Stop losing profits through your leases

Stop losing profits through your leases” is the message delivered to retail Chief Financial Officers this week.   Paul Kinney, executive director and co-founder of the National Retail Tenants Association (NRTA) advises retail executives, “The better your lease administration people do their jobs, the more profits improve.”

He explains, retailers and other commercial tenants aren’t in the real estate business. Sadly, they inherently think of the lease administration obligation as overhead, rather than an expense recovery center. “That’s where they drop the ball,” he insists.

Kinney encourages retail CFOs to turn to the NRTA as the perfect training opportunity for commercial tenants. Over the last 20 years, the NRTA has earned a reputation as the prime training resource for lease administrators, attorneys, auditors and lease accountants. Approximately 300 companies are currently members of the association: they actively participate in webinars; use the interactive website to share knowledge and best practices; and reap the benefits of an educational program that culminates in the annual Expanding Knowledge conference, which typically attracts about 500 real estate lease professionals.

The profit link many retailers are missing is found within their company’s ability to focus on the management of the property portfolio. Administering the terms of the lease, the dates, and the renewal options in a lease are essential. But, Kinney added, huge occupancy savings are to be found in lease management skills such as abstracting; lease auditing; software applications; and landlord billings (including CAM expenses, insurance, real estate taxes, and utilities). Each of these line item expenses require attention and due diligence on the part of the tenant.

Kinney urges retail executives to face the fact that for every retailer seeking a monetary recovery, there is a landlord trying to question one. He encourages retail practitioners to learn from each other.  The more tenants are educated in sound lease management practices, the easier it is for them to help a landlord to meet their primary goal–accuracy. Through good and documented practices a landlord and tenant can address and agree upon details of the lease they are obligated to live by. This goes a long way toward building a positive relationship between landlord and tenant.