Whether you are a retailer, a corporate entity or a property owner or manager, here are a few ways in which you can maximize your lease portfolio ROI, especially with the current global financial climate in mind.
While, we remain cautiously optimistic and don’t want to start off the new year with talks of recession, there is significant unrest in the global financial climate. Some financial experts believe it is only a matter of time before recession sets in. While we hope it doesn’t happen, it definitely makes sense to be prepared. A couple of things you can do in this regard from your lease portfolio management perspective are-
Ensuring you only pay what you owe
As a tenant, you need to ensure that you only pay to your landlord what you actually owe them. While this seems pretty straightforward and obvious, in NN or NNN leases, the CAM i.e. common area maintenance charges constitute a significant amount and its calculation is not that simple. There are chances of the landlord overcharging tenants by mistake and the onus rests on the tenants to get it corrected.
Also, if you are a tenant, make sure you are paying your dues on time, as any delay in lease-related payments mostly attract heavy penalties as per the lease clauses.
On the other hand, if you are a landlord, then you need to make sure that you are billing your tenants accurately and not losing out money on CAM charges by undercharging them.
One of the ways to do this, whether you are a tenant or landlord, is by getting a CAM reconciliation or CAM audit done.
Also, if you are a landlord, look out for delayed payments or other due date misses by your tenants. If stipulated in your lease, you will be able to eligible for additional payment from your tenant in the form of penalty for the missed/delayed payment.
Leverage technology to manage your lease portfolio efficiently
Staying on top of your lease portfolio can be challenging, but technology can make lease portfolio management easy. Deploy relevant technological solutions to manage your lease portfolio efficiently and stay on top of it. Examples include- Lease administration software programs, lease management platforms and even Ai-based lease abstraction platforms if you have leases to be abstracted. Learn more about Ai-based lease abstraction here
Make sure you have easy access to critical lease data–financial and non-financial
With the sudden onset of the COVID 19 Pandemic, we saw that a lot of businesses had to temporarily shut down. While it caused a considerable loss of income, another area where it really hurt businesses that we renting out spaces was, not being aware of any provisions in the lease that could help them in the situation. Tenants need to be aware of all protective clauses in the lease that can offer some financial respite should recession set in. Explore the options in your leases that can help. These include clauses like Go-dark, Force Majeure, Condemnation & Casualty, Construction & Delivery, Co-tenancy and even the right to negotiate and make amendments to existing leases in consultation with the Landlord.
As a landlord, having quick access to these clauses and understanding them will help you plan your cash flows better for the upcoming year and be prepared for any possible contingencies caused due to economic downturns.
To summarize, whether you are a tenant, or a landlord, here are few things you can do to be better prepared for 2023 from your lease portfolio management perspective-
- Get a CAM Audit done due to the sheer volume of leases in your portfolio. Consider outsourcing your lease administration process to a trusted lease services provider who can offer end-to-end lease administration services including CAM, collection calling, lease abstraction, critical date monitoring and more. (Click here to learn more about the benefits of outsourcing your lease portfolio management process.)
- Ensure you are constantly tracking and monitoring critical dates
- As a landlord, you can setup a collection calling process to ensure you are able to collect your dues from tenants who are lagging behind in payment of the same
- Have quick access to all the key financial and non-financial clauses in your leases so you can use them to your advantage if the situation calls for it
- Leverage technology wherever possible to stay on top of your lease portfolio
Wrapping your arms around all of the above can seem overwhelming especially when you have a business to run and customers to attend to. Even if you have an internal lease administration team, the whole process can get extremely challenging due to the sheer volume of leases in your portfolio. Consider outsourcing your lease administration process to a trusted lease services provider who can offer end-to-end lease administration services including CAM, collection calling, lease abstraction, critical date monitoring and more.(Click here to learn more about the benefits of outsourcing your lease portfolio management process.)
Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 17+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house.