Lease administration

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Lease administration is a department that usually falls under an organization’s real estate department. Lease administration involves, but not limited to: receiving rents from facilities they own and paying rent for the facilities they lease. It has become an integral part of the accounting, administrative, and legal requirements normally associated with a real estate portfolio. Job responsibilities for lease administrators and real estate professionals include: lease review and abstracting, accounting and processing, lease audits, CAM charges, lease renewal options, repairs and maintenance, information management and reporting, occupancy cost analysis, operating expense review, and document storage and maintenance.

Once a lease is in place, lease administrators continue to manage and monitor rental payments, coordinate any tenant alterations, and handle lease amendments when necessary.

Depending on a corporation’s departmental structure, lease administration or lease management can make up just one department under the umbrella of a corporations real estate structure. Other departments may include facilities management, real estate accounting, construction, and property management.

Lease administration can be handled either internally or through outsourcing. The sizes of the organization’s portfolio and the corresponding complexity of creating automated management and accounting systems are factors that influence an organization's decision to perform lease administration in house or to outsource the function.

Lease Abstract[edit]

Lease Management requires the extraction of key information from the lease agreement document into what is called a Lease Abstract Def: (noun.) "a summary of essential terms of a leasehold agreement of real estate".

A lease of real estate, regardless of the country or state of jurisdiction, fundamentally comprises clauses that define the commercial terms, legal terms and functional terms of the transaction.

A Lease Abstract is prepared upon the execution or commencement of the agreement to provide a more simplified, easier to use and shorter reference point for administering or managing the lease.

Software[edit]

Tenant-oriented software solutions for Lease Administration were available in the early 1980s. One of the pioneers of that generation of software was Ken Brown who created a custom application for XEROX called LeaseAd. This was the first commercially available Lease Administration software and was widely used by over 100 Fortune 1000 sized organizations including The Equitable, Citibank, Perkin-Elmer and Union Carbide. Prior to that time, most commercially available real estate software was used for property Management (i.e., Landlord Accounting). In the early 1990s, Ken Brown founded a company called National Facilities Group (NFG) and created SLIM (Strategic Lease Administration Management) which became an industry standard that is still in wide use today. At the same time that NFG was marketing SLIM, other companies like Westmark Harris and Seigler Mountain Group introduced products into the market (Strategem and Siteseer, respectively).

More recent developments in this industry have led to the release of cloud software applications which provide a web-based platform and are usually priced on a subscription basis with minimal if any capital expense cost and monthly or annual fees. One of the first providers of cloud-based software in 2003 was ProLease (www.proleasesoftware.com). Another provider of cloud based lease administration software solution is Lucernex [1] with the release of Lx Contracts in 2010.

More advanced lease administration software systems are now providing extensive bolt-on functionality such as charting, mapping, demographics, project management, contract management, asset management and business intelligence reporting.

Increased functionality, better technology and increased customer take-up has seen the investment in software systems for lease administration increase significantly since 2000. In recent years there have been numerous take-overs and mergers of vendors including industry leader Accruent being acquired by Vista Equity Partners (January, 2010) before buying Siterra (March, 2011); IBM acquiring Las Vegas-based software company Tririga, Inc. (April 2011) to compliment its Smarter Planet initiative; and CoStar Group's acquisition of Atlanta-based Virtual Premise (Oct 2011).

Since 2010 the pending changes to the FASB and IFRS lease accounting standards that are proposed to treat real estate leases as capital and not operating leases has seen an increase in the take-up of software systems by both tenants and landlords.

Organizations related to Lease Administration[edit]

  • OSCRE - Open Standards Consortium for Real Estate
  • NRTA – National Retail Tenants Association
  • NRF – National Retail Federation
  • RILA - Retail Industry Leaders Association
  • RMA - Retail Merchants Association
  • LISIPL - Lease Info Services India Pvt. Ltd.,
  • Lexserv Solutions