Andrew Zezas interviews Tim Anglim on CFO Studio
Tim Anglim, President of YesCFO discusses the “Role of the CFO in Privately-Held Companies and Not-for-Profit Organizations.”
Landlords Don’t Need Tenant Representatives!
“Boil them in oil!” “Bring me their heads!” “Hang them from the gallows!” “Don’t pay ’em a dime!”
Given the often fiery relationships that exist between landlords and tenant real estate advisors, one can envision high-powered landlords sitting behind large desks waiving their cigars and pounding fists in the air, decrying the fate of their arch enemies, those lowly tenant representatives. While some landlords wish for all tenant representatives to sink to the bottom of the ocean on that same ship where many suggest we should put all the lawyers, the best landlords recognize the value a good tenant representative brings to a lease transaction. Of course, some landlords, not the best-in-class, prefer to have no one between them and their prey, so they can feast on their opponents and extract maximum benefit on their own behalf.
However, the most successful landlords recognize that they actually need tenant representatives in order to achieve their own objectives. They know that many companies are now operating with smaller management teams and the need to remain transparent. For most tenants, it would be unacceptable to negotiate a real estate transaction directly with a landlord, their transactional opponent, without the benefit of objective third-party advice. This is especially true, given that most companies, whether public, private, or owned as part of a portfolio, are operated for the benefit of others…owners, investors, stakeholders, beneficiaries, charities, and so on. As such, given the fiduciary responsibilities most management teams must bear, being objectively advised before they negotiate, what are most often, multi-million dollar real estate transactions, is the only way they will proceed. And, seasoned, quality landlords get that.
Professional landlords recognize that a great tenant representative will guide its client through the thinking and planning stages prior to engaging in discussions or negotiations with the landlord. The result is most often a significant savings of the landlord’s time and resources in having to educate the tenant as to market conditions, transaction structure, how to distill operating needs into real estate transactions, and more. The approach taken by professional tenant representatives actually increases the likelihood that landlord will make quicker deals.
By the time a tenant who is advised by a tenant representative engages the market, the tenant can be expected to have completed its planning, will better understand its objectives, and will be better able to make internal decisions. Accordingly, as a result of the information gathered under the typical tenant represent process, landlords are most often better able to satisfy the needs of prospective tenants and can better arm themselves to negotiate terms and successfully complete transactions.
While many landlords blame tenant representatives for lost transactions, increased cost, decreased revenue, and more, the most successful landlords realize that they benefit when tenant’s engage their own representatives. They also know that, while engaged to protect the interests of tenants, tenant representatives indirectly create value for landlords, as well.
About CFO Studio
CFO Studio spotlights New Jersey based senior finance executives, providing them with the opportunity to share their knowledge and communicate their perspectives on current economic, financial, operational, and business issues. By invitation only, CFO Studio promotes select finance executives, their ideas, experience, and insights, in a professional, tasteful, and low-key interview setting. Topics include current and future trends in accounting, banking, business, corporate strategy, employment, finance, IT, operations, real estate, risk management, the economy, and more. Watch interviews with noted area finance executives and learn how your peers are creating sustainable value for their companies! Join the conversation or just watch, listen, and succeed! We welcome your ideas for future interviews. If you would like to appear on CFO Studio, please email or call our CEO, Andrew Zezas, at 732 868 0000 x111. Visit www.CFOstudio.com
About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations. Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America. By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.
In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate. The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery. Visit www.RealStrat.com. Follow CFO Studio at http://www.Twitter.com/CFOstudio.
Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.
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As Commercial Buildings Mature, Will Tenants Lose?
By the end of the 1980s, almost half of the office buildings that existed at that time were constructed during the previous ten years. When leasing space in new office buildings, it was easy for tenants to understand that they would not likely experience significant pass-throughs of capital expenditures. Why? Because the majority of those buildings were new, and even in a poorly conceived or constructed building, a tenant had a reasonable expectation that at least for the first few year of its lease term, substantial capital improvements would not be required.
Another interesting trait of the 1980s was that every third dentist became a real estate developer over night. And, many of us have heard of those stories where buildings were so horribly constructed that they immediately started falling down around their tenants. Thank you cheap money and speculative construction!
Those shiny new office buildings had brand new elevators, HVAC systems, electrical and safety systems, facades and parking lots. Their tenants, not expecting to bear the financial burden of major capital improvements, negotiated their leases by restricting their landlords from passing through such costs. Landlords, who also recognized that their buildings would not likely require immediate capital re-investment, most often agreed to such restrictions.
That was in the 1980s….30 years ago! Now, those buildings are mature, the warranties on their roofs, windows, elevators, HVAC systems, parking lots, and other infrastructure and capital components have long since expired. Replacements of capital items have been made once, twice, or more (at least in better run buildings!), in order to properly maintain functionality and service levels. That’s the nature of buildings…as their systems wear out, and they will wear out, those systems must be replaced.
Because of how leases were negotiated in the past, under the terms of such older leases, replacement of major systems and the associated costs fell to landlords. Now, with office buildings maturing and the expectation that building systems will require on-going replacement over time, should landlords continue to be responsible for these significant costs? Should those costs be passed onto tenants? Should both parties share these costs? Should those costs be handled differently for existing and renewing tenants versus new tenants? Who is rightfully responsible?
What do you think?
About CFO Studio
CFO Studio spotlights New Jersey based senior finance executives, providing them with the opportunity to share their knowledge and communicate their perspectives on current economic, financial, operational, and business issues. By invitation only, CFO Studio promotes select finance executives, their ideas, experience, and insights, in a professional, tasteful, and low-key interview setting. Topics include current and future trends in accounting, banking, business, corporate strategy, employment, finance, IT, operations, real estate, risk management, the economy, and more. Watch interviews with noted area finance executives and learn how your peers are creating sustainable value for their companies! Join the conversation or just watch, listen, and succeed! We welcome your ideas for future interviews. If you would like to appear on CFO Studio, please email or call our CEO, Andrew Zezas, at 732 868 0000 x111. Visit www.CFOstudio.com
About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations. Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America. By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.
In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate. The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery. Visit www.RealStrat.com. Follow CFO Studio at http://www.Twitter.com/CFOstudio.
Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.
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