March 31, 2010

It's time to upgrade lease administration software now

Lucernex expert and EVP Ken Brown’s (see Ken’s management summary here) discusses why its time to upgrade your Lease Administration Software.

Real estate organizations have been using lease administration systems for years. What started out as a replacement for clunky, file-based records that were often misplaced and decentralized, modern lease administration systems have turned into centralized, decision-support databases that are critical to maximizing ROI of real estate assets. When these systems first appeared, simply having all of the key leased and owned data in one place and sharable across the organization was the primary goal.
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March 29, 2010

IWMS with Sales prediction – the Site ROI predictor

Lucernex expert and President Joe Valeri (see Joe’s management summary here) discusses how integrated sales prediction modeling improves an IWMS.

In my last Blog I discussed use of Lease Analysis integrated into IWMS to provide the cost side of an ROI prediction tool. Cost is only half the data needed however, an accurate and trusted prediction of sales is equally important.

Sales prediction modeling is a tool used by real estate organization with multiple revenue producing sites whether it is direct sales, cell phone contracts, walk-in patients, investment clients, or tuition payments. In all cases a picture of “the customer” must be produced, usually based on past location results or a client defined picture of their customer.
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March 23, 2010

Lucernex provides path for SLIM, REM, Siteseer or Retail Lease Lease Administration upgrade

In 2009, Ken Brown, former CEO and Founder of National Facilities Group and the designer of the SLIM Lease Administration solution, joined Lucernex. He along with Lucernex’s President Joe Valeri and former Workplace IQ/Siteseer executive Howard Zola, set out to design a new module of Lx IWMS to manage all Leases and Contracts. The results is Lx Contracts!, a 100% web-based Lease Administration and Contract Management tool. SLIM was the first major lease administration solution to hit the market in the late 1980′s and was managed and developed by Ken until 2003. Ken’s expertise with all of the major lease administration tools including SLIM, REM, Siteseer and RetaiLease allowed Lucernex to create the new industry standard product for Lease Administration and Contract Management.
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March 22, 2010

Why integrated Lease Analysis improves an IWMS

Lucernex expert and President Joe Valeri (see Joe’s management summary here) discusses how integrated lease analysis improves an IWMS.

It is a big step for many companies to implement an IWMS and to simply establish a single source of all location data. It can advance a companies effectiveness substantially with that first step of IWMS use. Once this has been done successfully though, users of IWMS systems start to come up with ideas of how the system can be used to further improve their internal processes and evaluate success. By having all the data in one place, hopefully organized by location, users can begin to apply decision tools to make better decisions.
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March 18, 2010

Lucernex in Hospitality Technology Magazine online

A case study about the success Quanah Properties had with Lx IWMS is in this weeks Hospitality Technology Magazine online. Read the story here!.

March 15, 2010

5 GAAP/SOX Rules You Need to Know

Lucernex expert Jim Duport discusses the 5 rules you need to know about GAAP/SOX. Learn more about Lx LseMod Corporate for lease analysis including GAAP impact.

1. Rent straight-lined over the term if rent increases are known.

Impact: First Fiscal year cost will increase

 

2. Landlord Tenant Improvement Dollars are shown as a net rent credit, and Total construction cost including Landlord’s TI Dollars are depreciated.

Assume: Construction cost is $30/sf, Landlord paying $21/sf
Old Days: Depreciate $9/sf (part paid by tenant)
Now: Depreciate $30/sf (tenant and landlord cost) Landlord cost shown as credit to rent spread over term Tenant’s capital stays at $9/sf ($30 – $21)
Why? Rationale – base rent includes landlord’s amortization of TI$
Impact: Reduces “rent” charged to the P&L
Increases depreciation
Changes EBITDA

 

3. GAAP rent starts with “beneficial use” GAAP rent starts earlier of when construction starts or lease commences

Assume: Lease starts March 2007, construction starts January 2007
Old days: Start paying costs in March 2007
Now: GAAP rent starts when you “use” the space e.g. January 2007
Why? Tenant, in essence, controls space since construction is for Tenant’s use
Impact: Potential double rent on financial statements during construction (if relocating)
First Fiscal year cost will increase
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4. Restoration amortized over term

aka – “make good” or in UK, called “dilapidations”
Old days: Adjust Cash Flow at the end of term to include Restoration cost
Now: FASB 143 requires the accrual of future liabilities, in this case Restoration / Dilapidations. The following applies if you choose to Apply GAAP Accounting.The methodology used is to estimate the cost now, then apply an inflation factor to estimate the cost at the end of the term, the Future Cost.

The Future Cost is then discounted to a Present Value. The Discounted Present Value of the Future Cost is straight-lined over the lease term AND an accretion expense is applied to the increasing liability. The accrual starts with the GAAP lease term since it represents a liability. Cash Flow needs to be adjusted to reflect the P&L liability and the payment of the actual cost at the end of the lease term

Impact: Increases average annual occupancy cost on P&L

 

5. Rules for sublease analysis write-offs have been further defined

  • Cost written off when decision made. When vacate space or if vacant, when decide to sublease
  • Costs include NPV of rental costs, depreciation write-off, estimated subleasing costs and sublease income
  • Income Statement (P&L) charged the NPV of write-off
  • Monthly, interest expense on declining balance of the NPV Write-Off charged to P&L
  • Declining balance determined by taking net monthly costs and
    interest expense, deducting that from the NPV write-off

 

GAAP Accounting

GAAP Comparison

Shameless Plug

Lx LseMod Corporate Lease Analysis is the market leading application for Corporate lease analysis, providing GAAP impact analysis within detailed P&L and Cash Flow projections. Companies like GE, MetLife, American Express and Robert Half use Lx LseMod Corporate for lease analysis making it the most trusted name in corporate lease analysis.

March 15, 2010

What Makes some IWMS software so expensive?

Lucernex expert and President Joe Valeri (see Joe’s management summary here) provides details of why IWMS software from some vendors can be so expensive.

Reasons some vendors IWMS Software can get expensive

There are actually several answers to this question depending on the vendor you are looking at. I don’t believe it is appropriate to mention other vendors in a negative light so I will simply characterize them into groups and potential buyers will need to ask the right questions to ascertain where we all fit. Several vendors, particularly the really expensive ones, fit into many of these categories.
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March 11, 2010

Tenant Rep Brokers surviving the economy

Lucernex Commercial Brokerage expert and Account Executive Cinnamon Trimmer discussed how some Tenant Rep brokers are surviving the current economy.

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Recently I had very good conversation with an old brokerage buddy in California, Jack. He was really freaking out that his real estate career was heading in directions he was not prepared for. See he’s been a “Tenant Rep” for 20 plus years and now is competing for Landlord Rep and Sublease deals just to make ends meet!
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March 7, 2010

The power of Location Management

Lucernex expert and President Joe Valeri (see Joe’s management summary here) provides details of why Location is the key to Real Estate Technology.

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In the last Blog I talked about the importance of an IWMS using the Location as the central organization point for all data.
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March 1, 2010

IWMS? It’s Location! Location! Location!

Lucernex expert and President Joe Valeri (see Joe’s management summary here) provides details of why Location is the key to Real Estate Technology.

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My last blog discussed the very loose definition of IWMS and how it tries to describe a wide array of very different vendors. In this blog I will discuss one type of IWMS, Location Management Software, and what the different end users may need to focus on when selecting a Location Management IWMS.

What are the three things that matter in real estate – Location, Location, Location. This old adage about real estate applies to commercial real estate technology as well. The location is what real estate is all about whether you are a 2000 store retailer, a 30 building corporation, a large hotel company or a multi-building campus – everything you do in relation to your real estate is based on a location. And, managing the performance of each location to perform optimally is the ultimate goal for each location whether it’s optimizing revenue or minimizing cost.
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