Lease Audit/Analysis

Federal Appraisal, LLC provides expert lease audit and lease analysis services.

lease-audit-bigCommercial real estate leases are often very complex.  They often include unspecified rent and expenses beyond the base rent.  These include operating expense passthroughs, real estate tax passthroughs, common area charges (CAM), electricity charges, other utilities charges, insurance charges and many others.  These rents and passthrough could have any number of methods of calculation, including a net passthrough, a pro rate share, a specified (non-pro rata) share, and the methods can change from year to year. they can have minimums and maximums and they can be based on changes over a base amount or index.  Even base rent calculations are often complicated, with periodic base rent adjustments such as steps, CPI’s, and mark-to-market clauses.

Analyzing leases is thus difficult for the inexperienced.  Since lease payments can equal the market (sales) value of the real estate in as short as seven years, the consequences of not auditing a longer term commercial real estate lease can result in substantial losses.

 

Services to Tenants

Lease Audit

Lease audits examine the payments requested by landlords to determine their appropriateness.   Lease audits help identify errors and recover overcharges. Our process includes the analysis of  the lease, the landlord’s payment requests, the landlord’s records to the extent permitted by the lease.  It can include a results presentation to and negotiations with the landlord to recover overcharges.

Lease Analysis

Since the sum of the lease payments over a term of about seven to ten years can equal the market (sales) value of the real estate and since lease payments are often so complicated, all negotiations for longer term leases should be conducted with the counsel of expert real estate analysts, such as those at Federal Appraisal, LLC.  We can provide buy/rent decision analysis, lease to lease cash equivalence comparisons, and other due diligence support and reporting.

Services to Landlords

Lease Audit

Lease audits examine the payments requested by landlords to determine their appropriateness.   Lease audits help identify errors and recover undercharges. Our process includes the analysis of  the lease, the landlord’s payment requests, the landlord’s records.  It can include a results presentation to and negotiations with the tenants to justify the charges.

Lease Analysis

Since the sum of the lease payments over a term of about seven to ten years can equal the market (sales) value of the real estate and since lease payments are often so complicated, all negotiations for longer term leases should be conducted by expert real estate analysts, such as those at Federal Appraisal, LLC.  We can provide buy/rent decision analysis, lease to lease cash equivalence comparisons, and other due diligence support and reporting.

Services to Buyers and Sellers – Due Diligence

Also we provide and/or certify rent rolls, lease cash flow projections and net present value calculations of lease income.

Posted in Corporate Real Estate