CAM Workshop: The Desktop Audit – Part 2 Presented by: Theresa Wecker– Asset Strategies Group, LLC Cindy Headman – Burlington Stores

Survey Says … Who took CAM Workshop Part I today? Who here performs Lease Audits? Who here manages Small Shop Audits? Who here manages Big Box Audits? Do we have any attorneys in the room? How many years of experience? CH– each Q will come after a 5 second delay

The Agenda We will work in Groups Please use the handouts for the Examples Please read, analyze and discuss your options, opinions, corrections and questions you have for the example Try not to get hung up on details, record them as questions for the Landlord and then move on to the next issue CH

Example 1 Calculate the CAM for 2007-2009 You will need to start from 2005, the fixed starting point, to calculate your 2007-2009 You will need to calculate the 4% Cap You will need to calculate the CPI You will need to calculate the Actual share You will need to determine which is less, Actual, CAP, or CPI Let’s get started… TW – First we need to calculate the cap. The cap for the 1st year is $2.31 x 5,000 = $11,550 (bullet point 6 on page 2 of handout) so that is the max CAM for 2005. Now for 2006, based on the calculation of the 4% and the CPI the CPI is less therefore the CPI number will be used for 2006. 2007-2009 are as shown above CPI/CAP/CPI. We really don’t need the Actual right now we just needed to calculate the 4% cap and the CPI to move forward.

Example 1 (15 Minutes) TW

Example 1 TW – First we need to calculate the cap. The cap for the 1st year is $2.31 x 5,000 = $11,550 (bullet point 6 on page 2 of handout) so that is the max CAM for 2005. Now for 2006, based on the calculation of the 4% and the CPI the CPI is less therefore the CPI number will be used for 2006. 2007-2009 are as shown above CPI/CAP/CPI. We really don’t need the Actual right now we just needed to calculate the 4% cap and the CPI to move forward.

Example 1 TW

Example 2 Audit the CAM Rec. for 2009-2010 Review the Lease Review the CAM statement vs. Lease Review the GLA Review the Partial GL Listing; questions or removable items? Review prorata share and amounts due Look at everything you’ve been provided for Example 2 Let’s get started… CH

Example 2 (15 Minutes) CH

Example 2 CH

Example 2 TW

Example 2 TW

Example 2 CH

Example 2 TW

Example 2 CH

After the Review Discuss with internal business partners - Legal - Real Estate Present your claims to the Landlord Reduce current year escrows CH 16

After the Review Presenting Your Claim Present your claim by Letter / Email Do you need to send to Notice address? Cite Lease sections Be as clear and as simple as possible Ask for clarification: is x increase because of (a) or (b) Explain your assumptions, decisions, questions Provide your calculation worksheets Be amicable / Offer to Help Them! TW 17

Presenting Your Claim Intro-What and Why-Which docs Cite language-incl Section #s Illustrate using calcs Close asking for more info and prompt response TW Include contact info, email etc – Attach worksheets illustrating your recalcs. 18

Presenting Your Claim Attach worksheets illustrating your recalculations Answer their Q’s before they ask them Tell the Landlord what should be provided to remove your claim Close by asking for a prompt response Include contact info, email etc. CH

Presenting Your Claim Your campaign Keep a log of your contact/correspondence with the Landlord Helps you keep track of the number of contacts and the time between them Keeps claims on track & progressing Respond timely to the Landlord’s information or responses Refer responses from Landlord’s outside counsel to your in-house counsel CH 20

After the Review Negotiating the Recovery Options for Resolution Depend upon your Company’s policy Settle on a negotiated amount Rent credits or refund checks Consider Concessions: drop some claims for full credit on others Find solutions, not more issues TW 21

Negotiating the Recovery Options for Resolution continued… Amend the Lease/Letter Agreement For issues that are likely to be disputed again Set CAM caps going forward Fixed CAM rates as an option Refer to your Real Estate / Legal for upcoming deals, renewals, closures, etc. TW 22

1-Minute Break TW/CH 23

Example 3 (5 Minutes) CH

Example 3 CH

Example 4 (5 Minutes) TW – what we’re going to do here is use pages 7-8 of the handout to determine the % of GLA making similar payments. Page 7 shows the tenant, the space, the SF and the amount they’re paying. Page 8 is the lease language with the one assumption that Tenant considers 90% of other tenant payments to be similar in nature. Note that the Shopping Center Buildings definition and Shopping Center for purposes of this example will have the same meaning. Complete the schedule to determine whether at least 90% of the GLA of the SC is making similar payments.

Example 4 TW – you can see that by taking out the other tenants that are not making a similar payment (at least $3.60 or more than $4) Office 1 and 2 (because Shopping Center Buildings is defined as all “retail premises in 1.1) and our premises, only 68% of the SC is making similar payments (28,000 / 41,000). The vacant space still counts because GLA is defined as being all space whether occupied or not. And the lease requires that tenants occupying at least 90% of the GLA must be making similar payments; a vacant space is not making similar payments.

CAP(If We Have Time) TW The YELLOW shows the amount you would have to pay either Cap or Actual.

CAP TW The YELLOW shows the amount you would have to pay either Cap or Actual.

Thank you for all your participation. Please be sure to complete the course critique. Thank you for all your participation. 30

Asset Strategies Group, LLC Contact Information Theresa Wecker Asset Strategies Group, LLC twecker@consultasg.com Cindy Headman Burlington Stores cindy.headman@burlingtonstores.com 31 31