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Key Takeaways: Economy & Policy

• A sharp decline in economic activity in Q2 is expected and a V-shaped recovery is less likely than a U-shaped recovery.
• Initial claims data set three records in a row in March: job losses are mounting quickly.
• Income risk from job losses is the single largest threat for multifamily.
• Policy responses are explicitly targeting household cash flow, which should be supportive for multifamily.
• Actions by the Fed also benefit Agency-backed and AAA-rated private CMBS markets.

Key Takeaways: Multifamily

• Multifamily remains relatively resilient with no fundamental changes to underlying drivers of demand in the long-term after digesting near-term shocks to NOI.
• The increase in delinquency rates in April are not as pronounced as the market had feared. The true impact will begin to surface in May and June. 
• Early mitigants to COVID-19-related declines in traffic, leasing, and collections include PropTech, virtual marketing practices and e-payment platforms that have been well-established.
• Transactions began to pause in mid-March as the debt markets destabilized and investors wait to see the impact on operations in April, May and June.