NRTA Guest Editorial highlights a sample of content being shared at Annual Conference
The following is an excerpt from an article written in June 2022 by Rouben Alchoujian, President, Praedium. It is published here with permission.
LEASE ADMINISTRATION: UNVEILING THE MYSTERY
Even though Lease Administration, as part of the CRE suite of services, has been around for over 30 years now, it still remains a big mystery to many. As surprising as it may sound, the overwhelming majority of business professionals (even those in the Real Estate industry!) have little or no idea about it. Transactions / Brokerage, Facilities Management, Property Management, Investment Management, even Real Estate Finance and Accounting are relatively easy to explain – almost everyone knows what these are and what they do. But not so much for Lease Administration!
Unveiling the Mystery
Online definitions and information don’t add much clarity. According to Wikipedia, “Lease Administration is a department that usually falls under an organization’s real estate department. Lease Administration involves receiving rents from facilities they own and paying rent for the facilities they lease, and other activities.” So, it’s a department, that receives and pays the rent – were we wrong in thinking that accounting does that?
Another definition goes on to suggest that “Lease Administration involves ensuring that tenants are adhering to their contractual obligations and that the property owner and/or management are following through with their obligations.” So now it looks like an overlap with what the lawyers or paralegals should be doing.
“Lease management, sometimes referred to as lease administration, is the day-to-day execution of tasks related to a company’s lease portfolio. There’s no single approach to lease management. It involves reporting, document management, coordinating between stakeholders, and a myriad of administrative tasks.” Even though seemingly more wholesome, this definition adds more confusion, including about the term itself.
So perhaps Lease Administration is a bit of everything from the above descriptions – yet, there must be a way to put it in a concise and clear manner, so that everyone could get a good general idea without completing a course on it.
Per Albert Einstein, “If you can’t explain it to a six-year-old, you don’t understand it yourself.” So here’s our own, almost-a-six-year-old version:
“Lease Administration is an ongoing program that uses leased portfolio data to help manage the portfolio in the most efficient and risk-free way”. In other words, when occupiers have a lot of leases (say, over 20), they need to keep track of what’s happening with them over time, so that they (a) don’t run into problems, and (b) get the most out the leases they had signed.
Hungry to learn more of the most up-to-date lease industry best practices? Consider joining us in Phoenix this September!