Landlords. Property Managers.
Is the strength of your lease covenant declining?
Are too many new deals falling over?
Are you being hit up for Abatements that you are not sure would be a good investment?
Do you know whether a retailer is a credit risk?
Do you know if it is worth pursuing a Retailer through the legal system for outsanding debt?
Do lease assignments result in immediate MAT decline?
Are lease incentives on ever-increasing upward spiral?
The strength and security of the lease covenant is often jeopardised by lack of due diligence, lack of accessible information, and inability to judge the competence and capability of the incoming retail operator.
Retail- and Centre Managers don’t have access to all the resources, nor have the time to dig deep enough into a deal to truly understand the risk to the covenant. In many cases, because they may only do two or three assignements a year, they don’t have the deep experience to find the flaws in the incoming deal they way they would like.
- It is difficult for the property owner/manager (PO/PM) to get deeply involved/ comment on specific aspects of a retailer’s business, given its position of authority – even if specific flaws in a prospect’s business are self-evident.
- Lease Assignments are relatively infrequent, and many retail managers don’t have the expertise to make the evaluation process truly effective.
- PO/PM spend a lot of money on managing relatively unlikely/low impact risks, but don’t do thorough risk assessment on the core business: securing rental income streams.
- Previously, a new lease deal could simply be viewed as a commercial transaction with a certain level of business risk for the retail operator. The economic climate over time has seen the increase in large capital incentives, which transfers the business risk to the PO/PM. It should be best practice to make a full assessment on behalf of fund/ investment managers, because the commercial impact of increased vacancy cost vs the risk of investing in a retail business has rebalanced the criteria of commercial viability.
- As retail consultants, Ganador is often engaged to work with critical tenants. Around 60-70% of the time, the problems were entirely avoidable if the store was conceived and positioned correctly to significantly improve their chances of success. Independent retailers are not easy to ‘incubate’ and as centres grow larger, it is more difficult and more important to maintain those point-of-difference’ retailers, and being diligent about the start of the journey will make a significant difference to future bad debt and vacancy.
And the best of all is..
It costs nothing and you substantially improve risk management protocols. (It is often cost neutral because our fees are typically covered by Assignment Applicaiton Fees payable by Assignor.)
Professional, thorough due diligence and assessment that identifies any significant risks and/or expedites the process by qualifying prospective tenants using:
Evaluation of financial pro formas – by professional 3rd party
Credit history and debt risk – by professional 3rd party
Comprehensive digital evidence trail (including interviews) fully archived
Shorten leasing cycle (Close-to-Open times)
Maintain or Improve strength of lease covenant
Better, smarter decision making with managing Debt and Abatements
Avoid short-term failures and repeat vacancies
Full digital archive for record keeping and evidence
There are a number of other secondary benefits that including:
- the ability to reject an assignment of lease based on professional evidence of independent third party that will stand up in a court of law
- productivity savings for the centre teams
- ability to ensure the relationship is not adversarial from the outset
- improved consistency in process across ALL retail assets
Lease Assignment Management Services
Our focus is simple: conduct a thorough due diligence on any incoming retailer, via lease assignment or a new deal.
We offer two services:
1. Standard: Tenant Qualification Service (TQS)
- Check financial history (capacity)
- Experience & Business Plan Assessment (capability)
- Asset Test (resources)
2. Comprehensive: Comprehensive Due Diligence (LADDS)
- All of the above -PLUS
- Assignor /Assignee Interviews
- Verification of Identity (Metro)
- Compliance with Retail Lease Act (e.g. managing issuance of Disclosure Statements etc.)
- Document Management and Archiving
Implementing the Y1S System is easy
We work with your nominated representative to dovetail YOUR policies with our systems. For instance:
- We adapt the templates and pro-formas to reflect your system requirements.
- We will create the colateral for centres to issue to assignors/assignees
- We gather requisite information (Disclosure Statements, Draft Deed of Consent) as required
All that the centre managers need to do is:
- Provide the tenant with the fact sheet to explain your process.
- Provide Y1S with the enquiry details/ or completed application.
The Centre Team will receive our final recommendation & full digital archive upon completion of the project.
The good news: the cost of our service is often covered by the lease assignment application fee and is cost neutral to Landlord.
What’s not to like?
It costs nothing and you substantially improve risk management protocols.
We’d love to have a no obligation, confidential chat
Reach out to Dennis Price on +61-411 030 436
Email dennis(a) ganador.com.au
We work with the Property Owner/Manager to develop a workflow that works with your systems/technology or even templates.
Please see all elements of the process.