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Three questions to ask a commercial real estate asset manager before you sign on


Three questions to ask a commercial real estate asset manager before you sign on

By: Chris Sadler, President, Allegiancy

January 27, 2015

My company Allegiancy just signed a contract to manage a new commercial property in Raleigh, N.C., called Colonnade II. That got me to thinking about the questions that property owners could – or should – ask as they evaluate and select an asset manager.

After being in this business for a long time, we have definitely seen the good, the bad and the ugly in our field.   So today, I want to candidly suggest some discussion points to raise with a potential asset manager, including Allegiancy.  These questions would go beyond the standard financial due diligence that everyone should do before entering an agreement.

1.   Why should I trust you?

Trust is basic to any relationship, and it is paramount to one in which you’ll be entrusting your treasure to the care of someone else.  (This is particularly important if you plan on this treasure helping fund your retirement, or becoming a legacy for your family.)  So you must know beyond a doubt that your asset manager has credibility and integrity.

Determine this by spending as much time as possible not only talking directly with potential managers, but also by asking for other property owners you can talk to about their work.

When speaking to the other property owners, ask questions that get to “trust issues,” including:

– Do the managers call you back when they say they will?

– Do they do what they say they will when they say?

– Do they treat you and your money as you expected?

Ask for specific examples of these behaviors.

In every property that we manage, we’ve found that we have to establish trust amid chaos by demonstrating credibility and integrity.  Without that, we can’t be effective with any of the constituents.

2.  What will the first phase of your management look like at my property?

The first few months are vital to the success of a property takeover because it sets the tone for what will come with the tenants, lenders, vendors, leasing agents, and even potential tenants.  Look for a manager who plans to be extremely aggressive during this initial timeframe.

The first thing we do at Allegiancy is to meet personally with all the tenants.  There’s real value in face-to-face communications: people see who you are.  They find out they can relate to you, and they learn they can trust again. This ultimately protects our owners.

Allegiancy then also puts together a plan and openly shares it with the owners and other key players in face-to-face meetings and phone calls.  This shows everyone involved that there’s a new sheriff in town—one who will fix things where needed.

3.   What’s your first priority in managing a property?

Keep in mind that the lenders, tenants, vendors, property and leasing managers are all important, and their issues must be addressed.  But at the end of the day, you want an asset manager who is clear that they are first and foremost advocates for YOU, the owner.

It’s pretty simple.  You want an asset manager who will do what you would do if you were there at your property every day.

Chris Sadler’s company, Allegiancy, manages commercial properties that have outperformed their peers by 45 percent since 2006.  The company has more than $300 million in assets under management and delivers clients attractive returns and profitable, hassle-free investments in commercial real estate.

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