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Case Studies

CTS Creates Transparency in Complex, Third-Party Accounting Structures

There’s Opportunity for Savings in Many Areas of Your Lease.

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Click On a Case Study Below to See How We Deliver Value and Enhance the Billing Review Process:

Publishing Company   $56,000 Savings

Location: 48,000 SF, Class-A Office – Chicago, Illinois.

Issue: Improper Gross Up Methodology.

Financial Impact: The inaccurate gross up methodology, inconstant application, and failure to adjust the methodology for occupancy level driven expense shifts, resulted in a $56,000 overcharge to our client.

Audit Findings: CTS discovered that the landlord was utilizing an inaccurate gross up methodology that did not account for fixed versus variable occupancy, that the inaccurate gross up methodology was being inconsistently applied across expense terms, and that the landlord was not accurately accounting for building occupancy shifts in the gross up methodology employed.

Resolution & Recovery: $56,000 was refunded to our client, and an accurate gross up methodology was agreed upon for future application.

Technology Company   $32,000 Savings

Location: 27,000 SF, R&D Facility – Houston, Texas.

Issue: Electric and Improper Accounting.

Financial Impact: The inaccurate accounting of total electric charges by the landlord resulted in a $32,000 overcharge to our client.

Audit Findings: Electric costs were expensed directly to the landlord and individually submetered to the tenants. CTS identified that the landlord was not accurately backing out all tenant electric contributions from the net electric expenses, and subsuming the balance into the Building Operating.

Resolution & Recovery: $32,000 was refunded to our client, and follow up audits identified that the landlord is now accurately backing out all tenant-specific electric charge contributions.

Insurance Firm  $584,000 Savings

Location: 76,000 SF, Class-A Office – Long Island, New York.

Issue: Real Estate Taxes.

Financial Impact: The inaccurate use of a pre-conversion real estate tax valuation as our client’s real estate tax base year resulted in a net $584,000 overcharge to our client with $1 Million-plus in expected future overcharges.

Audit Findings: CTS noted that the building occupied by our client had undergone an expansion and conversion, and that our client had become a new tenant to the building immediately post-conversion. CTS identified that the landlord was utilizing a valuation of the building for Real Estate Tax Base Year purposes that was pre-conversion and prior to issuance of a new Certificate of Occupancy (CO). Our client’s lease specifically stated that the Real Estate Tax Base Year was to be the first tax assessed year post issuance of the new CO.

Audit Results: $584,000 was refunded to our client, and the landlord recalculated the lease’s real estate tax base year resulting in over one million dollars in future cost avoidance.

'Big Box' Retailer  $186,000 Savings

Location: 75,000 SF, Outdoor Mall – Los Angeles, California.

Issue: Lease-Impermissible Charges.

Financial Impact: The net sum of impermissible expenses resulted in a $186,000 overcharge to our client.

Audit Findings: Our client is an anchor tenant in the mall with a highly negotiated lease and individualized CAM exemptions. CTS identified numerous impermissible charges including non-CAM management payroll expenses taxes, overtime, processing fees, expenses for cleaning management offices, roof and sidewalk repairs that were lease-designated landlord expenses, unsupported HVAC and utility fees, impermissible insurance and parking lot expenses, and management fees that should have been calculated net of specific outparcel CAM contributions.

Audit Results: $186,000 was refunded to our client, and follow up audits show that the landlord is now properly accounting for our client’s lease-specified CAM exemptions.

Law Firm  $2.2 Million Savings

Location: Major Offices in Strategically Placed Class-A Buildings.

Issue: Numerous Issues across the Portfolio including Inaccurate Billing Methodologies, Improper Related Party Expenses, Impermissible Capital Expenses, Inaccurately Calculated Rent Escalation, Improperly Backed-Out Tenant-Specific Expenses, Electric & Utility Overcharges, etc.

Financial Impact: The net sum of CTS identified overcharges to our client across the portfolio resulted in a $2.2 Million overcharge with over $10 Million in systemic future overcharges.

Audit Findings: CTS has performed audits on each location within the portfolio and uncovered overcharges in a variety of areas ranging from improper billing methodology construction/application to lease-impermissible expenses being included in building operating expenses.

Audit Results: Over $2.2 Million has been refunded or credited to our client, and recalculated base years and corrected methodologies will lead to over $10 Million in future cost avoidance.

Financial Institution  $18 Million Savings

Location: Numerous Offices ranging from 10,000 to 250,000 SF in Class-A Buildings and Located in Markets Ranging from Major Metropolitan Financial Districts to Secondary Metropolitan and Suburban Markets.

Issue: Numerous Issues across the Portfolio including Inaccurate Billing Methodologies, Improper Related Party Expenses, Impermissible Capital Expenses, Inaccurately Calculated Rent Escalation, Improperly Backed-Out Tenant-Specific Expenses, Electric & Utility Overcharges, etc.

Financial Impact: The net sum of CTS identified overcharges to our client across the portfolio resulted in an $18 Million in overcharges with over $20 Million in systemic future overcharges.

Audit Findings: CTS has performed audits on each location within the portfolio and uncovered overcharges in a variety of areas ranging from improper billing methodology construction/application to lease-impermissible expenses being included in building operating expenses.

Audit Results: $18 Million has been refunded or credited to our client, and recalculated base years and corrected methodologies will lead to over $20 Million in future cost avoidance.