the unsung hero
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Learn how lease admin helps with managing critical dates, financial reviews, payment processing, revenue collection and more.
Although sometimes delegated to the accounting or leasing department, lease administration involves much more than storing lease data or managing rent payments. In fact, it encompasses a range of critical portfolio functions such as abstracting lease data according to an agreed scope and managing critical dates, financial reviews, payment processing, revenue collection, desktop audits, and much more.
Benefits of a comprehensive approach to lease administration
An uncoordinated approach to lease administration can result in missed critical dates, inaccurate lease data, late rent payments or overpayment for inaccurate charges. A proactive, analytics-driven approach not only reduces these risks, but also makes it easier to identify underutilized assets, right-size portfolios, and find opportunities to lower costs.
For example, a global consumer packaged goods (CPG) company says its real estate managers rely on data accuracy and governance from lease administration to support their strategic planning. Inputs from the lease administration team are a critical component of the reports and business intelligence used to make decisions.
The COVID-19 pandemic has also cast new light on the strategic value of lease administration. Many corporate real estate leaders who have sought rent deferments or abatements to offset the impact to their businesses have seen the value of having instant access to accurate lease information and market insight to inform discussions with their landlords.
Beyond negotiating concessions, effective lease administration can also help organizations determine how best to adjust their footprint for a COVID-changed world. A single source of truth that aggregates all lease terms and obligations provides important visibility into lease renewal and expiration timelines. And efficient access to key data such as pending lease expirations makes it easier to quickly assess opportunities to right-size the portfolio.
The CPG company cited previously affirms that seamless lease administration during COVID has helped its team smoothly manage its global real estate payments, ensuring invoices are received, goods receipts are processed and payments are released. In cases where the company has received COVID-related rent relief, lease administration has helped ensure accurate vendor payment and has also included managing communications with vendors that struggled to submit invoices properly due to work-from-home challenges
Components of an effective lease administration program
Following are three key components of a centralized, data-driven lease administration program that lays the foundation for strategic portfolio planning:
1. Visibility into lease timelines and terms and associated risks and opportunities
Do you know when your leases expire? And where you have options including renewal and contraction clauses as well as many other lease obligations?
Too often, organizations find themselves on the edge of a lease expiration without having time to properly analyze the market and consider all options. A streamlined approach to lease management will provide an accurate view of upcoming critical lease events, so you can avoid the pitfall of being unprepared.
There’s deep strategic value in this information. By knowing when leases expire and where markets are in the cycle, you can ensure you’re taking advantage of favorable market conditions.
The real estate team at a global life sciences company says lease admin provides portfolio reports that show lease expirations and options details that enable them to always be thinking one, two and even three years ahead.
2. Streamlined lease management
Do you have a mechanism to ensure rent is being paid accurately and on time across your enterprise?
Managing a portfolio of scale can be a major logistical feat. A consolidated rent payment feed can simplify the process and reduce the administrative burden of managing payments.
A strong process includes cross-checking invoices against the lease for accuracy. Your lease administration team can also set up rent roll variation reports to flag changes in rent, and then dig into the details to understand the variances and ensure charges are correct. Under a comprehensive real estate invoice review program, you should expect to see cost savings and avoidance of 0.4% to 0.8% of your total annual spend with your landlords. If you’re not reviewing all invoices against your negotiated lease terms, you’re leaving money on the table.
3. Analytics-driven review processes
Do you have lease expiration and critical date pipeline reviews?
With critical date reviews on a regular basis, such as monthly, it’s easier to keep track of action items. For example, you may discover that time is running out to take advantage of a substantial landlord capital contribution that was included in your lease.
Among our lease administration clients, almost $900 million in landlord capital contributions was incorporated into their contracts in 2020. Those funds—which can be left on the table if companies don’t seize the opportunity to use them before time runs out—are often used to build out space or improve building common areas. And amidst the COVID-19 pandemic, many companies have been finding value in renegotiating how that money was used, working with their landlords to allocate contributions to rent abatement.
Are you ready to elevate your lease administration program?
Many organizations are seeing greater value that comes with a smart, centralized approach to lease administration.
As one corporate real estate executive says, having a trusted service partner that can work within the company’s complex business environment is critical to success, from providing accurate data for portfolio strategy to ensuring timely and accurate payments to vendors.
Our scalable lease administration platform is designed to support a diverse set of needs, including managing your lease data and reporting on your lease obligations in a timely manner, ensuring timely rent payments, and negotiating savings and cost avoidance opportunities with landlords. Leveraging our user-friendly, web-enabled technology platform, our team turns critical data into actionable insights to inform your broader portfolio strategy.
Smarter, centralized lease management lays the foundation for strategic portfolio planning. Are you ready to take the next step?
Contact us today to learn how our lease administration solutions can support your portfolio strategy.
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Global Product Owner, Lease Administration
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