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Case Studies

Fortune 500 Technology Company - Lease Administration Services

Fell has provided lease administration services for over twenty years for a Fortune 500 technology company. In 2007 we embarked on an annual Audit Reconciliation program with the company. Fell provides Audit Reconciliations Services for over 200 properties in the portfolio on a recurring basis. Our Account Leader has worked with company representatives to develop a 40-page process manual for use in formalizing consistent, scalable Audit Reconciliation services. As a result of the process improvements and skillful delivery of this service, Fell has achieved average Savings and Recoveries of $900,000 + in each of the last three years.

Fortune 500 Insurance Company - Lease Administration and Desktop Audit

An insurance company reorganized the real estate function to centralize control over rent payment and real estate occupancy costs. Rather than dedicate staff to the administrative and audit functions, the client contracted with Fell to provide lease administration services, including desktop audit services. Over 2,000 poorly organized lease files were shipped in over 400 bankers boxes to Fell’s Chicago Office to be formatted, copied, abstracted and set up in a database.  A combined management and accounting system was created to support real estate strategy and accounting through the provision of lease audit and lease administration services.   In the implementation phase, Fell realized $600,000 in savings and cost avoidance for the client.  In the years following implementation, the savings have exceeded $3.0 million.

Fortune 500 Real Estate Holding Company - Desktop Audit

Since 2010 Fell has provided desktop audit services for the largest residential real estate holdings company in the United States. Through Fell’s robust audit reconciliation process they have saved the company just under $2.0 million. In one location just last year, our professional discovered that the Landlord incorrectly calculated our client’s pro rata share of operating expenses by subtracting the payments made from the total property expense and then multiplying it by our pro rata share. The landlord used the resulting total as justification to invoice our client $27,454.94. Upon uncovering the error, Fell’s team member presented the landlord with the correct methodology and the result was a credit balance $2,307.82. Additionally, review of certain email correspondence relating to an “Amendment #4” during the same month led to the finding of an unpaid TI Allowance reimbursement due from the landlord in the amount of $5,000.00 – total savings for the client in just this one location in August 2014 – $34,762.76.

Cellular Equipment Reseller - Database Clean-up

Fell Lease Administration contracted with a major retail reseller/licensee of cellular equipment and services affiliated with the largest cellular phone provider in the U.S. The services to be delivered commencing December 2014 were:

  • Database cleanup of the existing portfolio management tool.
  • Ongoing abstraction and database management after the initial data scrub.
  • Rent processing for the 425 unit portfolio using the lease administration software in lieu of the previously employed system.

Database Cleanup and Abstraction

A cleanup log was prepared in December 2014 containing the 421 locations housed at that time in the database. By generating and cross-referencing multiple reports, Fell discovered 70 additional properties not contained on the cleanup log.

Of these 70 reporting omissions, typical exceptions discovered included:

  • Five locations were not active in the database as an abstraction by the client had commenced but was halted because commencement dates were not yet determined.
  • 22 sites had expired according to lease administration database, most in 2014; one in 2012, and one, while not expiring until 7/2015 was noted as “store closed”; Fell reviewed and deleted from the active folder of the database with no cleanup needed.
  • Two store locations were created by the client solely from emails but no documents had been supplied – they were placed in the abstraction queue after discovery.

Also uncovered in the course of the cleanup review: the database contained 39 locations where the record scrub was commenced but stopped because:

  • scanning had chopped off portions of pages
  • one or more documents were missing
  • documents in the module contained conflicting information

Additionally, in approximately half of the locations where the scrub was completed, questions/notes of inaccuracies were logged from the reviewers representing files where further client input was necessary to make all advised corrections.

  • Many were minor such as illegible signatures or missing Date of Lease
  • Often exhibits or ancillary documents were missing

In many instances, the information in the software portfolio appeared to be incorrect but the abstractors made notes rather than change anything, as they were able to ensure themselves that they were possessed of all necessary information.

Rent Payment Processing

Upon commencement by Fell in March 2015 of rent processing, it was learned that the information in the lease administration database had not been updated by the client to reflect the changes that had occurred during the previous months in 2015. As an initial cleanup, we were required to review the changes that had been made to rents in January and February outside the lease admin software, to make sure the information in the database would be correct. Upon running a trial report for the March rents, Fell discovered a number of locations did not have rent attributed to them, incorrect CAM/RET/INS amounts were reflected in the database, and/or appropriates notations were not made for all additional costs that were in the database.

Resolution for the Rent Portion

We initially reviewed every invoice we were provided to make sure that the rents are accurately updated in the database and scheduling any one-time payments that needed to be made as a result of us paying the amount that was incorrectly paid to any landlord with the March rent.

Vendor Issues

A significant number of outdated vendor information was uncovered after running the March rents. Some locations did not have a payee profile selected which made it impossible for the rent to show up on the rent roll. Vendor numbers were not updated where there may have been a change after store opening, so landlord names were incorrect as well as addresses. All such deficiencies and inconsistencies were corrected prior to producing April’s rent run.

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