As a Property and/or Asset Manager (Manager), we are constantly striving to ensure the highest NOI for every asset within our portfolio by maximizing revenue and minimizing expenses. NOI (Net Operating Income) is a term used to determine the financial health of an asset before removing debt service, interest, commission or capital work. There are several different areas that a Manager will monitor to ensure a successful and positive NOI for an asset including monitoring income, operational expenses and following a well thought out budget for the asset.
A Manager closely monitors the incoming revenue for an asset by collection of rents, CAM (Common Area Maintenance Charges) and any additional rents that may be applicable based on a lease. Managers watch for Tenants to hit gross revenue sales to capture any overages. Additionally, Managers conduct regular meetings with both their tenants and their brokers to ensure the property is meeting the needs of the tenants and that we are realizing the full operational potential of any given asset.
Varying assets will have different operational expenses depending on the type. Managers will be familiar with retail, office, industrial, flex and mixed-use properties so that they can leverage all expenses. Real Estate Taxes are checked annually for market trend and recommendations are made on whether to appeal. Insurance is measured against other assets within a portfolio based on square footage to ensure best rates as well as coverage criteria. Managers work closely with all vendors providing routine services to an asset and leverage portfolio wide pricing to minimize all expenses and drive the income return.
Each fiscal year a Manager works with vendors, maintenance and leasing broker(s) to prepare and propose an operational budget for a given asset. This is a critical piece to the management of any asset as understanding the needs and continued success of an asset starts with the budget as a benchmark. Managers will compare current budgets over past year actuals – working with numbers from an extended history to watch the operational trend for the asset. Year over Year comparisons help mark the growth (or lack of) as well as market trends; and helps to make recommendations to owners for capital projects that could lower expenses (such as lighting retrofits, roofing, parking lot relays) along with what return would be on any proposed work. During budget preparation, Managers discuss occupancy with owners and leasing broker to work towards a fully occupied asset and make recommendations on spaces that are challenged. Managers present a full plan for the upcoming Fiscal Year as well as an extended capital budget for the next five years to give the ownership a good analysis of the property needs and upcoming work, as well as, making capital recommendations based on the asset’s financial health.
Driving NOI for any owner is one of the most critical roles a Manager controls. This line indicates the amount of time and work put into each asset, as well as, drives the value of the asset within the market. Consistent monitoring and trending of an asset allows for its continued success and growth. Managers that are focused on NOI will recognize when an asset is becoming challenged before it becomes a considerable issue for any owner and will stand ready to make recommendations for the continued success of any given asset.
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Nicole Read joined Cressy Commercial Real Estate in 2016 as a Property Manager. Nicole brings extensive knowledge in Retail, Medical and Office and has worked throughout several markets. Nicole oversees the day to day operations of the properties including monthly financial analysis, annual budget and extended capital budgeting, Tenant relations and retention, contract procurement and management, lease administration and works closely with Brokerage, Maintenance and Accounting to ensure that each Asset is performing at peak potential.