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

Benchmark & Reporting Standards
Presented by: Lee Trevena

Lease 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



Monetize Administration
• Need
The boss says so
Finance pay the money
Leasing guy asked for it
I want to keep my job

• Want
Have we got this information?
What do we know about the portfolio?

• Compete
Better information equals better outcomes



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 1 2 3 4 5 RENTAL
YR 5 $182,326

YR 4 $173,644

YR 3 $165,375

YR 2 $157,500
50%Rent
YR 1 Rent Free
Abatement $150,000

SALES $1,000,000 $1,070,000 $1,150,000 $1,100,000 $1,120,000
APA 15.0% 14.7% 14.4% 15.8% 16.3%
TPA 11.3% 14.7% 14.4% 13.2% 16.3%
VAR -25.0% 0.0% 0.0% -16.7% 0.0%



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 Tips
1. Don’t EVER track dates solo
2. Memories are not accurate
3. Read clauses carefully



Portfolio Performance Analysis
• Sales Productivity
Sales per unit of floorspace
How hard is our real estate working
• Occupancy Costs
Rent + whatever
Annual variances in variable charges
• Over-trades
Not maximising potential sales
Larger premises or additional site
• Under-trades
Operations alert
Tenancy too big
• Security of Income
Expiries & Holdovers
Renewal 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 data
Store Size
Performance Metrics
Geography
Ownership
• Benchmarking – setting standards
What 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 Leases RENTAL
Liability Value
Asset Value REVIEWS
Amortisation TERM
Depreciation / Interest
Rate - WACC OPTIONS
Asset Adjusted Differently to Liability INTELLIGENCE
NPV is very complex
High degree of Assumption INCENTIVE
Periodically Updated 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



FASB13
IS 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!

au.linkedin.com/in/leetrevena

leaglelee.com

http://www.facebook.com/leaseeagle

lee.trevena@leaseeagle.com

0407 711 622


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