Are You Capturing ALL of Your Rent?
Submitted by B. Hunt
THE CABOT GROUP recently assumed financial management and lease administration responsibilities for a multi-building office complex in Rochester N.Y. The property has numerous leases, with the majority of leases being triple net (tenant pays a base rent plus its proportionate share of the properties’ additional expenses for real estate taxes, operating expenses and utilities), — with the remainder of the leases being triple net after deduction of the additional expenses incurred in the first lease year.
The owner had operated for several years by charging the tenants additional expenses based on the operating budget that was constructed when each building was leased — and he was not reconciling the additional the additional expenses as incurred on an annual basis. Therefore, the tenants were enjoying the same additional rent rates as when the lease commenced while the owner was seeing his net operating income shrink each year. THE CABOT GROUP performed a thorough audit of all operating expenses for each year of each lease, verified base year expenses and reconciled the additional rents with each tenant. This effort resulted in the owner recovering in excess of $125,000 in revenue and established a significant additional revenue stream for the future. A system is now in place providing for annual operating budgets that detail the changes to the tenants’ proportionate share of annual additional with a timely billing for such expenses.