Five Ways for Leaders to Proactively Seek Opportunity Amid Chaos in Commercial Real Estate
- Apr 3, 2023
By Rob Katz
Between the Silicon Valley Bank’s demise (among other large institutions), the government taking regulatory action, and talk of another interest rate hike, the past few weeks have given real estate leaders reason to pause and reflect on their financial and operational health. Lenders have already been tightening credit standards, property values have been in flux, and a weakened banking environment complicates the picture even more for commercial real estate.
As we reach the end of Q1 and with spring upon us, it’s important to keep our eyes set on the future. With today’s uncertainty comes tomorrow’s opportunity. It's this mindset that not only helps protect your assets, portfolio, and operations from future uncontrollable factors, but positions yourself to take advantage of them as an avenue for growth.
Here are a few actionable strategies and ideals real estate leaders can leverage to proactively protect their portfolios, as well as set themselves up for future success.
Meet with Your Core Team Often and Consistently
During times of uncertainty, communication is everything. How often does your key leadership meet? Consider scheduling a mandatory team meeting for once a week, no more than one hour long. Tuesdays are usually the best, the day after people handle pop-ups that arose over the weekend. While it may seem like an obvious suggestion, it’s important to stay consistent as it’s easy to get lost in “business as usual.” Depending on the size of your organization try to limit it to only a few key leaders, allowing for helpful dialogs and back-and-forths.
For the meeting, establish a handful of key objectives you want to accomplish. Plan to revisit them each week for progress. Set quantitative milestones so leaders can track success. People want to demonstrate where they’re doing well – and nobody wants to attend a meeting and be questioned on why they have not met or fallen short of established goals and targets or missed cash flow improvement opportunities. This also reiterates the significance of the topics that should be tied to profits and performance.
Review and Assess Your Portfolios: Strongest, Weakest and Everything In Between
When was the last time you did an extensive portfolio review? With the changing environment, the time may be now.
Consider ranking your portfolio’s strongest and weakest assets. This creates clarity not only where opportunities exist but also where you need to focus and build up weaker assets. If leadership and stakeholders can answer these questions, great. If not, this needs to be assessed now more than ever. If your team doesn’t have a clear understanding of what is making -- or costing -- your business money, you lose the ability to be proactive and agile amid uncertainty.
Diversify Your Lending and Banking Relationships
With both today’s volatile banking environment and complex economy, most people might think it is time to hunker down. But it's also a rare time to explore new opportunities to diversify your lending relationships.
Request a meeting with your lender to discuss their financial position, economic outlook, and the strength of their balance sheet and capital structure. A great banking partner should honor that request, and often require the same from you anyway. The worst they can say is no.
Also, consider scheduling a meeting with a new lender and asking those same questions. See what their take is on the environment and what some of their offerings are. From their point of view, during times of uncertainty, they want to instill institutional confidence in potential clients, and bringing in new, well-capitalized clients does just that. It’s often a win-win situation for each party.
Offer Employees Accountability Without Blame
In today’s business environment, many look at accountability and blame and see them as one and the same -- but that cannot be further from the truth. Part of the reason stress levels are as high as they are is that if ‘things don’t go well,’ people feel the need or are compelled to place blame. The best leaders hold people accountable without blame. Holding an employee accountable for their work is a show of trust and an opportunity for them; blaming someone for an error or issue does just the opposite. Your people are your greatest asset; this behavior allows them to grow as well as effectively scales your real estate operations as you grow.
It also ties into the above reference: When weekly meetings occur, rarely do things go so far astray that they cannot be fixed without blame. To the highest quality and most successful companies, blame is a bad look.
Listen First, Speak Second
A very wise man told me to ‘listen to understand, not to respond.’ Effective leaders listen and observe twice as much as they speak. How many times are you in a conversation, making a point and the person you are speaking with is already responding before you have a chance to finish your thought? This only suggests the other person may not be listening in earnest.
In business, real estate in particular, having a close-knit circle of employees and advisors is key to long-term growth and success. If people are in your trusted circle, listen attentively to what they are saying. They offer a wealth of knowledge.
Along with your weekly leadership meetings, speak with your people one-on-one and often. Not only will truly listening to your team instill trust in you as a leader when times are tough, but it allows you to better understand what makes them tick, as well as identify issues and opportunities before they come up.
A Final Thought
Stay focused and do not panic. Regardless of the sector you operate in, no matter how successful, everybody hits a bump in the road. And we all learn the most during those times. It is much easier to succeed when life is going well, and you are riding the curve, but how you adjust during times like these are what positions and improves cash flow for the future.
Navigating Banking Uncertainty
At EisnerAmper, we recognize our responsibility to keep you informed on opportunities and pitfalls during times of uncertainty, and to provide you with the knowledge to make the right decisions for your business.
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Robert D. Katz
Robert Katz CPA is a Managing Director of EisnerAmper Financial Advisory Services Group, and works with public and private companies, in and out of bankruptcy, to create and execute the strategy needed to restructure or improve operating performance.
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