Each individual retail tenant is holistically scored according to over 20 indicators. This includes the solidity of their business model, their exposure to online competition, their strategic importance to the overall property and other tenants, or the degree to which a tenant can adequately substituted.
One of the retail handling guide’s key goals is to distinguish between tenants that were already struggling prior to the onset of Covid-19 and those with solid business models thrown in disarray by the current crisis. Based on this distinction, asset managers can make informed decisions about the property’s cost and revenue structure, for instance when it comes to (re)negotiating leases. Investors, in turn, are provided with a solid data basis for potential negotiations with financing banks and an overall repositioning of struggling retail properties. Lastly, financing banks can more realistically assess their exposure and risk by gaining transparency about the sustainability of a property’s tenant structure and positioning.
“Asset managers and investors are often caught in somewhat of a sandwich position between tenants struggling during the current challenges and financing banks on the other side. In this difficult situation, we provide a scoring tool that produces transparent and holistic tenant evaluations. On this basis, asset managers and investors can find sustainable solutions to the benefit of all stakeholders“, comments Lars Jähnichen, CEO of IPH Handelsimmobilien. A crucial component of a fully-fledged analysis of any retail property also includes forecasting tenants‘ sustainable maximum revenues and rental cashflows. „Potential conclusions that we recommend to investors can include refurbishments of former retail into – for instance – office spaces“, Jähnichen adds.
