Carter Validus' tenants seek deferments amid pandemic

Carter Validus Mission Critical REIT II Inc. says a “minor share” of its tenants have requested rent deferrals or have had to shut their doors amid the Covid-19 pandemic, but the company believes it is “well positioned” to handle the crisis.

In a letter to shareholders, Carter Validus’ President and CEO Michael Seton says government restrictions on elective surgeries has impacted some of its tenants in the healthcare sector, but that overall the Tampa-based landlord’s portfolio remains sound.

“We have tenants unable to maintain sufficient activity in their buildings and/or have not been deemed essential services,” Seton wrote. “Consequently, a few of our tenants have not been able to remain open for business.

“The number of tenants that have requested rent deferrals to date, relative to the overall portfolio, is a minor share, and we anticipate a relatively short duration of these unprecedented circumstances,” he adds.

Still, Seton contends the company has the resources to sustain itself, noting that it has $270 million in cash and equivalents on hand – nearly twice its annual operating expenses and debt service.

“We believe we are well positioned to weather the current economic turbulence,” Seton wrote.

But Carter Validus also says it could take a firmer stand with occupants, if necessary.

“We are confident in our ability to enforce our contractual lease rights when and where appropriate to ensure that tenants who can pay rent, do pay rent,” he adds. “Although we are sensitive to the current market conditions resulting from the pandemic and remain flexible to provide mutually beneficial solutions to certain tenants, it is our responsibility to you as stockholders to maximize the value of your investment in our company.”