Even if property is in principle more stable than other commodities, it is not immune to losses in value. As far as rented property is concerned, even an unenforceable rent increase or unexpected repairs becoming necessary can result in falling net revenues.
The loss of a key tenant can even mean that the revenue from the property no longer covers the costs. The greater the amount of vacant space and the longer this situation goes on for, the more likely it is that substantial adjustments to the asset value will become necessary. The lack in rental income can also lead to a maintenance backlog, which also has the effect of reducing the value.
Companies or other owners who generate a significant part of their revenue from letting real estate often fall into a liquidity crisis for this reason. Interest and principal payments due can no longer be paid, leading to a loss of trust on the part of banks or other creditors and to the risk of insolvency on the part of the owner.
Our task is to ward off this risk of insolvency.
Our 3-Phase Model shows how this is possible: