LEASE COMPLIANCE ANALYSIS
A Lease Compliance Analysis is a methodical and analytical process consisting of the examination and assessment of all documentation associated with the economic components of Commercial Real Estate Lease.
The approach to a Lease Compliance Analysis begins with a full examination of the lease indenture, modifications, amendments, and all relevant documentation and notes relating to the agreed upon terms and conditions of the lease. Upon completion of the documentation examination, the financial documents and records provided by the landlord will be analyzed, broken down and classified into several categories. This will include the base year statements and all subsequent years operating expenses, real estate taxes, cost of living adjustments, electrical surveys and/or sub-meter bills and any and all other additional rent obligation.
Each cost is broken down and sorted in various formats forming a historical comparison for each expense in the facility. Trends and irregularities will be identified and investigated further. Inflationary increases will be measured against the performance of the facility under review and comparative facilities in the same market.
The real estate taxes under go a comprehensive review that will include, but not be limited to, an understanding of the methodology utilized in determining the base year amount, tax abatements received, business improvement district (BID) taxes assessed, examination of the building(s) on the block and lot, landlords methodology and schedule(s) of payment, certiorari history, and other areas as may be developed during the examination
The basic rent components are reviewed and all abatement periods and cost of living increases will be closely analyzed. If the rent is tied to a collective bargaining agreement, the contract and wage rates will be reviewed and broken down. If an electric rent inclusion factor exists, the surveys will be reviewed, and electricity charges will be re computed based on the surveys. All other utility and sub-metering electricity will be reviewed. Condenser water charges will be recalculated based on actual gallons per hours utilized.
A complete re-calculation of all charges will be completed and compared to the actual method utilized by the Landlord or Property Management.