Real Estate Management - A Property Manager Perspctive

For many involved in property from occupiers to landlords, surveyors to contractors, the COVID -19 pandemic is probably the most unique situation we have ever been involved in. In Real Estate Management, we have shifted gear from more usual daily tasks of ensuring properties are fully operational for occupiers to planning and coordinating properties to house either very low occupancy levels or be completely vacant.

As you might imagine, a Property Manager regularly handles complex arrangements and challenging conversations, however in the last few weeks, this has gone into overdrive and with every asset simultaneously. Whilst some issues are very publicly documented, there are others which are not so;

• For the two weeks prior to the Government’s formal announcement on 23rd March, a number of local and national F&B occupiers closed their outlets due to significantly reduced volumes of diners. Many local retailers tried to remain open despite reduced footfall, incurring more staffing costs and general overheads. Whilst the Government has offered support to these businesses through loans and rates relief, many of the small and independent businesses continue to have two main concerns; paying the rent and paying their staff in order to retain them.  
• For many occupiers, their main concerns have been somewhat alleviated by the Government confirmations regarding Job Retention and also that no forfeiture of leases for non-payment of rent can take place. However, this news did not filter through to all occupiers immediately, and nor does it apply to all. Landlords, should they wish, can still implement CRAR (Commercial Rent Arrears Recovery) procedures, which will mean the seven day letter will be issued, but the enforcement agents will not visit any occupier until any restrictions have been lifted, and all enforcement agent attendance is on hold for an initial period of 30 days.
• Some occupiers made quick requests for rent holidays, changes to monthly payments or indicating payment may not be made. However some occupiers remained silent, possibly because they are concerned about how they are going to make payments and thoughts are dominated with paying their household bills. That said, not all occupiers have been impacted; heavy industrial tenants and ‘essential’ food suppliers for example have been able to continue to operate – for the time being at least.
• We are working with both the occupiers and with our clients to enable them to respond to occupier requests. Initially the desire was, as is usual, to look at requests on a tenant by tenant basis, however as the situation has developed there has been an appetite to offer a blanket response to rent holidays for example, with the agreement it is to be paid back over a set number of months once the restrictions are lifted. Each landlord has their own financing arrangement and it is difficult for many of them to agree such blanket rent holidays because they, like tenants have financial requirements to fulfill.
• Whilst there is no rental income and the majority of shops and restaurants are closed, there remain statutory and insurance obligations which need to be met. Our teams are liaising with insurers to confirm what the full responsibilities are likely to be as this will differ for each insurer and property. However, there will of course be a cost involved in ensuring the properties are kept safe during any period of closure. The impact of this is that whilst rent holidays can be agreed, service charge holidays are less achievable as providers (waste, security etc) need to be paid to keep the sites maintained or secure, and to keep their businesses operational. We are of course adjusting services to meet the current needs – as we would in any change situation - wherever possible, such as simple reductions to reducing cleaning and landscaping regimes or more complex building management system opportunities. We recognise that it is likely that in some scenarios landlords may receive funding requests to fulfil this element the longer this period goes on.

Experience and energy will be required to deliver the attention to detail to individual assets over the coming weeks and months, as the environment of the buildings and across the country changes. In my view, it can only be delivered by experts, who are used to handling multiple stakeholder views and requirements as well as codes of practice to see what others do not, to understand the possible impacts for both occupiers and clients and to pre-empt them with planned information, responses and options.