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Landlords who are renegotiating leases should not rush into short-term arrangements that could reduce rents for years to come, especially without full knowledge about historical and current monthly sales. Instead, landlords must carefully evaluate post-holiday sales data from tenants. That makes collecting, auditing and verifying sales data for complete transparency even more critical as landlords consider renewals or rent concessions. In their role as commercial property fiduciaries, landlords can’t just react out of fear. Now it’s their duty to position their properties for the future.
Full Story: Shopping Center Business
Incidences of retailer errors when reporting sales to landlords have skyrocketed during the pandemic. Louisiana-based financial management consulting firm The Lamy Group says that recent auditing during the pandemic has found that two out of three retailers have underreported sales to landlords. According to Lamy, online sales are the biggest culprit in misrepresentations. Many retailers don’t include online transactions, even when the sale is serviced and fulfilled by a brick-and-mortar location.
Full Story: Globe St.com (free subscription model)
There are sales, and then there are reported sales
February 26, 2021
Most tenants are making errors reporting their sales to landlords, and the majority of those result in underreporting, according to Kenneth Lamy, the founder, president and CEO of The Lamy Group, a consultancy that helps landlords quantify retailer sales for rent-collection purposes. That’s hurting the perceived value of retail properties. Lamy said the most common errors revolve around:
- items bought online and either picked up in store, delivered from the store to the shopper’s home or picked up curbside
- mishandling of online sales made in the retailer’s physical store
Full Story: ICSC – Shopping Centers Today (SCT) (ICSC member login required)
Where to Run a Store Now
February 1, 2021
The formula of where to locate a store involves many variables — rent, lease terms, parking, zoning, visibility — but perhaps above all is going where the people are. One (key target for retailers) is within metropolitan areas. Neighborhood shopping districts have been enjoying better traffic and sales than malls or downtown areas. Kenneth Lamy, CEO of financial management firm The Lamy Group, who works with commercial landlords, says such areas, and the stores and restaurants in them, may more readily bounce back from the challenges of the pandemic.
Full Story: Retail Dive
Webinar: Landlord Due Diligence in a Coronavirus World
January 27, 2021
A webinar covering landlord best practices and proper due diligence involving the collection of contract rents. Kenneth S. Lamy, CRRP, CRX (The Lamy Group) leads the discussion from the financial perspective and suggests which tenants should be examined and the information required from the tenant. Additionally, Howard F. Kline, Esq. (Law Office of) presents the key legal considerations, strategies and ramifications, including applicable lease clauses and remedies while Jeff Kreshek (Federal Realty) and Peter Morris, CRX, CLS, CSM, CMD (Greenstead Group) contribute the practical perspective of the landlord and property manager.
Full Story: CRE Radio & TV
The New Retailer-Landlord Relationship
January 6, 2021
The retailer-landlord relationship may be entering not just a new year, but a new era. After a contentious 2020, many store tenants and landlords are reshaping their leases to include a percentage rent provision whereby a retailer pays a base rent, plus a percentage of their revenue. Using revenue to figure out the rent requires a retailer to share more details about its operations with its landlord, as when a business goes to a bank for a loan, according to Kenneth Lamy, CEO of financial management firm Lamy Group, who works on behalf of landlords.
Full Story: Retail Dive
With holiday sales now being tabulated, retailers and their landlords are facing the next phase in the retail cycle as the health and economic calamity climaxes, then recovers: reassessing, renegotiating and renewing leases, many of which expire in January or February. Without careful sales auditing and verification as leases expire, landlords should not provide short-term reductions that will have negative implications as pandemic subsides later in 2021, says retail financial management thought leader Kenneth S. Lamy.
Full Story: WBOC-TV CBS (Salisbury, Md.)
The 40 Best Jewelry-Related Quotes of 2020
December 24, 2020
This has been quite a year, with plenty to talk about. And so JCK has collected 40 of the best, most interesting, most insightful, most revealing quotes of 2020. “In the ’70s, ’80s, ’90s, and early 2000s, people kept building these monster [mall] properties. The market could support one or maybe one-point-something, but they built three. The United States has overbuilt retail by multiple levels compared to any other country in the world.”—Kenneth Lamy, CEO of financial management firm Lamy Group, to Retail Dive
Full Story: JCK: The Industry Report
Servicers Get Harsher With Retail Loans, Look More Kindly on Hotels
December 10, 2020
Current loan to value ratios show an average of 138% for retail and 86% for lodging. Retail experienced an average drop in value of 49%, while lodging saw a 27% decrease. Further complicating the picture of retail health is the difficulty understanding retail sales during the pandemic. Kenneth S. Lamy, founder and CEO of Mandeville, La.-based The Lamy Group, told GlobeSt.com in an earlier interview that the increase in buy online, pickup in store (BOPIS) and curbside pickup will complicate matters.
Full Story: Globe St.com (free subscription model)
For landlords who have percentage rent leases with their tenants, the right sales numbers from the (2020) holiday shopping season are critically important. But this year, getting the right numbers may be more challenging than ever. For one thing, the increase in buy online, pickup in store (BOPIS) and curbside pickup will complicate matters. For another, the pandemic restrictions will make it difficult to conduct onsite audits, according to Kenneth S. Lamy, founder and CEO of Mandeville, La.-based The Lamy Group.
Full Story: Globe St.com (free subscription model)
Percentage Rent Leases: How Could Click-and-Collect Sales Factor In?
November 30, 2020
As U.S. landlords and tenants negotiate short-term rental agreements to make it through COVID-19, many landlords are angling for percentage rent lease terms, in which rental rates rise as tenants’ sales rise. However, accurate accounting is critical. In the past, landlords often skipped or glossed over audits of stores’ sales, says Ken Lamy, founder, president and CEO of management consultancy The Lamy Group. Now, however, lenders and investors are requesting that landlords deliver increasingly detailed information about tenants’ sales. Thus, in landlord dealings with tenants now, “it’s trust-but-verify, and this applies from the individual center owner to the small-portfolio landlord to the major REIT,” he said.
Full Story: ICSC – Shopping Centers Today (SCT) (ICSC member login required)
Verified Rent Relief Benefits Both Parties—By Kenneth S. Lamy
November 19, 2020
Businesses around the U.S. have reopened, but some face new restrictions and shutdowns. And many tenants continue to operate at partial capacity — sometimes with sparse shelves from inventory on back order. To ensure a steady stream of rental income, particularly during the critical retail holiday season, landlords may be best served by devising and accelerating a temporary rent relief plan. Such a plan could base rents for distressed retailer tenants on a percentage of sales, rather than the traditional fixed minimum rent plus percentage after an agreed-upon breakpoint. But first landlords must take an often-neglected step that will radically change the lease process going forward.
Full Story: Shop! Retail Environments Magazine
Anchors, Away: How Department Stores Are Ditching Malls
November 12, 2020
Have malls chased away their anchors, or have department stores disappointed as anchors? Green Street Advisors analysts in April said they expect a little more than half of all mall-based department stores to close by the end of next year. That in turn triggers clauses in inline tenant, or non-anchor leases that allow for an easy exit or an unscheduled renegotiation of rent. The pandemic has played a part in this. Dillard’s, J.C. Penney, Kohl’s and Belk are examples of retailers in the (department store) segment finding success in what is a smaller, lower-cost arrangement, according to Kenneth Lamy, CEO of financial management firm Lamy Group, who has been working with landlords in forging pandemic-related rent relief. This year Nordstrom said it would close 16 full-line stores and Macy’s said it would close 125 more stores in the next three years.
Full Story: Retail Dive
For Retail Landlords, The Key to Rent Relief is “Trust, But Verify”
November 6, 2020
The simultaneous bankruptcy filings by mall operators CBL & Associates and PREIT underscore the rent collection deficiencies during the COVID-19 era that have created severe financial distress for many retail landlords, who have obligations to pay mortgages, operating costs and taxes. “Before landlords agree to a percentage of sales as a form of rent relief, they need to verify tenant sales and establish a fair procedure for a temporary new rent structure by conducting a formal sales audit,” said Kenneth S. Lamy, founder and CEO of Mandeville, LA-based The Lamy Group. These audits are relatively straightforward when conducted remotely by qualified retail real estate accountants.
Full Story: Connect Commercial Real Estate
To ensure a steady stream of rental income, particularly during the critical retail holiday season, landlords may be best served by devising and accelerating a temporary rent relief plan basing rents for distressed retailer tenants on a percentage of sales, rather than the traditional fixed minimum rent plus percentage after an agreed-upon breakpoint, according to The Lamy Group, a financial management consulting firm that helps landlords quantify retailer sales for collecting rents. But first they must take an often-neglected step, one that will radically change the lease process going forward by conducting a formal sales audit,” recommends Kenneth S. Lamy, founder and CEO of Mandeville, Louisiana-based The Lamy Group.
Full Story: WTNZ Fox43 TV Knoxville
With indoor dining having been banned across the country for months and still heavily restricted in many areas, restaurants have faced deeply slashed revenues without a proportionate cut in costs. To address the disparity before tenants go under, more landlords have been offering to charge rent purely as a percentage of revenue rather than a flat rate. The percentage rate, which tends to land between 5% and 15% of a restaurant tenant’s revenue, is mostly being offered on a temporary basis until business conditions return to something like normal, financial adviser Ken Lamy told NREI.
Full Story: Bisnow National
A recent survey by the NYC Hospitality Alliance found that 87 percent of New York City’s restaurants, bars and nightlife venues couldn’t pay their full rent in August. The culprit, of course, is pandemic restrictions imposed on these businesses. Some restaurant landlords are temporarily switching from fixed-rate rents to rents based only on a share of the tenant’s gross sales or revenue, in an effort to help these businesses survive, says Ken Lamy, founder, president and CEO of The Lamy Group, a Mandeville, La.-based financial management consulting firm. Landlords are then leaving the door open to revisiting the rent structure at a later date, perhaps 12 to 18 months down the road, he notes.
Full Story: National Real Estate Investor
The restaurant industry has been suffering financially like few others, and landlords fear that individual restaurant survival will depend on the rent structure that restaurants can afford to pay during the next six months. Landlords are either deferring or abating rents for their restaurant tenants (that are unable to operate at full capacity during the pandemic). A percentage deal is the only fair method until the pandemic is over. It’s a tradeoff, but the upside is that restaurants can survive on half of its sales. As sales increase, so do the restaurant’s rent obligations.
Full Story: Shop! Retail Environments Magazine
As of early September, throughout the US, indoor dining is permitted with restrictions, except for some areas that have recently seen cases of the coronavirus spike. And despite being open, restaurants are facing severe challenges. Kenneth S. Lamy, founder, president and CEO of Louisiana-based The Lamy Group, said there is a solution for tenants to continue paying their rent while landlords avoid another business failure. He recommends tenants and landlords agree to percentage-only rent until the first half of 2021.
Full Story: Globe St.com (free subscription model)
As cooler weather in much of the U.S. and Canada will impact or preclude outdoor dining, percentage-only rent is key to landlord and tenant survival, says retail real estate financial management consulting firm. “Fall and winter will make [restaurants’ ability to survive] even more apparent, as you just can’t operate outdoor dining when it’s 35 degrees and sleeting. By negotiating percentage-only rent for six to 12 months, restaurants get a lifeline, and landlords can receive some monies to maintain the shopping center, pay real estate taxes and make mortgage payments,” said Kenneth S. Lamy, founder, president and CEO of Louisiana-based The Lamy Group.
Full Story: Houston Chronicle
According to Kenneth S. Lamy, founder and CEO of The Lamy Group Ltd., for retailers and landlords looking to negotiate a rent restructuring, The Lamy Group has an equitable model for landlords and retailers: collecting, analyzing and then verifying sales.
Full Story: Women’s Wear Daily (WWD) (tiered subscription model)
As U.S. retailers and shopping centers enter the sixth month of the pandemic, landlords are seeking more effective approaches for deferring partial rents into the fall, observes Kenneth S. Lamy, founder, president and CEO of The Lamy Group, an international financial management consulting firm specializing in retail and commercial real estate for more than 30 years. Restructuring can take several forms: deferral, abatement and outright forgiveness. But the only way to have an honest and productive partnership, Lamy noted, is through data that will allow landlords to evaluate the health of the retailer and allow them to assess the amount and type of assistance that can be offered.
Full Story: San Francisco Gate, Albany Times-Union, Seattle PI, San Antonio Express-News, Business Insider, Pittsburgh Post-Gazette
The Lamy Group has helped many retail real estate owners and managers assess tenant viability and resolve lease issues during times of hardship, including processing requests for rent deferrals, abatements and forgiveness. According to Kenneth S. Lamy, president and CEO of The Lamy Group, here are 10 things we learned from COVID-19 that should make us and everyone else stronger: 1. Landlords and tenants must forge viable partnerships…
Full Story: Chain Store Age
Full Story: National Real Estate Investor
