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What to consider when assessing your lease abstraction vendor’s experience?

 

If you are considering outsourcing your lease abstraction process, then it is because you already know the benefits of hiring a lease abstraction company to abstract your leases. 

Outsourcing lease abstraction 

  • Offers you significant cost benefits
  • Ensures you stay on top of your lease portfolio, no matter how short-staffed you are on the lease portfolio management front
  • Allows you to benefit from the expertise and industry experience of your lease abstraction vendor

However, in order to actually enjoy these benefits, you should pick the right lease abstraction vendor. One of the many things to look at when considering a lease abstraction vendor is their experience. Generally, clients tend to look at the number of years the lease abstraction vendor has been in the business. While experience in terms of industry-years is certainly a major factor impacting lease abstraction vendor selection process, it shouldn’t be the only one. The element of experience has multiple aspects to it. When looking at your lease abstraction vendor’s experience, two other areas to consider are, if they have experience.

Serving both, landlord & tenant 

Has your lease abstraction vendor worked with both tenants and landlords, or, is their experience largely limited to one of them? Leases are complex legal documents. You need someone who understands complexities and nuances of your leases that represent the culmination of negotiations between lessor and lessee. A lease abstraction vendor who has experience working with lessors and lessees over the years has a much broader perspective than someone who has been typically involved only with one side, such as the Landlord or the Tenant. Such a vendor will be able to bring their rich and diverse understanding and expertise into your lease abstraction project, driving maximum value for you.

Serving clients from your industry

Every lease is unique, and leases pertaining to each industry have their own nuances. When picking a lease abstraction vendor, you might want to consider someone who has experience working with clients in your industry. This is especially true in case of industry verticals like Cell-tower, healthcare, retail, etc, where there are a lot of industry-specific clauses and documents such as Tower co-location agreements, HIPAA regulations impacting the lease liabilities, percentage rent, and related audit rights, etc.

Taking a second look at the experience criterion from these two additional angles that we discussed will help ensure you pick a lease abstraction vendor who is able to abstract the key elements of the lease that you actually need in order to make better operational and strategic decisions; accurately, consistently, and fully.

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, 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 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house. Please contact us today to learn more.  

Lease Administration post: Building a solid foundation for your lease portfolio management process

 

Your lease portfolio management process has many moving parts. While it is complicated, it is also one of the most important business processes. In our blog this week, we discuss a few items that form the foundation of your lease portfolio management process.

Lease abstracts

Your lease abstracts are of course the most important aspect of your lease portfolio. Saying that leases contain a lot of information is an understatement. Lease abstracts summarize the key financial and non-financial terms of your leases so you have easy access to actionable data. So, the first thing to do, when solidifying your lease portfolio management process is to ensure you have accurate abstracts of all the leases in your portfolio.

Lease audits 

If you already have lease abstracts, the next step is to audit them all. A lease audit involves verifying the information in your lease abstracts against the original lease documents to ensure that the abstracts are accurate. A lease audit helps you identify any discrepancies and ensures your abstracts are up-to-date and no critical information or updates in the form of amendments or addendums are missed out.

Lease abstract templates

Sometimes, you may already have lease abstracts that are accurate and up-to-date, but they may fail to capture some critical information. Hence, as a part of your lease portfolio management process audit it makes sense to look at your existing lease abstract template to determine if you are capturing the right information. While some core fields such as rent, options, key dates, etc., are needed irrespective of what industry you belong to, there may be fields that are important for your business or industry in particular. Apart from such fields, there may be certain, less common clauses in some leases that must be captured. So, you need to identify what data matters to you and ensure that your lease abstract template caters to your needs by capturing that information. Our blog post, Is your lease abstraction set up accurate, offers more information on this. 

Ongoing lease administration

Once your lease abstracts are accurate, concise, up-to-date, and reflect all the information you require, the next step is to engage in ongoing lease administration. This helps in maintaining your ROI on the lease by ensuring that you don’t miss any critical timeline or lose out on any opportunity pertaining to your lease. Learn more about why you shouldn’t skip ongoing lease administration in this blog.


Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, 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 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house. Please contact us today to learn more.

Here’s why ignoring on-going lease administration is not a good idea.

 

Is your lease administration process consistent? Tenants often so caught up in their business that lease administration tends to take a back seat. Usually, it is because of one or more of the following reasons: 

The high cost of hiring, training, and retaining lease administration resources

Lease administration resources are considerably expensive. Add to that the training and retaining costs that accumulate over time, the lease administration process in itself becomes costly. 

The high rate of attrition affecting lease portfolio management and timely updates

The lease administration industry is characterized by a high rate of attrition, which adversely affects lease portfolio management. Organizations fall behind on timely updates and lease audits due to a lack of resources. 

However, ignoring on-going lease administration and timely lease audits can result in substantial financial losses due to missed opportunities. For example, you fail to identify and rectify erroneous rent calculations or CAM charges, which then get embedded in your lease, term after term. 

Tenants without a solid lease administration and audit process also end up underutilizing their assets/rights under the lease due to lack of information. This is often a result of decentralized, fragmented, and inaccurate lease data.

On-going lease administration and regular lease audits help ensure that you, as a tenant don’t miss any critical deadlines or overlook any opportunities such as the right to renew or expand. With detailed reports alerting you to critical dates, action items, and financial discrepancies such as incorrect billing or overcharges across various locations, you will be able to drive strategic business decisions accurately and on time, while saving substantial amounts of money. 

Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, 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 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking strategic advantage. All client projects are performed in-house. Please contact us today to learn more.

Lease Administration post: Is your rent really supposed to be that high?

 

Leasing is a key financial decision, so it is fair to assume that tenants analyze the viability of the decision to enter into a lease, thoroughly. However, once the lease is signed and the rented premises are occupied and operational, many tenants are taken by surprise as they find their rental costs ending up being significantly more than what was expected. This blog post discusses the possible reasons for such discrepancies. 

One of the first things to check is if your base rent calculations are accurate. If there are errors in your base rent calculations, they can get embedded in your rent roll, pushing your rent higher year-after-year, inaccurately. Some areas to check in this regard are-

Square footage calculations

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. Learn more in this blog post. 

CPI calculations

If your rent rises are linked to the CPI, then you need to ensure the CPI calculations made for your lease are accurate. You need to be aware of the CPI adjustments and apply them correctly to your rent roll. 

Rent commencement date, pro-rata rent, and term calculations

Another area to scrutinize is the rent commencement date. A lot of hinges upon your rent commencement date, including calculations related to your lease tenure. If your rent commencement dates are incorrect, or the terms and pro-rated rent are calculated wrong, you may be paying more than what you actually owe. 

You can avoid unpleasant surprises related to your rent amounts by deploying the services of an experienced lease administration firm that helps you stay on top of your lease portfolio management. Regular lease audits and lease administration services go a long way in identifying errors in your rent roll and helping you save significantly on rent.  

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

Lease Administration post: Why entrust your lease audits to experts?

 

With organizations looking to cut additional costs and curtail seemingly unwanted operating expenses, lease audit is gaining a lot of popularity as a tool that helps them accomplish this goal from the real estate perspective. In our blog this week we discuss why you should entrust the task of auditing your lease expenses to experts.

Lease audits involve a thorough perusal of the invoices raised by your Landlord in light of your lease agreement to determine if you actually owe those charges and if yes, then to ensure the amount you are being invoiced for is accurate. You will be essentially challenging your Landlord based on the information from the lease audit. Hence it is important that your lease audit is thorough and accurate. Any claims made in the lease audit also needs to be backed up with strong evidence supporting the claim. Without that, even legitimate claims may not be honored by your Landlord. 

Secondly, when you reach out to your Landlord with the findings of your lease audit, you need to be tactful and also be able to negotiate effectively. The Landlord also needs to be able to trust your lease audit firm in the sense that they will keep any information regarding a settlement confidential. Landlords may hesitate to agree with lease audit findings if they fear that the audit firm may then reach out to other tenants of the Landlord in the premises offering a lease audit service. Outsourcing your lease audits to a reputed and trusted vendor who offers lease audit services will go a long way in ensuring your lease audits and consequent negotiations happen smoothly. 

A poorly done lease audit can cost you your relationship with your Landlord. A trusted lease audit firm can help maintain your relationship with your Landlord better. Using the services of a professional lease auditor enhances your chances of getting your claims honored.

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

Lease Administration post: How well do you know your rent roll?

 

Rent rolls are one of the most important aspects of your lease. It wouldn’t be incorrect to say the rent roll is a key financial data point of your lease and forms the crux of your lease contract. But, how well do you know your rent roll? Understanding your rent structure clearly is very important as it can help you negotiate renewals better, save significant amount of money by identifying inaccuracies in rent calculations and also help you drive better real estate-related business decisions. Our blog this week discusses the key aspects of the rent roll that you should be aware of. 

What is your rent structure?

All tenants know their rent structures, no doubt, but what about the details? You should be aware of escalation clauses in your lease. What is your rent escalation tied to? Is it a direct, simple escalation by a predetermined amount or percentage, is it pegged to an economic indicator like the CPI, or is it based on your revenue, such as a percentage of your sales (most common in retail leases)? Understanding the rent escalation clause helps you analyze the feasibility of your lease.

What constitutes your Common Area Maintenance (CAM) charges?

If your lease is a net lease, then CAM charges will definitely be a core component of your rent roll. The thing about CAM charges is that it includes multiple headers and complicated calculations, which leave room for errors and even interpretation. You need to be aware of the various components of your CAM charges and how they are computed for you as per your lease. For example, what happens if you moved into a fairly empty building that’s only gradually filling up? How is the CAM divided among the existing tenants including you, until the time there’s 100% occupancy? What will be the repercussions on your CAM charges as new tenants are signed up.

When it comes to rent-roll calculations, the onus is always on the tenant to identify errors, if any, and report them to the landlord. So, it is essential that as a tenant, you pay keen attention to the core rent roll components such as rent escalation calculations and CAM charges allocation. Overlooking any errors in these calculations will cause them to become a part of the base calculations for the next lease year and as a tenant, this can cost you a lot. Plus, most leases place a timeframe within which such discrepancies should be reported to the landlord. Failing to do so on time may be construed as acceptance by the tenant to make the payments. 

You can avoid such scenarios by having clear, concise and accurate abstracts of your leases that simplify complex lease terms for you without diluting their essence. Solid lease abstracts can help you understand your rent roll and related components clearly. Two other very important elements in this regard are regular lease audits and a thorough lease administration process that will help you identify the gaps and act at the right time. 

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