NEW YORK--(BUSINESS WIRE)--GeoPhy announced today the launch of Tenant Credit Profile (TCP) 2.0, its proprietary tool that provides insight into tenants' ability to pay rent for U.S. multifamily commercial real estate (CRE) properties. Among other changes, TCP now covers more than 500,000 multifamily properties for investors and lenders including significantly increased coverage of garden-style apartments. That total is 66% more than were covered in TCP’s initial release in October 2020.
TCP provides a leading indicator of future rent collections as well as insights into tenant age and income. It is objective and based on property tenants’ aggregate credit scores and payment behaviors on credit loans and lines.
CRE professionals use TCP to find diamond-in-the-rough properties in their investment universe. These properties’ tenants are doing better than those in comparable properties. TCP enables investors and lenders to avoid potential issues before they occur by more accurately predicting rent collections and shortfalls.
The product includes a current snapshot and historical trends for the following aggregate metrics:
● Credit Scores: Average of all a property’s tenant credit scores, plus estimate of their average income
● Distress Indicators: Percent of tenants who have delinquencies as well as deferred payments by credit type (i.e. credit card, auto loan, mortgage, and student loan)
● Monthly Payments: Aggregated monthly payment amounts owed to lenders by credit type
● Credit Applications and Usage: Aggregated tenant leverage ratios, credit application rates, and an average percent of existing credit being used by tenants
How TCP Improves Returns for Multifamily Lenders and Investors
Tenant Credit Profile can be used by lenders and investors to find and screen new opportunities as well as assess and monitor risk on assets they own and service.
CRE lenders and investors primarily rely on historical or trailing operating statements and rent collections to predict future performance. Rear-looking reports have blind spots, including that they contain no insight into tenants’ payment obligations and performance on their credit lines and loans. Before missing rent payments, financially strapped tenants typically apply for more credit and stop paying their credit cards and other debt. TCP instantly provides investors and lenders this insight.
Also, Congress’ CARES Act addressed the financial impact of COVID by allowing consumers to request deferments – or “payment holidays” – for auto loans, credit cards, and mortgages. These deferred payments do not negatively affect credit scores. TCP provides an aggregated count of these payment holidays, providing an early warning of future tenant financial distress.
TCP’s aggregated data protects tenant privacy while still providing investors and lenders convenient access to consumer credit insights that can predict multifamily asset performance. TCP does this by aggregating credit scores and attributes for all property tenants to provide insight on a property’s overall tenant financial health. The tool is limited to properties where our partner credit reporting agency has credit reports above a minimum threshold of residents to ensure tenant anonymity.
TCP Use Cases
With TCP, CRE practitioners can more accurately forecast key metrics such as rent collections, vacancy rates, net operating income (NOI), turnover expense, and debt-service-coverage ratios (DSCR).
“GeoPhy’s Tenant Credit Profile offers lenders and investors unprecedented insight into the financial health of multifamily tenants,” said Steve Albert, COO at GeoPhy. “Our aggregated consumer credit attributes are ideal for screening off-market properties, pressure-testing rent collection and debt service coverage assumptions, enhancing portfolio risk management, and optimizing asset acquisition strategies.”
TCP joins GeoPhy’s automated valuation model (AVM) for multifamily properties, its collection of hundreds of individual benchmarks for use in modeling, and the proprietary GeoPhy Neighborhoods that breaks down metropolitan area submarkets in more granular detail. Collectively or separately, these features are available on GeoPhy’s Evra platform. Industry professionals can sign up for a demo or free trial at https://try.geophy.com/Trial-Features.html.
GeoPhy, with U.S. headquarters in New York City, is making the world of commercial real estate more transparent, efficient, and faster. We combine traditional and alternative data sources with machine learning to help clients identify opportunities and manage risks across the market.