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Search for Sublease Profits

Situation

A 1,000,000 sq. ft. building with significantly below-market rents requested an audit of sublease profits. Property Manager was concerned that sublease profits were not being collected.

Solution

The Realogic Lease Abstracting department abstracted the sublease clauses for every lease in the building and then performed an on-site occupancy audit to identify tenants with potential sublease profits.  Thirty (30) subtenants were found that had not been recognized by the Landlord, as sublessor did not seek Landlord Consent. Compliance with existing sublease language increased annual revenue by $50,000.

Encumbered Space Search

Situation

Leasing agent found deficient documentation of encumbered spaces for a new property management assignment.  Issue came to light when encumbered space was leased without knowledge of such encumbrance (legal resolution cost the building $45,000). All 70 leases needed to be abstracted quickly to avoid additional liability.

Solution

Realogic used ELLIPSIS to abstract Options & Encumbrances of all leases in 36 hours. Presented O&E results and then abstracted remaining requested items to prepare database for lease administration. ELLIPSIS continues to be used to perform ongoing lease administration, including an ELLIPSIS generated report of encumbered space by floor, as a future safeguard against such occurrences.

Lost Storage Revenue

Situation

Renewal leases for several tenants of a 900,000 sq. ft. building inadvertently did not address storage space that was being utilized.  Property Manager requested help in quantifying lost revenue.

Solution

Audit of the building found 13 spaces were being utilized for free. Commencement of billings increased revenue by $50,000 annually.

Lease Review Audit

Situation

Abstracts were completed by client using internal staff who had moderate to minimal experience reading leases.

Solution

Lease Review Audit performed. Abstracts compared to leases on a test basis. Ongoing findings resulted in request to review all abstracts. Lease Review Audit revealed 27% of building’s lease abstracts were missing base rent schedules for existing space as they were overwritten by erroneously abstracted expansion options.  Corrected abstracts increased annual revenue by $80,000.

Estoppel Requirement

Situation

Financial institution needed assistance obtaining lease data in order to complete Estoppel letters for a sale.

Solution

After the job was outlined, the Realogic team went on-site and abstracted all Estoppel clauses. Also, data fields were mapped from ELLIPSIS into a Realogic developed Excel spreadsheet to facilitate preparation of Estoppel letters, allowing the client to meet their deadline.

Preparation of Expense Reconciliation Billings

Situation

A Realogic abstracting client had an outside date as to when reconciliation billings could be performed in accordance several tenant leases (failure to complete billings by this date would result in LL losing the right to bill the tenant for any potential underpayment). The client did not have the in-house resources to prepare the reconciliation billings by such date.

Solution

Realogic met with the client to discuss their reconciliation process and to understand the nuances of their general ledger/chart of accounts. Realogic then utilized the actual expense amounts for the calendar year then ended to prepare expense reconciliation billings in accordance with tenant leases. As a result, the billings were made to tenants prior to the outside date mandated by several leases.

FASB 13 Straight Line Rent Calculations

Situation

A lease administration client hired Realogic to verify that lease data was properly entered into the client accounting system to facilitate FASB 13 rent adjustments.

Solution

Realogic met with the client to discuss their interpretation of FASB 13 calculations.  Based upon these discussions, Realogic created an Excel spreadsheet to calculate the FASB 13 rent for every lease as new lease documentation was provided. Realogic then cross-checked the summary data (# of months, total rent & average rent) against such summary data contained within the CTI accounting system. If such data agreed, then the lease data was entered properly into CTI to facilitate FASB 13 rent calculations. If the data did not agree, CTI data entry was reviewed to determine the source of possible entry errors.

Ongoing Lease Administration using client's accounting software

Situation

A large national client made the strategic decision to outsource their entire lease administration function to a third party vendor. Lease administration was to be performed directly into the client’s CTI accounting system.

Solution

Realogic spent two weeks on-site with the client discussing lease administration procedures and the use of CTI for lease administration. Realogic was granted remote access to the requisite CTI modules by the client. Realogic was added to the e-mail distribution list for all new lease documentation posted to Smart Cabinet. Upon receipt of new lease documentation, Realogic performed lease administration functions directly into CTI and became the point of contact for property managers who had questions regarding leases within their respective buildings. Realogic continues to perform lease administration for this client.

Aggressive Acquisition Campaign

Situation

A private real estate firm needed an outsourcing partner to help with lease abstracting and financial analysis during an aggressive acquisition campaign.

Solution

  • Using Ellipsis, Realogic abstracted approximately 700 leases during a tight due diligence timeframe.
  • Ongoing lease administration for all existing and new buildings.
  • Web access to all Ellipsis reports is available to the acquisition and property management teams.

2,000 Tenants

Situation

National commercial real estate owner hired Realogic to abstract all leases in their portfolio of over 2,000 tenants.

Solution

Using Ellipsis, Realogic performed the following tasks:

•    Initial lease abstracting
•    Coordinated scanning of all lease documents
•    Integration of all necessary lease data points into clients lease flow process
•    Ongoing lease administration

Our services allowed our client to:

•    Track and manage all critical lease dates more efficiently
•    Quick and easy access to all lease information – original leases, abstracts
•    Integrated critical lease data into their lease flow process
•    Manage their properties more effectively.
•    Ongoing lease administration, for over 12 million SF is being done.

Reconciliation of Outstanding Receivables

Situation

Significant outstanding receivables jeopardized the sale of a client’s 750,000 sq. ft. office building.  Asset Manager requested help to identify, quantify and collect amounts owed.

Solution

Leases were reviewed on site and reconciliation work was performed.  Invoices prepared and presented to tenants for back rent. Receivables of $1,000,000 were individually reconciled for each tenant and collected within 45 days to expedite closing.

400 Leases/ 10 Days

Situation

A prominent real estate company needed to close a large transaction in 30 days.

Solution

Within 2 days, our team was on-site and a remote network was set up. Leases were abstracted and key reports were provided, listing all options and future tenant improvement allowances. Results were then compared to ARGUS Asset Management®.

Electrical Audit

Situation

Property Manager suspected that electricity was not being billed correctly for 850,000 sq. ft. office building.

Solution

Review of leases and review of expense escalation's found the building had been paying on the electric meters for seven (7) tenants for several years due to an error made during the move-in process. Modification of move-in procedures were recommended that increased annual revenue by over $10,000.