About a month ago, I was sitting at my desk in the office watching in shock as city officials announced the closure of the Houston Livestock Show and Rodeo due to the spread of the Coronavirus in the city and surrounding counties. The Rodeo is a big deal to us Houstonians. It’s a treasured tradition that brings the whole city together, creates thousands of jobs, stimulates the economy, and, most importantly, awards millions in scholarships each year. This announcement rocked the city, to say the least, and I honestly couldn’t believe it. I look back at myself during that time and can’t help but think, “You ain’t seen nothing yet.”
These days, I use the word “uncertain” to describe the current state we’re in. None of us could’ve prepared for our current reality, and there seems to be a new change each day.
This shared uncertainty goes beyond things like concerts and working from home. Tenants, for example, are experiencing uncertainty around things like rent payments, vendor contracts, and lease expirations.
Our client services team has been hard at work this past month helping clients access the information they need to make decisions during these uncertain times. One thing is very apparent- the basics of your leases matter more now than ever. So, we compiled a list of the key details that we’ve heard about the most to share with you. We hope our insights offer a little bit of guidance.
What you Need
Accurate Master Lease List
First things first, you need to have a complete and accurate list of every lease in your portfolio. In order to make decisions or predictions, you have to know exactly what you’re working with. Bonus points if you can determine the exact term and expiration for each one.
Landlord Contact Information
If you need to reach out to your landlord about rent relief or delaying payments, you’ll need to have proper contact information. It seems simple enough, but the majority of Tenants haven’t talked with their Landlord since they signed the lease. Not to mention, this information can change, and sometimes Google will give you a better answer than your lease.
Instructions for Contacting Your Landlord
It seems silly, but a lot of Landlords specify how they would like to be contacted. It could be as simple as addressing a letter to the attention of a certain person, or as old school as sending a fax. Believe it or not, we’ve seen that before.
Force Majeure Clauses
Simply stated, if you cannot perform certain obligations that you’re bound to by contract (like paying rent) due to forces out of your control (like a global pandemic), Force Majeure excuses you from the obligations or gives you more time to perform them. Force Majeure is currently a widely discussed and complicated topic so I’ll direct you here and here for some expert insight. I bring up the topic to say that it’s important to familiarize yourself with the clause if you plan to approach your Landlord about something like delaying rent payments.
Having accurate rent projections for each of your locations will help you be proactive both in the present and for the future. You may need them right now to make quick decisions about the next few months, but if you can see at least a year into the future, you’ll be able to make a plan for navigating the aftermath of the Coronavirus.
How to Prepare
If you don’t have your lease information organized and aren’t sure where to start, begin with your documents. Make a folder for each location and sort the documents into their corresponding folder. It sounds like a simple practice, but from our experience, this is the best way to identify gaps and missing details. By doing this, you’re also formulating an accurate master lease list.
You’ve heard it a million times, but I’m going to say it again – stay home, wash your hands, and try not to touch your face too much. And while you’re at it, organize your leases. It’s a great way to kill uncertain time. For more insight on the reality CRE Tenants are facing these days, check out our video here.