Expense dispute fix builds lasting relationship with real estate firm
Solving $5 million dispute brings work across major national portfolio
CASE STUDY |
When one of the world’s largest real estate services firms acquired a signature Manhattan property, they bought more than a significant addition to their portfolio. They also inherited a dispute involving the proper allocation of more than $5 million in escrowed landlord operating expenses. Prior to the client’s acquisition, the building changed hands four times in five years, further complicating matters. And the tenants involved in the dispute included one of the nation’s leading media companies and two prominent national law firms. The real estate company turned to RSM for help.
The real estate company sought a timely, accurate financial analysis of the disputed charges, allowing them to appropriately assess charges between these major tenants without absorbing unnecessary additional charges.
Through dozens of meetings and conference calls with our client and their tenants, and after an extensive analysis of the disputed charges and the underlying lease documents, RSM enabled our client to reach a quick and favorable resolution of the dispute with minimal impact to our client’s financials. Shortly thereafter, we were retained to assist the client in preparation of their annual operating expense charges to all tenants in their portfolio after a tenant dispute at another property resulted in the client’s refund of more than $100,000 in tenant overcharges.
As a result of these two quick and substantial successes, this large global real estate firm built a long, extensive relationship with RSM to address a variety of needs. They have since retained RSM to:
- Assist with their annual common-area maintenance (CAM) and operating expense reconciliation preparation for their entire U.S. portfolio, which ranged from 15 to 23 high-profile office properties, and between 400 to 650 tenants. Since 2009, we have helped our client identify millions of dollars in potential errors, helping to head off future similar disputes.
- Help to defend operating expense disputes involving over $1 million in the aggregate with several high-profile national tenants, in every case delivering more than satisfactory results to the client.
- Perform full portfolio acquisition due diligence, including:
- Lease abstraction
- Financial analysis
- ARGUS cash flow modeling
- Estoppel analysis
- Tenant improvement exposure calculations
By quickly demonstrating our understanding of and ability to solve this major client’s needs in one challenging situation, RSM’s real estate team has built a broad, long-term relationship, helping them address key issues across their national trophy-asset property portfolio.
“We hired RSM to deal with one complex dispute. Their performance and commitment quickly earned them a place as our go-to advisors on operating expense issues and as key advisors supporting our due diligence efforts. Their proven understanding of our industry, and their commitment to understanding our company and our needs, is demonstrated every day, on every engagement.” -Managing Director for the client