Managing property assets

By Angus MacCUISH
Published: 20/04/2009

BUSINESSES in all sectors have a duty to secure the best return from leased or owned properties in the current challenging economic climate.
Good corporate governance is crucial if a business is to be properly focused and profitable.

One area which is often overlooked is how a business manages its property assets.
As far as commercial property is concerned, we believe directors have a duty to know where the risks lie and conversely where opportunities may exist which benefit the company and improve profitability.

Companies which do not actively or effectively manage their properties could, for example, miss a deadline for a lease-break which allows them to relocate to more desirable premises without financial penalty, or to negotiate better rental terms for their existing location.

Similarly, there may be an opportunity in a lease agreement to purchase a property within a specific timescale, but if missed by the occupier it could have a negative effect on the balance sheet.

It’s important that businesses have ready access to reliable information and are aware of critical dates which may impinge on decisions they have to take in relation to their commercial property requirements.

Some businesses will be very focused and fully aware of what lies ahead from one year to the next, but others may be less well organised and it can hit them hard when they can least afford it.

In addition to dealing with lease variations, companies need to have a planned property maintenance programme in place to take care of repairs and to avoid an expenditure bottleneck which could drain cash-flow.

Proper financial planning is an integral part of good corporate governance and a planned maintenance programme will avoid any expensive surprises in terms of repairs or general refurbishments which are required in the life cycle of a property.
If a company is not up to speed with critical dates affecting its property assets, it could distort the way it is perceived by their bank, prospective new funders and potential shareholders.

Seeking professional advice from a reputable commercial property expert will identify risks and maximise potential profit-growing opportunities.

Angus MacCuish is managing director of chartered surveyor and property consultant FG Burnett.