Commercial Property Managers – Tips for Better Monthly Reports to Landlords

Many commercial property managers will understand just how important the monthly report is to the clients and landlords that they serve.  The information that goes out in the report must be accurate and detailed.

It is interesting to note that many monthly reports sent out to landlords are little more than a financial report from some computer based property management system.  Whilst that is just fine for a basic shed or industrial property, it will not suffice for office buildings or retail property.  When a property is more complex in operation or tenant mix, then you will need better reports and not just financials for the landlord to look through.  Explanation and information is required.

The other fairly common problem in the industry is that many month end reports from computer based software systems are assumed to be accurate and error free; that is a big problem and will let incorrect information reach the property owners.

Here are some of the major issues that should be reported on in the monthly report for a property management landlord.

1. Income analysis should occur at month end to ensure that all provided income is accurate and expected. This will include the income received during the month from all the tenancies.  Any discrepancies will need to be explained and referred to the property budget.  The income commentary should also include details regards rent reviews and options that have an impact on the recovery of income.  In essence, you need to provide stability for the landlord in the recovery of income.  Any threats of vacancy need to be minimised.  Any opportunities to increase income should be identified.
2. Expenditure details should be accurate and up to date. The expenditure activity in a property from month to month can vary significantly.  Whilst some expenditure will be planned and budgeted for, other expenditure will remain outside a budget and will require adjustments to cash flow for the landlord.  It is very important to monitor the larger items of expenditure throughout the year.  Some of those larger items will be timed to payment requirements such as rates and taxes.
3. Arrears will always occur in a managed property from time to time.  It is really important to monitor the arrears in any property.  That will firstly be for the requirements of the income recovery and legal action.  There will however be secondary situations where the landlord is in agreement to stagger the recovery of arrears over a period of time from a particular tenant.  Whatever the situation is, the arrears need to be continually checked and monitored on a daily basis.  The landlord should be briefed for suitable action if arrears are unexpected and unexplained.
4. Lease documentation changes and tenancy updates will occur throughout the year in any managed property or portfolio.  Issues such as a lease option, rent review, and lease expiry will always be management challenges for you to administer in a timely way.  The best way to do this is to adopt a forward looking calendar that looks to the next 12 months and any events that occur inside the timeframe.  In this way you can prepare for the process and any negotiations that are required.
5. Vacancy reporting will always be important.  The reality of any property market is that vacancies will occur at any time and will require addressing.  It is wise to keep in close contact with tenants within the property.  Regular monthly meetings with the tenants will allow you to identify any upcoming vacancy challenges.  As part of that process is wise to have a tenant retention plan for each and every property that you manage.
6. Maintenance matters within the property will be either planned or unplanned.  You should have a budget allowance for each, and monitor the repairs or replacements to plant and equipment in the property as required.
7. Tenant mix changes will occur in any property and will become more complex subject to the number of tenants that you have in the portfolio and the age of the property.  For this reason you should be meeting with your tenants regularly to discuss occupancy needs, matters of expansion, contraction, and relocation.  The renovation and refurbishment requirements will also come into those discussions and strategies.
8. Market updates will be valuable as part of the monthly report for landlords.  In reporting to the landlords, you can advise them of shifts in market rental, vacancy activity, incentives, and leasing enquiry.  Throughout the year there will always be changes to these factors in commercial and retail property.

So this list is not finite and complete.  It does however give you an idea of the complexity of a good monthly report for a moderate to large commercial or retail property.

I go back to the earlier point; there is no point in sending out just the property financials to property management landlords, given that there are many other things going on in the average commercial or retail property needing to be fully explained to the client.

It is the quality of the property management service that you provide that will justify your property management fee and ongoing reappointment as property managers.

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