Category: Lease abstraction

Lease Administration post: Did your last lease audit cover this important area?

 

Why you shouldn’t overlook the definition of leased area/premises square footage in your lease?

As a tenant, you know how important it is to manage lease costs. You also know there’s always an opportunity to cut leasing expenses (or at a minimum, keep them from growing out of control!). A lease audit is a cost-effective way to help you identify these areas and financially benefit from them. Diligent tenants conduct annual lease audits to ensure they are not being overcharged by their landlords. Unfortunately, the scope of a lease audit can sometimes be so vast that auditors overlook areas that may not be as obvious. In our blog today, we discuss one such area in particular – leased space.

Leased space or square footage plays an important role because it forms the base for most of the charges levied upon the tenant. Even a few square feet here and there can make a huge difference when base rent, CAM charges, and other operating expenses are calculated on a per-square-foot basis. In order to ensure you are being billed fairly and correctly, you need to understand the definition of leased space clearly and verify the amounts you have been billed against that.

From a tenant’s perspective, it is most advantageous if your leased area or square footage definition involves only the actual usable area. This means other common areas such as hallways, stairs, other access pathways, etc., are not included. Ideally, as a tenant, you should be looking into this right at the time of signing your lease. If this angle was overlooked, you may still be able to negotiate with your Landlord and sign an amendment to address it. If not, understanding the concept of leased square footage with respect to your lease will help ensure you are not paying more than your fair share of operating expenses and CAM charges.

If you haven’t done so already, you should consider including leased space in the scope of your next lease audit. This is extremely important given that most leases specify a limited timeframe for any corrections/objections related to the tenant charges. If not modified within the stated time period, the charges are deemed accurate and accepted. This can prove especially costly in cases where the yearly rise in expenses is based on the previous year’s charges, causing the error to repeat year-after-year.

RE BackOffice is a strategic partner providing end-to-end lease administration and accounting services. We offer scalable, affordable and accurate lease accounting and administration services to optimize your lease portfolio and related processes. Please contact us today to learn more.

Case Study: RE BackOffice helps America’s leading mid-sized retailers of the largest communication brands to save more than $140,000 annually with effective and efficient Lease Administration Services

 

This week we share a case study that discusses how RE BackOffice helps America’s leading mid-sized retailers of largest communication brands to save more than $140,000 annually with effective and efficient Lease Administration Services. Some of the key challenges faced by our clients include-

  • High cost of hiring, training and retaining lease administration resources
  • High rate of attrition affecting lease portfolio management and timely updates
  • Financial losses due to missed opportunities and underutilization of assets resulting from decentralized, fragmented and inaccurate lease data.
  • Lack of qualified resources to conduct regular audits to identify discrepancies and possible cost savings

Find out how RE BackOffice helps these clients overcome these challenges with its efficient and effective lease administration and accounting services.

Download Case Study

About RE BackOffice
RE BackOffice is a strategic partner providing end-to-end lease administration and accounting services providing scalable, affordable and accurate lease accounting and administration services to make your lease portfolio management more efficient. Contact us today to learn how you can leverage our experience and expertise to drive revenue and cost savings by optimizing your lease portfolio management process.

Looking to increase the efficiency of your business? Lease audits are a good place to start!

Right now, businesses across the globe are facing huge challenges. The COVID-19 pandemic has resulted in an enormous loss of income to businesses and the pressure to operate efficiently is higher than ever before. Businesses are adopting various measures, including drastic pay-cuts and lay-offs to stay profitable or even just to stay afloat.  Another option that can contribute significantly towards lowering operating costs and boosting efficiency is lease audits.  

Lease auditing is the process of analyzing the key terms of the lease and related documents to ensure the landlord has billed the tenant accurately and not overcharged them in case of expenses such as tenant’s share of operating costs, taxes, utilities, CAM, rent escalations, per-square feet rent calculations, etc. Other than these key areas, lease audits also help ensure key opportunities such as renewal, expansion options are not missed out. An effective lease audit entails a thorough review of various documents apart from the lease itself, including invoices, bank statements, payment receipts, and even documents in the public domain, at times. 

Lease audits offer significant benefits to both the Landlord and the Tenant. Landlords usually perform lease audits to ensure they are not under-charging their retail tenants that have percentage rent clauses in their leases. However, lease audits are especially important from the tenant’s perspective, primarily because the onus of identifying and reporting incorrect charges lies with the tenant and not the Landlord. Moreover, most leases have a timeframe within which erroneous billing must be reported. If the timeline lapses, the tenant is deemed to have accepted the charges levied upon them. Further, if the lease has a clause wherein the charges are escalated based on the previous year’s charges, then the escalation will be applicable on the inflated amount and the cycle continues causing the tenant to lose thousands of dollars annually. There have been cases where lease audits have helped tenants cut their operating expenses by as much as 70%! 

When businesses sign a lease agreement, a lot of thought has gone into it in terms of determining the financial viability of the lease. Somewhere down the line, perhaps due to lack of resources, on-going maintenance of the lease takes a backseat and the inaccuracies creep in so silently that businesses fail to realize that the lease is no longer in line with their expected ROI projections. A lease audit can help fix this. If you are short on resources to perform yearly lease audits and related tasks, it makes sense to collaborate with an experienced lease administration vendor who can offer these services for you. Most tenants see that the ROI on their lease audits often outweighs the expense it entails by a great deal. 

About RE BackOffice

RE BackOffice, Inc. is a premier provider of strategic commercial real estate back-office functions, including lease abstraction, lease administration, and real estate marketing services. Since 2006, REBO has been a trusted partner to top-tier commercial real estate companies, retailers, and service providers seeking a strategic advantage. Whether managing a portfolio of leases or providing graphic support through stacking plans, renderings and websites, RE BackOffice’s team of professionals is dedicated to delivering high-quality services and optimal ROI to our clients. At RE BackOffice, your back office – is our front office.

Lease Administration post: 3 Things to look for when outsourcing your Telecom lease portfolio management

Leases by themselves are complex but critical business documents. Getting leases abstracted and managed accurately and efficiently directly benefits the bottom-line. While companies may have their own lease portfolio management teams in-house, a significant number of them tend to outsource at least some part of their lease portfolio management function. This trend is increasingly catching up with the telecom industry players as well, as they realize the benefits of having a vendor specialized in lease portfolio management take care of their cell-tower leases. However, when it comes to telecom lease abstraction and administration, there are a few key areas to consider before you zero-in on a vendor to manage your cell-tower lease portfolio. This blog post tells you what they are.

Experience

When we talk about bringing an experienced cell-tower lease abstraction and administration vendor onboard, we have to look at it from 3 angles. 

  1. Overall lease abstraction and administration experience- It is important that the vendor you choose is well-experienced in lease abstraction and administration on the whole. Though cell-tower leases have their specifics, the basics of lease abstraction and administration remain the same. 
  2. Experience in lease abstraction and administration of cell-tower portfolios:  An experienced vendor who has a thorough understanding of key elements of cell-tower portfolio management such as Due Diligence requirements, SLAs, zoning permits and acquisition documents will be able to add more value.
  3. Software experience: Your new vendor should have had hands-on experience working on your lease administration, accounting and telecom document management software.  Their industry-specific lease abstraction software experience will enable them to offer you quick turnaround times for your tower lease administration and abstraction projects. 

Proficiency in multilingual lease abstraction

This is important if you have cell-tower leases of different languages. Working with a single lease abstraction and administration vendor who can manage all your leases regardless of their language will add to the efficiency of your cell-tower lease portfolio management process.

Accuracy

This is obvious and of course, expected from a reputed, experienced telecom lease abstraction and administration service provider. But, you’ll be surprised to learn that there are very few such vendors in the market who will be willing to guarantee 100% accuracy on their services. And, with something as critical as your telecom leases, you don’t want to be less than 100% sure!

So, there you go! Make sure you consider these 3 things before you outsource your telecom lease portfolio management to a vendor.

4 Reasons to outsource your cell-tower lease abstraction and administration

Are you considering outsourcing your cell-tower lease portfolio management process, but are not sure if it is the right move for you? This blog post discusses four most-common reasons why industry-leading cell tower companies are leaning towards an outsourced tower lease portfolio management model.

Here’s how outsourcing your cell-tower lease abstraction and administration process can benefit you.

Infuse flexibility into your tower lease management process

When you outsource your cell-tower lease portfolio management process, you essentially make it more flexible. Your lease administration and abstraction vendor can help you to effectively augment your existing resources if you already have a full-time lease portfolio management team in-house and manage temporary workload spikes–such as those due to an acquisition, merger, or even a resource shortage due to the Holiday season, effectively.

Make your lease portfolio management process more scalable 

You can bring a lease abstraction and administration vendor onboard to supplement your existing team and ramp up your lease portfolio management process while drastically cutting down new resource add-on costs.

Leverage your vendor’s subject matter expertise

Your area of expertise is telecom, while your vendor’s is lease abstraction and administration. So, you benefit from their vast experience and knowledge of industry-wide best practices that they bring to bear while partnering with you.

Meet your timelines efficiently as you are always working at full capacity

Working with an experienced cell-tower lease abstraction and administration vendor helps you ramp your cell-tower lease management process up or down depending on your requirement, at any time. This scalability ensures you never miss a beat managing your cell-tower lease portfolio. Whether there’s a need to fill-in for maternity/paternity leave or a sudden, unexpected, resource turn-over, your vendor is there to bridge the gap.

Keeping your data safe when outsourcing your lease administration or abstraction process

Despite the numerous benefits offered by outsourcing lease administration and abstraction functions, businesses sometimes refrain from doing so, due to the fear of lack of data safety and security. If you are one of them, then this blog is a must-read for you. It touches upon six key data security related questions you should be asking your lease administration/abstraction service provider before signing up with them. 

How is your data access structured? Ask your lease abstraction/administration service provider about their data access structure. Ideally, the access should be role-based, meaning the service provider should limit data access and editing permissions such that only those who need to work on the data should get access to it and also, the access level should be limited to their scope of work. All data access should be logged and monitored to detect any unusual activity that may be an indication of unauthorized access.

Where is all the work stored? Check with your service provider to ensure no work is performed or stored on their local machines or local external hardware. Data stored locally can be easily stolen. Ideally, your service provider should be using local machines to only access the Cloud or the main servers where all the work would actually be done and stored.

Is their IT outsourced? It is best if your service provider has an in-house IT team. While managed IT services is not necessarily a red flag, an in-house IT team is preferred as it means your vendor will be directly responsible for ensuring data security and safety standards are maintained. Check with your vendor if they have firewalls, antimalware systems, security patches and updates implemented.

How are the physical entry and exit points managed? Physical entry and exit points to the vendor’s office/workspaces where your leases are managed should be monitored and secured. Examples include CCTV cameras, biometrics, electronic access controls, etc.

How do they deal with hard copies? Check with your vendor if they will be using hard (paper) copies of your lease documents as a part of their SOP. If yes, then ask them to specify how and where they will be stored during the course of the project, who will be having access to them, how the access will be controlled and how these will be discarded after the project. Ideally, they should be shredded and disposed of under the supervision of the project manager or some other person in a position of authority. 

Are they flexible? Your lease administration/abstraction service provider should be also flexible enough to accommodate your specific needs in terms of data security. For example, if you want multi-factor authentication for electronic data access or a strict ‘no-print’ policy followed during the project, your vendor should be willing to make it a part of their SOP for your project and implement it diligently. 

Data security is a very real concern when outsourcing your lease administration and abstraction processes. An experienced vendor will most likely be following the best practices we discussed and be willing to improvise as well to suit your specific requirements.

Backed by 14+ years of lease experience, RE BackOffice’s lease administration team is well versed in all leading lease administration platforms including MRI, Yardi, Prolease, Lucernex, and more. To learn more about RE BackOffice’s lease administration services, contact us at support@rebackoffice.com.