The key to rent collection during covid
Since the arrival of Covid-19, commercial property businesses have felt its impact, and a range of unforeseen challenges have emerged. The pandemic has left large property groups struggling to collect rent, and reporting a drop in rental payments received, as tenants have had to review their operational processes and costs.
Retail property has been particularly hard-hit with rent collection dropping to levels around 50%, however this isn’t a universal problem. Careful management and a personalised approach have been our key to bucking this trend, collecting close to 90% of rent across our portfolio of schemes throughout 2020, with a 12-month average including Q1 of 2021 that remains at over 80%.
In these unusual circumstances, a drop in rent collection would not be unexpected, but finding a positive way through by working collaboratively with tenants has proven successful for ESTAMA UK. In terms of asset management, our approach has always been heavily relationship-based. Our focus is on strong tenant partnerships and a synergistic way of working that benefit both parties. This ensures that as and when negotiations become necessary, they can be carried out in goodwill and mutual understanding. Whether it’s a full lease regear, or revision of particular terms, acknowledging that one party’s success will bring success for the other is key to a positive outcome.
This approach has served us well throughout the pandemic and our property management process is not dissimilar. As well as focusing on relationships, any property management company needs to equip its team with in-depth industry and asset knowledge. Knowing where your scheme fits into the national picture, as well as an understanding of the regional idiosyncrasies that will affect it, are crucial to success. Add to this specific site knowledge and you are a step closer to the expertise required. These elements are a powerful combination when wedded to a personal approach and strong relationship, as demonstrated by rent collection figures at one of our schemes remaining above 90% throughout the pandemic.
Supporting tenants to find a way through the pandemic has been a major focus. Particularly smaller, independent tenants who may have been most at risk and less familiar with the businesses’ processes that could help them navigate this turbulent time. Assisting these tenants in applying for and securing business support grants has helped them adapt to their dramatic change in circumstance and given them a fighting chance. This also keeps our schemes in good shape, avoiding vacant units and maintaining rental income; further proof that working together benefits all.
Underpinning all of this, a carefully managed and efficiently run property accounting team provides the foundation for all the above and safeguards the numbers. A dedicated and experienced credit control department provides the insight required to spot both opportunities and areas of concern, to ensure that nothing is missed. Daily analysis and cash-posting keeps all parties informed and, if an area needs attention, it all comes back to the bedrock of relationships to find an agreeable solution. The rent collection process involves numerous stakeholders, but whether you’re a property accountant, asset manager or centre manager, the key is strong relationships. If a property business invests in relationships as an ongoing priority, then the route to rent collection will be a smoother one.
