able face time with tenant contacts. During a visit last
December, I observed a substantially lower employment
base at a site. I quickly inquired about the tenant’s business
and learned there were staff cutbacks. Gathering this information allowed me to alert the ownership about a potential
issue before it became detrimental to the property.
Each year our office also generates a newsletter for
tenants describing upcoming projects on properties. By
clearly documenting upcoming work, tenants often feel
they are getting more value for their rent money and are
subsequently more loyal to the property. Similar to your
owners, regular phone calls and e-mails to your tenants
that proactively communicate elevator closures, special
events or routine maintenance that may affect them are
always appreciated.
COlleCTING reVeNUes
IREM Members have learned to live by the adage, “Collect
the rent, collect all of the rent, collect all of the rent on
time.”
In a stressed economy, it is imperative we focus on this
message. The first sign that a tenant might be struggling
is slow rent payment. As sales begin to slide, a tenant may
delay rent payments to remain financially afloat.
Managers who have already developed a strong relationship with their tenants will have an easier time collecting rents than managers who have been distant. Regular
personal tenant visits are an important part of establishing
a good relationship. If your tenants know you as a person,
they are more likely to be honest with you. This makes
everyone’s job easier.
Recently, one of my tenants forgot to pay rent. Since
we talk regularly, my call to request prompt payment was
received on friendly terms and the electronic transfer of
funds was received the next day. If I had been a distant
manager delivering bad news, collecting rent would have
been much more challenging.
While rents are expected to be received on the first of
each month, it is important to review an aging report on
the 5th and 10th of each month. Tenants who have not
paid by these dates should be contacted and prompted for
payment. Be sure to document when contact was made
with each tenant and provide this to your owners regularly. In tough economic times, it’s a good idea for managers to review aging reports on riskier properties daily, to
ensure tenants are paying on time.
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fOr OwnerS.
If a tenant shows numerous signs of financial weakness
and possibly does not open for business, it is imperative
to notify the owner immediately. With their guidance,
commence default proceedings in accordance with the
owner’s policies and the legal statutes for the jurisdiction
in which the space resides.
Laws pertaining to default and abandonment vary from
state to state, but in general, managers should alert ownership any time a tenant appears to abandon or go dark
in a space. Oftentimes the courts require owners to prove
the date of vacancy and attempt to collect rent. Ensuring
a tenant is current on their financial obligations before
vacating minimizes the financial exposure of ownership
to the situation and benefits management companies who
collect management fees for as long as possible.
eXPeNse saVINGs
Make sure you carefully monitor properties with base
years and expense caps. Many managers did not anticipate the tremendous increase in fuel and oil costs in 2008,
which resulted in substantially higher bids for asphalt
work, and services such as landscape and waste removal.
When analyzing projects, it is important to determine
if the project can be completed in phases or modified
to provide a savings to the owner. In times of financial
slowdown, people tend to purchase less and shop less. In
this market it is critical for retail managers to continue
an active marketing plan for their larger retail shopping
centers. Well-placed advertising will push a larger pro
rata portion of sales toward the center, which will aid in
