rpcon masterclass s204-fundamentals-desk_audit - jerry king
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Lease Administration Masterclass Friday, 23rd March 2012
Fundamentals of the Desk Audit
Presented by: Jerry King
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Session Objectives
• Overview Elements of a CAM Reconciliation • Identifying Key Issues • Spotting the errors• Collecting Over Payments
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Getting Organized
• Legal on board? • Lease review: abstracts, caps, fixed…etc. • Did you receive back-up? Request it! • Prior years reconciliations. • Collecting your findings – Letter Writing • Tracking your savings.
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Our Basic Rules
• Lease determines what can or cannot be charged back by the Landlord.
• Landlord is responsible for providing reasonable documentation supporting expenses charged on reconciliations.
• Expenses must be necessary and relate directly to common area operations.
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
What we need to Check
• Pro-Rata Share• Administration and Management Fees• Expenses• Capital Items?• Overhead Expenses• Offsite Expense
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Lease Administration Masterclass Friday, 23rd March 2012
Tools of the TradeLeases, Invoices and Documents
Reconciliation and supporting documentsItemized CAM Expense Listing
Depreciation schedules
GLA SchedulesExcluded Tenants sq.ft / sqm (Anchors/Majors, Outparcels, etc)
Real Estate Tax and Municipal Rates ChargesInsurance Charges
NRTA | Focus 08-Solutions for Success
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Typical Questionable Expenses
• Repairs/Maintenance • Off-site Labor • Security • Snow Removal (US)• Landscaping • Utilities • Trash / Grease Trap• Insurance
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Pro-Rata Share
• Most critical element of the CAM invoice. • All leasable space, including major
department stores and outparcels, are included in the pro-rata share unless specifically excluded in the Lease.
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Pro-Rata Share
• Formula: Premises/GLA=Pro-rata share• GLA (area) vs. GLA (average) • Area based on actual square footage of all
buildings regardless of occupancy • Average based on occupancy rates of all
square footage of buildings • Kiosk – Storage Trailers - Other income
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Lease Caps
• Prior to beginning audit, perform test on Lease Caps to determine if complete Reconciliation is necessary.
• Are there any exclusions from the Lease Cap calculation?
• Is Cap based on prior year PAID or Cumulative Cap?
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Administrative Fee
• Charged by Landlords as compensation for off-site management & other non-direct expenses.
• Generally based on a % of expenses, but can be based on actual expenses or a flat fee.
• If the Lease is silent with respect to an admin fee, an admin fee cannot be charged!
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
CAM or NOT?
• Promo / Advertising Fees • Pylon Signs • Bank Fees • Employee Incentives • Christmas Decorations• Vacant Land
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
CAM or NOT?
• Off Site Expense• Property Manager’s Car • Maintenance Vehicle / Golf Carts • Seasonal Flowers • Promotional Events / Advertising • Security for Special Events • Muzak
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Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012
Contact InformationJerry King
• [email protected]• www.rent-research.com• Rent Research Consultants, Inc.
PO Box 372 Swansea, MA 02777, USA
• Phone 1-866-635-5762• FAX 1-888-473-1121