Reaping the full fruits of lease deals.

Posted On Monday, 03 February 2003 02:00 Published by eProp Commercial Property News
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Ensuring your company is in a strong position when new lea-ses and lease renewals or rent reviews are negotiated and monitoring lease-related costs during the currency of a lease agreement pays off.

Jonathan SmithIt can contribute significantly towards the profitability of your company. Here are ideas for sound management of property or tenancy portfolio:
Ensure that the data contained within lease and service agreements is congruent with the physical and accounting elements of the
premises to which the lease relates.

Ensure that your database management system has integrity and meets the information needs of your internal users. Often companies use
modified accounting packages to manage their lease database.

While such packages pay the accounts and allocate recoverable amounts to the correct ledger, they sometimes fail to report by exception impending renewal deadlines or budget variances, resulting in audit exceptions being recorded long after financial year-end.

Finally, use your lease management database to plan your organisation's property needs at a strategic level. Incorporate
operations data into the lease management system so that premises/trade comparisons can be easily produced and growth patterns can be identified through the use of strategic management techniques within the system.

Your tenancy management system should provide you with a constant auditing system: a comparison between budgeted, contracted, actual
and market costs to alert you in time to take corrective action.

And now for ideas on preparing for a lease or sales negotiation: Employ the temporary services of a property specialist, just as one would seek specialist advice from lawyers or accountants.

Know also how the lease or sales transaction relates to your company's rate of return, as the lease transaction should also be in line with this rate.

When dealing specifically with lease agreements, analyse effects of market changes on the economics of your lease agreement. Finally, ensure that the lease or sale agreement is well drafted and accurately reflects the intention of the parties to the agreement.

Last modified on Monday, 26 May 2014 14:07

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