“Harding’s tip for shopping-center landlords negotiating a lease with a tenant is to keep a close eye on the clauses.” |
| Posted: 08 Jan 2011 11:16 PM PST Harding's tip for shopping-center landlords negotiating a lease with a tenant is to keep a close eye on the clauses. Matthew Harding's top tip for shopping-center landlords negotiating a lease with a tenant is to keep a close eye on the clauses.  DON SMITH/STAFF PHOTOGRAPHER Matthew Harding is CEO of Levin Management Corp., which operates more than 85 properties in three states. "There are so many things in a retail lease that can impact a landlord," says Harding, president and chief operating officer of Levin Management Corp. of North Plainfield, the property manager for Paramus Place, Clifton Plaza and Edgewater Square shopping centers, as well as more than 85 other centers in six states. Restrictions like co-tenancy clauses, which can specify that if an anchor tenant leaves the center, the rent is cut in half, can sink a center if a spate of retail bankruptcies occurs, he says. The motto of Levin Management — founded 50 years ago to manage the properties of the Levin family and then expanded to a management portfolio of 12.5 million square feet — is: "The management company that thinks like an owner." Matthew Harding President, chief operating officer, Levin Management Corp., North Plainfield His business: He supervises day-to-day administration of a retail property management firm that oversees about 90 shopping centers in six states, with more than 12.5 million square feet of retail space. The company employs 55. His background: He graduated from Hamilton College in 1985 and worked for Garrick-Aug Realty Associates in Manhattan for a year before joining Levin Management in 1986 as a leasing agent. He was born and raised in Morristown and lives in Monmouth County. That philosophy "is what sets our company apart," says Harding, 47. "We were started by a landlord and we only work from the landlord's side of the table." (Interview condensed for space.) Q. How did you get started in retail real estate? I was always interested in real estate and my first job out of college was for Garrick-Aug Realty Associates, which was a commercial real estate brokerage company in Manhattan, focused exclusively on retail. Approximately a year later, I started leasing properties for Levin. I started as a leasing agent, leasing empty spaces in shopping centers and I've been there ever since. Q. In April, Levin became the court-appointed receiver for the ITC Crossing center in Mount Olive. Are you the receiver for other properties or was that a first? It's not a first; we've done that in the past. But it's the first in this economic cycle for us. We're just about to start another project for a lender who's taking back a property. We'll be managing and leasing the property for the lender. We'll fix it up and in all likelihood they'll then dispose of the property. We've done lots of that work over time and expect to see more in 2011 as there are more loan maturities. There are quite a number of loan maturities coming due in 2011 that may cause lenders to take back properties if the borrower can't refinance. Q. Is it tough to go in as a receiver, or where a lender has taken back a property? Have those properties gone downhill? Often yes, because the current owner on the property may have checked out. We've encountered a wide range of scenarios. Sometimes it's a relatively cooperative situation, but we've had to go into centers where we've had nothing — no rent roll, no leases — and get the leases from the tenants and so forth. Then we're able to put together the books and records, and get the tenants comfortable. Often they're in a state of flux, not knowing what's going on with the ownership. Generally, when the lender hires us they have a greater feeling of comfort and stability. Q. You have four centers with A&P, Pathmark or Waldbaum's stores. Are you worried about any of those stores closing [with the recent A&P bankruptcy filing]? None of them have been closed thus far. We're looking at it closely. I don't want to speculate, but what often happens in a large retail bankruptcy like that is there's some further closing of stores, or maybe someone steps in and takes some of the leases. We're starting to look at other retailers that might be interested in the spaces in case they do close. Q. Is there demand for supermarket spaces? The supermarket situation in our area is pretty interesting because over time you've had consolidation and bankruptcies. So the number of supermarket chains you can talk to about expansion in New Jersey has declined. Sometimes a bankruptcy like A&P provides an opportunity for a player who's in the rest of the country to come in. That's what Kohl's did. They took advantage of the Caldor bankruptcy to get a critical mass of stores. Q. In 2009 and early 2010 there were lots of stories of tenants who stopped paying rent or who asked landlords for concessions because of the economy. Do those kinds of requests come up to your desk? They do. We have a committee at our office that used to meet relatively infrequently. As the economy changed we streamlined our process and made it a two-step process — an initial evaluation of whether to pursue further assistance and then we ask for sales history and other information from the tenant. We try to work with the tenant if we can. There are many things you can do — such as extending the lease term — that are good for the tenant and good for the landlord. The requests for help have dropped off quite a bit. But in our portfolio the level of arrears is really very good. We haven't suffered real significant losses of tenants. Q. You seem pretty upbeat. How does your mood now compare to December 2009, 2008. When did things look the bleakest? In 2009, things looked quite bleak. Everything had stopped. Financing stopped, tenant expansion stopped. In 2010, it has picked up. We've had a very good year leasing in light of the current economy. We've done a large number of deals in all ranges and we're renewing tenants, which is very important in maintaining occupancy. However, there's still an undercurrent of uncertainty out there when you see something like A&P filing for bankruptcy, or a Loehmann's bankruptcy. I expect the progress of 2010 to continue, with some ups and downs for particular retailers. Exec Access appears every Sunday. E-mail: verdon@northjersey.com Matthew Harding's top tip for shopping-center landlords negotiating a lease with a tenant is to keep a close eye on the clauses. "There are so many things in a retail lease that can impact a landlord," says Harding, president and chief operating officer of Levin Management Corp. of North Plainfield, the property manager for Paramus Place, Clifton Plaza and Edgewater Square shopping centers, as well as more than 85 other centers in six states. Restrictions like co-tenancy clauses, which can specify that if an anchor tenant leaves the center, the rent is cut in half, can sink a center if a spate of retail bankruptcies occurs, he says. The motto of Levin Management — founded 50 years ago to manage the properties of the Levin family and then expanded to a management portfolio of 12.5 million square feet — is: "The management company that thinks like an owner." That philosophy "is what sets our company apart," says Harding, 47. "We were started by a landlord and we only work from the landlord's side of the table." (Interview condensed for space.) Q. How did you get started in retail real estate? I was always interested in real estate and my first job out of college was for Garrick-Aug Realty Associates, which was a commercial real estate brokerage company in Manhattan, focused exclusively on retail. Approximately a year later, I started leasing properties for Levin. I started as a leasing agent, leasing empty spaces in shopping centers and I've been there ever since. Q. In April, Levin became the court-appointed receiver for the ITC Crossing center in Mount Olive. Are you the receiver for other properties or was that a first? It's not a first; we've done that in the past. But it's the first in this economic cycle for us. We're just about to start another project for a lender who's taking back a property. We'll be managing and leasing the property for the lender. We'll fix it up and in all likelihood they'll then dispose of the property. We've done lots of that work over time and expect to see more in 2011 as there are more loan maturities. There are quite a number of loan maturities coming due in 2011 that may cause lenders to take back properties if the borrower can't refinance. Q. Is it tough to go in as a receiver, or where a lender has taken back a property? Have those properties gone downhill? Often yes, because the current owner on the property may have checked out. We've encountered a wide range of scenarios. Sometimes it's a relatively cooperative situation, but we've had to go into centers where we've had nothing — no rent roll, no leases — and get the leases from the tenants and so forth. Then we're able to put together the books and records, and get the tenants comfortable. Often they're in a state of flux, not knowing what's going on with the ownership. Generally, when the lender hires us they have a greater feeling of comfort and stability. Q. You have four centers with A&P, Pathmark or Waldbaum's stores. Are you worried about any of those stores closing [with the recent A&P bankruptcy filing]? None of them have been closed thus far. We're looking at it closely. I don't want to speculate, but what often happens in a large retail bankruptcy like that is there's some further closing of stores, or maybe someone steps in and takes some of the leases. We're starting to look at other retailers that might be interested in the spaces in case they do close. Q. Is there demand for supermarket spaces? The supermarket situation in our area is pretty interesting because over time you've had consolidation and bankruptcies. So the number of supermarket chains you can talk to about expansion in New Jersey has declined. Sometimes a bankruptcy like A&P provides an opportunity for a player who's in the rest of the country to come in. That's what Kohl's did. They took advantage of the Caldor bankruptcy to get a critical mass of stores. Q. In 2009 and early 2010 there were lots of stories of tenants who stopped paying rent or who asked landlords for concessions because of the economy. Do those kinds of requests come up to your desk? They do. We have a committee at our office that used to meet relatively infrequently. As the economy changed we streamlined our process and made it a two-step process — an initial evaluation of whether to pursue further assistance and then we ask for sales history and other information from the tenant. We try to work with the tenant if we can. There are many things you can do — such as extending the lease term — that are good for the tenant and good for the landlord. The requests for help have dropped off quite a bit. But in our portfolio the level of arrears is really very good. We haven't suffered real significant losses of tenants. Q. You seem pretty upbeat. How does your mood now compare to December 2009, 2008. When did things look the bleakest? In 2009, things looked quite bleak. Everything had stopped. Financing stopped, tenant expansion stopped. In 2010, it has picked up. We've had a very good year leasing in light of the current economy. We've done a large number of deals in all ranges and we're renewing tenants, which is very important in maintaining occupancy. However, there's still an undercurrent of uncertainty out there when you see something like A&P filing for bankruptcy, or a Loehmann's bankruptcy. I expect the progress of 2010 to continue, with some ups and downs for particular retailers. Exec Access appears every Sunday. E-mail: verdon@northjersey.com This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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