1. Do You Have These Clauses in Your Lease?
Presented by: Steven Doben, Netscout Tim Myllykangas, Cresa

2. Housekeeping Please turn off your cell phones…If it Rings, you Sing 
Please ask questions (we have gifts)
Please complete the course survey
Did we mention gifts?

3. Agenda Introduction Different Negotiation Approaches
Operating Expenses
Repair and Maintenance
Financial Implications
Summary

4. Introduction

5. NEGOTIATION APPROACHES

6. Be Prepared For The Negotiation
Deck of Cards
Be Prepared to Give Away Something
Understand the Critical Points
Know What is and What is Not Market
Silence is Golden………Stay Firm
Time is Your Friend

7. Operating Expenses
Definition Expenses that are building related associated with
the operating, maintaining, managing and, at times,
replacing capital items in the Office Building (or
project as defined per the Lease)
Areas of Concern
Increases over Base Year / Base Value
Selection of Base Year / Base value
Gross-Up Provisions
Definition Issues

8. Operating Expenses (Cont’d)
What do you have to lose?

9. Repair and Maintenance
Latent Defects
Landlord Responsibility
Repairs v. Alterations
Restoration

10. Repair and Maintenance (Cont’d)
Clearly Define Capital
LLs’ attempt to include very briefly, if at all
Can be the single largest charge back to a tenant
Critical to have standard language that the TM relies upon
Clearly define
Useful life vs. Lease Term
GAAP vs. Industry Practices
Amortization formula
Base Building vs. Tenant Improvements

11. Repair and Maintenance (Cont’d)
What’s left on the table?

12. Financial Implications
Repair and Maintenance
Transfer of responsibility to Tenant
Capital
Restoration
Operating Expenses
Additional revenue to the Landlord
Base Building v. Tenant Improvement

13. Financial Implications (Cont’d)
Delivery v. Commencement
Premise Definition
Restrictions to Tenant Improvement Allowance

14. PITFALLS

15. SUMMARY
Expanding Knowledge 2015…Educating to Improve Profitability

16. Lease Administrator’s Value as a Team Member
The Lease Administrator can add significant value to the lease negotiation process. Points to consider…….

17. Standards & Benchmarking
Value Add
Review existing lease documents and historical issues prior to the negotiation.
Before the negotiation starts, provide the Transaction Manager with…….

18. Standards & Benchmarking (Cont’d)
A brief bullet point summary of the issues with the current lease
All amounts not paid to landlord or due to tenant and why
A list of key clauses that do not conform to the standard
All other concerns that will remove ambiguity, minimize risk/financial exposure

19. Standards & Benchmarking (Cont’d)
Establish the following STANDARDS within your team:
Opex exclusion list
Premise definition – exclude “above-ceiling” work
Gross-up clauses (if included make certain it applies to Base Year)
Capital replacement clause
Controllable expense clause
Building evaluation to determine base building or demised Premises deficiencies exist

20. Standards & Benchmarking (Cont’d)
Benchmark your Opex costs, in the entire portfolio and submarkets, to provide a measurable standard for annual tracking and savings
TIA deduction clause upon renewal

21. Standards & Benchmarking (Cont’d)
Create a Lease Administration Department BENCHMARK
grid to compare existing leases and new leases to the
standards. This will increase lease clause improvement
and allow the company to measure performance of the
Transaction Managers.
Provide these comments proactively to the Transaction
Manager; enhancing the value of you and your
department.

22. THANK YOU
Steven Doben, Netscout Tim Myllykangas, Cresa