Big-name Delaware developers secure PPP funds
Most of the state’s biggest names in real estate development secured funds through the U.S. Small Business Administration’s Paycheck Protection Program (PPP), according to newly released data.
Companies like Buccini/Pollin Group (BPG), Capano Management, Pettinaro, EDiS, and Schell Brothers obtained loans worth millions as they look to weather the impact of the COVID-19 pandemic. They were named among the more than 2,000 Delaware recipients of the SBA-backed loans that received between $150,000 and $10 million, the PPP’s max limit.
The SBA released the redacted PPP data Monday after being sued by media companies that argued that it was defying the Freedom of Information Act by declining to make the info available. The loan program was perhaps the Trump administration’s most prominent response to the economic havoc wrought by the COVID-19 pandemic. It allowed companies to apply for forgivable loans worth up to eight weeks of payroll costs.
After an initial onslaught of applications emptied $349 billion in loans in less than two weeks, a second congressional appropriation of $310 billion has been slow to be claimed. That’s because business owners fretted over the terms of the program and its forgiveness calculation as well as the lingering effects of the pandemic. As of June 30, about $130 billion remained in the second round of funds.
With the program set to expire at the end of June, the Senate approved an extension of the PPP until Aug. 8. The terms have also been made more favorable for businesses, allowing them to spend the loan over 24 weeks rather than the initial eight, and lowering the threshold for spending on payroll from 75% to 60%.
The most-detailed data identifies 660,000 small businesses and nonprofits organizations that received at least $150,000 in funding since the program’s launch in early April as well as the number of jobs supported by the loan. It did not include each loan’s value, but instead provided a range.
The interconnectedness of the real estate industry, from development to management, has been upended by the impacts of the pandemic. Developers and subcontractors have seen work stoppages as investors whose cash flow depended on tenants suddenly found themselves short on funds to bankroll new development. Many businesses had to renegotiate rent payments if they were forced to close under the governor’s state of emergency, squeezing landlords that also have payroll and debt service to cover. Unlike neighboring Pennsylvania, construction was never shut down in Delaware – a bit of relief for firms seeking to keeping pushing projects underway to the finish line.
Perhaps no single real estate company benefited from the PPP program in Delaware as much as BPG, which is believed to be the largest landowner in the city of Wilmington and holds a diversified portfolio of residential, hotel, restaurant, and entertainment assets.
BPG obtained at least $4.35 million for its Delaware-based assets, according to a Delaware Business Times review of the SBA data. The maximum it would have received under the ranges provided is $9.7 million.
The firm reported that a total of 543 jobs were protected by the proceeds of the eight loans identified by DBT. Its loan for its office building sector did not specify the number of jobs protected.
It’s likely that BPG received more loans for assets owned in other states, including a number of hotels, which would push its total benefit from the PPP even higher.
BPG wasn’t alone in securing the federal funds, however, as other big-name firms grabbed loans too. Pettinaro Construction obtained a PPP loan worth at least $2 million while Capano Management and its related LC Management of Delaware collected a minimum of $1.35 million. EDiS got a loan worth at least $1 million, while Bancroft Construction Co. and Greggo & Ferrara each obtained at least $2 million. Harvey, Hanna & Associates obtained at least $350,000 in federal funds.
“The way we looked at the PPP program was almost like a privatized unemployment program,” Harvey Hanna President Thomas J. Hanna told DBT on Tuesday. “By combining the PPP money and a pretty aggressive cost-cutting campaign, we were able to maintain full employment. So, we have not laid off anyone during this COVID-19 crisis.”
Hanna said that his firm, like many others, has worked with its 130 tenants to ensure that all have flexibility to keep their doors open.
“This crisis has been devastating. I can’t think of a single tenant or a single industry that’s been immune,” he said.
The outlier to the big-name firms was Delle Donne & Associates, which obtained a loan worth only between $150,000 and $350,000.
Residential developers also secured their piece of the program, with Sussex County giant Schell Brothers topping the list with a loan of at least $2 million. Wilmington-based custom builder Dewson Construction Co. and Greenwood-based modular builder Beracah Homes each received a minimum of $350,000 while others like Lang Development, Benchmark Builders and Landmark Homes received at least $150,000 each.
In total, all of the nearly 300 identified Delaware companies with a North American Industry Classification System (NAICS) code for the construction industry protected about 11,000 jobs with PPP loans.
By Jacob Owens