Most borrowers know that amidst the onset of COVID-19, ongoing disclosure to lenders with regards to how the pandemic is impacting the organization is crucial. But how often should operators be providing information? And what types of information — and to what degree of detail — is most needed?
To help facilitate better borrower disclosure and ensure a collaborative mindset when interacting with investors, Ziegler’s Credit Surveillance and Analytics team developed a new resource for borrowers. It outlines specific recommendations related to disclosure of COVID-19-specific events.
Among the key disclosure items:
- A COVID-19 case timeline with initial positive cases, peak number of cases, recovery and a tally of resident versus staff cases.
- A general operations overview.
- Information on marketing adjustments made due to COVID-19, pace of move-ins and sales and a pipeline of sales and move-ins.
- A local area overview with information on restrictions and nearby COVID-19 cases
- Financial information on COVID-19’s effect on revenue and expenses, federal loans or grants received and entrance-fee collections and refund liabilities.
- Status of future or current projects.
“The more transparency and information you provide, the more willing and able [investors] will be to help solve problems such as covenant violations if they arise in the future,” noted Mike Vitiello, a senior analyst with Ziegler. Vitiello added that although the recommendations list may look intimidating, the goal is to save time for both borrowers and investors by providing data in a public forum before investors need to ask questions.
