Lease administration of triple net leased properties (or anyproperties for that matter) generally involves making sure thetenant’s obligations, as defined in the lease, are enforced, aswell as ensuring that the landlord is in compliance with anyobligation that he may have under the lease. Amongst otherthings, it involves making sure that you as the landlord arereceiving not only proper rent payments but also ensuring that youare being reimbursed for all appropriate operating expenses. Performing this task successfully is not difficult; however it doesrequire organization and constant attention to detail.

Each lease in a portfolio will likely be different in at leastone of the numerous details that outline how the landlord issupposed to be reimbursed for operating expenses. The onus ofenforcing and collecting on all reimbursable expenses falls on thelandlord. The tenant’s leasing department is certainly notconcerned with making sure that every expense is accounted for inthe billing, creating the potential for sizable amounts of incometo be foregone if one fails to stay on top of these issues. Collecting this reimbursable income can realistically be thedifference between a successful investment and one that fails tomeet the investment strategy of the owner.

The process of collecting on all reimbursable expenses at yourproperty is apt to become more difficult than originallyenvisioned, particularly if you’re dealing with more than oneproperty. In theory, you should be able to send your tenantsa list of your reimbursable expenses plus any relevant invoices,and receive a check in the mail for the amount you outlined.Sometimes, depending upon the lease, you may have to estimate thesecosts at the beginning of the year and have them pay in a monthlyestimate and then true up to the actual expenses at the end of theyear. In other situations you may send them invoices as theyarrive, it all depends upon the lease. Seemingly minor issues canget in the way and greatly complicate this process.

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Jonathan Hipp

Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.