If you are playing and don’t know who the patsy is, you’re the patsy.
Things will change, no matter how much you plan.
Plan your work, work your plan but don’t plan the results.
How often do you discuss your specific plans with strangers? Think corporation is any different? If publically traded, you can get their annual report but remember who wrote it. You can also buy stock and attend shareholder’s meeting.
I can tell you stories that you don’t want to hear.
Best Advice: negotiate so well that, should the tenant move, you will be happy and know how to profit. Then pray they don’t go T.U.
Buying a shopping center with some national tenants in it, how do i find out if
these tenants plan on staying? Is it common to just call up and ask , call corp
offices…? what and how do i do? I just want to know what their intentions are
before i purchase as their leases expire within 2 years.
How deep are you into the negotiation process? I would ask for 3
years worth of P&L statements (preferably audited) as well as copies
of the individual leases. Depending upon the type of lease (gross,
net, modified gross), you could negotiate with lessees on their
expense items in order to maintain occupancy, if applicable. In
many cases, a 5-10% vacancy and collection rate (V&C) range is
usually deducted from the potential gross income. I would bank on
either some collection loss or vacancy annually to be realistic in
your cash flow models. If at all possible, I would estimate the
remaining economic life of the building’s short and long lived items.
This will allow you to forecast a reasonable maintenance expense
per year or give you guidance if you choose to set up a reserve
account - unless the lessee is responsible for all interior
maintenance and exterior cam charges. If you were to perform a 10
year DCF model (I like Argus software although expensive) using
realistic going-in and terminal cap rates (realtyrates is a good place
for data), you could make a sound investment decision. Always be
mindful of your investment holding period - you want to realize
when tax benefits are diminished due to depreciation and financing
conditions. Good luck in your endeavor.