CREJ

Page 14 — Property Management Quarterly — April 2020 www.crej.com Management COST EFFECTIVE VALUE ADD SOLUTIONS DESIGN / COLOR CONSULTATION SELANTS & SPECIALTY COATINGS REBRAND REPOSITION RESTORE INTERIOR / EXTERIOR PAINTING 303-861-2030 / denvercommercialcoatings.com C onsider the market’s current positioning and outlook. Reflect for a moment, a fewmonths back when a consistent feed of research pointed toward low interest rates, high level of liquidity in the debt and equity markets, negative yields in the global markets, compress- ing cap rates teetering on disparate values as compared to stock price multiples, limited assets available for acquisition and maturity in the current economic cycle.This led us to consider that while assets were fully priced, from an investment perspective, verify- ing they were not overpriced would be critically important. Nowwith COVID- 19 proving to a black swan, investors will be competing to find stable oppor- tunities for maximizing yields from within new and current holdings. Those capitalizing will be focusing on finding creative ways to strengthen their portfolio by uncovering oppor- tunities to reduce operating expenses and seeking out value-add invest- ments.This begs the question, how con- trollable are operat- ing expenses?Where will these enhanced returns come from? In a market driven by tenant experi- ence and building amenities/services, are there sustainable ways to reduce costs while not sacrific- ing quality? Not only is this achievable, but also by focusing on the right mix of initiatives one can bolster the tenant experience while creating the desired outcome for the owner. Consider the following approaches. n Appealing tax assessments. Rarely is it enough to simply state that you don’t agree with a new value.You need not only to be prepared to state what you think the value is but also have data to build a case that proves it. Consider getting the property re-appraised or a exploring a similar valuation analysis. When assessing this option, consider if any of the following are relevant to the property in question: • Impending or actual loss of tenancy. • Recent casualty damage. • Recent increase in valuation based on transactional data. • Local market economic obsoles- cence from new construction. • Substantial deferred maintenance or necessary capital improvements. • Building systems less than ideal for tenants with sophisticated needs. • Recent demographic, transit and/or tenant mix changes. n Rebidding property insurance. Global insurance prices rose nearly 11% in the fourth quarter, according to a new report by Marsh. It’s the ninth con- secutive quarter of price increases. USI is forecasting a 10 to 20% increase for property noncatastrophic with good loss history and as much as 60% increases for properties with poor loss histories. Rebidding insurance often is an opportunity to find providers with more favorable rates or coverage than provided under existing policies. Have your broker provide a break- down of the differences in coverage between carriers. There is always a risk that lower prices come with less coverage. When calculating property value, use the cost to rebuild the property after a total loss versus the market value. Lastly, you should consider increasing your deductibles to lower coverage costs. A higher deductible can be benefi- cial if you are not planning on filing claims for small losses or risk the carrier’s nonrenewal. Uncovering returns in 2020’s uncertain market Jason Kiper Client services leader, Haynes Mechanical Please see Kiper, Page 24 There still are areas where management can discover returns Matthew Harrell, National Real Estate Investor