A large, international software company had grown rapidly and had accumulated 46 lease obligations in the US in a very short period of time. The company had no real estate department, and therefore, no one had a handle on the existing financial obligations, lease provisions, and critical option dates of the various leases. There was no discernible real estate strategy, no procedures for cost controls or payment approvals, and no corporate use standards. Additionally, some cities had several locations under lease at the same time, often within a few miles of each other.
Cindy was hired to create a real estate department. The first step was understanding what the lease obligations were and creating a working policy with the accounting department regarding timely and correct payment of recurring rents, and approval of non-recurring invoices. Once systemized, other policies and procedures were implemented to insure operating expenses were audited regularly and site staff worked only through the real estate department for their space needs. Security deposits and letters of credit were identified and tracked, insurable values were accurately reflected, and a database created to house pertinent lease information. Corporate real estate strategies were created after collaboration with relevant departments, then presented to the Board of Directors for implementation. These strategies included merging offices to create efficiencies, expansions, contractions, and in some instances, the sale of real estate the company owned. Excess offices were either closed, terminations negotiated with the landlords, or subleased.
- Through a rigorous review and approval process, Cindy collected over $610,000 in rent overpayments, utility overpayments, security deposit refunds, and excess or unauthorized parking charges.
- Implemented annual operating expense audit program that resulting in savings of over $86,000 on one property.
- Sold a company owned asset without the assistance of a listing broker; netting $4.5M in profit and saving an additional $500,000 in brokerage commissions.
- Through an active sublease and termination program, Cindy reduced the monthly rental obligation by $1.1M per month and generated a documentable net savings to the company of over $60.5M, which was a savings rate of over 60% of the outstanding obligations at the time of closure.
- Completed a complicated three party negotiation, which terminated the company’s $45M lease obligation for $14M (32%), while allowing the building to be sold to a user/investor – yielding a win-win-win scenario for the company, the landlord, and the buyer.