Inside HCC’s Pandemic Playbook

Near & dear to our investors’ hearts are K-1s, so let’s start here:  Thirteen posted leaves five K-1s that we’re working overtime to process before the April 15 deadline  Tax law changes and converting to a new delivery system hammered last year’s effort, but this year is a different critter: we sold a ton of stuff in 2019.  That and the pandemic crisis itself has our CPA in Operation Maximus mode to cancel any dependency on that July 15 extended tax filing deadline.

OK, the latest call is, the prediction models were way off.

Maybe.

Just days ago, US testing was at 0.3% (compared to Iceland’s 3.0%), so might wanna hold off celebrating.  We aren’t there on data collected, never mind mounting questions on accuracy. Out of dozens of Covid-19 tracking dashboards, the best I’ve found is University of Virginia’s https://nssac.bii.virginia.edu/covid-19/dashboard/.  There’s one you like better?  Text or email it to me.

Know this: we’re dealing with the truly unprecedented.  Comparing this crisis to any previous is apples to oranges.  No matter how many rallies, this is not going to be over as fast as the stock market wants.  That hoped-for V-shaped recovery economists were touting?  Fading fast. Forgot to factor in that 2nd wave of cases as restrictions relax, or what the other side of coronavirus may look like?  Uh, oh!

Even then, underneath the coronavirus, hides the stock market’s balance sheet/earnings problem no one wants to talk about. If it were a psychiatric patient, I’d classify the stock market as borderline bipolar.  Curb thy enthusiasm, knave.

You’d think such a cataclysmic event would have us awash in fire sales.  Now comes the time we have to tell you in harsh language:  it wasn’t until two excruciatingly painful years after the ‘08 crash a buyer’s market emerged. And now, the 2020 fed, having long ago spent their ammo on lower interest rates, has not a bullet left for today’s crisis. HCC’s two-year drought in new acquisitions may be extended another two years.

Maybe a silver lining for real estate?  Refinancing could be it for this crisis.  HCC began positioning for a market downturn with its largest sell off ever starting in 2018, so we have but four assets remaining with debt. Yes, we’re working overtime with loan servicers on all four.

Central to HCC’s playbook is CDC protocols.  We adopted them 100%, and you should notice zero change in operations in our transition to remote support.  HCC is also filing SBA PPP applications to protect employees. Then the Alston & Bird Webinar “The Road Ahead: Keeping Up with the Regulatory Onslaught and Forbearance Agreements” last Friday, April 3 hosted by one of HCC’s investors. That alone made for a huge head start in building the HCC pandemic playbook.

For your playbook:

  1. Continue all CDC protocols, no matter how silly you may imagine others see you.
  2. Read Factfulness by Hans Rosling. Then read it again.  My blog on that is here.
  3. Not that it ever will, but what is your personal being-sick plan should you be tested against the mother of all outbreaks? The worst time to think about that is when you’re sick and not thinking clearly. Seriously, plan now: step by step… on paper… gather meds, phone numbers, closest insurance supported ERs, as if slapping together your hell-or-high-water Go-Bag.
  4. Comment on this article. Now. We can’t learn anything if we can’t hear from you.

SO: our world now is two parts, before the pandemic… and after.  So please, now, strike “normal” from your vocabulary.  You’ll only make both of us look bad.

Mike Heatley