Revenue Maximization Checklist

July 23, 2009 | Download PDF

The Real Estate Group at Marks Paneth LLP (Marks Paneth) has developed a Revenue Maximization Checklist to help property owners ask the right questions and gain maximum benefit from existing lease provisions. A well designed audit of procedures surrounding property accounting such as billing, collections, lease abstracts and lease audits conducted by accountants deeply versed in commercial real estate can turn up unanticipated revenue opportunities and help ensure that property portfolios are yielding maximum returns.

The checklist appears below or you can download the PDF.

Billings

1.  We bill based on current year estimated operating expenses when leases allow, rather than on prior year actuals.

2.  We include all allowable gross-ups such as cleaning credits, trash removal credits, electric and security in our escalation charges. 

3.  Periodically, we have someone other than the assigned property accountant review tenant escalation calculations to ensure they are accurate. 

4.  Annual capital expenditures are reviewed by operations to determine if they qualify as depreciable pass-through operating expenses due to operating cost savings. 

5.  We have reporting systems in place which allow us to perform retro billings (true-ups) within 90 days of the close of the escalation year-end. 

6.  CPI adjustments are reviewed to ensure that the correct index and base amount are being utilized. 

7.  Common area maintenance charges are continually assessed to determine if all allowable charges are being billed to tenants. 

8.  We engage an energy consultant to assess common area electric charges that we can pass-through to tenants.

Lease Abstracts

9.  Prior to being entered into the billing database system, lease abstracts are reviewed for completeness and accuracy by someone other than the preparer. 

10.  Lease modifications are entered into the database billing system in a timely matter.

Lease Audits 

11.  For retail tenants that are required to pay a percentage of sales, our leases require that tenants report sales at least quarterly, if not more often. 

12.  We have systems in place to monitor tenant compliance regarding submission of financial statements, both audited and unaudited. 

13.  From time to time, we exercise our right to perform audits of tenants who are subject to paying us contingent rent such as percentage of sales, subletting profits, and other forms of participation rent. 

14.  We strictly enforce lease provisions which require that certain tenants produce audited financial statements. 

15.  Lease audits performed by our tenants have NOT resulted in our organization having to refund large sums to tenants. 

16.  Timely electric surveys are performed and tenant billings are adjusted accordingly. 

If you answered no to any question, you should contact Susan Nadler, Real Estate Partner at Marks Paneth LLP to arrange a complimentary consultation to discuss how we can assist you in maximizing your revenue stream.  Susan can be reached by phone at 212.503.6304 or by email at snadler@markspaneth.com.