Strategic Real Estate

Question 1

1. How did you negotiate rent concessions during Covid?

Answer 1

a. Confirmed the basic concession provided to tenants
b. Reviewed tenants arrears and deducted the basic concession to have the remaining arrears outstanding
c. Contacted tenant and started negotiation
d. Where tenants were unable to pay remaining arrears, agreed a payment plan
e. Advised the client of outcome of negotiation
f. Arranged for concession to be documented

Question 2

2. How was covid concessions documented?

Answer 2

a. The concessions usually involved extending the term or removing breaks therefore this would be via our solicitors

Question 3

3. What is the purpose of a licence to Alter?

Answer 3

a. To understand permitted alterations at the point of rent reviews, end of leases for dilaps

Question 4

4. Larger unit to a smaller pitch. Did I request to clear all arrears before this happened?

Answer 4

a. Yes the arrears position needed to be resolved prior to lease renewal

Question 5

5. Was the issue that they couldn’t afford the rent but could clear arrears?

Answer 5

a. It was that, they couldn’t afford the rent especially as they will need a business loan to clear remaining arrears

Question 6

6. How was the other part disposed of?

Answer 6

a. We found another tenant to occupy

Question 7

7. How many voids do you have?

Answer 7

a. 17 void units

Question 8

8. What is the plans for those voids?

Answer 8

a. In the immediate future, rates mitigation is arranged. I also assist with tenants occupying on a temporary basis. These tenants usually cover rates and service charge to protect the NOI.

Question 9

9. How does the temp lets mitigate the NOI?

Answer 9

a. It reduces the landlords costs and therefore protects the profits

Question 10

1. What is WAULT

Answer 10

a. Weighted Average unexpired lease Term

Question 11

2. What is the current shopping centre WAULT?

Answer 11

a. WAULT to expiry is 6 years
b. WAULT to break is 5

Question 12

3. Is WAULT of 6 good?

Answer 12

a. Considering most leases are 5 years or less in the current markets this is a typical WAULT. It depends on the market, a market with rising rents you would want lower WAULT as this provides stronger negotiating position.
A market with falling rents you would want higher WAULT to allow time to wait for the market to repair.

Question 13

4. How do you calculate WAULT

Answer 13

a. Annual rent X remaining years.
b. Add all rent to end of lease together
c. Add all annual rent figures together
d. Total rent to end of lease / Total annual rent

Question 14

5. What is NOI

Answer 14

a. Net Operating Income it assess’ the profitability of the business.
b. Deduct operating expenses from the income which gives you the true profit.
c. Less operating expenses = more profit

Question 15

6. How do voids impact NOI

Answer 15

a. It essentially eats into any profit as LL has to cover business rates, SC and insurance

Question 16

7. What strategies are in place to protect NOI

Answer 16

a. Short term lets
b. Rates mitigation
c. Moving tenants to allow tenant to extend
d. Finding long term lets
e. Looking for alternative uses for car parks
f. Commericialisation on malls

Question 17

8. How did reducing pitch and therefore rent help with payment of arrears

Answer 17

a. In order to clear arrears the tenant advised they needed to get a loan which could not be paid back on top of rent. It meant they could do both.

Question 18

9. Why did high vacancies effect the tenant?

Answer 18

a. No reason for customers to go down to that part of the mall. The anchor at the end (Debenhams) had gone so it was hard to increase footfall without that pull