REoptimizer® Blog

Critical Date Management

Posted by Don Catalano on Feb 28, 2014 9:36:00 AM

When it comes to administering a corporate real estate portfolio, one of the most important processes has almost nothing to do with the underlying buildings and land. Having a critical date management regime ensures that you not only meet your obligations under your leases but also that you are prepared for any changes that can occur in your occupancy status. To a large extent, leases are schedules of what you have to do and when you have to do it. 

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Critical Dates that Every Corporate Tenant Should Be Aware Of

Posted by Michael Sweeney on Sep 12, 2013 9:46:00 AM

There's a reason that the phrase critical date management gets used to refer to tracking the timing requirements under commercial real estate leases. In a commercial lease, missing a single date could invalidate a renewal option or put you in default. Tracking the critical dates within your lease is a business imperative.

 

Commencement and Termination Dates

With a commercial lease, commencement and termination dates aren't always straightforward. Frequently, you end up with multiple commencement dates that all mean different things. Here are the ones that you should be watching:

  • Delivery date: The date on which the landlord has to have the space ready for you or suffer the sanction spelled out in the lease.

  • Lease commencement date: The date on which the lease officially starts. Frequently other dates in in your lease are tied to this one, so it's an important one to track in your critical date management system.

  • Rent commencement date: Frequently, you don't start paying rent when you move in, and the rent commencement date takes free rent and other concessions into account to let you know when to start sending rent checks.

  • Termination date: The termination date is the date when your lease ends. Usually, you need to have completely vacated the space and removed your property by then. Read your lease carefully to see if there is a holdover clause that will let you stay longer, albeit a higher rent.

  • Early termination date: Some leases allow you to buy them out after a set period of time. Sometimes also called a kick-out clause, these options usually require you to pay a lump sum, which can be sizable, and have a limited time in which they're available.

 

Rent, Increase and Adjustment Dates

  • Due date: This is another key date, which usually falls on the same day of the month as the lease commencement date.

  • Rent increase dates: If your lease has increases, these are the dates on which they'll occur. They're frequently tied to your lease commencement date as well.

  • CAM reconciliation dates: Every year, most landlords issue CAM reconciliation statements that adjust the CAM budget for the next year and either refund CAM over-collections from the previous year or require payment of any under-collections.

 

Option and Right Dates

Some leases allow you to expand your space or even buy the building. Others give you the ability to renew your lease at pre-negotiated rates or terms. When these options and rights are valuable to you, most landlords become sticklers about the dates, so they're important to track as a part of your critical date management strategy.

  • Right of first refusal/negotiation dates: Some leases give you a first shot at buying your space or let you match another offer, but they typically give you a short time window.

  • Renewal option date: Many options carry two dates - the date on which you can first notify your landlord of your intent to renew, and the date on which the option expires. For instance, you may have a five year option that is valid from six to three months before your lease's expiration date.

  • Purchase option date: These typically give you until a set date to buy the building.

 

Critical Date Management

Dedicated commercial real estate software is an excellent tool for handling all key dates together in one place. Managing your critical dates in the sample place where you manage all aspects of your commercial real estate portfolio takes the stress out of critical date management.

 

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Lease Holdovers and Critical Date Management

Posted by Jordan Slater on Mar 13, 2013 1:17:00 PM

A lease holdover occurs when a tenant retains occupancy of the premises through the expiration of the lease.  Typically, from this point, the tenant rents the space on a month-to-month basis.  While there is the added benefit of flexibility for the tenant, “holding over” a space is rarely an ideal situation.  Consider how such a situation arises, and what a it means for your bottom line:

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Critical Date Management for Your Industrial CRE Leases

Posted by Jordan Slater on Jun 25, 2012 10:19:00 AM

Critical date management of your industrial CRE leases will save your company a great deal of money. Most industrial leases have four dates that require your attention. Missing them could cause you to both lose opportunities and potentially run into cashflow shortfalls:

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CRE Lease Dates to Be Careful Of in Critical Date Management

Posted by Jordan Slater on Apr 18, 2012 12:24:00 PM

 

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Critical Date Management in Corporate Real Estate

Posted by Jordan Slater on Mar 26, 2012 10:36:00 AM

Managing a portfolio of commercial real estate portfolio means tracking the critical dates for each lease and making sure that the people who need to know about them are reminded in enough time to make the key strategic decisions.

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