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Audit Decreases Annual Expenses by $212,300.

Audit Decreases Annual Expenses by $212,300

Lease Auditing
Client: Major encyclopedia printer

Audit Discovery:
The lease specifically excluded expenses related to operating the parking garage as well as commercial establishments such as fitness centers, clubs, and kiosks. Despite this, the landlord passed on operating expenses for the facility’s parking garage and fitness center to all tenants. The landlord took the initial position that the pass-through of expenses was justified because these amenities benefited the tenants.

Resolution:
MBG Consulting researched the issue and discovered that the building did not have a fitness center when our client entered into the lease. Once it was built, the landlord started passing through the expenses without considering the initial intent and specific lease language. In response to our documentation of the matter, the annual reconciliation of operating expenses was revised to exclude parking garage and fitness center charges totaling $212,300.


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