NRTA responds to retailers’ CAM headaches
By Paul Kinney, [email protected]
Common Area Maintenance (CAM) charges are a headache for commercial tenants of all sizes. Unfortunately, overcharges make the management of CAM expenses a major problem for retail tenants. Responding to the CAM overcharge hot button, the National Retail Tenants Association (NRTA) has once again made CAM management a key topic of its education curriculum of its annual conference planned for this September in Orlando.
The NRTA will host a number of workshops to educate lease administrators and property managers on how to protect themselves when entering into lease agreements and other issues relevant to occupancy cost practices. As a whole, the conference curriculum deals with real property issues and encourages the development of best practices between landlords and tenants.
What will your real estate and lease administration team learn at the NRTA sessions? Tips and advice include making sure the lease fits your needs, counting all costs, and reviewing the history of the building’s CAM charges for prior years. As well, presenters will warn attendees to assure that only legitimate CAM charges are included in the CAM provision, and items such as capital improvements and compliance with laws are excluded.
Best practices dictate that lease administrators not accept a provision that makes the landlord’s determination of CAM charges final. The NRTA advises retailers to always reserve the right to audit the landlord’s expenses and to review the landlord’s calculations. Do not accept CAM expenses that are the landlord’s obligation under other provisions of the lease.
Some leases may have a provision that makes the landlord’s determination of CAM charges final. Since the landlord is basically spending the tenant’s money, the landlord should be held accountable to the tenant for those expenses. At the time a lease is first written, it is so important for a tenant to reserve the right to audit the landlord’s expenses and to review the landlord’s calculations before paying these charges.
If a CAM charge is passed through to the tenants, then the tenant has the right to audit their records whether the audit right is stated or not, in the lease. NRTA members have helped to develop best practices to improve effectiveness and clarity for both tenants and their landlords, and the association certainly serves to improve working relationships between them.
One such best practice is an understanding that the landlord’s expense summary statement is not sufficient documentation to determine if a charge is legitimate or not. A trained lease administrator will want to access the source records, and then compare the expense to the annual statement. Access to these documents should not be an issue.
CAM records are typically accessible in a primary headquarters or a management location and easy for a semi-experienced person to audit.
NRTA course presentations empower tenants to verify and to challenge a landlord’s expense billings, including Common Area Maintenance charges. While CAM overcharges are not uncommon, lease reconciliations also are not unusual. Audits covering CAM reviews over periods of multiple years have the potential of uncovering very substantial overcharges. Therefore, it is not surprising to learn that many retailers are investing resources into their auditing capabilities in the form of additional staff, software improvements and use of outside audit specialists.
To learn more about CAM best practices and related issues, visit NRTA’s website retailtenants.org and review the 2011 curriculum agenda planned for its September Annual Conference.
Paul Kinney is executive director of the National Retail Tenants Association, based in East Longmeadow, Mass. He can be reached at [email protected].
GGP promotes Father’s Day with MLB All-Star Game sweepstakes
With Father’s Day approaching, General Growth Properties has rolled out a mall promotion that invites shoppers to “check in” to their local GGP mall using Foursquare for a chance to win a trip to the 82nd MLB All-Star Game at Chase Field in Phoenix.
When shoppers “check-in” through Foursquare, they receive a link to enter the sweepstakes, which includes four tickets to the MLB All-Star Game on July 12, $1,000 in Shop Etc. Mall Gift Cards and a hotel stay and golf outing at the AAA Four-Diamond, all-suite Arizona Grand Resort.
“We’re continually looking for fun and interactive ways to engage our shoppers — especially through social media. This is the first time we’ve used Foursquare for a mall promotion and we’re excited for our customers to participate,” said Lesley Cheers, director, public relations, GGP. “And baseball, summer and dad all go hand-and-hand so it’s the perfect sweepstakes.”
VF Corp. to buy Timberland
New York City — Apparel giant VF Corp., whose brands include Wrangler, The North Face, and Nautica, said it has agreed to buy Timberland Co. for approximately $2 billion. The deal, expected to close in the third quarter, values Timberland at $43 a share, a 43% premium to Friday’s closing price of $29.99 on the New York Stock Exchange.
“This will be a winning combination, leveraging VF’s international and direct-to-consumer platforms to drive growth in the Timberland and Smartwool brands globally,” Eric Wiseman, CEO, VF, said in a statement.
VF said it expected to boost Timberland sales by 10% annually, in part by growing the brand’s international business and helping it expand in Europe, Asia and Latin America. VF also will Timberland grow its apparel and women’s businesses, and open more retail.
“Timberland is proud of its rich heritage, its track record of success and its reputation as a responsible and environmentally conscious global citizen, all of which will be preserved and enhanced by becoming part of the VF family of brands,” Jeffrey Swartz, CEO of Timberland, said in a statement. “VF is known for its ability to acquire and grow authentic outdoor brands, while protecting a brand’s unique culture and DNA.”
According to reports, VF will make Timberland part of its outdoor and actions sports business, and Timberland’s headquarters will remain in Stratham, N.H.
VF plans to finance the deal through a combination of cash on hand, commercial paper and term debt.