Property management
Vacancy and bad debt risk
These risks are addressed by taking timely action in relation to forthcoming lease expiries, contract revisions and rent reviews, screening new tenants for creditworthiness and actively monitoring accounts receivable and the tenant mix. Any vacancies are identified at an early stage and followed up appropriately in the form of new transactions.
Operating risk
Each business unit has a technical department, which is responsible for the quality of the properties (including technical standards) and ensuring maintenance work and investments are done on time and that changes in legal and other requirements relating to the properties are complied with. Portfolio managers are responsible for controlling the property operating expenses and service charges. Maintenance work is divided into the following categories: work that is required by law or under other rules or regulations; work considered necessary from a safety perspective; work intended to maintain the long-term value of the property; and work considered desirable from a commercial perspective that could boost operating cash flow directly or indirectly.
Contingency risk
Corio’s property portfolio is insured against public liability and damage to buildings. In 2008, liability was insured up to € 100 million per event, subject to a maximum of € 100 million in any one year. The buildings are largely insured by means of a European umbrella policy on the basis of their replacement cost, with loss of rent also covered.
In France and Spain it is possible to make claims under national programmes covering losses due to terrorism. In Italy and Turkey, Corio is insured through local policies covering losses due to terrorism. In the Netherlands, Nederlandse Herverzekeringsmaatschappij voor Terrorismeschade NV was incorporated in May 2003. This reinsurance company covers losses resulting from terrorism up to a maximum of € 75 million per event and up to a maximum of € 1 billion per annum. Corio can make claims under this insurance.
Turkish property is insured against earthquake damage up to at least the level of their replacement cost, with loss of rent also covered for a period of up to 24 months. Corio’s uninsured risk in this case is the statutory minimum (20%).
Source: Annual Report 2008, Chapter Corporate governance, page 130 (PDF, 72 kB)
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