Firms Mismanaging Property Assets Fail Corporate Governance Test

Business owners who fail to manage their property portfolio could be accused of poor corporate governance, a leading property expert claimed today.
 
Angus MacCuish said some companies miss out on potential savings and open themselves up to greater risk because their estate is mismanaged.
Mr MacCuish, managing director of Scottish commercial property consultants, FG Burnett, said company directors have a responsibility to their stakeholder to ensure property assets are fully utilised and efficiently managed.

Mr MacCuish said: "In the current challenging economic climate, businesses in all sectors have a duty to secure the best return from leased or owned properties. Good corporate governance is crucial if a business is to be properly focused and profitable, more so today when the way companies are managed is under greater than ever scrutiny.

"One area which is often overlooked is how a business manages its property assets. As far as commercial property is concerned, we believe directors have a duty to know where the risks lie and conversely where opportunities may exist which benefit the company and improve profitability."

Mr MacCuish said examples of property mismanagement would include where companies miss a deadline for a lease-break which allows them to relocate to more desirable premises without financial penalty, or to negotiate better rental terms for their existing location.

He added: "Similarly, there may be an opportunity in a lease agreement to purchase a property within a specific time scale, but if missed by the occupier it could have a negative effect on the balance sheet.

"It's important that businesses have ready access to reliable information and are aware of critical dates which may impinge on decisions they have to take in relation to their commercial property requirements. Some businesses will be very focused and fully aware of what lies ahead from one year to the next but others may be less well organised and it can hit them hard in when they can least afford it.

"If a company is not up to speed with critical dates affecting its property assets it could distort the way it is perceived by their bank, prospective new funders and potential shareholders."