Practical advice on ways to improve control over your company’s real estate costs.

The single-most important factor in determining how much rent a tenant has to pay is the size of the rentable area being leased.  Yet, at the same time, one of the most confusing topics in commercial real estate is how to determine that size.  That’s because measurement standards vary from market to market and most [...]

If you think about it, every abstract is, by its very nature, wrong.  It is an inherently incomplete picture of the rights and obligations of the underlying documents.  As any attorney will tell you, documents speak for themselves.  The minute you change, summarize, abridge, characterize or otherwise alter the words, you change the meaning.  That’s [...]

If you have ever been involved with an on-site lease audit of a landlord’s books and records, you would know that landlords hate them. With the widespread use of digitized record-keeping, many landlords are opting to send such records to their tenants electronically. This article discusses the benefits and limitations of sharing digital copies of Operating Expense/CAM records, and suggests sample lease language for that purpose.

Not-So-Impending Doom   Finalizing the changes is taking much longer than anticipated. This means the effective date of the changes will be pushed off farther into the future, giving companies more time to deal with the impact. As you have  probably heard, extensive public comment over the proposed changes in the Boards’ original August 2010 Exposure [...]

It’s the end of April, and you should have received your operating expense and tax reconciliations from 2011. But you face a problem: the receipt of these statements starts the clock on when you must notify your landlord of errors. If you don’t, your statements are “deemed” conclusive and binding, regardless of how blatant or obvious errors may be.

This article will show you how to deal with this costly restriction and to avoid it in the future.

Why would a tenant’s operating expense bill be 10 times higher than expected just 2 years after occupying new space? Many real estate professionals will tell you that 80-90% of all corporate leases suffer from deficiencies; the question is–can you identify and remedy them? We’d like to arm you with some information to help navigate these waters and avoid some of the more dangerous issues. This LeaseTip addresses the dilemma a tenant that moves into an empty building can face.

Why you need to comb through your leases’ Operating Expense bills Gone are the days when tenants could comfortably rely on their landlords to follow the leases when billing ancillary charges such as operating expenses, taxes and sundry charges.  In fact, as the real estate market has softened, landlords are devoting more time and resources [...]

Discussion between Andrew Zezas of SIOR NJ and Marc Betesh of KBA Lease Services. Together they outline the upcoming changes to lease accounting under GAAP and their potential impact on commercial real estate, developers and occupants.

FASB and IASB announced on July 21, 2011 that they will re-expose the lease accounting proposal containing their revisions and tentative decisions thus far, further delaying final implementation of these highly controversial rules.

Gross-ups are adjustments to building expenses that are made when such expenses are below normal levels because of building vacancies and other factors.

According to industry chatter, it is looking quite likely that the FASB plans to continue to re-deliberate crucial issues based on the steady flow of industry opinion and data received from comment letters, roundtables and outreach initiatives.

Duke Long interviews Marc Betesh about upcoming FASB changes at Corenet’s Chicago conference. 

Most landlords employ a CPA firm to prepare the entity’s financial statements and tax returns. In many cases, a segment of the financial statements that are issued are delivered to tenants in support of their operating expense pass-through billings. Tenants must be careful to not rely on these statements to protect their rights.

Landlords are devoting more time and professional resources to increase revenue. As evidence of this, landlord-oriented articles are appearing in various publications suggesting how to uncover hidden income from tenants through greater attention to tenant pass-throughs. Now more than ever, tenants should be reviewing their leases and bills to make sure they do not contain overcharges or errors. Here are 6 reasons why tenants should increase their vigilance with respect to operating expenses and other pass-through charges.

Landlords and tenants often argue over lease audit rights in leases. Landlords seek to restrict the tenants’ right to audit by imposing restrictions on an otherwise open right. Tenants seek to ensure that they have a practical, workable clause that will enable them to verify their costs. Michael E. Meyer, Esq., one of the country’s leading leasing attorneys and partner at DLA Piper LLP (US), has developed this checklist of issues that should be covered in a well-negotiated lease audit clause.

In real estate, some of the most commonly used terms are “Net Lease” and “Gross Lease.” This article discusses structures such as net, gross, modified gross and hybrid leases. Because of the many different variations on lease structures, it is important to understand what these terms refer to and how they should be used.

The Lease Tips™ Archive includes the following articles. For full access to the archive, please click “Get Lease Tips™” to subscribe.

Checklist for Negotiating a Fair Lease Audit Provision
Succumbing to Landlord Pressure to Limit Lease Audit Rights
Which Leases Are Good Candidates for Audit? — How to Identify the Key Indicators
Lease Administration vs. Lease Auditing
Commercial Lease Occupancy Cost Measurement
Expense Escalation Caps
Stop Giving Away Your Audit Rights
It’s That Time of Year Again
Due Diligence: The Foundation of Lease Auditing
What Happened to that Great Lease You Negotiated?
Don’t Get Shocked by Your Electric Charges
Don’t Pay Twice for a Better Building
Reminder: The Clock Is Ticking…
Prepare Your Budgets Properly
Protecting Yourself in Base Year Leases
A CPA Certification is Not Enough
Criteria for Selecting a Lease Audit Firm
Lease Auditing: What Is It and How Does It Work?
How “Grossing Up” Operating Expenses Affects your Lease Costs
Cost-Reducing Capital Expenditures
Audit Deadlines Come in All Forms
Sarbanes-Oxley and Control of Corporate Real Estate Leases
Demystifying the Difference between Net and Gross Leases
Capital Expenditures – Includable or Not?
Negotiating Lease Audit Rights
Measurement of Square Footage
Carefully Constructed Rent Escalation Clauses Help Avoid Landlord-Tenant Disputes
Negotiation Skills: The Most Important Ingredient in Lease Auditing