ACM COVID-19 Update

March 18, 2020

With the continued impact COVID-19 is having on the financial markets and our lives in general, we wanted to provide a brief update on our company and the funds we manage.

Business as usual

All of our employees are safe, healthy and productively working from home. We migrated to the cloud several years ago so already had the infrastructure in place for a smooth transition to working from home. There have been no changes to our policies or procedures except for restrictions on travel / in-person meetings. All teams are collaborating effectively and are in constant communication. We are happy to share our IT infrastructure to facilitate video conference calls with you if so desired.

All ACM-managed funds are well positioned

Between our experienced, diversified and well-capitalized borrowers and our focus on cash flowing properties, all the funds we manage are well positioned heading into challenging times. The asset management team continues to actively monitor individual loans and are constantly updating loan risk rating scores to incorporate real-time information and adjust assumptions on a go-forward basis to reflect current market conditions. Given the fluidity of these conditions, we will continue to provide regular updates.

It is becoming quickly apparent that the business segments hit hardest thus far are the travel industry (airlines, cruise ships, etc.), hospitality (hotels) and the “experiential” sector of retail (in particular restaurants, cafes, cinemas and fitness facilities). ACM has no exposure to the hospitality sector, limited exposure to travel industry tenants and some exposure to experiential retail tenants. Within this segment though, a number of properties that do contain restaurants, cafes, theatres, gyms, etc. form part of larger mixed-use projects (ie. multi-family residential and/or office component on top of ground floor retail) that provide additional cash flow and downside protection in the event of retail rent interruptions.

As has been witnessed in British Columbia, COVID-19 is a risk to the seniors housing sector. In this sector though, ACM focuses on the independent living segment – retirees that remain active and do not require long-term care that older, more vulnerable seniors do. Loans secured by senior housing facilities in ACM-managed funds all have full recourse to borrowers who have significant covenants to backstop the loan.

Evaluation of new lending opportunities

ACM continues to actively pursue and evaluate high quality mortgage lending opportunities, albeit with a heightened awareness of the impact COVID-19 could ultimately have on the broader economy, both nationally and globally. With early signs of less credit availability in the commercial mortgage market, accretive lending opportunities are available although we will be looking for more conservative terms than the market had been offering before this crisis. Of course, adherence to the prudent and disciplined credit principles that have guided us for the past 30 years will be at the forefront of this analysis.

We are very appreciative of those working tirelessly in the healthcare industry and the employees that continue to keep our communities functioning in these times.

If you have any questions or concerns, please feel free to contact us.

Stay safe,

Chad Mallow CFA, MBA
President & CEO, ACM Advisors