By Christopher Perry III
Some seasoned real estate professionals recall a time when lease terms were written on napkins; sealed with a handshake… Ahh yes, the good old days when life was simpler.
Unfortunately, the leasing process for owners, investors, asset managers, and brokers cannot be managed on the back of a napkin. Add in reporting requirements, financial forecasting, long-term planning, and other essential administrative needs that come with increasingly sophisticated investment platforms, and clear, well-defined solutions are needed to ensure financial profitability and enhance efficiencies in time management.
The issues and challenges faced by commercial real estate owners, investors, asset managers, and brokers are best solved by people who have a full grasp of the importance to capture, analyze and share critical information. The founders of LeasePipeline have walked the proverbial mile in your shoes. Based on our experiences (and yours), we’ve developed a comprehensive, state-of-the-art lease and asset management software system that is capable of fully automating critical tasks for owners, investors, managers, and brokers.
LeasePipeline was developed by professionals with extensive backgrounds in asset/portfolio management and investment and has many features that address the most critical administrative and operational needs of owners, investors, managers, and brokers.
Some of those features include:
• Deal tracking and analysis: LeasePipeline tracks pipeline activity and key metrics.
• Deal versions: Detailed tracking that takes into consideration a variety of potential transactions scenarios
• Complex lease structures: The intuitive interface component of LeasePipeline accommodates both simple structures and complex structures such as blend/extend, expand/extend, deals with multiple rate bands, etc. that are common in institutional office buildings.
• Options and encumbrances: The LeasePipeline space management system tracks all options and encumbrances and flags any potential conflicts before a problem is created.
• Notifications: Each user can set up custom notifications for key milestone dates and pipeline/leasing activity.
• Approvals: Automated approval routing based on your customized workflow of an important audience.
• Automated stacking plans: The system provides real-time stacking plans with the ability to drill-down to all aspects of the deal.
• Plan book/space planning integration: Interaction with the space management portal allows the attachment of floor plans to each floor within the stacking plan.
• Automatically Track Actual and Contractual Space: LeasePipeline tracks all deals on both an actual (BOMA/REBNY) and contractual (as-leased) basis so that building measurements and occupancy can automatically be reconciled. This eliminates the need to constantly reconcile multiple measurements.
• Leasing commissions: Leasing commissions are automatically calculated for each deal and detailed audit reports are provided to verify broker commission vouchers.
• Leasing budgets: LeasePipeline provides real time collaboration on leasing budgets and comparative leasing activity to budget.
• Accounting system integration: The program allows for basic accounting system integration with the ability to run validation reports.
• Lender compliance: If assets are encumbered by secured financing, lender approval requirements can be added to the deal workflow, enabling timely and automatic notifications of approval requirements.
• Document management: The LeasePipline function allows users to share working documents and to attach/include document comments.
• Syndicate availabilities: Interactive capabilities allows available space to be posted directly to a listing web site such as CoStar.
• Robust security controls: LeasePipeline provides for control over who has access to sensitive data.
The cumulative benefit of these features is to improve opportunities for financial profitability and enhance efficiencies in time management. These features are needed because it is all too easy to see profits chipped away by unprofitable habits and inefficient programs and systems; however, there are more options than ever before to improve an assets profitability.
The Paper Factor
Paper-based documentation systems are inherently time consuming. Imagine when a capital partner asks about the tenant interest history of an asset because they want a deeper understanding of who has expressed interest in a soon-to-be vacant space. The next day, a regulator demands comprehensive information on tenants who occupied your building for a period of five years, which was several years and many lease turnovers past.
These scenarios can be easily addressed using the technology that quietly advanced during the financial crisis, reducing runaround/turnaround time to minutes from days or weeks. With an efficient technology solution, think of the many ways your staff could spend their time or how much your organization can save on its bottom line.
Avoiding Profitability Pitfalls
There are four primary ways owners unnecessarily harm their own profitability, often while striving to save money. Some of the pitfalls, and strategies for managing them include:
• Reduce Documentation Runaround/Turnaround Time. Every owner has at some point lost costly staff time at all levels of the organization meeting documentation requests. When capital partners and other stakeholders demand a paper trail that crosses time and tenants, even the most rigorous paper based systems can require significant resources to gather data. Most owners use at least three separate systems for leasing proposals, executing leases, and leasing data. It is now possible to consolidate the entire asset management and leasing life cycle of an asset into one software system.
End-to-end lease documentation capture is one way to reduce this unnecessary resource burden, and to consolidate the full range of documents. Complete electronic capture of all relevant “paperwork”—from lease inquiry and beyond execution—can contribute significantly to efficiency in these situations. Some technology systems capture a portion of relevant documents, which are usually related to the marketing process. However, if the entire lifecycle of an asset and its leases are not captured in a single compatible system such as LeasePipeline then staff time will always be required to reconcile records from multiple disparate locations, which means your team wasting time and losing revenue.
• Anticipate Lease Renewal Timing. Without an automated alert system for anticipating ideal negotiation timing requires a high degree of rigor to align ideal market timing with anticipated lease renewals. In many cases, particularly in a market where rents are rising, it might benefit an owner to approach tenants early, to create a win-win leasing situation. When owners follow the traditional process of reviewing leases on a standardized schedule prior to the renewal date, market opportunities could be lost.
This failure to anticipate market timing can be avoided with LeasePipeline, which acts a past and forward-looking software that analyzes both market trends, portfolio and deal data.
• Streamline Closing Hassles. Inefficiencies in the closing process are the bane of any owner’s existence, particularly on large leases involving multiple stakeholders. A centralized system where all documentation is available related to any given transaction at a single click can go a long way toward reducing delays and simplifying the process. The ability to review and sign updates to the transaction documents at any time, from anywhere, has an immediate impact on getting deals done.
• Seamlessly Field Regulatory Demands. Nothing raises the stress level within an organization that owns real estate like demands from investors, regulators, and attorneys. When it comes to the aforementioned demands, quick and thorough responses can help avoid negative interaction, and create positive outcomes. A lease data system that gives your executives the confidence a quick search will provide accurate and documented answers can reduce not only your immediate staff time investment—but costly future legal fees, data inconsistencies, etc.
The higher your lease volume, the more opportunity your ownership group may have to improve its efficiency. This could be true for owners of large portfolios or owners of buildings with high leasing volume, such as retail centers, business parks, industrial parks, or medical office buildings. The common thread is that owners can increase their overall profitability by challenging old habits.
Where there are inefficiencies in a process, there is potential for technology-based solutions. Given the recent advances in technology—platforms that essentially have built a better napkin—sticking with inefficiencies that sandbag commercial real estate profitability is inexcusable.
Version 3.0 Released Spring 2015
In April 2015, LeaseLinks introduced its LeasePipeline 3.0 offers users new features developed to save even more time and maximize revenue for asset managers, brokers and leasing teams. A few of the new features include:
– More than 20 new report templates to complement the 24 reports in place make it possible to recreate nearly any existing leasing, occupancy, or budget report.
– Encumbered spaces are automatically identified if a deal is proposed that may interfere with an encumbrance.
– Enhanced lease modeling functions make it possible to model any possible lease scenario, and was put to the test on one of the most complex leasing transactions in New York City in late 2014.
– Budget collaboration offers a new platform for asset managers, lease administrators and brokers to collaborate and set forward-looking leasing expectations.
– Robust mobile functionality: LeasePipeline 3.0 is usable on all major mobile device platforms and offers robust functionality across the board. Available for Apple (iOS), Google (Android), Microsoft (MS), and Blackberry (BB). The mobile interface includes rapid deal entry, comparisons to budget, approval processing , in addition to features that support site tours, space planning, and property/deal document storage.
Perry III is a former portfolio manager and also worked on investments for large institutional commercial real estate organizations. He recently took his expertise in commercial real estate investments, operations, and information technology to advocate the development of new commercial real estate technology. He is a co-founder and partner at LeaseLinks.