ICSC European Retail Property School European Retail Property School Accounting, Budgets and Lease Administration dr Jolanta Wawrzyszuk, CCIM 8/7/2014 Management I Few words about

ICSC European Retail Property School

Accounting, Budgets

and Lease Administration

dr Jolanta Wawrzyszuk, CCIM

8/7/2014 Management I

Few words about myself:� 16 years of experience in commercial real estate (retail, offices and

mixed used projects) � Experience in asset and property management, leasing,

commercial advisory as well as developments and redevelopments in Poland and other CEE countries

� Head of Asset Management in Atrium European Real Estate responsible for Poland’s and Latvia portfolio (24 projects)

� Former Head of Property Management, Estate Fellows, part of NAI Global (over 370 000 sqm of lettable area in PM), Commercial Director/Partner in Astaris Property Solutions and AssociateDirector in Retail Asset Management in DTZ Management Polska

� PhD, Managament faculty, University of Economics, Poznań, Poland � Licenced CCIM, real estate broker and property manager

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dr Jolanta Wawrzyszuk dr Jolanta Wawrzyszuk

Diversity of shopping centres

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Shopping centre – the most demandingcommercial real estate

Shopping Centres – most demandingcommercial real estate

Shopping centre management

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Property managementReal estate management - division

Successful property management

For success in shopping centre management you needa perfect match and cooperation between

Frontstage and Backstage

Plus zdjecie

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Successful property management

Property Management

Front stage

Letting

Marketing

Tenants’ /investor/city

relationsDevelopment

PM

Backstage

Accounting

Finance and

budgets

Debts collection

Lease administration

Maintenance

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Property Management scope

Property management tasks

� Administration of the property including facility management - repairs, maintenance, media, monitoring of payments, fullfillingall requirements regulated by law

� Financial management - budgets (incomce/costs), management of lease agreements, P&L, financial results

� Asset management – property value management, investments, financial engeneering, market/ positioning strategy

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Property management tasksProperty management

Owners’ requirements towards PM:

� Constant increasing or at least maintaining project value through day-to-day activities of PM

� Creating a comfortable, welcoming shopping place for clients and efficient place for sales for tenants

� Taking care of the optimal centre operation and effective functioning of all systems in order to fullfill the users’ expectations

� Securing at high standard level income and cost side� Proactive approach and up-to-date market knowledge

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Owners’ requirements towards PM (1/3)



� Proactive approach to maintenance - planning and realisation of current repairs as well as long term modernisation and investment plans

� Constant analysis of income and costs, especially service charges (keeping them competitive, suited to tenants’ resources and needs)

� Identifying areas for income optimizing (long and short term)� Identifying areas for cost optimizing (renegotiation of rates,

new suppliers)

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� Identifying areas for improvement and presenting recommended solutions to the owners

� Implementing innovations in every aspect of building operation� International, institutional investors expect implementation of

international standards ( in accounting, controlling, reporting, procedures, certifications etc.)

� Sufficient insurance and business running procedures� In many cases PM does not only do project accounting but

also corporate accounting

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Typical scope of services:

� Maintaining the bank account and bank statements registration� Issuing and bookkeeping sales invoices (monthly rent/turnover

rent/ short term income/others/ service charges invoices)� Reinvoicing of media costs ( if applicable)� Approval and bookkeeping of invoices concerning shopping

centre maintenance (FM) and management (PM)� Preparing and executing payments (mostly related to service

charges) based on AM/owner approval� Payroll and other services concerning Shopping Centre management

team (if required)� Payment of all tax obligations � With cooperation of finance team and PM - allocating costs

according to proper allocation structures (keys) regulated by LA,� Preparation of service charge reconciliation ( mostly annual) 11

Property accounting

Corporate accounting

Scope of services (Owners’ books):

� Bookkeeping invoices� Maintaining the bank account and bank statements registration� Control of sale invoices for tax purpose� VAT and CIT declaration preparation� VAT return preparation� Annual CIT return preparation� Annual Financial Statement preparation: balance sheet, P&L,

notes, cash flow ( more and more often done in propertyaccounting)

� Real Estate Tax return preparation

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Corporate accounting

Major activities related to property finance and controlling:

� Increasing role of controlling in PM and AM – correct data/reports� Controlling of income and cost side� Analyses and forcasts for turnovers� Activities related to Lease Administration� Controlling of proper cost allocations� Analyses of credit/debt coverage� Cashflows� P&L’s

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Property finance and controlling

Budgets

Budgets

Income side

Letting – rent -long term

Turover rent

Letting – short terms

Other

Cost side

Service charges budget

Letting Budget

Operational (opex)

Investment (capex)

Marketing (marex)

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Budgets Budgets

Budgets, control and reporting (1/2)

Scope of services rendered by PM:

� Management and co-ordination of yearly budgeting process for the owner

� Preparing budgets on income and cost side ( letting budget, turnovers forecasts and operational/marketing/investment budgets)

� Accurate monthly and annual reporting based on established/agreed templates (budget/realisation/variance/reasons/impact on end results)

� Day-to-day control of service charge costs and insight service charge budget execution

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Budgets, controlling and reporting (1/2)

Scope of services rendered by PM

� Preparing monthly/annual management reports and other reports that may be required, in agreed form

� Preparing monthly KPI’s report ( in regular report or separately)� Monthly follow up on NOI � Monthly follow up on other contractual obligations� Supporting owner in analysis of key factors in reporting that may

influence decision making process

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Budgets, controlling and reporting (2/2)

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Budget as a management toolBudgetsBudgets

Budgets –part of management process

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Planning/ analyses =>

Budgets

Organising/ Budgets

Implementation/ coordination

Controling /corrections=>reporting

Budgets – part of management process

The four basic budgetting methods are:

� traditional historic budgeting� zero-based budgeting� priority-based budgeting� activity-based budgeting

Budgeting methods are used in their pure form but also combinations of these methods are used.

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Budgets - methodologyBudgets - methodology

Budgets – methodology

Historical approach

� Most traditional method� Based on historical information and data ( in case of new projects – based

on benchmarks) - the "baseline" is automatically approved

� Involves an incremental approach (gradual increase)� Increase/ reduction usually based on fixed percentage� Does not review necessity of all budgets elements

This type of budgeting can be performed in several ways, most extreme are:� The bottom-up approach (participatory budgeting provides the opportunity

for employees to be involved in setting their own goals and expectations for a given financial period)

� The top-down approach (budget that is set without allowing the ultimate budget holder to have the opportunity to participate in the budgeting process)

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Zero based budgeting

� requires expenditure above a zero base be justified and costs to be estimated for differing levels of output and service

� in zero-based budgeting, every line item of the budget must be approved, rather than only changes. During the review process, no reference is made to the previous level of expenditure

� advantage of zero-based budgeting is that all proposed expenditure can be judged consistently and that optional and discretionary operations can be more closely scrutinised

� requires significant management effort to evaluate each cost centre by service level and expenditure

� often performed for selected cost centres and profit centres as a separate cost reduction exercise, maintaining regular financial control using traditional budgeting methods

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Priority-based budgeting

� designed to produce a competitively ranked listing of high to low priority discrete bids for resources which are called "decision packages"

� all activities are re-evaluated each time a budget is set� applies a concept of ranking bids as for capital expenditure but

also to more routine expenditure. � similar to zero-based budgeting but does not require a zero

assumption

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Activity-based budgeting

� focus on longer term improvements, through the monitoring of productivity, capacity utilisation, efficiency and effectiveness

� concentrates on the factors that drive the costs, not only on historical expenditure and data

� the strategic objectives can drive the budgetary targets and determine the volume of activities to be performed

� the budgets are derived from the activities using estimated cost rates

� separates the analysis of cost/benefit and value of activities from the more mechanistic budgeting exercise, reducing the complexity of the budgetary process and concentrating attention on the management of the business not simply on the costs incurred.

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� Example of service charges budget scope

� Budget assumptions

� Example of general budget - executive

summary


Budgets –service charge budget goals

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Goal of service charges budgeting in terms of repairs, maintenance and utilities:=> to create ideal, close to reality budget=> to realize it in 100 % and on time=> savings already reflected in budget formula

� Steady service charges prepayments vs. annual reconciliation and wobbly expenditure

� Flat budget vs. rocky budget� Balancing R&M with Utilities - trying to make the budget line as

flat as possible

Budgets –service charge budget goals

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Negative example:� big fluctuations - lack of realization according to the budget

� risk increase

Budgets – utilities and repairs

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Positive example: • small fluctuations - realization close to the budget

0

50

100

150

200

250

300

R&M

Utilities

Suma

Budgets – utilities and repairs

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� R&M – predictable and unpredictable

� Reasons for lack of realization of predictable R&M

(discussion)

Solution for resolving unpredictability:� analyses of statistics� prevention by earlier and planned exchange of necessary

systems/elements� negotiations of payments terms and timing with service

providers

Budgets – repairs, maintenance utilities –realisation and control

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Balancing impact of Utilities on R&M � R&M – tendency to maximize in summer season� Utilities – tendency to maximize in winter season

Budgets – repairs, mainteances, utilities –realisation and control

Accounting

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Accounting

•

Accounting - basics

Cash accounting

� An accounting method where receipts are recorded during the period they are received, and the expenses in the period in which they are actually paid

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Accounting - basics

Accrual Accounting

� An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur

� The economic events are recognized by matching revenues to expenses (the matching principle) at the time in which the transaction occurs rather than when payment is made (or received). This method allows the current cash inflows/outflows to be combined with future expected cash inflows/outflows to give a more accurate picture of a company's current financial condition

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Accounting - basics

Modified Accrual Accounting

� An accounting method (commonly used by government agencies)that combines accrual-basis accounting with cash-basis accounting

� Modified accrual accounting recognizes revenues when they become available and measurable and, with a few exceptions, recognizes expenditures when liabilities are incurred

� This system divides available funds into separate entities within the organization to ensure that the money is being spent where it was intended

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Accounting - basics

Rental income – budget and administration

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Income

Rent roll

� Source of all necessay base information for rent roll – signedLease Agreement with appendixes ( and annexes if applicable)

� Rent roll ( tenancy schedule, tenant roster)– example

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Lease agreement summary:� Lease agreement in shopping centre – mixed type of

agreement combining pure elements of lease agreement and agreement between landlord and tenant for providing services

� Lease agreement summary/abstract - defining key elements of the lease agreement in a compressed form

� Key elements include: tenant’s company name; trading name, unit no, lease signing, starting date and expiration date, baserent, indexation methodology, turnover rent, service charges and other additional fees,securtites, insurance, termination options, others

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Lease agreement

Lease agreement summary:

� Typical lease agreement with base rent and reconcilled service charges – summary example

� Turnover rent only agreement – summary example

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Lease agreement summary


Minimum rent budget:� Occupied space� Vacancies (present/forecast)� Scheduled adjustments:

a. Indexationb. Negotiated/ fixed increase/ RPIc. Step rentd. Rent free periods

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Indexation:

� The minimum Rent shall be indexed each year with effect as of 1st

of January, (typical, can be any other date!) in case of EURO quoted rents, in accordance with the “Harmonised Index of Consumer Prices” (HICPs) for EU Member States or Euro Zone only, published by Eurostat

� In case of rents in local currency – relevant index published by national statistical office

� Timing of calculating indexation =>diversified market practice� The first indexation usually after a first calendar year� In case of rent expressed in local currency – CPI published by

national statistic office applicable� Quite often indexation by CPI defined as not lower than 2%-3%

year to year39

Rental income – rent indexation

Rental income - turnover

Turnover rent – definition

� Equivalent to the positive difference between the amount ofpercentage of the Tenant’s Net Income defined in the leaseagreement earned in a given calendar year ( or other definedperiod– month/quarter/half of the year) and the annual (orother defined period) Monthly Rent amount binding in a givencalendar year (or other defined period);

� The Tenant shall pay the Turnover Rent amount within 7/10/14 (orother agreed number) days from receiving an invoice from theLandlord, which in principle should happen no later than by 31March of the year following the year in which the Tenant’s Incomewas generated. The Landlord has the right to settle the TurnoverRent at a later date but no later than by 30 June of the yearfollowing the year in which the Tenant’s Income was generated.

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Rental income – turnover rent

Rental income – turnover elements

Turnover elements

� Tenant’s turnover - the sum total of the revenues, excluding tax ongoods and services, due to tenant in connection with theoperations run by tenant, in particular in respect of the sale, grantof a license to use or rent any products, possessions and goodssold, licensed or rented by tenant within the framework of thetenant’s operations, as well as any revenues due to tenant inrespect of the services provided to tenant’s customers, and otherrevenues resulting from any operations run using the Premises orany part thereof.

� The revenues on sales on credit or sales on installment plan shallbe credited to the sum total of the revenues set out in thepreceding sentence at the time of the conclusion of the salesagreement. 41

Rental income – turnover elements

Rental income – turnover reporting

Turnover rent – reporting, reconciliation and payment

• Turnover reporting – daily, weekly, monthly, with formal monthlyand yearly conformation by tenant – certified accountant, shopowner etc.

• Defining elements excluded from reported turnover• Reporting – in agreed form - on-line or to sc administration• Reconciliation – in case of annual reconciliation ( most frequent)

first settlement period is the period from a shopping centeropening to the end of the calendar year, next for full calendaryears, and the last settlement period is the period from 1st Januaryof the calendar year in which the lease period terminates to thelast day of the lease period

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Rental income – turnover reporting

Turnover rent due

Most frequently used period of time for turnover reconciliation: calendar year; � best of the Landlord – monthly reconciliation� best for tenant – annual reconciliation

� Quite often:In case of turnover rent due for a given calendar year exceeds the amount of the minimum guarantee rent due for the same period by 25% ( or any other defined %) then the landlordshould be entitled to call the tenant to pay the quarterly advances towards due turnover rent. The amount of such advance shall be equal to the part of the recently invoiced due turnover rent proportional to the period of time

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Rental income – turnover reconcilation

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Turnover as one of KPIs

Rental income – turnover calculation

Turnover rent – calculation

• Natural break point• Artificial break point• Stair stepped• Offsets/ outsets – list of items excluded from sales in the premises

( sales via internet, other income not related to sales of merchandise etc.)

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Rental income – turnover calculation

Ca

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Example:• National shoe chain

• Unit: 135,9 m2

• Base rent: 27,00 EUR

• Ex.rate:4,1 PLN

• Turnover rent: 7%

• Annual rent: 180 529,56 PLN

• Annul turnover:

3 278 612 PLN

• Natural break point: turnover

at 2 578 993 PLN

• Positive example: good

turnover results => tenant’s

base rent can be potentially

increased, option of extention

of the offer in represented

branch

0

5000

10000

15000

20000

25000

30000

Base rent vs turnover rent - monthly bases

base rent turnover rent per month

Rental income – base rent vs turnover rent

Ca

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Example:• International fashion chain

• Unit: 108 m2

• Base rent: 25,00 EUR

• Ex.rate:4,1 PLN

• Turnover rent: 8%

• Annual rent: 133 086 PLN

• Annul turnover:

667 609 PLN

• Natural break point: turnover at

1 663 575 PLN

• Negative example: poor

turnover results => tenant’s

base rent can be potentially

decreased; exchange of tenant;

analyses of whole branch

performance in the project

0

2000

4000

6000

8000

10000

12000

Base rent vs turnover rent

turnover rent per month base rent per month

Rental income – base rent vs turnover rent

Measure success of tenants sales� PM analyses different that tenant’s own success measurement� PM takes into account tenants’ covenant, its own marketing, own

shop or franchising, others

How to define if tenant is successfulin our shopping centre?

� no of visitors ( in case of individual footfall meters)

� transfer from visitors to shopper ( no of receipts/no of visitors) – impact of

offer/ sales environment/service

� average basket (trends)

� turnover per sqm – comparison of results with other tenants in same retail

branch

� analyses of sales trends

� RSR (rent to sales ratio)

� payment of turnover rent 48

Rental income – assessment of tenants’ sales

Tenant sales audit

� Allowed according to procedures defined in signed leaseagreement

� Tenant required to present to Landlord, by the 10th day of eachmonth ( or other defined), a written statement on the amount ofthe tenant’s turnover for the preceding month.

� The statement should be signed by the persons authorized torepresent Tenant. At Landlord’s request, tenant shall be requiredto present to landlord original printouts from the cash registerand any other documents material to the determination of theamount of the tenant’s turnover.

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Rental income – tenant sales audit (1/5)

Tenant sales audit

� By March 31st ( or other defined date), of each Lease Year, Tenantshall be required to file a statement, in the same form, on theTenant’s Turnover in the Lease Year that ended, such statement tobe certified by the Tenant’s chief accountant.

� If Tenants is required pursuant to the Law on accounting to haveits annual financial statements audited by an auditor, it shall beunder the obligation to file also a statement certified by the auditoron the tenant’s turnover in the Lease Year.

� In the case of a failure to deliver any such documents orstatements, the Landlord will be entitled to charge the Tenant withthe contractual penalty for each day of delay in providing theabove documents or statements.

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Tenant sales audit

� If, following the verification of the Tenant’s statements it turns outthat the Tenant’s Turnover in the Settlement Period as reported byTenant is less than the actual Tenant’s Turnover as defined,Tenant shall be required to pay an additional amountcorresponding to the balance between the amount paid to day byTenant in respect of the of the Rent on Turnover and the amountof that rent determined as a result of the verification plus thestatutory interest on such balance.

� In such an event, Landlord shall issue an additional VAT invoice tocover such additional amount, which Tenant shall pay asap.

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Tenant sales audit

� If the information provided by Tenant on his turnover give rise todoubts on the part of Landlord, Tenant shall be required to enableLandlord to review the accounts and documents relating to theTenant’s Turnover generated by Tenant; provided that Tenant shallprovide Landlord and its advisors with free access to theaforementioned information promptly at the request by Landlord.

� Landlord shall also have the right to have the accounts anddocuments audited by an auditing company to be selected by it. Ifany discrepancies are found between the actual status asdemonstrated by the auditing company and the data relating to theTurnover provided by Tenant, then Tenant shall be required tocover the costs of the audit carried out.

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Tenant sales audit

� Tenant shall be required to keep any and all documents relating tothe Tenant’s Turnover pursuant to the provisions of law in force,but for a period no shorter than 5 years from the end of eachLease Year in which the turnover is confirmed by such documents

� If the Tenant fails to deliver turnover statement, the Landlord shallbe entitled to determine the Rent on Turnover for the ReducedSettlement Period according to its best knowledge, taking intoconsideration other documents provided by the Tenant to show theTenant’s Turnover.

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Budgeting for percentage rent

� historical data analyses� general and individual trend analyses ( general market trends/

branch trends/individual tenant)� verification of lease agreements towards options of increasing

base rent in case of turnover rent payment

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Rental income – turnover rent budgeting

Other income

� Short term leasing ( kiosks, stands, promotions)� Leasing of advertising space� Parking space leasing� Antennas� Fees from media resellers in case of signing such agreements� Penalties from tenants (i.e. ealier lease termination)� Entrance money from tenants ( in best shopping centres)

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Other income

Costs and expenses – budgets and administration

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Costs

Scope of service charges define costs centres

Scope of service charges defined in LA defines costs centres and areas for which PM is responsible and takes care of

Main elements of service charges:� management (including PM team management, taking care of

taxes, insurance, accounting etc.)� technical supervision and repairs� securtity� cleaning

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Scope of service charges define costs centres

� Lease agreements define methodology of service charge reconcillation => allocationkeys

� Methodology should be consistant through out whole period of s.c. life and managament, and if only possible same for alltenants in the project

� Wording of lease agreements defines who covers costs not covered by Anchor Tenants

Example of allocation keys

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Service charges reconcillation – allocationkeys

Common area administration

� Administration/Supervision fee� Centre Management Fee

� Billing Methods� Monthly estimate/annual adjustment� Monthly/quarterly based on actual

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Common area administration

Real estate tax administration

Lease language – sample of lease abstract-sample of lease abract turnover rent

Footprint vs. Building &Parking

Problem areas: extensions/ redevelopments ( CASE STUDY)

Assessment analyses:� Working with assessors� Appeal process� Legal fees/ appeal costs considerations� Liability 60

Real estate tax administration

Owner’s insurance:� Landlord shall provide insurance against full or partial loss or

destruction of the building (or buildings) of the Shopping Centerand external infrastructure as a result of the risks set out in theLandlord’s policy; insurance on lost of profit – Landlord own cost( to reconciled within service charges)

Retailer’s insurance/ Third Party insurance:� Tenant shall be required to conclude and keep during the Tenant

Works third party insurance policy covering damages to person and assets relating to risk connected with Tenant Works in the agreed amount. Such policy is to be presented by Tenant to Landlord, for its approval.

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Insurance administration (1/2)


Retailer’s insurance/ Third Party Insurance:� Tenant shall be required to conclude and to keep for the duration

of the term of the Lease Agreement third party liabilityinsurance policy, covering damages to persons and assets,which are connected with the risk relating to the Operations run byit in shopping centre. Such policy is to be presented by Tenant toLandlord, for its approval.

� Tenant shall be required to insure the Premises against otherrisks to be specified in writing by Landlord, if any otheragreed.

� The costs of the conclusion of insurance agreements and of thepayment of contributions shall be covered by Tenant, and Tenantshall be required to present evidence to Landlord of the relevantinsurance agreements, to keep insurance coverage throughoutthe term of the Lease Agreement and to timely pay thecontributions under such agreements. 62


Utilities & miscellaneous billings� Electricity & Gas� Water & Sewer� Heating Ventilation and Air Condition (HVAC) Service and

Maintenance� Repairs

� Billing examples

� Record keeping

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Utilities & miscellaneous billings

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date of invoicingpayment due

dateperiod of invoicing

1st follow up 2nd follow up legal follow up

20th of each month (+/-2 days), exchange rate as of the date of issuing invoice (or as per LA)

1st business day of each month

monthly

10 days after due date - call to the tenant + first notice of payment ( registered post)

15 days after due date - call + email to the tenant + PM meeting + 2nd notice of payment (by registered post)

31-35 days after due date - last notice of payment with 30 days for the payment, additionallymeeting with tenant (monitoring if tenant does not fall under 2 months unpaid rent -possibility of termination)

example: example: example: example: example: example:

rent for July 2014 invoiced on 20th of June 2014

1st of July2014

monthly 10th of July2014

15th of August 2014

5th of September2014

Billing vs collection and defaults

Financing and capital investement

FINANCING AND CAPITAL INVESTMENT� Methods of Financing� NRI/NOI

Gross Potential Income (GPI)

- Loss to Lease

- Vacancy and Collection Loss

= Net Rent Revenue (Net Rental Income)

+ Miscellaneous Income

+ Expense Reimbursements

= Effective Gross Income (EGI)

- Operating Expenses

= Net Operating Income (NOI)

- Annual Debt Service (ADS)

= Before-Tax Cash Flow (BTCF)

� Cost of Capital – cost in time� Return on Capital Invested

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Financing and capital investement

Lease administration – key elements and IT

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Why lease administration?

� supervising fullfillment of obligations under signed lease agreement

� complete and organized lease documents – easy usage and control� current and accurate lease database ( one project or portfolio)� not to miss critical dates which can lead to mistakes and cost

money� receiving correct rent and other fees and paying accurate costs� always ready for audit ( internal/external/due diligance)� ensuring compliance with accounting and bookkeeping rules

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Lease administration (1/2)


Why lease administration?

� Proper methodology and timing for invoicing� Proper methodology and timing for indexation� Proper methodology for calculating required amount of securites

and securing timing and maintaing proper amount though out the lease period

� Proper methodology for service charge reconcillation and timing� Securing landlord and tenants rights� Keeping update on all changes which are inevitable in long

term

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Lease administration - elements

� Lease auditing� Lease abstracting� Lease administration� Data validation� All documents and data management

More and more often - lease administration andtenants’ data management done via/ with supportof complex PM IT system

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Lease administration – key elements and IT

Comparing with Excel-approach, a good property management system provides many advantages

� Information on objects, premises, lease agreements and ammendments in one place

� Easy lease administration (key data follow up)� Easy securities management� One-click invoice generation for the whole shopping centre� Automatic indexation of rates in agreements� Reports for collection of receivables� One-click annual settlement of operating cost budget� Property management and financial reports� Automatic integration of property management data with accounting� Possibility to access to same data by more people at the same

time

Benefits of using modern IT systems

y

� Real-time access to all reports and documents� Higher quality of data

� a system makes natural updates of data e.g. the data must be correct and

complete to generate all invoices correctly

� Full automation of most mundane, time-consuming operations

� managing objects, floors, premises, tenants, agreements, rent-roll, and other data

� managing invoices and other documents, securities, media, turnovers

� operating cost reconcillation and rent/fees indexation

� managing payments, receivables aging, budgets, facility management

� reporting etc.

� Remote access for all employees or third parties (e.g. owners, external accountants, media technicians, or even tenants)

� Possibility to simulate future revenues and costs even from the beginning of the commercialization phase

� Possibility to create „data rooms” with documents for potentialshopping centre buyers

IT systems instead vs traditional approach

y

� Tough market - more time needed for a contact with tenantsfor letting, lease extentions or signing and receivablescollection

� Strong pressure from tenants and owners related to keep property management costs under control (i.e. the same team managing more projects)

� All data up to date and validated - easier sell/disposal of the property

� Limiting human factor in mistakes

� Structuring work and cooperation between different departments (same information, IT system used as communication platform –internally and externally)

IT support vs traditional approach

Summary

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Summary

� One can not have a very good property management withoutclose and efficient cooperation between front and backstage of PM

� More and more elements of asset management in propertymanagement

� PM needs to know lease agreement and to be able to fullyinterpret it

� Professional PM of shopping centre manages the project and its value through all activities

� Understanding financicing and accounting and its impact on property value

� Different budgeting and accunting approach related to differentneeds and habits of the owners

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Summary (1/2)

Summary (2/2)

� PM controls costs and builds up income � Strong emphasis on time and cost effectiveness and results � Using wide knowledge from different fields � Proactive approach and being open for positive changes � Base for all actions – bottom line – financial result � Adjustment to strategy and internal procedures of SC owner � Holistic approach to the project � Accepting process as the way to success � Accepting permanent change of situation and adjusting to work on

„live organism”

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Summary (2/2)

THANK YOU VERY MUCH FOR YOUR ATTENTION AND ALL THE BEST IN RETAIL CARRIER

In case of any additional questions,please do not hesitate to contact me:

dr Jolanta Wawrzyszuk, CCIMEmail: [email protected]

Phone: +48 697 700 804

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ICSC European Partners

ICSC European Partners

ICSC Global Partner

Documents

ICSC European Retail Property School European Retail Property School Accounting, Budgets and Lease Administration dr Jolanta Wawrzyszuk, CCIM 8/7/2014 Management I Few words about