The COVID-19 pandemic has negatively impacted the economy and created uncertainty for businesses in various industries. In light of the current situation, companies are looking to obtain some financial relief, with rent among the major concerns they are seeking to resolve.
This situation has placed an unprecedented amount of pressure on landlords, both financial and operational, as they scramble to process these requests and understand the impact these requests have on their building values, portfolios and their obligations to lenders and shareholders.
The following are a few tips on how to effectively and efficiently process rent relief requests, to help ease the pressure on you and your team as you address your tenants’ situation.
1. Be empathetic. Tenants are feeling the effects of a distressed economy: a large decrease in sales and revenue, as well as having to reduce their employee bases, among others. They are trying to find ways to keep their businesses and finances afloat while fulfilling their obligations, from loan payments, to vendor fees, to rent. Putting yourself in your tenant’s shoes can help both of you objectively assess the situation and hopefully come to an agreement that works for both parties.
2. Proactively communicate with tenants and don’t wait for them to approach you with an appeal. Reaching out to a tenant before they come to you will open up the lines of communication early, so you and the tenant can get a sense of where you both stand now, before the situation reaches a critical point. Having a conversation sooner than later will allow you and your tenant to more thoughtfully create, propose and consider scenarios for rent relief that work for both sides. The alternative of connecting at the eleventh hour could result in hurried negotiations, “band-aid remedies” and missed opportunities, which do a disservice to you and your tenant.
3. Create rapid processing criteria to streamline the process. Having a “formula” for evaluating a multitude of appeals will create efficiency. Set your criteria to specifically meet your portfolio strategy; your criteria could take into account tenants’ size, lease terms, pandemic contingency plans and long-term growth potential. Whichever benchmarks you wish to use – and these benchmarks may significantly differ from landlord to landlord – establishing order and a system for fulfilling the piles of applications on your desk will provide a sense of control and hopefully, ease.
4. Create a triage plan for the requests you are receiving. Assigning a priority level to each request and tackling it accordingly will help make the task at hand feel less daunting. Incorporate standardization into your responses and offers as much as possible, so you don’t feel like you’re starting from scratch with each request. Give tenants two or three options, maximum, to avoid getting overwhelmed, especially by the aspect of going through the fine details of each lease term.
5. Create manageable and realistic scenarios for tenants to opt into. Remember Top Tip #1 – Take into account the tenant’s situation when presenting them with options to consider in exchange for rent relief. Whether you’re proposing to increase future rent, extend the tenant’s current lease term or a combination of the two, assess as well the considerations you are willing to take on. In the long run, maintaining good relationships with your tenants helps assure you of continued business and income.
6. Get help. Partner with a trusted advisor from a trusted company that has good relationships with tenants. An effective advisor can help facilitate and expedite your rent relief assessment process; communicate with your tenants; get approvals; manage documentation; as well as assist with operational opportunities and cost deferment, all adding up to a smoother, less onerous task on your part.