Real Estate Lease Audit
Every company that leases space can benefit from a real estate lease audit. APEX Analytix finds opportunities for recovering revenue based on incorrect billing, miscalculations related to operating expenses, taxes, common area maintenance, utilities and more. The accuracy of billings from your landlord is affected by the fact that the process is self-policing and is based upon some of the most complex portions of a lease agreement. Without a detailed review of the landlord’s billings, you are relying solely on the landlord’s interpretation of these provisions. And, as more and more leases may specify audit windows as short as 30 days, it is important to take action quickly. APEX Analytix offers a proven process of reviewing errors that can result in recovered dollars in a timely manner, without sacrificing the relationship with your landlord. Our real estate lease audit service offers commercial and retail clients the benefit of years of experience in identifying millions in recoveries for numerous clients, including many of the Fortune 500. Our in-depth understanding of leases and high opportunity targets for recoveries ensure an efficient and thorough audit with maximum findings and probability of recovery. Seasoned APEX personnel handle the recovery negotiations to effect the highest recovery possible. Some of the areas of potential recovery are:
• • • •
Operating expenses, taxes and CAM (common area maintenance): inclusions, exclusions, compilation errors, cap provisions, gross-up provisions, and base year calculations Utilities (metered/over-standard) and after-hours charges Base rent: increases, steps, and index escalations Other: Percentage rent, TI (tenant improvement) allowances, deposits, and square footage errors
Our experience and methodology ensure maximum recovery while preserving important relationships.
Industry knowledge, a proven process refined over time, and a commitment to help you maintain strong relationships with your landlords combine to offer a world-class lease audit. Unlike some audits, where the definitions of valid findings result in gray areas and frustrate both clients and their landlords, we discuss the process and specific issues beforehand, ensuring that we avoid any disruption in the tenant/landlord relationship.
The process.
Beginning with the terms of the audit engagement, APEX Analytix works with you to set an appropriate scope, timeline and expectations for the audit. Once the scope has been defined, we follow a tried and true process, which is illustrated below.
Preliminary Review
Receive list of leased properties with location, size and basic terms Visit client office to review lease document files Determine whether there is opportunity for recovery
Determine Type of Review for Each Leased Location
File review – audit based upon information in the client’s lease file only Desktop audit – additional information will be requested from the landlord but no site visit will occur Field audit – Visit to the landlord’s office to review the general ledger and all supporting documentation
Audit Preparation
Create working files for locations targeted for further review Provide client with a report detailing the audit plan
Audit
Notify landlords for properties under review - authorizing APEX’s involvement Complete review/audit Compile findings and present report to client for review Forward client-approved report to landlord for comment. Review and summarize landlord response for client’s review If necessary, forward client approved counter-response to landlord Negotiate recovery and method for client to receive a refund or credit
While the APEX Analytix real estate audit is among the most comprehensive available, the average engagement requires our auditors to spend only a few weeks per year at your site generating and updating working files. Other than the field audit at the landlord’s office, which typically takes less than a week to complete, most work is done offsite.
Who should consider a lease audit?
Virtually every large company that leases space can reap significant financial benefit with a full-scope review of their lease costs. But some circumstances are particularly likely to create opportunity for recovery. Your organization is an exceptionally strong candidate for a real estate lease audit if: You have large commercial office leases with a base year or stop provision You have a heavy-use component, such as a 24/7 call or data center You are an anchor retail tenant and your lease includes pass-through expenses
Detect. Recover. Prevent.
Every audit recovery will be explained in detail so that your staff can learn to spot potential issues not previously identified and prevent them from reoccurring in the future.