In a commercial property today a landlord has to be fully briefed on lease and tenancy matters if property performance is to be optimised. The process of reporting to the landlord is a key part of the role of a commercial or retail property manager. The reports should be comprehensive and provided monthly together with the financials for the asset.
The aim of the lease and tenant report process should be to optimise the tenant mix and control the rental cash flow. The landlord for the property will have a plan and targets that impact rental, vacancies, tenant selection and refurbishments. That is why each property should have a property business plan that is established for the plans of the landlord and then regularly updated.
At the start of any asset management service, the property manager should interview the landlord to understand the factors that are important to property function and income. The reporting and control plan can then be established.
Here are some topics to incorporate into the landlord monthly report:
- The income for the property will be of key focus to the landlord. The income will be impacted by the leases, and on that basis, the manager of the asset will need to understand each tenants lease comprehensively. Care needs to be taken with critical dates and income rental charges. In some cases you can find that the critical dates in the leases are based on dates where ‘time is of the essence’. In that case action is required by the selected dates.
- Changes of rent charges will be relative to the lease and any agreements that the landlord and tenant have. Everything of that nature must be in writing. Good records will help you stay on top of rental changes and charges.
- Outgoings recovery will be based on the occupied areas for each tenant. That recovery will have a relationship to the lease for each tenant. Some leases have limitations on the outgoings that can be recovered so care should be exercised in checking that information for any reconciliation of rental and tenant payments of outgoings.
- Market rentals will change from time to time based on the area in which the property is located and the property type. On that basis the monthly report to the property owner should have some update on market rental trends and changes that could impact any upcoming market rent assessment in the property.
- Lease expiries coming up should be tracked and recommendations be made early to the landlord so the vacancy downtime can be managed and minimised. In such situations it pays to work 12 months in advance so that problems of vacancy can be solved early.
The report to the landlord of a managed property should be seen as a tool of control and record. When it is done well it can help all parties involved with the property make the right decisions in a logical way. Want more information? Subscribe to our mailing list right here.