Understanding the Lease Administration Process
For entities with commercial real estate leases in place or in development, it’s important to have an efficient, streamlined, and scalable lease administration process. Effective lease administration processes can result in reduced legal exposure, smoother operations, and significant cost savings.
On its face, administration is simply about collecting and/or paying rent, and ensuring the obligations spelled out in the lease itself are met. However, an effective lease administration process is more complex. While every organization’s needs differ somewhat, the steps involved in the administration process typically include:
- Lease abstraction, to summarize key lease terms and obligations. This can help companies stay on top of expirations, notice requirements, and other metrics.
- Analyzing lease expenditures – including operating costs, CAM expenses, property taxes and utilities – and taking action to adjust those expenditures where possible and appropriate.
- Managing key dates and lease options proactively, to allow for enough time to make critical decisions.
- Managing and monitoring payment terms to ensure rental payments are made/received when due.
- Facilitating, receiving, and responding to requests for tenant alterations to leased space.
- Administering and executing amendments to existing leases.
- Reporting on key terms, provisions, and performance of leases.
- Ensuring corporate governance compliance with Sarbanes-Oxley and GAAP requirements.
- Evaluating and auditing the lease portfolio to identify potential issues.
Successful lease administration is about more than just each of these functions individually. When taken as a whole, lease administration can help you use information on commercial real estate more effectively, since it is a key component of the forecasting and budgeting process.
Efficient administration processes ensure dates and deliverables are managed. And, by having experienced lease administration professionals working behind the scenes, you can minimize the potential for errors in the invoicing, billing, and collection processes too.
There are many benefits for outsourcing the lease administration process on your portfolio of commercial leases. To find out how Baer Reed can help, contact us online, or call us at (888) 433-1990 today.
- On December 8, 2017
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