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10 Reasons Why More Businesses Are Choosing to Utilize a Lease Administration Partner

The Value of Professional Lease Administration

By Michael Muna

Companies scrambling to adopt to ASC 842 lease accounting changes are evaluating a variety of software and third party options to help comply with the new standards. Lease administration plays a critical role in the accounting compliance. While at its base lease administration is built on quality data management, proficient lease administration can do so much more by allowing a company to decrease risks, save resources and enable a focus on core business objectives.

As a company’s real estate portfolio grows, the risk of missing critical dates and expenses increases. Imagine trying to juggle key dates and expenses for numerous locations on an excel spreadsheet while simultaneously performing various other job functions. Overlooking a material date can occur easily and have very costly ramifications for a company’s financial and operational continuity.

Utilizing an experienced external partner can accomplish these critical tasks for many companies. Often when evaluating the need for third party lease administration, the alternative for a company would be to either hire additional staff or reallocate existing employee time to lease administration functions. Here are 10 advantages to partnering with a professional lease administration team.

1. Gain access to an expanded team of subject matter experts.

A good lease administration partner will have a team of real estate experts responsible for each account. They act as an extension of a client’s team, sharing a common goal for the client’s success.

2. Increase knowledge to help reduce risk.

Expertise and experience in lease administration means that the partner knows exactly what clauses to look for and where hidden key dates can be found in leases, avoiding the all-too-common mistake where critical lease dates are missed.

3. Experience in difficult real estate and account situations.

Experienced lease administration partners have been around the block a few times and have faced a variety of situations that may be puzzling for anyone that isn’t an expert in the field of real estate. With knowledge learned from past experiences, a lease administration partner can advise businesses on a variety of difficult issues that affect real estate and accounting teams.

4. Keep focused on what matters most.

Outsourcing the function allows clients to focus their valuable time and resources on core business objectives.

5. Save money.

Aside from the high level of expertise, the cost of outsourcing is often less expensive than the alternative of hiring or reallocating additional employees to perform the function.

6. Thorough data input and review.

While a client’s team may only have time for the initial data input, a good lease administration partner has multiple reviewers who can give a client the confidence in accuracy, consistency and completeness of the data. One person should not be the sole keeper of critical information that represents one of the top financial expenses for your company.

7. Have access to an extensive infrastructure.

Lease administration systems can require hefty investments in excess of six-figures for many companies. Lease administration partners have often invested in the resources necessary to ensure successful lease administration which clients can utilize to avoid their own unnecessary capital investment.

8. Reduce risk of lost tribal knowledge.

By relying on a proven lease administration team, companies can avoid the risk of losing knowledge continuity that comes with in-house employee turnover.

9. Recover erroneous CAM charges.

A good lease administration partner will scrutinize every CAM reconciliation and budget to confirm that the charges are accurate and in line with the lease and industry standards.

10. Have information at your fingertips.

Each month, reports containing portfolio information should be delivered to the client. Solid lease administration partners are easily and quickly accessible to answer any questions that arise and assist client’s in making critical lease decisions.

The advantages to hiring a trusted lease administration partner to handle the real estate portfolio of a business can be invaluable. From instantly gaining a team of industry experts, to having access to lease information 24/7, having an outsourced team who is focused solely on the interests of their clients is an important aspect that every business should consider when trying to maintain a large or growing real estate portfolio.

Michael Muna is an associate vice president of Hughes Marino’s Portfolio Lease Administration and Advisory team, an award-winning commercial real estate company specializing in tenant representation and building purchases with offices across the nation. Contact Michael at 1-844-662-6635 or michael.muna@hughesmarino.com to learn more.



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