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Streamlined Processes Save Client $3.7 Million.

Streamlined Processes Save Client $3.7 Million

Global portfolio, Lease Administration
Client: Fortune 500 furniture manufacturer

Overview:
The client originally performed lease administration in-house, utilizing portfolio management software purchased as a stand-alone product. Duties were split between the real estate department and local managers and, due to this decentralized approach, they had difficulty budgeting and reporting on basic portfolio costs, metrics, and performance. In addition, this arrangement led to problems with duplicate payments, missed payments, and missed critical dates resulting in substantial penalties and lost opportunities. The client wanted to proactively manage its portfolio and critical dates while minimizing time spent on lease administration.

Scope of services:
MBG Consulting streamlined management of the client’s portfolio by implementing our world-class lease administration processes and procedures including: implementation of new lease administration software; complete lease document abstraction; rent payment centralization; once-monthly rent processing; authorized personnel approval; and rent check distribution. Centralized rent payments meant all relevant costs and their trends were captured and integrated into portfolio analysis. We leveraged this data to produce annual budget forecasts with 99.9% accuracy. All critical dates were reported a year in advance with electronic follow-up notifications.

After including all domestic leases in the database and centralizing all rental payments, the client chose to fold its entire international real estate portfolio into MBG Consulting’s lease administration program. We assisted in collecting all international lease documents and translated them into English using in-house staff augmented by our team of translators trained in lease administration terminology. Costs were 300% lower than any other translation service by a legal or brokerage firm. Today, all international leases follow the same processes for critical data tracking and lease administration. The corporate real estate department gained a tremendous amount of internal visibility from its increased control of global real estate operations.

Results:
MBG Consulting saved the client $3.7 million by eliminating billing errors; recovering uncollected tenant improvement allowances and uncollected security deposits; reviewing and analyzing annual operating expense reconciliations; collecting subtenant rental income; adjusting CPI calculations; and contesting real estate taxes. Additional intangible value is brought by decreased time spent on administration functions; minimized resource use; management of critical dates; and elevation of the real estate department’s profile by the virtue of its proactive management of the company’s portfolio.


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