KBA’s lease audit process focuses on all of the rent and rent-related charges incurred by a tenant, and our analysis is geared to produce the greatest net recoveries for our clients while maintaining good business relations with their landlords.
KBA collects copies of all internal client documents needed for a preliminary analysis. This includes the lease, any subleases, all amendments, exhibits, estoppels and any pertinent correspondence between landlord and tenant. The relevant documentation also includes copies of all bills for escalations, including operating expenses, real estate taxes, utilities, porters’ wage and other similar charges.
The KBA audit process begins with a thorough review of all lease documents. We analyze all documents from the commencement of occupancy in order to gain an understanding of what the tenant agreed to and how the landlord-tenant relationship evolved. We then examine the bills received from the landlord and compare them to the obligations in the lease documents.
We perform tests for consistency with the lease language and conduct trend analyses of expense items incurred since lease commencement. For example, we analyze space size and utility consumption and compare the expense levels to the norms within each particular market. To make these comparisons, we refer to BOMA, other industry resources and our extensive database of lease information, developed from our many years of lease audit experience.
In the event that KBA identifies charges that appear to be inconsistent with the lease documents, KBA will present its findings to the client. We consult with the client and determine how best to present our findings to the landlord. We then develop a resolution strategy in conjunction with the client. In executing our resolution strategy, we prepare all necessary correspondence and each letter is reviewed with our client prior to issuance (we will not contact a landlord without our client’s consent). Once a claim is resolved, we ensure compliance by the landlord upon resolution and when the recovery of savings is scheduled to occur after the date of resolution.