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Maximizing lease portfolio savings with CAM Reconciliation

 

Common area maintenance (CAM) charges are a crucial aspect of commercial property leasing. These fees cover the costs associated with maintaining and operating shared spaces, such as lobbies, elevators, parking lots, and common areas in multi-tenant buildings. Landlords typically charge CAM fees on top of base rent, and they can have a significant impact on a tenant’s overall occupancy costs.

However, CAM charges are not fixed and can vary from year to year, based on actual expenses incurred. This is where CAM reconciliation comes in – it is a process that ensures that tenants only pay their fair share of the CAM expenses, based on the actual costs incurred by the landlord. CAM reconciliation is an important tool for maximizing lease portfolio savings because it helps to eliminate overcharging and identify potential cost savings for both landlords and tenants.

Here are some of the ways CAM reconciliation can help maximize lease portfolio savings:

Identifying and correcting overcharges

CAM reconciliation involves comparing the estimated CAM charges that were billed to tenants at the beginning of the lease term with the actual expenses incurred by the landlord. If the actual expenses are less than the estimated charges, the tenant may have been overcharged. CAM reconciliation allows for adjustments to be made, and any overcharges to be refunded to the tenant. By identifying and correcting overcharges, tenants can save money on occupancy costs, which can have a significant impact on their bottom line.

Encouraging landlord accountability

CAM reconciliation encourages landlords to be more transparent about their expenses and to be accountable for their management of shared spaces. Landlords are required to provide tenants with detailed expense reports that show how their CAM fees were spent. This level of transparency can help to reduce the risk of being overcharged by Landlords and can give tenants greater confidence in their leasing arrangements.

Negotiating better lease terms

CAM reconciliation can also help tenants negotiate better lease terms. By reviewing the actual CAM expenses incurred, tenants can identify areas where expenses could be reduced, such as by implementing energy-efficient measures or by negotiating better vendor contracts. This information can then be used to negotiate more favorable lease terms, such as lower CAM fees or longer lease terms.

Improving cash flow

CAM reconciliation can also help improve cash flow for both landlords and tenants. For landlords, CAM reconciliation can help to ensure that expenses are accurately tracked and billed, which can help to reduce the risk of unpaid expenses or uncollected fees. For tenants, CAM reconciliation can help to eliminate unexpected charges and ensure that they only pay for their fair share of expenses, which can help to improve cash flow and reduce the risk of financial surprises.

In conclusion, CAM reconciliation is an important tool for maximizing lease portfolio savings. By identifying and correcting overcharges, encouraging landlord accountability, negotiating better lease terms, and improving cash flow, CAM reconciliation can help both landlords and tenants save money on occupancy costs. If you are a tenant, it is important to review your CAM charges get a CAM reconciliation done by an experienced CAM audit firm or a lease administration service provider.

Lease Abstract Fundamentals

 

When it comes to lease portfolio management, there are many moving parts. At the core of it all lie your lease abstracts, which capture the essence of your leases by summarizing the key financial and non-financial clauses therein. With quick and easy access to crucial lease information, lease abstracts help you stay on top of your lease portfolio at any time.

This week we share a whitepaper that discusses the perspective, processes and resources needed to manage your lease abstraction project successfully, while highlighting the areas that you should focus on when setting up your lease abstraction process.

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 17+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house.

Whether it is one clause, one amendment or a whole lease agreement, we can do it for you.

Optimizing your Lease Portfolio Savings in 2023

 

Whether you are a retailer, a corporate entity or a property owner or manager, here are a few ways in which you can maximize your lease portfolio ROI, especially with the current global financial climate in mind. 

While, we remain cautiously optimistic and don’t want to start off the new year with talks of recession, there is significant unrest in the global financial climate. Some financial experts believe it is only a matter of time before recession sets in. While we hope it doesn’t happen, it definitely makes sense to be prepared. A couple of things you can do in this regard from your lease portfolio management perspective are-

Ensuring you only pay what you owe

As a tenant, you need to ensure that you only pay to your landlord what you actually owe them. While this seems pretty straightforward and obvious, in NN or NNN leases, the CAM i.e. common area maintenance charges constitute a significant amount and its calculation is not that simple. There are chances of the landlord overcharging tenants by mistake and the onus rests on the tenants to get it corrected. 

Also, if you are a tenant, make sure you are paying your dues on time, as any delay in lease-related payments mostly attract heavy penalties as per the lease clauses. 

On the other hand, if you are a landlord, then you need to  make sure that you are billing your tenants accurately and not losing out money on CAM charges by undercharging them. 

One of the ways to do this, whether you are a tenant or landlord,  is by getting a CAM reconciliation or CAM audit done. 

Also, if you are a landlord,  look out for delayed payments or other due date misses by your tenants. If stipulated in your lease, you will be able to eligible for additional payment from your tenant in the form of penalty for the missed/delayed payment.  

Leverage technology to manage your lease portfolio efficiently

Staying on top of your lease portfolio can be challenging, but technology can make lease portfolio management easy. Deploy relevant technological solutions to manage your lease portfolio efficiently and stay on top of it. Examples include- Lease administration software programs, lease management platforms and even Ai-based lease abstraction platforms if you have leases to be abstracted. Learn more about Ai-based lease abstraction here

Make sure you have easy access to critical lease data–financial and non-financial

With the sudden onset of the COVID 19 Pandemic, we saw that a lot of businesses had to temporarily shut down. While it caused a considerable loss of income, another area where it really hurt businesses that we renting out spaces was, not being aware of any provisions in the lease that could help them in the situation. Tenants need to be aware of all protective clauses in the lease that can offer some financial respite should recession set in. Explore the options in your leases that can help. These include clauses like Go-dark, Force Majeure, Condemnation & Casualty, Construction & Delivery, Co-tenancy and even the right to negotiate and make amendments to existing leases in consultation with the Landlord.

As a landlord, having quick access to these clauses and understanding them will help you plan your cash flows better for the upcoming year and be prepared for any possible contingencies caused due to economic downturns. 

To summarize, whether you are a tenant, or a landlord, here are few things you can do to be better prepared for 2023 from your lease portfolio management perspective-

Wrapping your arms around all of the above can seem overwhelming especially when you have a business to run and customers to attend to. Even if you have an internal lease administration team, the whole process can get extremely challenging due to the sheer volume of leases in your portfolio. Consider outsourcing your lease administration process to a trusted lease services provider who can offer end-to-end lease administration services including CAM, collection calling, lease abstraction, critical date monitoring and more.(Click here to learn more about the benefits of outsourcing your lease portfolio management process.)

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 17+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house.

Whether it is one clause, one amendment or a whole lease agreement, we can do it for you.

How retailers can tackle the Holiday season payroll paperwork challenge successfully

 

According to a study by the National Retail Federation, almost 50% of consumers do their Holiday shopping on the weekend between Thanksgiving and Cyber Monday. The Research also indicated that a significant portion of customers preferred starting out as early as mid-October as they believed Holiday shopping is only more likely to get expensive closer to Christmas. This means, retailers have to step up their game well before the Holiday season in order to be able to meet the demands of these early-bird customers successfully.  Among other things like ensuring their inventory is stocked, outlets are decorated to reflect the Holiday spirit, the website, IT infrastructure and payment processing systems are robust enough to handle the sudden spike in transactions, there’s one more important area to look into–temporary staff. 

As a retailer, seasonal hiring to take care of your holiday shoppers is a must!  However, overworking your payroll department is optional (and not so nice!)!  Hiring staff on a seasonal basis is a great way to effectively meet the resource crunch that retailers often face this time of year. However, it also means a lot more paperwork that needs to be completed and on a tight schedule. Processing hundreds of offer letters (and even thousands if you are a large-sized retailer) can be challenging as your payroll department may not be staffed to meet this temporary spike in workload.   Consider your options this holiday season, including the use of payroll processing service providers to tackle all your seasonal hire offer letters.

Outsourcing your payroll management process during this busy season to a trusted payroll service provider can be an efficient and cost-effective solution to this challenge. However, before you proceed make sure your payroll management services vendor–

Is able to offer same-day turnaround

Temporary retail help is in high demand during the holiday season and you need to be quick in hiring and processing their offer letters. A payroll management service provider who can process your offer letters within 24 hours can make all the difference.

Has expertise in leading retail payroll management platforms

It is important that the firm you outsource your payroll management process to has expertise in the payroll management software that you are using. Whether it is ADP or any other retail payroll management software, your vendor should have a sound understanding of the platform so they can process your offer letters accurately and quickly.

Is cost-effective

While the Holiday season is likely to bring you a significant amount of revenue, it also involves significant investment. Make sure outsourcing your payroll management services is cost-effective, helping you save money and get better ROI in your temporary hiring. 

It is the season to be jolly…why let “seasonal hire“ paperwork be your folly!

RE BackOffice can help you tackle the mountain of HR/payroll paperwork with affordability and ease. 

payroll management

6 questions to ask your lease abstraction and admin vendor before you sign them up

 

This post talks about 6 questions you must ask your vendor before you trust them with your cell tower leases.

Question-1: Do you perform all your projects in-house?

Did you know that often lease abstraction and admin vendors outsource their work to other agencies? You should be aware if your vendor also engages in similar subcontracting projects as it can affect you in 2 ways–

  1. Data security and confidentiality: If your critical cell-tower lease data is being shared with someone else, it can have serious consequences. Unless you are convinced of the data security measures adopted by your vendor and the sub-contractors, you can’t rest assured that your data is safe.
  2. Possible delays: If your vendor is relying on someone else to do the actual work, any impediment on the subcontractor’s end will end up delaying your project and result in missed deadlines–something you cannot afford when dealing with critical time-bound, needs-based triggers like Due Diligence and acquisitions.  

Question-2: How big and experienced is your team?

It is important that you ask your potential cell-tower lease abstraction and administration vendor about their team strength and collective experience. These factors play a key role in the quantity and quality of output they deliver. One of the reasons why many telecom companies prefer to outsource their cell-tower lease abstraction and administration processes is because of the scalability and flexibility they get by outsourcing. If your vendor doesn’t have enough staff strength to scale up with you during times of resource shortage, or when you have an exceptionally higher load of leases due to factors such as a new merger or cell-tower acquisitions, then you fail to leverage a key benefit of outsourcing. 

At the same time, be sure to ask about the overall team experience, as this has a direct impact on the quality of output and also on its quantity. An experienced team will be able to deliver high-quality output in a relatively shorter timeframe.

Question-3: Will you collaborate with our other stakeholders?

For the cell-tower lease administration process to be effective, often, the lease administrators will have to get in touch with others in the legal or accounting functions of the landlord or tenant’s business. This is especially true in case of recurring lease administration tasks such as reconciliations, collections, etc., You may even have an in-house lease admin team with whom your vendor may have to collaborate often. Having a lease administration vendor who can do the liasioning for you will make the entire process more efficient and you will be spared the hassle of multiple emails and calls to collaborate with different stakeholders across the country or even the globe, if you have an international presence. 

Question-4: Can you give us client references?

Ask your potential tower lease abstraction and admin vendors for client references. When outsourcing a process as important as lease portfolio management, you want to make sure that your vendors truly place great emphasis on customer delight and creating positive customer experiences. One of the ways to verify that is by asking for client references and testimonials. It is even better if the clients are from your industry.

Question-5: What about client support?

Ask your vendor about their client support set up. Do they offer 24h client support? Are they available on all working days of the week? What about the point-of-contact? Will they offer you a single point-of-contact throughout the course of your project? This becomes especially crucial when you have offices operating from different parts of the world. Having a single project manager to handle your lease portfolio can make the process more fluid, transparent and efficient.

Question-6: Can you customize your service offerings?

When it comes to lease portfolio management, every client, every industry is different and the one-size-fits-all service model won’t work well.  For an outsourced lease portfolio management process to work well, it is important that your vendor caters to your industry-specific needs and customizes their service offering to meet them effectively.

Lease Administration post: The importance of ongoing lease management

 

If lease portfolio management were to be compared to anything, it wouldn’t be wrong to say it is a marathon. But, a lot of organizations tend to treat it like a sprint race. The only time leases get the attention they deserve is at the time they are signed. When a new lease is signed, organizations make the effort to get it abstracted and entered into their lease portfolio management systems and more often than not it stays put there until termination or renewal comes up. However, this can result in significant economic losses. Let’s look at why consistent, ongoing lease management is important.

You may be overpaying

One of the most important reasons as to why you should be reviewing and updating your lease portfolio is to identify any inconsistencies in CAM expense billing, rent hikes and other operating expenses that the Landlord may be imposing on you. 

You may miss out on various benefits that are not obvious

If you don’t service your leases regularly, you run the risk of overlooking important dates and options that could be beneficial to you. Examples include notice periods for termination, renewal, expansion and the right of first refusal. Keeping an eye on these dates and executing your options at the right time can help you get a good deal on your existing leases.

Repetitive errors may be causing you losses

If your initial abstract has errors, or if you don’t reconcile your operating expense, CAM charges, rent increase and other payments periodically, you run the risk of letting the errors embed into your leases. In cases where the rent/operating or CAM charges increase based on the preceding years’ value, you will erroneously end up paying a lot more than you should.  

You may be miss taking advantage of critical dates and clauses

If you don’t service your leases regularly, you run the risk of overlooking important dates and options that could be beneficial to you.

At some level organizations are aware of the importance of ongoing lease maintenance, but fall behind on their lease portfolio management due to lack of resources. In such scenarios, an experienced and trusted lease administration vendor can help. They can work independently or support your existing lease administration resources to help you stay on top of your lease portfolio management requirements. Plus, their expertise can add value to your internal lease administration process.