Certified Leasing Specialist CLS Global Certification Brief Andrew Carlson, CRX, CSM, CLS VP-Retail Brokerage, JLL (AM) 2016 ICSC Professional Certifications Why CLS Matters For our industry: Elevate Professional Standards Recognize Industry Leaders For your company: Identify Emerging Leaders Enhance Individual Performance For you: Increase your worth and recognition Achieve highest professional standards 1
Certified Leasing Specialist Domain 1. Development and Market Research Fundamentals (10%) Domain 2. Leasing Fundamentals (20%) Domain 3. Long-term Leasing (10%) Domain 4. Short-term Leasing (10%) Domain 5. Legal (13%) Domain 6. Design & Construction (9%) Domain 7. Retailing (13%) Domain 8. Finance (10%) Domain 9. Operations, Marketing and Promotions(5%) Domain 1 Development & Market Research Fundamentals Market Planning and Analysis Competition/Void Analysis Trade Area (catchment area) Analysis Market Share Types of Centers and Anchor Selection Site Planning/Analysis 2
Development & Market Research Fundamentals Business Climate/Industry Trends Retailer Site Selection Process Redevelopment Public/Private Cooperation Development Landlord and Retailer Incentives Entitlement Process 8 Development & Market Research Fundamentals Which of the following is a psychographic measure of a trade area? A. Household income levels B. Number of children and adults per household C. Educational level of the population D. Newspaper preferences of the population 3
Development & Market Research Fundamentals Which of the following is a psychographic measure of a trade area? A. Household income levels B. Number of children and adults per household C. Educational level of the population D. Newspaper preferences of the population Development & Market Research Fundamentals The population of a trade area can indicate which of the following for a shopping center? A. Its potential business volume B. Its probable profit margin C. What size store will be most successful D. What length lease term will be most profitable Development & Market Research Fundamentals The population of a trade area can indicate which of the following for a shopping center? A. Its potential business volume B. Its probable profit margin C. What size store will be most successful D. What length lease term will be most profitable 4
Domain 2 Leasing Fundamentals Tenant Prospecting and Evaluation by Developer Merchandise Mix and Tenant Mix Establishing the Leasing Plan Structuring the Deal Economics of Total Occupancy Costs (TOC) Remerchandising Brokers/Tenant Representatives 15 5
Leasing Fundamentals A landlord wants to recapture a tenant's space prior to lease expiration and is willing to negotiate a buyout. Which of the following is the most important component for the landlord to consider in determining a fair value for the location? A. Trade area demographics B. Location of the shopping center C. Unamortized tenant allowance D. Prevailing market rents Leasing Fundamentals A landlord wants to recapture a tenant's space prior to lease expiration and is willing to negotiate a buyout. Which of the following is the most important component for the landlord to consider in determining a fair value for the location? A. Trade area demographics B. Location of the shopping center C. Unamortized tenant allowance D. Prevailing market rents Leasing Fundamentals In a food-court lease, a tenant's cash contribution to the landlord is commonly referred to as a: A. construction allowance B. maintenance or utility fee C. negative allowance or key money D. guarantee 6
Leasing Fundamentals In a food-court lease, a tenant's cash contribution to the landlord is commonly referred to as a: A. construction allowance B. maintenance or utility fee C. negative allowance or key money D. guarantee Leasing Fundamentals Which of the following is most important to a leasing specialist who is prospecting for a high-fashion specialty store? A. Merchandised well within category B. Attractive storefront display C. Outstanding store fixtures D. Multiple store locations Leasing Fundamentals Which of the following is most important to a leasing specialist who is prospecting for a high-fashion specialty store? A. Merchandised well within category B. Attractive storefront display C. Outstanding store fixtures D. Multiple store locations 7
Domain 3 Long-Term Leasing Long-term Leasing Prospecting Pad/Freestanding/Outlot Proposal/Letter of Intent (LOI) Tenant Improvement (TI) Allowance Key Money 24 8
Long-Term Leasing Which of the following is essential to a landlord's letter of intent? A. Assignment/sublet provisions B. Rental deposit requirements C. Basic business terms D. Expiration date of offer Long-Term Leasing Which of the following is essential to a landlord's letter of intent? A. Assignment/sublet provisions B. Rental deposit requirements C. Basic business terms D. Expiration date of offer Long-Term Leasing From a landlord's perspective, and after financing has been obtained, the most important reason for including an operating covenant in a department store agreement is to obtain: A. small-tenant leases B. temporary-tenant leases C. increased market rents D. longer lease terms 9
Long-Term Leasing From a landlord's perspective, and after financing has been obtained, the most important reason for including an operating covenant in a department store agreement is to obtain: A. small-tenant leases B. temporary-tenant leases C. increased market rents D. longer lease terms Domain 4 Short-Term Leasing License Agreement Revenue Generating Sources Setting Fees (short-term rents ) Short-Term Leasing Prospecting Common Area Limitations Visual Merchandising Operations Securing, Sponsorship, Advertising and Events 10
31 Short-Term Leasing A space in a center has a width of 25 feet to the centerline between each of the stores on either side of it and each sidewall is 1ft. thick. The space is 100 feet deep from the outside of the store front to the inside of the rear wall, which is also 1ft. thick. The measurement of this space is how many square feet (sf)? A. 2,400 sf C. 2,500 sf B. 2,424 sf D. 2,525 sf Short-Term Leasing A space in a center has a width of 25 feet to the centerline between each of the stores on either side of it and each sidewall is 1ft. thick. The space is 100 feet deep from the outside of the store front to the inside of the rear wall, which is also 1ft. thick. The measurement of this space is how many square feet (sf)? A. 2,400 sf C. 2,500 sf B. 2,424 sf D. 2,525 sf 11
Short-Term Leasing What is an early warning sign of a poorly performing short-term merchant? A. Late openings B. Adding merchandise which is not part of the use clause C. Delinquent rent payments D. No return policy Short-Term Leasing What is an early warning sign of a poorly performing short-term merchant? A. Late openings B. Adding merchandise which is not part of the use clause C. Delinquent rent payments D. No return policy Domain 5 12
Legal Lease/License Terminology Defaults and Remedies Other Legal Concepts 38 Legal A tenant has a lease that does not permit assignment. The tenant subsequently files for bankruptcy under Chapter 11. Under the authority of the bankruptcy court, which of the following statements is true? A. The tenant has a maximum of six months in which to file a reorganization plan. B. The tenant must immediately close all of its unprofitable stores. C. The tenant is prohibited from borrowing money. D. The tenant is permitted to assign its lease to a creditworthy tenant with a consistent use. 13
Legal A tenant has a lease that does not permit assignment. The tenant subsequently files for bankruptcy under Chapter 11. Under the authority of the bankruptcy court, which of the following statements is true? A. The tenant has a maximum of six months in which to file a reorganization plan. B. The tenant must immediately close all of its unprofitable stores. C. The tenant is prohibited from borrowing money. D. The tenant is permitted to assign its lease to a creditworthy tenant with a consistent use. Legal A fidelity bond is defined as: A. A bond marketed to gather money for an investment. B. A state-issued bond marketed to finance a shopping center. C. An insurance policy that covers employee theft of dishonesty. D. An insurance policy that covers customer shoplifting. Legal A fidelity bond is defined as: A. A bond marketed to gather money for an investment. B. A state-issued bond marketed to finance a shopping center. C. An insurance policy that covers employee theft of dishonesty. D. An insurance policy that covers customer shoplifting. 14
Domain 6 Design & Construction Terminology Environmentally Accepted Practices Pricing and Costs Construction Process 45 15
Design & Construction The problem of division of responsibility for various construction items in a store can best be resolved through which of the following? A. Lease proposals B. A construction lease exhibit C. Site inspections D. Tenant's plans and specifications Design & Construction The problem of division of responsibility for various construction items in a store can best be resolved through which of the following? A. Lease proposals B. A construction lease exhibit C. Site inspections D. Tenant's plans and specifications Design & Construction Leasehold improvements are defined as: A. only those improvements that can be removed without damaging the premises. B. only those improvements that can be removed easily. C. permanently affixed improvements only. D. all improvements. 16
Design & Construction Leasehold improvements are defined as: A. only those improvements that can be removed without damaging the premises. B. only those improvements that can be removed easily. C. permanently affixed improvements only. D. all improvements. Design & Construction Before tenant construction begins, all of the following should be received from the tenant EXCEPT: A. Execution of the lease B. Building permit C. Certificate of insurance D. Certificate of occupancy Design & Construction Before tenant construction begins, all of the following should be received from the tenant EXCEPT: A. Execution of the lease B. Building permit C. Certificate of insurance D. Certificate of occupancy 17
Domain 7 Retailing Mathematics of Retailing Terms and Definitions Categorization of Retail Stores Multi-channel Retailing Retailer Financial Statements and Metrics Retailing Occupancy Cost-to-Sales Ratio Retailer s Brand Strategy and Business Plan Sales Performance by Type of Retailer Supply Chain Management Retailer Seasonality 18
55 Retailing A juniors' store and a misses' store are best differentiated by which of the following? A. Price points B. Depth of merchandise selection C. Age of target customer D. Fashion-forward focus Retailing A juniors' store and a misses' store are best differentiated by which of the following? A. Price points B. Depth of merchandise selection C. Age of target customer D. Fashion-forward focus 19
Retailing Which of the following would NOT be caused by poor stock turnover? A. Outdated merchandise B. Restricted open-to-buy C. Excessive markdowns D. Lack of inventory Retailing Which of the following would NOT be caused by poor stock turnover? A. Outdated merchandise B. Restricted open-to-buy C. Excessive markdowns D. Lack of inventory Retailing Joanne s Jeans is looking to meet with a developer to move her street-front store into a mall location. She is concerned about the type of information that the developer will ask her to present at her meeting. What should she take to the meeting? A. Copy of her current lease B. Pictures of her store C. Marketing plan D. Business plan 20
Retailing Joanne s Jeans is looking to meet with a developer to move her street-front store into a mall location. She is concerned about the type of information that the developer will ask her to present at her meeting. What should she take to the meeting? A. Copy of her current lease B. Pictures of her store C. Marketing plan D. Business plan Domain 8 Finance Setting Budgets Reforecast Pro Forma Project/Center Profit and Loss [P&L] Statements Market Value of Project Center Net Effective Rent (NER) Basic Financial Terminology Owner s Objectives Stakeholder, Ownership and Management Types 21
64 Finance A tenant signs a 10-year lease and agrees to a $20-persquare-foot (psf) rent with a $40-psf tenant allowance. An interest rate of 10 percent is used and the amortized rate is 16.27 percent. From the landlord's perspective, what is the approximate net effective rent? A. $20.00 psf C. $15.60 psf B. $16.00 psf D. $13.50 psf Finance A tenant signs a 10-year lease and agrees to a $20-persquare-foot (psf) rent with a $40-psf tenant allowance. An interest rate of 10 percent is used and the amortized rate is 16.27 percent. From the landlord's perspective, what is the approximate net effective rent? A. $20.00 psf C. $15.60 psf B. $16.00 psf D. $13.50 psf 22
Finance A profit and loss statement measures a retailer's performance over a period of time and shows which of the following? A. Income and expense only B. Income, expense and receivables C. Income, expense and inventory D. Income, expense and net worth Finance A profit and loss statement measures a retailer's performance over a period of time and shows which of the following? A. Income and expense only B. Income, expense and receivables C. Income, expense and inventory D. Income, expense and net worth Finance Assuming a capitalization (cap) rate of 10 percent and a net operating income (NOI) of $460,000, the value of the property is $4,600,000. If the cap rate is down 2 points to 8 percent, then the value of the property will be? A. Increased by $1,150,000 C. Increased by $920,000 B. Decreased by $1,150,000 D. Decreased by $920,000 23
Finance Assuming a capitalization (cap) rate of 10 percent and a net operating income (NOI) of $460,000, the value of the property is $4,600,000. If the cap rate is down 2 points to 8 percent, then the value of the property will be? A. Increased by $1,150,000 C. Increased by $920,000 B. Decreased by $1,150,000 D. Decreased by $920,000 Domain 9 Operations, Marketing and Promotions Basic Terminology Business-to-Business (B2B) Marketing to Attract Leasing Prospects Use of Social Media and Digital Marketing Common Area Maintenance (CAM) 24
73 Operations, Marketing and Promotions An 800,000-square-foot shopping center contains four department stores, W, X, Y, and Z, each containing 100,000 sf. The lease on a 2,000 sf space states that the tenant will pay its pro rata share of CAM expenses, less the amounts paid by department stores X, Y and Z only. The tenant's pro rata share is defined as the proportion its demised premises bear to the gross leasable area of the shopping center, less the amount of space occupied by department stores X, Y, and Z only. Each of the four department stores contributes $25,000 to CAM. The total CAM costs for the center are $575,000. In this situation, the 2,000 sf. tenant is responsible for how much CAM? A. $1,500 C. $2,375 B. $2,000 D. $2,500 Operations, Marketing and Promotions An 800,000-square-foot shopping center contains four department stores, W, X, Y, and Z, each containing 100,000 sf. The lease on a 2,000 sf space states that the tenant will pay its pro rata share of CAM expenses, less the amounts paid by department stores X, Y and Z only. The tenant's pro rata share is defined as the proportion its demised premises bear to the gross leasable area of the shopping center, less the amount of space occupied by department stores X, Y, and Z only. Each of the four department stores contributes $25,000 to CAM. The total CAM costs for the center are $575,000. In this situation, the 2,000 sf. tenant is responsible for how much CAM? A. $1,500 C. $2,375 B. $2,000 D. $2,500 25
Operations, Marketing and Promotions What would typically be listed in a tenant s operational audit performed by the landlord in a center? A. Walkways in front of the store are clean and well-maintained B. Storefront: all materials are in good repair (windows, moldings, flooring, wood trim, etc.) and are maintained according to center standards C. Windows are clean and with new and up-to-date merchandise D. The cash register is new and less than 3 years old Operations, Marketing and Promotions What would typically be listed in a tenant s operational audit performed by the landlord in a center? A. Walkways in front of the store are clean and well-maintained B. Storefront: all materials are in good repair (windows, moldings, flooring, wood trim, etc.) and are maintained according to center standards C. Windows are clean and with new and up-to-date merchandise D. The cash register is new and less than 3 years old CERTIFICATION EXAM INFORMATION AND LOGISTICS 26
Prometric Testing Centers Computer-Based Testing Over 400 Testing Locations Worldwide Appointments Necessary First come -First Served Basis Re-tests Available Certification Testing Windows June 18-26, 2016 Applications due May 30 October 8-16, 2016 Applications due September 10 Application Fees Members Non-Members Certification Eligibility $95 $195 Exam Appointment $395 $795 $490 $990 JTR School Attendees Earn up to $400 off! 27
Exam Format & Regulations Format Arrive 30 Minutes Early Take Tutorial 3 ½ Hours for Exam 100 Questions Multiple Choice 15 Minute Break What to Bring on Test Day Approved Calculator Government Issued ID What is Provided Lockers for personal items Scratch Paper Testing Tips Be prepared Budget your time Read questions Carefully Eliminate answers you know are wrong Always answer the question-there is no penalty for guessing Exam Preparation and Study Aids Exam Specifications These blueprints provide you with a detailed and organized list of domains and knowledge areas you will be tested on Shopping Center Study Series 12 webinars covering key concepts in the retail real estate industry Available online at www.icsc.org/cls 28
Exam Preparation and Study Aids Knowledge Assessments & Practice Tests In key areas available online, anytime Publications While there is no single publication that will prepare a candidate, many professionals use publications to augment their study Available online at www.icsc.org/cls Exam Preparation and Study Aids John T. Riordan Schools Fast-rising executives, ambitious newcomers and experienced industry professionals come together for 3-5 days engaging in coursework designed to provide attendees with an unparalleled curriculum that is uniquely customized with regional concepts, issues and case studies. Upcoming school is September 25-29, 2016 in Miami, FL. Visit www.icsc.org/education Questions & Discussion 29
Leverage a Global Network of Peers Argentina Australia Austria Bahrain Bahamas Belgium Brazil Canada Chile China Colombia Czech Republic Ecuador El Salvador Germany Hungary India Indonesia Japan Latvia Lithuania Luxembourg Malaysia Malta Mexico Netherlands Oman Peru Philippines Portugal Poland Qatar Romania Russian Federation Saudi Arabia Singapore Slovakia Spain Sweden Switzerland Taiwan Trinidad and Tobago Turkey United Arab Emirates United Kingdom Syrian Arab Republic United States Uruguay Venezuela Vietnam Course Evaluation Please Complete Your Evaluation Now. 1. Take Out Your Smartphone or Tablet 2. Go to survey.icsc.org/2016recon 3. Select this course: CLS Global Brief 30