Strategic Rent Decisions Stemming From COVID-19

The opportunity

Now is the time for commercial real estate companies to utilize the proprietary and public information at their disposal, combined with analytic and visualization tools to prepare a rapid and detailed analysis of tenant viability. Companies have an opportunity to leverage analytics to improve decision making to insulate the value to the portfolio.

Deloitte’s customizable rent relief services provide needed observations and insights to proactively operate in a highly agile and analytic capacity to assist organizations in making informed decisions quickly.

Our artificial intelligence-driven rent relief services respond to clients who:

• Need to create a strategic, well-managed, and sustainable rent relief program to proactively respond to tenants.
• Require assistance to analyze and operationalize the rent relief program and estimate its impact on portfolio financials, future earnings, asset valuations, debt covenants, and operations.
• Lack the AI-driven capabilities to quickly ingest and analyze public and proprietary sourced credit / financial performance data on tenants to support a detailed decision process.
• Are required to quickly process a large volume of lease modifications or amendments and record them in their existing system.

Our rent relief services

Gather Tenant and Lease Data augmented by AI and Machine Learning tools

• Quickly ingest and aggregate tenant and lease data from existing systems.
• Review and add relevant clause data from executed leases (force majeure, default, minimum occupancy, security deposit, co-tenancy, kick-outs, go-dark, hours of operation).
• Enrich with valuable financial and non-financial data inputs.

Identify overall tenant value proposition to portfolio

• Mutually agree on quantitative and qualitative decision-making criteria.
• Leverage analytics-based dashboards to guide decision-making.
• Estimate tenant future viability.
• Segment tenants to allocate limited rent relief resources.

Rapidly execute on rent relief decisions

• Assist clients to develop the amendment framework for negotiation with tenants.
• Develop an efficient workflow routing and approval support for amendment process.
• Abstract amended leases into existing systems.

Assess overall impacts of decisions to the asset

• Determine cumulative decisions to debt covenant ramifications.
• Estimate valuation, financial reporting, and budget impact.
• Incorporate business changes to standard lease form.
• Advise on new and revised property management procedures and compliance.

Outcomes and benefits

• Insights to drive highly informed proactive actions rather than ad-hoc decisions.
• Detailed view of decision impact and implications.
• Strategic inputs for portfolio management.
• Visual illustration of financial and operational impacts of rent relief to the client business.
• Foundation for ongoing analytics as market conditions change.
• Reduce cash flow impact and potential to enhance value.

The Deloitte difference

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Deloitte’s real estate industry practice has:

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