Summit on savings

Chain Store Age conducted a cost-cutting roundtable discussion with six retail lease administration experts. The participants, members of the National Retail Tenants Association, discussed dollar-saving measures currently being implemented within their companies that they also recommend to other retailers.

Ted Pajda, group real estate director, Enterprise Rent-A-Car, St. Louis: 

Scan lease documents. Having the information in an electronic form results in time savings and allows you to readily access the lease document to analyze abstract (summary) interpretations. In this economy, you have to get to the root of the issue to ensure that your rights are being protected and you have to examine every avenue for capturing lost dollars.

Rick Burke, president, Lease Administration Solutions, Marblehead, Mass.: 

Not only do we scan our clients’ leases but we “OCR [optical character recognition]” them, which translates the documents into machine-editable text. By having the leases in an editable form, retailers can cut and paste as well as search for such important clauses as termination rights more easily.

Paul Kinney, executive director, National Retail Tenants Association, East Long-meadow, Mass.: 

We’ve given much attention lately to co-tenancy clauses in the lease. Now is the time to review your lease and see what has been affected by a retailer’s departure or the center’s occupancy level.

Kathy Powers-Middlecoop, director of lease administration, American Greetings Corp., Cleveland: 

I have a system for co-tenancy investigation and enforcement whereby twice a year all our stores take a current mall directory and check off what retailers are still there, who has left and new arrivals. I scan the information and match it up to co-tenancy clauses, then follow up with a letter to the landlord.

David Rodgers, director of real estate-lease audit, Brown Shoe Co., St. Louis: 

We have been really digging into small-shop co-tenancy. Small shops will go vacant and we won’t know it because they fly under the radar. We watch the landlord’s Web site for details about available space for lease. From that information, you can calculate vacancies and how they impact the occupancy provisions of our leases.

For the first time ever, we have focused one auditor solely on co-tenancy issues. We have a database that tells us every store that has anchor protection and that has a minimal occupancy protection, so we can sort the information and act immediately.

Powers-Middlecoop: We also are looking at the language in our leases. When the lease states the landlord supplies utility or waste management for our premises that is comparably priced to what is available locally, I follow up and, with the help of an outside energy-management consultant, make sure that what we’re being charged is indeed comparable. With the trash piece in particular, I have been able to get sizeable returns back. If you’re in a high-trash bracket but you’re not a high-trash volume user, you can canvas the local area and determine whether or not returns are in order.

Dave Prior, senior manager of lease audit and collection, CVS Caremark, Woonsocket, R.I.: 

CVS is doing the same thing. We recently revised our lease contracts so the landlord can charge no more than what he paid. This is important because landlords frequently negotiate lower rates for services, and we expect those rates to be passed along to us.

Real estate taxes are another area for savings. We now have a lot of freestanding locations in which we have carved out a small piece of a shopping center. Sometimes the landlord has billed based on the entire shopping center acreage instead of our pro rata share. Careful reviews can save significant dollars.

Editor’s note: NRTA is a not-for-profit, tenant-driven association that educates retail lease administration and accounting professionals. For more information, go to   www.retailtenants.org.