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Representative Real Estate Client List
Lease Advisory Services
- Aetna
- Amerada Hess
- Anadarko
- Aspen Tech
- Blue Cross Blue Shield
- Boeing
- Cigna
- Concentra
- Dillards
- Electronic Data Systems
- ExxonMobil
- Greater Houston Partnership
- Harris County Appraisal District
- IBM
- I2
- ICG
- Jacobs Engineering
- Luby’s
- Merrill Lynch
- Prudential
- Regal Cinemas
- Sumitomo
- Southwestern Bell
- Wells Fargo
Due Diligence/Lease Abstraction
- American Express
- Arden Realty/GE
- Burnham Properties
- Center Trust
- Commonwealth
- Crescent Real Estate Equities Company
- Donahue Schriber
- Harris Bank
- HDG Mansur Investments
- Holliday Fenoglio Fowler, LP
- Lincoln Property
- Regency
- RREEF America
- Thomas Properties Group
- Tishman Realty
- Vornado
- Waterbury Properties
- Wells Fargo
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Scrutinize Your Lease and Uncover Additional Cash Flow
Real estate costs often represent the second highest expenditure for a business, typically exceeded only by personnel cost. The commercial lease, and more specifically the operating expenses paid by the tenant, may not receive the level of review on an annual basis that provides assurance of compliance with the terms of the agreement. However, pressure to reduce operating expenses, maximize shareholder value and create financial transparency in all aspects of the lessee’s primary business operations may bring a lease under more scrutiny.
The final negotiated lease documents can be extremely complicated, involving third-parties during the negotiation process that might include all or some of the following: brokers, accountants and lawyers for both side of the transaction, as well as the tenant’s internal personnel and the landlord. Once these experts complete the transaction what effort is made to ensure compliance of these terms are achieved from year-to-year? There are no strict rules or written guidelines, and only limited governmental regulations for landlords to reference when calculating and reporting operating expense pass-through (CAM) costs.
Conducting an annual lease audit provides assurance that all base rental amounts, pass-through operating expenses and tenant-specific charges are in accordance with the terms of the lease. More importantly, the lease audit ensures that the methodology and application of the CAM costs are escalated in strict compliance with the content of the tenant’s lease.
The lease audit process, generally performed subsequent to the issuance of operating expense reconciliation statements within the first or second quarter of the calendar year, is a prudent business decision and an indication of an informed business operator. The process provides accurate and appropriate controls over these very significant expenditures.
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If you are the tenant, when was the last time a full review of property operating costs was performed? Do you have the assurance that you aren’t paying for services you didn’t receive or paying for costs that are explicitly restricted from inclusion in your lease operating costs?
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If you are a landlord, do you have the level of controls in place to ensure that audit time is minimized and that potential errors are either prevented or quickly resolved? Are you prepared to adequately address the issues that will arise from a tenant’s lease audit?
While the lease audit process may never be totally painless, understanding the critical elements that should be addressed and adhered to per this very important document can minimize misunderstanding, misinterpretation and assist in working toward a mutually acceptable resolution to any identified issues.
Fuller Group Realty Advisors is adept at understanding the most complicated leases and providing the expertise to ensure that all costs are properly assessed, no matter whether you are the lessee or lessor. For more information: Call or e:mail Fuller Group Realty Advisors, LLC today |
