9 things retail landlords can do right now to stay alive

If you're currently experiencing the joys of real estate ownership and were fortunate enough to select retail as your chosen investment strategy, don't hit yourself in the face with a hammer just yet.

No one really knows what's around the corner but the trick is being around to find out, and then (especially) if you don't like what's around that corner, being around long enough to find out what's around the next corner.

It looks like we won't scrape this coronavirus off our shoe as quickly as we hoped, so buy time and create options - here's how:

1. Re-forecast. You've got a problem, and like any good 12-step program, the first step is acknowledgement. Look at your cash flow with fresh eyes. Meet with your tenants. Enlist third parties that have insight. For public company tenants, listen to investor conference calls, read analyst reports, and watch retailer presentations. Talk to store managers and anyone else that will spill their guts. Talk to other landlords. Subscribe to third-party data like Creditintell. Find scuttlebutt wherever you can and decide if you agree. Get educated - really educated - then plant a flag where you believe your revenue will be. Then add some buffer and this will reveal the mountain you need to climb.

2. Torch operating expenses. These often don't move the meter very much but the objective is to lengthen your runway, and sometimes even another month can be all you need. Review each line item and ask how you could possibly delete, reduce, or defer expenses. If you're paying for trash service and tenants are closed or have shortened operating hours, can pick-ups be reduced? Can property management be outsourced or brought in-house? Understand the short-term repercussions of not paying property taxes. What if you skipped fall color plantings? Can property insurance be re-bid? What if you acknowledged temporary rent reductions with an email or form letter rather than paying an attorney to do individual lease modifications? Throw nickels around like they're manhole covers.

3. Hustle temporary income. Are there ways to monetize your common areas or parking lots? Food trucks, auto sales, maybe that goofy fireworks stand would be less offensive than running out of cash this month. Maybe you have a service tenant that is flourishing and they would pay for improved pylon signage. You don't need to solve for every problem, you're just trying to buy time.

4. Refinance. It might be a crappy time to own retail, but its a great time to borrow money. Find out what options you have - you might be surprised. If you have no property-level debt, get a line of credit in place before you loosen your belt too much. You don't have to draw on it but it will be a safety blanket if you get jammed up later and need to pay a big property tax increase or (hopefully) leasing costs. If you have a portfolio, look to consolidate debt on some properties so as to leave something unleveraged. You may be able to do the same within a single property - encumber only the credit and leave the shops free and clear. If you have only unsecured debt, see what options property-level debt might create. If you can't refinance, get in front of your lender open kimono and request a deferral of all or a portion of your payment (even if you've already done it). Cash is King.

5. Recapitalize. As a follow-on to your work on the debt side, if you have partners you may find they don't have the stomach to continue looking around corners and are open to buyouts. You may soon find that your lender has a new mandate to shrink their balance sheet and will accept a discounted payoff. These opportunities might not appear for another few quarters, and it is where real money can be made, but you have to be in a position to act. Again, cash is king.

6. Explore partial sales. Do you have ground-leased outparcels that can be sold at a premium? Can you condo your buildings or land and sell a bite-sized portion to a tenant or investor? Is there expansion land that can be sold? Are their air rights or easements or that can be sold? Is there a transaction with a neighbor or municipality that can solve a problem for them and put some cash in your jeans?

7. Reconfigure. So your anchor closed, good riddance. So there's no one to backfill it, so what. The rent was likely pretty low anyway. Instead of just thinking of the box, think of the parking lot as well. Is there a way to create high-visibility space? You may find a couple of outparcels can provide more revenue than a box retailer. Is there an opportunity to create a multifamily site? Maybe your basis and location points to a premium townhome site.

8. Get exposure to non-traditional uses. Vacant retail is raising the eyebrows of non-retail users. Last-mile distribution is becoming a thing, medical is a thing, and storage has been a thing for a while. You may have a site suitable for creative office space if some big windows and maybe an internal courtyard were added. To find out if there are non-traditional users for your site, it's a game of exposure - use social media and leverage your efforts by enlisting specialists in the brokerage community.

9. Preserve income. Leasing velocity is slowing, keep tenants where you can IF they can pay or you believe they can recover, but create optionality for yourself - remove exclusives, no-build restrictions, renewal options, whatever reduces your flexibility and get termination rights if you can, but keep as much revenue in place as possible.

Maybe you don't have the patience to continue busting your pick. Maybe its time to move on and spend your efforts elsewhere. Sometimes life is just too short to walk around with a bad deal chained to your ankle. But if you're not quite ready to tap out, buy all the time you can because time has a way of solving most any real estate problem.