A lease abstract is a summary of the pertinent financial, business and legal terms that are pertained in a commercial real estate lease. The goal is to capture all relevant lease provisions, financial obligations critical dates. The key to an efficient lease abstract is to keep things short and simple.
An abstract may vary in length and detail depending on the particular needs of the client. The abstract behaves as an outline of the lease, providing a summary of selected lease information and directing the reader where to obtain further information. Specifically, in addition to a lease summary an abstract will referenced section headings so that all critical lease information is easily accessible.
Abstracts enable a user to easily review all relevant lease information without taking the time to search and read through each page of the lease. Aggregating the lease information, the abstracts allow users to properly manage a portfolio of leases. Lease abstracting serves to organize lease data, which is a crucial benefit when leases contain many amendments, when trying to streamline data from leases outside the North American borders, or when dealing with a variety of lease formats.
Basically, a lease abstract should contain the most important “dates and dollars” provisions of the lease.
Real estate expenses are typically a company’s second highest expenses after payroll, and commercial leases are one of its key components. A significant portion of the cost of a lease can represent the tenant’s obligation to share in building operating costs, taxes and utilities. Because leases and these charges can be complex, it is prudent to review these expenses on a frequent basis.
Most leases stipulate that the obligation remains with the tenant to identify errors and bring them to the landlord’s attention, and to do so within a limited time period. Tenants do not have the time or resources to perform this function and oftentimes pay the bills as rendered. This can lead to overpayments that can recur year after year.
A lease audit is a comprehensive analysis of lease terms and validation of charges to ensure that amounts billed are correct and per the negotiated lease contract. A thorough and disciplined review of lease documents, invoices and various other materials is mandatory to validate these charges. Oftentimes this includes a review of the property manager’s books and records as well as public records and other data.
- Financial projections and internal budgeting is in line
- Overpayments are recovered
- Compliance and original intent of leases
- Increased landlord awareness that costs are being reviewed
- Enhancement of internal controls
- Identifying areas for improvement of future leases
With traditional Accounts Payable systems there are two types of accounting packages. One is an invoice based system and the other is a contract based system. In commercial real estate the invoice comes too late to utilize this method and the contract typically only stipulates the base rent ignoring the other costs associated with a commercial lease. MacMunnis has developed a hybrid to merge these as is necessary with commercial real estate leases. By implementing a monthly invoice entry process, the added value and protection from errors in billing charges can be maximized.
MacMunnis has developed a process that includes the following:
Landlord Reconciliation Report – The report compares the invoice received to the payment made, allowing for reconciling differences along with an explanation. Because invoices come in after the payment is due a reconciliation procedure is needed to catch up on either charges or credits that come in after payment has been processed. The Landlord Reconciliation offers a vehicle where the customer can communicate back to MacMunnis, Inc. its intent on the charges/credits. Once updated a final Landlord Reconciliation is generated.
Change Report – Compares current month payment to the prior month payment, indicating any changes with comments. Changes may be due to the contract or to variable charges such as utilities. If any changes exist between the two months, comments would appear explaining the differences and requesting customer approval. Once approved a final Change Report is generated incorporating the changes based on customer input.
Draft/Master Check Request – Indicates the draft amount to pay per location with vendor and allocation breakdown. The totals on the Draft Check Request must match the total on the Change Report. The Draft Check Request is run to verify the Payee information including, address, vendor ID and Tax ID. In addition the allocation breakdown is noted which is designed to capture the charges based on the GL code provided by Accounts Payable. Once approved and verified, final reports are run.
MacMunnis is set up to process and disburse client rent payments in the USA, Canada and United Kingdom, all in local currencies. MacMunnis processes rent payments globally for clients choosing to disburse their own funds and can provide all the accountings and uploads of data including accrued rent and straight-line data.
Security Deposit and tenant improvement process design for quick collection.
Each month MacMunnis sends our clients a list of properties for which a refund for the security deposit and/or tenant improvement allowance reimbursement is needed. Our payments team will then follow up with the landlords to find out when this amount will be paid. When a security deposit has been paid and/or a tenant improvement allowance is recovered MacMunnis records this within our system.
Integral to corporate real estate is budgeting and forecasting. The standard is a back breaking effort to piece all the data together into a single integrated plan, resulting in a massive expenditure of time and effort.
Budgets, however final they may seem at first glance, are hardly flexible. There are always multiple recasts and reworks to address new situations which arise in day to day business.
Once completed, budgets require constant monitoring. A whole regime of reporting requirements are used to keep track of progress. Actuals are compared to budget at all levels of detail, by section, region, business group, division, portfolio, building, lease holder and by an almost endless number of possible permutations. Typically, reporting is performed on a monthly basis. Dynamic exception reporting would be far more ideal and preferable.
MacMunnis has created the tools and reporting that are dynamic, proactive, flexible and efficient all exportable to a spreadsheet or .pdf.
MacMunnis online provides the tools to easily manage the property taxes in your portfolio. MacMunnis can assist in monitoring the payment of real estate taxes allowing for easy management in order to avoid any delinquencies. MacMunnis can assist in coordinating effort to audit real estate tax payment with highly specialized tax audit consultants nationwide.
MacMunnis online offers a full featured, web-based Work Order system. Integrated fully with the Accounts Payable/Accounts Receivable modules a seamless solution to streamline the workflow and enable the following:
- Improve workflow efficiency by providing a fast and easy tool for submitting work requests
- Maintain customer satisfaction with automated alerts when customer requests are approved, rejected and completed
- Enables unlimited number of customers to easily submit requests via email that are automatically captured
- Work request form accessible from your Intranet site for easy web-based submission of work requests and service requests
- Optional routing of requests to designated individuals for approval based on business rules
MacMunnis is able to process the request for an insurance certificate. To compile such a request the following information is required:
- Specific wording regarding the additional insureds
- Contact information for the landlord
- Policy limits and coverage specifications
MacMunnis can design automated processes to ensure timely delivery of Insurance Certificates to Landlords will fulfilling the lease obligations.
In addition to lease administration, MacMunnis online is a fully functioning contract administration tool in order to manage any type of contract. Leveraging existing personnel MacMunnis is able to offer Contract Administration to support and manage other contracts. The goal is to effectively manage the contracts and to ensure compliance with the terms and conditions, as well as documenting and agreeing on any changes or amendments that may arise during its implementation or execution. In summary, the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.
Copiers, computer, fleet and many other assets are only a few of the types of contracts MacMunnis online is capable of tracking.
MacMunnis online is fully supportive of uploading image and CAD files in order to create a complete file. Files can be uploaded singly or a process to automate an upload of multiple files is possible.
Organize everything you need to complete a project in one spot. Break large goals into manageable pieces, attach files, and set due dates. Easily track overall progress and individual contribution using the Status feature of MacMunnis online. Never miss a date or action again while maintaining a full history log of any user defined topic or project.
- Create a task
- Assign a task
- Schedule a task
- Set the task status
- Tag a task (organize tasks by subject)
- Share a task
- Follow a task
- Print a task
- Add dependencies to a task
MacMunnis works to push and pull data from a variety of sources including other real estate software applications, AP/AR systems such SAP and Oracle, Employee Headcount information such as PeopleSoft to list a few. Through FTP, Cloud or other venues the goal of seeking out the most efficient transfer protocol in order to save time and money.
Developed for an international audience hungry for information across a variety of sectors, MacMunnis’s team of top-tier legal and financial experts have been drawn from a host of educational and industry leading outlets. More of a dynamic process than a one-off solution, MacMunnis online is designed to be highly portable (web-based) and efficient (it’s thick and robust). The focus is on capturing a wide array of data elements and documents for appropriate decision-making reports.
MacMunnis administers contracts on a global basis assisting with translating and summarizing non-English contracts, processing rent payments in Canada and the UK and reporting rent files for payment disbursement in South America, Europe, Asia and Australia.