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Navigating the Holiday Season Staff Shortage in Lease Administration: Strategies and Outsourcing Solutions

 

The holiday season is a time of joy and celebration, yet for many lease administration departments, it also presents a significant challenge: staff shortages. As teams prepare for festivities and well-deserved breaks, the workload often skyrockets, leaving lease administrators swamped with tasks and struggling to manage the day-to-day lease administration activities and tasks.

According to recent industry reports, nearly 40% of businesses experience staffing shortages during the holiday season. For lease administration departments, this shortage can significantly impact efficiency and productivity, leading to potential delays in lease reviews, renewals, and crucial date management processes.

Challenges Faced by Lease Administrators

The holiday season exacerbates existing challenges in lease administrationn. With limited staff, meeting deadlines becomes a daunting task, potentially delaying crucial lease admin activities.

Overburdened staff are more susceptible to making errors or oversights in lease documents, potentially leading to compliance issues or financial ramifications.

Here are some strategies lease administration departments can adopt to mitigate the impact of staff shortages during the holiday season:

  1. Prioritize Tasks: Identify critical tasks that must be completed and prioritize them accordingly. Focus on high-impact activities such as lease renewals or payments and critical date alerts.
  2. Temporary Staffing: Consider hiring temporary lease administrators or freelance lease administrators to assist with the workload during this period. Outsourcing some lease administration tasks to reliable professionals can alleviate the burden on in-house teams.
  3. Leverage Technology: Invest in a good lease management software or tools that automate repetitive tasks, streamline processes, and enhance efficiency. Technology can help manage documents and workflows more effectively, even with reduced manpower.

Amidst these challenges, outsourcing lease administration to an experienced service provider like RE BackOffice offers several benefits:

  1. Expertise and Efficiency: Specialized lease services providers possess the expertise to handle diverse lease-related tasks efficiently, ensuring accuracy and timely completion.
  2. Scalability: Outsourcing allows for flexibility in scaling resources as per the workload fluctuations, especially during the holiday season, preventing bottlenecks and ensuring consistent operations.
  3. Cost Savings: By outsourcing, companies can avoid the overhead costs associated with hiring and training additional in-house staff, leading to potential cost savings.
  4. Focus on Core Business Functions: Delegating lease administration tasks to a reliable partner enables in-house teams to focus on strategic initiatives and core business functions.

While the holiday season brings its share of staffing challenges for lease administration departments, proactive measures such as task prioritization, temporary staffing, and technology adoption can help mitigate the impact. Outsourcing lease administration to experienced leas administration service providers like RE BackOffice not only addresses immediate staffing gaps but also offers long-term efficiency and expertise, ensuring seamless lease management throughout the year.

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.

Unlocking Hidden Savings: How CAM Reconciliation Benefits Landlords and Tenants

 

Leasing commercial space often involves more than just agreeing on a monthly rent amount. Common Area Maintenance (CAM) charges, covering shared operational expenses for common spaces, can significantly impact both landlords and tenants. However, CAM reconciliation, often overlooked, presents a unique opportunity for both parties to unearth hidden savings within their lease agreements.

Understanding CAM Reconciliation

CAM charges encompass various costs associated with maintaining common areas in commercial properties. These expenses include maintenance, repairs, utilities, landscaping, security, and more, essential for preserving the property’s functionality and appeal. Typically, landlords pass on these expenses to tenants based on their pro-rata share of the property.

Benefits of CAM reconciliation for Landlords

For landlords, CAM reconciliation serves as a pivotal tool to ensure equitable distribution of operating expenses among tenants. Through meticulous CAM audits and reconciliations, landlords can:

Ensure Accuracy: Verify expenses and billing accuracy, reducing errors that may inflate costs for both parties.

Identify Overcharges: Pinpoint instances of overbilling or erroneous charges, leading to fair and transparent cost allocations.

Enhance Property Value: By managing expenses efficiently, landlords can potentially increase property value, attracting and retaining high-quality tenants.

Benefits of CAM reconciliation for Tenants-

Tenants, on the other hand, benefit from CAM reconciliation in several ways:

Cost Transparency: Clear insight into operational expenses ensures fair billing, avoiding unexpected or unjustified charges.

Potential Savings: Through reconciliation, tenants can discover overcharges or inaccuracies, leading to reduced occupancy costs.

Improved Lease Negotiation: Understanding CAM charges facilitates informed negotiations during lease renewals or new agreements.

Discovering Hidden Savings with CAM Reconciliation

CAM reconciliation acts as a mutual win-win scenario for both landlords and tenants, often unveiling overlooked savings opportunities:

Identifying Billing Errors: Detailed reconciliation can uncover discrepancies or billing errors that may have gone unnoticed, resulting in cost savings for both parties.

Streamlining Operations: Efficient CAM reconciliation processes streamline operational expenses, leading to reduced administrative costs and potential savings.

Negotiation Leverage: Uncovering areas of excess charges provides leverage for tenants during lease negotiations, fostering better terms and savings.

In today’s competitive commercial real estate landscape, CAM reconciliation emerges as a critical component for fostering transparency, fairness, and cost efficiency in lease agreements. By embracing regular reconciliation processes, both landlords and tenants can collaborate effectively, ensuring accurate cost allocations and optimizing their financial outcomes. CAM reconciliation isn’t merely an administrative task; it’s a strategic approach benefiting both landlords and tenants. Through meticulous scrutiny and collaboration, uncovering hidden savings within lease agreements becomes an achievable goal, fostering stronger relationships and favorable financial outcomes for all parties involved.

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.

Giving Thanks for CAM Reconciliation: A Vital Practice for Maximizing Retail Lease ROI

 

As the aroma of pumpkin pie fills the air and families gather around tables, retailers are also preparing for a different kind of feast – the holiday shopping rush. Thanksgiving marks not only a time for gratitude but also the commencement of the busiest shopping season of the year. Amidst this hustle and bustle of Thanksgiving, this blog takes a few minutes to remind you of the critical role that Common Area Maintenance (CAM) reconciliation plays in maximizing the lease ROI for retailers.

Understanding CAM Reconciliation

CAM charges are fees paid by tenants to cover the maintenance and operation costs of shared spaces within a commercial property, such as lobbies, hallways, parking lots, and common areas. For retailers operating within commercial properties like malls or shopping centers, CAM fees are a familiar aspect of their lease agreements. These fees cover the shared costs of maintaining common areas such as parking lots, walkways, and communal spaces. CAM reconciliation is the process by which landlords and tenants review and adjust these fees annually, ensuring fair distribution and accurate accounting of expenses. At the end of each financial year, lease administration teams initiate the CAM reconciliation process to compare the estimated CAM charges paid by tenants with the actual expenses incurred.

Why CAM Reconciliation Matters

Financial Transparency: Just as Thanksgiving dinner brings everyone to the table, CAM reconciliation ensures transparency and fairness in cost-sharing among tenants. 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. It allows retailers to scrutinize expenses, ensuring they’re not overcharged for common area maintenance. 

Budgeting and Planning: Much like preparing a Thanksgiving meal requires careful planning, retail tenants rely on accurate CAM reconciliation to budget effectively for the upcoming year. By knowing the actual costs incurred, they can plan and allocate resources more efficiently.

Building Trust: Thanksgiving is about fostering connections, and CAM reconciliation fosters a healthy landlord-tenant relationship. A transparent reconciliation process builds trust and mutual respect between parties, creating a more conducive environment for long-term partnerships.

Outsourcing CAM reconciliation to an experienced lease administration service provider like RE BackOffice offers significant advantages. By leveraging their expertise, advanced technology, and efficient processes, leading lease administration service providers like RE BackOffice are able to streamline the CAM reconciliation process, reducing the burden on your in-house lease admin teams and enhancing accuracy. You benefit from cost savings, improved efficiency, and the peace of mind that comes from working with a trusted partner. Embracing outsourcing can revolutionize CAM reconciliation, allowing your in-house lease administration teams to focus on strategic initiatives instead of the mundane.

This Thanksgiving, as you gear up for the holiday rush, do not overlook the significance of CAM reconciliation. In the spirit of gratitude, let’s raise a toast to transparency, fairness, and thriving partnerships between landlords and retail tenants.

Happy Thanksgiving!

Best practices for CAM reconciliation from the Landlord’s perspective

 

Usually, CAM charges and reconciliation are discussed from the tenant’s perspective. After all, the onus of pointing out any discrepancies in the CAM calculations lies with the tenant and not the landlord. However, the CAM reconciliation season can be quite a handful for landlords as well. When clients point out inaccuracies or inconsistencies in CAM computations, the Landlord has to cross-verify if the client’s claims are true, and if so, then make the necessary changes. Incorrect CAM computation is a major hassle for the Landlord as well. Our blog this week discusses some best practices that landlords can follow to ensure their CAM charges computation is accurate.

Check your invoices and general ledgers

Start by checking your books of accounts and invoices. CAM charges are basically common area maintenance expenses that are divided amongst the various tenants on the property. CAM expenses include various components such as common area utilities, elevator maintenance, parking lot maintenance, centralized HVAC charges, snow removal expenses, etc. The elements included in the CAM header may vary from lease to lease. But, the point is, no matter what is included in the CAM header it would have an invoice. For example, the utility company would’ve invoiced you on a monthly/annual basis for the common area utility consumption, you may have an invoice from the trash or snow removal company, etc. So, the first step in ensuring your CAM computations are accurate is to review your ledgers and compare the amount therein with the invoices you received from the vendor who provided those services to you and make sure that you have not missed out or overcharged your tenants for any of them.

Occupancy throughout the financial year

Occupancy is a key factor affecting the pro-rata share of tenants when it comes to CAM charges. Depending on the gross-up terms and conditions agreed upon between the landlord and the tenants, the tenant’s pro-rata share of CAM expenses will vary if the occupancy rate of the premises fluctuates. In order to ensure your CAM computations are accurate, ensure that you have taken into consideration any changes in occupancy rate including move-ins, move-outs, expansions, contractions, etc.,

Pro–rata share calculations

Pro-rata share calculations are, of course, the cornerstone of CAM charges computation. Ensure you have calculated the pro-rata share accurately for each tenant because that determines the final amount they owe you as CAM charges.

Exclusions and caps

In order to ensure the accuracy of your CAM calculations, make sure you pay attention to exclusions and caps. Exclusions in your leases will point out to expenses that are not a part of the CAM header. You won’t be able to pass on expenses that are excluded to tenants. Similarly, your leases will also specify caps, if any, on your CAM charges. Caps force you to limit CAM expenses to a certain pre-approved threshold, which is usually a percentage of the previous/base year’s expenses. Make sure your CAM computations are in line with the caps specified in your leases.

Irrespective of whether you are a landlord or a tenant, CAM computation and reconciliation can be complicated and time-consuming and can put a severe strain on your internal lease team during the audit season. In such a scenario it may be beneficial to outsource your CAM audit and reconciliation tasks to an expert lease administration company.

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.

Unlocking Real Estate Cost Savings: How Tenants Can Benefit from CAM Audits

As commercial real estate tenants, it’s crucial to optimize cost savings wherever possible. One often overlooked opportunity lies in conducting Common Area Maintenance (CAM) audits. By thoroughly examining various aspects of lease expenses, tenants can uncover potential cost savings in several key areas. Let’s explore how CAM audits can help tenants unlock significant savings across annual expense reconciliations, capital improvements, escalation caps, gross-ups, tenant improvement allowances, real estate taxes, pro rata share discrepancies, base year calculations, landlord billing issues, and even security deposits.

Annual Expense Reconciliations:

CAM audits scrutinize annual operating expense and reconcile them to ensure that tenants are only charged for their fair share of operating expenses. By reviewing invoices, contracts, and lease agreements, tenants can identify billing errors, duplicate charges, or incorrect calculations that may result in overpayment.

Capital Improvements:

CAM audits assess whether the capital improvement costs charged by the landlord align with lease agreements. Tenants can verify the appropriateness of expenses, negotiate the allocation of costs, and ensure compliance with lease provisions, potentially reducing their financial burden.

Escalation Caps:

CAM audits confirm whether escalation caps on expenses are accurately applied. Tenants can ensure that their lease terms are being adhered to, preventing costs from exceeding predetermined limits and maintaining budget predictability.

Gross-Ups:

CAM audits evaluate whether gross-up calculations for shared common area expenses are performed correctly. Identifying any discrepancies can lead to fairer allocation among tenants, potentially reducing individual cost burdens.

Tenant Improvement Allowances:

CAM audits review tenant improvement costs to ensure they align with the lease agreement. By validating that charges are within the agreed-upon allowance, tenants can avoid unexpected expenses and effectively manage their financial resources.

Real Estate Taxes:

CAM audits verify the accuracy of real estate tax assessments. Tenants can identify potential errors or discrepancies, ensuring that they are not overpaying on their share of property taxes.

Pro Rata Share Discrepancies:

CAM audits analyze pro rata share calculations to ensure accurate distribution of common area expenses among tenants. This scrutiny helps tenants identify any imbalances or errors in cost allocation, leading to fairer financial responsibility.

Base Year:

CAM audits assess base year calculations to confirm their accuracy. By verifying that the base year is appropriately established, tenants can ensure that future expense increases are calculated correctly, avoiding unnecessary financial strain.

Landlord Billing Issues:

CAM audits scrutinize billing practices to identify any discrepancies or inaccuracies in charges. This thorough examination empowers tenants to rectify billing errors promptly and negotiate fair resolutions.

Security Deposits:

CAM audits review security deposit accounts to ensure compliance with lease terms. Tenants can identify any discrepancies or mishandling of funds, ensuring the appropriate return of their security deposit upon lease termination.

CAM audits offer tenants an excellent opportunity to uncover cost savings and ensure fair and accurate expense allocations. By engaging in these audits, tenants can proactively manage their lease expenses, identify potential errors or overcharges, and negotiate favorable outcomes. Embracing CAM audits allows tenants to maximize their cost savings, enhance financial predictability, and optimize their overall leasing experience. Take control of your lease expenses through CAM audits and reap the benefits of significant cost reductions and improved financial performance.

Learn More about RE BackOffice’s CAM Audit Services:

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.

 

Lease Abstraction Essentials: Key Questions and Answers

Lease abstraction is a critical element of lease portfolio management. This blog discusses some of the basic questions related to lease abstraction and their answers.

What does lease abstraction mean?

The term, lease abstraction, refers to the process of extracting the key financial and non-financial data from a lease and summarizing it so it is meaningful and easy to understand. Lease information thus extracted is known as a lease abstract, since it provides an abstract version of the original lease.

Why have leases abstracted?

Leases have a lot of information and run into hundreds of pages. As a result, some critical information may be overlooked, which can result in a breach of contract of the lease and attract penalties, fines, premature lease termination and sometimes, even legal action. A lease abstract captures the essence of the lease and highlights the key financial and non-financial obligations ensuring they are not overlooked. Examples  include:

  • Rent amount due
  • Date when rent is due
  • Notice period for termination
  • Notice period for lease renewals
  • Rent increase dates, rent increase percentage, etc.
  • Having abstracts of your leases allows you to stay on top of your lease portfolio and prevents any accidental oversight of lease obligations.

How to get leases abstracted?

If the next question on your mind is who prepares the lease abstracts or who typically abstracts leases, the answer is, a lease abstractor. A lease abstractor, also often referred to as a lease analyst usually does the lease abstraction. A lease analyst has a strong hold over the lease language and terms therein. Leases use a lot of legal terminology and not everyone is well versed in it to be able to decipher the actual meaning of the lengthy lease clauses. A lease analyst is also someone with a lot of experience in working with different lease administration software platforms.

What does a lease analyst do?

A lease analyst or a lease abstractor’s job can be split into 3 steps. The first is to read the leases, related amendments, addendums, side letters and any other document connected with the lease agreement thoroughly. The second step is to identify the key financial and non-financial elements of the lease and the third step is to capture them in a lease abstraction template or a lease administration platform, as requested by the client.

While the lease analyst will capture the key fields that are generally included in all lease abstracts as a norm, such as rent, commencement date and others, they may also include information about other clauses if the client requests them to do so.

Does everyone with a lease portfolio have a lease analyst for lease abstracting their leases?

Lease abstracts are a must if you want to stay on top of your lease portfolio. Retailers, corporate clients, REITs, property managers and property owners often require the services of not just one lease analyst but a whole team! This is because, their lease portfolio tends to be large with hundreds and sometimes thousands of leases spanning across different geographical locations. But, having a lease abstraction team in-house poses its own challenges, which is why a lot of them choose to outsource their lease abstraction and administration tasks to a trusted lease abstraction and administration vendor. This post tells you more about these challenges and how outsourcing lease abstraction is a viable solution.

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 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house.