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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.

If you want more tips on commercial or retail property management you can get them in our newsletter at this site.

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Shopping Centre Managers – How to Do Your Monthly Report for the Landlord

When you manage a retail property there are a lot of things going on that need control and communication back to the landlord.  That is where a good reporting system will help you greatly as a centre manager.

It is no secret that the retail property market can be a challenge at the moment with a significant shift between retail sales on the internet, versus retail sales in the shop.  It is the retailer that suffers the downturn in trade, and as a consequence they must revisit their product and service offering.  If they cannot make a go of it, then a distressed tenant soon turns into a vacant tenancy.  The landlord then suffers in loss of income.

Today more than ever before there is a strong bond between tenants, customer, landlord, and property manager.  The balance and success of a shopping centre sits in between all of them.  They all have a vested interest to make a retail property work and perform as an investment.

Whilst it is nice to have a tenant and a lease for retail shop premises, a vacant tenancy is a waste of time and energy for all concerned.  It is in the landlord’s best interest to help a tenant succeed in a retail shopping centre.  The link between the two parties is the property manager.  A good property manager knows how to help a property thrive and grow as an investment; they also know how to assist a distressed tenant get back on track with sales and customer numbers.

To keep the landlord fully briefed on the performance of a retail property, the monthly reporting system needs to be comprehensive and advanced.  Here are some of the big topics to help you structure and provide a monthly report to your landlord client.

  1. Tenant mix activity should always be tracked.  That will include the changes in a property and the upcoming lease activities.
  2. Lease rent reviews and lease options coming up should be planned and actioned early.  Do not leave these things to the last minute.  Many a landlord or property manager has been taken by surprise when it comes to a lease document that they did not fully understand.
  3. Tenant renovation will always be a priority in retail shopping and shopping centres.  A shop that looks poorly for any reason will deter customers not just for that particular tenant, but also for those other tenants that are nearby.
  4. Maintenance in the property will occur for both planned and unexpected events.  You must report on maintenance budget activity and results each month.
  5. Sales by tenant category and by tenant will give the landlord an indication of just what tenants are successful and those that are struggling.  Trend these numbers in a graph so you can see what is going on in the property.
  6. Vacancy marketing will always be important to minimise the impact of loss of rent.  Any existing or upcoming vacancy should be comprehensively marketed to attract new tenants to the property.
  7. Centre marketing to the local community will help with sales for each tenant.  There should be a marketing fund for this process.  The tenants lease should allow contribution by each tenant to the marketing fund.
  8. Income and expenditure will be updated each month for the property.  In an ideal world the income and expenditure should track closely to budget; that being said, there will always be challenges that need resolve and management.

If you manage larger retail properties, then this list will get larger and deeper.   Control will allow you as the property manager to keep the property on track as a retail property investment.