Retail Portfolio Gains Value Through Addition of Property Management

December 14, 2022

Commercial real estate (CRE) is an attractive investment because of its consistent returns, passive income, and growth potential. The commercial sector of real estate investing is becoming more and more popular as an alternative investment. However, while it has the potential to be profitable, the acquisition of commercial investments is only the first step to strategic profitability. Knowing when, what, and how to manage the assets in a commercial real estate is an essential component of success or failure.

A successful owner of five high-profile suburban Chicago retail centers reached out to Caton Property Management after struggling to achieve desired financial outcomes with his investment portfolio.

As part of the onboarding process, the property management team conducted an analysis of the financial records, reviewed tenant leases and performed visual inspections of each of the retail strip centers. They also began contacting existing tenants to help facilitate a smooth transition and to prepare the business owners to work with the management team directly. As part of this analysis Caton discovered that several tenants had not paid their CAM reconciliations for several years. Other issues were also discovered that had been negatively impacting the annual net operating income across the portfolio.

Within the first 120 days the property management team made an impressive collection effort netting over $70,000 in balances due from 2019, 2020, and 2021; reducing delinquencies within a very short period of time. Recognizing the opportunity to reinvest the unexpected funds back into the assets, the owner allocated the funds to several maintenance projects and exterior improvements.

Leasing vacancies is a natural next step after securing lost revenue and bringing maintenance up to date. In this case, Caton Property Management partnered with the brokerage division of the firm to lease the primary vacancy in the portfolio. With the combined power of marketing and relationships, Caton Commercial Real Estate broker, Rich Bowden, was able to attract and secure a long-term lease with national tenant within 60 days of listing the space for lease.

The value of commercial real estate is mostly dictated by three things, the location of the property, the physical building and how well it’s maintained, and the quality of the tenants occupying the spaces. After the critical first steps were taken to re-establish a relationship between this investor and his tenants the expectations for tenants has been reset. Caton Property Management continues to deliver comprehensive service with day-to-day tasks such as tenant relations, rent collection, CAM reconciliation, preparing a budget, capital improvement projects, invoice payment, maintenance, and monthly financial reporting.

Caton Property Management takes pride in finding effective solutions to their clients’ most challenging concerns as well optimizing investors’ property values.

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