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Kleppiere Walmart Case Summary

855 Words4 Pages

Benchmarking commercial real estate, shopping center developers
Breaking down of rental yield and understanding company performance

One of the most important criteria for determination of the success of a commercial real estate developer’s portfolio is rental yield. A strong portfolio is one which continuously generates higher rental income with consistent demand for space in the locality or region. Additionally, other factors such as maintenance and upkeep costs, occupancy rate, market value of the portfolio, types of tenants, lease expiration profile, tenant cost of occupancy (rent per sq. ft. to tenant sales per sq. ft.), demand and supply forces and the general state of a local real estate industry play an important role in determining …show more content…

This was due to the recent acquisition of Corio and the company was yet to fully derive synergies from the merger. However, Intu had the lowest EBITDA margin owing to higher costs in comparison to revenue per sq. ft., while Unibail had the lowest costs per sq. ft. and fetched highest EBITDA margin among the three. Source?
Moreover, rental income and costs are also affected by popularity and location of properties, this can be measured by footfalls, which in turn get converted into tenant sales. For instance, tenant sales per sq. ft. of Unibail grew by 4.1%, while for Kleppiere the growth was 4.4%. A consistent increase in tenant sales can translate into higher overage rent and, in turn, increase net rental income or revenue for developers. Source: Company …show more content…

The rental revisions and reimbursements are dependent on lease renewals and tenant retention rate. Hence, except Unibail, other companies witnessed a decline in the increase of base minimum rent for their portfolio. Subsequently, both Kleppiere and Intu renewed leases at lower base rents to retain clients. However, revenue per sq. ft. remained consistent as these collected reimbursements and other recoveries from their tenants. Unibail, on the other hand, maintained quite higher rents for its premium brands and on average rentals on other tenants. Its maximum rent per sq. ft. was around Euro 79 per sq. ft., while the weighted average was around Euro 45. Therefore, rent increase was not uniform across all tenants, thereby, ensuring a healthy increase in base minimum rent for the

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