Recovery Training

Basic Set-Up

Create the Expense Pool

1. Determine where the pool should be created:
   1. Budget Level: When a pool is applicable to more than one building (i.e., standard lease form used across buildings with a 95% gross-up on Operating Expenses or for Cross-Asset recoveries).
   2. Building Level: When pool is unique to the building (i.e., newly acquired building using a different lease form or for heavily negotiated leases).
2. Select the components of the pool. May be done via a combination of:
   1. Individual account selection
   2. Formulations (groupings of accounts) - Best Practice
   3. Reference to an existing Recovery Pool
   4. Specific Dollar Amounts
   5. Amounts per Square Foot
3. For each component of the pool, indicate:
   1. A Gross-Up % (if component is variable and may be grossed-up for recovery purposes)
   2. Whether the component is subject to a cap
   3. An Administrative Fee % (typically used for retail leases)

Set Up the Recovery for each Tenant on the Rent Roll

1. Add the Recovery and:
   1. Assign the Recovery to a Charge Code (should be the same charge code reflected in the Charges(#) section of the Rent Roll tab)
   2. Select an Input Type
      • Detailed to enter recovery specifics
      • Pre-established standard recovery that applies to the tenant
   3. Define an abatement period, if any.
2. If Input Type = Detailed, enter the following:
   1. Recovery Pool
   2. Expense Stop (if applicable)
   3. Admin Fee (if applicable)
   4. Pro-Rata Share
   5. Recovery Cap

Other Considerations

Standard Recoveries - Expedite to be used for:

1. Market Leases
2. Tenants with the same recovery calculation mechanics within a building

Cross Asset

Cross-asset Recoveries are used for campuses/business parks where expenses from more than one building are combined to create the Recovery Pools and pro-rata shares are based upon the consolidated square footage of all buildings within the campus/business park.

Same set-up as building level with two exceptions:

1. Calc Portfolios - Portfolio set up at Client level and used to define the buildings that comprise the campus/business park for which expenses are to be consolidated.
2. Area Measures - Need to establish an Area Measure for the consolidated square footage of the business park. Necessary for Market Leases applicable to business parks with cross-asset recoveries.

Calculating

Calculating Recoveries should be done only when you want to add and/or edit the amount of the billed estimate charge.

Typically done:

1. For an entire building when the budget for the following year is finalized, i.e. the budget sets the amounts of the estimated billings
2. On a tenant-by-tenant basis as speculative leases are added to the Rent Roll tab or are amended.

Recoveries may be calculated for the entire building using the "Recoveries" (calculation) button on the pane 1 toolbar on the Rent Roll Tab or at the tenant level, "Calc Recoveries" button in pane 2 of Recoveries(#) for the selected tenant.

Reports

Alert: Recovery reports relating to cross asset recoveries must be run building-by-building. Batching reports will result in duplication of amounts in the reports although the calculations will be correct.

Recovery Detail

Top section: For each tenant record, provides numerical data for each component that is used in calculation of the tenant recovery and the calculated results of the recovery. Information is provided (i) on the left hand side for the last time the recovery was calculated; and (ii) on the right hand side based upon the current budgeted/reforecasted pool amounts.

Bottom section: Account by account detail of the make-up of each recovery pool, including grossed-up amounts for variable expenses subject to the gross-up. If a pool has both capped and uncapped expenses, these will be presented separately for each pool.

Recovery Pools

Monthly detail of the make-up of each recovery pool, including grossed-up amounts for variable expenses subject to the gross-up. Report can be displayed by “Pool Design” (i.e., amounts shown at the Formulation level if used) or at a detailed level (i.e., all accounts that make up a formulation are displayed).

Recovery True-Up Audit

For each tenant, calculates the delta between the monthly billed estimates and the recovery amount based upon budgeted/reforecasted amounts with actuals for each pool assigned to the tenant. Last page of the report displays the total delta for each recovery charge code.

Rent Roll with Recoveries

Same as the Rent Roll report except for each tenant, a "Recovery Definition" section is added that displays summary level information for each recovery pool assigned to the tenant.