Case Study: 5 benefits of lease property management for tenants
ANZ National Bank - Reducing Lease Costs and Mitigating Risks
Case Study No: 9
The five benefits of lease property management services
ANZ is an iconic New Zealand bank which claims to touch the lives of almost every Kiwi. With nearly 1 in 2 New Zealanders having a banking relationship with them, that claim isn’t too hard to believe. With a long-established history, there have been many significant milestones over the years which have led to the reputation and size of their brand.
In 2003, ANZ merged with National Bank – a combined network of over 320 branches and 500 ATMs, making it one of the largest corporate property portfolios in NZ.
Property costs are generally the second largest business cost behind staff and the biggest fixed cost item in a company’s financials.
Proactive lease property management reduces lease costs, mitigates lease risks and improves profitability. Every dollar saved in lease costs simply drops into the profit line.
Lease property management is a broad term that encompasses tracking, managing and optimising leases to minimise costs and mitigate risks.
Tenant lease property management services differs from traditional property management, which is landlord-side focused, and includes activities such as tenant management, rent collection, payment of opex, and property maintenance.
Marcus was employed to provide in-house lease property management services to manage ANZ National Bank’s property costs . Marcus managed the Bank’s internal lease team and its combined branch and ATM portfolio.
The key issues that needed addressing at ANZ National were:
- accurate budgeting and forecasting of property costs
- proactive management of rent reviews and operating costs
- timely management of lease issues and renewals
- finding premises, negotiating leases and managing the fit-out of new branch premises
The complexity in managing the Bank’s retail lease portfolio arose from the volume of lease events occurring annually.
Actions Taken
Getting stuck into the finer details of the lease portfolio and its financial situation, Marcus and the team:
- conducted a lease audit
- reviewed and corrected key lease data
- built reporting dashboards to manage upcoming key lease events
- designed and implemented a cost and premises-specific lease budgeting process, enabling a more granular approach to cost forecasting and cost management
- implemented a more rigorous peer-reviewed rent review process
As such, Marcus devised a portfolio management strategy to ensure:
- Proactive property cost management via annual bottom-up lease budgeting
- Annual OPEX reviews and reconciliations
- Proactive tenure management via lease extensions to secure and protect future tenure on all sites
- Timely decision-making on property issues via stakeholder forums
- Business cases for property investment decisions
The Client Outcome
Marcus made a significant difference to ANZ National Bank by implementing lease property management services across the Bank’s lease portfolio.
The benefits to the Bank were:
- Improved business unit visibility of the costs of occupying premises
- Improved transparency of business unit property decisions on its cost base
- Improved forecasting of future property costs
- Increased tenure renewal options on key premises
- Reduced property costs by $2.4m over a three-year timeframe while opening new branch premises
In addition to improving the Bank’s lease portfolio management, Marcus was instrumental in developing and implementing a successful and profitable sale and leaseback transaction on 16 bank branches in 2009 during the GFC crisis. This was one of the largest property transactions of 2009.
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