Audit Case Study Synopsis™ (12416)
Savings (square foot)
Exclusive Service Provider
Upon the commencement of the audit, RRG determined that an allowance granted through the lease had not been applied appropriately by the landlord. The clause had a provision whereby any unused amount converted to base rent credit available immediately up to a capped amount which was to be applied proactively by the landlord. The trigger date on this concession was three (3) years prior. Any balance above the cap amount was to be applied using a pre-set model to reduce the monthly base rent on a pro-rata basis through the remaining term of the lease. The landlord initially noted that the cost of building out the space far exceeded the allowance that was provided and that it would be generating a final invoice for submission to the client. RRG performed an audit of the entire construction project including all contracts, construction documents, AIA documents, drawings, project invoices and relevant supporting documentation. RRG matched all subcontractors’ cost schedules against the American Institute of Architects (“AIA”) documents and cross referenced the landlord’s payment records against the actual invoiced amounts. RRG verified that there wasn’t an overage, but rather a material surplus available. Subsequently, we modeled the amounts, ensured the proper application of the initial, immediate credit and provided an accurate base rent reduction schedule to resolve the open matter.
RRG also removed through the audit a roof replacement project that had been classified as a routine, recurring expense instead of a capital expenditure. It was further noted by the landlord that it has attempted this classification as the lease only allowed capital expenditures that decreased the operating cost of the building and then only up to the quantifiable savings amount.
Base Rent Credit