ones. Asking tenants to agree to rental plans may, therefore, be one of its only options.
“If their revenue isn’t realized, they can’t pay their mortgage,” Quinn said.
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