When Risks Collide. Why Timing is so Important in Commercial Property

By Doug Parker, Montbart
First published 28th September 2026

Isolated risks can be manageable. The difficulty begins when several arrive at the same time.

When we’re talking ‘risk’, commercial property has its fair share.  There may be a tenant break approaching, a significant chunk of capital expenditure looming on the horizon, an EPC improvement to look at, a vacancy to address or a plan to refinance a few years away.

Of course none of these things generally create stress for owners, they’re simply part of owning commercial property.  The really tricky thing is when they all become relevant at the same time.  A lease event is likely to be perfectly manageable if the owner has time, liquidity and a strong reletting market in their favour. A large and complex capital project might be perfectly manageable if the income is secure and finance is established.  And refinancing might be entirely straightforward if the asset enjoys a stable income profile and there are no significant investment commitments in the immediate future.

If all three are aligned together though, the picture is very likely to look different.  That is why I think asset risk should be considered not only by type, but also by its timing.

Risk will not arrive in a neat package

Asset Managers and Surveyors are used to separating risk into categories. We might look at leasing risk, covenant strength, capex, obsolescence, financing, sustainability, occupational demand and valuation as quite distinct concepts. The separation can be useful, as it helps us understand each component of the investment.

The owner, however, experiences the asset as a single investment. The building doesn’t know the roof replacement plan is on one spreadsheet, the lease expiry is on another and the loan maturity is being monitored by someone in the finance team. Eventually, those separate issues meet.

Consider an example; an otherwise reasonable investment with a major tenant break in two years. On its own, it might prompt an early conversation with the occupier and some thought about alternatives. Suppose however, that significant plant replacement is likely during that same period. Again, neither issue is especially alarming, but if the existing debt facility also matures shortly afterwards, the owner may now be entering a period in which tenant retention, capital expenditure and refinancing all need attention simultaneously.

Now add in weaker occupational demand, a sustainability requirement or another significant lease event, and the situation becomes even more complicated. No individual event caused the problem. The issue lies in their convergence.

The contractual date is not always the important date

This becomes particularly apparent when looking at lease events. A break date in (say) eighteen months doesn’t mean the owner has eighteen months before anything needs to happen. There might be a six-month notice period, a regear could take several months to negotiate and, if the occupier plans to leave, decisions about marketing, refurbishment and reletting will need to be made comfortably before the contractual event itself.

The same principle applies to debt. A loan maturity date is an endpoint rather than the date on which refinancing should first be thought about. Depending on the asset and financing structure, an owner might sensibly begin preparing twelve or eighteen months beforehand.  This creates a distinction between the date on which something actually happens, and the date on which it becomes relevant to management.

I’ve written recently about developing Lease Event Concentration Risk (LECR) alongside what I refer to as Action LECR. The first looks at the period where contractual lease events are concentrated within an asset or portfolio. The second considers when those events actually warrant management attention. In some cases, the difference between those two views can be quite significant.

What will the asset situation be when capital is required?

Financing introduces yet another dimension to the analysis. An asset might look relatively strong today, but appear quite differently when the owner next approaches the debt market.

Imagine for example, refinancing is due in three years. Between now and then, a significant proportion of the rent roll becomes exposed to risk in the form of tenant breaks, substantial capex is required and part of the building needs refurbishment. Looking only at the present position might therefore not offer the full picture.

So, planning ahead and considering how the asset might appear when refinancing is due changes the role of asset management.  Lease negotiations, capex and occupier strategy stop being isolated operational matters and begin to determine the future financing proposition. An early regear could improve income certainty; completing a capital project might reduce uncertainty before approaching lenders; and resolving a vacancy will certainly strengthen the income profile.

None of those actions, carried out individually, are likely to transform an asset. Done together though, they can significantly change the position that will eventually be presented to the financing market.

Income resilience changes the consequence

Timing alone is unlikely to tell us how serious a convergence of risk might be. Two assets can have identical lease-event profiles and still present very different levels of risk exposure.  One might contain occupiers who are well established in the building, paying realistic rents for space that is attractive to the occupational market. Another asset might have tenants with little operational attachment, rents set above ERV, and accommodation that needs considerable expenditure before it could be re-let. The dates could be identical, but the consequences would certainly not be.

This is where the idea of income durability becomes interesting. Rather than asking only whether a tenant has the financial ability to pay rent, income durability looks at how likely that income stream is to stay intact over an extended period. Contractual lease length is clearly relevant, but so is occupier behaviour, the suitability of the premises, the tenant's reasons for remaining in occupation and, ultimately, the ability to replace the income if it suddenly disappears.

LECR can therefore help identify where and when risk exposure is concentrated. Income durability offers another way for the owner to consider how concerned they should be about that exposure.

Asset management ‘should’ create options before they’re needed

The practical purpose of establishing converging risks is not to produce yet another Excel spreadsheet. It’s to create more time to act.

If several significant issues are likely to converge in next few years, there may be opportunities today to separate them. A lease might potentially be regeared early, capex could be phased differently, a vacant area could be addressed earlier or refinancing might sensibly be brought forward. In some circumstances, the owner might even decide that disposing of the asset before several uncertainties begin to converge and overlap is the more appropriate choice.

None of those conclusions are automatic, but the important point is that the owner has choices before circumstances begin making those choices for them.  To me, that is one of the absolutely fundamental purposes of asset management. It’s not simply about dealing efficiently with events as they occur; it’s about looking far enough ahead to understand where pressure could develop, and creating options while there is still time to implement them.

Looking for the Risk Convergence Window

I’ve started referring to this period as a ‘risk convergence window’. I don’t think it needs to become another complicated metric or score. It is simply a way of identifying the period during which several individual pressures on an asset begin to overlap.

Those pressures might include lease events, significant capex, refinancing, sustainability requirements, vacancy, significant rent reviews or just changing occupational demand. The combination will differ from one property to another, but the underlying premise is to look at when the biggest risks become pressing, and whether they arrive together. 

A property can represent risk without being a weak investment. Indeed, almost every commercial property does. The issue is often not the existence of an individual risk, but allowing several individually manageable ones to develop into one much more difficult problem.  I believe good asset management should establish that possibility early enough to do something about it.

By Doug Parker, Montbart
First published 28th September 2026