Rebuilding After Katrina: An Owner's Perspective Two Years Later

Real Estate Issues, Spring 2008 by Meltzer, John A, Shlaes, Noah

Due to the utter devastation, they all were willing to discuss a grace period, but none for more than a few months so that everyone had time to assess the situation. Local banks, with their firsthand knowledge, were first to offer several months of zero payments, which, it was agreed, would be paid back upon insurance reimbursements.

Not all lenders were as understanding. One loan, originally made through a conduit, was eventually granted a few months of loan payment deferral. In my naivet�, I had assumed that this would simplify my situation. I hadn't considered that the respite in payments came at a high price: the loan was transferred to Special Assets, which is a whole different animal. The documentation requirements, mandatory inspections at my expense and constant communication required under the deferral provision, were an enormous drain on my time and resources. Had I known the depth of time, expense and effort it would take to satisfy the CMBC requirements for a classified Special Asset, I would have borrowed the money elsewhere to make those payments.

INSURERS

Devastation on this scale overwhelmed the insurers. Even so, as the insured (and the victim), my most important communication was with my insurers and their adjusters.

I learned to call early, call often, and document every phone call, every piece of wet sheetrock and every new nail. If I made their jobs easier, my financial future would reap the results. In the high-pressure, post-Katrina environment, adjusters were overloaded initially, so insurers moved them around.

On some properties I worked with two or three adjusters over the course of the claim. This meant providing duplicate documentation with each change. Anything I could do to make their job easier, I did. As frustrating as it might have been, if they lost an invoice or a bid, I sent it again, sometimes several times. Their problems were my problems.

PROPERTY MANAGEMENT

Operating properties during reconstruction and after completion took on different emphasis, skills and analysis. Since police protection was in short supply, we were required to put fencing around our tractor trailers in the parking lot, so gypsum board and other building materials would not be stolen. Before the storm, unemptied trash cans or uneven HVAC temperatures were typically addressed within one day. A year after the storm though, some of the properties were occupied, but perfect management was not yet obtainable because of janitorial labor shortages or plumbing technician shortages. Though it did not happen often, we occasionally had to remind tenants and their headquarters of the depth of the devastation. Communication is at the core of good property management, but it was crucial post-Katrina. Even today, quality labor and technical support in many areas of sales, service or construction is still not up to pre-storm levels.

Keeping properties clean was a constant problem. Most of our product is strip retail, and big parking lots were magnets for trash. We kept one of our subs busy weekly, but it was important for our retailers.