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PSA focuses on three areas of tenant representation. First, it provides advice to tenants during the lease negotiation stage. This advice ensures that tenants understand all economic lease clauses with particular emphasis on clauses which increase the tenant’s occupancy costs due to methods that owners use. These include tenant electric charges, the gross up of expenses, capital amortization, management fees paid to related companies of the owner, space measurement, expenses related to profit centers of the landlord, etc. Negotiating these clauses and others at the time that the lease is written will save the tenant substantial sums of rent in future years.
Second, PSA provides base year audits for tenants. Without a base year audit future tenant audits become much more difficult as it is impossible to know qualitatively and quantitatively if the expenses in future years are comparable to those incurred in the base year. Many owners like to artificially lower base year expenses in an effort to increase their bottom line. A base year audit corrects these errors and establishes an accurate bench mark against which all future years expenses will be compared to. A base year audit also provides the tenant with an historical record of what services the owner provided, staffing levels, gross up methods, capital amortization and other pertinent data so that in future years they will be able to conclusively point to the methodology that the owner used in the base year, and require the same method to be used in the current year. Properties may change hands several times during a tenant’s lease term or the owner’s representative that worked on the property during the base year may not work on it in future years. These changes in ownership or in an owner’s representation can easily lead to inconsistent methods being used to determine future year’s expenses, as compared to the base year, thus costing the tenant additional rental charges.
Third, PSA provides future years lease audits, which protects the tenant from an owner over billing. In spite of what the lease says owners will work the margins and pass through expenses to the tenant that may be questionable based on the lease. Many owners believe in the philosophy that for the one tenant who catches the owner doing something incorrect there are many more tenants that never find out what has been done to them. This is because they have not had an audit done, or the auditor is someone who has not been in the real estate business and does not truly understand the nuances of what the owner is doing.
PSA provides a free initial review of the tenants lease and billings in order to determine if the tenant has a reasonable opportunity to achieve a reimbursement from the owner.
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