If lease portfolio management were to be compared to anything, it wouldn’t be wrong to say it is a marathon. But, a lot of organizations tend to treat it like a sprint race. The only time leases get the attention they deserve is at the time they are signed. When a new lease is signed, organizations make the effort to get it abstracted and entered into their lease portfolio management systems and more often than not it stays put there until termination or renewal comes up. However, this can result in significant economic losses. Let’s look at why consistent, ongoing lease management is important.
You may be overpaying
One of the most important reasons as to why you should be reviewing and updating your lease portfolio is to identify any inconsistencies in CAM expense billing, rent hikes and other operating expenses that the Landlord may be imposing on you.
You may miss out on various benefits that are not obvious
If you don’t service your leases regularly, you run the risk of overlooking important dates and options that could be beneficial to you. Examples include notice periods for termination, renewal, expansion and the right of first refusal. Keeping an eye on these dates and executing your options at the right time can help you get a good deal on your existing leases.
Repetitive errors may be causing you losses
If your initial abstract has errors, or if you don’t reconcile your operating expense, CAM charges, rent increase and other payments periodically, you run the risk of letting the errors embed into your leases. In cases where the rent/operating or CAM charges increase based on the preceding years’ value, you will erroneously end up paying a lot more than you should.
You may be miss taking advantage of critical dates and clauses
If you don’t service your leases regularly, you run the risk of overlooking important dates and options that could be beneficial to you.
At some level organizations are aware of the importance of ongoing lease maintenance, but fall behind on their lease portfolio management due to lack of resources. In such scenarios, an experienced and trusted lease administration vendor can help. They can work independently or support your existing lease administration resources to help you stay on top of your lease portfolio management requirements. Plus, their expertise can add value to your internal lease administration process.
RE BackOffice is a strategic partner providing end-to-end lease administration and accounting services, including lease audits. We offer scalable, affordable and accurate lease accounting and administration services to optimize your lease portfolio and related processes. Please contact us today to learn more.