For the past 21 years, I have had the unique pleasure and responsibility of teaching a variety of courses for the International Council of Shopping Centers (ICSC). Most of the classes have been related to lease language, common area maintenance or accounting for non-accounting professionals. And, I probably get as much or more out of the classes as the students do, because the classes are always a conversation. I get to learn.
This past Monday, I spent the day leading two classes at ICSC’s University of Shopping Centers with a long-term friend and industry professional, Ken Lamy. The morning class was Finance and Accounting for Non-Accounting Shopping Center Professionals, and the afternoon class was a Case Study – where the students get to learn and apply that knowledge. So, you have brokers, marketing people, development professionals, some asset managers and even a few accountants just trying to learn the real estate terms. They come from both the landlord side and the tenant side, and are all trying their hands at a little bit of accounting and lease administration as groups of them develop an offer and a plan of action for a shopping center they “want” to acquire. “Want,” because not everyone would buy this center, but for purposes of the exercise, they do. And, in a little more than three hours, they realize they actually have learned some accounting and lease language!
But, what I try to get across in the classes is that every clause in a lease somehow affects cash flow, and cash flow affects value. So, what I will try to do with this blog is tackle parts of the lease and explain the impact on cash flow. Whether it is understanding the difference between true partial lease years, extended lease years and extended partial lease years, or why a 600 square foot hiking store can cost you a prospective tenant or millions of dollars, we will hit it.
We will address the cash flow and value of lease language! I intend to post weekly each Sunday.
(And a special thanks to Michael Beckerman from thenewsfunnel.com for sharing about the need for content as traditional media withers. Great session!)