rpcon masterclass s202-benchmark-and-reporting-standards - lee trevena

Lease Administration Masterclass Friday, 23rd March 2012

Benchmark & Reporting Standards

Presented by: Lee Trevena

Lease Administration Masterclass Friday, 23rd March 2012Lease Administration Masterclass Friday, 23rd March 2012


Session Overview

• Measuring Occupancy Cost• Preparing a Tenancy Schedule• Tracking Critical Dates• Portfolio Performance Analysis • Portfolio Profiling & Benchmarking• Preparing for Portfolio Reviews• IFRS & FASB13 Reporting• Budgeting and Forecasting • Percentage Rent Tracking



• NeedThe boss says so

Finance pay the money

Leasing guy asked for it

I want to keep my job

• WantHave we got this information?

What do we know about the portfolio?

• Compete Better information equals better outcomes

Monetize Administration



Measuring Occupancy Cost

• How do we measure it?

Annualised Per Annum Dollar ($APA)

APA / MAT

Annualised Per Metre Dollar ($APM)

Total Per Annum Dollar ($TPA)

TPA / MAT

Annual Variance(s)

Total Monthly Cost (cashflow)

IFRS – Straight Line




• What does it represent?

The cost of being in that property – of course!

Actual or Effective

• What should it include?

Promo Levy?

Rental Credits & Rebates?

Percentage Rent?

Statutory Charges?




• Why do we measure it?

True cost of occupancy

Track cash flow in the business

Affordability at renewal

Benchmark comparisons

To speak ‘Landlord’

Measure Property Performance

Rate Staff Performance




YEARS RENTAL

YR 5 $182,326

YR 4 $173,644

YR 3 $165,375

YR 2 $157,500

YR 1 $150,000

SALESAPATPAVAR

5

-25.0% 0.0% -16.7% 0.0%

50% Rent Abatement

1 2 3 4

0.0%

15.0%11.3%

14.7% 14.4% 15.8% 16.3%14.7% 14.4% 13.2% 16.3%

Rent Free

$1,000,000 $1,070,000 $1,150,000 $1,100,000 $1,120,000



Preparing a Tenancy Schedule

• Spreadsheet or System?

• Simple Lease Abstract

• What do you include

Simple Example

Complex Example

• Do an Excel Course?

• Tenancy Schedule are so 80s!



Tracking Critical Dates

• Which Dates?

Lease Start/Expiry

Rent/Charge Adjustments

Option Exercise Dates

Accounting Periods

Insurance Renewals

Compliance Dates

Notification Dates

Clause Dates – Co-Tenancy, Rebate, Make Good



Tracking Critical Dates

• How do we set them up?Excel – very quiet

Outlook – very private

System – proactive and collaborative

• How do you update them?Manual or Automatic

• Key Tips1. Don’t EVER track dates solo

2. Memories are not accurate

3. Read clauses carefully



Portfolio Performance Analysis• Sales Productivity

Sales per unit of floorspaceHow hard is our real estate working

• Occupancy CostsRent + whateverAnnual variances in variable charges

• Over-trades Not maximising potential salesLarger premises or additional site

• Under-tradesOperations alertTenancy too big

• Security of IncomeExpiries & HoldoversRenewal Program



Portfolio Performance Analysis• Property Dept. Performance

Site Selection – Forecast Sales vs Actual Sales

Network Planning – Increased Sales & Disposals

Security – % of portfolio exposed

Deal Negotiation – Forecast Renewals vs Lease Deal

Lease Administration – Doc Execution

Lease Audit – Savings from Errors

Legal – Successful clause negotiations



Portfolio Profiling & Benchmarking

• Organic analysis – analyst?• Business management• Trend identification• Decision support – role?• Landlord negotiations• Franchisee negotiations• Compliance• Business protection



Portfolio Profiling & Benchmarking• Portfolio – define the group

Group of Stores – i.e. Westfield, CBD, Rural

• Profiling – choose your dataStore Size

Performance Metrics

Geography

Ownership

• Benchmarking – setting standardsWhat is a good number?

Are there applicable influences or responses?

IF, THEN ELSE

Getting business buy-in

Source of intelligence



Preparing for Portfolio Reviews

• Collect the information early• Work with deal maker• Current, trends & forecasts• Benchmark Your Landlords• Strategise Over-trades and Under-trades• Make the information manageable• Have a strategy• Know your position• Don’t blink



IFRS & FASB 13 Reporting

• NOW = Straight lining of Rent

Known Factors

Rent

Incentives

Some Reviews – not CPI

Not % Rent

Periodically Updated

Variance to AGAPP is key




• FUTURE = Capital LeasesLiability Value

Asset Value

Amortisation

Depreciation / Interest

Rate - WACC

Asset Adjusted Differently to Liability

NPV is very complex

High degree of Assumption

Periodically Updated

RENTAL

REVIEWS

TERM

OPTIONS

INTELLIGENCE

INCENTIVE

MAKE GOOD




• Its coming quicker than you think

Likely 31st December 2015

Yr 1 Comparison – 1st Jan 2015

Yr 2 Comparison – 1st Jan 2014

18 months away!

Compare to Y2K timeframe

HUGE information request


FASB13IS COMING




Budgeting & Forecasting

• What is a budget?

When and how long does it take?

• What is a forecast?When and for how long does it take?

Accuracy

Multi-format (AGAPP, AIFRS)

Becoming more complex

Existing 12 month cash flow

Reviews Expiries and Expiries

Percentage Rent

Outgoings, Promos, Electricity



Percentage Rent Tracking

• Key part of Accruals Tracking

• Accounting Periods are critical

• How close to threshold are we?

• Is it a fix or scaled threshold?

• Once YTD sales are ready each month prepare

• Benchmarking



Thank you!

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rpcon masterclass s202-benchmark-and-reporting-standards - lee trevena

Technology

administration needthe

dates solo2

tenancy schedule spreadsheet

annum dollar

simple lease abstract

metre dollar

rent free abatement

statutory charges