There is a common misconception in the net lease industry that tenants automatically adhere to all of their lease obligations, and that a net lease asset is passive. The recent impact of COVID-19 on the retail industry showcases the real risks in the net lease sector, as a large number of tenants failed to pay April and May rent, or requested relief or abatement.
It is our view that asset management is for both good and bad times, such as what we’re experiencing now. As such, here are four reasons to partner with an asset manager throughout the lifecycle of your asset:
Asset managers work with tenants in numerous locations and have strong relationships
Net lease properties derive a significant portion of their value from the income stream and lease. Some tenants provide owners with a general email as the sole point of contact. Asset managers work with tenants across the country and have existing relationships that help landlords reach the right point of contact, stay informed, and come to effective resolutions.
Asset managers provide focused attention and expertise
Commercial real estate asset managers are hired to provide owners with the passive ownership experience they coveted when first purchasing their asset.
Asset managers have frequent conversations with brokers, tenants, lenders, accountants, and vendors that are necessary to build a full picture of your investment and monitor performance.
They also handle accounting requirements, financial projections, and maintenance requests from the tenant to provide a single source of information for your investment.
Asset managers have multiple strategies for a property at all times
There will be an inflection point in the lifecycle of every property. Inflection points may revolve around a tenant requesting rent relief or rent reduction, the property having an upcoming vacancy, or macro and microeconomic conditions.
Decisions around these events are critical to a property’s value, and should be made only when an investor is fully informed. Asset managers conduct market research on a regular basis. The information found through this research allows the asset manager and investor to develop two to three plans for any potential inflection point.
Once that point is reached the asset manager will execute the most advantageous investment strategy to mitigate the landlord’s risk.
Asset managers give landlords peace of mind
Asset managers consistently monitor tenants and market conditions. These findings are passed on to investors on a frequent basis (monthly, quarterly, or annually), preventing the never ending feeling of not knowing what is going on with your tenant and property.
They also present an unbiased viewpoint of your tenant and asset – allowing you to make the best investment decision for your property.
Send us a note
Hopefully this outline helps you along your ownership journey!
We offer multiple ways to benefit from our expertise if you have questions or are in need of help. We offer service plans that correspond to the needs of landlords throughout the ownership life cycle, and for a period of time, our Senior Director of Asset Management, Noah Shaffer, is answering submitted questions.