The costs are still being tallied, but damages inflicted by back-to-back 2024 hurricanes Helene and Milton could exceed $50 billion, according to estimates. While plenty of storms this century have wrought significant destruction, Helene and Milton contributed heavily to what are projected to be $300 billion in economic losses in 2024 due to natural disasters globally.
For REITs that own assets in the affected areas of the Southeast, Helene and Milton triggered what over time have become methodical and well-executed responses. As soon as storms begin their march towards land, companies immediately act to first and foremost protect human life and minimize potential damage during the storm. They also assemble teams of associates, suppliers, and vendors to provide coordinated and immediate post-storm structural inspections, repairs, relief, and cleanup so that tenants can return to their businesses or homes as soon as possible.
The strategies are a natural fit with efforts to enhance portfolio resiliency while supporting tenants, employees, and the broader community. Case in point, in July, Hurricane Beryl knocked out power to some 3 million homes and businesses in Houston, including some Camden Property Trust (NYSE: CPT) apartments. In response, the REIT brought in water and food trucks to the affected communities, says Laurie Baker, COO for Camden, which owns more than 170 properties in the U.S. It did the same in the aftermath of Helene and Milton.
“We’ll do this in Colorado in the event of a tornado or in California where there have been wildfires—anywhere and anytime we have these types of situations,” Baker says. “We can’t control the weather, but we can sure control how to make a difficult situation caused by mother nature a little bit better.”
Experience-Driven
Despite the destruction inflicted by Helene and Milton, Camden and other big property owners throughout the Southeast, like Kimco Realty Corp. (NYSE: KIM) and Phillips Edison & Co. (Nasdaq: PECO), experienced minimal damages. Properties were spared in large part simply because they didn’t take a direct hit from the hurricanes. But years of experience responding to disasters, and an emphasis on quality construction, capital improvement spending, consistent maintenance, timely communication, and strong supplier relationships also helped mitigate the fallout, REIT executives say.
Cincinnati-based PECO, which had 40 properties in Milton’s path, activates its formalized incident response team as storms approach, says Bob Myers, president of PECO, an owner of 311 grocery-anchored centers across the U.S. What’s more, its associate-led PECO Impact team also goes into action. Most recently, it collected donations and delivered supplies to communities following Helene and Milton.
“There’s a lot that goes into making sure that our Neighbors (what we call our tenants) are prepared and feel secure,” he adds. “You never know what’s going to happen with hurricanes, but one of the most important things we’ve done over the years is get our grocers back open as soon as possible so that they can serve the communities.”
Unfortunately, few natural disasters provide the same warning as hurricanes. While wildfires in western states occur more frequently than in the past, geographic information system (GIS) mapping tools support tracking and predictability. Earthquakes tend to be less predictable, but receiving information about them as soon as possible helps hasten the response. That’s why Chris Freeman, senior vice president of property management with Kimco in Jericho, New York, receives alerts on his devices whenever earthquakes of a magnitude of five or higher strike.
“We’ve got people and resources throughout the country, and I check in with them immediately,” says Freeman, who oversees field operations at Kimco’s 567 shopping centers. “Anything five or above on the Richter can really shake stuff up and is enough to scare the heck out of you.”
Maintaining Operations
Not all responses are created equal. For hurricanes in particular, preparation at retail and apartment properties typically focuses on preventing damage from flying debris and flooding, including moving outdoor furniture and planters to storage, locking down trash receptacles, reducing water levels in pools, and stacking sandbags in flood-prone areas. Year-round routine maintenance like pruning and removing trees, trimming landscaping, inspecting roofs for loose shingles and fasteners, and clearing clogged drainage pipes also contribute to preparedness.
Because it’s likely that many businesses will close amid evacuation orders, losing power at most commercial properties isn’t a huge concern as hurricanes move through—and it’s virtually unpreventable. Still, REITs tend to work with utilities to secure a quick response in the aftermath and to activate backup systems as needed.
That’s not the case with data centers. While owners of those assets may have relative concerns about flooding or wind damage, they want to maintain power throughout storms so that their tenants’ servers can continue to operate. Similarly, cell tower owners want to keep electricity flowing so that their network customers can maintain service, especially because the ability for first responders to communicate is critical.
In both cases, that means ensuring that there are generators and fuel on site. American Tower Corp. (NYSE: AMT), for example, keeps enough fuel at its towers to run backup generators for up to 100 hours and portable generators are deployed as a supplementary backup in cases of significant infrastructure impacts. In 2023, the company reports, generators powered towers for 200,000 hours in the U.S.
“During Helene especially, our customers who used our backup power were up and operating,” says Tuoyo Ebigbeyi, vice president of network operations for the U.S. Tower division at Boston-based American Tower, which owns 148,000 towers worldwide. “The value of those generators was validated most notably in that storm, because there were a lot of power outages in places where you typically don’t get that much flooding.”
Standardization is also key to responding to a crisis, says Ryan Knepshield, head of global security and enterprise resilience for Austin, Texas-based Digital Realty (NYSE: DLR). As a result, the data center owner tries to apply cookie-cutter designs, configurations, and equipment across its assets so that its engineers are comfortable entering any of its 300-plus global properties.
“That means when we need to bring in a piece of equipment like a pump, we already know what kind of pump we can use, what we can do with that pump, what kind of power we can use, and how the power is going to be sourced,” Knepshield says. “Meanwhile, our engineers don’t need to re-learn an entire data center; they know where the central pieces of equipment are and how the systems should be operating.”
Harnessing Information and Technology
Similar to its importance in improving the prospects of success when making new investments or signing leases, possessing accurate and timely information before, during, and following disasters is critical to effective incident management.
Prior to hurricanes, for example, REITs will closely monitor the National Oceanic and Atmospheric Administration’s National Hurricane Center and engage other services or software to determine the storm’s likely path, often in conjunction with restoration vendors and suppliers.
Among other tools, Kimco consults Federal Emergency Management Agency (FEMA) flood zone maps to identify areas of potential flooding, which can vary dramatically across even a single property, Freeman says. That allows the REIT to pinpoint where it needs to target its resources, he continues, including deploying sandbags and large pumps.
REITs want to keep their property management teams and tenants in the loop, as well. PECO leverages its DashComm communication portal to provide its tenants with storm preparation guidance and important contacts like vendors and utilities, Myers says. Meanwhile, in addition to urging its residents to follow local directives, Camden delivers preparation instructions, including reminders to clear balconies of loose furniture, evacuation procedures, and safety tips in the event tenants decide to ride out the storm, Baker adds.
Having the ability to communicate with property managers and other employees, vendors and suppliers, tenants, and relief organizations in an event’s aftermath is also crucial. But it’s not uncommon for cell traffic to overburden networks in areas where towers have been damaged or downed. That was Kimco’s experience in 2017 when Maria struck Puerto Rico with 140-mile per hour winds, Freeman recalls. Additionally, although the company uses satellite phones, they are less reliable because they require areas with no obstructions, he adds.
After Maria, Kimco applied for access to a priority-level network controlled by the Department of Homeland Security that’s reserved for first responders. Considered a provider of necessary services like gas stations and grocery stores, the REIT was approved. More recently, however, Kimco deployed Starlink internet systems during Milton for the first time and team members were able to converse normally with local managers who had no power for days.
“You can spin these up as easily as mobile hot spots, and with the right systems, you don’t even need access to power because they’re battery operated,” Freeman explains. “So assuming we get approval, we are turning to Starlink systems next year because they proved to be a lifesaver for our people in markets hit by Milton.”
Turnaround After Tragedy
Yet for all the preparation and planning that REITs undertake, sometimes there is just no way to stop the destructive forces of nature. To be able to turn disaster into opportunity is a rare feat, one that Regency Centers Corp. (Nasdaq: REG) has been able to achieve.
In October 2019, a tornado touched down and tore through Dallas, including Regency Centers’ Preston Oaks shopping center. The REIT did not just rebuild but reimagined the shopping center’s future potential. The redevelopment reflected a commitment to quality and community, and an opportunity to create a more vibrant, modern retail destination, the REIT says.
“The new design and tenant mix have breathed new life into the center, making it a shining example of how thoughtful redevelopment can turn challenges into triumphs, reinforcing Preston Oaks as a cherished community asset,” Regency says.